LaFarge North America v. Warren Mills, W2020-00959-COA-R3-CV

Background

Warren Mills (one owner of Choctaw) signed a personal guaranty for Choctaw’s concrete account on December 22, 2009; prior guarantor William Carrier had declared bankruptcy and Choctaw then owed $266,557.14.
After Mills signed, Choctaw purchased on COD and made payments; LaFarge applied those payments to the oldest debt (the Carrier-guaranteed debt), leaving a claimed balance; LaFarge sued Choctaw, Carrier, and Mills on April 30, 2010 for breach and guaranty enforcement.
Mills counterclaimed for intentional misrepresentation/fraud, alleging the guaranty was procured by fraud and that post-guaranty payments extinguished the debt for which he was bound.
On first appeal (LaFarge I), this Court reversed summary judgment for LaFarge, granted summary judgment to Mills because payments after Mills signed should have been applied to the debt for which Mills was bound, and separately held the guaranty itself was valid and enforceable.
After remand, Mills sought to reopen discovery to pursue his dismissed counterclaim; the trial court denied that motion and denied reconsideration. Mills appealed again.
On this second appeal the Court affirmed the denial of discovery and dismissal of the counterclaim, and held the appeal frivolous, remanding for assessment of LaFarge’s appellate attorney’s fees and costs.

Issues

Issue	Plaintiff's Argument (Mills)	Defendant's Argument (LaFarge)	Held
Whether the trial court erred by denying Mills’ motion to reopen discovery and by dismissing his counterclaim	Mills: remand in LaFarge I allows him to pursue counterclaim and discovery	LaFarge: LaFarge I affirmed guaranty enforceability, so counterclaim (based on guaranty being void) is foreclosed	Affirmed: trial court did not err; counterclaim barred because guaranty was found valid/enforceable in LaFarge I
Whether Mills waived appellate review of the counterclaim dismissal by failing to raise it in the first appeal	Mills: did not waive; remand permits further litigation	LaFarge: issues not raised in first appeal are waived and cannot be relitigated on second appeal	Court: party generally waives issues not raised on first appeal; further, Mills effectively waived the claim
Whether the guaranty is void, ambiguous, or procured by fraud (basis for counterclaim)	Mills: guaranty ambiguous, fails contract elements, procured by fraud, violates Statute of Frauds	LaFarge: guaranty clearly signed by Mills, who is sophisticated; guaranty is unambiguous and enforceable	LaFarge I (reviewed and adopted): guaranty is valid and enforceable; thus counterclaim lacked a basis
Whether this appeal was frivolous and whether LaFarge is entitled to appellate attorney’s fees under Tenn. Code Ann. § 27-1-122	Mills: appeal seeks proper relief (reopen discovery)	LaFarge: appeal is frivolous because it ignores prior holding that guaranty is enforceable and reargues waived issues	Held frivolous: award of appellate fees and costs to LaFarge; case remanded to quantify fees/costs

Key Cases Cited

Chiozza v. Chiozza, 315 S.W.3d 482 (Tenn. Ct. App. 2009) (discusses appellate court’s discretion to award damages for frivolous appeals)
Indus. Dev. Bd. v. Hancock, 901 S.W.2d 382 (Tenn. Ct. App. 1995) (defines frivolous appeal as one devoid of merit or unlikely to succeed)