Paul T. Brown v. Hederman Brothers

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

NO. 2014-CA-01553-COA

PAUL T. BROWN APPELLANT

v.

HEDERMAN BROTHERS, LLC APPELLEE

DATE OF JUDGMENT: 09/30/2014
TRIAL JUDGE: HON. JOHN HUEY EMFINGER
COURT FROM WHICH APPEALED: MADISON COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: PAUL ANDERSON KOERBER
ATTORNEYS FOR APPELLEE: JOHN HOUSTON DOLLARHIDE
JOHN C. HENEGAN
NATURE OF THE CASE: CIVIL - CONTRACT
TRIAL COURT DISPOSITION: GRANTED SUMMARY JUDGMENT IN
FAVOR OF APPELLEE
DISPOSITION: AFFIRMED - 05/17/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

BEFORE LEE, C.J., BARNES AND GREENLEE, JJ.

LEE, C. J., FOR THE COURT:

¶1. Paul T. Brown—managing member of Bookmark Publishing LLC—appeals the grant

of summary judgment in favor of Hederman Brothers LLC—a commercial printing company

in Ridgeland, Mississippi. Finding no error, we affirm.

FACTS AND PROCEDURAL HISTORY

I. Two Agreements

¶2. In September 2010, Hederman Brothers entered into two contracts. The first was a

credit application with Bookmark Publishing, an entity formed by Brown. The second was

a continuing guaranty with Brown, individually.
¶3. The credit application was signed in anticipation of Bookmark Publishing using

Hederman Brothers’ services to print wildlife calendars. Brown was a professional wildlife

photographer. Under the terms of the credit application, Bookmark Publishing would have

sixty days to pay all invoices.

¶4. Under the terms of the continuing guaranty, Brown personally guaranteed

the payment in full when due, whether by acceleration or otherwise, of any and
all indebtedness of [Bookmark Publishing] to [Hederman Brothers] up to the
principal amount of [f]orty-five thousand and NO/100 Dollars ($45,000) and,
in addition all related interest, attorneys’ fees, collection costs and other fees
and charges . . . .

The guaranty clearly stated:

This is a guaranty of payment and not a guaranty of collection; consequently,
the liability of the Guarantor shall be absolute and unconditional . . . .
[Hederman Brothers] shall not be bound to take any action against [Bookmark
Publishing] . . . before [Hederman Brothers] is entitled to payment from the
Guarantor in the amount hereby guaranteed.

Moreover the guaranty stated:

The liability of the Guarantor hereunder shall not be released, discharged,
limited or affected in any way by . . . any lack of validity or any
unenforceability of any agreement or instrument relating to [Bookmark
Publishing’s] obligations, . . . any action or omission of any kind or at any time
on the part of [Hederman Brothers] in respect of any matter whatsoever, or . . .
any other circumstance which might otherwise constitute a defense available
to or discharge of [Bookmark Publishing.]

¶5. Hederman Brothers printed calendars for Bookmark Publishing three years in a

row—for 2011, 2012, and 2013. But in November 2012, while working on the 2013

calendars, Hederman Brothers grew concerned by Bookmark Publishing’s failure to pay in

full for the 2012 calendars. Bookmark Publishing’s past-due invoices totaled more than

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$15,000 and had accrued $3,000 in interest. Prior to shipping the 2013 calendars, Hederman

Brothers negotiated a payment plan with Bookmark Publishing. Bookmark Publishing

agreed to make installment payments to pay off the balance of the 2012 calendars by

December 21, 2012. Bookmark Publishing would then begin paying the $30,000 plus for the

2013 calendars in $5,000 biweekly installments, beginning January 2, 2013. In exchange,

Hederman Brothers agreed to write off the $3,000 in interest and ship the 2013 calendars to

Bookmark Publishing on credit.

II. Lawsuit

¶6. Bookmark Publishing failed to finish the installment payments for the 2012 calendars

and never made a payment on the 2013 calendars. After sending a demand letter, Hederman

Brothers sued Brown, individually, in the Circuit Court of Madison County on February 25,

2013. Its complaint alleged Bookmark Publishing had failed to pay $51,930.97.

¶7. Hederman Brothers did not name Bookmark Publishing as a defendant.1 Yet it

brought claims of breach of the credit application and failure to pay an open account,

following a written demand. See Miss. Code Ann. § 11-53-81 (Rev. 2012). Hederman

Brothers also brought a claim based on the continuing guaranty.

