The opinion
STATE OF MAINE SUPERIOR COURT
CUMBERLAND, ss CIVIL ACTION
DOCKET NO. CV-09-250
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SOUTHWORTH-MILTON, INC.
Plaintiff
ORDER ON PLAINTIFF'S
v. MOTION FOR SUMMARY
JUDGMENT
MICHAEL COWAN
Defendant
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.
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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
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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, <JIB, 956 A.2d 104, 108. "A contract may be
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
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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 <n 14, 956 A.2d at 108. If a contract is not a complete and exclusive
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, <n 11, 804 A.2d 379, 382, citing Williston on Contracts § 33:18, at 650 (4th ed.
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
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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
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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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