The Fifth Circuit Court of Appeals has upheld a lower court's ruling that requires Thomas Swarek to pay First Service Bank (FSB) over $54 million related to a loan guarantee. This decision affects Swarek, who served as a guarantor for a large loan, and it clarifies the authority of banks to collect debts even after selling portions of the loan to other entities.

In this case, FSB entered into a $50 million loan agreement with El Dorado Gas & Oil, Inc., in 2020, with Swarek acting as a guarantor. After the borrower defaulted on the loan, FSB sought to collect the outstanding balance from Swarek. The case highlights the responsibilities of guarantors and the legal implications of loan agreements.

The dispute began when FSB filed a lawsuit in January 2024 after Swarek failed to respond to the bank's claims. The bank had sold a 95% interest in the loan to MS Facilities 2020 LLC while retaining a 5% interest and acting as the loan's servicing agent. When Swarek did not answer the complaint in time, the court entered a default judgment against him.

Swarek challenged the bank's right to collect the full debt, arguing that it should only be entitled to recover its 5% interest in the loan and that MS Facilities was a necessary party in the lawsuit. He also questioned the calculation of the judgment amount and the evidence used by FSB in its summary judgment motion.

In its ruling, the Fifth Circuit affirmed the district court's decision, stating that FSB had the contractual authority to collect the entire debt despite selling a portion of it. The court noted, “FSB retained title to the loan and authority to enforce the entire obligation.” The judges found that Swarek did not present sufficient evidence to dispute FSB's claims or the validity of the loan documents.

The court also addressed Swarek's concerns regarding the judgment amount, which totaled $54,928,751.83. The judges pointed out that Swarek had forfeited his argument about the calculation of the judgment because he did not raise it in the lower court. The ruling stated, “Swarek has identified no evidence of an incorrect calculation to create a genuine dispute of material fact.”

Furthermore, the court ruled that Swarek was not denied the opportunity to respond to evidence presented by FSB in its summary judgment reply. The judges concluded that there was no abuse of discretion in the district court's reliance on that evidence.

This ruling has significant implications for future cases involving loan guarantees and the responsibilities of guarantors. It reinforces the idea that banks can pursue full repayment from guarantors, even when they have sold parts of the loan to other entities. This case serves as a reminder for individuals considering acting as guarantors to fully understand their obligations and the potential financial risks involved.

Looking ahead, Swarek may have limited options for appealing this ruling. The court's decision is final unless he can present new evidence or arguments that were not previously considered. There are no indications in the court filing of any related cases pending that could affect this outcome.