LaFarge North America v. Warren Mills, et al.

The trial court granted summary judgment in favor of Appellee, finding that the guaranty agreement Appellant executed was enforceable. At the time Appellant executed the guaranty, Choctaw II, LLC (“Choctaw”), a company of which Appellant was a member, owed approximately $275,000.00 to Appellee on an open credit line, which was guaranteed by William Carrier, another owner of Choctaw. Mr. Carrier filed bankruptcy, and Appellee closed the open credit line for lack of guaranty. In an effort to continue to purchase materials from Appellee, Appellant signed a guaranty. After Appellant signed the guaranty, Appellee sold an additional $75,000 worth of goods to Choctaw, and Choctaw paid Appellee approximately $79,000 after Appellant signed the guaranty. Appellee applied these payments to the $275,000 balance and then sought payment for the $75,000 in goods from Appellant. The trial court held that Appellee properly applied the payments to the older debt. We hold that the guaranty agreement is enforceable. However, as to the application of the payments, we hold that Appellee was required to apply the $79,000 to the debt guaranteed by Appellant. Because the payments were sufficient to pay off the $75,000 in goods, Appellant owes nothing to Appellee under the guaranty and is entitled to summary judgment. Reversed and remanded for entry of summary judgment in favor of Appellant.