350 So.3d 1107
Miss. Ct. App.2022Background
- In 2007 Cardinal Health and PharmNet (owned by Stanley Devine and Roger Beardain) entered a credit-application contract; Devine and Beardain signed a guaranty as officers, making them personally liable for PharmNet debts to Cardinal Health.
- PharmNet filed Chapter 7 bankruptcy in October 2017; Cardinal Health demanded payment of roughly $259,490.68 from the guarantors; they refused and Cardinal Health sued Devine and Beardain for breach of the guaranty.
- The copy of the credit application attached to the complaint was largely illegible and the complaint mistakenly listed the execution date as July 31, 2017 (the correct date was July 31, 2007).
- Cardinal Health moved for summary judgment and submitted an affidavit from its credit manager, Phelton Woods, swearing the guaranty was executed and attached to the complaint; Defendants submitted responses alleging fraud, illegibility, and a date error but offered no contradictory sworn affidavits.
- The trial court granted summary judgment for Cardinal Health; the court found no genuine factual dispute about execution and enforceability of the guaranty, held Cardinal Health had no duty to re-take collateral before suing the guarantors, and found Devine waived any fraud defense by not pleading it in his answer.
- The Court of Appeals affirmed the grant of summary judgment.
Issues
| Issue | Cardinal Health's Argument | Devine / Beardain's Argument | Held |
|---|---|---|---|
| Enforceability/authenticity of the guaranty | Woods’ affidavit proves Devine and Beardain signed an enforceable guaranty attached to the complaint | The contract exhibit is illegible and the date error creates factual issues that should go to a jury | Held: No genuine issue; Woods’ sworn affidavit unrebutted; guaranty enforceable |
| Duty to mitigate by pursuing PharmNet first | No duty to re-take collateral or foreclose before suing guarantors under commercial law | Cardinal Health should have attempted collection/foreclosure from PharmNet first | Held: No duty to mitigate; creditor may pursue legal remedies against guarantors without first re-taking collateral |
| Fraud affirmative defense | N/A — Cardinal asserts guaranty is enforceable and fraud defense was waived | Devine alleges Cardinal made misrepresentations that induced the contract | Held: Fraud waived because it was not pleaded as an affirmative defense in the answer and was not pleaded with particularity in response to summary judgment |
| Prejudice from scrivener's date error and illegible exhibit | The date mistake is a minor scrivener’s error and parties were on notice of the 2007 contract | The erroneous 2017 date and illegible exhibit create material issues of fact | Held: Date was a scrivener’s error and did not prejudice defendants; illegibility overcome by Woods’ affidavit and course of dealing |
Key Cases Cited
- Bonner v. Imperial Palace of Miss. LLC, 117 So. 3d 678 (Miss. Ct. App. 2013) (standard of review for summary judgment)
- Rea v. O’Bannon, 158 So. 916 (Miss. 1935) (secured creditor may choose foreclosure or legal action; not required to foreclose first)
- W. Point Corp. v. New N. Miss. Fed. Sav. & Loan Ass’n, 506 So. 2d 241 (Miss. 1986) (creditor may sue on note without resorting to foreclosure)
- Fleisher v. S. AgCredit, FLCA, 108 So. 3d 948 (Miss. Ct. App. 2012) (no requirement that creditor foreclose before seeking monetary judgment)
- Woodard v. Miller, 326 So. 3d 439 (Miss. 2021) (failure to timely raise affirmative defenses in the answer constitutes waiver)
- Beasley v. Sutton, 192 So. 3d 325 (Miss. Ct. App. 2015) (conflicting sworn statements create fact issues for trial)