Court Opinion

ID: 4175863
Source: CourtListenerOpinion
Date Created: 2017-06-08 19:11:22.806904+00
Date Added: 2024-06-11T09:21:15.779221
License: Public Domain

FOURTH DIVISION
                                   DILLARD, P. J.,
                                  RAY and SELF, 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 31, 2017

In the Court of Appeals of Georgia
 A17A0391. LYNCHAR, INC. et al. v. COLONIAL OIL
     INDUSTRIES, INC.

      SELF, Judge.

      Colonial Oil Industries, Inc. (“Colonial”) filed the instant suit on an account

against Lynchar, Inc. d/b/a T&W Oil Company (“Lynchar”) and two of its

shareholders, Lawrence M. Derby, Sr. and Charles G. Thompson, Jr. (collectively,

“appellants”), alleging that appellants owed $1,406,194.61 in principal, plus interest,

on an open account for the sale and delivery of fuel products and other goods by

Colonial. Colonial alleged that Derby and Thompson signed personal guaranties for

the debts of Lynchar and were therefore liable for the same. The trial court entered

an order granting Colonial’s motion for partial summary judgment and denying
appellants’ motion for partial summary judgment. Appellants appeal both rulings. For

the reasons that follow, we reverse.

             Summary judgment is proper when there is no genuine issue of
      material fact and the movant is entitled to judgment as a matter of law.
      A de novo standard of review applies to an appeal from a grant of
      summary judgment, and we view the evidence, and all reasonable
      conclusions and inferences drawn from it, in the light most favorable to
      the nonmovant.

(Footnote omitted.) Community Magazine v. Color Xpress, 326 Ga. App. 330 (756

SE2d 564) (2014). So viewed, the record reflects that Colonial entered into an

account agreement with Lynchar whereby Colonial would sell and deliver fuel

products and other goods. A “New Account Data Sheet” signed December 10, 1986,

lists “Lynchar Inc. d/b/a T&W Oil Co.” as the billing name on the account. An

updated “Account Data Sheet and Agreement” signed August 18, 1997, lists “T&W

Oil Co.” as the billing name on the account. The signature block of the 1997

agreement lists the “Company Name” as “T&W Oil.” In 2007 and 2008, Thompson

and Derby executed personal guaranties. Both guaranties identify Colonial as the

“Holder” and T&W Oil, Inc. as the “Debtor,” and Derby’s guaranty provides as

follows:

                                         2
      On this the 23[rd] day of April, 2008[,] in consideration of and as
      inducement for Colonial Oil Industries, Inc. (hereinafter, “Colonial” or
      “Holder”) to sell product to T&W Oil, Inc. (“Debtor” or “Borrower”) on
      credit or delayed payment terms, to extend to Debtor existing or new
      credit or indebtedness, and/or to otherwise assume a credit risk with
      respect to Debtor whereby Debtor will owe to Colonial money, each of
      the undersigned guarantors (hereinafter, collectively and individually a
      “Guarantor”) do hereby agree, jointly and severally, as follows:

      1. Guarantor hereby unconditionally and absolutely guarantees to the
      Holder the full and prompt payment, when due, of all of the
      “Obligations.” “Obligations” shall mean and include all indebtedness
      and liability of whatsoever nature of the Borrower to the Holder. . .
      together with any and all costs and expenses of and incidental to the
      collection any of the foregoing or the enforcement of this Guaranty,
      including, but not limited to, reasonable [attorney] fees and costs and
      expenses of litigation generally.

      ...

      16. . . . In the event Guarantor breaches this Guaranty, then Guarantor
      shall pay to Holder all costs of the Holder in enforcing this Guaranty and
      collection of the Liabilities, including but not limited to reasonable
      [attorney] fees and the costs and expenses of litigation. . . .

Thompson and Derby are shareholders in Lynchar, Inc., and both aver that they have

never been associated with an entity known as “T&W Oil, Inc.”

