IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2020-CA-01101-COA
STANLEY DEVINE AND ROGER BEARDAIN APPELLANTS
v.
CARDINAL HEALTH 110, LLC APPELLEE
DATE OF JUDGMENT: 09/21/2020 TRIAL JUDGE: HON. GEORGE M. MITCHELL JR. COURT FROM WHICH APPEALED: MONTGOMERY COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANTS: A. E. (RUSTY) HARLOW JR. ROGER ADAM KIRK KATHI CRESTMAN WILSON MORGAN KAY JACKSON ATTORNEY FOR APPELLEE: JONATHAN S. MASTERS NATURE OF THE CASE: CIVIL - CONTRACT DISPOSITION: AFFIRMED - 04/12/2022 MOTION FOR REHEARING FILED: MANDATE ISSUED:
BEFORE BARNES, C.J., McDONALD AND LAWRENCE, JJ.
LAWRENCE, J., FOR THE COURT:
¶1. On July 31, 2007, Stanley Devine (Devine) and Roger Beardain (Beardain),on behalf
of PharmNet Inc. (PharmNet), entered into a contract with Cardinal Health 110 LLC
(Cardinal Health) for the purchase of products and medicines to sell to the public. Devine
and Beardain owned PharmNet. Cardinal Health alleges that the contract included a guaranty
signed by Devine and Beardain, agreeing to be personally liable for any debts PharmNet
owed to Cardinal Health. On October 20, 2017, PharmNet filed for bankruptcy. Cardinal
Health requested that Devine and Beardain pay the debt owed by PharmNet, as required by the guaranty they had signed. Devine and Beardain refused. On January 29, 2018, Cardinal
Health filed suit for breach of contract in the Circuit Court of Montgomery County. On
September 6, 2018, Cardinal Health filed a motion for summary judgment. A hearing was
held on August 28, 2020, to determine if summary judgment should be granted. The trial
court granted Cardinal Health’s motion for summary judgment, finding the guaranty bound
Devine and Beardain to pay the PharmNet debt. Devine and Beardain appealed the trial
court’s decision, arguing that there were genuine issues of material fact that should have been
left for a jury to decide. Upon review of the record, we affirm the trial court’s grant of
summary judgment for Cardinal Health.
FACTS
¶2. Cardinal Health and PharmNet entered into a contract on July 31, 2007. Devine was
the president of PharmNet, and Beardain was the vice president. On July 31, 2007, Devine
sent Cardinal Health a credit application that both he and Beardain signed on behalf of
PharmNet, which would allow PharmNet to purchase and receive products from Cardinal
Health and sell in their local store.1 Cardinal Health alleged that the credit application
included the guaranty, which provided that Devine and Beardain would be personally liable
for the debts of PharmNet in relation to purchases PharmNet made from Cardinal Health if
PharmNet could no longer make payments. Cardinal Health accepted the application and
began a contractual partnership with PharmNet. On October 20, 2017, PharmNet filed for
1 In its complaint, Cardinal Health mistakenly stated this credit application was sent on July 31, 2017. Cardinal Health argues this is a scrivener’s error that does not prejudice the parties.
2 Chapter 7 bankruptcy. Upon this filing, Cardinal Health “made a demand to Devine and
Beardain for the debt owed . . . .” Devine and Beardain refused to pay. Cardinal Health filed
its complaint in the Montgomery County Circuit Court against Devine and Beardain for
breach of contract and alleged they owed Cardinal Health $259,490.68.
¶3. In paragraph nine of its complaint, Cardinal Health alleged that Devine’s and
Beardain’s refusal to pay PharmNet’s debts breached the guaranty between the parties.
Cardinal Health attached a copy of the contract, including the guaranty, to the complaint as
Exhibit A. However, Exhibit A was almost entirely illegible. In their answers, Devine and
Beardain denied Cardinal Health’s claims about the Guaranty in paragraph nine.
