ABC v. John Casanova, Jr. (2013)

MEMORANDUM OF DECISION

On April 24, 2013, the captioned case was tried in the Waterbury Superior Court.   The plaintiff presented testimony of Grant Hayden, manager of the Waterbury branch of the plaintiff, Cynthia Starks, employee at the ABC Supply Waterbury store in charge of purchasing, receiving, accounts receivable and sales, Chris Barnaby, a manager for GAF, Inc., and Denise Pagano, an employee of ABC Supply acting as the customer financial services credit application reviewer for the Northeast region.   The plaintiff also offered in evidence nineteen (19) documentary exhibits.

The defense presented the testimony of the defendant and one documentary exhibit.

This matter arises out of a claim to enforce a written guarantee admittedly signed by the defendant in favor of the plaintiff concerning building materials provided by the plaintiff to a limited liability company, Casanova Enterprises, LLC, owned by the individual defendant.

The plaintiff established through competent evidence that between January 19, 2012 and June 10, 2012, the plaintiff sold and delivered roofing materials to Casanova Enterprises, LLC. The value of those materials sold and delivered totals $103,097, see Plaintiff's Exhibits 3, 4 and 7. While Exhibit 2 has a slightly higher total than the aforementioned, Exhibit 2 included interest charges which increased the total beyond the total of the cost of the materials provided.

Plaintiff's Exhibit 1 is a Commercial/Residential Account Application submitted by Casanova Enterprises, LLC to ABC Supply.   Page 2 of the Application includes a personal guarantee, section “3. Your personal guaranty.”   The personal guarantee provides in pertinent part:  “I, the undersigned, hereinafter referred to as Guarantor, do jointly, severally and unconditionally guarantee and promise to promptly pay when due any and all indebtedness of the Buyer (Casanova Enterprises, LLC) to ABC, together with any late payment charge that may accrue thereon, regardless of how such indebtedness is incurred, whether such indebtedness is direct or indirect, absolute or contingent, due or to become due, or exists now or arises hereafter.   In addition, the Guarantor agrees to pay all costs of collection, legal expenses and attorneys fees paid or incurred by ABC in the collection of buyer's indebtedness and in enforcing this Continuing Guaranty.”

The defendant, John Casanova, acknowledged his signature was placed below that Continuing Guaranty language on Exhibit 1 on December 12, 2011 while he was at the ABC Supply office in Waterbury, CT. Several witnesses established that Mr. Casanova signed this document, after reviewing the same.   Mr. Casanova testified that he went to ABC Supply on December 12, 2011 in order to pay an outstanding bill, that he was anticipating the execution of a credit application because he was behind on payments due to ABC. He confirmed that he did execute the document.

Following the execution of that document, the plaintiff delivered the aforementioned roofing materials to Casanova Enterprises, LLC. The bills for those roofing materials were not paid by Casanova Enterprises, LLC and remain due and outstanding.

Thereafter Casanova Enterprises, LLC filed for protection in the bankruptcy court.   Though no documentation was offered to the court in connection with that bankruptcy, the evidence established that Casanova Enterprises, LLC discharged from bankruptcy the indebtedness owed to ABC Supply arising out of the delivery of materials by ABC to Casanova Enterprises, LLC between January 19, 2012 and June 10, 2012.

Grant Hayden, manager of ABC in Waterbury, testified that Casanova Enterprises and John Casanova did business with ABC for four or five years immediately preceding 2012.   Hayden testified that Casanova was a very good customer during those years.   He described that roofing materials were delivered to site or picked up during the week and by the end of the same week as the goods were delivered, the bills were paid in full to ABC Supply in connection with those materials.

Hayden described that in the second half of 2011, Casanova Enterprises, LLC's payment for ABC Supply materials began to be delayed and deferred.   Hayden noted that Casanova was a substantial customer with gross sales from ABC to Casanova in the amount of $704,000 in 2011 and therefore Hayden became concerned when ABC's account receivable with Casanova Enterprises, LLC began to rise.   Hayden described a series of conversations with Casanova culminating in the December 12, 2011 credit account application and execution of a personal guarantee.   Hayden also described a GAF incentive program that was extended to Casanova.   Hayden indicated that ABC did not participate in that incentive program to Casanova.

