Frontier Fiscal Services LLC v. Pinky's Aggregates, Inc.
928 N.W.2d 449
| N.D. | 2019Background
- Pinky’s Aggregates, owned by Dale Honsey, subcontracted on a DOT project and entered hauling agreements with at least 16 sub‑subcontractors for hauling gravel/aggregate.
- Many sub‑subcontractors assigned their accounts receivable to Frontier Fiscal Services, an invoice factoring company; Pinky’s received notice of assignment and made some payments to Frontier.
- Pinky’s fell behind on payments to Frontier; Frontier stopped factoring, sub‑subcontractors refused further work unless factoring resumed, and Honsey signed a document titled a “guaranty” signing as “an Individual & President of Pinky’s.”
- Frontier sued Pinky’s for breach of contract and sued Honsey on the personal guaranty; the district court granted Frontier summary judgment and awarded $526,253.12, holding Pinky’s and Honsey jointly and severally liable.
- On appeal, Pinky’s/Honsey challenged (1) whether Frontier proved the assignors complied with contracts and (2) validity/enforceability of Honsey’s guaranty (ambiguity, lack of consideration, consent, and invalid waiver clauses).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether factual disputes about sub‑subcontractors’ performance/assignments preclude summary judgment | Frontier relied on Honsey’s admissions and assignment notices to show rights via assignment | Pinky’s argued Frontier must prove each assignor complied with hauling contracts and paperwork/records/timeliness | Court: No genuine issue; Honsey’s deposition admitted Pinky’s owed Frontier and accepted assignments, so no proof gap |
| Whether Honsey’s guaranty is ambiguous as to individual vs. representative liability | Frontier: guaranty’s plain language creates personal liability by Honsey | Honsey: signing “as President” creates ambiguity whether he guaranteed personally or only on behalf of Pinky’s | Court: Not ambiguous; the guaranty expressly states “I, Dale Honsey personally guarantee,” so personal liability attached despite corporate title |
| Whether alleged waiver clauses or attorney‑fee provisions void the guaranty or render it unenforceable | Frontier: clauses not applied; even if invalid, remainder of guaranty enforceable | Honsey: waiver clause violates N.D.C.C. § 9‑08‑05; fee clause violates § 28‑26‑04 | Court: Clauses not relied on; even if invalid, contract severable and lawful parts enforceable; argument fails |
| Whether guaranty lacked consideration or was induced by mistake/without consent | Frontier: Frontier resumed factoring only after guaranty; Pinky’s benefited and continued operations — sufficient consideration | Honsey: guaranty lacked new consideration and he mistakenly believed he signed only as corporate officer (not personally) | Court: Consideration present (benefit/detriment); misunderstanding of legal effect is not a factual mistake to void guaranty; summary judgment proper |
Key Cases Cited
- Becker v. Burleigh Cty., 924 N.W.2d 393 (N.D. 2019) (summary judgment standard)
- Collection Ctr., Inc. v. Bydal, 795 N.W.2d 667 (N.D. 2011) (assignee receives no greater rights than assignor)
- Hendricks Prop. Mgmt. Corp. v. Birchwood Props. Ltd. P’ship, 741 N.W.2d 461 (N.D. 2007) (officer signing contracts presumed to know contents)
- Monster Heavy Haulers, LLC v. Goliath Energy Servs., LLC, 883 N.W.2d 917 (N.D. 2016) (burden of proof rests with party possessing facts)
- Baker Boyer Nat. Bank v. JPF Enters., LLC, 924 N.W.2d 381 (N.D. 2019) (summary judgment when party fails to establish factual dispute on essential element)
- Lab. Corp. of Am. v. McKown, 829 So.2d 311 (Fla. Dist. Ct. App. 2002) (officer’s corporate title on signature does not negate personal guarantee when document shows personal liability)
- Schue v. Jacoby, 162 N.W.2d 377 (N.D. 1968) (parol evidence inadmissible to contradict unambiguous written agreement)