¶4. On September 6, 2018, Cardinal Health filed a motion for summary judgment. In the
motion, Cardinal Health stated, “The only issue before this Court is whether Defendants are
personal[ly] liable to Cardinal Health under the Guaranty. Both Defendants signed the
Guaranty. . . . Defendants now owe to Cardinal Health the Outstanding Balance incurred by
PharmNet.” Cardinal Health attached the executed agreement as Exhibit E.2 In a footnote,
Cardinal Health acknowledged that the “executed Credit Application is difficult to read,” so
it attached Exhibit F. Exhibit F was “an unexecuted version of Cardinal Health’s standard
Credit Application, which contains the same terms” as the executed contract between
Cardinal Health and PharmNet. Exhibit F is legible. Cardinal Health also included the exact
language of the guaranty from Exhibits E and F in its motion for summary judgment.
Additionally, Cardinal Health admitted there was an error concerning the date the contract
2 Exhibit E that was attached to Cardinal Health’s motion for summary judgment is the same illegible agreement that was attached as Exhibit A to the complaint.
3 was executed in its original complaint and alleged that the error was a “minor scrivener’s
error.”
¶5. To further support its motion for summary judgment, Cardinal Health attached as
“Exhibit D to its motion for summary judgment” the affidavit of Phelton Woods (Woods),
a credit manager for Cardinal Health. In his sworn affidavit, Woods stated he had personal
knowledge that “[a] true and accurate copy of the Credit Application [was] attached to the
Complaint as Exhibit A.” (Emphasis added). Woods stated he had personal knowledge
that Devine and Beardain “executed and delivered to Cardinal Health a written Guaranty.”
Woods also stated he had personal knowledge that “[p]ursuant to the Guaranty, Defendants
irrevocably and unconditionally guaranteed the prompt and full payment and performance
of all obligations of PharmNet to Cardinal Health as defined in the Credit Application . . . .”
¶6. Devine filed a response to Cardinal Health’s motion for summary judgment on
September 17, 2018. Devine argued that Cardinal Health had committed fraud by making
“numerous misrepresentations to [him] and PharmNet regarding working with him on
developing projects, and with regard to working on underwater claims. . . .” Devine also
stated that he and PharmNet “would not have entered into the contract attached to [the]
Complaint or remained in same for the period of time that they did but for the fraudulent
conduct of Cardinal Health.” Devine attached his own affidavit to his response. In his
affidavit, Devine alleged various misrepresentations made by Cardinal Health. Devine also
stated, “I signed the wholesale contract with Cardinal Health in my capacity as President
of Pharmnet, Inc.” (Emphasis added). Devine did not make any argument about the validity
4 of the guaranty.
¶7. Beardain also filed a separate response to Cardinal Health’s motion for summary
judgment on October 12, 2018. In his response, Beardain argued that the motion for
summary judgment should be denied because “the Plaintiff has failed to establish the
‘existence’ of a valid and binding contract dated July 31, 2017, as alleged in the complaint.”3
Beardain argued that Cardinal Health’s mistake in dates was not a scrivener’s error. Instead,
Beardain claimed that there were “genuine issues of material fact in dispute. Specifically,
the credit application upon which [Cardinal Health] bases its claim for breach of
guaranty/contract has not been produced, and therefore, cannot substantiate the claims of the
Complaint.” Additionally, Beardain argued that “even if the document attached to the
complaint is the proper [contract], it is largely illegible and should be tendered to a jury to
determine whether it says what [Cardinal Health] alleges.” Beardain did not attach any
affidavits to his response.
¶8. On August 28, 2020, a hearing was held to determine whether summary judgment
should be granted. Cardinal Health argued that there was a valid contract, signed by Devine
and Beardain, so they should be required to adhere to the contract’s provisions. Cardinal
Health also argued that the date of July 31, 2017, instead of July 31, 2007, was a “minor
scrivener’s error” that did not prejudice the parties because it was clear what contract was
at issue. Cardinal Health agreed that the original contract attached to the complaint as
3 Cardinal Health argues its error in stating July 31, 2017, instead of the correct date of July 31, 2007, is a scrivener’s error. Additionally, the contract attached to Cardinal Health’s original complaint is clearly dated July 31, 2007.
