Maine-ly Batteries, Inc. v. Battery World, Inc.

• Court: Superior Court of Maine
• Decided: March 28, 2014
• Docket: YORcv-12-63
• Status: Unpublished

Opinion

INURED OCr n11m STATE OF MAINE SUPERIOR COURT YORK, SS. DOCKET NO. CV-12-63

MAINE-L Y BATTERIES, INC. ) ) Plaintiff, ) v. ) ) BATTERY WORLD, INC., and ) ) ORDER DAVID E. WILLETTE, and ) ) RICHARD A WILLETTE, ) ) Dedendants. )

L Background

Maine-ly Batteric;~s began supplying batteries and battery supplies to Battery World in late

2000. (Supp. S.M.F. ~ 5.) By late October 2010, Battery World had accrued a significant amount

of debt owed to Maine-ly Batteries. (Supp. S.M.F. ~ 6; Opp. S.M.F. ~ 6.) On October 27, 2010,

Defendants David and Richard Willette executed a Personal Guaranty Agreement guaranteeing

the obligations of Battery World to Maine-ly Batteries. (Supp. S.M.F. ~ 7.) Defendants David

and Richard Willette conveyed their interests in Defendant Battery World, Inc. by Bill of Sale

dated November 10, 2010 to Barabara Davis. (Add. S.M.F. ~~ 29, 30.)

On February 29, 2012, Maine-ly Batteries sent a Demand for Payment via both US. mail and

Certified mail to Battery World, David Willette, and Richard Willette. (Supp. S.M.F. ~ 9.) On

March 16, 2012, Maine-ly Batteries filed the current action to collect $36,606.69 from Battery

World, and David and Richard Willette. (Supp. S.M.F. ~ 10.) Plaintiff, Maine-ly Batteries, filed

motions for emergency injunctive relief and attachment, both of which were granted. (Supp.

S.M.F. ~ 10, 11.)

1 On June 11, 2012 Maine-ly Batteries and Battery World informally mediated and reached a

partial settlement. (Supp. S.M.F. ,-r,-r 12, 13.) The Settlement Agreement provided that "Battery

World agrees that it owes Maine-ly Batteries $30,000 in full settlement of the Action as to

Battery World". (Opp. S.M.F. ,-r 13.) The Willettes did not attend the mediation and were not

included in the Settlement Agreement. (Supp. S.M.F. ,-r,-r 12, 14; Opp. S.M.F. ,-r 12.) Defendants

David Willette and Richard Willette certify that they each terminated the Personal Guaranty

Agreement by letter on April 1, 2012. (Add. S.M.F. ,-r,-r 27, 28.)

Plaintiffs assert that the total balance due from Battery World to Plaintiff as of December

31, 2013 was $18,503.86. (Supp. S.M.F. ,-r 16.) Plaintiffs further assert that of the total balance,

$12,708.69 is the balance owed Battery World under the settlement agreement. (Supp. S.M.F. ,-r

17.)

Plaintiff is now seeking judgment against David and Richard Willette for the debt accrued by

Battery World above the settlement amount. Plaintiff asserts that Defendants David and Richard

Willette are personally liable for $5795.17, costs, and fees as a result of the Personal Guaranty

Agreement they executed.

II. Standard ofReview

Summary judgment is appropriate where no genuine issue of material fact exists and the

moving party is entitled to judgment as a matter oflaw. Beal v. Allstate Ins. Co., 989 A. 2d 733,

738 (Me. 2010); Dyerv. Department ofTransportation, 951 A.2d 821,825 (Me. 2008). When

reviewing a motion for summary judgment, the court reviews the parties' statements of material

facts and the cited record evidence in the light most favorable to the non-moving party. Id.

A genuine issue of material fact exists where the fact finder must make a determination

between differing versions of the truth. Reliance National Indemnity v. Knowles Industrial

2 Services Corp., 2005 :ME 29, ,-r7, 868 A.2d 220; citing Univ. of Me. Found. V Fleet Bank of

Me., 2003 :ME 20, ,-r20, 817 A.2d 871. Furthermore, "a fact is material if it could potentially

affect the outcome of the case." Id.

ill. Discussion

Plaintiff moves for a Summary Judgment of $5 795.17, cost, and fees against Defendants

David and Richard Willette. Plaintiff attests that the Personal Guaranty Agreement executed by

the Willettes provides Plaintiff with the right to recover.

