Court Opinion

ID: 6334893
Source: CourtListenerOpinion
Date Created: 2022-04-26 14:05:45.700292+00
Date Added: 2024-06-11T09:23:10.884049
License: Public Domain

In the
                                Missouri Court of Appeals
                                            Western District

                                                            
    BREEZE INVESTMENTS, LLC,                                
                                                                WD84588
                                 Respondent,                    OPINION FILED:
    v.                                                      
                                                                April 26, 2022
    MICHAEL ROCKWELL AND                                    
    MR FLOORS, LLC,                                         
                                                            
                                  Appellants.               
                                                            
                                                            

                    Appeal from the Circuit Court of Jackson County, Missouri
                         The Honorable Kyndra James Stockdale, Judge

                                    Before Division Three:
         Anthony Rex Gabbert, P.J., Lisa White Hardwick and Thomas N. Chapman, JJ.

          Michael Rockwell (“Rockwell”) appeals from a judgment of the Jackson County Circuit

Court that found in favor of Breeze Investments, LLC (“Breeze”) on Breeze’s breach of contract

claims against MR Floors, LLC (“MR Floors”)1 and Rockwell. Breeze’s claim against Rockwell

was contingent on a personal guaranty that Rockwell executed in 2014 and its applicability to a

subsequent lease agreement executed in 2017 by Breeze and MR Floors. On appeal, Rockwell

asserts that the trial court misapplied the law in determining that the personal guaranty Rockwell

1
  At various points in the written agreements between Breeze and MR Floors, MR Floors is referred to as “Mr.
Floors.” In this appeal, we refer to the entity as “MR Floors” consistent with the trial court’s judgment, the parties’
references to MR Floors in the underlying proceedings, and the briefs filed on appeal.
executed in 2014 continued as a personal guaranty of the obligations of MR Floors under the

subsequent lease agreement in that neither the personal guaranty nor the lease agreement clearly

indicated an intent that the guaranty would continue beyond the 24 months of the original lease.

The judgment is reversed as against Rockwell, affirmed as against MR Floors, and the case is

remanded for entry of judgment consistent with this opinion.2

                                                  Background

         On July 15, 2014, Breeze and MR Floors entered into a two-year Commercial Industrial

Lease (“Original Lease”) for a property located at 200-D NE Woodbury Drive in Grain Valley,

Missouri. The Original Lease contained 40 paragraphs. Paragraph five of the Original Lease

provided:

         5. SECURITY DEPOSIT. Concurrently with tenant’s signing of this Lease and
         Personal Guaranty, Tenant shall deliver to Landlord $1,327.00 as security for the
         performance by Tenant of every covenant and condition of this Lease (the “Security
         Deposit”). Said Security Deposit may be co-mingled with other funds of Landlord
         and shall bear no interest. If Tenant shall default with respect to any covenant or
         condition of this Lease, including, but not limited to the payment of rent, Landlord
         may apply the whole or any part of such Security Deposit to the payment of any
         sum in default or any sum which Landlord may be required to spend by reason of
         Tenant’s damage or default. If any portion of the Security Deposit is so applied,
         Tenant, upon demand by Landlord, shall deposit cash with Landlord in an amount
         sufficient to restore the Security deposit to its original amount. Should Tenant
         comply with all of the covenants and conditions of this Lease, the Security Deposit
         or any balance thereof shall be returned to Tenant promptly after expiration of the
         term thereof.

The first sentence of this provision contained the only reference in the Original Lease to a

personal guaranty.

2
 No challenge is raised in this appeal to the judgment as against MR Floors; thus, the judgment is affirmed as
against MR Floors.

                                                         2
       On or about July 23, 2014, (shortly after execution of the Original Lease) Michael

Rockwell executed a Personal Guaranty, the first paragraph of which provided:

       Michael Rockwell (hereinafter referred to as “Guarantor”), as further consideration
       for this that certain Lease Agreement between Breeze Investments LLC, as
       “Lessor”, and Mr. Floors, LLC as “Lessee,” dated July ____, 2014 (the
       “Agreement”), unconditionally and jointly and severally guarantee(s) the Twenty
       Four (24) months of performance and observance of all the covenants, conditions,
       and agreements herein provided to be performed and observed by Lessee for the
       Twenty Four (24) months of the formal lease agreement. Guarantor expressly
       agrees that the validity of this Guaranty and the obligations of the Guarantor
       hereunder for the Twenty Four (24) months of the lease agreement shall in no way
       be terminated, affected, or impaired by reason of the granting by Lessor of any
       indulgences to Lessee or by reason of the assertion by Lessor against Lessee of any
       of the rights or remedies reserved to Lessor pursuant to the provisions of the
       Agreement or by the relief of Lessee from any of Lessee’s obligations under the
       Agreement by operation of law or otherwise, including, but without limitation, the
       rejections of the Agreement in connection with proceedings under the bankruptcy
       laws now or hereafter enacted; Guarantor hereby waiving all suretyship defenses.

The final paragraph of the guaranty stated:

       No subletting shall operate to extinguish or diminish the liability of the Guarantor
       under this Guaranty; and wherever reference is made to the liability of Lessee
       named within the Agreement, such reference shall be deemed likewise to refer to
       the Guarantor.

       At the expiration of the Original Lease (July 18, 2016), MR Floors continued to occupy

the lease property, paying monthly rent for an additional nine months. On April 9, 2017, Breeze

and MR Floors, LLC executed a document entitled “2nd Amendment to Commercial Industrial

Lease Dated July 10, 2014” (“Amended Lease”). Under the Amended Lease, MR Floors would

occupy a different property at 108A NE Woodbury Drive at a different monthly rate for a term of

three years beginning May 1, 2017. The opening sentence of the Amended Lease states: “This is

an amendment, reinstatement and extension of the original lease executed the 10th day of July,

                                                3
2014 by Breeze Investments LLC as the Lessor and Mr. Floors LLC the Lessee.”3 The document

then described the leased premises, the amount of monthly rent and duration of the lease, and a

provision regarding an option to purchase. Finally, the last paragraph of the Amended Lease

stated: “All remaining terms and conditions to remain in effect.”

        On May 20, 2020, Breeze filed a two-count petition in the Circuit Court of Jackson

County. Count I asserted a breach of contract claim against MR Floors for unpaid rent, its

attorney fees and costs. Count II sought to recover the same amounts from Rockwell on the

grounds that the personal guaranty rendered Rockwell personally liable for the obligations of

MR Floors.

        A trial was held on April 23, 2021, during which the trial court heard testimony from

Bruce Casey (a member of Breeze) and from Rockwell The trial court also received as exhibits

the Original Lease, the Amended Lease, and the personal guaranty. At the close of Breeze’s

evidence, Rockwell moved the court to find in favor of Rockwell on Count II of Breeze’s

petition on the grounds that the personal guaranty, by its terms, was limited to 24 months and

contained no language indicating that it would apply to any subsequent agreements. Rockwell’s

motion was denied. At the close of all evidence, Rockwell again argued that the personal

guaranty did not extend beyond the 24 months of the Original Lease. Breeze argued that the

language in the Amended Lease that “[a]ll remaining terms and conditions [were] to remain in

effect” was a clear reference to both the Original Lease and the personal guaranty. The trial court

took the matter under advisement.

3
  The opening sentence of the Original Lease began: “THIS LEASE is made as of July 10, 2014[.]” At the end of
the document, the lease was signed by the parties and dated July 15, 2014.

                                                       4
       The trial court thereafter issued its judgment. On Count I, the trial court found in favor of

Breeze and against MR Floors in the amount of $30,576.00 for eight months of unpaid rent from

September of 2019 through April of 2020. The trial court further granted Breeze attorney fees in

the amount of $3,182.20 against MR Floors. With respect to the personal guaranty, the trial court

determined that “[t]he Personal Guaranty signed by Defendant Michael Rockwell continued to

serve as his personal guarantee for the obligations of MR Floors, LLC as set forth in the Second

Amended Lease.” Thus, on Count II, the trial court determined that Rockwell was jointly and

severally liable for unpaid rent in the amount of $30,576.00. The trial court further found

Rockwell jointly and severally liable for attorney fees in the amount of $3,182.20.

       Rockwell now appeals to this court.