Additionally, Hayden described a charitable effort amongst GAF, ABC and Casanova wherein GAF would donate various roofing materials, ABC would donate various roofing materials and Casanova Enterprises would donate labor so that one or two homes per year could have new roofs installed, without cost, based on the homeowner's need and other qualifying criteria.   Hayden confirmed that GAF, ABC and Casanova did two houses in 2011 and one building in 2012.   Casanova and Barnaby confirmed that this charitable effort also existed in 2010 and prior thereto for one or two buildings per year.   The evidence established that ABC has not included any billing for materials charitably donated in the $103,000 claimed for materials delivered to Casanova between January 19, 2012 and June 10, 2012.

Barnaby described a GAF rebate program that was extended to Casanova.   This rebate program provided for reduced cost of GAF shingles purchased by Casanova during a particular time period.   After the purchase, GAF would send quarterly rebate checks to Casanova depending upon the type and amount of materials purchased.   Barnaby identified a number of rebate checks and testified that all rebates due to Casanova Enterprises had been fully paid by GAF. Barnaby knew of no similar program or agreement between ABC and Casanova.

Cynthia Starks is an ABC employee in charge of purchasing, receiving, A/R and sales.   She knows the defendant as a customer.   She was present when the defendant signed Exhibit 1, the credit application that contains the Continuing Guaranty.   She recalled being in the office with Grant Hayden, John Casanova and herself and she observed John Casanova sign the same.   She had no recollection of any conversation concerning any limitation on Casanova's obligation under the Guaranty.

Denise Pagano works for ABC in the customer financial services division in Telford, PA. One of her job duties includes accepting, reviewing, researching and making recommendations regarding credit applications.   She confirmed that she did receive a faxed copy of plaintiff's Exhibit 1, the credit application signed by John Casanova.   She reviewed the same and indicated that she recommended to Grant Hayden that the Waterbury branch of ABC extend $25,000 of credit to Casanova Enterprises, LLC. She further testified that though this was her recommendation, it is an internal limit and that the local ABC manager has the authority to override that recommendation.   She indicated that the internal limit was not shared with the customer.   She made notations on the fax copy she had received of the credit application.   Defense marked her notations on Defendant's Exhibit A. The notations appear on the right side mid-page in the section titled, “Section 3 Your Personal Guaranty” and are just to the right of Continuing Guaranty.   Those notations are 25K 3.34.   Ms. Pagano described that these notations meant that she was recommending to Grant Hayden that Mr. Hayden consider extending credit to Casanova Enterprises, LLC in an amount of $25,000 because Casanova Enterprises, LLC had a credit rating of 3.34, using a 1 to 6 scale and that 3.34 was a “pretty good rating.”

On cross examination, Ms. Pagano indicated that she did not fax back her internal memo with her personal notations, but rather believed that she communicated with Grant Hayden via e-mail describing her recommendations.   Ms. Pagano was clear that her internal analysis were recommendations only because the manager of the local ABC Supply was responsible for determining whether to extend greater or lesser credit to the customer based upon the local manager's knowledge of the customer, assessment of the local business climate and other factors.

John Casanova testified that on December 12, 2012 he went to ABC to pay a bill.   He understood that he was going to be asked to sign an application for a line of credit.   He denied that he understood that he was signing a personal guarantee.   He agreed that he signed Exhibit 1. He agreed that when he signed Exhibit 1 there were no markings on the Exhibit by Ms. Pagano as shown in Defendant's Exhibit A. He made no claim that he was pressured, threatened or otherwise coerced into signing the personal guaranty contained in Exhibit 1. He agreed that he filled out Exhibit 1 and signed the same.   Mr. Casanova testified that following his signature on the credit application, the same was immediately faxed to ABC and within fifteen minutes ABC had responded to Mr. Hayden with a limitation of $25,000 line of credit.   Casanova then testified that because Casanova Enterprises bill with ABC was at that moment greater than $25,000 and he had received a $25,000 line of credit, Casanova simply paid to ABC the difference between the then outstanding balance due ABC and the $25,000 line of credit approved by the ABC credit analyst.   No documentary evidence was offered to support these claims.

