Legal Question in Business Law in California
I co-signed an unsecured promissory note for 650K with a friend in 2004 for money he borrowed from his father. He then borrowed another 100K a month later and signed a new note for 750K from the same person (His father) he then made payments for a little over 4 years and then defaulted. They now are claiming I'm liable under the first 650K note back from 2004. Was the replacement note enough to release me of liability as the money seems like it would have been refinanced. I never received a dime or made any payments to the father. Thank you. Steve.
4 Answers from Attorneys
Good question. I think a case could be made that the 750K note was a "novation" and replaced the 650K note entirely, including your guaranty, but this is a gut feel and I would need to read both notes, learn about the surrounding circumstances, and then do a little research in order to be reasonably sure.
You have several arguments. If you are being sued and are serious about obtaining representation to help protect you, please contact me.
Best,
Daniel Bakondi, Esq.
415-450-0424
The Law Office of Daniel Bakondi, APLC
870 Market Street, Suite 1161
San Francisco CA 94102
http://www.danielbakondi.com
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Steve, without reading the exact language of both notes it is not possible to answer your question, however, assuming the 2nd note did not relieve you of your liability, you would be liable. However, the GOOD NEWS is that you have several defenses. First, the Statute of Limitations has probably run on any lawsuit that could be filed against you. (These Statutes are found in California Code of Civil Procedure, Sections 335 - 349. You can read them yourself to see which ones might apply to you, but Section 337 states that most instruments in writing have a limitations period of 4 years.) Additionally, if you were misinformed about your friend's intentions to pay off the note, you can claim a defense of fraud and/or misrepresentation against him/her. There are a number of other defenses that might apply to your situation, but I think your strongest is the Statute of Limitations which bars anyone from suing you after all this time. It would be a good idea to speak with an attorney to get a full picture of all of your rights. I wish you the best of luck. Susan Adler, Esq.
The original and second Notes' terms and conditions will ultimately determine the answer. You can get a consultation with counsel, and get an 'opinion', but that is not, and never can be, a guarantee of outcome. If you are sued, you get to argue it out in litigation. Don't even think of doing this without an experienced attorney, you have way too much at risk. He can raise all your defenses with whatever admissible and credible witnesses, evidence and facts are available for legal arguments. If serious about hiring counsel to do whatever is possible for you, feel free to contact me.
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