5 Exhibit A was “hard to read,” but the copy attached to the complaint was the only copy
Cardinal Health was able to obtain. Cardinal Health also noted that PharmNet, Devine, and
Beardain had been operating under this contract for ten years. Cardinal Health argued that
neither the contract between the parties nor Mississippi law imposed a duty upon Cardinal
Health to retrieve collateral from PharmNet first before pursuing Devine and Beardain.
Cardinal Health claimed to have made a request for collateral from PharmNet when it filed
for bankruptcy, but Cardinal Health never received any payment.
¶9. At the summary judgment hearing, Beardain argued that Cardinal Health’s motion for
summary judgment should be dismissed because the complaint referenced a contract dated
2017, instead of the actual contract from July 31, 2007. Beardain argued that “[it’s] not a
scrivener’s error for Cardinal Health to put the incorrect date on its complaint.” Therefore,
Beardain contended summary judgment should not be granted.
¶10. Beardain also argued that the contract Cardinal Health attached to its complaint was
“mostly illegible.” Beardain stated that the supplement Cardinal Health attached as Exhibit
F to its motion for summary judgment does not clarify what the language of the contract
between PharmNet and Cardinal Health said. Therefore, he maintained, there is a genuine
issue of material fact as to the language of the contract at issue that should go to a jury.4
¶11. Devine argued at the hearing for summary judgment that Cardinal Health had a “duty
to collect [its] collateral” from PharmNet before it pursued him or Beardain. Devine stated
that Cardinal Health’s failure to adhere to its duty to collect collateral created a “jury
4 It is important to note that this argument was made by Counsel and there is no sworn testimony asserting facts to support the argument.
6 question.”
¶12. The trial court ultimately granted summary judgment. The judge noted that
Mississippi is a notice-pleading state, so the need for a perfect complaint does not exist. The
judge also stated that the amount requested in the complaint was the same amount requested
at the hearing, the parties in the complaint were the same parties before him, and the contract
at issue was dated correctly and attached to the complaint. In its order granting summary
judgment, the trial court found:
On or about July 31, 2007, Devine and Beardain signed and agreed to personally guarantee a Credit Application [contract] to Cardinal Health on behalf of their now defunct Mississippi company, PharmNet. The [contract] sets forth Cardinal Health’s agreement to accept and fill PharmNet’s pharmaceutical orders on credit in exchange for an agreement to pay Cardinal Health for such orders. Pursuant to the terms of the [contract], Devine and Beardain personally guaranteed and jointly and severely assumed all of the obligations and responsibilities for all debts that PharmNet incurred in connection with PharmNet’s purchases from Cardinal Health, including collection costs, interest, attorneys’ fees and court costs.
Devine and Beardain appealed from the trial court’s order granting summary judgment.
¶13. Devine argues that the trial court erred in granting summary judgment because there
were genuine issues of material fact about whether Cardinal Health failed to mitigate the
damages by not pursuing PharmNet, and whether Cardinal Health made misrepresentations
to convince PharmNet to enter into a contract. Beardain argues that the trial court erred in
granting summary judgment because there were genuine issues of material fact about a
contract from July 31, 2017, the erroneous date in the complaint, which was never produced.5
5 Again, this argument stems from the erroneous date in the complaint which listed the contract as being executed on July 31, 2017, but has now been shown to be a scrivener’s error. The original contract clearly stated the date as July 31, 2007.
7 Devine and Beardain also argue that Cardinal Health’s failure to mitigate damages by not
exhausting its remedy options with PharmNet should prevent summary judgment. Finding
no error, we affirm.
STANDARD OF REVIEW
¶14. This Court reviews a trial court’s grant of summary judgment de novo. Bonner v.
