Judgment rendered April 13, 2022. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 54,437-CA
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
EVEREST STONE LLC Plaintiff-Appellee
versus
LOUISIANA SOUTHERN STONE Defendant-Appellants JOHN C. WATERS
Appealed from the Twenty-Sixth Judicial District Court for the Parish of Webster, Louisiana Trial Court No. 78,888
Honorable Charles A. Smith, Judge
JOHN C. WATERS In Proper Person
NEWMAN, MATHIS, BRADY & SPEDALE Counsel for Appellee By: Richard L. Crawford
Before MOORE, PITMAN, and ROBINSON, JJ. MOORE, C.J.
John C. Waters, surety of Louisiana Southern Stone LLC (“LSS”),
appeals a summary judgment that ordered him to pay $26,828.05, plus legal
interest and a 25% attorney fee, on an open account that Everest Stone LLC
had extended to LSS. For the reasons expressed, we affirm.
FACTUAL BACKGROUND
In May 2017, LSS, a limited liability company in Minden, La., filled
out a credit application (“the Application”) with Everest Stone, a limited
liability company in Addison, Texas. This was signed by Waters on behalf
of LSS. On line 11, “Credit Requested,” someone handwrote, “ – o – (COD
only).”
In January 2018, the same parties executed a credit and security
agreement (“the Agreement”), which also was signed by Waters. Under the
signature line was printed: “In consideration of credit being extended to the
above named entity [LSS], I personally guarantee all indebtedness.”
According to invoices attached to Everest’s filings, Everest sold and
shipped various loads of polished granite to LSS between February and
August 2018. However, LSS fell behind in payments. In July 2020,
Everest’s attorney sent a demand letter to LSS for the balance due,
$26,828.05. Apparently, no payment was made.
Everest filed this suit, on open account with personal guarantee, in
October 2020. It named LSS and Waters, “who personally guaranteed the
open account” of LSS. LSS has never filed any responsive pleading;
eventually, Everest took a default judgment against it. Waters, however, launched a vigorous pro se defense. He first
contended that he signed the Application to guarantee items shipped “COD
only,” not for any other type of credit. He then filed a motion for partial
summary judgment arguing that any goods not shipped COD, or for
anything over the handwritten amount of “o,” were “in excess of that
expressly stated” in the suretyship, and he was not liable. He also argued
that Everest’s action in shipping granite on credit, rather than COD,
materially altered the principal obligation, thus extinguishing the surety. In
an affidavit, Waters admitted signing the continuing guarantee at the bottom
of the Agreement, but stated that he was only a sales representative for LSS,
not a member, owner, or officer. Acting pro se, Waters never requested a
hearing on his motion for summary judgment.
In May 2021, Everest filed its own motion for summary judgment,
attaching the affidavit of its president, containing an account summary, and
certified copies of the Agreement, the Application, and invoices.
At the hearing on Everest’s motion, Waters did not appear. After
Everest presented its case, the court stated that the continuing guarantee was
valid, and granted the judgment as prayed for. The court added that this
disposition made Waters’s motion moot.
Waters appealed devolutively, raising one assignment of error: the
court erred in not granting his own motion for summary judgment, and in
instead granting Everest’s motion.
WATERS’S POSITION
Waters raises three arguments in support of his sole assignment of
error. First, he contends that a surety cannot be liable for a sum in excess of
that expressly stated in the surety contract. He cites La. C.C. art. 3067, “A 2 surety is not liable for a sum in excess of that expressly stated in his
contract.” He argues that the Application referred to zero credit and to
goods shipped COD only; shipments on open account exceed this, and he is
not liable for them.
Second, he contends that Everest materially modified the principal
obligation, and thus extinguished the surety. He cites La. C.C. art. 3062,
“The modification or amendment of the principal obligation * * * in any
material manner and without the consent of the surety, has the following
effects. An ordinary suretyship is extinguished.” He argues that by shipping
on open account, rather than on strict COD, Everest materially altered the
obligation, ending the suretyship.
