Court Opinion

ID: 4636228
Source: CourtListenerOpinion
Date Created: 2020-11-24 22:33:45.763437+00
Date Added: 2024-06-11T07:58:30.519320
License: Public Domain

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                                     Appellate Court                           Date: 2020.09.08
                                                                               08:43:23 -05'00'

                  Performance Food Group, Inc. v. Ariva Hospitality, Inc.,
                               2020 IL App (3d) 190409

Appellate Court          PERFORMANCE FOOD GROUP, INC., Plaintiff-Appellant, v.
Caption                  ARIVA HOSPITALITY, INC., an Illinois Corporation, d/b/a Garden
                         Hotel, and CHAD BRYDEN, Individually, Defendants-Appellees.

District & No.           Third District
                         No. 3-19-0409

Filed                    May 27, 2020

Decision Under           Appeal from the Circuit Court of Rock Island County, No. 19-SC-720;
Review                   the Hon. John L. McGehee, Judge, presiding.

Judgment                 Affirmed.

Counsel on               James S. Zmuda, of Califf & Harper, P.C., of Moline, for appellant.
Appeal
                         Amanda Adams Martinez, of Law Office of Amanda Adams Martinez
                         LLC, of Loves Park, for appellee Chad Bryden.

                         No brief filed for other appellee.
     Panel                    JUSTICE WRIGHT delivered the judgment of the court, with opinion.
                              Justice Carter concurred in the judgment and opinion.
                              Justice McDade dissented, with opinion.

                                              OPINION

¶1        In late December 2015, Ariva Hospitality, Inc. (Ariva), was doing business as the Garden
      Hotel in South Beloit, Illinois. From this time until early 2019, Performance Food Group, Inc.
      (PFG), sold food products to Ariva on a line of credit under a customer account application,
      which was subject to the personal guarantee of the general manager of the Garden Hotel, Chad
      Bryden. Bryden left his employment as the general manager of the Garden Hotel in July 2017.
      In April 2019, PFG filed a small claims complaint against Ariva, whose owner could not be
      located for service, and Bryden, seeking to collect Ariva’s debt for food products ordered for
      the Garden Hotel in February and March 2019. The circuit court entered judgment for Bryden.
      PFG appeals.

¶2                                         I. BACKGROUND
¶3         On April 9, 2019, plaintiff, PFG, filed a small claims complaint for breach of contract,
      alleging both named defendants, Ariva and Bryden, owed PFG “the sum of $5,203.59 ***
      pursuant to the parties’ written contract.” PFG attached a customer account application and
      personal guarantee, dated December 23, 2015, to the small claims complaint. The customer
      account application established terms of credit that were extended to Ariva. This document
      listed Zhanhai Zhang as “ownership” of Ariva but was signed by the Garden Hotel’s general
      manager, Bryden. Bryden also signed a separate personal guarantee, which stated:
                  “FOR IN CONSIDERATION OF and as inducement for [PFG] *** to extend credit
              on an open account to [Ariva], the party identified in this Customer Application, the
              undersigned guarantor[, Bryden,] *** hereby personally, and not as an agent of [Ariva],
              irrevocably, absolutely and unconditionally without right of any deduction, set off or
              otherwise, at all times, guaranty and agree to fully and promptly pay when due ***, as
              primary Guarantor any and all indebtedness owing to PFG by [Ariva] on said open
              account, whether said indebtedness now exists or is incurred hereafter, and whether for
              goods or services or in the form of notes, bills[,] open account or any indebtedness in
              any other form. This Guarantee is absolute and continuing in nature until terminated by
              the written notice of Guarantor[, Bryden,] to PFG, sent certified mail ***. Any
              termination of this Guarantee shall not terminate Guarantor’s[, Bryden,] liability for
              any and all indebtedness incurred prior to the effective date of termination.
                  All information and terms and conditions appearing in the Customer Application,
              which is executed contemporaneously herewith, are hereby incorporated into this
              Guarantee by reference, including, but not limited to terms pertaining to interest
              charges, attorneys’ fees and terms of credit. GUARANTOR[, BRYDEN,] HAS READ
              AND UNDERSTANDS ALL OF THE PRINTED, TYPED AND HANDWRITTEN
              LANGUAGE APPEARING ON ALL PAGES OF THIS THREE (3) PAGE
              DOCUMENT AND ACKNOWLEDGES THAT NO ESSENTIAL TERMS ARE
              OMITTED.