                                           3
      When Lynchar failed to meet its obligations under the agreements, Colonial

sued appellants asserting claims for breach of the account agreement, promissory

estoppel, breach of both guaranties, and attorney fees. The complaint alleged as

follows:

      Pursuant to an agreement with Defendant T&W Oil and personal
      guaranty agreements with Defendant Lawrence M. Derby, Sr. and
      Defendant Charles G. Thompson, Jr., Plaintiff sold and delivered fuel
      products and other goods to Defendant T&W Oil on account. The
      outstanding balance on this account for product sold is $1,406,194.61
      plus interest.

      Defendant. . . Derby. . . signed a Guaranty Agreement through which he
      bound himself to be personally liable for any amounts owed Plaintiff by
      Defendant T&W Oil. . . .

      Defendant. . . Thompson. . . signed a Guaranty Agreement through
      which he bound himself to be personally liable for any amounts owed
      Plaintiff by Defendant T&W Oil. . . .

Appellants filed an answer, admitting these allegations, but disputing the amount

owed. . In an amended answer, appellants later denied these allegations and raised a

new affirmative defense based on the Statute of Frauds. Thereafter, appellants moved

for partial summary judgment on Colonial’s claims for breach of the guaranties and

                                         4
attorney fees, arguing that the guaranties were not enforceable because they failed to

identify the correct principal debtor, Lynchar, Inc.

      In the meantime, Colonial amended its complaint to include a claim for fraud.1

Colonial also moved for partial summary judgment on all of its remaining claims with

the exception of its claim for promissory estoppel. In support of its contention that

summary judgment was proper, Colonial pointed to appellants’ admissions in their

original answer as well as various emails between Derby as “President of T&W Oil

Company” and Colonial’s credit manager evincing Lynchar’s inability to satisfy its

payment obligations as well as its desire to continue doing business with Colonial and

pay off its account “in full.” Colonial also pointed to Derby’s deposition testimony

and Lynchar’s federal tax return in support of its motion. During his deposition,

Derby confirmed that the 2011 federal tax return listed the corporate name as

“LYNCHAR, INC. D/B/A T&W OIL COMPANY, INC.” Regarding the guaranty,

Derby testified as follows:

      1
         As amended, the complaint alleged the following claims: breach of the
account agreement (count I); promissory estoppel (count II); breach of Derby
guaranty (count III); breach of Thompson guaranty (count IV); fraud (count V); and
attorney fees (count VI). After Colonial amended its complaint, appellants amended
their motion for partial summary judgment to include Colonial’s claim for fraud. The
trial court granted summary judgment to appellants on the fraud claim.

                                          5
      Q: What was your understanding of what this document, this guaranty, was
      supposed to do?
      A: Personal guaranty, you know, for the debt.
      Q: And what does that mean?
      A: That I’d be held responsible.
      Q: And what debt were you going to be personally responsible for?
      A: From Colonial.
      Q: Whose debt were you covering personally?
      A: It would be Lynchar.
      Q: Okay. Lynchar doing business as –
      A: T&W Oil.
      Q: Okay. The document refers to T&W Oil, Inc. Do you see that?
      A: [. . . ] Okay, I see it now.
      Q: Why is that name in there?
      A: I’m not sure.
      Q: Well, is that a correct name of whose debt you were going to guaranty?
      A: No, ma’am. We don’t go by that name.
      Q: Okay. Did you tell Colonial that that was not the proper name?
      A: No, ma’am.
      Q: Was it your intent to deceive Colonial at that point?
      A: No ma’am.
      Q: Okay. So in fact, you wanted Colonial to rely upon this [guaranty] in
      providing you fuel products?
      A: Right. Yes ma’am.

Derby further testified that he understood that the guaranty he signed “was to

guaranty the debt of T&W Oil Company to Colonial Oil” and that he would be

“personally responsible” for that debt.

