Southworth-Milton, Inc. v. Cowan

• Court: Superior Court of Maine
• Decided: December 1, 2009
• Docket: CUMcv-09-250
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION DOCKET NO. CV-09-250 fl ,_.. ~ I -, \ I

BEFORE THE COURT

Before the court is Plaintiff Southworth-Milton, Inc.' s (Milton) Motion for

Summary Judgment against Defendant Michael Cowan (Cowan) pursuant to

M.R. Civ. P. 56.

BACKGROUND

Defendant Cowan is the President and sole shareholder of Maine

Earthmoving, Inc. Maine Earthmoving, Inc. filed for chapter 11 bankruptcy on

February 10,2009. On or about March 1, 1994, Milton and Maine Earthmoving,

Inc. entered into a credit agreement. As part of the credit agreement, Cowan

executed a guarantee whereby he personally guaranteed payments owed to

Milton by Maine Earthmoving, Inc. under the credit agreement. The language of

the personal guarantee provides: "I, as officer, director, and/ or shareholder,

agree to PERSONALLY GUARANTEE paymei1t to Southworth-Milton, Inc. for

any and all indebtedness hereafter incurred by or for the corporation for which

the application is made."

Maine Earthmoving, Inc. has failed to pay invoices in the amount of

$88,033.24. On or about March 30, 2009, Milton sent a demand letter to Cowan, as the personal guarantor for Maine Earthmoving. Inc., seeking payment for all

amounts owed. The debt has not been paid and the total amount owed as of July

9, 2009 was $94,039.12, which includes amounts owed pursuant to the 1.5%

monthly service charge set forth in the credit agreement. The service charge

accrues at a rate of $38.01 per day.

DISCUSSION

I. Standard of Review

Summary judgment should be granted if there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law. M.R.

Civ. P. 56(c). In considering a motion for summary judgment, the court should

consider the facts in the light most favorable to the non-moving party, and the

court is required to consider only the portions of the record referred to and the

material facts set forth in the parties' Rule 56(h) statements. E.g., [011115011 v.

McNeil, 2002 ME 99, <][ 8, 800 A.2d 702, 704. A contested fact is "material" if it

could potentially affect the outcome of the suit under the governing law. IlIkel v.

Livillgsto1l, 2005 ME 42, 1 4, 869 A.2d 745, 747. A fact is "genuine" if there is

sufficient evidence supporting the claimed fact to require a fact-finder to choose

between competing versions of facts at trial. [d. For the purposes of summary

judgment, factual disputes and ambiguities must be resolved against the movant.

Nevertheless, when the facts offered by a party in opposition to summary

judgment would not, if offered at trial, be sufficient to withstand a motion for

judgment as a matter of law, summary judgment should be granted. Rodrigue v.

Rodrigue, 1997 ME 99, 1 8, 694 A.2d 924, 926.

2 II. Contract Claim and the Evidence Before the Court

Milton alleges a claim for breach of contract. The elements of a breach of

contract claim Clre breach of Cl materiClI contract term, cClusation, Clnd dClmages.

Maine Energy Recovery Co. v. United Steel Structures, Inc., 1999 ME 31, 9I 7, 724

A.2d 1248, 1250. Milton has shown that (1) a contract exists, (2) that Cowan

signed the personClI guarantee of payments owed by Maine Earthmoving, Inc.,

(3) that a debt of over $94,000 has been incurred by Earthmoving, Inc., and (4)

that the debt has not been paid.

The dispute in this case centers on the personal guarantee clause of the

credit agreement. Cowan signed the personal guarantee Clnd he does not dispute

the amount charged on the credit account. However, Cowan disputes the

amount that he personally owes as a result of the personClI guarantee based on

two aUeged issues of material fact. First, Cowan claims that the personal

gUClrantee clause is ambiguous. Second, Cowan asserts in his Clffidavit that in

discussions about the credit agreement and Clt the time of the signing, Milton's

credit manager Gerry Kittridge represented that the line of credit would have a

maximum of a couple of thousand dollars, and that Cowan would only be

personally guaranteeing at most a couple thousand dollars. Cowan claims he

was not told that the personal guarantee was unlimited in amount. Cowan

claims that a note on the credit agreement stating, "1000 KG" is reasonClbly

interpreted as a $1,000.00 credit limit approved by Kittridge.

Cowan attempts to construe the guarantee clause as ambiguous by

emphasizing the phrase "for which this application is made." Cowan couples

this argument with his claim that he was told the line of credit would only be for

a couple of thousand dollars. However, when read in full, the personal

., .J guarantee clause is unambiguous. The personal guarantor agreed to pay "for

any and all indebtedness hereafter incurred by or for the corporation for which

this application is made." The court concludes that the plain meaning of this

clause is unambiguous.

