Lynchar, Inc. v. Colonial Oil Indus., Inc.

• Decision Date: 31 May 2017
• Docket Number: A17A0391
• Citation: 801 S.E.2d 576
• Parties: LYNCHAR, INC. et al. v. COLONIAL OIL INDUSTRIES, INC.
• Court: Georgia Court of Appeals

341 Ga.App. 489

801 S.E.2d 576

LYNCHAR, INC. et al.

v.COLONIAL OIL INDUSTRIES, INC.

A17A0391

Court of Appeals of Georgia.

May 31, 2017

Benjamin Wade Wallace, Columbus, for Appellant.

Tracy Ann O'Connell, Savannah, Philip Michael Thompson, for Appellee.

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 S.E.2d 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:

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."

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 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:

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 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 S.E.2d 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

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 S.E.2d 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 S.E.2d 568 (1997). As we reiterated in Community Magazine , supra,

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

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