Unreported / Non-Citable
Background
Sangalli Private Ventures, LLC (SPV), a lender, extended credit to Iconic, LLC through four promissory notes: $950,000 (September 2023), $1.5 million (August 2019, amended March 2021), $1 million (August 2023), and $1.5 million (May 2020). Four individuals and entities—Regicon, LLC; RJH I, LLC; Rodney J. Hayes; and Ryan J. Hayes—signed separate guaranty agreements on October 31, 2023. Iconic’s business involved purchasing Mercedes vehicles, converting them, and selling the converted products to dealerships and individuals.
By June 2025, Iconic had accumulated total principal debt of $5,633,250.26. SPV moved for traditional and no-evidence summary judgment on all breach of contract claims. Iconic and the guarantors raised affirmative defenses of impossibility, impracticability, and frustration of purpose. The trial court granted SPV’s motion, awarding $5,633,250.26 in principal plus interest, and attorney fees of $67,006.93 against all defendants jointly and severally.
The Court’s Holding
The court affirmed, addressing two main appellate arguments. First, regarding consideration for the guaranty agreements: Appellants argued that guaranty agreements signed by Regicon, RJH I, and the two Hayes individuals lacked consideration and thus were unenforceable. However, the court found this defense was procedurally waived. Under Texas Rule of Civil Procedure 93(9), lack of consideration must be raised by verified pleading. The appellants never raised this defense in their original or amended answers, nor in their response to the summary judgment motion. When a guaranty is written and signed by a guarantor, its existence presumes consideration; the burden falls on the guarantor to affirmatively plead its absence through proper pleading. Appellants’ failure to do so forfeited the defense entirely.
Second, on the impossibility defense: Iconic argued performance became impossible because Mercedes issued a “Stop Sell order” and nationwide recall, and because Iconic’s conversion partner, Regency Conversions Inc., filed for bankruptcy, freezing substantial inventory and parts. The court distinguished between objective and subjective impossibility. Objective impossibility—where “the thing cannot be done” by anyone—may excuse performance. Subjective impossibility—arising wholly from a party’s individual circumstances—does not. Here, Iconic’s inability to conduct business stemmed from subjective factors. More critically, none of the promissory notes or loan agreements contained provisions excusing or reducing payment obligations due to product recalls, third-party bankruptcies, economic downturns, or business disruptions. The contracts imposed absolute obligations without limitation, making summary judgment proper.
Key Takeaways
- A written and signed guaranty agreement enjoys a presumption of consideration; the guarantor must raise lack of consideration through verified pleading or waive the defense entirely.
- Only objective impossibility excuses contractual performance; subjective impossibility arising from a party’s individual circumstances—even severe business disruptions—does not discharge contractual duties.
- Contracts containing no force majeure, product recall, or other contingency clauses impose absolute obligations that survive external events outside a party’s control.
- Summary judgment is appropriate when guaranty agreements are in writing, signed, and uncontroverted, absent proper pleading of valid defenses.
Why It Matters
This decision reinforces settled principles favoring enforceability of guaranty agreements and loan documents. For lenders pursuing breach claims, the ruling confirms that borrowers and guarantors face a high procedural bar when contesting guaranty validity—defenses must be affirmatively pleaded or they are forever waived. The “presumption of consideration” attached to written guaranties substantially favors creditors. Practically, this means borrowers cannot surprise lenders with lack-of-consideration arguments at summary judgment without prior notice in pleadings.
The strict distinction between objective and subjective impossibility is equally significant for commercial parties. Businesses hoping to escape contractual obligations due to supply chain disruptions, regulatory actions (like product recalls), or third-party insolvencies—even when severe—will find no relief absent explicit contractual language providing such relief. Unless a promissory note or loan agreement expressly addresses force majeure or contingent obligations, the borrower’s contractual duties remain absolute regardless of intervening circumstances.