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                 Guarantor[, Bryden,] expressly waives notice from PFG of acceptance and reliance
             on this Guarantee, notice of sales made to [Ariva] and notice of default by [Ariva].
             Guarantor[, Bryden,] expressly consents to any modification or renewal of the terms of
             credit granted to [Ariva] from time to time, and waives notice of any such modification
             or renewal.
                 In the event of any default by [Ariva] of its obligations, PFG may proceed directly
             against Guarantor[, Bryden,] to enforce its rights, without proceeding against [Ariva]
             or exhausting any other remedies PFG may have. This personal guarantee shall be
             binding upon Guarantor, [Bryden,] its heirs, successors, representatives and assigns,
             and shall inure to the benefit of PFG, its successors and assigns.
                                                   ***
                 The Guarantor(s)[, Bryden,] execute(s) this Guarantee on his or her own personal
             behalf, and not in any other capacity regardless of how Guarantor[, Bryden,] may
             characterize itself below.”
¶4       On June 12, 2019, PFG presented its case against Bryden during a bench trial in small
     claims court. 1 PFG called Lori Vroman, an employee in PFG’s credit department, as a witness.
     Vroman testified that Ariva stopped making payments to PFG in early 2019. According to an
     exhibit reviewed by Vroman, Ariva’s outstanding account balance totaled $5203.59 for food
     products ordered for the Garden Hotel between February 8 and March 8, 2019. When PFG’s
     sales representative travelled to the Garden Hotel to collect the outstanding account balance,
     he found a note posted to the door indicating the business was closed for remodeling.
¶5       Bryden also testified before the circuit court. According to Bryden, he was employed by
     Ariva as the general manager of the Garden Hotel from June 2014 to July 2017. During that
     time, Bryden reported to Ariva’s local owner, Zhang. 2 Bryden testified that he would submit
     vendor reports to Ariva’s ownership, who would then decide whether to make purchases from
     the vendors. Bryden has not been in contact with his former employer or had access to Ariva’s
     business records since leaving the company in July 2017.
¶6       Bryden also testified that, after leaving Ariva in July 2017, he did not terminate the personal
     guarantee, as that agreement allows with “written notice *** to PFG, sent certified mail.”
     Bryden was unaware PFG and Ariva did business through early 2019. Further, Bryden did not
     know of Ariva’s debt, incurred in early 2019, until PFG filed the small claims lawsuit.
¶7       On June 21, 2019, after taking the matter under advisement, the circuit court entered an
     order announcing its decision in favor of Bryden. The circuit court’s order stated:
                 “Bryden was the general manager when he signed the personal guarantee
             agreement, but he left his employer Ariva *** in 2017. The agreement had no stated
             termination date. *** Bryden did not approve the [2019] purchase order in dispute since
             he was no longer employed at Ariva ***. There was no new personal guarantee
             introduced from a current general manager at the time of the [2019] purchase order
             from [PFG]. [PFG] had a salesman at the time of the sale in 2019 and knew of the

        1
           As of the date of the bench trial, PFG was unable to locate and complete service of process on
     Ariva’s owner, Zhang.
         2
           Bryden believed Zhang “was the original owner of the [Garden Hotel] property.” Another owner,
     Liancheng Zhang, was a director of Ariva. Bryden stated Ariva has properties throughout China.

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              workings of Ariva ***. There had been a gap of almost 4 years from when the guarantee
              agreement had been signed by [Bryden] and the new [2019] purchase order was placed.
                  In a contract which does not have a fixed time for performance, the law presumes
              that the parties intended the contract for a reasonable time. What constitutes a
              reasonable time is dependent upon the nature, purposes and circumstances surrounding
              the transactions.
                  Like other contracts, a guarantee is complete when the minds of parties meet in
              mutual ascent [sic] to the same things in the same sense. Circumstances changed when
              *** Bryden left his employer *** in 2017, and it also changed for [PFG] because the
              salesman would be dealing with a new general manager or company representative,
              and not *** Bryden.
                  Personal guarantee agreements signed by the general manager are to make sure the
              current bills get paid by their employers. Once the general manager no longer works at
              a company, all leverage to get bills paid by that general manager are lost. It would be
              unreasonable to hold *** Bryden liable for this debt due to the circumstances and facts
              of this case. Judgment for [Bryden].”
       PFG filed a timely notice of appeal on July 1, 2019.