¶8. In his answer, Brown asserted counterclaims against Hederman Brothers. He alleged

Hederman Brothers fraudulently induced him into the printing arrangement by falsely

representing its work product and its ability to market Bookmark Publishing’s calendars to

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At the time Hederman Brothers filed suit, Bookmark Publishing had been dissolved
by the Mississippi Secretary of State’s Office due to Bookmark Publishing’s filing
deficiencies. Bookmark Publishing was later reinstated.

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new customers. Brown also alleged Hederman Brothers failed to perform the printing work

“in a professional and reasonably prudent manner.” Finally, he claimed Hederman Brothers

negligently handled his personal and intellectual property during the printing process.

¶9. As part of discovery, Hederman Brothers deposed Brown. During his deposition,

Brown repeatedly expressed his dissatisfaction with Hederman Brothers’ printing work and

how it handled his original slides.

¶10. Following this deposition, Hederman Brothers moved for summary judgment, relying

on Brown’s admission that he signed the guaranty and that he had agreed to the payment

schedule confirmed by email back in November 2012.

¶11. The circuit court granted this motion in part. The court granted a judgment in favor

of Hederman Brothers on its breach-of-guaranty claim against Brown. According to the

court, Brown had guaranteed Bookmark Publishing’s debt, up to $45,000, plus interest,

attorney’s fees, and collection costs. Hederman Brothers conclusively proved Bookmark

Publishing owed more than $45,000 for services rendered. And Brown failed to pay pursuant

to the continuing guaranty. Thus, the court found, as a matter of law, Hederman Brothers

was entitled to $45,000, plus eighteen percent contractual interest.2

¶12. But the circuit court denied summary judgment on Hederman Brothers’ claims on the

open account and breach of the credit application. The court found these claims had to be

pursued against Bookmark Publishing, which was not a party to Hederman Brothers’ suit.

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In the final judgment, the circuit court found Hederman Brothers was entitled to
$45,000, pre-judgment interest of $15,605.94, and attorney’s fees of $15,096.93. Post-
judgment interest would accrue at the contract rate of eighteen percent per annum.

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Later, the court would permit Hederman Brothers to voluntarily withdraw these claims,

leaving all of Hederman Brothers’ claims against Brown resolved.

¶13. The circuit court also granted summary judgment in favor of Hederman Brothers on

all of Brown’s counterclaims. The court found these claims too were based on the contract

between Hederman Brothers and Bookmark Publishing, so Brown in his individual capacity

had no standing to bring suit. Additionally, the court found that Brown failed to present

sufficient evidence to support his counterclaims.

¶14. Once the summary-judgment order became final,3 Brown timely appealed.

STANDARD OF REVIEW

¶15. In considering a trial court’s grant of a motion for summary judgment, this Court

conducts a de novo review and “examines all the evidentiary matters before it—admissions

in pleadings, answers to interrogatories, depositions, affidavits, etc.” City of Jackson v.

Sutton, 797 So. 2d 977, 979 (¶7) (Miss. 2001) (citation omitted). The Mississippi Supreme

Court has clarified the summary-judgment standard, explaining that “[t]he movant bears the

burden of persuading the trial judge that: (1) no genuine issue of material fact exists, and (2)

on the basis of the facts established, he is entitled to [a] judgment as a matter of law.”

Karpinsky v. Am. Nat’l Ins., 109 So. 3d 84, 88 (¶11) (Miss. 2013) (citation omitted). The

supreme court has further stated that “[t]he movant bear[s] the burden of production if, at

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Following the entry of the order granting summary judgment, Brown filed a “motion
to reconsider.” The circuit court denied this motion, as well as granted Hederman Brothers’
motion to voluntarily dismiss its open-account and breach-of-credit-application claims.
Following these two actions, the circuit court entered a final judgment, as all claims between
the parties had been resolved.

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trial, [he] would bear the burden of proof on the issue raised. In other words, the movant

only bear[s] the burden of production where [he] would bear the burden of proof at trial.”

Id. at 88-89 (¶11) (citations omitted). The supreme court again clarified that “while

[d]efendants carry the initial burden of persuading the trial judge that no issue of material

fact exists and that they are entitled to summary judgment based upon the established facts,

[the plaintiffs] carr[y] the burden of producing sufficient evidence of the essential elements

of [their] claim at the summary-judgment stage, as [they] would carry the burden of

production at trial.” Id. at 89 (¶13).