Milton alleges in its reply statement of facts that statements in Cowan's

August 11, 2009 affidavit are inadmissible hearsay. Specifically, Milton objects to

the admissibility of Cowan's claim that Gerry Kittridge said that the line of credit

would be for a maximum threshold of a couple of thousand dollars. Hearsay is a

statement made by someone other than the declarant offered to prove the truth

of the matter asserted. M.R. Evid. 801(c). An admission by a party opponent is

expressly declared not to be hearsay. M.R. Evid. 801 (d)(2). Therefore, the

contested statements in Cowan's affidavit are not excluded as hearsay.

However, Cowan is precluded from offering evidence outside of the

written credit agreement based on the parol evidence rule. The parol evidence

rule"operates to exclude from judicial consideration extrinsic evidence offered to

vary, add to, or contradict the terms of an integrated written agreement." Brown

Dev. Corp. v. Hemond, 2008 ME 146,

completely or partially integrated, and the degree of integration will impact the

scope of permissible extrinsic evidence." Id. Whether a contract is integrated is a

question of law. Id. An integrated contract is a writing constituting a final

expression of one or more terms of the contract. Restatement (Second) of

Contracts § 209 (1981). "Where the parties reduce an agreement to a writing

which in view of its cOl1l.pleteness and specificity reasonably appears to be a

complete agreement, it is taken to be an integrated agreement unless it is

established by other evidence that the writing did not constitute a final

4 expression." Id. If the contract is integrated, evidence offered to alter

unambiguous language will be excluded by the parol evidence rule. Brow7l Dev.

Corp. at

statement of the terms of the agreement, then the contract is partially integrated.

Restatement (Second) of Contracts § 210(2) (1981). Where an agreement is

partially integrated, extrinsic evidence will be admissible if the additional terms

are consistent with the written terms. ld.

Cowan alleges Gerry Kittridge told him during discussions and at the

signing of the agreement that the line of credit would be for a maximum of a

couple of thousand dollars, and that Cowan would only be personally

guaranteeing at most a couple of thousand dollars. The two thousand dollar

limitation is entirely inconsistent with the written terms of the credit agreement

and the personal guarantee. "An oral condition is inconsistent if repugnant to

the conditions or terms actually stated in the writing." Rogers v. lncksoll, 2002 ME

140,

1999). The personal guarantee makes the guarantor responsible for "any and all

indebtedness hereafter incurred by or for the corporation." There is no mention

anywhere in the agreement that Cowan's liability as the guarantor would be

limited to a couple of thousand dollars. Therefore, in considering Milton's

Motion for Summary Judgment, Cowan's claim that Gerry Kittridge told hin\ the

credit limit was a couple of thousand dollars is excluded by the parol evidence

rule.

Cowan argues that the "1000 GK" notation on the credit agreement is

most reasonably interpreted as a $1,000.00 credit limi t approved by Gerry

Kittridge. Cowan makes this claim in his August 11 th affidavit, and also in a

5 footnote in his Memorandum in Opposition to the Motion for Summary

Judgment. The affidavit states:

The maximum amount of the line of credit was not indicated in the Credit Application and Agreement. However, after the Credit Application and Agreement was approved, someone wrote notes at the top of the first page, presumably someone from Southworth­ Milton, Inc. The notes at the top right corner look to state "1000 GK." I interpret that to indicate that the line of credit was approved for $1000.00.

Cowan Aff. 9I 12. This claim is not mentioned in Cowan's Opposing Statement of

Material Facts, and the claim that Cowan's liability was limited to $1,000.00 is

inconsistent with Cowan's claim that his liability was limited to $2,000.00. There

is no statement under oath saying Cowan's liability was limited to $1000.00. As a

result, the court does not consider the notation a sufficient ground to withstand

Plaintiff's Motion for Summary Judgment.

Therefore, the entry is:

Plaintiff's Motion for Summary Judgment is GRANTED.

Dated at Portland, Maine this )fJ~ dayof ~ ,2009.

obert E. Crowley Justice, Superior Court

6 12/02/2009 MAINE JUDICIAL INFORMATION SYSTEM dcvnaugh CUMBERLAND COUNTY SUPERIOR COURT mjxxi013 PAGE A - ATTORNEY BY CASE VIEW SOUTHWORTH MILTON INC VS MICHAEL COWAN UTN:AOCSsr -2009-0046095 CASE #:PORSC-CV-2009-00250

SEL VD REPRESENTATION TYPE DATE 01 0000001421 ATTORNEY:BEAGLE, C ALAN ADDR:26 CITY CENTER PO BOX 7044 PORTLAND ME 04112-7044 F FOR:MICHAEL COWAN DEF RTND OS/28/2009

02 0000009902 ATTORNEY: HATCH , JOHN K ADDR:ONE MONUMENT SQUARE PORTLAND ME 04101 F FOR:SOUTHWORTH MILTON INC PL RTND 04/30/2009

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