Dennis Draper, Greg Hadley, and Charles Huston v. Austin Manufacturing Services I, Inc.
03-15-00429-CV
Tex. App.Dec 14, 2015Background
- AMS (manufacturer) contracted to produce 5,000 "Golf Guru" units for A‑Pro/TQI; A‑Pro lacked credit so four principals (Draper, Cornish, Hadley, Huston) each signed guarantees for 25% of PO 1682.
- PO 1682 was a "blanket" purchase order (5,000 units at $128.95 each) that incorporated a quotation including terms allowing changes; parties expected takedown orders and specification changes.
- A‑Pro/TQI requested and took delivery of units (including later color units); AMS manufactured and delivered but A‑Pro/TQI failed to pay in full.
- AMS sued A‑Pro/TQI and the guarantors; following a bench trial the trial court entered judgment in favor of AMS for unpaid amounts and attorneys’ fees, allocating specified amounts to each guarantor.
- Appellants (Draper, Hadley, Huston) appeal, arguing technical defects/material alterations in the guarantees, that subsequent takedown POs satisfied PO 1682, and that fee award was unreasonable.
Issues
| Issue | Plaintiff's Argument (AMS) | Defendant's Argument (Guarantors) | Held |
|---|---|---|---|
| Whether trial court factual findings should be credited | Defer to trial court after bench trial; ample evidence supports findings | Argue record does not support trial findings | Court gives substantial deference to trial court; findings sustained |
| Whether PO 1682 and the Guarantees were executed together and bound guarantors | Guarantees expressly reference PO 1682 and were prerequisite to AMS extending credit | Guarantors claim technical defects or form defects invalidate guarantees | Trial court found guarantees tied to PO 1682; guarantors bound |
| Whether later changes (takendown orders; color units; delivery timing) materially altered the contract so as to void guarantees | Changes were contemplated by the parties, consented to (via Cornish/agent), and not material; guarantors benefited | Guarantors claim those changes materially altered terms and discharged guaranty | Trial court held no material alteration; guarantors remained liable |
| Whether takedown POs and partial payments satisfied the guaranteed obligation | Underlying blanket PO remained unsatisfied ($382,484.92 outstanding); takedown entries do not extinguish blanket obligation | Guarantors point to accounting showing a zero balance on a later PO 1682 and other records | Trial court credited AMS accounting; liability remains; satisfaction defense rejected |
| Whether attorneys’ fees award was reasonable and properly non‑segregated | Fees reasonable under Arthur Andersen factors; claims and defenses intertwined so no segregation required | Guarantors argue award excessive / should be segregated | Trial court found fees reasonable and non‑segregation appropriate; award upheld |
Key Cases Cited
- BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (standards for reviewing legal conclusions and bench‑trial findings)
- Ortiz v. Jones, 917 S.W.2d 770 (Tex. 1996) (bench‑trial findings have weight of jury verdict)
- Frost Nat’l Bank v. Burge, 29 S.W.3d 580 (Tex. App.—Houston [14th Dist.] 2000) (material alteration doctrine and guarantee construed with underlying transaction)
- Austin Hardwoods, Inc. v. Vanden Berghe, 917 S.W.2d 320 (Tex. App.—El Paso 1995) (officer’s guaranty not excused where amount/time to be determined later)
- Vastine v. Bank of Dallas, 808 S.W.2d 463 (Tex. 1991) (existence of fact issue on material alteration can defeat summary judgment)
- Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997) (factors for assessing reasonable attorneys’ fees)
- Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (when segregation of fees is unnecessary because claims are inextricably intertwined)