      Appellants objected to Colonial’s reliance on parol evidence to construe the

unambiguous guaranties. Following a hearing on the cross-motions for partial

                                          6
summary judgment, the trial court overruled appellants’ objection and granted

Colonial’s partial motion for summary judgment; the trial court contemporaneously

denied appellants’ partial motion for summary judgment. The trial court ruled that

appellants admitted the debt and that Colonial established a prima facie right to

judgment on its breach of contract claim. Based on the evidence recounted above, the

trial court also ruled that the guaranties were enforceable even though they identified

the debtor as “T&W Oil, Inc.” instead of “Lynchar” or “T&W Oil Company” because

Derby and Thompson admitted the interchangeable nature of the names and that

under L. Henry Enterprises v. Verifone, Inc., 273 Ga. App. 195 (614 SE2d 841)

(2005), parol evidence was admissible to explain ambiguities in descriptions. Finding

that the account agreement and guaranties provided for attorney fees, the trial court

also granted summary judgment to Colonial on its claim for attorney fees. In its order,

the trial court reserved for later determination the issue of damages. Appellants

appeal the trial court’s rulings as to Colonial’s claims for breach of the guaranties and

attorney fees.2

      2
       Appellants have not appealed the trial court’s grant of summary judgment to
Colonial on its claim for breach of the account agreement.

                                           7
         1. In five somewhat overlapping enumerations, appellants contend that the trial

court erred in granting partial summary to Colonial on the guaranties because (1) the

guaranties are unambiguous and (2) parol evidence is not admissible to interpret an

unambiguous contract. According to appellants, the guaranties identify the principal

debtor as “T&W Oil, Inc.,” which is not a legally existing entity. Appellants contend

that the guaranties here are identical to the one in PlayNation Play Systems v.

Jackson, 312 Ga. App. 340 (718 SE2d 568) (2011), which we found unenforceable

because it failed to reference the corporate debtor. Appellants assert that PlayNation

requires that we reverse the trial court’s order. Colonial disagrees, contending that

PlayNation is distinguishable and that this case is controlled by L. Henry, supra. We

agree with appellants.

         “The contract of suretyship or guaranty is one whereby a person obligates

himself to pay the debt of another. . . . “ OCGA § 10-7-1. Moreover, “[a] personal

contract of guaranty must be in writing and must satisfy all of the requisites of the

[S]tatute of [F]rauds, OCGA § 13-5-30 (2).” Sysco Food Svcs. v. Coleman, 227 Ga.

App. 460, 461 (489 SE2d 568) (1997). As we reiterated in Community Magazine,

supra,

                                            8
      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.
      It is well settled that a guaranty must identify the principal debtor by
      name. If 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. Even where the intent of the parties is manifestly obvious, where
      any of these names is omitted from the document, the agreement is not
      enforceable because it fails to satisfy the Statute of Frauds. Moreover,
      a court must strictly construe an alleged guaranty contract in favor of the
      guarantor. The guarantor’s liability may not be extended by implication
      or interpretation. And parol evidence is not admissible to supply any
      missing essential elements of a contract required to be in writing by our
      Statute of Frauds. Thus, this Court is not authorized 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.

(Punctuation and footnotes omitted.) 326 Ga. App. at 332 (1). See Legacy

Communities Group v. Branch Banking & Trust, 316 Ga. App. 496, 497 (729 SE2d

612) (2012) (“It is well settled that a guaranty must identify the principal debtor by

name.”) (emphasis in original). See also Builder’s Supply Corp. v. Taylor, 164 Ga.

App. 127, 128 (296 SE2d 417) (1982) (guaranty which omitted name of principal

debtor, but which defendants admitted to executing, did not satisfy the Statute of

                                          9
Frauds and was, therefore, unenforceable; parol evidence inadmissible to “supply. .

. description which is entirely wanting in the writing”) (citation and punctuation

omitted).

