Opinion ID: 2543467
Heading Depth: 2
Heading Rank: 1

Heading: Hinds's Liability as a Guarantor

Text: Hinds argues that the trial court erred in entering a summary judgment against him because, he argues, he is not liable on the August 25, 2006, guaranty (hereinafter the guaranty). Hinds reasons that the language of the guaranty extends Hinds's liability only to written agreements between Bon Harbor and United Bank and that, because Bon Harbor's signature of the underlying promissory note was defective, the guaranty does not secure any valid written agreements. Our review of a summary judgment is de novo. `A motion for summary judgment is granted only when the evidence demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Rule 56(c), Ala. R. Civ. P.' Reichert v. City of Mobile, 776 So.2d 761, 764 (Ala.2000). We apply `tee same standard as that of the trial court in determining whether the evidence before the court made out a genuine issue of material fact.' Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988); System Dynamics Int'l, Inc. v. Boykin, 683 So.2d 419, 420 (Ala.1996). In order to defeat a properly supported motion for a summary judgment, the nonmoving party must present substantial evidence that creates a genuine issue of material fact. `Substantial evidence' is `evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). Borders v. City of Huntsville, 875 So.2d 1168, 1176-77 (Ala.2003). `In the present case, the plaintiff asked for and was granted a summary judgment. On a motion for an offensive summary judgment, that is, one on behalf of the plaintiff, the plaintiff must conclusively prove every element of his claim.' Ex parte Ramsay, 829 So.2d 146, 153 (Ala.2002) (quoting Ramsay v. Grove Hill Mem'l Hosp. Auxiliary, 829 So.2d 142, 144-45 (Ala.Civ.App.2000)). Additionally, we note that `[q]uestions of law are reviewed de novo.' Henderson v. MeadWestvaco Corp., 23 So.3d 625, 629 (Ala.2009) (quoting Alabama Elec. Coop. v. Bailey's Constr. Co., 950 So.2d 280, 283 (Ala.2006)). As long as the contractual terms are clear and unambiguous, questions of their legal effect are questions of law. Winkleblack v. Murphy, 811 So.2d 521, 525-26 (Ala. 2001) (citing Commercial Credit Corp. v. Leggett, 744 So.2d 890 (Ala. 1999)). In their principal brief on appeal, Bon Harbor and Hinds state the following regarding Bon Harbor's indebtedness to United Bank: Bon Harbor recognizes that it may not accept the proceeds from United [Bank] and then claim that it bears no liability to repay it on the ground that it did not execute the loan documents. The company acknowledges that the money received from United [Bank] was not a gift, and expected to pay a reasonable rate of interest for the use of the money. Bon Harbor does not claim that the rate of interest provided for in the loan documents was unreasonable. However, it did not enter into the loan documents presented by United [Bank], or any other written agreement, and is therefore not bound according to the terms of those documents. (Bon Harbor and Hinds's brief, at 44.) The guaranty stated: Guarantor hereby unconditionally guarantees the prompt and full payment and performance and promises to pay all of [Bon Harbor's] present and future, joint and/or several, direct and indirect, absolute and contingent, express and implied, indebtedness, liabilities, obligations and covenants (cumulatively `indebtedness') to [United Bank] as follows : X UNLIMITED: Guarantor's liabilities and obligations under this guaranty (`obligations') shall be unlimited and shall include, all present and future written agreements between [Bon Harbor] and [United Bank] (whether executed for the same or different purposes) including, but not limited to, the [July 8, 2005,] promissory notes and agreements ... evidencing the indebtedness, together with all interest and all of [United Bank's] expenses and costs. ... (Emphasis added.) Hinds argues that the scope of his liability under the guaranty cannot be extended beyond the language of the guaranty. He cites § 8-9-2(3), Ala. Code 1975, which requires that promises to answer for the debt, default or miscarriage of another be in writing. He also relies on several cases stating that guaranty agreements must be strictly construed. [3] Hinds then reasons that the phrase shall include, all present and future written agreements limits his liability under the guaranty to express and implied[] indebtedness, liabilities, obligations and covenants, arising from written agreements. United Bank contends that the phrase shall include, all present and future written agreements is not limiting in nature. United Bank notes that the preceding paragraph provides that Hinds guarantees the express and implied, indebtedness, liabilities, obligations and covenants between Bon Harbor and United Bank. (Emphasis added.) United Bank then argues that the words shall include are not limiting in nature, but are rather words of enlargement, citing Southeastern Meats of Pelham, Inc. v. City of Birmingham, 895 So.2d 909 (Ala.2004). United Bank then notes that the guaranty agreement contained three possible paragraphs describing the scope of the guaranty: unlimited, limited to an amount, and limited to specified agreements. Hinds and United Bank selected the first paragraph. United Bank argues that, if the parties had wanted to limit the guaranty to written agreements, they could have selected the third option and expressly limited the guaranty to written agreements between Bon Harbor and United Bank. Instead, the parties chose the first option which stated instead that the guaranty shall be unlimited. We agree with United Bank's construction of the guaranty. In Southeastern Meats, this Court stated: In another context, this Court explained that the word `including is not to be regarded as limitational or restrictive, but merely as a particular specification of something to be included or to constitute a part of some other thing.' Sims v. Moore, 288 Ala. 630, 635, 264 So.2d 484, 487 (1972) (emphasis added). `Including is not a word of limitation, rather it is a word of enlargement, and in ordinary significance also may imply that something else has been given beyond the general language which precedes it. ' Id. (emphasis added). 895 So.2d at 913. Therefore, the phrase shall include ... written agreements (emphasis added) cannot reasonably be read as limiting or restricting the scope of the guaranty. This is true particularly considering the immediately preceding phrase, which states that the guaranty shall be unlimited, and considering the alternative choices that would have allowed the parties to specify that the guaranty was limited to certain agreements. Accordingly, Hinds was liable under the guaranty for Bon Harbor's indebtedness, express and implied, written or otherwise, to United Bank. Based on the previously noted admission of liability of Bon Harbor, Bon Harbor is indebted to United Bank for the $7,500,000 transferred to it in July 2005 and for reasonable interest on that debt. As a result, United Bank has shown that there is no genuine issue as to any material fact regarding Hinds's liability under the guaranty for Bon Harbor's indebtedness to United Bank and that it is entitled to a judgment as a matter of law. The absence of proper signatures obviously does not afford a defense to Bon Harbor's indebtedness or Bon Harbor and Hinds would not concede Bon Harbor's liability in their principal brief on appeal. Given the scope of the guaranty as it relates to implied liabilities of Bon Harbor, we need not further address the implications of the absence of alleged proper signatures. Hinds, therefore, has not shown that the trial court erred in entering a summary judgment against him.