Opinion
NO. 01-15-00704-CV
11-16-2017
JEFF O'BANION, Appellant v. INLAND WESTERN CLEAR LAKE GULF SHORES GP, LLC AND SHANNON METHVIN, Appellees
On Appeal from the County Court at Law No. 1 Galveston County, Texas
Trial Court Case No. CV-0061302
MEMORANDUM OPINION
Appellant, Jeff O'Banion, challenges the trial court's judgment, entered after a bench trial, in favor of appellees, Inland Western Clear Lake Gulf Shores GP, LLC ("Inland") and Shannon Methvin, in Inland's suit against O'Banion for breach of a guaranty agreement pertaining to a commercial lease and in O'Banion's third-party claim against Methvin for indemnity under a divorce decree. In three issues, O'Banion contends that the trial court erred in concluding that he personally guaranteed the lease and concluding that he is not entitled to indemnity.
O'Banion originally brought a fourth issue, asserting that the trial court erred in refusing, after timely request, to make findings of fact and conclusions of law as to O'Banion's third-party claim against Methvin. We abated the appeal and remanded the case to the trial court for the entry of supplemental findings and conclusions. The trial court filed a supplemental record containing its findings and conclusions, and O'Banion filed a supplemental brief. Thus, O'Banion's fourth issue is now moot.
We affirm in part and reverse and remand in part.
Background
In 2005, O'Banion and Methvin, who were husband and wife, opened a skateboard business, known as Flipt, Inc. ("Flipt"). On July 7, 2005, O'Banion, on behalf of Flipt, leased from Inland a retail space located at 243 FM 2094, Suite L, in Kemah, Texas. The term of the lease (the "Lease") was for five years, commencing on September 1, 2005, and terminating on August 31, 2010. The initial rental set out in the Lease was $2,200.83 per month. O'Banion executed the Lease as follows:
Executed by Tenant [date]
TENANT
Flipt, Inc.
By: Jeff O'Banion, President [hand-written]
Jeff O'Banion
President - Flipt, Inc.
O'Banion also executed, as "Exhibit G" of the Lease, a guaranty agreement (the "Guaranty"), guaranteeing Flipt's payment of the Lease to Inland:
GUARANTY
Unconditional Guaranty of Lease Dated 7-7-05
By and Between
[Inland] "As Landlord" [a]nd Flipt, Inc. "As Tenant"
The undersigned (herein called "Guarantor," whether one or more), to induce the Landlord named therein to execute such lease and as a material consideration and inducement therefor (recognizing that without execution of this guaranty such Landlord would not be willing to enter into or make such lease with said Tenant), hereby jointly and severally unconditionally guarantees performance and observance by such Tenant of all the obligations, duties, covenants, agreements and conditions provided in such lease, as same may be amended from time to time, to be performed or observed by such Tenant (including specifically and without limiting the generality of the foregoing, payment by such Tenant of all rental and other amounts and damages of whatsoever kind or nature which may be or become due from such Tenant under the terms of or in connection with such lease). This guaranty is unconditional and the liability of Guarantor shall be absolute, in the same manner as if Guarantor was named and had signed such lease as the "Tenant" thereunder. . . . It shall not be necessary or required in order to maintain and enforce Guarantor's liability hereunder that demand be made upon such Tenant or that action by commenced or prosecuted against such Tenant of that any effort be made to enforce the liability or responsibility of such Tenant for performance of his obligations or duties under or in connection with such lease, and it shall not be required that such Tenant or any other party liable on such lease be joined in any action brought against guarantor for enforcement of Guarantor's liability and responsibility under this guaranty or that judgement have therefore been obtained against such Tenant or any other party liable therefor on or in connection with any such claim. . . .
. . . .
"GUARANTOR(S)"
Jeff O'Banion - President Flipt, Inc. [hand-written]
Jeff O'BanionFurther, in the acknowledgement portion of the Guaranty, O'Banion included his driver's license number.
2016 Pebble Beach
League City, Texas 77573
[###-##-####] [hand-written]
Social Security Number of Guarantor
In 2006, O'Banion and Methvin divorced. In the "Agreed Final Decree of Divorce," the trial court awarded Flipt to Methvin, as her sole and separate property, as follows:
IT IS ORDERED AND DECREED that the wife, [Methvin], is awarded the following as her sole and separate property, and the husband [O'Banion] is divested of all right, title, interest, and claim in and to that property:
W-1. The business known as Flipt, Inc., located at 243 Suite L, F.M. 2094, Kemah, Texas 77565 including all inventory, stock, accounts receivable, present and future income . . . .