DISCUSSION

I. Hederman Brothers’ Claim Under the Guaranty

¶16. On appeal, Brown asserts he could not be judged liable under the continuing guaranty

without Hederman Brothers first obtaining against Bookmark Publishing “a judgment or any

finding of liability or non-payment under ‘Credit Application’ agreement.”

A. Brown’s Unconditional Guaranty

¶17. To support his argument that Hederman Brothers had to pursue payment from

Bookmark Publishing first, Brown relies on Brent v. National Bank of Commerce of

Columbus, 258 So. 2d 430, 434 (Miss. 1972). That case does speak of a guarantor being

“secondarily liable to the creditor . . . only by the happening of the prescribed conditions at

a time after the contract itself [was] made[.]” Id. But under the terms of the contract Brown

signed, Hederman Brothers reducing Bookmark Publishing’s liability to a judgment was not

a “prescribed condition[ ].” Id.

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¶18. As Brent points out, while “a guarantor is an insurer of the ability or solvency of the

principal, . . . this characteristic is not present in an absolute guaranty or a guaranty of

payment, but only in a conditional guaranty or a guaranty of collection[.]” Id. “A

conditional guaranty, also termed a ‘guaranty of collection[,]’ is one under which the creditor

can seek performance from the guarantor only after the occurrence of some condition such

as the condition that the creditor has unsuccessfully and with reasonable diligence sought to

collect the debt from the principal debtor.” United States v. Vahlco Corp., 800 F.2d 462, 466

(5th Cir. 1986) (emphasis added) (applying Texas law). In contrast, “a guaranty that is

absolute and unconditional is one that requires no condition precedent to its enforcement

against the guarantor other than mere default by the principal debtor.” Id. “Such a guaranty

is also called a ‘guaranty of payment[.’]” Id.

¶19. The guaranty Brown signed was not conditional. Instead, it clearly stated, “This is a

guaranty of payment and not a guaranty of collection; consequently, the liability of the

Guarantor shall be absolute and unconditional.” (Emphasis added). And it has been the law

in Mississippi since at least 1845 that with a guaranty of payment, the creditor does not have

to “institute any legal proceedings against the debtor” before suing the guarantor. Wren v.

Pearce, 12 Miss. 91, 98 (1845). Thus, under the terms of the unconditional and absolute

guaranty, the only “prescribed condition” to suing Brown under the guaranty was Bookmark

Publishing’s default. See Woods-Tucker Leasing Corp. of Ga. v. Kellum, 641 F.2d 210, 215

n.7 (5th Cir. 1981) (noting an absolute guarantor’s liability attaches “immediately upon the

default of the debtor”).

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B. Brown’s Default

¶20. Brown clings to the terms of the credit application, which gave Bookmark Publishing

sixty days to pay the invoice, to argue the December 31, 2012 invoice was not due—and thus

Bookmark Publishing was not in default—when Hederman Brothers filed suit on February

25, 2013.

¶21. But the terms of the credit application—specifically the provision that an invoice is

not due for sixty days—had been supplanted by the November 2012 payment plan. The

payment plan had all the elements of a valid contract: (1) two or more contracting

parties—Bookmark Publishing and Hederman Brothers; (2) consideration—Bookmark

Publishing would make installment payments, instead of waiting to pay an invoice, and

Hederman Brothers would write off $3,000 in interest and ship the 2013 calendars before

receiving payment; (3) an agreement that is sufficiently definite—definite payment terms

reduced to writing; (4) parties with legal capacity to make a contract; (5) mutual assent; and

(6) no legal prohibition precluding contract formation. See Rotenberry v. Hooker, 864 So.

2d 266, 273 (¶25) (Miss. 2003) (listing essential elements of a valid contract).

¶22. Under the payment plan, Bookmark Publishing’s first payment for the 2013 calendars

was due January 2, 2013. Indisputably, Bookmark Publishing never made this payment—nor

any other payment towards the $30,000-plus debt for the 2013 calendars. Instead, Bookmark

Publishing clearly defaulted, giving Hederman Brothers the immediate right to pursue

payment from Brown under the guaranty.

C. Bookmark Publishing’s Defenses

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¶23. Still, Brown claims Bookmark Publishing’s liability to Hederman Brothers had to first

be resolved before going after him personally because Bookmark Publishing had valid

defenses to Hederman Brothers’ demands for payment, such as shoddy printing work and

misrepresentations. But Brown expressly contracted away his ability to assert Bookmark

Publishing’s defenses to nonpayment.

