L & H Enterprises, Inc. v. Allied Building Products Corp.

ROSALYN B. BELL, Judge. In March of 1986, appellants, L & H Roofing, Inc., trading as L & H Enterprises, Inc. (L & H), applied for ⁶⁴⁴ credit with appellee, Allied Building Products Corporation (Allied). The arrangement called for credit to be extended by Allied for the purchase of building materials on an open account. The form used in the credit application process was the standard Allied Credit Application.

The credit form was filled out and signed by Donald L. Hataloski and Peter Scott Lord, who were the president and vice president/treasurer, respectively, of L & H. Materials were then shipped and delivered at the request of Lord and/or Hataloski. Separate invoices were generated each time an order was placed. On or about August 16, 1988, L & H failed to pay the account then due. Allied then made numerous demands for payment, commencing in 1988.

When the invoice rendered by Allied in the amount of $17,304.61 remained unpaid, Allied filed suit against L & H. Additionally, citing what it claimed to be a “personal guarantee” by Hataloski and Lord for the debt of L & H, Allied joined Hataloski and Lord personally on the debt suit. Allied based its claim of personal liability on guaranty language in its credit application which provides: “In consideration of Allied Roofers Supply Corp., its subsidiaries or affiliates, extending credit I/we jointly and severally do guarantee unconditionally at all times, to Allied Roofers Supply Corp., its subsidiaries or affiliates, the payment of indebtedness, or balance or indebtedness of the within named firm. “(All partners or officers should sign.)” Allied claims that Lord and Hataloski signed the credit application in their personal capacity and thus became guarantors of the corporate debt. Extensive preliminary activity then began. Allied’s complaint and a Motion for Partial Summary Judgment were originally filed in the Circuit Court for Howard County.

On February 7, 1990, the court granted Allied’s motion for partial summary judgment. Judgment was later vacated and the motion reopened after L & H filed a motion to ⁶⁴⁵ vacate judgment premised upon defective or no service. The reopened motion for partial summary judgment was then denied. Allied next submitted a second motion for summary judgment, but before a ruling had been made, the case was transferred to the Circuit Court for Anne Arundel County in response to a motion by L & H for a change of venue.

In October of 1990, a hearing was held on Allied’s second motion for summary judgment and the circuit court granted summary judgment in favor of Allied against L & H, Hataloski and Lord, jointly and severally, in the amount of $17,304.61, plus interest at a rate of 18 percent per annum, reasonable attorney’s fees of $3,430, and costs for a total judgment figure of $27,051.51. From this ruling L & H, Hataloski and Lord appeal, contending that the circuit court erred: —in entering summary judgment based on the credit application document submitted by Allied, notwithstanding affidavits and testimony disputing personal liability; and —in inferring that Hataloski and Lord were personally liable for the corporate debt of L & H based on the wording of the guaranty clause in the credit application. Based on ambiguities we find present in the language of the credit application as a whole, we hold that extrinsic evidence should be considered to determine in what capacity Lord and Hataloski signed the contract. We therefore vacate the judgment as to Lord and Hataloski, personally, and remand the case for a full trial as to them.

Since L & H, as a corporate entity, has not raised any defense to the debt owed to Allied on appeal, we affirm the judgment with respect to the debt owed by L & H. SUMMARY JUDGMENT The standard governing summary judgment is well settled in Maryland. Rule 2-501(e) states: ⁶⁴⁶ “The courts shall enter judgment in favor of or against the moving party if the pleadings, depositions, answers to interrogatories, admissions, and affidavits show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.” In Coffey v. Derby Steel Co., 291 Md. 241, 246 , 434 A.2d 564 (1981), the Court of Appeals said that “in reviewing the granting or denial of a motion for summary judgment, all inferences ... must be resolved against the moving party. If the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law, then the judgment sought shall be rendered forthwith.” See Berkey v. Delia, 287 Md. 302, 304 , 413 A.2d 170 (1980); Honaker v. W.C. & A.N. Miller Dev. Co., 285 Md. 216, 231 , 401 A.2d 1013 (1979); Merchants Mtg.

Co. v. Lubow, 275 Md. 208, 217 , 339 A.2d 664 (1975). In considering whether a dispute remains surrounding a material fact, the court “must accord great deference to the ... party against whom the motion for summary judgment has been filed.” Syme v. Marks Rentals, Inc., 70 Md.App. 235, 238 , 520 A.2d 1110 (1987). Even if the facts in the case are undisputed, “if those facts are susceptible of more than one permissible inference, the choice between those inferences should not be made as a matter of law, but should be submitted to the trier of fact.” Syme, 70 Md.App. at 238-39 , 520 A.2d 1110 . Ambiguity The outcome of this case turns on whether the credit application is ambiguous.

