82 So. 3d 650
Ala.2011Background
- Black Warrior sued Empire Coal Sales and Fay to recover amounts under a coal-purchase agreement and a personal guaranty signed by Fay.
- Empire’s debt to Black Warrior existed above $1.2 million at the time of the February 11, 2009 agreement and guaranty execution.
- Empire and Fay were sued in November 2009; Black Warrior asserted contract, open account, stated account, and goods sold claims against Empire and breach of guaranty against Fay.
- The trial court granted summary judgment for Black Warrior against Empire but denied summary judgment on Fay’s breach-of-guaranty claim; ore tenus hearing followed for the guaranty claim.
- The trial court entered judgment in Fay’s favor on the guaranty, finding the guaranty language ambiguous and that it applied only to amounts in excess of $1.2 million.
- On appeal, the Alabama Supreme Court reversed, holding the guaranty was unambiguous and covered all monetary obligations, and remanded for entry of judgment in Black Warrior’s favor on the guaranty claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the guaranty is ambiguous and limits Fay’s liability | Fay, via Black Warrior, argues the guaranty unambiguously covers all obligations. | Fay contends the guaranty is ambiguous and caps liability at amounts exceeding $1.2 million. | Guaranty unambiguous; Fay liable for all monetary obligations. |
Key Cases Cited
- Homes of Legend, Inc. v. McCollough, 776 So.2d 741 (Ala. 2000) (contract terms given ordinary meaning when unambiguous)
- Winkleblack v. Murphy, 811 So.2d 521 (Ala. 2001) (ambiguous contract determination reviewed de novo)
- SouthTrust Bank v. Copeland One, L.L.C., 886 So.2d 38 (Ala. 2003) (two-step analysis for ambiguity and effect of unambiguous terms)
- Bertolla v. Bill, 774 So.2d 497 (Ala. 1999) (ore tenus evidence standard in review of trial court findings)