Frontier Fiscal Services LLC v. Pinky's Aggregates, Inc.
2019 ND 147
| N.D. | 2019Background
- Pinky’s Aggregates (Pinky’s) subcontracted to supply aggregate and hired sub‑subcontractors for hauling; many sub‑subcontractors assigned their receivables to Frontier Fiscal Services (Frontier) for factoring.
- Pinky’s received notice of assignments and paid Frontier on some accounts but fell behind; factoring ceased and sub‑subcontractors refused further work unless factoring resumed.
- To restore factoring, Pinky’s president Dale Honsey signed a guaranty styled “as an Individual & President of Pinky’s,” promising to personally guarantee payment and a $790,000 wiring commitment to be applied to oldest invoices.
- Frontier sued Pinky’s for breach of contract and Honsey on the personal guaranty; the district court granted summary judgment for Frontier for $526,253.12, jointly and severally against both defendants.
- On appeal Pinky’s and Honsey contended genuine issues of material fact existed concerning compliance with hauling contracts and challenged validity/enforceability of the personal guaranty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Assignee standing / compliance with underlying contracts | Frontier: assignments were valid; Pinky’s owed amounts to Frontier | Pinky’s: Frontier must prove sub‑subcontractors complied with hauling contracts and paperwork | Held: No dispute—Honsey admitted Pinky’s owed Frontier, saw and accepted assignments; summary judgment appropriate |
| Nature of guaranty (individual vs. representative) | Frontier: guaranty language imposes personal liability on Honsey | Honsey: ambiguous signing as president creates ambiguity whether he intended individual liability | Held: Not ambiguous; explicit “I, Dale Honsey personally guarantee” imposes personal liability despite corporate title |
| Clauses waiving defenses / attorney fees | Frontier: clauses not applied here | Honsey: waiver and fee clauses void under ND statutes | Held: District court did not rely on those clauses; even if invalid, remainder of guaranty is enforceable under severability principles |
| Consideration / mistake / consent to guaranty | Frontier: continued factoring for sub‑subcontractors was sufficient consideration; Honsey needed to secure operations | Honsey: lack of distinct consideration; mistake of fact believing he signed only for Pinky’s | Held: Adequate consideration existed (benefit to Pinky’s/Honsey); misunderstanding of legal effect is not mistake of fact or law; guaranty enforceable |
Key Cases Cited
- Becker v. Burleigh County, 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 takes no greater rights than assignor)
- Hendricks Prop. Mgmt. Corp. v. Birchwood Props. Ltd. P’ship, 741 N.W.2d 461 (N.D. 2007) (corporate officer presumed to know contract contents)
- Lab. Corp. of Am. v. McKown, 829 So.2d 311 (Fla. Dist. Ct. App. 2002) (officer’s signature with title does not necessarily negate personal liability)
- Anderson v. Zimbelman, 842 N.W.2d 852 (N.D. 2014) (existence of consideration is a question of law)
- Molbert v. Kornkven, 910 N.W.2d 888 (N.D. 2018) (definition of good consideration)
- Schue v. Jacoby, 162 N.W.2d 377 (N.D. 1968) (severability and construing contracts to give effect to lawful parts)