Citadel Investments, Inc., v. White Fox Inc., F/L/A The Jones Group, et al.

This is an action on a promissory note against two stockholders of a now insolvent closely-held corporation, who it is alleged, guaranteed payment of a note owed by the corporation. The alleged guarantee arises out of a stock purchase agreement. Liability hinges on the construction of the stock purchase agreement and whether parol evidence is admissible. The trial court found the agreement unambiguous and barred parol evidence. The defendants insist the agreement is ambiguous and that evidence of negotiations leading up to the execution of the agreement and the intent of the parties should have been admitted. We find the agreement is ambiguous and therefore parol evidence should have been considered. We also find that the defendants are entitled to a new trial on the merits because they have been deprived of the substantial right to introduce evidence of contract negotiations and the intent of the parties at the time the Agreement was executed. We therefore vacate the judgment and remand this matter for further proceedings consistent with this opinion.