Handy Boat Service, Inc. v. Professional Services, Inc.

1998 ME 134, 711 A.2d 1306, 1998 Me. 134, 1998 Me. LEXIS 221
CourtSupreme Judicial Court of Maine
DecidedJune 3, 1998
StatusPublished
Cited by82 cases

This text of 1998 ME 134 (Handy Boat Service, Inc. v. Professional Services, Inc.) is published on Counsel Stack Legal Research, covering Supreme Judicial Court of Maine primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Handy Boat Service, Inc. v. Professional Services, Inc., 1998 ME 134, 711 A.2d 1306, 1998 Me. 134, 1998 Me. LEXIS 221 (Me. 1998).

Opinion

SAUFLEY, Justice.

[¶ 1] Professional Services, Inc. and Kerry S. Luther appeal from the summary judgments entered in the Superior Court (Cumberland County, Mills, J.) in favor of Handy Boat Service, Inc. on its breach of contract and fraudulent transfer claims. On appeal, they argue that the court erred in construing Luther’s personal guarantee, applying the parol evidence rule, and awarding damages on the fraudulent transfer claim. Finding no error with the exception of a damage calculation, we affirm in part and vacate in part.

2] On April 20, 1990, Handy Boat Service, Inc. and Professional Services, Inc. executed a lease governing Professional Services’s occupation of a waterfront building in Falmouth for the purpose of operating a restaurant. The lease was signed by representatives of both parties, including Kerry S. Luther, president of Professional Services. 1 Luther also signed a separate guarantee of the lessee’s obligation.

[¶3] Pursuant to the terms of the lease, Professional Services exercised its option to extend the lease for an additional five years on February 7,1991. In 1994, Luther established a separate corporation, Professional Catering Services, Inc., because he knew there was going to be trouble between Professional Services and Handy Boat. 2 In November 1995, Professional Services vacated the leased premises and transferred property having a value of $60,000 to Professional Catering without any equivalent exchange in value.

[¶ 4] Handy Boat subsequently filed a two-count complaint alleging breach of contract against both Professional Services and Luther. Handy Boat later amended that complaint to include a third count alleging fraudulent transfer against both defendants pursuant to the Uniform Fraudulent Transfer Act, 14 M.R.S.A §§ 3571-3582 (Supp. 1997). As amended, the complaint sought contract damages for unpaid rent and expenses and double damages for the fraudulent transfer pursuant to 14 M.R.S.A § 3578(1)(C).

[¶5] Concluding that Luther’s guarantee applied to the original lease term and the extension, the court granted a summary judgment for Handy Boat on its breach of contract claims against both defendants, *1308 awarding $114,083.90 plus interest, costs, and attorney fees. The court also granted a summary judgment for Handy Boat on its fraudulent transfer claim against the defendants, awarding $228,167.80, or double Handy Boat’s contract damages, plus interest and costs. 3 This appeal by the defendants followed.

I. The Personal Guarantee

[¶ 6] Luther argues that his personal guarantee does not apply to the lease as extended by Professional Services because the lease unambiguously defines a one-year lease term and three separate five-year extension terms and the guarantee contains no language explicitly making it applicable to the extension terms.

[¶ 7] A guarantee is a contract and is governed by the same rules of construction applicable to other contracts. See Bumila v. Reiser Homes of Maine, Inc., 1997 ME 139, ¶ 12, 696 A.2d 1091,1094. When a guarantee and contract are executed at the same time, by the same parties, for the same purpose, and in the course of the same transaction, they will be construed together as one legal instrument. See id. A contract is to be interpreted to effect the parties’ intentions as reflected in the written instrument, construed with regard for the subject matter, motive, and purpose of the agreement, as well as the object to be accomplished. See id. The interpretation of an unambiguous contract is a question of law. See Town of Lisbon v. Thayer Corp., 675 A.2d 514, 516 (Me.1996). We review such questions de novo. See Collins v. Trius, Inc., 663 A.2d 570, 572 (Me.1995).

[¶8] The unambiguous language of the lease and the guarantee made Luther’s personal guarantee applicable to the optional lease term extensions. The parties executed both the lease and the guarantee for the purpose of operating a restaurant at the Falmouth premises. Section 2.01 of the lease provides Professional Services with “said Premises for a term of one (1) year ... unless sooner terminated or extended as provided in this Lease [.]” (Emphasis added). Section 18.01 of the lease further provides Professional Services with options to extend the lease for three successive periods of five years. When Professional Services exercised its option to extend the lease for an additional five-year period, it did so pursuant to the explicit terms of the lease.

[¶ 9] The guarantee provides that Luther “unconditionally guarantees to [Handy Boat] the complete performance of all obligations of [Professional Services], its successors or assigns, under the Lease, without limitation.” (Emphasis added). The extension of the lease created a continuing obligation under that lease. Construing the guarantee and the lease as one document to effect the parties’ intentions concerning the undisputed object to be accomplished, the operation of a restaurant at the Falmouth premises, we conclude that the guarantee unambiguously and unconditionally applies to the extended six-year lease term, without limitation. Cf. Bumila, 1997 ME 139 at ¶ 13, 696 A.2d at 1094 (holding that guarantee executed in connection with principal note extended to replacement note, given that the guarantee encompassed “other papers evidencing the obligations hereby guaranteed.”). The court therefore committed no error in concluding that Luther’s personal guarantee applied to the lease as extended by Professional Services.

II. The Parol Evidence Rule

[¶ 10] Luther and Professional Services argue that the court erred in refusing to consider extrinsic evidence offered to prove (1) that the inventory of restaurant equipment was not attached to the lease when it was signed, (2) that the inventory was not accurate, and (3) that the condition of the premises and equipment was different than alleged by Handy Boat.

[¶ 11] The parol evidence rule operates to exclude from judicial consideration extrinsic evidence offered to alter, augment, or contradict the unambiguous language of *1309 an integrated written agreement. See Clarke v. DiPietro, 525 A.2d 623, 625 (Me.1987); Astor v. Boulos Co., 451 A.2d 903, 905 (Me.1982). Application of the rule requires an initial finding that the parties intended the writing to integrate their understandings concerning the subject matter of the agreement. See Farley Inv. Co. v. Webb, 617 A.2d 1008, 1010 (Me.1992).

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1998 ME 134, 711 A.2d 1306, 1998 Me. 134, 1998 Me. LEXIS 221, Counsel Stack Legal Research, https://law.counselstack.com/opinion/handy-boat-service-inc-v-professional-services-inc-me-1998.