The court looks to the terms of the Personal Guaranty Agreement in order to determine as a

matter of law whether Plaintiff has a right to recover the difference between the settlement

amount and the full claim of debt from Defendants David and Richard Willette, as well as costs

and fees. "Since a guarantee is a type of contract ... guaranties are governed by the same rules of

construction as other contracts." Bumila v. Keiser Homes ofMaine, Inc., 1997 :ME 139, ,-r 12,

696 A.2d 1091. "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. The interpretation of an unambiguous

contract is a question oflaw." Handy Boat Serv., Inc. v. Profl Servs., Inc., 1998 :ME 134, ,-r 7,

711 A.2d 1306.

The Personal Guaranty Agreement states that:

"The liability of the GUARANTORS shall not be impaired, altered, or otherwise affected by any renewal, modification, compromise or discharge of the INDEBTEDNESS or any part thereof The liability hereunder of the GUARANTORS, shall be direct, immediate and absolute and shall not be conditional or contingent upon the pursuit, exercise or prosecution by OBLIGEE of any other remedy or remedies whatsoever and OBLIGEE shall have and may exercise against the GUARANTORS any and all remedies that it might against a principal debtor upon a past due liquidation obligation.

3 Personal Guaranty Agreement,~ 2. The Personal Guaranty Agreement is unambiguous as to

Plaintiff's right to pursue GUARANTORS, David and Richard Willette, for the full amount of

the debt accrued even where Plaintiff has discharged the debt as it pertains to Defendant Battery

World. The Personal Guaranty Agreement is similarly unambiguous pertaining Plaintiff's right

to seek repayment for debt accrued by Battery World from David and Richard Willette whether

or not Plaintiff first seeks repayment from Battery World. There is no question of material fact

concerning whether David and Richard Willette are liable for debt accrued by Battery World

pursuant to the Personal Guaranty Agreement.

David and Richard Willette contend that they are not liable for debt accrued by Battery

World pursuant to the Personal Guaranty Agreement because they terminated the Personal

Guaranty Agreement and because they sold their interest in Battery World. The Personal

Guaranty Agreement does permit unilateral termination of the Personal Guaranty Agreement,

"provided however that this Agreement and the undersigned liability hereunder shall remain in

full force and effect with respect to the portion of the JNDEBTEDNESS created, arising or

existing prior to such termination". Personal Guaranty Agreement, ,-r 1. David and Richard

Willette argue that they terminated the Personal Guaranty Agreement by letters dated April 11,

2012 and therefore Plaintiff is not entitled to judgment against them. The Personal Guaranty

Agreement states that the Guarantors are liable for all debt accrued before the date of

termination. Plaintiff is seeking to recover for debt accrued prior to termination. There is no

question of material fact concerning Defendant David and Richard Willettes' liability.

Defendants David and Richard Willette argue that they are not liable for debt accrued by

Battery World because the Personal Guaranty Agreement was part of the conveyance of

Defendants David and Richard Willette's full interest :ln Battery World by bill of sale to

4 Barabara Davis on November 10, 2010. David and Richard Willette argue that by conveying

their "full interest" in Battery World they conveyed their personal guaranty and were no longer

liable for any debt accrued by the company. According to Black's Law Dictionary, a Guaranty is

"A promise to answer for the payment of some debt, or the performance of some duty, in case of

the failure of another who is liable in the first instance." Guaranty, Black's Law Dictionary (9th

ed. 2009), guaranty. The Personal Guaranty Agreement was a promise by Defendants David and

Richard Willette to personally answer for the payment of Battery World's debt in case of Battery

World's failure to do so. Battery World could not have been both the primary obligor and the

guarantor. The Personal Guaranty Agreement was a personal asset of the Willettes', not an asset

of the company. Therefore, the Personal Guaranty Agreement was not conveyed as part of the

November 10,2010 bill of sale.

