Carnegie Technologies. v. Triller, 39 F.4th 288

Background

Triller was sold in October 2019; Carnegie (an owner and service provider under an Administrative Services Agreement, "ASA") recorded unpaid services as a liability.
At closing Triller executed a Promissory Note to Carnegie for ~$4.28M plus 10% interest (due Oct. 8, 2021) that converted the ASA liabilities into a repayable obligation.
Immediately at closing Triller executed an Assignment transferring the Note to Triller Legacy, LLC (Legacy); the Assignment recited Legacy’s assumption of the Note’s obligations and had a California choice-of-law clause and an integration/merger clause.
Carnegie sued Triller for breach of the ASA and to enforce the Note after default; Triller defended claiming the Assignment operated as a novation that extinguished Triller’s liability and offered declarations describing an oral understanding that Triller would be taken over "debt-free."
The district court granted summary judgment to Carnegie: it found breach of the ASA, that the Note was enforceable, and that Triller failed to show the Assignment extinguished its obligations because the Assignment contains no express release and the merger clause bars parol evidence.
On appeal the Fifth Circuit affirmed, holding that under Texas law a novation requires clear intent to extinguish the old obligation, and under California law the plain Assignment language and integration clause foreclose using the extrinsic declarations to show release.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Novation — did the Assignment extinguish Triller’s liability under the Promissory Note?	Carnegie: No; Assignment assumes obligations and is silent on release, so Note remains effective	Triller: Yes; Assignment plus surrounding transaction and contemporaneous oral assurances show intent to transfer debt to Legacy and release Triller	Held: No novation. Assignment contains no clear release; merger clause and California law bar using extrinsic evidence to create a release.
Admissibility of extrinsic/parol evidence to show a release	Carnegie: Integration clause prohibits extrinsic evidence to alter written Assignment	Triller: Declarations show parties intended takeover to be debt-free; extrinsic evidence can show intent	Held: Integration clause and California parol-evidence rules exclude the contemporaneous oral evidence; no ambiguity pleaded to admit extrinsic evidence.
Choice of law for interpreting Assignment	Carnegie: Assignment’s California choice-of-law applies to interpretation	Triller: Asked to apply California law to the Assignment but argued more broadly for extrinsic evidence	Held: Court applies California law to construe the Assignment’s terms; Texas law controls novation elements but turns on the Assignment’s text.
Summary judgment adequacy on novation defense	Carnegie: Triller failed to create a genuine issue of material fact on extinguishment element	Triller: Declarations create triable issue and summary judgment was premature	Held: Summary judgment affirmed — Triller did not raise a material factual dispute that would establish novation.

Key Cases Cited

Chastain v. Cooper & Reed, 257 S.W.2d 422 (Tex. 1953) (defines novation and requires intent to extinguish prior obligation)
Goldman v. Olmstead, 414 S.W.3d 346 (Tex. App. 2013) (lists novation elements under Texas law)
MacKinnon v. Truck Ins. Exch., 73 P.3d 1205 (Cal. 2003) (contract interpretation centers on mutual intent inferred from writing)
Wells Fargo Bank v. Bank of Am., 38 Cal. Rptr. 2d 521 (Cal. Ct. App. 1995) (subsequent contract must clearly show intent to extinguish original to constitute novation)
Mountain Air Enters., LLC v. Sundowner Towers, LLC, 398 P.3d 556 (Cal. 2017) (integration clause effect — written agreement as sole binding agreement)
Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co., 442 P.2d 641 (Cal. 1968) (extrinsic evidence admissible only to resolve ambiguity; courts should first attempt to interpret contract from its words)