Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 94 C 309--Harry D. Leinenweber, Judge.
Before RONEY, *fn1 BAUER, and EASTERBROOK, Circuit Judges.
Herman Marino and Michael Concialdi were shareholders, officers, and directors of Anthony Dodge, Inc., an automobile dealership. Marino was the Secretary and Treasurer and Concialdi was the President and registered agent. Anthony Dodge arranged for Chrysler Credit Corporation to lend it money and extend it credit. As is typical with this type of arrangement, Chrysler required Marino and Concialdi and their wives to personally guaranty the debts of Anthony Dodge as a condition of loaning money and extending credit to the dealership. Around August 1, 1990, the Marinos and the Concialdis executed separate but identical guaranties for the indebtedness of Anthony Dodge to Chrysler. After the guaranties were signed, Chrysler loaned money and extended credit to Anthony Dodge.
Anthony Dodge subsequently defaulted on its indebtedness to Chrysler and owes $451,292.44. In 1992, in response to Anthony Dodge's default, Chrysler first brought a replevin action in federal court against Anthony Dodge seeking satisfaction of its debt. When that piece of litigation got bogged down, Chrysler brought this action against the Marinos and the Concialdis seeking enforcement of their guaranties. The Marinos answered and asserted counter-claims; the Concialdis failed even to answer. Chrysler moved to dismiss the counterclaims and for summary judgment. The district court granted both motions, and the Marinos appeal. We affirm.
The parties agree that the guaranty dictates that the law of Illinois applies to this dispute. Under Illinois law, contracts are enforced according to their terms. See, e.g., Citicorp Sav. v. Ascher, 554 N.E.2d 409, 411 (Ill. App. Ct.), appeal denied, 561 N.E.2d 687 (1990). Guaranties are contracts to be interpreted in accordance with their clear and unambiguous meaning. Bank of Benton v. LaBuwi, 551 N.E.2d 749, 753-54 (Ill. App. Ct. 1990). "That principle applies with full vigor to waivers in a guaranty: When they are clear and unambiguous, Illinois courts consistently enforce them." BA Mortgage and Int'l Realty Corp. v. American Nat'l Bank and Trust Co., 706 F.Supp. 1364, 1376 (N.D. Ill. 1989) (citations omitted).
The guaranty clearly states that it was made to induce Chrysler to make the loan and extend the credit to Anthony Dodge. It also obligates the guarantors to make prompt payment when all indebtedness of the Anthony Dodge becomes due and relieves Chrysler of taking any action against Anthony Dodge prior to seeking payment from the guarantors. Most importantly for our purposes, the guaranty also contains a clause in which the guarantors waive "each and every defense" under principles of guaranty or suretyship law. In addition to this general waiver, this clause enumerates several, specific defenses waived by the guarantors.
This contract is clear and unambiguous. We therefore must accord it its clear meaning: That the Marinos guaranteed payment in the event of Anthony Dodge's default and waived each and every defense available to them under suretyship law. The Marinos do not disagree with this interpretation, at least not directly. They do, however, make arguments that, when viewed properly, are designed to subvert the guaranty's clear meaning. A sketch of the underlying transaction will be a useful reference for our evaluation of the Marinos' confusing and ultimately unavailing arguments.
This guaranty (and that of the Concialdis) was necessary for Chrysler to extend funds and credit to Anthony Dodge. Necessary because, as we noted out during the course of oral argument, Chrysler was and is good for its money, while a small-business borrower often is not. Further recognition of this fact is Chrysler's demand of the Marinos' waiver of all defenses. Far from some spurious request of Chrysler's, the waiver was a term critical to the completion of the loan. It permitted Chrysler to force the Marinos to pay in the event of a default and hold the stake while sorting out the anticipated (and ultimately realized) dispute over the indebtedness.
Clearly, the waiver of defenses benefits Chrysler and works to the Marinos' disadvantage. Principally, the waiver substantially increases the Marinos' risk since, after satisfying the debt, they must pursue payment from the apparently faltering business. But that is precisely the idea behind guaranties generally. The waiver, however, does not deny the Marinos substantive rights against Chrysler because they retain subrogation rights against Anthony Dodge. Subrogation, though, also has its downside, for the Marinos are required to pay sooner and assert any claims that might entitle them to some rebate from Chrysler later. So, when the Marinos allude to certain hardships this guaranty agreement works upon them, they are right. But, the guaranty was the price to be paid for securing credit for Anthony Dodge, and this is the deal to which the Marinos agreed. In fact, the events against which Chrysler attempted to protect itself by securing the guaranty were realized; Anthony Dodge defaulted, and after three years, Chrysler still holds the bag, having received payment from neither the debtor nor the guarantor. This transaction certainly illustrates the need (if not the effectiveness) for such a guaranty containing the requisite waivers. We can now entertain the Marinos' arguments that they believe entitle them to evade the obligations their guaranty so clearly thrusts upon them.
The Marinos first argue that the district court erred in refusing its request to stay the instant action. They based their request on the existence of the ongoing replevin action filed by Chrysler against Anthony Dodge in federal court. We can dispose of this argument summarily.
We review the denial of a motion to stay proceedings pending the completion of another lawsuit for an abuse of discretion. See, e.g., Aetna Cas. and Sur. Co. v. Kerr-McGee Chemical Corp., 875 F.2d 1252, 1255 (7th Cir. 1989) (citations omitted). The Marinos first argue that this case should have been stayed under the doctrine established by Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). Colorado River and its progeny, however, address the stay of federal proceedings pending the conclusion of parallel state actions and that is how we have applied it. See, e.g., Trust & Inv. Advisers, Inc. v. Hogsett, 43 F.3d 290, 294 (7th Cir. 1994). Here, both the guaranty and replevin actions were filed in federal court in the Northern District of Illinois. Consequently, abstention from the guaranty action under Colorado River is inapplicable.
There is the possibility that the Marinos are actually, but inartfully, arguing that this guaranty action should be stayed because it is duplicative of the replevin action. That would be a different story, but no more compelling. A federal suit may be dismissed for "reasons of wise judicial administration . . . whenever it is duplicative of a parallel action already pending in another federal court." Serlin v. Arthur Andersen & Co., 3 F.3d 221, 223 (7th Cir. 1993) (citations omitted). A suit is only duplicative if it ...