Defendants David and Richard Willette also argue that Plaintiff did not properly retain the

right to pursue the W"illettes for the debt at the time of the Settlement Agreement between

Plaintiff and Battery World. Defendants David and Richard Willette argue that because Plaintiff

did not properly retain the right to pursue the debt, the Willettes are no longer liable for any debt

accrued by Battery World.

To the extent that the obligee releases the principal obligor from its duties pursuant to the underlying obligation: (a) the principal obligor is also discharged from any corresponding duties of performance and reimbursement owed to the secondary obligor unless the terms of the release effect a preservation of the secondary obligor's recourse(§ 38); (b) the secondary obligor is discharged from any unperformed duties pursuant to the secondary obligation unless: (i) the terms of the release effect a preservation ofthe secondary obligor's recourse(§ 38); or (ii) the language or circumstances of the release otherwise show the obligee's intent to retain its claim against the secondary obligor

5 Restatement (Third) of Suretyship & Guaranty§ 39 (1996). The terms of the agreement and the

Amended Consent Judgment entered by the court on May 1, 2013, show the obligee's intent to

retain its claim against David and Richard Willette. 1 There is no question of material fact

concerning Defendant David and Richard Willettes' liability.

Next the court must determine the extent of Defendant David and Richard Willettes' liability.

According to the Personal Guaranty Agreement:

"The records of OBLIGEE shall be conclusive with respect to the amounts, times and places of delivery of any and all merchandise and the balance due and owing to OBLIGEE by said COMPANY. Any evidence admissible in an action against the COMPANY shall be admissible in an action against the GUARANTORS on this Guaranty."

Personal Guaranty Agreement, ~ 2. The OBLIGEE, Plaintiff, has presented its records with

respect to the balance owing. The Personal Guaranty Agreement states unambiguously that the

Plaintiffs records are to be conclusive on the matter of the amount due by David and Richard

Willette. Plaintiff seeks the amount due according to the records less the amount Battery World

has agreed to pay. According to Plaintiffs records, that amount it $5795.17. After review of

Plaintiffs records, the court finds that there is no question of material fact concerning the

balance of the debt after Plaintiff's Settlement Agreement with Battery World.

Finally, the court must determine whether David and Richard Willette must compensate

Plaintiff for reasonable costs and attorneys fees accrued in this action. Once again, the court

1 Section 39 continues: (c) if the secondary obligor is not discharged from its unperformed duties pursuant to the secondary obligation by operation of paragraph (b), the secondary obligor is discharged from those duties to the extent: (i) of the value of the consideration for the release; (ii) that the release of a duty to pay money pursuant to the underlying obligation would otherwise cause the secondary obligor a loss; and (iii) that the release discharges a duty of the principal obligor other than the payment of money; Restatement (Third) of Suretyship & Guaranty § 39 (1996). While Defendants David and Richard Willette are not discharged of the entire debt, they are discharged of the duty to answer for the value of the consideration for the release. Plaintiff may only seek the amount due over and above the amount of the Settlement Agreement at this time.

6 looks to the language of the Personal Guaranty Agreement: "The GUARANTORS hereby agree

to pay OBLIGEE all costs and expenses, including reasonable attorneys fees, which it may incur

in attempting to collect from CO:rvfi> ANY or the GUARANTORS in the enforcement of this

guaranty." Personal Guaranty Agreement,~ 4. David and Richard Willette unambiguously

promised to pay all reasonable costs and fees associated with collecting on the debt accrued by

Battery World. Therefore, the court finds as a matter of law that David and Richard Willette are

liable for reasonable costs and fees accrued by Plaintiff Plaintiff may submit to the court an

itemized record of costs and fees for review within 60 days of entry of this order.

IV. Conclusion

Pursuant to M.R. Civ. P. 79(a), the Clerk is directed to incorporate this order into the docket

by reference and the entry is

Plaintiff's Motion for Summary Judgment is Granted.

DATE: John~ Justice, Superior Court