Lafarge Bldg. Materials Inc. v. Pratt

• Decision Date: 09 February 2011
• Docket Number: No. A10A1982.,A10A1982.
• Citation: Lafarge Bldg. Materials Inc. v. Pratt, 307 Ga.App. 767, 706 S.E.2d 131 (Ga. App. 2011)
• Parties: LaFARGE BUILDING MATERIALS, INC.v.PRATT et al.
• Court: Georgia Court of Appeals

307 Ga.App. 767

706 S.E.2d 131

11 FCDR 271

LaFARGE BUILDING MATERIALS, INC.

v.PRATT et al.

No. A10A1982.

Court of Appeals of Georgia.

Feb. 9, 2011.

Dietrick, Evans, Scholz & Williams, John A. Williams, Scott A. Schweber, Atlanta, for appellant.Webb, Tanner, Powell, Mertz & Wilson, Anthony O.L. Powell, Melody A. Glouton, Lawrenceville, for appellees.BARNES, Presiding Judge.

LaFarge Building Materials, Inc. brought suit against Lowell Pratt Residential, LLC and its principal, Lowell F. Pratt, seeking payment for building materials supplied for residential construction projects in Gwinnett and Hall Counties. LaFarge claimed that Pratt was individually liable for the debt pursuant to a personal guaranty executed by him as part of a credit application. The trial court denied LaFarge's motion for summary judgment and granted Pratt's renewed motion for partial summary judgment, concluding that the guaranty was unenforceable as a matter of law. Because the guaranty failed to sufficiently identify the principal debtor and thus did not comply with the statute of frauds, we affirm.

Summary judgment is appropriate where “there is no genuine issue as to any material fact and ... the moving party is entitled to a 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.” (Citation and footnote omitted.) Dabbs v. Key Equip. Finance, 303 Ga.App. 570, 694 S.E.2d 161 (2010).

So viewed, the record reflects that Lowell Pratt Residential, LLC (“LPR”) was in the residential construction business. Lowell F. Pratt was a member and manager of LPR. LaFarge Building Materials, Inc., formerly known as Blue Circle, Inc., was a supplier of residential building materials that would extend credit to qualifying customers. Central to this case is an unsigned “Application For Credit” submitted to Blue Circle on behalf of LPR (the “Application”), the second page of which includes a separate box containing a “Continuing Guaranty” signed by Pratt (the “Guaranty”).

The Application, dated October 17, 2000, is a two-page form document drafted by Blue Circle. At the top of the first page is a blank for the “Name of Company/Individual,” where the name LPR is handwritten, along with LPR's address. Directly underneath is a section for listing “Owners, Partners and Officers,” where the name “Lowell F. Pratt” is handwritten. The next section is entitled “For Residential Builder Or Individual Building Own Home,” and contains several blanks requesting information about the home or subdivision under construction. “Carriage Station” in Gwinnett County is identified in this section as the subject subdivision.

Nothing on the face of the Application indicates that either Blue Circle or LPR reached agreement concerning the extension of credit. In this regard, in the “Office Use Only” section of the Application, nothing is handwritten in the box under “Approved,” “Credit Limit,” or “Date.” The “Authorized Signature” line of the Application, which was intended for the signature of a representative of the customer seeking credit, is likewise left blank.

The Guaranty is found in a separate box on the second page of the Application. Under the heading “Continuing Guaranty,” the Guaranty provides that the “undersigned” would “unconditionally guaranty the payment when due of all indebtedness now due or which may become due by Applicant to Blue Circle Inc., including all divisions and subsidiaries thereof.” The Guaranty does not incorporate the terms of the Application by reference, and it does not define “Applicant” or otherwise identify the “Applicant” by name. Pratt executed the Guaranty on the line for “Signature of Personal Guarantor” on October 18, 2000. There are no other documents in the record that memorialize the credit relationship between the parties other than the Application and the Guaranty.

During 2006 and 2007, LPR ordered and received building materials from LaFarge for construction projects in Gwinnett and Hall Counties. None of these projects was for a subdivision known as Carriage Station.¹ LPR has not paid for the materials delivered in 2006 and 2007. Consequently, LaFarge filed a verified complaint against LPR and Pratt seeking to collect on the debt.

Pratt filed a motion for partial summary judgment, arguing that the Guaranty was unenforceable on several grounds. The trial court denied the motion. LaFarge subsequently filed a motion for summary judgment on the issue of the enforceability of the Guaranty, and Pratt renewed his motion for summary judgment on the same issue. The parties agreed that the question of whether the Guaranty was enforceable was a legal one that should be resolved by the trial court. The cross-motions for summary judgment then were heard by a different trial judge sitting by designation.