Imperial Palace of Miss. LLC, 117 So. 3d 678, 682 (¶11) (Miss. Ct. App. 2013). Summary
judgment “shall be rendered forthwith if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law.” M.R.C.P. 56(c). This Court has stated, “[S]ummary judgment is
appropriate when the non-moving party has failed to make a showing sufficient to establish
the existence of an element essential to the party’s case, and on which that party will bear the
burden of proof at trial.” Robinson v. Robinson Prop. Grp. Corp., 274 So. 3d 952, 957-68
(¶16) (Miss. Ct. App. 2019) (quoting Karpinsky v. Am. Nat. Ins. Co., 109 So. 3d 84, 89
(¶¶10-11) (Miss. 2013)). The evidence is considered in a light most favorable to the non-
moving party. Sweet v. TCI MS Inc., 47 So. 3d 89, 91 (¶9) (Miss. 2010).
ANALYSIS
1. The trial court did not err in granting summary judgment for Cardinal Health because there were no genuine issues of material fact.
¶15. The question for this Court is whether there are genuine issues of material facts
concerning whether Devine and Beardain are legally liable under the guaranty. After
8 reviewing the record, we find no genuine issue of material fact. “When a motion for
summary judgment is made and supported as provided in [Rule 56], an adverse party may not
rest upon the mere allegations or denials of his pleadings, but his response, by affidavits or
as otherwise provided in this rule, must set forth specific facts showing that there is a genuine
issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered
against him.” M.R.C.P. 56(e).
¶16. While the contract between Cardinal Health, PharmNet, Devine, and Beardain was
illegible, Woods’ affidavit attached to Cardinal Health’s motion for summary judgment
resolved any issues of material fact. In Woods’ affidavit, he stated that he had personal
knowledge that “[a] true and accurate copy of the Credit Application [was] attached to the
Complaint as Exhibit A.” Woods stated that he had personal knowledge that Beardain and
Devine signed a guaranty, which was “included at the end of the Credit Application, attached
to the Complaint as Exhibit A.” Woods also stated, “Pursuant to the Guaranty, Defendants
irrevocably and unconditionally guaranteed the prompt and full payment and performance
of all obligations of PharmNet and Cardinal Health as defined in the Credit Application,
whether then existing or thereafter arising.”
¶17. In their responses to Cardinal Health’s motion for summary judgment, neither Devine
nor Beardain made any arguments relating to the guaranty. They also failed to attach
affidavits contradicting the assertions set forth in Woods’ affidavit. Devine admitted in an
affidavit attached to his response for summary judgment that he “signed the wholesale
contract with Cardinal Health in [his] capacity as President of Pharmnet, Inc.” Beardain did
9 not admit or deny that he signed the contract, and he did not provide any sworn testimony or
affidavits negating what Woods claimed in his affidavit. Because Devine and Beardain did
not respond with their own affidavit or sworn testimony disputing Woods’ claims in his
affidavit, there was no genuine issue of material fact as to whether the guaranty was signed
as stated by sworn proof provided by Cardinal Health’s employee, Woods.
¶18. This Court and the Mississippi Supreme Court have held that “[i]ssues of fact
sufficient to require denial of a motion for summary judgment obviously are present where
one party swears to one version of the matter in issue and another says the opposite.”
Beasley v. Sutton, 192 So. 3d 325, 334 (¶31) (Miss. Ct. App. 2015) (quoting Williams v.
Toliver, 759 So. 2d 1195, 1198 (¶10) (Miss. 2000)); see also K.R. Borries v. Grand Casino
of Miss. Inc. Biloxi, 187 So. 3d 1042, 1046 (¶8) (Miss. 2016) (quoting Williamson ex rel.