¶24. Under the terms of the guaranty, Brown agreed his liability “shall not be released,

discharged, limited or affected in any way by . . . any action or omission of any kind or at any

time on the part of [Hederman Brothers] in respect of any matter whatsoever, or . . . any other

circumstance which might otherwise constitute a defense available to or discharge of

[Bookmark Publishing.]” In other words, any defenses Bookmark Publishing may have had

to not paying the invoices did not excuse Brown. For purposes of the guaranty, all Hederman

Brothers had to show was that payment by Bookmark Publishing was due in order to trigger

Brown’s liability for payment.

¶25. The guaranty itself cautioned Brown to read and consider carefully before agreeing

to unconditionally guarantee Bookmark Publishing’s debts. And the fact Brown did read and

carefully consider the contract is evidenced by his refusal to sign off on all the contract’s

terms. As one of the terms Brown did agree to was that his liability would not be affected

by any of Bookmark Publishing’s contract defenses, Bookmark Publishing’s alleged contract

defenses against Hederman Brothers are not material to Hederman Brothers’ suit against

Brown under the continuing guaranty.

¶26. The undisputed material facts show: (1) Brown unconditionally guaranteed Bookmark

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Publishing’s debts to Hederman Brothers up to $45,000, plus interest and attorney’s fees; (2)

Bookmark Publishing’s obligation to pay Hederman Brothers more than $45,000 was clearly

past due when Hederman Brothers filed suit; and (3) Bookmark Publishing never paid any

of this indebtedness. Thus, as a matter of law, Hederman Brothers was entitled to summary

judgment on its breach-of-guaranty claim. See M.R.C.P. 56(c) (directing “[t]he judgment

sought [to] 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”).

II. Brown’s Counterclaims

¶27. Brown also appeals the dismissal of his counterclaims.

A. Brown’s Standing

¶28. Brown claims genuine issues of material fact preclude summary judgment on these

claims. But he fails to show why these counterclaims belong to him and not Bookmark

Publishing.

¶29. In fact, Brown emphasizes in his brief that it was his legally distinct limited-liability

company, and not he, that entered into the contract for printing services with Hederman

Brothers. As this is the case, we agree with the circuit court that Brown in his individual

capacity has no standing to sue Hederman Brothers based on the printing arrangement with

Bookmark Publishing. Specifically, Brown as an individual had no standing to claim

Hederman Brothers fraudulently induced Bookmark Publishing into the printing arrangement

or that Hederman Brothers failed to perform services for Bookmark Publishing in a

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professional manner. If Brown wanted to pursue those claims, he had to join his company,

Bookmark Publishing, as a defendant, which he did not do.

B. Brown’s Burden of Production

¶30. The only counterclaim for which Brown possibly may have standing is the claim

Hederman Brothers mishandled his “personal and intellectual property.”

¶31. Because Brown would have born the burden of proof at trial on this counterclaim, he

bore the burden of production when facing Hederman Brothers’ summary-judgment motion.

See Karpinsky, 109 So. 3d at 88-89 (¶11). Under this burden, to survive summary judgment,

Brown had to “make a showing sufficient to establish the existence of [each] element

essential to [his] case[.]” Id. at 89 (¶11) (quoting Buckel v. Chaney, 47 So. 3d 148, 153 (¶10)

(Miss. 2010)).

¶32. Here, we find Brown has not even articulated what the essential elements of his claim

are, let alone pointed to evidence in the record that sufficiently supports each one of them.

As the supreme court has consistently held, “Mere general allegations which do not reveal

detailed and precise facts will not prevent the award of summary judgment.” Buckel, 47 So.

3d at 153 (¶10) (quoting Brown v. Credit Ctr. Inc., 444 So. 2d 358, 362 (Miss. 1983)). All

Brown has offered to support his counterclaim are broad assertions that Hederman Brothers

has mishandled or misappropriated his personal and intellectual property. He has not

enunciated what legal theory he is traveling under. And he has offered no details or precise

facts.

¶33. Therefore, we affirm the grant of summary judgment dismissing this counterclaim,

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along with the dismissal of the other counterclaims for which Brown as an individual lacked

standing.

¶34. THE JUDGMENT OF THE MADISON COUNTY CIRCUIT COURT IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANT.

IRVING AND GRIFFIS, P.JJ., BARNES, ISHEE, CARLTON, FAIR, WILSON
AND GREENLEE, JJ., CONCUR. JAMES, J., DISSENTS WITHOUT SEPARATE
WRITTEN OPINION.

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