Third, he reiterates that a surety who expressly guaranteed payment of
goods delivered only COD cannot be liable for sums due on an open
account. He stresses that Everest “unilaterally” modified its obligation.
DISCUSSION
This court observes at the outset that the denial of Waters’s motion for
summary judgment is interlocutory and not appealable. La. C.C.P. art. 968;
Hood v. Cotter, 08-0215 (La. 12/2/08), 5 So. 3d 819; Weaver v. City of
Shreveport, 52,407 (La. App. 2 Cir. 12/29/18), 261 So. 3d 1079. However,
the ruling may be reviewed in conjunction with an appealable final
judgment. Robertson v. Arledge, 54,129 (La. App. 2 Cir. 9/22/21), 328 So.
3d 551, writ denied, 21-01837 (La. 2/8/22), __ So. 3d __; Chreene v. Prince,
52,351 (La. App. 2 Cir. 9/27/18), 256 So. 3d 501. Such is the case here.
After an opportunity for adequate discovery, a motion for summary
judgment shall be granted if the motion, memorandum, and supporting
3 documents show that there is no genuine issue as to material fact and that the
mover is entitled to judgment as a matter of law. La. C.C.P. art. 966 A(3).
Contracts of guaranty or suretyship are subject to the same rules of
interpretation as contracts in general. Wooley v. Lucksinger, 09-0571 (La.
4/1/11), 61 So. 3d 507; Fleet Fuel Inc. v. Mynex Inc., 38,696 (La. App. 2
Cir. 6/23/04), 877 So. 2d 234. When the words of a contract are clear and
explicit and lead to no absurd consequences, no further interpretation may be
made in search of the parties’ intent. La. C.C. art. 2046.
Suretyship is an accessory contract by which a person binds himself to
a creditor to fulfill the obligation of another upon the failure of the latter to
do so. La. C.C. art. 3035. A contract of guaranty is equivalent to a contract
of suretyship. Fleet Fuel Inc. v. Mynex Inc., supra. The extinction of the
principal obligation extinguishes the suretyship. La. C.C. art. 3059. The
modification or amendment of the principal obligation, or the impairment of
real security held for it, by the creditor, in any material manner, and without
the consent of the surety, extinguishes the ordinary suretyship. La. C.C. art.
3062.1 A surety is not liable for a sum in excess of that expressly stated in
his contract. La. C.C. 3067.
Written contracts may be modified by oral contracts or by the conduct
of the parties. Victus 1 Inc. v. Stocky’s World Famous Pizza #14 Inc.,
52,221 (La. App. 2 Cir.
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Judgment rendered April 13, 2022. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 54,437-CA
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
EVEREST STONE LLC Plaintiff-Appellee
versus
LOUISIANA SOUTHERN STONE Defendant-Appellants JOHN C. WATERS
Appealed from the Twenty-Sixth Judicial District Court for the Parish of Webster, Louisiana Trial Court No. 78,888
Honorable Charles A. Smith, Judge
JOHN C. WATERS In Proper Person
NEWMAN, MATHIS, BRADY & SPEDALE Counsel for Appellee By: Richard L. Crawford
Before MOORE, PITMAN, and ROBINSON, JJ. MOORE, C.J.
John C. Waters, surety of Louisiana Southern Stone LLC (“LSS”),
appeals a summary judgment that ordered him to pay $26,828.05, plus legal
interest and a 25% attorney fee, on an open account that Everest Stone LLC
had extended to LSS. For the reasons expressed, we affirm.
FACTUAL BACKGROUND
In May 2017, LSS, a limited liability company in Minden, La., filled
out a credit application (“the Application”) with Everest Stone, a limited
liability company in Addison, Texas. This was signed by Waters on behalf
of LSS. On line 11, “Credit Requested,” someone handwrote, “ – o – (COD
only).”
