Dabbs v. Key Equip. Finance Inc

• Decision Date: 07 April 2010
• Docket Number: No. A10A0825.,A10A0825.
• Citation: 694 S.E.2d 161,303 Ga.App. 570
• Parties: DABBSv.KEY EQUIPMENT FINANCE, INC.
• Court: Georgia Court of Appeals

303 Ga.App. 570

694 S.E.2d 161

DABBSv.KEY EQUIPMENT FINANCE, INC.

No. A10A0825.

Court of Appeals of Georgia.

April 7, 2010.

Raley & Sandifer, G. Brian Raley, Atlanta, for appellant.

Alston & Bird, Christopher A. Riley, Lisa K. Bojko, Atlanta, for appellee.

BLACKBURN, Presiding Judge.

In this action to collect on a guaranty, alleged guarantor Pamela Dabbs appeals the order granting summary judgment to alleged promisee Key Equipment Finance, Inc. (“Key Equipment”) and denying summary judgment to her. She argues that the guaranty in question omitted several critical elements, including the identification of the debt, of the principal debtor, and of the promisee. We agree, rejecting Key Equipment's argument that the lease allegedly being guaranteed supplied those missing elements, since we note that that lease was not attached to the guaranty at the time it was executed. Thus, that lease could only be connected as a contemporaneous writing with the guaranty if the court were to consider parol evidence to exclude two similar leases executed at the same time. Because the court should have granted summary judgment to Dabbs, 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. OCGA § 9-11-56(c). A de novo standard of review applies to an appeal from a grant or denial 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. Matjoulis v. Integon Gen. Ins. Corp.¹

The evidence here is undisputed. On June 20, 2005, Dabbs's employer executed a preprinted lease agreement, which in the appropriate box identified the equipment being leased. In the owner box, the lease identified Key Equipment as the owner of the equipment, with the blanks for payments being filled in to obligate the employer to make 51 monthly payments of $2,473.20 to Key Equipment (“Lease No. 1”). That same day, Dabbs's employer executed a second, identical preprinted lease referring to the same equipment and again identifying Key Equipment as the owner of the equipment but obligating the employer to make 51 monthly payments of $2,732.85 to Key Equipment (“Lease No. 2”). Ten days later on June 30, Dabbs's employer executed a third identical preprinted lease, again referring to the same equipment but this time identifying CIT Technology Financing Services, Inc. as the owner and obligating the employer to make 51 payments of $2,732.85 to CIT (“Lease No. 3”). All three leases on the front page had a separate identical paragraph setting forth a guaranty of the lease obligation, which paragraph had its own separate signature line for a guarantor to sign. None of these three guaranty paragraphs was signed. At least two of the leases had the same second page identifying additional terms and conditions, including a paragraph 14 that related to the employer's consenting to the jurisdiction of a certain court.

On the same day that Lease No. 3 was executed (June 30), Dabbs's employer presented her with a single-page document that was created by making three photocopies of the guaranty paragraph from the preprinted lease form. This document was not attached to nor accompanied by any of the three leases. ² Although the document had at its top a blank preceded by the typewritten language “Lease #,” that blank was not filled in so as to identify the lease. Because the president of her employer told Dabbs that it was necessary for her, him, and another employee to sign the guaranties so the company could obtain some equipment, she signed the guaranty that day, not having seen any of the leases and not knowing to which lease it pertained. The other two signed their respective guaranty paragraphs also. Each guaranty paragraph read:

As additional inducement for us to enter into the Agreement, the undersigned (“you”) unconditionally, jointly and severally, personally guarantees that the customer will make all payments and meet all obligations required under this Agreement and any supplements fully and promptly. You agree that we may make other arrangements including compromise or settlement with the customer and you waive all defenses and notice of those changes and will remain responsible for the payment and obligations of this Agreement. We do not have to notify you if the customer is in default. If the customer defaults, you will immediately pay in accordance with the default provisions of the Agreement all sums due under the terms of the Agreement and will perform all the obligations of the Agreement. If it is necessary for us to proceed legally to enforce this guaranty,

you expressly consent to the jurisdiction of the court set out in paragraph 14 and agree to pay all costs, including attorneys fees incurred by enforcement of this guaranty. It is not necessary for us to proceed first against the customer before enforcing this guaranty. By signing this guaranty, you authorize us to obtain personal credit bureau reports for credit and collection purposes.

