O’Neill’s guaranty was enforced according to its express terms.REASON The court applied the principle that “reliance on supposed misrepresentations that contradict the terms of the parties’ agreement is unreasonable as a matter of law and so cannot support a claim.” O’Neill’s claim was “irreconcilably at odds with the guaranty’s express terms.” The guaranty stated that O’Neill was familiar with the value of the property and that he was not relying on it as an inducement to sign the guaranty. ![]() Court of Appeals for the First Circuit affirmed the lower court’s judgment in favor of HSBC. O’Neill appealed, still arguing that HSBC had fraudulently induced him to sign the guaranty.ISSUE Is a guarantor bound to the clear, unambiguous terms of the guaranty?DECISION Yes. O’Neill argued that this clause represented that HSBC would try to recover on the property before the guaranty.The court granted HSBC’s motion to dismiss O’Neill’s counterclaim and issued a judgment in HSBC’s favor. The second provision stated that if Brandywine defaulted, HSBC could recover its loan by selling the property. O’Neill alleged that this clause valued the property at $26.5 million and that HSBC knew this was not the property’s real value. ![]() The first provision expressed the loan-to-value ratio. O’Neill filed a counterclaim, alleging fraud.O’Neill based his fraud claim on two provisions in the loan agreement. Brandywine defaulted, and HSBC filed a suit in a federal district court against O’Neill to recover on the guaranty. As part of the deal, Brian O’Neill, principal for Brandywine, signed a guaranty that designated him the “primary obligor” for $8.1 million of the loan. ![]() O’NeillUnited States Court of Appeals, First Circuit, 745 F.3d 564 (2014).FACTS To finance a development project in Delaware, Brandywine Partners, LLC, borrowed $15.9 million from HSBC Realty Credit Corp. This problem has been solved: Solutions for Chapter 21 Problem 3C: HSBC Realty Credit Corp.
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