Tractor and Equipment Co. v. Dual Trucking and Transport, LLC et al
ORDER AND REASONS granting 16 Tractor & Equipment's Motion for Summary Judgment; denying 17 Defendants' Motion for Summary Judgment. Tractor and Equipment's motion in limine to exclude parol evidence is DENIED AS MOOT. Signed by Judge Sarah S. Vance on 4/3/2017. (cg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TRACTOR AND EQUIPMENT CO.
DUAL TRUCKING AND TRANSPORT,
LLC, AND ANTHONY ALFORD
ORDER AND REASONS
Before the Court are cross motions for summary judgment on the validity of a
surety agreement signed by Anthony Alford. 1 In addition, Tractor and Equipment Co. has
filed a motion in limine to exclude an affidavit submitted by Alford. 2 Because the Court
finds that Alford’s intent to be bound as Dual Trucking and Transport, LLC’s surety is
clear from the plain language of the “Personal Guarantee” agreement, Tractor and
Equipment’s motion for summary judgment is granted, defendants’ corresponding
motion is denied, and Tractor and Equipment’s motion in limine is denied as moot.
This action arises out of Dual Trucking and Transport, LLC’s (DTT) alleged default
under an open account agreement with Tractor and Equipment Co. 3 The core facts are
not in dispute. On March 19, 2012, a DTT employee sent Tractor and Equipment a form
application for credit. 4 Tractor and Equipment’s application form consists of two parts,
first a section requesting information regarding the entity seeking credit, and second, a
R. Doc. 16; R. Doc. 17.
R. Doc. 19.
R. Doc. 1 at 1 ¶ 1.
R. Doc. 16-3 at 10.
personal guarantee. 5 The day after DTT sent its application, a Tractor and Equipment
employee sent a letter to DTT stating as follows:
In reviewing the application for Credit you submitted, we find the Personal
Guarantee portion was not signed. Please have the owner or officer of
company [sic] sign the attached application as indicated, fax a copy to me
at 406 651 8346 and drop the copy with original signature in the mail to PO
Box 20158, Billings MT 59107.
Thank you for your help and consideration.
[Signature Block] 6
Anthony Alford, a 50% owner of DTT, 7 signed the “Personal Guarantee” section of
the credit application form supplied by Tractor and Equipment and returned it the
following day. 8 The application for credit form Alford signed was identical to the copy
DTT submitted on March 19, except that the March 19 copy was, with the exception of the
“Personal Guarantee” section, mostly filled-out. 9 It was signed on the line requesting the
signature of an owner, principal, or authorized officer or partner of the applicant. 10 By
contrast, the form Alford signed had many unfilled blanks. 11 It identified only the
applicant’s corporate name and address, and it was not signed by a corporate
R. Doc. 16-4 at 3.
R. Doc. 16-5 at 1.
R. Doc. 16-4 at 4; R. Doc. 18-1.
Compare R. Doc. 16-3 at 10 with R. Doc. 16-4 at 4.
In late 2013, Tractor and Equipment sued DTT and Anthony Alford in Montana
state court, alleging that DTT had an unpaid account balance of $292,646.30. 13 Tractor
and Equipment also alleged that Alford had personally guaranteed DTT’s open account
and was therefore jointly liable for the amounts due under its open account agreement. 14
The Montana court dismissed the claims against Alford for lack of personal jurisdiction,
and later entered judgment against DTT in the amount of $292,846.30, plus interest,
attorney’s fees, and costs. 15 After the Montana court dismissed Alford from that litigation,
Tractor and Equipment filed this suit seeking a declaratory judgment that Alford’s surety
contract is valid and enforceable.
The parties have filed cross motions for summary judgment, 16 and corresponding
responses 17 and replies. 18 Tractor and Equipment has also filed a motion in limine to
exclude an affidavit completed by Alford. 19
Summary judgment is warranted when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute
as to any material fact exists, the Court considers “all of the evidence in the record but
R. Doc. 1 at 3 ¶ 7.
Id. at 4 ¶ 11.
R. Doc. 5-4 at 10; R. Doc. 16-3 at 8-9.
R. Doc. 16; R. Doc. 17.
R. Doc. 18; R. Doc. 22.
R. Doc. 26; R. Doc. 29.
R. Doc. 19.
refrain[s] from making credibility determinations or weighing the evidence.” Delta &
Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008).
All reasonable inferences are drawn in favor of the nonmoving party, but “unsupported
allegations or affidavits setting forth ‘ultimate or conclusory facts and conclusions of law’
are insufficient to either support or defeat a motion for summary judgment.” Galindo v.
Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see also Little, 37 F.3d at 1075.
“No genuine dispute of fact exists if the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party.” EEOC v. Simbaki, Ltd., 767 F.3d 475, 481
(5th Cir. 2014).
If the dispositive issue is one on which the moving party will bear the burden of
proof at trial, the moving party “must come forward with evidence which would entitle it
to a directed verdict if the evidence went uncontroverted at trial.” Int’l Shortstop, Inc. v.
Rally’s, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonmoving party can then defeat
the motion by either countering with evidence sufficient to demonstrate the existence of
a genuine dispute of material fact, or “showing that the moving party’s evidence is so sheer
that it may not persuade the reasonable fact-finder to return a verdict in favor of the
moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party will bear the burden
of proof at trial, the moving party may satisfy its burden by merely pointing out that the
evidence in the record is insufficient with respect to an essential element of the
nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden then shifts to the
nonmoving party, who must, by submitting or referring to evidence, set out specific facts
showing that a genuine issue exists. See id. at 324. The nonmovant may not rest upon
the pleadings, but must identify specific facts that establish a genuine issue for trial. See,
e.g., id.; Little, 37 F.3d at 1075 (“Rule 56 mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” (quoting Celotex, 477 U.S. at 322)).
As noted, the parties do not dispute that Alford signed the “Personal Guarantee”
section of a form application for credit and submitted it to Tractor and Equipment. The
relevant section—contained in a separate box from the remainder of the form—reads as
The undersigned, ___________________, in consideration of your
giving credit to the aforesaid applicant, jointly and severally guarantee(s)
and agree(s) to pay to TRACTOR & EQUIPMENT CO., N C MACHINERY
CO., MACHINERY POWER & EQUIPMENT CO., N C POWER SYSTEMS
CO. OR ANY OF THEIR RELATED OR AFFILIATED COMPANIES all
monies which shall become due you from Dual Trucking and Transport
LLC by reason of any credit you extended as credit you extend as [sic]
herein requested, including late payment charges and all costs of
collection and reasonable attorney’s fee for recovery of the debt if it is due
whether it is incurred by the debtor or guarantor or both.20
Alford’s signature appears directly below this paragraph. 21 Despite this clear language,
Alford and DTT argue that the purported guarantee does not bind Alford because: (1) the
guarantee applies only to existing debt, not to any debts incurred after the guarantee was
signed; (2) the personal guarantee is an invalid surety agreement under Louisiana law,
and (3) Alford signed the guarantee in his representative capacity as an officer of DTT,
R. Doc. 16-4 at 4.
rather than his personal capacity, and did not intend to be personally bound to pay DTT’s
debts. The Court begins by considering Louisiana surety law, and then considers each of
defendants’ arguments in turn.
In Louisiana, “[a] contract of guaranty is equivalent to a contract of suretyship[,
and t]he terms guaranty and suretyship may be used interchangeably.” DROR Int’l, L.P.
v. Thundervision, L.L.C., 81 So. 3d 182, 185 (La. App. 5 Cir. 2011) (citing Eclipse
Telecommunications Inc. v. Telnet International Corp., 800 So. 2d 1009, 1011 (La. App.
5 Cir. 2001)). In a surety contract “a person binds himself to a creditor to fulfill the
obligation of another upon the failure of the latter to do so.” La. Civ. Code art. 3035.
Surety agreements must be express and in writing. La. Civ. Code art. 3038. “The surety’s
contract need not observe technical formalities, but must contain an absolute expression
of intent to be bound.” Fleet Fuel, Inc. v. Mynex, Inc., 924 So. 2d 480, 482 (La. App. 2
Surety agreements “are subject to the same rules of interpretation as contracts in
general.” Comar Marine, Corp. v. Raider Marine Logistics, L.L.C., 792 F.3d 564, 578 (5th
Cir. 2015) (quoting Ferrell v. S. Cent. Bell Tel. Co., 403 So.2d 698, 700 (La. 1981)). “[T]he
main goal of contract interpretation under Louisiana law is determining the common
intent of the parties.” Franks Inv. Co. v. Union Pac. R. Co., 772 F.3d 1037, 1041 (5th Cir.