                                       Standard of Review

       “On review of a court-tried case, an appellate court will affirm the circuit court’s

judgment unless there is no substantial evidence to support it, it is against the weight of the

evidence, or it erroneously declares or applies the law.” Ivie v. Smith, 439 S.W.3d 189, 198-99

(Mo. banc 2014) (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)). “While we

defer to the circuit court’s factual findings, the court’s legal conclusions and application of law to

fact are reviewed de novo.” Robb v. Bond Purchase, L.L.C., 580 S.W.3d 70, 77 (Mo. App. W.D.

2019) (citing Zweig v. Metro. St. Louis Sewer Dist., 412 S.W.3d 223, 231 (Mo. banc 2013)).

“The interpretation of a contract presents a question of law subject to our de novo review.” Id.

                                              Analysis

       In his sole point on appeal, Rockwell argues that the trial court misapplied the law in

determining that the personal guaranty he signed was operative with respect to the Amended

Lease. Relying on Jamieson-Chippewa Inv. Co., Inc. v. McClintock, 996 S.W.2d 84 (Mo. App.

                                                  5
E.D. 1999), Rockwell contends that, in the absence of language clearly expressing the intent that

a guaranty is to continue beyond its terms, a guaranty for a specific term does not apply to a

subsequent renewal term. In particular, Rockwell contends that neither the Original Lease, the

Amended Lease, nor the guaranty clearly expressed the intention of the parties that the guaranty

would extend beyond the 24 months stated in the guaranty.

       A guaranty is an agreement in which a guarantor agrees to assume liability for the

obligation of an obligor in the event of non-performance by the obligor. Jamieson-Chippewa,

996 S.W.2d at 87. A guaranty “is a collateral agreement for another’s undertaking, and is an

independent contract which imposes responsibilities different from those imposed in the

agreement to which it is collateral.” Id. “A ‘continuing’ guaranty is one that contemplates

guaranteeing a series of possible transactions between the debtor and creditor, rather than only a

single such transaction.” Id.

       “The rules of construction applicable to a guaranty are the same as applied to other

contracts.” Grand Inv. Corp. v. Connaughton, Boyd & Kenter, P.C., 119 S.W.3d 101, 115 (Mo.

App. W.D. 2003) (quoting Royal Banks of Mo. v. Fridkin, 819 S.W.2d 359, 361 (Mo. banc

1991)). “The terms of a guaranty are to be understood in their plain and ordinary sense, when

read in light of the surrounding circumstances and the object intended to be accomplished.” Id.

(quoting Nat’l Super Mkt., Inc. v. KMSK, Inc., 940 S.W.2d 47, 49 (Mo. App. E.D. 1997)). “A

guaranty may be construed together with any contemporaneously executed agreements dealing

with the same subject matter as an aid in ascertaining the intention of the parties.” Id.

       “However, this does not mean that those agreements constitute a single contract, and the

liability of the guarantor remains primarily dependent on the guaranty agreement itself.” Id.

(quoting Jamieson-Chippewa, 996 S.W.2d at 87). “[T]he guarantor’s liability ‘is to be strictly

                                                 6
construed according to the terms of the guaranty agreement’ in the guarantor’s favor and ‘may

not be extended by implication beyond the strict letter of the obligation.’” Id. (quoting Fridkin,

819 S.W.2d at 362).

       In Jamieson-Chippewa, upon which Rockwell primarily relies, the Eastern District of our

Court determined that the placement of the word “Guarantor” by the signature line of a five-year

commercial lease was insufficient to establish that the guarantors who signed the lease

individually (in addition to the corporate lessee) would be liable for a subsequent renewal term

after the corporate lessee exercised its option to renew the lease for an additional five-year term

via letter stating that the terms and conditions of the original lease agreement were to remain the

same. Jamieson-Chippewa, 996 S.W.2d at 86 & n.1. The Jamieson-Chippewa Court held:

       We hold as a matter of law that the language of a lease guaranty, or else the
       underlying lease agreement to which it is collateral, must expressly indicate the
       intention of the parties that the guaranty continue in order to hold the guarantor
       liable. Absent some contract language clearly expressing such an intent, the
       guaranty must be construed as limited to the original lease term and will not extend
       to a renewal term.

Id. at 89-90.

       Breeze acknowledges the holding in Jamieson-Chippewa, but argues that Grand

Investment is a more appropriate case to guide our analysis. Breeze argues further that the

language of the guaranty, the Original Lease, and Amended Lease provides a clear expression of

an intent to extend the guaranty to the Amended Lease.