The decree also provides that O'Banion is to indemnify Methvin for certain debts and obligations:
IT IS ORDERED AND DECREED that the husband [O'Banion] shall pay, as a part of the division of the estate of the parties, and shall indemnify and hold wife and her property harmless from any failure to so discharge, these items:
. . . .
H-6. Any and all debts, charges, liabilities and other obligations incurred solely by the husband or in his sole name, unless express provision is made in this decree to the contrary.
The decree further provides that Methvin is to indemnify O'Banion for certain debts and obligations:
IT IS ORDERED AND DECREED that the wife, [Methvin], shall pay, as a part of the division of the estate of the parties, and shall indemnify and hold the husband and his property harmless from any failure to so discharge, these items:
W-1. Any and all debts, obligations, accounts payable whether past due or current in relation to the business known as Flipt, Inc., 243 Suite L, F.M. 2094, Kemah, Texas 77565.
. . . .
W-3. Any and all debts, charges, liabilities, and other obligations incurred solely by the wife from and after September 15, 2006 unless express provision is made in this decree to the contrary.
. . . .
W-5. Any and all debts, charges, liabilities and other obligations incurred solely by the wife or in her sole name, unless express provision is made in this decree to the contrary.
In 2009, Flipt defaulted on the Lease by failing to pay monthly rent to Inland. Inland sued Flipt for breaching the Lease and sued O'Banion on the Guaranty, asserting that O'Banion had personally guaranteed Flipt's obligations under the Lease.
After Flipt did not file an answer, the trial court rendered a default judgment against it, in favor of Inland, in the amount of $38,463.07, plus attorney's fees.
O'Banion filed an answer, generally denying the allegations, and a verified denial, denying that he had executed the Guaranty in his personal capacity. He further asserted that the Guaranty is ambiguous as to whether he signed it in his personal or representative capacity.
O'Banion also filed a third-party claim against Methvin, alleging that, pursuant to the divorce decree, she had assumed responsibility for all debts, obligations, and accounts payable relating to Flipt, which was awarded to her as her sole and separate property, and she agreed to indemnify him against any failure to make such payments, including rents to Inland under the Lease.
Methvin filed an answer, generally denying the allegations, and asserting that, although, in the decree, she was awarded the business, Flipt, the liability for the payment of rent remained with Flipt and O'Banion, under the Lease and Guaranty.
The trial court granted Inland a partial summary judgment, holding, in relevant part, that on July 7, 2005, O'Banion executed a "Guaranty of Lease," in which he "guaranteed, in some capacity, the Tenant's [Flipt's] obligations under the Lease." On April 28, 2009, Flipt defaulted on the Lease by failing to pay rents due and vacating the premises. The unpaid rental and additional charges due to Inland on the Lease from Flipt, less the amounts to be recovered from the replacement tenant for the remainder of Lease, and adding the expenses incurred in obtaining the new tenant, resulted in total damages to Inland in the amount of $46,041.57. The trial court noted that "the only remaining factual issue to be tried [was] the capacity of the execution by the Guarantor."
At trial, O'Banion testified that, while he was married to Methvin, they formed a corporation, Flipt, for the purpose of opening a skateboard shop in Kemah, and they leased a retail space from Inland. In June 2005, O'Banion and Methvin, after having their attorney and accountant review the Lease and Guaranty, met with Inland's representative, Clay Trozzo, to discuss the terms. O'Banion testified that he signed both the Lease and Guaranty as "a corporate officer," i.e., as president of Flipt, told Trozzo he had done so, and gave the documents to Trozzo, who did not object. O'Banion testified that it was his understanding that he was signing in his "corporate capacity," and he noted that he would not have signed the Guaranty if Inland had told him that he was required to personally guarantee the Lease. He noted that the address shown in the signature block is both his home address and the "corporate address" of Flipt. O'Banion conceded, however, that, on the Guaranty, in the space asking for the "Social Security Number of Guarantor," he provided his personal social security number, and not the tax identification number of Flipt. Further, he or Methvin, in conjunction with executing the Lease and Guaranty, had provided Inland with copies of O'Banion's 2003 and 2004 personal tax returns and statements from his personal bank accounts. He stipulated that the copies presented at trial were true and accurate copies of his tax returns and bank accounts.