¶8                                           II. ANALYSIS
¶9         In this case, PFG challenges the circuit court’s conclusion that it would be unreasonable
       for Bryden’s 2015 personal guarantee to extend to a debt for food products ordered by Ariva
       in February and March 2019. PFG submits the circuit court’s judgment deprived PFG of the
       benefit of relying on Bryden’s personal guarantee. Further, PFG rejects the circuit court’s
       factual findings pertaining to PFG’s knowledge of “the workings of Ariva.”
¶ 10       In response, Bryden argues the circuit court correctly found the personal guarantee
       terminated after a reasonable time. Bryden submits the personal guarantee should not be
       construed as a “perpetual, blank check” for PFG. With respect to consideration, Bryden argues
       it would be “unreasonable to hold [him] responsible for the debts of a former employer when
       [he] derived no benefit from a vendor relationship nineteen months after his employment”
       ended.
¶ 11       Recently, our court had the opportunity to address the nature of personal guarantees. See
       TH Davidson & Co. v. Eidola Concrete, LLC, 2012 IL App (3d) 110641. In doing so, we noted
       personal guarantees are construed according to principles of contract. Id. ¶ 10; see also
       Restatement (Third) of Suretyship and Guaranty §§ 7, 14 (1996). Thus, we review de novo the
       legal questions arising from the construction of a personal guarantee. TH Davidson, 2012 IL
       App (3d) 110641, ¶ 10. To the extent required, we review factual findings against the manifest
       weight of the evidence. International Supply Co. v. Campbell, 391 Ill. App. 3d 439, 447-48
       (2009).
¶ 12       Here, the language of the personal guarantee contemplates “a future course of dealing or a
       succession of credits” between PFG and Ariva. (Internal quotation marks omitted.) See TH
       Davidson, 2012 IL App (3d) 110641, ¶¶ 11-12. Without question, Bryden agreed to act as “a
       secondary obligor for all future obligations of the principal obligor[, Ariva,] to the obligee,”
       PFG. See id.; Restatement (Third) of Suretyship and Guaranty § 16 (1996). Further, PFG’s
       extension of credit to Ariva sufficed as consideration for the personal guarantee. See Tower

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       Investors, LLC v. 111 East Chestnut Consultants, Inc., 371 Ill. App. 3d 1019, 1028 (2007);
       Finn v. Heritage Bank & Trust Co., 178 Ill. App. 3d 609, 611-12 (1989); Restatement (Third)
       of Suretyship and Guaranty § 9 (1996). Therefore, we agree with PFG that Bryden’s personal
       guarantee is a continuing guarantee, supported by consideration, that was enforceable against
       Bryden when executed.
¶ 13       Nonetheless, we also recognize that the terms of this personal guarantee expressed an
       unlimited duration for Bryden’s liability. In TH Davidson, our court acknowledged the
       controlling supreme court precedent regarding continuing guarantees of unlimited durations.
       See TH Davidson, 2012 IL App (3d) 110641, ¶ 13. Over a century ago, in Mamerow v.
       National Lead Co., 206 Ill. 626, 634 (1903), our supreme court held “where the guaranty is a
       continuing one, and is unlimited as to duration and amount for which the guarantor will be
       liable, such time and amount must be reasonable, under the circumstances of the particular
       case.” See also Wilmette Partners v. Hamel, 230 Ill. App. 3d 248, 257 (1992) (stating what is
       “a reasonable time is a matter of proof under all the *** circumstances” and is “a question of
       fact”). 3
¶ 14       Here, the circuit court did not specifically reference the decisions in TH Davidson or
       Mamerow. However, as required by those cases, the circuit court made detailed findings of
       fact, under the circumstances of this particular case, regarding the reasonable duration of
       Bryden’s personal guarantee. See TH Davidson, 2012 IL App (3d) 110641, ¶ 13; Mamerow,
       206 Ill. at 634. Moreover, the circuit court’s findings of fact laid a strong foundation for its
       legal analysis, which mirrored the approaches utilized in TH Davidson and Mamerow.
       Specifically, the circuit court recognized Bryden’s personal guarantee was enforceable for a
       reasonable amount of time but was not enforceable indefinitely.
¶ 15       Indeed, the circuit court found Bryden’s personal guarantee was executed when he was the
       general manager of the Garden Hotel in 2015 but Bryden’s secondary obligation was not
       “triggered” until Ariva defaulted on its payments for food products ordered in early 2019. See
       Campbell, 391 Ill. App. 3d at 449 (“A guarantor’s secondary liability is triggered by a default
       of the debtor on the obligation *** owe[d] to the creditor.”). The circuit court made factual
       findings that Bryden “left his employer Ariva *** in 2017,” Bryden “did not approve the
       [2019] purchase order in dispute,” and PFG was “dealing with a new general manager or
       company representative.” As such, the circuit court indicated “all leverage to get bills paid by
       *** [Bryden was] lost.” These findings of fact are not contrary to the manifest weight of the
       evidence. See id. at 447-48.
¶ 16       Based upon these findings of fact, the circuit court concluded, consistent with controlling
       precedent, that it would be unreasonable “to hold *** Bryden liable for this debt” under the
       particular circumstances of this case. See TH Davidson, 2012 IL App (3d) 110641, ¶ 13;
       Mamerow, 206 Ill. at 634; Hamel, 230 Ill. App. 3d at 257. Therefore, we affirm.

