Unreported / Non-Citable
Background
Copeland Contracting Company borrowed $1.9 million from Heskell Khozouri-Zadeh to provide cash security for bonds required under a federal construction contract. The loan was documented by a loan agreement and promissory note and secured by collateral that included interests in real property. Copeland president Elsa Brown executed a guaranty of payment and performance, while Event Holdings, LLC executed a limited guaranty backed by pledged real property.
The loan matured in August 2024, but Copeland did not repay the principal and other amounts due. After sending multiple default notices and offering a conditional extension that Copeland did not accept, Khozouri-Zadeh sued Copeland for breach of the note and loan agreement, Brown for breach of her guaranty, and Event Holdings for breach of its guaranty and judicial foreclosure. He moved for summary judgment on all claims.
The Court’s Holding
The court granted summary judgment to Khozouri-Zadeh on all claims. It concluded that the evidence established his right to enforce the note and guaranties: the instruments existed, had been executed by the defendants, were owned or held by Khozouri-Zadeh, and remained unpaid. The loan and guaranties were unambiguous, and Copeland’s failure to pay by the maturity date constituted an event of default without exception or limitation.
The defendants argued that delays in the federal construction project postponed the release of surety funds and made performance impossible. The court held that they cited no competent summary-judgment evidence creating a genuine factual dispute and failed to show objective impossibility. Their inability to pay because expected funds were delayed amounted, at most, to subjective impossibility, which does not excuse contractual performance under Texas law. Their remaining affirmative defenses likewise failed because they rested on boilerplate assertions rather than specific facts or record evidence.
Key Takeaways
- A lender may obtain summary judgment on a promissory note by establishing the note’s existence and execution, the lender’s ownership or possession, and a definite unpaid balance.
- Financial difficulty caused by delayed receipt of anticipated funds is subjective impossibility and does not excuse repayment under Texas law.
- A party opposing summary judgment must identify competent evidence supporting its defenses; unsupported assertions and boilerplate pleadings do not create a genuine factual dispute.
Why It Matters
The decision underscores that courts will enforce unambiguous payment obligations and guaranties according to their terms, even when external project delays disrupt a borrower’s expected source of repayment. A payment guarantor cannot avoid liability merely because the borrower encountered cash-flow problems.
The ruling also illustrates the evidentiary consequences of an inadequate summary-judgment response. Because the defendants did not identify supporting record evidence, their impossibility theory and other affirmative defenses could not prevent judgment for the lender. The court directed Khozouri-Zadeh to submit a proposed judgment and separately address attorneys’ fees.