November 7, 2023

Oh Where, Oh Where Has My Guarantor Gone? Pursuing Guarantor Liability in Foreclosure Actions

In a recent case, Dyck-O’Neal, Inc. v. Trevor Meikle, Florida’s Fourth Circuit Court of Appeals shed light on an essential legal principle: plaintiffs can still pursue guarantors in foreclosure actions even if they were served via publication. This ruling has significant implications for creditors looking to recover deficiency judgments. Let’s delve deeper into the case and explore its potential impact on pursuing breach of guaranty claims against guarantors in commercial loans. 

Background of the Case  

When a property is sold at a foreclosure sale, and the sale amount falls short of the outstanding loan, creditors often pursue deficiency judgments. In the case of Dyck-O’Neal, Inc. v. Trevor Meikle, Dyck-O’Neal, Inc. sought to recover a deficiency judgment after being assigned the foreclosure judgment. However, a complication arose as the mortgagor had been served via publication during the foreclosure proceedings. 

The Challenge of Service by Publication 

Service by publication is permitted in cases of mortgage foreclosure. However, to pursue a deficiency judgment, personal service to the mortgagor is necessary. Despite the initial service via publication, Dyck-O’Neal, Inc. managed to locate Meikle, the mortgagor, and personally served him with a complaint alleging deficiency.  

The Legal Turning Point 

Meikle sought and was granted summary judgment, arguing that Dyck-O’Neal, Inc. was prohibited from pursuing a deficiency judgment against him due to the prior service via publication. Nevertheless, the District Court of Appeals swiftly reversed this decision, emphasizing the precedent set in NCNB National v. Pyramid Corporation, decided by the 4th DCA in 1986. The Court clarified that service by publication during the foreclosure action did not impede the acquisition of personal jurisdiction through subsequent personal service in the deficiency action. 

Implications for Guarantors on Commercial Loans  

The significance of this ruling extends beyond mortgage foreclosures. Pursuing a breach of guaranty claim against a guarantor follows a similar trajectory. To obtain a judgment against a guarantor, personal service remains a crucial requirement. This precedent underscores the possibility of pursuing breach of guaranty claims even after the conclusion of a foreclosure action, even if the initial service was through publication. 

This ruling serves as a critical reminder to creditors and lenders regarding the steps necessary to ensure successful legal actions against guarantors. The case of Dyck-O’Neal, Inc. v. Trevor Meikle serves as a beacon for understanding the intricacies of pursuing guarantor liability and the significance of meticulous legal procedures. As the legal landscape continues to evolve, it remains essential to remain vigilant and adaptable in the pursuit of justice and rightful recovery in foreclosure actions. 

Expert Legal Guidance for Foreclosure Actions and Guarantor Liabilities 

In navigating the complex terrain of foreclosure actions and guarantor liabilities, it is vital to have a comprehensive understanding of legal nuances and precedents. As this case exemplifies, the intricacies of service and jurisdiction can significantly impact the outcomes of legal proceedings. 

If you find yourself grappling with similar legal challenges or require guidance on matters related to foreclosure actions or breach of guaranty claims, I am here to provide assistance and support. We can work together to protect your interests and navigate the legal complexities with confidence and expertise. Feel free to reach out to me for a thorough evaluation of your case and a strategic plan of action. 

Jordan Shealy
Attorney, Real Estate
Kelley Kronenberg-Fort Lauderdale, FL
(954) 370-9970