Misused Name in Guaranty Didn't Relieve Guarantors' Responsibility

Facts: A shopping center owner signed a lease guaranteed by the tenant’s business partners. The tenant stopped paying rent. The guarantors refused to pay. They argued that because the “landlord” was listed as a different business entity in the lease than in the guaranty, they weren’t responsible for the lease obligations. The owner sued the tenant and the guarantors. A court ruled in favor of the owner as to its claims against the tenant—ordering it to pay back rent—but not the guarantors. The owner appealed.

Decision: A Texas appeals court reversed the lower court’s ruling.

Reasoning: The appeals court determined that, while the entity listed as the landlord on the two documents was different, both entities were owned by a single individual whose name was in both documents, albeit as the “property owner,” rather than the “landlord.”

Because the property owner and landlord were “one and the same,” and the guarantors had agreed to perform all the tenant’s obligations imposed by the lease with the landlord, the landlord was, as a matter of law, entitled to enforce the lease obligations against the guarantors via the guaranty, said the appeals court. The appeals court noted that while different entities were interjected into the lease and guaranty, that doesn’t prohibit a court from construing the documents “to effectuate the parties’ true intent,” by correcting errors, removing misused names, and incorporating correct names. Here, the lease and guaranty were clearly meant to work together to give the landlord more protection than by relying on the tenant alone to fulfill its lease obligations. The appeals court concluded that the landlord in the lease was also the landlord in the guaranty, despite the use of a different entity’s name, and, therefore, the guarantors owed him a fulfillment of the tenant’s obligations.

• SAR Western Ctr. Plaza, L.P. v. Le Frisbie, LLC, May 2015