O'Banion further testified that, in December 2006, during the term of the Lease, he and Methvin divorced. In the divorce decree, Methvin was awarded the business, Flipt, as her sole and separate property, and he was divested of all interest. He noted that, thereafter, he did not participate in the business. O'Banion testified that he and Methvin had agreed, as reflected in the decree, that she would indemnify him, and hold him harmless, from any failure to discharge any debt or obligation in relation to Flipt. He did not learn that Flipt had defaulted on the Lease until he received a copy of Inland's default judgment against it. The trial court admitted into evidence copies of the Lease, Guaranty, divorce decree, and default judgment.
Methvin testified that all of the bank statements and tax returns that she and O'Banion had provided to Inland were to demonstrate their personal income in order to support the Guaranty, and it was "very clear" that the Guaranty was personal. Because Flipt was a new business and had no banking history, Inland would not have agreed to the Lease without O'Banion signing a personal guaranty, and he "100 percent knew that."
Methvin further testified that, after she was awarded Flipt in the divorce, she sold the business. Although she told O'Banion that the Lease needed to be re-assigned to the new owners and that Inland was considering the Guaranty to be a personal guarantee of the Lease, O'Banion did not change the documentation to the new owners. Thereafter, the new owners paid the monthly rent directly to Inland. A year or so later, however, they defaulted on the payments and went out of business.
The trial court entered judgment in favor of Inland, and against Flipt and O'Banion, in the amount of $46,041.57 and attorney's fees of $8,700.00. With respect to the Guaranty, the trial court entered the following findings of fact and conclusions of law:
FINDINGS OF FACT
. . . .
5. Also on or about July 7, 2005, Defendant Jeff O'Banion (the "Guarantor") executed a Guaranty of Lease in which he personally guaranteed the Tenant's obligations under the Lease.
. . . .
15. There is no evidence or insufficient evidence that any person who may have heard any statement made by the Guarantor while he was signing the Guaranty was an employee or agent of [Inland].
16. There is no evidence or insufficient evidence that any person who may have heard any statement made by the Guarantor while he was signing the Guaranty had any authority to bind the [Inland] by his or her action or inaction.
17. There is no evidence or insufficient evidence that Inland "accepted" the Guaranty as signed by the Guarantor to be in his representative capacity only.
18. Guarantor, by his signature, signed the Guaranty in his personal capacity.
19. The Guaranty clearly indicates that the Guarantor was guaranteeing the Lease between the Landlord and the Tenant.
20. The Guarantor provided his individual social security number in signing the Guaranty.
21. The Guarantor provided personal financial statements to the Landlord.
. . . .
CONCLUSIONS OF LAW
1. The Guaranty contains all necessary elements to constitute a Guaranty and is not ambiguous.
2. The Guaranty is not ambiguous.
3. The signature of the Guarantor followed by a corporate office is descriptio personae of the Guarantor and does not vitiate the Guaranty.
4. The Landlord intended for the Guarantor to be liable in his personal capacity.
5. The Court is required to construe a contract so it will not be rendered meaningless.
6. The Guaranty would be rendered meaningless if the primary debtor/tenant is found to be the sole party liable thereunder.
7. Even if the Guaranty was ambiguous, the great weight and preponderance of the evidence proves that the Guaranty bound the Guarantor individually.
. . . .
9. Defendant Jeff O'Banion executed the Guaranty in his personal capacity.
With respect to O'Banion's claim against Methvin, the trial court found that:
2. Third party defendant [Methvin] had no part in the [L]ease or the Guarant[y] between the landlord and Guarantor.The trial court concluded that "Third Party Defendant [Methvin] is not personally obligated under the [G]uarant[y] executed by the Guarantor."
3. The Guaranty was executed solely in the name of the guarantor.
4. The divorce decree between the Guarantor and the Third Party Defendant specified that the Guarantor shall hold Third Party defendant harmless [for] any and all debts, charges, liabilities and other obligations incurred solely by the Guarantor (Husband).
Guaranty
In his first issue, O'Banion argues that the trial court erred in rendering judgment for Inland because the Guaranty unambiguously indicates that he signed it in his capacity as president of Flipt, and not in his personal capacity. In his second issue, O'Banion asserts, alternatively, that, at the very least, the Guaranty is ambiguous as to whether he signed it in his personal or representative capacity and the extrinsic evidence conclusively establishes that it is not a personal guaranty.
In an appeal from a bench trial, findings of fact have the same weight as a jury's verdict. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). A trial court's findings of fact are not conclusive when, as here, there is a reporter's record filed in the appeal. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). The trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence by the same standards that are applied in reviewing the evidence supporting a jury's answers. Id. at 794-95; Levco Constr., Inc. v. Whole Foods Mkt. Rocky Mountain/Sw. L.P., No. 01-15-00620-CV, 2017 WL 3429939, at *9 (Tex. App.—Houston [1st Dist.] Aug. 10, 2017, no pet.).