      In PlayNation, the owner of The Bottom Line, a limited liability corporation,

in the business of selling and installing children’s swing sets, entered into a

dealership agreement with a swing set manufacturer. One month after signing the

agreement, the owner signed a guaranty for the debts of “Swing Set Planet.” The

guaranty named only “Swing Set Planet,” The Bottom Line’s fictitious name or d/b/a

designation, without any reference to The Bottom Line or other legal entity it was

describing. The owner subsequently changed The Bottom Line’s fictitious name to

“PlayNation Parties and Playgrounds” and then failed to make payments on

outstanding invoices. The manufacturer sued for breach of the guaranty and the trial

court granted the owner’s motion for summary judgment, ruling that he could not be

held responsible for the debt of PlayNation Parties because the debtor listed on the

guaranty was Swing Set Planet. We affirmed, rejecting the manufacturer’s argument

that the owner promised to pay the debts of The Bottom Line, and finding that the

guaranty named only the fictitious name or d/b/a designation, without any reference

to a corporation or other legal entity. Because the guaranty named only Swing Set

                                        10
Planet, we concluded that the owner was, therefore, not obligated to guarantee the

debt of The Bottom Line or PlayNation Parties: “To hold otherwise would extend a

guarantor’s liability by implication or interpretation – an act forbidden to the courts.”

PlayNation, supra, 312 Ga. App. at 342. Compare American Express Travel Related

Svcs. v. Berlye, 202 Ga. App. 358, 360 (1) (414 SE2d 499) (1991) (guaranty

enforceable where change in d/b/a designation did not alter fact that guaranty named

the corporation as the agent).

      We find the rationale in PlayNation to be dispositive of the issue here. In

PlayNation, the guaranty was unenforceable not because the d/b/a name changed, but

because the guaranty failed to designate the corporate debtor. In this case, as in

PlayNation, the guaranties do not reference the corporate debtor, but, rather,

reference Lynchar’s d/b/a designation, T&W Oil, Inc. “The use of d/b/a or ‘doing

business as’ to associate a tradename with the corporation using it does not create a

legal entity separate from the corporation but is merely descriptive of the

corporation.” Berlye, supra, 202 Ga. App. at 360 (1). We did not find any ambiguity

in the defect at issue in PlayNation, and we find similarly in this case. Where a defect

cannot be treated as an ambiguity, judicial construction of the contract of guaranty is

improper and parol evidence is inadmissible to cure the defect. See Sysco Food,

                                           11
supra, 227 Ga. App. at 462. Strictly construing the guaranties here, we cannot

conclude that Derby and Thompson were obligated to guarantee the debt of the

corporation, Lynchar, Inc. Accordingly, the trial court erred in granting summary

judgment to Colonial on its claims under the guaranties.

      Colonial’s assertion that the guaranties here are ambiguous and that L. Henry,

supra, and not PlayNation, controls this case is incorrect. In L. Henry, the corporate

maker’s name on the note and guaranty differed slightly and we affirmed the trial

court’s consideration of parol evidence to explain the ambiguity. Because the

defendant in L. Henry signed the guaranty contemporaneously with a note which had

the correct corporate name, our decision was based on the “contemporaneous writing”

rule. L. Henry, supra, 273 Ga. App. at 198 (2). See OCGA § 24-3-3 (a). See also Duke

v. KHD Deutz of America Corp., 221 Ga. App. 452 (471 SE2d 537) (1996) (where

guaranty was executed at the same time and in the course of the same transaction as

a loan and security agreement and a stock pledge agreement, the three documents

could be read and construed together under the contemporaneous writing rule, OCGA

§ 24-3-3 (a), formerly OCGA § 24-6-3 (a), to determine the identity of the principal

debtor). Because the account agreement in this case had been in effect years before

                                         12
the guaranties were executed, the “contemporaneous writing” rule does not apply and

L. Henry is inapposite.

      2. Relying on Citrus Tower Boulevard Imaging Center v. Owens, 325 Ga. App.

1 (752 SE2d 74) (2013), appellants contend in their third enumeration of error that

the trial court erred in considering their withdrawn admissions. We agree.

      OCGA § 24-8-821 provides that “[w]ithout offering the same in evidence,

either party may avail himself or herself of allegations or admissions made in the

pleadings of the other.”

