LLC v. DiPrima, A-99-497.

• Citation: 9 Neb. App. 333,611 N.W.2d 637
• Decision Date: 06 June 2000
• Docket Number: No. A-99-497.,A-99-497.
• Parties: 780 L.L.C., a Nebraska Limited Liability Company, appellee, v. James C. DiPRIMA, appellant.
• Court: Court of Appeals of Nebraska

611 N.W.2d 637

9 Neb. App. 333

780 L.L.C., a Nebraska Limited Liability Company, appellee, v. James C. DiPRIMA, appellant.

No. A-99-497.

Court of Appeals of Nebraska.

June 6, 2000.

John C. Wieland and C.G. Jolly, of Frazier, Wieland, Bataillon & Katz, Omaha, for appellant.

Ann M. Grottveit and Donald J. Buresh, of Stalnaker, Becker, Buresh, Gleason & Farnham, P.C., Omaha, for appellee.

IRWIN, Chief Judge, and SIEVERS and MOORE, Judges.

IRWIN, Chief Judge.

I. INTRODUCTION

James C. DiPrima appeals a judgment of the district court for Douglas County in favor of 780 L.L.C., a Nebraska limited liability company. The district court concluded that 780 L.L.C. was entitled to enforce a guaranty against DiPrima individually in the amount of $17,980.54. On appeal, DiPrima contends that the district court erred in admitting parol evidence to determine the capacity in which he signed the guaranty, in finding that he signed the guaranty in his personal capacity, in determining his liability to be for 6 months' rent, in failing to find that a subsequent guaranty of a David Dunn did not release him from all obligations under his guaranty, and in failing to fix his maximum personal liability under the guaranty to $4,056. For the reasons stated below, we affirm.

II. FACTUAL BACKGROUND

In August 1993, DiPrima was president of M.B.D. Midwest, Inc., a company seeking to set up Mail Boxes Etc. stores in Nebraska. DiPrima began negotiating with Rick Lee Scott, a listing agent for Miracle Hills Partnership, to lease some commercial property in Omaha for a Mail Boxes Etc. store. We note from the record that since the events relevant to this lawsuit, Miracle Hills Partnership has changed the nature of its organizational structure from a partnership to a limited liability company and is now doing business as 780 L.L.C. as evidenced in the record by an "Agreement of Merger."

On August 23, 1993, M.B.D. Midwest and Miracle Hills Partnership executed a lease for the property. A document entitled "Personal Guarantee" was also executed. In relevant part, it reads:

PERSONAL GUARANTEE

The undersigned hereby unconditionally guarantee unto the Landlord the payment of the rent and the performance of all of the covenants under the Lease by the Tenant and hereby waive notice of any default under the Lease and agree that this liability shall not be released or affected by an extension of time for payment or by any forbearance by the Landlord. The undersigned's liability shall not exceed an amount equal to the sum of the following six months total rents.

Dated This 30 day of Aug, 19993 [sic] By: James C. DiPrima Pres [signature in space provided] MBD MiDWEST [handwritten in space provided] Name 14627 INDUSTRIAL RD [handwritten in space provided] Street Address OMAHA NE [handwritten in space provided] City/State/Zip

In January or February 1994, M.B.D. Midwest took possession of the property under the lease and began to pay rent. DiPrima had left his employment with M.B.D. Midwest in November 1993. It appears that at some point, Miracle Hills Partnership obtained a guaranty of some kind from Dunn, because "DiPrima left the company and someone else took his place." M.B.D. Midwest continued to pay rent until March 1997 and then vacated the premises 3 or 4 months later. According to the managing partner of Miracle Hills Partnership, the balance due from M.B.D. Midwest under the lease is $20,261.26 for the period from March 26 to September 30, 1997.

On June 9, 1997, 780 L.L.C. initiated a lawsuit against DiPrima and Dunn. In its amended petition, which is the operative petition in this case, 780 L.L.C. named only DiPrima as a defendant. In its amended petition, 780 L.L.C. alleged that M.B.D. Midwest was in default under the lease for failing to make lease payments in April, May, and June 1997 and that DiPrima was liable for the default in lease payments by M.B.D. Midwest pursuant to his "personal guarantee" of the obligations of M.B.D. Midwest under M.B.D. Midwest's lease with Miracle Hills Partnership. 780 L.L.C. prayed for judgment against DiPrima in the amount of $59,203.

On January 20, 1999, a trial was held on the amended petition. At trial, parol evidence regarding discussions between DiPrima and Scott that occurred prior to the execution of the guaranty at issue was admitted without objection. This evidence will be set forth in the analysis section below. After hearing the evidence, the district court entered judgment in favor of 780 L.L.C. and against DiPrima in the amount of $17,980.54 plus costs. It is clear from the order that the district court considered the parol evidence. From this order, DiPrima timely appealed.