          3
            We note the issue in TH Davidson focused on whether the amount owed under the personal
       guaranty was limited to $1000. See TH Davidson, 2012 IL App (3d) 110641, ¶ 9. Based on the facts of
       that case, we affirmed as reasonable, while citing Mamerow, the circuit court’s decision to hold the
       defendant liable for $5600.80 instead of $1000. See id. ¶ 13 (citing Mamerow, 206 Ill. at 634).

                                                    -5-
¶ 17                                     III. CONCLUSION
¶ 18      The judgment of the circuit court of Rock Island County is affirmed.

¶ 19      Affirmed.

¶ 20       JUSTICE McDADE, dissenting:
¶ 21       The majority has affirmed the order of the Rock Island circuit court relieving defendant,
       Bryden, of an obligation incurred as personal guarantor for his former employer, Ariva, to pay
       Ariva’s defaulted debt. I do not agree with the fundamental premise on which the decision
       rests, and I, therefore, respectfully dissent.
¶ 22       After acknowledging the law that would confirm that the personal guarantee executed by
       Bryden is a legally recognized and permitted continuing obligation (supra ¶ 12), the majority
       finds, erroneously in my opinion, that the personal guarantee executed by Bryden was of
       “unlimited duration” and was, therefore, not legally enforceable against him. I would find, for
       two reasons, that the guarantee was not of “unlimited duration.” The first reason is that it
       specifically provided for its termination, solely at Bryden’s totally unfettered election
       whenever he chose. The only qualifications were that he give PFG written notice by certified
       mail and that he accept responsibility for nonpayments by Ariva prior to his execution of the
       termination provision. The letter would give PFG notice that Bryden was no longer serving as
       personal guarantor and the opportunity to secure a new personal guarantor for its future
       dealings with Ariva. There is no reasonable construction of this clause that supports the
       conclusion urged by Bryden, and implicitly accepted by the majority, that it is “a perpetual
       blank check for PFG.”
¶ 23       The second reason is that Bryden expressly agreed in the document he signed that no
       essential terms had been omitted from the contract, an acknowledgment that is both true as to
       the termination provision and legally binding on him.
¶ 24       The majority makes numerous references to the trial court’s findings of fact, but there was
       no need or justification for factual findings. The contract is not ambiguous nor does the
       majority find that it is.
¶ 25       The personal guarantee is a single-page document in which Bryden, “personally, and not
       as an agent of Purchaser” agrees “to fully and promptly pay when due” “any and all
       indebtedness owing to PFG by Purchaser on said open account.” The contract then limits its
       duration as follows: “This Guarantee is absolute and continuing in nature until terminated by
       the written notice of Guarantor to PFG sent certified mail, return receipt requested to
       [address]. Any termination of this Guarantee shall not terminate Guarantor’s liability for any
       and all indebtedness incurred prior to the effective date of termination.” It reconfirms the
       personal nature of the promise in the following terms: “The Guarantor(s) execute(s) this
       Guarantee on his or her own personal behalf and not in any other capacity regardless of how
       Guarantor may characterize itself below.”
¶ 26       The contract contains a gloss of colorful bombast and expansive language, but the actual
       terms, including the one at issue, are clear, unambiguous, and benign. This is not a contract of
       adhesion; it was not unfair, it did not impose onerous burdens, and it was, in fact, eminently
       reasonable. Bryden did not have to sell his soul or his first-born child to release himself from
       his contractual promise to act as personal guarantor; he was not even required to secure the

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acquiescence of PFG. He only needed to send a letter to withdraw that promise. He chose not
to do that. Had he sent the letter when he left Ariva’s employ, or at any time before
February/March 2019, he would not have incurred the debt for which PFG has now sought to
hold him responsible and from which our courts have improperly freed him.

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