      Under OCGA § [24-8-821, formerly 24-3-30], admissions in judicio in
      a party’s pleadings bind the party so that they cannot put up evidence
      over objection to contradict such admissions. However, if the party
      amends its pleadings to withdraw the admissions, it may then introduce
      evidence contravening the admissions. If such contradictory evidence is
      admitted, even over the objection of the other party, then under OCGA
      § 9-11-15 (b), such evidence may be deemed to amend the pleadings to
      withdraw the admissions.

(Punctuation and footnotes omitted.) SAKS Assoc. v. Southeast Culvert, 282 Ga. App.

359, 364 (2) (638 SE2d 799) (2006). “Even so, the other party may rely on the

original admission as evidence.” Citrus Tower, supra, 325 Ga. App. at 4 (1). As we

noted in Citrus Tower,

                                        13
      [i]n other words, although a party may withdraw or strike from the
      pleadings an admission in judicio by amendment and tender evidence to
      contravene such admission, the opposite party can tender in evidence the
      original admission in judicio against such party as an admission against
      interest. Even after its withdrawal, an opposing party undeniably has a
      right to use it as evidence.

(Punctuation and footnote omitted.) Id. Citrus Tower makes it clear, however, that

      an admission in judicio applies only to the admission of fact and does
      not apply where the admission is merely the opinion or conclusion of the
      pleader as to law or fact. Thus, where the admission is simply an opinion
      on the part of the party making it as to the legal effect of a paper, the
      withdrawn admission is not a fact that can be taken advantage of by the
      opposing party.

(Punctuation and footnotes omitted.) Id.

      Here, Colonial argued, and the trial court agreed, that Colonial was entitled to

recover under the guaranties because both Derby and Thompson admitted in the

original answer to entering into personal guaranties with Colonial making them

personally liable for any amounts owed Colonial by “T&W Oil.” Appellants

subsequently withdrew this answer, however, and admitted that “Colonial had an

agreement with, and sold and delivered fuel products and other goods to, Defendant

Lynchar, Inc. d/b/a T&W Oil Company on account.” Appellants denied the amount

                                           14
owed and also denied that Derby and Thompson “signed. . . Guaranty Agreement[s]

through which [they] bound [themselves] to be personally liable for any amounts

owed Plaintiff by Defendant T&W Oil.” Appellants urge us to follow our reasoning

in Citrus Tower and find that the withdrawn admissions go to the legal effect of the

guaranties – not to any factual issue – which Colonial cannot use to its advantage. We

agree that Citrus Tower controls the issue here.

      In Citrus Tower, the plaintiff sued for breach of a lease and sought to recover

against the defendant in his personal capacity to recover rent and other amounts under

a guaranty signed by the defendant. The defendant admitted in his original answer to

executing the guaranty whereby he guaranteed payment of all sums owing under a

lease. In an amended answer, the defendant later denied those allegations. The trial

court granted summary judgment to the defendant, presumably finding that the

defendant had executed the guaranty as a representative of his professional

corporation and not in his personal capacity. This Court affirmed, finding that

“[defendant’s] admission that he ‘executed’ the Guaranty may demonstrate that he

signed the Guaranty, but that fact is undisputed and in itself does not create a genuine

issue of material fact as to whether [defendant] was personally bound by it.” Citrus

Tower, supra 325 Ga. App. at 5 (1). Similarly, in this case, the trial court erred in

                                          15
relying on the withdrawn admissions because those admissions went to the legal

effect of the guaranties and were not evidence of whether the written guaranties

complied with the Statute of Frauds or the requirement that the debtor be identified.

      3. Finally, appellants contend that because the guaranties are unenforceable,

the trial court erred in granting summary judgment to Colonial on its claim for

attorney fees. Given our finding that the guaranties are unenforceable, it follows that

the trial court erred in granting summary judgment to Colonial on its claim for

attorney fees under the guaranties.3

      Given the foregoing, we conclude that the trial court erred in granting

Colonial’s motion for partial summary judgment on counts III, IV, and VI, and in

denying appellants’ motion for partial summary judgment on those same counts.

      Judgment reversed. Dillard, P. J., and Ray, J., concur.

      3
       We render no opinion as to whether Colonial is entitled to attorney fees under
any other theory or claim for relief.

                                          16