LLC v. Healthy Food Corp.

          James F. Laboe, Esq. Christopher P. Mulligan, Esq. David K. Pinsonneault, Esq. Lisa Snow Wade, Esq.

          ORDER

          JOSEPH DICLERICO, JR. UNITED STATES DISTRICT JUDGE

         17 Outlets, LLC brought suit against Healthy Food Corporation, d/b/a Frozurt, (“HFC”) and Tai H. Pham after HFC failed to pay rent due under a lease for commercial space in Merrimack, New Hampshire. In its claim against Pham, 17 Outlets sought to enforce a guaranty signed by Pham.^[1] Pham moves for summary judgment, and 17 Outlets objects.

         Standard of Review

         Summary judgment is appropriate when the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A genuine dispute is one that a reasonable fact-finder could resolve in favor of either party and a material fact is one that could affect the outcome of the case.” Flood v. Bank of Am. Corp., 780 F.3d 1, 7 (1st Cir. 2015). Although the facts and reasonable inferences are taken in the light most favorable to the nonmoving party, unsupported speculation and evidence that “is less than significantly probative” are not sufficient to avoid summary judgment. Planadeball v. Wyndham Vacation Resorts, Inc., 793 F.3d 169, 174 (1st Cir. 2015) (internal quotation marks omitted). “On issues where the movant does not have the burden of proof at trial, the movant can succeed on summary judgment by showing ‘that there is an absence of evidence to support the nonmoving party's case.'” OneBeacon Am. Ins. Co. v. Commercial Union Assurance Co. of Canada, 684 F.3d 237, 241 (1st Cir. 2012) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).

         Background

         The claims in this case arose from events that began when ThurKen III, LLC (or another related entity) made arrangements during the spring of 2012 to buy land to build a strip mall in Merrimack, New Hampshire.^[2] The strip mall was to contain four units leased to retail enterprises. On May 23, 2012, Orange Leaf, a frozen yogurt shop and one of the four lessees, decided not to lease a unit in the mall.

         Through agents, Thurloe Kensington Corporation contacted Tram Dang about leasing the vacant unit for her frozen yogurt business and sent Dang a letter of intent. A personal guaranty was required for the lease. Pham signed a guaranty agreement on May 31, 2012, before the lease was signed.

         The “Unlimited Guaranty, ” which Pham signed, states that the guaranty was “[t]o induce Landlord [Thurken III LLC] to enter into a certain lease agreement of even or near date with Tram Dang dba Frozurt, (‘the Lessee'), for real property located in Merrimack, New Hampshire (the ‘Lease').” Pham “absolutely and unconditionally guarantee[d] the full and punctual payment to Landlord of all sums which may be presently due and owing and of all sums which shall now and in the future become due and owing to Landlord from the Lessee, under the Lease.”

         Pham signed the guaranty at his home on Long Island. He did not see the lease or attend the closing on the lease the next day when Tuan Dang signed the lease on behalf of HFC. Pham signed the guaranty because of his family relationship to Tram Dang's mother, who is his cousin, as a matter of Vietnamese tradition and duty. He had no information about the operation of Tram Dang's business and did not know the business was incorporated.

         The lease, which was signed the day after Pham signed the guaranty agreement, identified HFC as the tenant and ThurKen III as the landlord. Tuan Dang, the president of HFC, signed the lease on behalf of HFC, and Richard E. Landry signed the lease on behalf of ThurKen III. Tram Dang was not a lessee named in the lease and did not sign the lease.

         HFC moved into the strip mall unit and operated the Frozurt business there. By spring of 2014, HFC was unable to continue to make the payments required under the lease. 17 Outlets served an eviction notice on HFC, which vacated the strip mall unit sometime after October 3, 2014. When HFC did not pay the rent due under the lease, 17 Outlets demanded the amount due from Pham pursuant to the guaranty agreement. Pham denied that he had any obligations under the guaranty agreement to pay what HFC owed under the lease.

         17 Outlets brings a claim that Pham breached his personal guaranty promised in the guaranty agreement. It previously moved for summary judgment in its favor on its breach of guaranty claim. The court concluded, however, that material factual disputes existed as to whether the guaranty agreement was voidable because of a mutual mistake as to the identity of the lessee and whether the parties entered an agreement at all because of a lack of meeting of the minds. As a result, the court denied 17 Outlets's motion for summary judgment.

         Discussion

         Pham moves for summary judgment on the breach of guaranty claim against him, arguing that 17 Outlets cannot prove the claim because the guaranty is void and unenforceable as to HFC's lease obligations. In support, Pham refers to his arguments made in objecting to 17 Outlets's motion for summary judgment and focuses on his argument that the guaranty agreement was void because there was no meeting of the minds. 17 Outlets objects, arguing that Pham and ThurKen III agreed that Pham would guaranty Tram Dang's obligations under the lease which formed an enforceable agreement, that then the guaranty could be modified without Pham's consent, that Pham waived all suretyship defenses, that the change in the identity of the lessee was not material, and that the issue of intent cannot be resolved on summary judgment.

         I. Meeting of the Minds

         “For a contract to be valid, there must be a meeting of the minds on all essential terms of the contract, meaning that the parties must have assented to the same contract terms.” Chase Home for Children v. N.H. Div. for Children, Youth & Famlies, 162 N.H. 720, 727 (2011). “The formation of a guaranty contract, like any other contract, is governed by the principles of mutual assent, adequate consideration, definiteness, and meeting of the minds.” Middileton Bldg. Supply, Inc. v. Gidge, 2000 WL 33915975, at *2 (N.H. Super. Ct. June 5, 2000) (internal quotation marks omitted). The identity of the person or entity whose obligations are being guaranteed, which is the subject matter of the agreement, is a material term of the guaranty agreement. See, e.g., In re Blonder, 2015 WL 5773230, at *7 (Bankr. N.D.Ga. Sept. 28, 2015); Elderberry of Weber City, LLC v. Living Ctrs.-Southeast, Inc., 958 F.Supp.2d 623, 628 (W.D. Va. 2013); Lerman v. Rock City Bar & Grille, Inc., 2010 WL 2044865, at *4-*5 (N.D. Ohio May 21, 2010); Provident Bank v. Taylor Creek Enters., LLC, 2010 WL 298300, at *3 (N.D. Fla. Jan. 19, 2010).

         In the agreement, Pham agreed to guaranty the obligations of Tram Dang as the lessee of the strip mall unit under a lease with ThurKen III. The guaranty agreement identifies Tram Dang as the lessee and ThurKen III as the landlord but does not mention HFC. Tram Dang, however, was not the lessee when the guaranty was signed and never became the lessee. Therefore, Tram Dang did not have and never incurred any lease obligations to ThurKen III for Pham to guarantee. Instead, ...