In Insel v. Solomon, 63 Md.App. 384, 396 , 492 A.2d 963 (1985), this Court articulated the standard which controls the interpretation of contract language: “[i]f the language is clear, it controls; if it is ambiguous, the court may consider extrinsic factors in ⁶⁴⁷ ascertaining what the parties intended.” This Court has also stated that an “[ajmbiguity arises if, to a reasonably prudent person, the language used is susceptible of more than one meaning and not where one of the parties disagrees as to the meaning of the subject language.” Board of Education of Charles County v. Plymouth Rubber Co., 82 Md.App. 9, 26 , 569 A.2d 1288 (1990). Allied argues that under the objective theory of contracts the court must stick to the four corners of the credit application and agreement to determine what a reasonable person in the position of the parties would have understood the agreement to mean at the time it was executed. Aetna Casualty Ins. Co. v. Insurance Comm'r v. 293 Md. 409 , 420, 445 A.2d 14 (1982); Board of Trustees of State Colleges v. Sherman, 280 Md. 373, 380 , 373 A.2d 626 (1977); Sagner v. Glenangus Farms, 234 Md. 156, 162 , 198 A.2d 277 (1964); Insel v. Solomon, 68 Md.App. at 395, 492 A.2d 963 .

Allied claims that, when the guaranty provisions are read within the context of the entire agreement, the language is clear, certain and unambiguous. It is precisely that reading, however, that leads us to the opposite conclusion. The first page of the Allied credit application requires the persons filling out the agreement to list their firm’s name, address, whether the business is incorporated, give the corporate attorney’s name and address, and identify corporate officers by their title. Hataloski and Lord did so, indicating in each space provided information pertaining only to the corporation.

They did, however, list their residence addresses in the part of the form that called for information to be given by an owner, partner or president. In those same sections, however, where the application called for the listing of the spouse’s name, both Hataloski and Lord filled in “N/A” (not applicable). This tends to show an intent only to bind the corporation because the available evidence points to the fact that at least Lord was married at the time and it would be impossible for Allied to reach joint marital assets without the signature of Lord’s spouse. The second page follows in a similar fashion, ⁶⁴⁸ asking for other firms that have advanced open credit to L & H. The disputed clause then follows, specifying that “[a]ll partners and officers should sign.” Again, it is unclear from this language whether Hataloski and Lord were supposed to sign in their personal or representative capacity.

But if these signatures were not in their representative capacity, the corporate credit application would be incomplete. That certainly makes no sense because the application was for credit to be extended to L & H. The ultimate ambiguity arises when the clauses just before the provision upon which Allied relies to support its claim of liability are read: “[1.] I/we authorize you to contact all credit and trade references herein to verify our credit standing with them. “[2.] Invoices past due thirty days are subject to a one and one half percent Service Charge per month. “[3.] If it becomes necessary to effect collection, I/we agree to pay all costs of collection including reasonable court costs and attorney fees.” The next provision is the guaranty clause followed by the signatures of Lord and Hataloski. This was the only place on the credit application where a signature was required and the only place where Lord and Hatalowski did, in fact, sign. In order to investigate the credit and trade references of L & H, Allied needed the authorization of the corporation.

In order to charge interest to L & H, Allied needed the agreement of L & H. In order to secure attorney’s fees for collection, Allied needed the agreement of L & H. It is unclear whether Allied investigated L & H’s credit rating, but Allied did charge L & H interest and included that interest in its complaint. Allied did add attorney’s fees and that also appeared in the complaint, and was a part of the judgment. So for those purposes, Allied could be found to have dealt with the signatures of Lord and Hataloski as being in their representative capacity. While the guaranty ⁶⁴⁹ language itself may be clear and unambiguous, when read with “1” through “3,” the nature of the signatures becomes ambiguous.

In Volume Tire Co. v. O’Conner, 190 Ga.App. 242 , 378 S.E.2d 415, 416 (1989), the Court of Appeals of Georgia held that summary judgment was inappropriate where an open credit agreement signed by the corporation’s president did not indicate whether he was signing as guarantor or as president. The Georgia Court held this to be a question of fact to be resolved through the use of parol evidence, including the affidavits of both parties to the dispute. We hold this to be applicable to the case now before us. Another factor that may be considered in resolving the understanding of the parties regarding the disputed clause is testimony given by Lord at the summary judgment hearing, over objection of Allied’s counsel, in which he described a separate personal guaranty he had made to Allied in 1982 for a then outstanding debt of L & H. 1 In his ⁶⁵⁰ previous dealings with Allied, Lord had personally guaranteed a debt owed to Allied only through a separate instrument made after L & H had been unable to pay its debt as it came due.

Allied further argues that Lord and Hataloski did not properly plead estoppel and waiver defenses in their answer and thus raised no genuine dispute of material fact. We need not address this contention, however, since we have determined that the ambiguity in the contract clause and the