United States District Court, D. New Hampshire
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,
...