Williamson v. Keith, 786 So. 2d 390, 393 (Miss. 2001)); Lancaster v. Miller, 319 So. 3d
1174, 1181 (¶30) (Miss. Ct. App. 2021) (finding that a motion for summary judgment should
be denied when both parties swear to opposite versions). Here, Devine and Beardain did not
refute Woods’ affidavit through affidavits of their own. One party did not “swear to one
version” while the other parties swore to the “opposite.” See Beasley, 192 So. 3d at 334
(¶31). Beardain attached no affidavits. Devine’s affidavit alleged fraud and a failure of
Cardinal Health to mitigate their damages. There was no genuine issue of material fact as
to the guaranty because Devine and Beardain failed to refute the sworn allegations set forth
in the affidavit attached to Cardinal Health’s motion for summary judgment.
2. Cardinal Health had no duty to mitigate before demanding Devine and Beardain pay it the money owed by PharmNet.
10 ¶19. Devine and Beardain argue that Cardinal Health had a duty to mitigate damages by
attempting to collect money from PharmNet before it pursued legal action against them to
obtain the money owed. However, Mississippi Code Annotated section 75-9-601(a)(1)(Rev.
2016) states that a secured party “may reduce a claim to judgment, foreclose, or otherwise
enforce the claim, security interest, or agricultural lien by any available judicial procedure”
if a party has defaulted.
¶20. This Court and the Mississippi Supreme Court have held that a secured creditor does
not have to mitigate damages by re-taking collateral to satisfy a debt it is owed before trying
to obtain the money owed through judicial proceedings. See Rea v. O’Bannon, 171 Miss.
824, 158 So. 916, 918 (1935) (A secured creditor “could pursue the foreclosure to
conclusion, or, if he deemed it advantageous to himself, he could forego the foreclosure and
proceed at law to collect his debt in the law forum . . . . There is no inconsistency between
the legal and equitable remedial rights possessed by a mortgage . . . , and he may exercise
them all at the same time, and resort to one is not a waiver the other.”); W. Point Corp. v.
New N. Miss. Fed. Sav. & Loan Ass’n, 506 So. 2d 241, 242-43 (Miss. 1986) (finding North
Mississippi Savings and Loan Association “had the unconditional right to choose its forum
for suit and to institute suit on the note alone for its collection, without resort to the deed of
trust or foreclosure thereon”); Fleisher v. S. AgCredit, FLCA, 108 So. 3d 948, 954 (¶24)
(Miss. Ct. App. 2012) (stating that “Southern AgCredit need not foreclose on the property
before seeking a monetary judgment”).
¶21. Cardinal Health was the secured creditor of PharmNet after the July 31, 2007 contract
11 had been executed. Woods’ sworn affidavit stated that Devine and Beardain signed the
contract, including the guaranty, which would make them personally liable if PharmNet
failed to pay. Therefore, Cardinal Health could “reduce [its] claim to judgment, foreclose,
or otherwise enforce the claim . . . by any available judicial procedure.” Miss. Code Ann.
§ 75-9-601(a)(1). Cardinal Health had no duty to mitigate damages, so it could pursue a suit
against Devine and Beardain without first attempting to re-take collateral from PharmNet.
See Rea, 171 Miss. 824, 158 So. at 918; W. Point Corp., 506 So. 2d at 243; Fleisher, 108 So.
3d at 954 (¶24). Therefore, there is no genuine issue of material fact as to whether Cardinal
Health had a duty to mitigate before seeking payment from Beardain and Devine as allowed
in the guaranty.
3. Devine waived the affirmative defense of fraud by failing to raise it in his answer.
¶22. Devine argues that the trial court erred in granting Cardinal Health’s motion for
summary judgment because there were genuine issues of material fact about whether
Cardinal Health made misrepresentations to Devine to encourage him to enter into a
“distributorship agreement” with Cardinal Health on behalf of PharmNet. However, Devine
never raised an allegation of fraud in his answer as an affirmative defense or as a
counterclaim. Mississippi Rule of Civil Procedure 8 states that “[i]n pleading to a preceding
pleading, a party shall set forth affirmatively . . . fraud . . . or [other] affirmative defenses.”