In January 2018, the same parties executed a credit and security
agreement (“the Agreement”), which also was signed by Waters. Under the
signature line was printed: “In consideration of credit being extended to the
above named entity [LSS], I personally guarantee all indebtedness.”
According to invoices attached to Everest’s filings, Everest sold and
shipped various loads of polished granite to LSS between February and
August 2018. However, LSS fell behind in payments. In July 2020,
Everest’s attorney sent a demand letter to LSS for the balance due,
$26,828.05. Apparently, no payment was made.
Everest filed this suit, on open account with personal guarantee, in
October 2020. It named LSS and Waters, “who personally guaranteed the
open account” of LSS. LSS has never filed any responsive pleading;
eventually, Everest took a default judgment against it. Waters, however, launched a vigorous pro se defense. He first
contended that he signed the Application to guarantee items shipped “COD
only,” not for any other type of credit. He then filed a motion for partial
summary judgment arguing that any goods not shipped COD, or for
anything over the handwritten amount of “o,” were “in excess of that
expressly stated” in the suretyship, and he was not liable. He also argued
that Everest’s action in shipping granite on credit, rather than COD,
materially altered the principal obligation, thus extinguishing the surety. In
an affidavit, Waters admitted signing the continuing guarantee at the bottom
of the Agreement, but stated that he was only a sales representative for LSS,
not a member, owner, or officer. Acting pro se, Waters never requested a
hearing on his motion for summary judgment.
In May 2021, Everest filed its own motion for summary judgment,
attaching the affidavit of its president, containing an account summary, and
certified copies of the Agreement, the Application, and invoices.
At the hearing on Everest’s motion, Waters did not appear. After
Everest presented its case, the court stated that the continuing guarantee was
valid, and granted the judgment as prayed for. The court added that this
disposition made Waters’s motion moot.
Waters appealed devolutively, raising one assignment of error: the
court erred in not granting his own motion for summary judgment, and in
instead granting Everest’s motion.
WATERS’S POSITION
Waters raises three arguments in support of his sole assignment of
error. First, he contends that a surety cannot be liable for a sum in excess of
that expressly stated in the surety contract. He cites La. C.C. art. 3067, “A 2 surety is not liable for a sum in excess of that expressly stated in his
contract.” He argues that the Application referred to zero credit and to
goods shipped COD only; shipments on open account exceed this, and he is
not liable for them.
Second, he contends that Everest materially modified the principal
obligation, and thus extinguished the surety. He cites La. C.C. art. 3062,
“The modification or amendment of the principal obligation * * * in any
material manner and without the consent of the surety, has the following
effects. An ordinary suretyship is extinguished.” He argues that by shipping
on open account, rather than on strict COD, Everest materially altered the
obligation, ending the suretyship.
Third, he reiterates that a surety who expressly guaranteed payment of
goods delivered only COD cannot be liable for sums due on an open
account. He stresses that Everest “unilaterally” modified its obligation.
DISCUSSION
This court observes at the outset that the denial of Waters’s motion for
summary judgment is interlocutory and not appealable. La. C.C.P. art. 968;
Hood v. Cotter, 08-0215 (La. 12/2/08), 5 So. 3d 819; Weaver v. City of
Shreveport, 52,407 (La. App. 2 Cir. 12/29/18), 261 So. 3d 1079. However,
the ruling may be reviewed in conjunction with an appealable final
judgment. Robertson v. Arledge, 54,129 (La. App. 2 Cir. 9/22/21), 328 So.
3d 551, writ denied, 21-01837 (La. 2/8/22), __ So. 3d __; Chreene v. Prince,
52,351 (La. App. 2 Cir. 9/27/18), 256 So. 3d 501. Such is the case here.