In a legal-sufficiency challenge, we consider whether the evidence at trial would enable a reasonable and fair-minded factfinder to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Levco Constr., Inc., 2017 WL 3429939, at *9. We must credit favorable evidence if reasonable factfinders could, and disregard contrary evidence unless reasonable factfinders could not. See Wilson, 168 S.W.3d at 827. When an appellant challenges the legal sufficiency of the evidence supporting an adverse finding on an issue for which it did not have the burden of proof, he must show that no evidence supports the adverse finding. Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 215 (Tex. 2011); Levine v. Steve Scharn Custom Homes, Inc., 448 S.W.3d 637, 649 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). We will sustain a "no evidence" challenge if: (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. See Wilson, 168 S.W.3d at 810. Evidence constitutes more than a scintilla if reasonable minds could differ about the existence of the vital fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). Conversely, "[w]hen the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence." Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004).
When an appellant challenges the factual sufficiency of the evidence supporting a finding on which he did not have the burden of proof, we consider and weigh all of the evidence and set aside the verdict only if the evidence that supports the finding is so weak as to make the verdict clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Tamuno Ifiesimama v. Haile, 522 S.W.3d 675, 684 (Tex. App.—Houston [1st Dist.] 2017, pet. denied). We may not substitute our own judgment for that of the factfinder, even if the evidence would support a different result. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998).
We review the trial court's conclusions of law de novo and will uphold them if the judgment can be sustained on any legal theory supported by the evidence. Marchand, 83 S.W.3d at 794-95; Levco Constr., Inc., 2017 WL 3429939, at *9. Although a trial court's conclusions of law are not subject to a factual sufficiency challenge, we may review the legal conclusions drawn from the facts to determine their correctness. Levco Constr., Inc., 2017 WL 3429939, at *9. "If the reviewing court determines [that] a conclusion of law is erroneous, but the trial court rendered the proper judgment, the erroneous conclusion of law does not require reversal." Marchand, 83 S.W.3d at 794.
"A guaranty is an undertaking by one party to be answerable for the payment of some debt or the performance of some contract or duty by another person, who remains liable." Exxon Corp. v. W. Tex. Gathering Co., 868 S.W.2d 299, 306 (Tex. 1993). In construing a guaranty, as with other contracts, the primary concern of the reviewing court is to ascertain the intent of the parties as expressed in the instrument. Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1, 7 (Tex. 2014); see also Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); ExxonMobil Corp. v. Valence Operating Co., 174 S.W.3d 303, 312 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). We examine and consider the entire writing in an effort to harmonize and give effect to all of the provisions of the contract so that none will be rendered meaningless. Coker, 650 S.W.2d at 393. "No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument." Id.; see also State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). We give contract terms their plain, ordinary, and generally accepted meanings, unless the contract itself shows them to be used in a technical or different sense. Moayedi, 438 S.W.3d at 7.
If a guaranty is so worded that it can be given a certain or definite legal meaning or interpretation, it is not ambiguous, and we construe it as a matter of law. Coker, 650 S.W.2d at 393. If the instrument is not ambiguous, extrinsic evidence is inadmissible and the court is barred from giving any effect to that evidence. Gulf & Basco Co. v. Buchanan, 707 S.W.2d 655, 658 (Tex. App.—Houston [1st Dist.] 1986, writ ref'd n.r.e.).
If, however, after applying established rules of interpretation, the contract's meaning is uncertain or it remains reasonably susceptible to more than one meaning, then it is ambiguous and interpretation of the agreement becomes a fact issue for a fact-finder to resolve through extrinsic evidence. Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex. 1996); Gulf & Basco Co., 707 S.W.2d at 659. Only after a court first determines that a contract is ambiguous, however, may it consider extraneous evidence to determine the true meaning of the instrument. Lake Charles Harbor v. Bd. of Trustees of Galveston Cty., 62 S.W.3d 237, 243 (Tex. App.—Houston [14th Dist.] 2001, pet. denied). An ambiguity does not arise simply because the parties advance conflicting interpretations of the contract. Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). For an ambiguity to exist, both interpretations must be reasonable. Id.
Here, O'Banion challenges the trial court's findings that:
5. . . . [O]n or about July 7, 2005, [O'Banion] (the "Guarantor") executed a Guaranty of Lease in which he personally guaranteed the Tenant's obligations under the Lease.
. . . .
