Dennis Draper, Greg Hadley, and Charles Huston v. Austin Manufacturing Services I, Inc., 03-15-00429-CV

Background

A‑Pro principals (Draper, Hadley, Huston) signed a personal guaranty promising to pay 25% of “all amounts due” under Purchase Order (PO) 1682 if Assistant Pro, Inc. (A‑Pro) defaulted; PO 1682 nominally covered 5,000 black‑and‑white "Golf Guru" units.
AMS accepted a purchase order signed in TQI Corporation’s name (Cornish owned TQI), not A‑Pro, because AMS would not extend credit to the newly formed A‑Pro.
AMS later altered PO terms (quantity, price, delivery date, and product type) after negotiation involving Cornish/Horne and AMS personnel; the Individuals say they did not consent to those alterations.
AMS sued A‑Pro, TQI, Cornish and the Individual guarantors; at bench trial the court awarded AMS damages and held each Individual liable for a 25% share plus attorney’s fees.
Appellants (the three Individuals) appeal, arguing (1) the guaranty never was triggered because AMS did not extend credit to A‑Pro and PO 1682 named TQI, (2) material alterations to the guaranteed transaction discharged the guarantors, (3) AMS’s own accounting shows zero balance on PO 1682, and (4) attorney’s fees were not properly segregated.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Enforceability of guaranty: was the guaranteed transaction formed with A‑Pro?	AMS contends PO 1682 and related dealings create liability; A‑Pro/TQI acted as a joint commercial unit so guaranty applies.	Guarantors argue AMS never extended credit to A‑Pro and PO 1682 was issued to TQI, so guaranty consideration failed and cannot be enforced.	Trial court found guaranty enforceable and entered judgment against guarantors; appellants challenge that ruling on appeal.
Material alteration: did post‑guaranty changes discharge guarantors?	AMS maintained changes were permissible or beneficial and did not release guarantors.	Guarantors contend price, quantity, delivery date, and product changes were material and made without their consent, discharging their obligations.	Trial court concluded no discharging alteration for Draper, Hadley, Huston; Cornish treated differently. Appellants argue this was erroneous.
Existence of amounts due under PO 1682	AMS asserted amounts were due on account and relied on multiple invoices and aging records.	Guarantors point to AMS’s own exhibits and accounting testimony showing a zero balance specifically for PO 1682 (while other POs had balances), so no guaranteed default existed.	Trial court found amounts due (allocated across items) and assessed guarantor shares; appellants dispute sufficiency and factual basis.
Attorney’s fees award	AMS sought full recovery of fees under the guaranties and Chapter 38.	Guarantors argue AMS failed to segregate recoverable vs non‑recoverable fees and failed to allocate fees among multiple defendants/claims.	Trial court awarded $150,000 (plus conditional appellate fees) and deemed further segregation unnecessary; appellants seek reversal of fee award or vacatur.

Key Cases Cited

McKnight v. Virginia Mirror Co., Inc., 464 S.W.2d 428 (Tex. 1971) (guaranties are strictly construed and cannot be extended by implication)
Vastine v. Bank of Dallas, 808 S.W.2d 463 (Tex. 1991) (material alteration of underlying contract can discharge surety)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal‑sufficiency review principles for factual sufficiency claims)
Tony Gullo Motors v. Chapa, 212 S.W.3d 299 (Tex. 2007) (need to segregate attorney’s fees recoverable for certain claims)
Mustang Pipeline Co. v. Drier Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (elements of breach of contract and causation)
OAIC Commercial Assets v. Stonegate Village, 234 S.W.3d 726 (Tex. App.—Dallas 2007) (privity/standing in contract claims)
Material Partnership v. Ventura, 102 S.W.3d 252 (Tex. App.—Houston [14th Dist.] 2003) (consideration requirements for guaranty)
Moore v. White Motor Credit Corp., 708 S.W.2d 465 (Tex. App.—Dallas 1985) (guarantor liability depends on the principal’s obligation)