Jonathan Wasserberg and Jason Felt v. Flooring Services of Texas, LLC and Stewart Title Guaranty Co.
2012 Tex. App. LEXIS 5927
Tex. App.2012Background
- FST sued Waterhill Company, LLC (WCL) for unpaid goods and services and sued Wasserberg and Felt on their personal guaranties.
- WCL later converted to Waterhill Company, LLC to Waterhill Company, Limited (WCL) with WCL continuing exist as the converted entity per statute.
- FST filed notices of materialmen and mechanic’s liens; Stewart Title intervened to recover settlement amounts.
- Wasserberg and Felt signed “all bills paid” affidavits stating no unpaid claims, omitting some vendor debts.
- Trial court found debts due and awarded damages and attorneys’ fees against WCL, Wasserberg, and Felt; Stewart Title recovered against WCL and Wasserberg.
- On appeal, Wasserberg and Felt argue guaranties do not cover post-conversion debts and that the affidavits’ evidence was improperly limited; the appellate court affirms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the guaranties enforceable for debts incurred by WCL after conversion? | Wasserberg/Felt guaranties cover all indebtedness to FST. | Guaranties limited to Waterhill debt incurred before conversion; not to WCL. | Guaranties apply to post-conversion debts. |
| Can FST enforce the guaranties against a successor entity of the debtor without explicit successor language? | Guaranties are absolute and continuing, extend to successors. | No explicit language extending to successors required by Marshall/Gifford-Hill analysis. | Guaranties enforceable against successor entities; extend beyond exact named entities. |
| Was Wasserberg properly prevented from presenting evidence about the all bills paid affidavits? | Affidavit misrepresentations should be contestable; fraud theories allowed. | Ruling improperly barred unpleaded defenses; evidence excluded. | Trial court ruling upheld; affidavits admissible to support fraud finding. |
Key Cases Cited
- Tenneco Oil Co. v. Gulsby Eng’g, Inc., 846 S.W.2d 599 (Tex. App.—Houston [14th Dist.] 1993) (establishes elements for proving a guaranty claim)
- Lee v. Martin Marietta Materials Sw., Ltd., 141 S.W.3d 719 (Tex. App.—San Antonio 2004) (reaffirms strictissimi juris standard and importance of guaranty terms)
- Marshall v. Ford Motor Co., 878 S.W.2d 629 (Tex. App.—Dallas 1994) (limits guaranty scope when not expressly extending to successors/assigns; distinguished here)
- FDIC v Attayi, 745 S.W.2d 939 (Tex. App.—Houston [1st Dist.] 1988) (notes strict construction of guaranties; informs interpretation)
- Gifford-Hill & Co. v. Bank One Tex., N.A., 794 S.W.2d 854 (Tex. App.—Dallas 1990) (discusses language extending guaranty to a debtor’s successor; not viewed as necessary here)
- SEI Bus. Sys., Inc. v. Bank One Tex., N.A., 803 S.W.2d 838 (Tex. App.—Dallas 1991) (cited regarding corporate form changes and guaranty applicability)