519 F. App'x 219
5th Cir.2013Background
- PEI sued to enforce a Guaranty Agreement against Sanchez, Sports Time, Inc., and Group Seven Communications related to a Mexican Playboy license with Editorial Caballero (EC).
- The Guaranty Agreement, dated Sept 10, 1996 and signed Nov 7, 1996, guaranteed EC’s performance under the License Agreement for a Mexican edition of Playboy.
- The district court treated the Guaranty as absolute/unconditional and held Appellants jointly and severally liable for EC’s liabilities.
- GRupo Siete S.A., Inc. is not an actual entity; Sanchez admitted as much, affecting personal liability under Texas law.
- There was a dispute over which license agreement was guaranteed (despite lack of attached copy), but the court found the underlying agreement identifiable and enforceable.
- Sanchez is argued to be personally liable for signing as agent for a fictitious principal; the court concluded he did not escape liability under Texas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Guaranty absolute and unconditional? | PEI argues it imposes unconditional liability. | Sanchez argues defenses and ambiguities may limit liability. | Yes, the Guaranty is absolute/unconditional. |
| Does the License Agreement ambiguity affect enforceability of the Guaranty? | PEI identified the underlying agreement and parties. | Ambiguities about which License Agreement apply. | No ambiguity; underlying agreement identifiable and enforceable. |
| Are there suretyship defenses/discharge due to changes in the underlying contract? | None that defeat Guaranty. | Renegotiated terms could discharge guarantors. | Suretyship defenses do not defeat an absolute guaranty. |
| Can Sanchez be personally liable when signing as a representative of a fictitious principal? | Agent signs for fictitious principal; liable. | Signatory capacity should relieve personal liability. | Sanchez is personally liable. |
| Which law governs the contract and choice-of-law implications? | Illinois law applies as per license terms. | Texas law applies per forum rules; differing laws yield same result. | Texas law governs; Sanchez waived choice-of-law argument. |
Key Cases Cited
- Material P’ships, Inc. v. Ventura, 102 S.W.3d 252 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (identifies essential terms of guaranty and underlying agreement)
- Universal Metals & Mach., Inc. v. Bohart, 539 S.W.2d 874 (Tex. 1976) (absolute guaranty concepts and liability without demand against principal)
- Houston Sash & Door Co., Inc. v. Heaner, 577 S.W.2d 217 (Tex. 1979) (guarantor liability under absolute guaranty; defenses limitations)
- U.S. v. Little Joe Trawlers, Inc., 776 F.2d 1249 (5th Cir. 1985) (cited regarding absolute guaranty concepts)
- Eubank v. First National Bank of Bellville, 814 S.W.2d 130 (Tex. App.—Corpus Christi 1991, no pet.) (agent liable on contract when signing for nonexistent principal)
- Stacy v. Energy Mgmt. Grp. Ltd., Inc., 734 S.W.2d 149 (Tex. App.—Houston [1st Dist.] 1987, no writ) (agent liability where principal not disclosed)
- Carter v. Walton, 469 S.W.2d 462 (Tex. App.—Corpus Christi 1971, writ ref’d n.r.e.) (agency liability concepts under Texas law)
- Fruge v. Amerisure Mut. Ins. Co., 663 F.3d 743 (5th Cir. 2011) (failure to raise alternative law analysis waives argument)