18. Guarantor, by his signature, signed the Guaranty in his personal capacity.
19. The Guaranty clearly indicates that the Guarantor was guaranteeing the Lease between the Landlord and the Tenant.
O'Banion also challenges the trial court's conclusions that:
1. The Guaranty contains all necessary elements to constitute a Guaranty and is not ambiguous.
2. The Guaranty is not ambiguous.
3. The signature of the Guarantor followed by a corporate office is descriptio personae of the Guarantor and does not vitiate the Guaranty.
4. The Landlord intended for the Guarantor to be liable in his personal capacity.
. . . .
6. The Guaranty would be rendered meaningless if the primary debtor/tenant is found to be the sole party liable thereunder.
. . . .
9. Defendant Jeff O'Banion executed the Guaranty in his personal capacity.
12. [Inland] is entitled to judgment [against O'Banion] . . . .
We first examine the contract language. See id. Because the Lease and Guaranty were executed contemporaneously and the Guaranty is incorporated into the Lease, we construe them together. See In re Raymond James & Assocs., Inc., 196 S.W.3d 311, 320 (Tex. App.—Houston [1st Dist.] 2006, orig. proceeding) ("When one document is incorporated into another by reference, the two documents must be construed together."); see also Hasty v. Keller HCP Partners, L.P., 260 S.W.3d 666, 670 (Tex. App.—Dallas 2008, no pet.) (construing lease and guaranty together).
The Lease, at Article 1.1, "Basic Lease Provisions," identifies the "Tenant" as "Flipt, Inc." and the "Name and Address of Guarantor" as "Jeff O'Banion" at "2016 Pebble Beach, League City, Texas 77573." Otherwise, with exceptions not pertinent here, the rights and obligations stated throughout the Lease pertain to the Tenant, Flipt. In the signature block of the Lease, O'Banion signed on behalf of Tenant Flipt as follows:
Executed by Tenant [date]Thus, the Lease clearly reflects that it is an agreement "Executed by Tenant," Flipt, but, physically, "By" O'Banion, as president of Flipt.
TENANT
Flipt, Inc.
By: Jeff O'Banion, President [hand-written]
Jeff O'Banion
President - Flipt, Inc.
"Exhibit G" of the Lease is titled, "Guaranty" and sub-titled, "Unconditional Guaranty of Lease Dated 7-7-05 By and Between [Inland] '[a]s Landlord' and Flipt, Inc. '[a]s Tenant.'" Thus, the title states that the Guaranty is intended to unconditionally guarantee the Lease between Inland and Flipt.
The first sentence of the body of the Guaranty, read in conjunction with the language it references, i.e., the "undersigned," identifies O'Banion as "Guarantor," as follows:
The undersigned (herein called "Guarantor," whether one or more), to induce the Landlord named therein to execute such lease and as a material consideration and inducement therefor (recognizing that without execution of this guaranty such Landlord would not be willing to enter into or make such lease with said Tenant), hereby jointly and severally unconditionally guarantees performance and observance by such Tenant of all the obligations, duties, covenants, agreements and conditions provided in such Lease . . . . This Guaranty is unconditional and the liability of Guarantor shall be absolute, in the same manner as
if Guarantor was named and had signed the lease as "Tenant" hereunder. . . .(Emphasis added.) Further, in the acknowledgement portion of the Guaranty, O'Banion included his driver's license number.
. . . .
'GUARANTOR(S)'
Jeff O'Banion - President Flipt, Inc. [hand-written]
Jeff O'Banion
2016 Pebble Beach
League City, Texas 77573
[###-##-####] [hand-written]
Social Security Number of Guarantor
Thus, the body of the Guaranty provides that as a "material consideration and inducement" to Inland to execute the Lease, and "recognizing that without execution of this [G]uaranty such Landlord [Inland] would not be willing to enter into or make such [L]ease with said Tenant [Flipt]," O'Banion unconditionally guaranteed performance "by" Flipt and observance by Flipt of all the "obligations, duties, covenants, agreements and conditions provided" in the Lease. By its express terms, the Guaranty constitutes a collateral undertaking to secure the debt of the corporation, Flipt. This is consistent with the Guaranty's constituting O'Banion's personal guaranty.