2014). Accordingly, courts must “give legal effect to all [surety] contracts according to the
true intent of the parties, and this intent is to be determined by the words of the contract
when these are clear and explicit and lead to no absurd consequences.” Comar Marine,
792 F.3d at 578.
In this case, the Court finds that the plain language of the contract evinces “an
absolute expression of intent to be bound,” Fleet Fuel, 924 So. 2d at 482, and the Court
therefore need not look beyond the text of the agreement. Under the bolded, underlined
heading reading, “Personal Guarantee”—and in a box separating the surety agreement
from the remainder of the document—the paragraph in question clearly identifies the
applicant or principal obligor (DTT) and the creditor (Tractor and Equipment). 22 The
contract also states Alford’s agreement to guarantee and pay the creditor “all monies” due
from the principal obligor “by reason of any credit you extended as credit you extend as
[sic] herein requested.” 23 Although this limiting clause appears to contain a drafting
error, the mistake does not undermine the plain meaning of the agreement: DTT is
applying for credit, and, if Tractor and Equipment extends DTT credit based on that
application, Alford agrees to guarantee DTT’s obligations to Tractor and Equipment.
To resist this conclusion, Alford and DTT argue that the guarantee applies only to
DTT’s existing debt, not to any debts incurred after the guarantee was signed. This
argument is based on a strained reading of the limiting clause discussed above. In essence,
Alford and DTT argue that when the agreement refers to “credit you extended,” 24 it limits
the operative effect to past debts. This interpretation fails for several reasons.
First, the Court notes that, contrary to defendants’ representations, an agreement
binding a surety to future obligations is neither unusual nor suspect. See La. Civ. Code
art. 3036 (“The principal obligation may be subject to a term or condition, may be
presently existing, or may arise in the future.” (emphasis added)); Sizeler Prop. Inv’rs,
Inc. v. Gordon Jewelry Corp., 550 So. 2d 237, 244 (La. App. 4 Cir. 1989) (explaining that
“[s]uretyship has historically been given for future obligations in Louisiana.”). Second,
R. Doc. 16-4 at 4.
defendants’ argument ignores that the limiting clause specifically refers to credit as
“herein requested.” This clear statement of what debts fall under the guarantee outweighs
any asserted ambiguity caused by the use of a single past-tense verb. Third, in their
myopic focus on the tense of a particular word, defendants ignore the document as a
whole. That the guarantee is included as part of an application for credit strongly suggests
that it applies to obligations resulting from that application. See La. Civ. Code art. 2050
(“Each provision in a contract must be interpreted in light of the other provisions so that
each is given the meaning suggested by the contract as a whole.”); see also Am. Bank &
Trust Co. of Houma v. Wetland Workover, Inc., 523 So. 2d 942, 945 (La. App. 4 Cir. 1988)
(“[T]he mortgage note and the guarantees must be interpreted together and in a manner
which will make the loan transaction effective and meaningful.”). Fourth, defendants’
interpretation violates this Court’s mandate to interpret contract clauses so as to give
them some effect. See La. Civ. Code art. 2049 (“A provision susceptible of different
meanings must be interpreted with a meaning that renders it effective and not with one
that renders it ineffective.”). No party has suggested that DTT has any obligations to
Tractor and Equipment that predate the March 19, 2012, application for credit.
Defendants’ attempt to limit the guarantee to past debts therefore “would render it
nugatory,” and this interpretation must be rejected in favor of one that gives the
agreement some effect. Franks Inv. Co., 772 F.3d at 1042.
Defendants’ also argue in the alternative that the agreement is wholly invalid. In
support, defendants cite the Louisiana Supreme Court’s 1889 decision in Chretien v.
Bienvenir, 6 So. 553 (1889). In that case, the court declared unenforceable a form contract
so incomplete that the document contained “nothing defining or expressing any
obligation whatsoever.” Id. at 554. Chretien does not, however, stand for the blanket
proposition that all alleged surety contracts with unfilled blanks are invalid. In this case,
for the reasons discussed above, the unfilled blanks in the credit application do nothing
to obfuscate Alford’s clear expression of intent to be bound. Chretien therefore does not
undermine the Court’s finding of a valid surety agreement.
Finally, defendants argue that the personal guarantee is invalid because Alford
signed it in his representative capacity as an officer of DTT, rather than in his personal
capacity. Alford asserts that he did not intend to be personally obligated for DTT’s debts,
and submits an affidavit to that effect. 25 This argument is meritless. If Alford signed in a
representative capacity on behalf of DTT, then the “personal guarantee” serves only to
bind DTT as its own surety. This interpretation renders the guarantee both absurd and
worthless. Louisiana courts have rejected such arguments for this reason. See Veterans
Commercial Properties, LLC v. Barry’s Flooring, Inc., 67 So. 3d 627, 631 (La. App. 5 Cir.