In a detailed order, the trial court concluded that LaFarge could not recover against Pratt individually because the Guaranty was unenforceable as a matter of law. Among other things, the trial court concluded that the Guaranty did not sufficiently identify the principal debtor and, therefore, violated the statute of frauds. Accordingly, the trial court denied LaFarge's motion for summary judgment; set aside the prior order denying Pratt's motion for partial summary judgment; and granted Pratt's renewed motion for partial summary judgment. This appeal followed.

The statute of frauds requires that “[a] promise to answer for the debt ... of another,” in order to be binding on the promisor, “must be in writing and signed by the party to be charged therewith.” OCGA § 13–5–30(2). “This requirement has been interpreted to mandate further that a guaranty identify the debt, the principal debtor, the promisor, and the promisee.” John Deere Co. v. Haralson, 278 Ga. 192, 193, 599 S.E.2d 164 (2004). See Roden Elec. Supply v. Faulkner, 240 Ga.App. 556, 556(1), 524 S.E.2d 247 (1999); Sysco Food Svcs. v. Coleman, 227 Ga.App. 460, 461, 489 S.E.2d 568 (1997). “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.” Dabbs, 303 Ga.App. at 572, 694 S.E.2d 161. See McDonald v. Ferguson Enterprises, 274 Ga.App. 526, 527(1), 618 S.E.2d 45 (2005); Coleman, 227 Ga.App. at 461, 489 S.E.2d 568. Furthermore,

[t]he 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.

(Citations, punctuation, and footnotes omitted.) Dabbs, 303 Ga.App. at 572–573, 694 S.E.2d 161. See OCGA § 10–7–3; McDonald, 274 Ga.App. at 527(1), 618 S.E.2d 45; Fontaine v. Gordon Contractors Bldg. Supply, 255 Ga.App. 839, 840, 567 S.E.2d 324 (2002); Roden Elec. Supply, 240 Ga.App. at 557(1), 524 S.E.2d 247.

LaFarge does not dispute that the Guaranty fails to identify the principal debtor by name, but argues that the identity of the principal debtor is obviously LPR when the Application and the Guaranty are read together. But LaFarge's argument is predicated on the erroneous assumption that the Application and the Guaranty can be read together in this case. Under the strict rules of construction applicable in this context, “nothing may be inferred merely from the presence of another form on the same paper.” Workman v. Sysco Food Svcs. of Atlanta, 236 Ga.App. 784, 785, 513 S.E.2d 523 (1999). Hence, the fact that two separate agreements involving different promisors, the Application and the Guaranty, are included in the same two-page document does not lead inexorably to the conclusion that they should be construed together. See id.; Coleman, 227 Ga.App. at 461, 489 S.E.2d 568. Rather, the Application and the Guaranty must be treated as two separate writings, and the rules of construction must be applied with that understanding in mind. See id. Under the applicable rules of construction, a personal guaranty can be read in conjunction with another writing without violating the statute of frauds if (1) the guaranty refers to the other writing or (2) the two can be deemed contemporaneous writings under OCGA § 24–6–3(a). See Dabbs, 303 Ga.App. at 573–574, 694 S.E.2d 161; Schroeder v. Hunter Douglas, Inc., 172 Ga.App. 897, 898–899(2), 324 S.E.2d 746 (1984). See generally Harris v. Baker, 287 Ga.App. 814, 816, 652 S.E.2d 867 (2007). Each of these possibilities will be discussed in turn.

1. If a personal guaranty “refer[s] to any other writing which can be identified completely by this reference, without the aid of parol evidence,” the guaranty can be construed together with the other writing to satisfy the statute of frauds. (Citations and punctuation omitted.) Schroeder, 172 Ga.App. at 899(2), 324 S.E.2d 746. See Roach v. C.L. Wigington Enterprises, 246 Ga.App. 36, 37, 539 S.E.2d 543 (2000). Applying this rule, we have held that if a guaranty does not incorporate a credit application by reference or use the same material terms, the two cannot be read together to determine the identity of the principal debtor, even if the guaranty is part of the same document as the credit application. See Fontaine, 255 Ga.App. at 840–841, 567 S.E.2d 324; Workman, 236 Ga.App. at 785, 513 S.E.2d 523; Coleman, 227 Ga.App. at 461, 489 S.E.2d 568.

Here, the Guaranty does not incorporate the terms of the Application by reference. Compare Cox v. U.S. Markets, Inc., 278 Ga.App. 287, 289(1), 628 S.E.2d 701 (2006) (noting that guaranty “specifically incorporated the terms of the promissory note...