III. ASSIGNMENTS OF ERROR

For DiPrima's assignments of error, he contends that the district court erred in admitting parol evidence to determine the capacity in which he signed the guaranty, in finding that he signed the guaranty in his personal capacity, in determining his liability to be for 6 months' rent, in failing to find that a subsequent guaranty of Dunn did not release him from all obligations under his guaranty, and in failing to fix his maximum personal liability under the guaranty to $4,056.

IV. ANALYSIS

1. ADMISSION OF PAROL EVIDENCE

(a) Waiver of Objection to Parol Evidence

DiPrima first assigns that the district court erred in admitting parol evidence regarding the discussions between Scott and DiPrima prior to the execution of the guaranty at issue. 780 L.L.C. argues that DiPrima waived any objection to the receipt of such evidence when he failed to object to its admission at trial. We disagree.

It is true that the general evidentiary rule is that the failure to make a timely objection waives the right to assert prejudicial error on appeal. Mischke v. Mischke, 253 Neb. 439, 571 N.W.2d 248 (1997); Benzel v. Keller Indus., 253 Neb. 20, 567 N.W.2d 552 (1997). However, in Perry v. Gross, 155 Neb. 662, 665, 53 N.W.2d 73, 76 (1952), the Nebraska Supreme Court recognized that

the parol evidence rule is not merely one of evidence. It is one of substantive law as well. As a rule of substantive law it renders ineffective proof of an oral prior or contemporaneous agreement the effect of which would be to vary, alter, or contradict the terms of a written agreement. The admission of evidence without objection in proof of an oral agreement which is in violation of the parol evidence rule furnishes no basis for enforcement of the oral agreement.

We recognize that in Barks v. Cosgriff Co., 247 Neb. 660, 529 N.W.2d 749 (1995), the Supreme Court concluded that the failure to object to the admission of certain parol evidence resulted in the waiver of the right to raise any alleged error regarding its admission on appeal. However, in Barks, the Supreme Court neither addressed nor overruled Perry, supra.

We note that the rule in Perry is consistent with the holdings in a majority of other states which have addressed this issue. See, e.g., Brewer v. Devore, 960 S.W.2d 519 (Mo.App.1998); Penton v. J.F. Cleckley & Co., 326 S.C. 275, 486 S.E.2d 742 (1997); State Nat. Bank v. Academia, Inc., 802 S.W.2d 282 (Tex.App.1990); Magnetic Copy Servs. v. Seismic Specialists, 805 P.2d 1161 (Colo.App.1990); Howell Mill/Collier Assoc. v. Pennypacker's, 194 Ga.App. 169, 390 S.E.2d 257 (1990); Matter of Estate of Kalouse, 282 N.W.2d 98 (Iowa 1979).

We apply the rule in Perry to the case before us. As a matter of substantive law, a party's failure to object to the admission of parol evidence does not waive the proper application of the parol evidence rule. We stress that the better practice is to object to parol evidence at trial. We conclude that DiPrima did not waive his right to challenge the use of the parol evidence to vary the writing because of his failure to object to the admission of the parol evidence at trial. We therefore consider the merits of DiPrima's assertion that the parol evidence was improperly received and used by the trial court.

(b) Ambiguity of Guaranty

We first note that a contract may not be modified through the use of parol evidence unless the contract is shown to be ambiguous. Therefore, in order to determine whether the parol evidence was properly admitted in the present case, we must address whether the guaranty was ambiguous. We note that a guaranty is a type of contract by which a guarantor promises to make payment if the principal debtor defaults. Northern Bank v. Dowd, 252 Neb. 352, 562 N.W.2d 378 (1997). A guaranty is interpreted using the same general rules as are used for other contracts. Spittler v. Nicola, 239 Neb. 972, 479 N.W.2d 803 (1992).

When parties have executed a completely integrated written document purporting to express the terms of their agreement, the parol evidence rule renders ineffective any evidence of a prior or contemporaneous oral agreement which adds to, alters, varies, or contradicts the terms of the written document. Rowe v. Allely, 244 Neb. 484, 507 N.W.2d 293 (1993); Five Points Bank v. White, 231 Neb. 568, 437 N.W.2d 460 (1989). Where negotiations between parties result in an agreement which is reduced to writing, the written agreement is the only competent evidence of the contract in the absence of fraud, mistake, or ambiguity. Rowe, supra; Silverman v. Arbor Street Partnership, 213 Neb. 628, 330 N.W.2d 904 (1983).

A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings, Kropp v. Grand Island Pub. Sch. Dist. No. 2, 246 Neb. 138, 517 N.W.2d 113 (1994), or where the language employed is vague or ambiguous, Coppi v. West Am. Ins. Co., 247 Neb. 1, 524 N.W.2d 804 (1994). Whether a contract is ambiguous is a question of law. Union Ins. Co. v. Land and Sky, Inc., 247 Neb. 696, 529 N.W.2d 773 (1995). As to questions of law, an appellate court has an obligation to reach a conclusion independent from a trial court's conclusion in a judgment under review....