House Hasson Hardware Company, Inc. v. Richard L. Lawson ( 2015 )

THIRD DIVISION
ANDREWS, P. J.,
DILLARD and MCMILLIAN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules/
May 4, 2015
In the Court of Appeals of Georgia
A13A2160. HOUSE HASSON HARDWARE COMPANY, INC. v.
LAWSON’S HOME CENTER, INC. et al.
DILLARD, Judge.
House Hasson Hardware Company, Inc. (“House Hasson”) sued Lawson’s
Home Center, Inc. (“LHC”) and its principals, Richard Lawson and Scott Lawson,
alleging that LHC defaulted on a promissory note and that the Lawsons were
personally liable for that note based on a written guaranty. After the parties filed
cross-motions for summary judgment, the trial court granted House Hasson’s motion
on its claim that LHC was liable for the debt but denied it as to the Lawsons, and
granted the Lawsons’ motion on the ground that the personal guaranty did not satisfy
the Statute of Frauds. House Hasson appealed, arguing that the trial court erred in
finding that the personal guaranty was unenforceable.
In an unpublished opinion issued on February 26, 2014, this Court affirmed the
trial court’s judgment, holding that our prior precedents in this area of law—including
Thompson v. LaFarge Building Materials, Inc.1—“dictate[d] the result in this
case”—i.e., our conclusion that the personal guaranty did not identify the principal
debtor with sufficient specificity to satisfy the Statute of Frauds.2 But on October 20,
2014, the Supreme Court of Georgia granted House Hasson’s petition for certiorari,
vacated our judgment, and remanded the case to this Court for reconsideration3 in
light of its recent decision in LaFarge Building Materials, Inc. v. Thompson.4 In that
decision, the Supreme Court held that a personal guaranty, which incorporated the
subject credit application and described the party whose debt was guaranteed as the
1
323 Ga. App. 276, 280 (746 SE2d 908) (2013).
2
House Hasson Hardware Company, Inc. v. Lawson’s Home Center, Inc., Case
No. A13A2160 at 7-8 (decided February 26, 2014) (unpublished opinion) (“We reach
the foregoing conclusion fully cognizant that our Supreme Court recently granted a
petition for certiorari in LaFarge Building Materials, Inc. v. Thompson . . . to address
whether this Court erred in “holding that the guaranty agreement at issue here did not
identify the principal debtor with sufficient specificity to satisfy the Statute of
Frauds[.] Nevertheless, for the time being, the applicable precedents in this area of
law dictate the result in this case.”).
3
See House Hasson Hardware Co., Inc. v. Lawson’s Home Center, Inc., Case
No. S14C0976 (October 20, 2014).
4
295 Ga. 637 (763 SE2d 444) (2014).
2
“applicant,” sufficiently identified the principal debtor to satisfy the Statute of
Frauds.5 And given this decision, we conclude that the personal guaranty at issue here
likewise sufficiently identified the principal debtor. Thus, we reverse the trial court’s
grant of summary judgment in favor of the Lawsons as to the enforceability of the
personal guaranty and its denial of summary judgment to House Hasson as to this
same issue.
At the outset of our analysis, we note that summary judgment is proper “if the
pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law.”6 If summary
judgment is granted by a trial court, it enjoys no presumption of correctness on
appeal, “and an appellate court must satisfy itself de novo that the requirements of
OCGA § 9-11-56 (c) have been met.”7 Indeed, in our de novo review of a trial court’s
grant of a motion for summary judgment, we are charged with “viewing the evidence,
5
See id. at 641 (2).
6
OCGA § 9-11-56 (c).
7
Cowart v. Widner, 287 Ga. 622, 624 (1) (a) (697 SE2d 779) (2010).
3
and all reasonable conclusions and inferences drawn from the evidence in the light
most favorable to the nonmovant.”8
So viewed, the record shows that on October 18, 1996, LHC completed a credit
application with House Hasson. At the top of the form, a line designated for the
“Individual, Partners, or Corporate Name” was left blank, but just below, a line
designated for the “Trade Name or Business Name” indicated “Lawson’s Home
Center, Inc.” The bottom of the form contains a paragraph that reads as follows:
The undersigned, jointly and individually, guarantee any and all debts,
direct or indirect, contingent or otherwise, whether now existing or
hereafter incurred, of the above Applicant to House Hasson Hardware
(HHH). This guaranty will continue in full force and effect until
revocation in writing by the undersigned. Such revocation shall not
release the undersigned from any liability owed prior to receipt by HHH
of such revocation notice. The undersigned expressly waives notice of
acceptance of the guaranty, diligence, presentment, demand for payment,
any right to require proceedings first against Applicant, protest or
notices of any kind.
Below this paragraph, Scott Lawson and Richard Lawson signed on lines above their
printed names, which were designated for guarantors.
8
Benefield v. Tominich, 308 Ga. App. 605, 607 (1) (708 SE2d 563) (2011)
(punctuation omitted).
4
On April 15, 2010, LHC executed a promissory note for $64,814.40 in favor
of House Hasson. But less than two years later, LHC defaulted on the note, and,
subsequently, House Hasson filed a lawsuit against LHC and the Lawsons, seeking
the amount due, interest, and attorney fees. Shortly after LHC and the Lawsons filed
an answer, House Hasson moved for summary judgment, arguing that both LHC and
the Lawsons were liable for the debt. Then, following LHC and the Lawsons’
separate responses, the trial court issued an order granting summary judgment in
favor of House Hasson as to its claim against LHC but denying it as to its claim
against the Lawsons on the ground that the guaranty did not satisfy the Statute of
Frauds.