       In Grand Investment, our Court determined that the language of the lease and guaranty

agreements at issue clearly expressed an intent to extend the guaranty beyond the original five-

year lease term to a subsequent renewal period. Grand Investment, 119 S.W.3d at 117. In Grand

Investment, the guaranty agreements at issue provided that the two guarantors “unconditionally

                                                 7
guarantee[d]” the terms and conditions of the lease for “the full term of the Lease or until the

termination thereof according to its terms, notwithstanding any modification or alteration of said

Lease[.]” Id. The guaranties further stated: “no modification, compromise, indulgence, or

alteration of the Lease shall in any manner release or discharge the undersigned and the

undersigned does hereby consent thereto.” Id. The guaranties further stated: “the terms and

provisions of the Guaranty Agreement shall remain in full force and effect until the Tenant or the

undersigned shall have fully and satisfactorily discharged all of its or their obligations to

Landlord.” Id. The guaranties further stated “that the giving of the guaranty was a material

inducement to the landlord to enter the lease.” Id. at 105. The lease at issue in Grand Investment

provided: “[w]ithout said guarantees, Landlord would not enter into this Lease Agreement.” Id.

at 115. The lease further provided that the guaranty agreements were attached and made part of

the lease. Id. The lease further provided an option to extend the lease “upon the same terms and

conditions” as those specified in the lease. Id. The Court determined that one of those

conditions was that the lease be personally guaranteed by the two guarantors. Id. at 117. Based

on all of the abovementioned language, the court in Grand Investment found that the language of

the guaranty agreements and the lease clearly expressed an intent for the liability of the

guarantors to extend beyond the initial five-year lease term. Id. In sum, Grand Investment did

not modify the holding in Jamieson-Chippewa. Rather, it reaffirmed that the language of the

guaranty and lease must clearly express an intent that the liability of a guarantor extend to a

subsequent renewal term, and found such a clear expression in the language of the guaranties and

lease in that case. Id.

        In this matter, we find no language in the guaranty or the Original Lease entered in 2014

which clearly expresses an intent that Rockwell’s personal liability be continued to the Amended

                                                  8
Lease entered in 2017. See Jamieson-Chippewa, 996 S.W.2d at 89-90. Accordingly, the trial

court misapplied the law in determining that Rockwell’s personal liability extended to the

Amended Lease.

       Because “the liability of the guarantor remains primarily dependent on the guaranty

agreement itself[,]” Grand Investment, 119 S.W.3d at 115 (quoting Jamieson-Chippewa, 996

S.W.2d at 87), the logical starting point in determining the liability of a guarantor is the guaranty

agreement itself. In this matter, the guaranty agreement expressly limited its applicability to the

24 months of the Original Lease. Under the terms of the guaranty, Rockwell agreed to

       unconditionally and jointly and severally guarantee[] the Twenty Four (24) months
       of performance and observance of all the covenants, conditions, and agreements
       herein provided to be performed and observed by Lessee for the Twenty Four (24)
       months of performance and observance of all the covenants, conditions, and
       agreements herein provided to be performed and observed by Lessee for the Twenty
       Four (24) months of the formal lease agreement. . . .

The language of the guaranty makes clear that Rockwell guaranteed MR Floors’ performance for

the 24 months of the Original Lease. The language of the guaranty does not in any way indicate

that Rockwell guaranteed the performance of MR Floors for any other period of time or

guaranteed the performance of MR Floors for any other transaction. Unlike the guaranty

agreement in Grand Investment, Rockwell’s guaranty did not leave the duration of the guaranty

indefinite. The language of the guaranty provides no indication that it is a continuing guaranty or

that Rockwell’s liability would extend beyond the 24 months repeatedly expressed in the

guaranty as a limit on the guaranty’s applicability. Thus, if the guaranty itself were our only

consideration, then it would be clear that the guaranty did not extend to the renewal term.