M.R.C.P. 8(c) (emphasis added). A party’s failure to raise an affirmative defense in his or
her answer constitutes a waiver of that defense. See Woodard v. Miller, 326 So. 3d 439, 449-
50 (¶41) (Miss. 2021) (“A defendant’s failure to timely and reasonably raise and pursue the
12 enforcement of any affirmative defense or other affirmative matter or right which would
serve to terminate or stay the litigation, coupled with active participation in the litigation
process, will ordinarily serve as a waiver.”) (quoting MS Credit Ctr. Inc. v. Horton, 926 So.
2d 167, 180 (Miss. 2006)); Hutzel v. City of Jackson, 33 So. 3d 1116, 1119 (¶12) (Miss.
2010) (stating that the Supreme Court interprets Rule 8(c) to mean “if a party fails to raise
an affirmative defense in its original answer, the defense will be deemed waived”). Devine’s
failure to raise the affirmative defense of fraud in his original answer constituted a waiver
of that defense.
¶23. Additionally, when Devine did raise this issue of fraud in his response to Cardinal
Health’s motion for summary judgment, he did not plead it with particularity. Instead, he
made general allegations. Mississippi Rule of Civil Procedure 9(b) states, “In all averments
of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with
particularity.” M.R.C. P. 9(b). To plead a fraud claim with particularity, Devine needed to
show “(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of
its falsity or ignorance of its truth; (5) the speaker’s intent that the representation should be
acted upon by the hearer and in the manner reasonably contemplated; (6) the hearer’s
ignorance of its falsity; (7) the hearer’s reliance on the representation’s truth; (8) the hearer’s
right to rely thereon; and (9) the hearer’s consequent and proximate injury.” Soni v.
Dhaliwal, 203 So. 3d 628, 637 (¶45) (Miss. Ct. App. 2016) (quoting State v. Bayer Corp.,
32 So. 3d 496, 501 (¶18) (Miss. 2010)). Additionally, the “circumstances of the alleged
fraud such as the time, place and contents of any false representations or conduct must be
13 stated.” Bryan v. Dent, 270 So. 3d 976, 979 (¶15) (Miss. Ct. App. 2018) (quoting Howard
v. Harper, 947 So. 2d 854, 861 (¶20) (Miss. 2006)). In Devine’s response to Cardinal
Health’s motion for summary judgment, Devine argued his case was similar to Mark Allen
v. Mac Tools. Inc., et al., 671 So. 2d 636 (Miss. 1996), and provided a case summary.
Devine stated that Cardinal Health made “additional representations that caused him not to
immediately repudiate the contract upon discovery of the fraudulent representations.”
Devine also stated that Cardinal Health “was doing nothing about the underwater claims and
not actually helping PharmNet develop new products.” Devine claimed that the
misrepresentations made him remain in a contract with Cardinal Health. However, the exact,
alleged misrepresentations made by Cardinal Health were never stated with particularity.
Be that as it may, the allegations set forth by Devine did not create a genuine issue of
material fact that the guaranty at issue in this case was signed by him and should be enforced.
Further, the credit application and guaranty at issue were signed in 2007, and it appears the
fraud alleged by Devine did not begin until the parties were engaged in the course of business
as a result of that contract. This issue is without merit.
CONCLUSION
¶24. Upon review of the record, this Court finds that the trial court did not err in granting
summary judgment because there were no genuine issues of material fact as to whether the
guaranty was signed, legally effective, and binding upon Devine and Beardain for the debts
owed by PharmNet. Further, whether Cardinal Health had a duty to mitigate damages is clear
under Mississippi Code Annotated section 75-9-601(a)(1), which does not impose such a
14 duty in the commercial contract for which that section applies. Finally, Beardain waived the
affirmative defense of fraud by failing to raise it in his answer. Further, there were no
genuine issues of material fact relating to the fraud alleged by Devine, which would legally
negate the credit application and guaranty signed by the parties.
¶25. AFFIRMED.
BARNES, C.J., CARLTON AND WILSON, P.JJ., GREENLEE, WESTBROOKS, McDONALD, McCARTY, SMITH AND EMFINGER, JJ., CONCUR.