JEAN T. CALLISON
JAMES B. GLICK, SUBSTITUTE TRUSTEE, ET AL.
THE CIRCUIT COURT OF THE CITY OF STAUNTON Herbert G. Gill,
Jr., Judge Designate
BERNARD GOODWYN, JUSTICE
appeal, we consider whether the circuit court erred in
refusing to declare a party a subsurety to a loan obligation,
holding that a purchase option contract was enforceable, and
declining to explain the meaning of its final order upon
request of a party.
The Lease and Option
March 1, 2007, Waller Callison (Mr. Callison) leased his
commercial property in Staunton, Virginia (Property) to
Elliott Chevrolet, Inc., which is owned by William Elliott,
IV (Elliott). The Property had a single building on it
that Elliott Chevrolet used as an automobile service center.
The lease term was five years with an automatic renewal.
Under the lease, Elliott Chevrolet could "make additions
or alterations to the Property" with Mr. Callison's
lease gave Elliott Chevrolet an "Option to
Purchase" (Option). Elliott Chevrolet had the right to
purchase the Property if Mr. Callison decided to sell the
Property, if Mr. Callison passed away, or "after the end
of the first renewal term of this Lease." The Option set
a purchase price to be determined by an appraiser. It also
If Tenant exercises the right to purchase the Property, the
Property shall be conveyed to Tenant, or its assign,
by General Warranty Deed with English Covenants of Title,
free and clear of all liens and encumbrances, in
exchange for payment of the full purchase price in
immediately available funds.
(Emphases added.) The Option gave Elliott Chevrolet the
"unqualified right to assign the [Option] at any time
and such assignment shall be binding on Landlord," and
stated it would "survive the death of Landlord, and
shall be binding on their heirs and successors in
interest." Mr. Callison and Elliott signed the lease and
March 25, 2011, Mr. Callison and Elliott signed a lease
addendum, which fixed the Option purchase price for the
Property at $550, 000.
Property Construction and Renovations
and David Trainum (Trainum) owned ET Investments, LLC, which
leased its various properties to Elliott's car
dealerships. Elliott Chevrolet wanted to renovate the
Property's existing building and also to construct a
second building on the Property for an auto paint shop.
Elliott and Trainum decided that ET Investments would fund
the construction of the second building and the renovations
on the Property, and that Elliott Chevrolet would eventually
assign the Option to purchase the Property, at the fixed
Option purchase price, to ET Investments.
10, 2011, ET Investments took out a loan of $500, 000 (Note)
from Frontier Community Bank (Bank) to finance the
construction and renovations of the Property. A
"Commercial Guaranty" (Guaranty) of the Note was
signed by Trainum, who personally guaranteed
full and punctual payment and satisfaction of [Trainum's]
Share of Indebtedness of [ET Investments] to [the Bank] and
the performance and discharge of all [ET Investment's]
obligations under the Note . . . . [The Bank] can enforce
this Guaranty against [Trainum] even when [the Bank] has not
exhausted  remedies against anyone else obligated to pay
the Indebtedness or against any collateral securing the
Trainum's "Share of Indebtedness" was 50% of
any outstanding debt on the Note. Another guaranty was signed
by Elliott, personally, with the same terms as the Guaranty
signed by Trainum, including responsibility for a 50% share
of the indebtedness.
May 10, 2011, Mr. Callison signed a "Construction Deed
of Trust" (Deed of Trust), which secured the Note with
the Property. The Deed of Trust stated:
Except as otherwise provided in this Deed of Trust, [ET
Investments] and [Mr. Callison] shall pay to [the Bank]
all indebtedness secured by this Deed of Trust as it
becomes due, and [ET Investments] and [Mr. Callison]
shall strictly perform all their respective obligations
under the Note, this Deed of Trust, and the Related
[The Bank] may . . . declare immediately due and payable all
sums secured by this Deed of Trust upon the sale or transfer,
without [the Bank's] prior written consent, of all or any
part of the [Property].
(Emphases added.) The Deed of Trust specified that the
Bank's successors and assigns could enforce the Note.
of the Property improvements began in 2011. In addition to
paying Mr. Callison rent under the terms of the lease,
Elliott Chevrolet also paid ET Investments $4, 250 per month
for the construction and renovations, and ET Investments in
turn made monthly payments of a similar amount to the Bank on
Callison passed away intestate on November 26, 2011. His
wife, Jean Callison (Mrs. Callison), was his only heir.
early 2012, the construction and renovations suffered
unanticipated cost overages. As a result, on April 23, 2012,
ET Investments and the Bank increased the Note amount to
same day, Mrs. Callison signed a "Modification
Agreement" (Modification Agreement) changing the Deed of
Trust's language so that it secured "the repayment
of any and all loans and/or advance" from ET Investments
up to $600, 000. The Modification Agreement also stated:
Except as expressly modified above, the terms of the original
Deed of Trust shall remain unchanged and in full force and
effect . . . . It is the intention of [the Bank] to
retain as liable all parties to the Deed of Trust and all
parties, makers and endorsers to the Note, including
accommodation parties, unless a party is expressly released
by [the Bank] in writing.
improvements were completed in 2012. Elliott Chevrolet
continued its payments to Mrs. Callison under the terms of
the lease, and to ET Investments for payment on the Note.
Elliott Chevrolet Closes
fall of 2015, Elliott's car dealerships began closing. On
January 1, 2016, Elliott Chevrolet ceased its operations at
the Property. Elliott Chevrolet subsequently stopped making
its $4, 250 monthly payments to ET Investments, and Elliott
transferred his 50% interest in ET Investments to
end of January 2016, Trainum ceased ET Investment's
monthly payments to the Bank on the Note. On February 8,
2016, Trainum executed a promissory note of approximately one
million dollars to the Bank in exchange for acquiring several
loan assets, including the Note. As manager of ET
Investments, Trainum prevented ET Investments from paying
anything further on the Note. Instead, ...