2011) (construing surety agreement as personally binding the signatory where “[t]o
construe otherwise would render the guaranty worthless”); Am. Bank & Trust Co. of
Houma, 523 So. 2d at 945 (finding that sureties signed in personal capacity because “to
construe the signatures as indicating that the guarantors executed the guarantees in their
corporate capacity, thus binding only the corporation, would render the documents
meaningless.”); McKesson Chem. Co. v. Tideland Chem. Co., 471 So. 2d 812, 815 (La. App.
3 Cir. 1985) (rejecting personal-capacity argument and stating: “We shall not interpret
the letter of guarantee in a way as to render its effect worthless.”); Am. Cas. Co. v.
Howard, 175 So. 2d 355, 356 (La. App. 4 Cir. 1965) (rejecting personal-capacity argument
R. Doc. 18-1.
because “[i]f the individuals signed the guarantee for the Agency, the Agency would have
guarantee[d] performance of an agreement on which it was already bound.”).
To resist the weight of this precedent, defendants cite a handful of Louisiana cases
finding an issue of fact as to whether a guarantor signed in his representative or individual
capacity. These cases are easily distinguishable. In Pelican State Wholesale, Inc. v. Mays,
15 So. 3d 341, 341 (La. App. 2 Cir. 2009), a supplier sued a store owner’s widow and
children to enforce an alleged personal guarantee. The store owner had signed a “new
account” form that included a single sentence purporting to bind the signatory to a
personal guarantee. Id. The store owner signed the form only once. Id. at 341-42. The
trial court granted summary judgment in favor of the creditor, but the court of appeals
reversed and remanded. Id. at 344. In doing so, the appellate court found that in the
situation before it—where a single signature was alleged to bind both the corporation and
the person—there existed a genuine issue of fact as to whether the store owner intended
to sign in his personal capacity. Id. Here, by contrast, Alford signed only the separate
box under the title “Personal Guarantee.” 26 He did not sign on the line designated for a
corporate representative. 27 That line had been signed by another DTT officer on DTT’s
original application for credit. 28 Pelican State Wholesale’s reasoning therefore does
create an issue of fact in this case. 29
R. Doc. 16-4 at 4.
R. Doc. 16-3 at 10.
In Pelican Plumbing Supply, Inc. v. J.O.H. Const. Co., 653 So. 2d 699 (La. App. 5
Cir. 1995), the Louisiana Fifth Circuit upheld a trial court’s finding that a similar
agreement did not create a valid personal guarantee. This case is inapposite for the same
reasons as Pelican State Wholesale.
Defendants also cite Eclipse Telecommunications Inc. v. Telnet Int’l Corp., 800
So. 2d 1009 (La. App. 5 Cir. 2001). In that case, the Louisiana Fifth Circuit upheld the
trial court’s dismissal of Mr. Anderson, an individual defendant, from a suit on an open
account. Id. at 1010. The “Guarantor Agreement” at issue in Eclipse—which was a
separate document from the underlying obligation—contained a “section requiring the
name, address, telephone number, and social security number of the guarantor.” Id. at
1011. This section was entirely filled out with information corresponding to Telnet, the
The guarantor’s name is listed as Telnet and the corporation’s address and
telephone number are listed. The corporation’s tax number is entered in
the blank which requests the guarantor’s social security number. The
document is signed by “Chris Anderson, president.” There is no personal
information on the document which pertains to Mr. Anderson.
Id. at 1011-12. The court in Eclipse found these indicia that Mr. Anderson signed in a
corporate capacity sufficient to support dismissal. But no similar corporate information
is present in Alford’s guarantee. DTT is listed as the applicant, but nothing identifies DTT
as the guarantor. 30 Accordingly, Eclipse does not disturb the Court’s reasoning.
For these reasons, the Court finds that the “Personal Guarantee” constitutes a valid
surety agreement, and that Alford signed it in his personal capacity. Because the Court
concludes that the common intent of the parties to personally bind Alford as surety is
made clear and explicit by the words of the contract, the Court does not consider the
extrinsic evidence submitted by either party.
R. Doc. 16-4 at 4.
Tractor & Equipment’s motion for summary judgment is GRANTED. Defendants’
motion for summary judgment is DENIED. Tractor and Equipment’s motion in limine to
exclude parol evidence is DENIED AS MOOT. The clerk is directed to enter judgment
declaring the personal guarantee executed by Anthony Alford to be a valid and
enforceable surety agreement.
New Orleans, Louisiana, this _____ day of April, 2017.
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?