Casanova claimed that he had a discussion with Grant Hayden on December 12, 2011 during which Grant Hayden assured Casanova that Casanova's personal liability was limited to $25,000.   Hayden denied such a conversation occurred.   Ms. Starks denied such conversation.

Casanova's testimony is internally inconsistent.   He first testified that he did review and sign Exhibit 1, which includes a personal guaranty, but then denied that he understood that he had any personal obligation for the goods delivered by ABC to Casanova Enterprises.   Thereafter he testified that he understood he did have a personal obligation.   However, his claim is that Grant Hayden assured him that his personal obligation was limited to $25,000.   All of these events supposedly happened on December 12, 2011 during Casanova's brief visit to ABC in Waterbury.

The Court finds Mr. Casanova's recollections of the events to be so inconsistent as to be untrustworthy.   The Court finds Mr. Hayden's and Ms. Starks' recollection of the events much more consistent with the document that were executed on that date.   The testimony of Mr. Casanova that Ms. Pagano had received the Casanova Enterprises' credit application on December 12, 2011 and within fifteen minutes had analyzed Casanova Enterprises' credit worthiness and responded to Grant Hayden with that information was unsubstantiated.   Ms. Pagano offered no such evidence and other than Mr. Casanova's unsupported testimony, there was no such evidence.

Mr. Casanova also testified that ABC offered him a 3% kickback on all roofing materials.   He had no documentation to support this claim.   He had no witnesses to support this claim.   Mr. Hayden denied this claim.   Mr. Casanova offered no details of when such an agreement was reached, where such an agreement was reached, the scope of the agreement, the person with whom the agreement was reached or any other salient details about a “kickback” or rebate agreement between Casanova Enterprises and ABC Supply.

Mr. Casanova also testified that ABC Supply had agreed to reduce his cost of squares of shingles from $98.00 per square to $72.00 per square.   Casanova indicated that because he was working 100 hours a week during the roofing season, he did not notice that ABC Supply had failed to give him this discount during the season and only noticed at the end of the year that he had failed to receive this discount.   Mr. Casanova had no documentation to support his claim of a price discount.   Mr. Casanova offered no evidence of when the discount was applicable, on what materials, who authorized the same, nor any other salient factual support for the claim of an agreement to discount the cost of shingles sold by ABC to Casanova Enterprises.

Furthermore, Mr. Casanova claimed that ABC Supply may have delivered some of the $103,000 worth of materials to people other than Casanova Enterprises, LLC's employees, agents or servants.   Again, Mr. Casanova had no documentary or testimonial support for this claim.   He offered no specific example or instance.   He had nothing but a broad general statement that ABC was giving materials to people not working for him.

Casanova offered no evidence to substantiate that claim.   He offered no examples of materials delivered to any other individual nor did he offer any testimonial evidence to support this claim.

Casanova also claimed that ABC included $20,000 worth of materials in the instant claim that were in fact materials for a roof on an SPCA building in Monroe, CT. Again Mr. Casanova offered no evidence in support of this claim.   He identified no line items in the billings of the plaintiff that were applicable to this claimed project.   He offered no documents or other testimonial evidence of whether and when a roof was installed on an SPCA building in Monroe, CT. He offered no evidence that the parties had agreed to a charitable donation for that roof.   In sum, he offered no supporting evidence to the claim that the plaintiff had included $20,000 of materials that were supposed to be charitably donated in the instant claim.

The Court finds the defendant has offered insufficient evidence to establish any defense to the claim at hand.   He offered insufficient evidence to substantiate or support his Special Defense of duress.   He offered insufficient evidence to support any claim of set off for any rebate programs, any agreement concerning reduced pricing or charitable donations or goods delivered to parties not associated with Casanova Enterprises, LLC.

