US Fuel International, Inc. v. Murphy Oil USA, Inc.

417 S.W.3d 228, 2012 Ark. App. 367, 2012 Ark. App. LEXIS 493
CourtCourt of Appeals of Arkansas
DecidedMay 30, 2012
DocketNo. CA 11-1288
StatusPublished
Cited by2 cases

This text of 417 S.W.3d 228 (US Fuel International, Inc. v. Murphy Oil USA, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
US Fuel International, Inc. v. Murphy Oil USA, Inc., 417 S.W.3d 228, 2012 Ark. App. 367, 2012 Ark. App. LEXIS 493 (Ark. Ct. App. 2012).

Opinion

JOSEPHINE LINKER HART, Judge.

This is a suit on a promissory note and guaranty. The Lonoke County Circuit Court granted summary judgment to ap-pellee, Murphy Oil USA, and awarded Murphy $179,998.63, which included accrued interest, and attorney’s fees of $37,857.12, jointly and severally against appellants, U.S. Fuel International, Inc.; Troutman Oil Co.; and Toby and Jodie Troutman.1 On appeal, appellants contend that the circuit court erred (1) in not finding that the appellants were relieved as signers and guarantors of the note because of a novation; (2) in finding that the Trout-mans’ response to summary judgment did not extend the time for Troutman Oil to respond to summary judgment; (3) in finding that the guarantee of an “underlying agreement” obligated the guarantors to pay when the underlying agreement is not defined or shown by exhibits; and (4) in awarding attorney’s fees because there was insufficient evidence to support such an award. Finding no error, we affirm.

US Fuel is a subsidiary of Troutman Oil. Toby Troutman was the president of both corporations. On November 9, 2005, Toby Troutman and Jodie Troutman executed a “Guaranty of Payment and Performance and Indemnity Agreement” (Guaranty Agreement) with Murphy whereby they personally guaranteed payment by U.S. Fuel “dba Troutman Oil Co., Inc.” The Guaranty Agreement referred to the purchase of petroleum products or merchandise from Murphy by U.S. Fuel as the “underlying agreement.” It also stated that it was an absolute and continuing guarantee that applied to all obligations owed by U.S. Fuel at the time that the Guaranty Agreement was executed, as well as future obligations created after that time. The Guaranty Agreement further provided that

no renewal, extensions or rearrangements or any other indulgence with respect to [US Fuel’s] Obligations, ... no release of or substitution for any security or other guaranty now or hereafter held by Murphy for payment of [US Fuel’s] Obligations, ... no release of [US Fuel] or of any other person primarily or secondarily liable on [US Fuel’s] Obligations, ... (including any maker, endorser, guarantor, or surety), no delay in enforcement of payment of [US Fuel’s] Obligations, ... and no delay, omission or lack of diligence or care in exercising any right or power with respect to [US Fuel’s] Obligations, or any security therefor, including impairment of collateral, or guaranty thereof or under this Guaranty, shall in any manner impair or affect the rights of Murphy or the duties and/or liabilities of [the Troutmans] hereunder.

The Troutmans waived any suretyship defenses they might have. The Guaranty Agreement also stated that

no amendment, modification, termination or waiver of any provision of this Guaranty, nor consent to any departure by [the Troutmans] therefrom, shall in any event be effective unless the same shall be in writing and signed by Murphy, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

The expiration date of the Guaranty Agreement was December 31, 2019, unless either party terminated the agreement pri- or to that date.

On January 28, 2009, Toby Troutman, as president of U.S. Fuel, executed a promissory note in favor of Murphy in the amount of $188,541.25. Monthly payments of $5000 were to begin on February 1, 2009, and continue through January 1, 2010. A balloon payment of $128,541.25 was due on February 1, 2010. If payments were made as scheduled, no interest would be due; otherwise, interest would be charged from the date of the note and based on the Federal Reserve Discount Rate plus five percent. The note also provided for payment of attorney’s fees.

On August 31, 2009, Murphy sued U.S. Fuel, Troutman Oil, and the Troutmans, alleging that U.S. Fuel had defaulted on the note and that the Troutmans’ Guaranty Agreement applied to this obligation. Murphy sought payment of $162,541.25, costs, pre-and post-judgment interest, and attorney’s fees.

The Troutman defendants answered, denying the material allegations of the complaint. They averred that U.S. Fuel was a Nevada corporation and that its charter had been revoked. They also asserted that Troutman Oil had never purchased goods from Murphy. The Troutman defendants also alleged that there was no underlying agreement, that the Guaranty Agreement did not apply because it did not mention a note, and that the note sued upon did not exist at the time of the execution of the Guaranty Agreement.

Murphy later amended its complaint against U.S. Fuel and the Troutman defendants. In addition to the original allegations, it also alleged that a second guaranty agreement had been executed in September 2006 whereby Troutman Oil guaranteed payment for purchases made by U.S. Fuel.2 The Troutman defendants again answered, incorporating their earlier answers. They also denied the existence of the two guaranty agreements and the note.

Murphy filed a motion for summary judgment against all of the defendants. In addition to a supporting brief, Murphy also submitted an affidavit of Laura Brown, the general manager of Murphy’s credit department. Brown set forth the .Guaranty Agreement, the note, and the payments made on the note. She stated that balance due as of the date the complaint was filed, August 31, 2009, was $162,541.25. The balance had grown to $179,998.63 as of the filing of the motion for summary judgment.

The Troutmans, but not Troutman Oil, timely filed a response to the motion, asserting that the “underlying agreement” was not established and that the issue of liability on that agreement was an outstanding issue remaining for trial.3 Several months later, on June 7, 2011, the Troutman defendants, including Troutman Oil, filed an amended response to the motion to assert that the note worked a no-vation so as to substitute for the prior obligations up to that point. They also asserted that the Troutmans’ guaranty did not apply because the note was Rnot in existence at the time of the guaranty. They further asserted that Troutman Oil was not liable for the note. The amended response was also captioned a cross-motion for summary judgment. Attached as an exhibit was the affidavit of Toby Troutman, who stated that Troutman Oil did not make any purchases from Murphy and did not sign the note.

The Troutman defendants also filed an answer to the amended complaint. The amended answer stated that the Troutman defendants “incorporate their prior answers as filed in this Court with the exception that [they] allege novation as [Murphy] pointed out in its June 21, 2011 brief that novation had not been pleaded.” Murphy raised the issue of Troutman Oil’s response not being timely because it did not originally respond to Murphy’s motion for summary judgment.

At the hearing on the motion for summary judgment, the Troutman defendants argued that the 2009 note worked a novation as to the Troutmans’ personal guaranty. The circuit court ruled from the bench, denying the claim that a novation occurred. The court granted summary judgment against U.S. Fuel and the Trout-man defendants. In its written order, the circuit court found all the defendants jointly and severally liable to Murphy in the sum of $179,998.63, which included accrued interest.

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Related

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2013 Ark. App. 737 (Court of Appeals of Arkansas, 2013)

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Bluebook (online)
417 S.W.3d 228, 2012 Ark. App. 367, 2012 Ark. App. LEXIS 493, Counsel Stack Legal Research, https://law.counselstack.com/opinion/us-fuel-international-inc-v-murphy-oil-usa-inc-arkctapp-2012.