Were we to adopt O'Banion's construction, i.e., that he executed the Guaranty strictly as a representative of Flipt itself, and thus Flipt was guaranteeing its own performance and debt, the Guaranty would be rendered meaningless. See Elsey/Honeycutt Ward Sur.-Ins. Agency, Inc. v. Nat'l Loan Inv'rs, L.P., No. 01-93-00060-CV, 1993 WL 322734, at *3 (Tex. App.—Houston [1st Dist.] Aug. 26, 1993, writ denied) ("Under normal circumstances, a written collateral undertaking given to secure a corporate debt will be rendered meaningless if the primary debtor is found to be the exclusive party liable under it."); see also TWI XVIII, Inc. v. Carroll, No. 02-12-00065-CV, 2013 WL 1457725, at *5 (Tex. App.—Fort Worth Apr. 11, 2013, pet. denied) (mem. op.) ("The appellants' construction, that Texas Wings was guarantying its own performance under a lease between itself and Carroll, is not a reasonable interpretation."). Again, in construing an agreement, we must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none of the provisions will be rendered meaningless. Coker, 650 S.W.2d at 393. "A guaranty creates a secondary obligation whereby the guarantor promises to answer for the debt of another." Flavor Finish Resurfacing, L.L.C. v. Ellerkamp, No. 01-11-00099-CV, 2012 WL 3776345, at *6 (Tex. App.—Houston [1st Dist.] Aug. 30, 2012, no pet.) (mem. op.) (emphasis added) (internal quotations omitted).
O'Banion argues that the Guaranty unambiguously establishes that it is not a personal guaranty because it shows that he added his professional title, i.e., president of Flipt, to his signature in the signature block of the Guaranty. This Court has noted, however, that "there is no clear mode of signature that will absolutely fix or avoid personal liability." Gulf & Basco Co., 707 S.W.2d at 657. Again, ordinarily, a written collateral undertaking given to secure a corporate debt will be rendered meaningless if the primary debtor is found to be the exclusive party liable under it. Elsey/Honeycutt Ward Sur.-Ins. Agency, Inc., 1993 WL 322734, at *3. Consequently, corporate designations "appearing after signatures on documents of this type are considered only to be descriptio personae, that is, the use of a word or phrase merely to identify or point out the person intended and not as an intimation that the language in connection with which it occurs is to apply to him only in the technical character which might appear to be indicated by the word." Id.; see also 84 Lumber Co., L.P. v. Powers, 393 S.W.3d 299, 305 (Tex. App.—Houston [1st Dist.] 2012, pet. denied) ("That a signature is followed by a corporate designation does not necessarily serve to relieve the signatory of individual liability."); Material P'ships, Inc. v. Ventura, 102 S.W.3d 252, 259 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (holding that because letter expressed clear intent to bind guarantor "personally," signature over his corporate office did not render document ambiguous).
Unlike in the signature block of the Lease, nothing in the signature block of the Guaranty suggests that the parties intended for it to be executed "by" Flipt or "by" O'Banion for Flipt. "When parties use different language in different parts of a contract, we may ordinarily assume that they intended different things." In re Wilmer Cutler Pickering Hale & Dorr LLP, No. 05-08-01395-CV, 2008 WL 5413097, at *4 (Tex. App.—Dallas Dec. 31, 2008, orig. proceeding). Notably, O'Banion identified himself in the signature block of the Guaranty by his personal social security number, and not the federal tax identification number of Flipt, as well as by his personal driver's license number. Although O'Banion added that he is the president of Flipt, this designation after his signature does not destroy the effect of the Guaranty. See, e.g., Am. Petrofina Co. of Texas v. Bryan, 519 S.W.2d 484, 487 (Tex. Civ. App.—El Paso 1975, no writ).
In addition, the body of the Guaranty makes reference to joint-and-several liability, which contemplates multiple parties sharing liability and thus a tenant (or lessor) and guarantor who are not the same party. See Flavor Finish Resurfacing, 2012 WL 3776345, at *6. This is consistent with the Guaranty's constituting O'Banion's personal guaranty. The Guaranty also states that "the liability of the Guarantor shall be absolute, in the same manner as if the Guarantor was named and had signed such lease as the 'Tenant' thereunder." (Emphasis added.) This language similarly contemplates separate parties and is consistent with a personal guaranty.
Although, as O'Banion notes, nothing in the body of the Guaranty includes O'Banion's name, the terms "personal" or "individual," any personal pronouns, or any language specifically stating that O'Banion was personally or individually guaranteeing the lease or pledging his personal assets as security, the first sentence of the body of the Guaranty, read in conjunction with the "undersigned" identified in the signature block, identifies O'Banion as the "Guarantor" and simply references the "Guarantor" throughout. See Elsey/Honeycutt Ward Sur.-Ins. Agency, 1993 WL 322734, at *4. Equally, there is no language in the body of the Guaranty suggesting that O'Banion was acting in purely a representative capacity.
