As the credit crisis crests ever higher, the Seventh Circuit’s affirmance of summary judgment against a guarantor today strikes Blawgletter as a harbinger of decisions to come.

The ruling turned on whether a guarantor of a Uruguayan tiremaker’s debt presented evidence to support its defense that the lender "impaired" the collateral for the loan.  Impairing security for a debt increases the likelihood that the guarantor, through no fault of its own, will have to make up any shortfall between the amount owing and the proceeds from selling the collateral.  Impairment may thus get the guarantor off the hook.

The problem for the guarantor stemmed from the fact that its lawyers missed a deadline for designating experts.  As a result of the tardy disclosure, the district court struck the experts and refused to consider their opinions.  On appeal from summary judgment for the holder of the debt in the full amount of the guaranty ($1 million), the guarantor tried to avoid the late designation by casting the opinion of its valuation expert as a "lay" opinion to which the disclosure deadline didn’t apply.  But the Seventh Circuit tubed the argument, holding that the opinion resulted not from the witness’s personal knowledge of the specific collateral (as the owner of the business would presumably have) but from his general experience with similar assets.  Compania Administradora de Recuperacion de Activos Administradora de Fondos de Inversion Sociedad Anonima v. Titan Int’l, Inc., No. 07-1996 (7th Cir. July 10, 2008).

Our feed wonders if the plaintiff could’ve made its name any longer.