LEGAL STANDARDS

“Where there is definite contract language, the determination of what the parties intended by their contractual commitments is a question of law.”   Thompson & Peck, Inc. v. Harbor Marine Contracting Corp., 203 Conn. 131 (1987).   The language of the Continuing Guaranty agreement explicitly provides that the guarantor unconditionally guarantees and promises to promptly pay when due any and all indebtedness of the buyer (Casanova Enterprises, LLC to the seller ABC).   The personal guarantee in the instant matter contains no restriction or limitation on the amount of the guaranty.   The defendant's assertion that his liability is limited by the notation made on the Continuing Guaranty, see defendant's Exhibit A, by Ms. Pagano wherein she recommended a credit limit of $25,000, is unpersuasive to this Court that such notation was in any way a limitation on the defendant's guaranty.   In the case of Associated Catalogue Merchandisers, Inc. v. Chagnon, 210 Conn. 734 (1989), the parties had agreed that the guarantor's liability was limited to a guarantee of not more than the sum of $35,000.   In Boxed Beef Distributors v. Rexton, 7 Conn.App. 555 (1986), the personal guarantee of the debt was limited to “A MAXIMUM OF $20,000.”   The instant case is unlike the two aforementioned Appellate Court cases wherein the guarantee signed by the defendant guarantor specifically limits the guarantor's obligations.   In the instant matter, Mr. Casanova signed a personal guarantee and an unlimited personal guarantee of Casanova Enterprises, LLC's obligations to ABC. Only after he had signed that unlimited guarantee was the credit application sent to Ms. Pagano for an internal review and recommendation to the local ABC manager, Hayden, with a recommendation of a limit of credit of $25,000.   The instant fact pattern is unlike the Appellate Court cases above-described wherein a guarantor's liability is limited by the language contained in the guarantee agreement.   There is no such language in the instant agreement.

The Continuing Guaranty also provides that the guarantor will be responsible for “all costs of collection, legal fees and attorneys fees paid or incurred by ABC in connection with the collection of the buyer's indebtedness and in enforcing this Continuing Guaranty.”   Plaintiff's Exhibit 5 and 6 established reasonable attorneys fees and non-taxable costs/expenses totaling $8,506.10.   Additionally, the Court rejects the defendant's assertion that the bankruptcy by the non-party Casanova Enterprises, LLC would impact the liability of the guarantor defendant with respect to the instant claim.   The bankruptcy code, specifically 11 USC 424, permits this Court to find that a discharge under Chapter 11 of the code “has no affect on the liability on a non-debtor, co-debtor or guarantor of the discharged debt.”   The Court notes in the Restatement Third of the Law, Suretyship and Guaranty, § 34, Comment (b) provides:  discharge in bankruptcy proceedings.  “A secondary obligation protects against the inability or unwillingness of the principal obligor to perform the underlying obligation.   Most often, a principal obligor that fails to perform does so because of a financial ability to perform.   Financial inability to live up to one's obligations, of course, correlates quite highly with insolvency and bankruptcy.   Indeed, an obligee who insists upon a secondary obligation as a condition of extending credit is typically most concerned with the risk of discharging bankruptcy proceedings.   If the principal obligor's defense in bankruptcy proceedings could be raised by the secondary obligor, the value of the secondary obligation would be seriously diminished.   Accordingly, this defense may not be raised by the secondary obligor.”

WHEREFORE, the court finds in favor of the plaintiff against the defendant and finds the principal amount due to be $103,097.00.   Interest pursuant to C.G.S. § 37–3a from June 10, 2012 to April 24, 2013 is awarded at the rate of $24.64 a day is $8,418.59.   Reasonable attorneys fees and expenses in the amount of $8,506.10 are awarded to the plaintiff pursuant to the contract between the parties.   Judgment enters in favor of the plaintiff in the amount of $120,022.69.

BY THE COURT

ZEMETIS, T.

Zemetis, Terence A., J.