       Although both Jamieson-Chippewa and Grand Investment stand for the proposition that a

guarantor’s liability is primarily determined from the language of the guaranty itself, id., both

                                                  9
cases also stand for the proposition that language clearly expressing that a guaranty continues for

a subsequent renewal term may be found in either the guaranty or the lease agreement to which it

is collateral. See id. at 117 (quoting Jamieson-Chippewa, 996 S.W.2d at 89-90). In this matter,

the lease agreement to which Rockwell’s guaranty was collateral contained precisely one

reference to a personal guaranty. Paragraph five of the Original Lease began: “5. SECURITY

DEPOSIT. Concurrently with tenant’s signing of this Lease and Personal Guaranty, Tenant

shall deliver to Landlord $1,327.00 as security for the performance by Tenant of every covenant

and condition of this Lease (the “Security Deposit”).” We find that this language does not

clearly express an intent that Rockwell’s guaranty was to continue beyond the 24 months of the

Original Lease. Accordingly, “the guaranty must be construed as limited to the original lease

term and will not extend to a renewal term.” See Jamieson-Chippewa, 996 S.W.2d at 89-90.

       Breeze argues that the language in paragraph five of the Original Lease made the

personal guaranty a condition of the lease, such that, when the Amended Lease stated “[a]ll

remaining terms and conditions to remain in effect[,]” this language incorporated the personal

guaranty into the Amended Lease. We disagree. Although the language of paragraph five of the

Original Lease indicates that the parties had contemplated that a personal guaranty would be

signed around the time of the lease, this language largely refers to the timing of the delivery of

the security deposit. We find this language is insufficient to make the guaranty agreement a term

or condition of the Original Lease, and that this language is insufficient to constitute a clear

expression that Rockwell’s personal guaranty extend beyond the 24 months expressly stated in

the guaranty agreement.

       Likewise, the Amended Lease does not refer to the guaranty or its continuance with clear

language. Rather, it refers to the Original Lease: “This is an amendment, reinstatement and

                                                 10
extension of the original lease executed the 10th day of July, 2014[.]” The Original Lease was a

separate contract from the personal guaranty. Jamieson-Chippewa, 996 S.W.2d at 87. Thus,

when the Amended Lease stated that “[a]ll remaining terms and conditions” were to remain in

effect, it was referring to the terms and conditions of the Original Lease (to which it expressly

referred) and was not clearly referring to the terms of the personal guaranty so as to constitute a

clear expression that the guaranty continued to the amended lease.4

         In Missouri, a guarantor’s liability “may not be extended by implication beyond the strict

letter of the obligation.” Grand Investment, 119 S.W.3d at 115 (quoting Fridkin, 819 S.W.2d at

362). Rather, there must be a clear expression of the parties’ intent that a personal guaranty is to

continue in order to hold the guarantor liable for a subsequent renewal term. Jamieson-

Chippewa, 996 S.W.2d at 89-90. In this matter we find no such clear expression in the guaranty,

the Original Lease, or the Amended Lease. Accordingly, the trial court erred in determining that

Rockwell’s personal guaranty continued to make him liable for the obligations of MR Floors

under the Amended Lease. Rockwell’s point on appeal is granted.

                             Breeze’s Motion for Attorney’s Fees on Appeal

         Prior to submission of this case, Breeze filed a motion for attorney’s fees on appeal based

on language contained in the Original Lease. That motion was taken with the case. Having

4
  Moreover, the Amended Lease was not executed by Rockwell in his individual capacity. Although not argued by
Rockwell in this appeal, we further note, ex gratia, that the Amended Lease executed by Breeze and MR Floors was
not simply a renewal but was a lease for a different property and for a different monthly rate than the Original Lease.
“A material alteration in, or departure from the contract of guaranty without the guarantor’s consent will discharge
him.” Citizens Bank of Smithville v. Lair, 687 S.W.2d 268, 270 (Mo. App. W.D. 1985). “If the change enlarges or
lessens the liability, it is material and vitiates the contract.” Id. In this matter, the monthly rate of the rental
property in the Amended Lease was $3,822 per month, nearly three times greater than the monthly rate of the rental
property in the Original Lease ($1,327 per month).

                                                          11
found against Breeze in this appeal, we find that Breeze is not entitled to its attorney fees on

appeal. Breeze’s motion for attorney fees on appeal is denied.

                                            Conclusion

       The judgment is reversed as against Rockwell, affirmed as against MR Floors, and the

case is remanded to the trial court for entry of judgment in favor of Rockwell on Count II of

Breeze’s petition.

                                                      Thomas N. Chapman, Judge

All concur.

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