In March 2007, the employer ceased making the payments required by Lease No. 1, and Key Equipment instituted the present action against Dabbs and the other two guarantors (who are not parties to this appeal) to collect on the guaranty, claiming that the guaranty pertained to the obligations set forth in Lease No. 1. Key Equipment and Dabbs both moved for summary judgment, and the court ruled in favor of Key Equipment, granting its motion for summary judgment and denying Dabbs's motion. Dabbs appeals.

“The statute of frauds requires that a promise to answer for another's debt, to be binding on the promisor, ‘must be in writing and signed by the party to be charged therewith.’ This requirement has been interpreted to mandate further that a guaranty identify the debt, the principal debtor, the promisor, and the promisee.” (Citations omitted.) John Deere Co. v. Haralson.³ See Johnson v. Rycroft.⁴ Where the guaranty omits the name of the principal debtor, of the promisee, or of the promisor the guaranty is unenforceable as a matter of law. See Roden Electrical Supply v. Faulkner;⁵Sysco Food Svcs. v. Coleman;⁶Schroeder v. Hunter Douglas, Inc.⁷ 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. See generally Roden Electrical Supply, supra, 240 Ga.App. at 557(1), 524 S.E.2d 247; Sysco Food Svcs., supra, 227 Ga.App. at 461, 489 S.E.2d 568.

Moreover, a court must strictly construe an alleged guaranty contract in favor of the guarantor. Caves v. Columbus Bank & Trust Co.⁸ The guarantor's liability may not be extended by implication or interpretation. OCGA § 10-7-3. And “[p]arol evidence is not admissible to supply any missing essential elements of a contract required to be in writing by our statute of frauds. Gatins v. NCR Corp.⁹” Sawyer v. Roberts.¹⁰ 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. See Fontaine v. Gordon Contractors Bldg. Supply;¹¹ Roden Electrical Supply, supra, 240 Ga.App. at 557(1), 524 S.E.2d 247.

Here, the single-page guaranty, executed by Dabbs and attached to no other documents at the time, failed to identify the debt, the principal debtor, or the promisee. The guaranty referred only to the “Agreement” as the debt, which “Agreement” is not defined, described, or identified. The principal debtor is referred to only as the “customer,” with no further clue as to who that “customer” may be. The promisee is referred to as “we” or “us,” with no identification of that entity or entities. Accordingly, the guaranty fails to comply with the statute of frauds and is unenforceable. See Sysco Food Svcs., supra, 227 Ga.App. at 462, 489 S.E.2d 568. Compare Capital Color Printing v. Ahern ¹² (guaranty identified three separate entities in the box for principal debtor; guaranty enforceable because principal debtor or debtors were identified and parol evidence was admissible to explain ambiguity).

Key Equipment nevertheless maintains that the lease itself provided the missing elements of the guaranty, and that therefore, as a contemporaneous document, the lease should have been construed in conjunction with the guaranty to provide those elements. Under the circumstances of this case, this argument is flawed.

It is true that OCGA § 24-6-3(a) provides that “[a]ll contemporaneous writings shall be admissible to explain each other.” Based on this statute Baker v. Jellibeans, Inc.¹³ held “that as long as all the necessary terms are contained in signed contemporaneous writings, the statutory requirements and purpose of the Statute of Frauds have been met, whether or not the writings are cross-referenced.” See C.L.D.F., Inc. v. The Aramore, LLC;¹⁴L. Henry Enterprises v. Verifone, Inc.¹⁵ Contrary to the argument of Dabbs, “[t]he statute does not restrict this particular subsection to admit contemporaneous documents only if there is an ambiguity in the documents.” Duke v. KHD Deutz of America Corp.¹⁶ See Harris v. Distinctive Builders.¹⁷ (“ OCGA § 24-6-3(a) does not restrict this particular subsection to admit contemporaneous documents only if there is an ambiguity in the documents”) (punctuation omitted). However, the evidence must show that “the guaranty agreement was executed at the same time and in the course of the same transaction as the [second writing]” in order to allow the writings to be construed together. (Punctuation omitted; emphasis supplied.) Duke, supra, 221 Ga.App. at 453, 471 S.E.2d 537. See Martinez v. DaVita, Inc.¹⁸ (“[u]nder Georgia rules of contract construction, where multiple documents are executed at the same time in the course of a single transaction, they should be construed together. OCGA § 24-6-3(a)”) ...