After an opportunity for adequate discovery, a motion for summary
judgment shall be granted if the motion, memorandum, and supporting
3 documents show that there is no genuine issue as to material fact and that the
mover is entitled to judgment as a matter of law. La. C.C.P. art. 966 A(3).
Contracts of guaranty or suretyship are subject to the same rules of
interpretation as contracts in general. Wooley v. Lucksinger, 09-0571 (La.
4/1/11), 61 So. 3d 507; Fleet Fuel Inc. v. Mynex Inc., 38,696 (La. App. 2
Cir. 6/23/04), 877 So. 2d 234. When the words of a contract are clear and
explicit and lead to no absurd consequences, no further interpretation may be
made in search of the parties’ intent. La. C.C. art. 2046.
Suretyship is an accessory contract by which a person binds himself to
a creditor to fulfill the obligation of another upon the failure of the latter to
do so. La. C.C. art. 3035. A contract of guaranty is equivalent to a contract
of suretyship. Fleet Fuel Inc. v. Mynex Inc., supra. The extinction of the
principal obligation extinguishes the suretyship. La. C.C. art. 3059. The
modification or amendment of the principal obligation, or the impairment of
real security held for it, by the creditor, in any material manner, and without
the consent of the surety, extinguishes the ordinary suretyship. La. C.C. art.
3062.1 A surety is not liable for a sum in excess of that expressly stated in
his contract. La. C.C. 3067.
Written contracts may be modified by oral contracts or by the conduct
of the parties. Victus 1 Inc. v. Stocky’s World Famous Pizza #14 Inc.,
52,221 (La. App. 2 Cir. 9/26/18), 256 So. 3d 1146, and citations therein;
Driver Pipeline Co. v. Cadeville Gas Storage LLC, 49,375 (La. App. 2 Cir.
1 Waters has not alleged that he was a commercial surety, La. C.C. art. 3042, or a legal surety, La. C.C. art. 3043. If he had been a commercial surety, a material modification of the principal obligation would extinguish the suretyship “to the extent the surety is prejudiced by the action of the creditor,” which, in this case, would be the same as completely extinguishing the suretyship. 4 10/1/14), 150 So. 3d 493, writ denied, 14-2304 (La. 1/23/15), 159 So. 3d
1058.
The Agreement states, “In consideration of credit being extended to
the above named entity [LSS], I [Waters] personally guarantee all
indebtedness.” By plain reading, the words all indebtedness mean obligation
of any kind, and the balance due for polished granite that was delivered to
LSS’s workplace in Minden is an obligation of any kind. The district court
did not err in finding, beyond any genuine issue of material fact, that Waters
obligated himself to pay this debt.
Waters contends that he is not bound because the amount claimed
exceeds that stated in the surety, contrary to La. C.C. art. 3067. As noted,
however, the suretyship instrument (here, the Agreement) refers to all
indebtedness, so the amount claimed obviously does not exceed that stated
in the surety.
Waters next contends that he is not bound because LSS’s debt was
modified in a material manner, without Waters’s consent, contrary to La.
C.C. art. 3062: the principal obligation (here, the Application) called for “o”
credit and COD only; when Everest decided to extend credit, this was a
material modification. Finally, he stresses that Everest made this
modification unilaterally.
However, the invoices show that despite the earlier plan to use COD
only, Waters subsequently signed the Agreement, thereby obligating himself
to guarantee all indebtedness; and then, Everest shipped granite, and LSS
accepted it, on credit. The conduct of the parties obviously modified the
original Application. Victus 1 Inc. v. Stocky’s World Famous Pizza #14,
supra; Driver Pipeline Co. v. Cadeville Gas Storage LLC, supra. If Everest 5 acted unilaterally, then LSS and Waters did not object or refuse the
shipments, and thus conferred their consent. These arguments lack merit.
CONCLUSION
The district court did not err in finding no genuine issue of material
fact and that Everest was entitled to judgment as a matter of law. All costs
are to be paid by John C. Waters.
AFFIRMED.