O'Banion further argues that the Guaranty is not personal because it is not titled, "Personal Guaranty"; rather, the title states that it is between Inland and Flipt. Read carefully, however, the subtitle reflects that it is intended as a guarantee of the Lease that is between Inland and Flipt, not that the Guaranty is between Inland and Flipt. Moreover, although, "in certain cases, courts may consider the title of a contract provision or section to interpret a contract, 'the greater weight must be given to the operative contractual clauses of the agreement.'" Enter. Leasing Co. of Hous. v. Barrios, 156 S.W.3d 547, 549 (Tex. 2004) (internal quotations omitted).
We conclude that the Guaranty is only reasonably susceptible to one construction and is not ambiguous. We conclude that legally and factually sufficient evidence supports the trial court's findings that O'Banion, acting in his personal capacity, executed the Guaranty, in which he personally guaranteed Flipt's obligations under the Lease. See City of Keller, 168 S.W.3d at 810; Cain, 709 S.W.2d at 176. We further conclude that legally sufficient evidence supports the trial court's conclusions that the Guaranty is not ambiguous, the designation of O'Banion's title after his signature is descriptio personae, Inland intended for O'Banion to be liable in his personal capacity, the Guaranty would be rendered meaningless if the primary debtor/tenant is found to be the sole party liable thereunder, O'Banion executed the Guaranty in his personal capacity, and Inland is entitled to judgment against O'Banion. See Marchand, 83 S.W.3d at 794-95; Levco Constr., Inc., 2017 WL 3429939, at *9.
We overrule O'Banion's first and second issues.
Indemnity
In his third issue, O'Banion asserts that the trial court erred in rending a judgment against him on his third-party claim against Methvin because the evidence "conclusively established" that Methvin is obligated to indemnify him for the judgment entered against him. He does not dispute that Methvin is not personally obligated under the Guaranty. He asserts, rather, that Methvin's obligation to indemnify him for the post-divorce debts of Flipt arises from the agreed decree.
When an appellant attacks the legal sufficiency of an adverse finding on an issue for which he has the burden of proof, he must demonstrate that the evidence establishes that issue as a matter of law. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001).
A trial court may, in an agreed divorce decree, order the parties to defend and indemnify one another from claims or lawsuits brought against one spouse for the other spouse's debts, obligations, and liabilities. See, e.g., Lynch v. Lynch, No. 01-16-00573-CV, 2017 WL 4054167, at *5 (Tex. App.—Houston [1st Dist.] Sept. 14, 2017, no pet. h.). An agreed judgment should be construed in the same manner as a contract. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 422 (Tex. 2000). Similarly, we construe indemnity agreements strictly under the usual principles of contract interpretation to give effect to the parties' intent as expressed in the agreement. Id. at 423; E.I. Du Pont De Nemours & Co. v. Shell Oil Co., 259 S.W.3d 800, 805 (Tex. App.—Houston [1st Dist.] 2007, pet. denied). We give the terms in an indemnity agreement their plain, ordinary, and generally accepted meaning unless the agreement indicates otherwise. Lehmann v. Har-Con Corp., 76 S.W.3d 555, 562 (Tex. App.—Houston [14th Dist.] 2002, no pet.). An indemnity agreement is unambiguous if it can be given a definite or certain legal meaning, and we will construe an unambiguous indemnity agreement as a matter of law. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003); E.I. Du Pont De Nemours & Co., 259 S.W.3d at 805.
As pertinent to this issue, the trial court found that:
The divorce decree between the Guarantor and the Third Party Defendant specified that the Guarantor shall hold Third Party defendant harmless [for] any and all debts, charges, liabilities and other obligations incurred solely by the Guarantor (Husband).The trial court concluded that "Third Party Defendant [Methvin] is not personally obligated under the [G]uarant[y] executed by the Guarantor."
In the "Agreed Final Decree of Divorce," which O'Banion and Methvin stipulated is "enforceable as a contract," the trial court awarded Flipt to Methvin, as her sole and separate property, as follows:
IT IS ORDERED AND DECREED that the wife, [Methvin], is awarded the following as her sole and separate property, and the husband [O'Banion] is divested of all right, title, interest, and claim in and to that property:
W-1. The business known as Flipt, Inc., located at 243 Suite L, F.M. 2094, Kemah, Texas 77565 including all inventory, stock, accounts receivable, present and future income . . . .
The decree also provides that O'Banion is to indemnify Methvin for certain debts and obligations:
IT IS ORDERED AND DECREED that the husband [O'Banion] shall pay, as a part of the division of the estate of the parties, and shall indemnify and hold wife and her property harmless from any failure to so discharge, these items:
. . . .
