Wall St. Mgmt. & Capital, Inc. v. Crites

• Decision Date: 14 October 2015
• Docket Number: A151512.,10P10557
• Citation: 360 P.3d 673,274 Or.App. 347
• Parties: WALL STREET MANAGEMENT & CAPITAL, INC., a Florida corporation, Plaintiff–Appellant, v. Kent L. CRITES and Shannon F. Piel, Co–Personal Representatives of the Estate of Elmer L. Crites, Defendants–Respondents.
• Court: Oregon Court of Appeals

274 Or.App. 347

360 P.3d 673

WALL STREET MANAGEMENT & CAPITAL, INC., a Florida corporation, Plaintiff–Appellant,

v.Kent L. CRITES and Shannon F. Piel, Co–Personal Representatives of the Estate of Elmer L. Crites, Defendants–Respondents.

10P10557

A151512.

Court of Appeals of Oregon.

Argued and Submitted Oct. 7, 2014.

Decided Oct. 14, 2015.

Thomas C. Pattonfiled the briefs for appellant.

Brian R. Talcottargued the cause for respondents. With him on the brief was Dunn Carney Allen Higgins & Tongue LLP.

Opinion

HADLOCK, J.

This case involves a contract purportedly signed by defendant¹that guaranteed the repayment of certain loans made by plaintiff to defendant's son. After defendant's son failed to pay his debt, plaintiff brought this action against defendant based on the guaranty. Defendant quickly moved for summary judgment, arguing that the guaranty was not an enforceable contract. Defendant first maintained that someone forged his signature on the guaranty. Defendant also argued that, even if he had signed the guaranty, it still would not be enforceable, because the signed guaranty was merely an offer to form a contract and plaintiff never communicated his acceptance. The court granted defendant's motion for summary judgment based on its conclusion that there was no credible evidence that defendant had signed the guaranty. Plaintiff appeals and argues that the trial court erred because there was a genuine issue of material fact as to whether the signature on the guaranty was defendant's. Defendant responds that the trial court ruled correctly on the issue of the signature and that, even if it did not, plaintiff's failure to notify defendant that it was accepting the guaranty provides an alternative basis for affirmance. For the reasons that follow, we reverse and remand.

Because the trial court granted defendant's motion for summary judgment, we state the “facts and all reasonable inferences that may be drawn from them in the light most favorable to plaintiff, the nonmoving party.” Oregon Steel Mills, Inc. v. Coopers & Lybrand, LLP,336 Or. 329, 332, 83 P.3d 322 (2004). We omit discussion of hearsay evidence to which defendant properly objected during the summary judgment proceedings.

Plaintiff, Wall Street Management & Capital, Inc., is a Florida corporation that provides financial management and consulting services to businesses. Jim Schnorf is Wall Street Management's president and sole shareholder. In 2005, Schnorf was introduced to defendant's son, Scott Crites, who was interested in obtaining funding to finance an expansion of his business, Breakfast Club of America (BCA). Subsequently, Scott Crites hired Schnorf as a consultant to, among other things, help identify possible funding sources. The working relationship between Scott Crites and Schnorf became close. First, Scott Crites decided to expand the scope of Wall Street Management's consulting services and, eventually, he hired Schnorf as an individual employee of BCA. During the first half of 2005, Wall Street Management made several loans to BCA.

By August 2005, however, BCA was apparently having trouble securing additional loans—the company's finances had deteriorated and it was having trouble making payroll. In response, Schnorf (acting on BCA's behalf) attempted to secure additional business funding from several banks. During the course of the negotiations with the banks, Schnorf and Scott Crites discussed obtaining a loan guaranty from Scott's father, defendant Elmer Crites. Ultimately, however, they were unable to obtain the bank loans.

The parties dispute what happened next. According to plaintiff, Schnorf stated that Wall Street Management would not extend further loans to BCA unless those loans were guaranteed by someone other than Scott Crites. After BCA was unable to obtain a bank loan, Schnorf made the following offer to Scott Crites: Wall Street Management would loan additional money to BCA on the condition that defendant guarantee the loans. In plaintiff's version of events, Scott Crites was amenable to that idea and indicated that his father would be willing to act as a guarantor. Plaintiff prepared a guaranty contract for defendant to sign. In September, Scott Crites traveled from Florida to Oregon to visit his father. Scott Crites then returned to Florida and presented Schnorf with a guaranty signed “Elmer L. Crites.” Although the guaranty was drafted with a signature block to be signed by a notary public, the document was not notarized. In addition, the document was not dated when Schnorf received it. Schnorf testified in his deposition that he asked Scott Crites what date to write next to defendant's signature. Based on Scott Crites's response, Schnorf wrote September 19, 2005, on the document; he did that in Scott Crites's presence.