House Hasson, thereafter, filed a motion for reconsideration, which the trial
court denied. And a few months later, the Lawsons filed their own motion for
summary judgment, arguing that they could not be held personally liable for the debt
because the guaranty was unenforceable as a matter of law. House Hasson responded,
but the trial court granted summary judgment in favor of the Lawsons. This appeal
follows.
House Hasson contends that the trial court erred in denying its motion for
summary judgment and granting the Lawsons’ motion for same. Specifically, it
5
argues that the court erred in concluding that the personal guaranty contained in the
credit application was unenforceable as a matter of law because it did not comply
with the Statute of Frauds. As noted supra, given the Supreme Court’s recent decision
in LaFarge Building Materials, Inc. v. Thompson, we agree and, therefore, reverse
the trial court’s judgment.
As we have previously explained “under the Statute of Frauds and cases
applying the Statute, a promise to answer for another’s debt is only enforceable
against the promisor if it identifies the debt, the principal debtor, the promisor, and
the promisee.”9 Indeed, it is well settled that a guaranty must “identify the principal
debtor by name.”10 And where a guaranty omits the name of the principal debtor, of
the promisee, or of the promisor, “the guaranty is unenforceable as a matter of law.”11
In fact, even where the intent of the parties is manifestly obvious, “where any of these
9
Legacy Communities Group, Inc. v. Branch Banking & Trust Co., 316 Ga.
App. 496, 497 (729 SE2d 612) (2012); see also Tampa Investment Group v. Branch
Banking & Trust Co., 290 Ga. 724, 728 (2) (723 SE2d 674) (2012); John Deere Co.
v. Haralson, 278 Ga. 192, 193 (599 SE2d 164) (2004); OCGA § 13-5-30 (2).
10
Legacy, 316 Ga. App. at 497; see also Builder’s Supply Corp. v. Taylor, 164
Ga. App. 127, 128 (296 SE2d 417) (1982).
11
Legacy, 316 Ga. App. at 498 (punctuation omitted); see also Dabbs v. Key
Equip. Finance, 303 Ga. App. 570, 572 (694 SE2d 161) (2010).
6
names [are] omitted from the document, the agreement is not enforceable because it
fails to satisfy the Statute of Frauds.”12
Furthermore, a court must “strictly construe an alleged guaranty contract in
favor of the guarantor,”13 and “the guarantor’s liability may not be extended by
implication or interpretation.”14 In addition, parol evidence is not admissible to
“supply any missing essential elements of a contract required to be in writing by our
Statute of Frauds.”15 Consequently, this Court is not at liberty to determine “the
identity of the principal debtor, of the promisee, or of the promisor by inference as
this would entail consideration of impermissible parol evidence.”16
12
Legacy, 316 Ga. App. at 498 (punctuation omitted); see also Dabbs, 303 Ga.
App. at 572.
13
Legacy, 316 Ga. App. at 498 (punctuation omitted); see also Dabbs, 303 Ga.
App. at 572; Caves v. Columbus Bank & Trust Co., 264 Ga. App. 107, 114 (589 SE2d
670) (2003).
14
Legacy, 316 Ga. App. at 498 (punctuation omitted); see also Dabbs, 303 Ga.
App. at 572-573; OCGA § 10-7-3.
15
Legacy, 316 Ga. App. at 498 (punctuation omitted); see also Dabbs, 303 Ga.
App. at 573.
16
Legacy, 316 Ga. App. at 498 (punctuation omitted); see also Dabbs, 303 Ga.
App. at 573.
7
That being said, here, the guaranty included at the bottom of the same page as
the credit application, which was clearly completed by Lawson’s Home Center, Inc.,
identifies the principal debtor by referring to “the above Applicant.” And it is
appropriate to define the term used to “identify the principal debtor in the guaranty
here—‘Applicant’—using its usual and common signification.”17 Indeed, to
understand a contract, we must “read and understand the words used in the contract[,
and] unless the contract indicates otherwise, we generally accept that contractual
terms carry their ordinary meanings.”18 Of course, “applicant” is ordinarily defined
as “[o]ne who applies or makes request.”19 Thus, when read in conjunction with the
incorporated application, and with the word “applicant” bearing its usual and
common meaning, the guaranty here identifies Lawson’s Home Center, Inc. as “the
party applying for credit, which plainly makes that company the ‘Applicant’ and
therefore the principal debtor.”20 Given these circumstances, the trial court erred in
17
Thompson, 295 Ga. at 640 (2).
18
Id. (punctuation omitted).
19
The Compact Oxford English Dictionary 64 (2d ed. 1991); see also
Thompson, 295 Ga. at 640 (2).
20
Thompson, 295 Ga. at 641 (2).
8
denying House Hasson’s motion for summary judgment and in granting summary
judgment in favor of the Lawsons as to the enforceability of the personal guaranty.21
Accordingly, we reverse those judgments.
Judgment reversed. Andrews, P. J., and McMillian, J., concur.
21
See id. at 640-41 (2); Capitol Color Printing, Inc. v. Ahern, 291 Ga. App.
101, 105-06 (1) (661 SE2d 578) (2008) (holding that personal guaranty was
enforceable because principal debtor was identified as “customer” on designated line
in credit application, guaranty referenced customer as purchaser, and defendants
admitted in discovery responses that principal debtor was the “customer” to whom
plaintiff was extending credit).
9