H-6. Any and all debts, charges, liabilities and other obligations incurred solely by the husband or in his sole name, unless express provision is made in this decree to the contrary.
The decree further provides that Methvin is to indemnify O'Banion for certain debts and obligations:
IT IS ORDERED AND DECREED that the wife, [Methvin], shall pay, as a part of the division of the estate of the parties, and shall indemnify and hold the husband [O'Banion] and his property harmless from any failure to so discharge, these items:
W-1. Any and all debts, obligations, accounts payable whether past due or current in relation to the business known as Flipt, Inc., 243 Suite L, F.M. 2094, Kemah, Texas 77565.
. . . .
W-3. Any and all debts, charges, liabilities, and other obligations incurred solely by the wife from and after September 15, 2006 unless express provision is made in this decree to the contrary.
. . . .
W-5. Any and all debts, charges, liabilities and other obligations incurred solely by the wife or in her sole name, unless express provision is made in this decree to the contrary.
Although the decree provides, as the trial court found, that O'Banion must hold Methvin and her property harmless from any failure to discharge "any and all debts, charges, liabilities and other obligations incurred solely by the husband or in his sole name," this requirement is qualified in the decree by the phrase, "unless express provision is made in this decree to the contrary." O'Banion asserts that there is in fact an express provision to the contrary set forth in the decree, namely, Methvin's obligation to indemnify him for the obligations of Flipt.
The decree provides that Methvin is to indemnify O'Banion for "[a]ny and all debts, obligations, accounts payable whether past due or current" incurred "in relation to" Flipt, without exception. According to its plain meaning, this language includes within its ambit any and all, without limitation, obligations "in relation to" Flipt, and not just those incurred by Flipt. The phrase "relates to" is recognized as "very broad" in scope. SSR Corp. v. Siegmund, 309 S.W.3d 686, 701 (Tex. App.—Dallas 2010, no pet.) (forum-selection clause); see Kirby Highland Lakes Surgery Ctr., L.L.P. v. Kirby, 183 S.W.3d 891, 898 (Tex. App.—Austin 2006, no pet.) (arbitration clause); Whitten v. Vehicle Removal Corp., 56 S.W.3d 293, 308 (Tex. App.—Dallas 2001, pet. denied) (statutory preemption provision); see also Pennzoil Explor. & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1067-68 (5th Cir. 1998) (concluding that "in relation to" or "in connection with" language is broad and dispute need only "touch" matters covered by the contract). Thus, the ordinary meaning of the phrase "in relation to" is broad enough to encompass any obligation that has some connection with Flipt. The language of the decree demonstrates that, in agreeing to transfer Flipt to Methvin, as her sole and separate property, and to divest O'Banion of all right, title, interest, and claim, the parties intended for Methvin to assume any and all debts and obligations of Flipt and to indemnify O'Banion from same.
It is undisputed that, after O'Banion and Methvin divorced and the trial court awarded Flipt to Methvin as her sole and separate property, Flipt defaulted on the Lease, and the default constitutes a "debt" or "obligation" of Flipt. The record shows that the trial court has rendered a judgment in favor of Inland, and against Flipt and O'Banion, in the amount of $46,041.57, plus attorney's fees of $8,700.00. Although we concluded above that O'Banion signed the Guaranty in his personal capacity, and the trial court's sole conclusion of law on this issue is that Methvin is not a party to the Guaranty, Methvin's obligations to O'Banion arise under the indemnity provision in the agreed divorce decree, and not the Guaranty. An indemnity agreement is an "original obligation between the contracting parties and independent of other agreements." Joseph Thomas, Inc. v. Graham, 842 S.W.2d 343, 346 (Tex. App.—Tyler 1992, no writ) (distinguishing indemnity agreements from guaranty agreements).
We conclude that O'Banion has conclusively established that the agreed decree unambiguously requires Methvin to indemnify him for any and all debts and obligations relating to Flipt. See Gulf Ins. Co., 22 S.W.3d at 423; Dow Chem. Co., 46 S.W.3d at 241. We hold that the trial court erred by concluding that O'Banion is not entitled to indemnity from Methvin on the judgment against him.
We sustain O'Banion's third issue.
Conclusion
We reverse the portion of the trial court's judgment denying O'Banion indemnity from Methvin and remand the case to the trial court for rendition of judgment in accordance with this opinion. We affirm the remainder of the trial court's judgment.
Sherry Radack
Chief Justice Panel consists of Chief Justice Radack and Justices Keyes and Caughey.