Defendant tells a different story. Defendant claims that he knew almost nothing about his son's business dealings. In his deposition testimony, defendant agreed that his son visited him in Oregon in September of 2005, but defendant denied that they had any discussions about signing a guaranty. In fact, defendant denied ever having discussed the idea of a business loan with Scott Crites.

The parties agree that Wall Street Management extended additional financing to BCA via a series of amendments to an existing loan agreement. The first of those amendments is dated September 19, 2005. Plaintiff did not contact defendant to inform him of those amendments; Schnorf assumed that Scott Crites would keep his father informed about those developments.

Schnorf and defendant did eventually meet, but only after the loans at issue were made. In December 2005, defendant traveled to Florida to visit his son. During that visit, Schnorf met defendant at a party at Scott Crites's house. At that meeting, Schnorf testified that he thanked defendant for “helping his son with his business and his loan.” Schnorf remembers that defendant replied, “ ‘Always willing to help my son,’ or something like that.” According to his affidavit, Schnorf claims that “[a]t no point during his visit to Florida did [defendant] question or indicate that he did not have knowledge of his personal Guaranty obligations.” Defendant denies that that conversation took place.

In 2007, BCA filed for bankruptcy without having fully repaid the loans to plaintiff. Subsequently, plaintiff filed suit in federal bankruptcy court in the State of Florida, claiming that those loans were not dischargeable in bankruptcy because Scott Crites had obtained them through false representation. See11 USC § 523(a)(2)(A). Defendant was not a party to that proceeding. Ultimately, the bankruptcy court found that the loans were dischargeable. Plaintiff then brought the present action in Oregon seeking to collect the disputed funds from defendant based on his alleged status as the guarantor of the loans.

Before trial, defendant moved for summary judgment arguing that, for two reasons, the guaranty was not enforceable against defendant. First, defendant argued that plaintiff had failed to introduce any evidence tending to prove that defendant signed the agreement. Second, defendant argued in the alternative that, even if he had signed the guaranty, it would not be a binding contract. That was so, according to defendant because, under the circumstances of this case, the signed guaranty would merely be an offer to enter into a guaranty agreement. Defendant argued that plaintiff could not have accepted that offer because, even under plaintiffs version of events, there is no evidence that plaintiff ever directly communicated its acceptance to defendant or that it informed defendant that it had issued any new loans to Scott Crites.

With respect to defendant's first argument, he emphasized the following facts: (1) Schnorf did not witness the guaranty being signed, (2) the guaranty is not notarized, (3) Schnorf, rather than defendant, wrote a date on the guaranty, and (4) defendant denies that he signed the guaranty. With respect to the physical characteristics of the signature itself, defendant's motion states:

“Defendant has provided plaintiff with a number of handwriting exemplars. It is undisputed that the signature appearing on the Guaranty is materially different than the signature appearing on the handwriting exemplars. Mr. [Elmer] Lew Crites testified that, at all time relevant, he signed his name ‘E. L. Crites,’ which is how his signature appears on the handwriting exemplars. However, the Guaranty at issue here was signed ‘Elmer L. Crites.’ Mr.[Elmer] Lew Crites has not signed his name that way since high school, approximately 70 years ago.”

(Citations omitted; emphasis added.) Defendant attached to his motion copies of personal checks that were signed “E. L. Crites.”

Plaintiff responded by arguing that summary judgment was not appropriate because there was a genuine issue of fact as to whether the signature was authentic. In response to defendant's assertion that he always signs his name “E. L. Crites,” plaintiff noted that defendant had signed his name “Elmer L. Crites” on at least two affidavits that were prepared for the present case. Plaintiff's attorney also filed an affidavit in which he averred that he had “retained a duly qualified handwriting expert who will testify that there are multiple significant similarities between the limited handwriting exemplars provided by defense counsel and the signature on the Guaranty.”

Defendant's second argument was based on Balfour, Guthrie & Co. v. Knight,86 Or. 165, 167 P. 484 (1917). According to defendant, that case holds that a signed guaranty is merely an offer to form a contract, rather than an enforceable agreement, when the guarantor does not receive notice of acceptance and three additional circumstances are present. Those circumstances, defendant asserted, are that the guarantor signs the instrument and (1) the guarantor has not received a prior request from the beneficiary to do so; (2) the beneficiary has not personally witnessed the...