Pagoda Trading Co. v. Timothy Brown ( 1996 )

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No. 95-2215
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Pagoda Trading Company, Inc., *
*
Plaintiff/Appellee, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Pro Moves, Inc., * [UNPUBLISHED]
*
Defendant, *
*
Timothy D. Brown, *
*
Defendant/Appellant. *
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Submitted: December 14, 1995
Filed: February 26, 1996
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Before FAGG, GARTH,* and WOLLMAN, Circuit Judges.
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PER CURIAM.
Timothy D. Brown appeals both the district court's1 grant of
summary judgment in favor of Pagoda Trading Co., Inc. (Pagoda) on
his personal guaranty and its certification of the judgment
pursuant to Federal Rule Civil Procedure 54(b). We affirm.
I.
Brown is a professional football player for the Oakland
Raiders. In 1990, Brown and his brother, Donald Kelly, formed Pro
*The HONORABLE LEONARD I. GARTH, United States Circuit
Judge for the Third Circuit, sitting by designation.
1
The Honorable Catherine D. Perry, United States District
Judge for the Eastern District of Missouri.
Moves, Inc. (Pro Moves) for the purpose of selling athletic shoes.
Brown became Chairman of the Board of Pro Moves and Kelly acted as
President. Pro Moves entered into an agreement with Pagoda in
September of 1990 whereby Pagoda would design and manufacture shoes
and supply them to Pro Moves.
From 1992 until February 1993, Pagoda sent shipments of
athletic shoes to Pro Moves. Although each shipment contained a
sales invoice, Pro Moves did not pay Pagoda according to the
invoice terms. In fact, during this entire period, Pro Moves paid
Pagoda only $103,233.19 on these invoices, although it ordered
shoes worth $1,594,477.55. In May 1992, Brown complied with
Pagoda's request that he sign a personal guaranty to vouch for Pro
Moves' debt to Pagoda for up to $1 million.
In February 1993, Pro Moves executed a demand note evidencing
its indebtedness of $1,438,882.76 to Pagoda. Despite Pagoda's
demand for payment, Pro Moves failed to pay. Brown also failed to
honor the terms of his personal guaranty.
Pagoda brought an action against Pro Moves and Brown in
September of 1993. Pagoda's suit against Pro Moves consisted of an
action on account, a claim for breach of contract, and an action on
the demand note. Pagoda also brought a claim against Brown on the
personal guaranty. Pro Moves and Brown counterclaimed for breach
of a joint venture agreement. Pagoda filed a motion for summary
judgment as to all of the claims. The district court granted
partial summary judgment on three of Pagoda's claims and on the
counterclaim, leaving only Pagoda's breach of contract claim
against Pro Moves for trial. On motion by Pagoda, the district
court certified the judgment against Brown pursuant to Rule 54(b).
Brown appeals.
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II.
Because our jurisdiction depends on proper certification of
the judgment pursuant to Rule 54(b), we must first decide this
issue before reaching the merits of the grant of summary judgment.
Under Rule 54(b) the district court "may direct the entry of a
final judgment as to one or more but fewer than all of the claims
or parties only upon an express determination that there is no just
reason for delay." Before granting certification, the district
court must consider the equities involved and take into account
judicial administrative interests so as to prevent piecemeal
appeals. Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8
(1980). We review the district court's grant of Rule 54(b)
certification for an abuse of discretion. Interstate Power Co. v.
Kansas City Power & Light Co., 992 F.2d 804, 807 (8th Cir. 1993).
The district court correctly followed the requirements of Rule
54(b) by stating there was no just reason for delay in certifying
the judgment. Elaborating on its decision, the court stated that
"[t]here are no issues remaining for decision as between plaintiff
[Pagoda] and defendant Brown, and the ultimate resolution of [the
breach of contract claim] against Pro Moves will have no legal
effect on the already-determined liability of defendant Brown on
his personal guarantee."
We agree that the district court's order entirely disposed of
Pagoda's claim against Brown and that there was no just reason for
delaying certification. The remaining breach of contract claim
involves a potential liability of Pro Moves for shoes that were
ordered but never shipped to Pro Moves because of its nonpayment to
Pagoda. This issue is completely severable from the guaranty claim
against Brown, which is based upon liability already incurred by
Pro Moves. At the very least, Pro Moves owes Pagoda more than $1.4
million as evidenced by the demand note, well over the amount
guaranteed by Brown. Thus, certification was proper because there
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is no significant relationship between the individual claim against
Brown based on his personal guaranty and the remaining claim
against Pro Moves for breach of contract. See In re Flight Transp.
Corp. Sec., 825 F.2d 1249, 1251 (8th Cir. 1987), cert. denied, 485
U.S. 936 (1988) (finding certification proper when "no significant
relationship [existed] between adjudicated and unadjudicated
claims").
Moreover, Brown's liability based on the personal guaranty is
separate and distinct from any of Pagoda's claims against Pro
Moves. Under Missouri law, "[g]uarantees are separate contracts,
collateral to and independent of any underlying agreement."
McFarland v. O'Gorman, 814 S.W.2d 692, 694 (Mo. Ct. App. 1991). A
guarantor's liability stems primarily from the guaranty itself.
Id. (citing Boatmen's Bank v. Community Interiors, Inc., 721 S.W.2d
72, 79 (Mo. Ct. App. 1986)). It was not unreasonable, then, for
the district court to order Brown to tender payment before final
resolution of the action. See Federal Deposit Ins. Corp. v.
Elefant, 790 F.2d 661, 664-65 (7th Cir. 1986) (holding that
guarantor may be required to pay obligee at once, despite pending
action on underlying note, when basic liability is apparent).
Moving on to the merits of this action, we hold that the
district court did not err in granting partial summary judgment on
Brown's personal guaranty. We review a grant of summary judgment
de novo. Grossman v. Dillard Dep't Stores, 47 F.3d 969, 971 (8th
Cir. 1995). Because this is a diversity case, we also review the
district court's interpretation of state law de novo. Michalski v.
Bank of America Arizona, 66 F.3d 993, 995 (8th Cir. 1995) (citing
Salve Regina College v. Russell, 499 U.S. 225, 231 (1991)).
Here, it is undisputed that Brown voluntarily signed an
unconditional, continuing guaranty promising to pay Pagoda up to $1
million for debt incurred by Pro Moves. The terms of the guaranty
are clear and unambiguous. They specifically provide that the
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guaranty may be enforced "independently of any action against said
debtor." Pro Moves has acknowledged by demand note that it owes
Pagoda more than $1 million and has not tendered payment. Based on
these facts, we find that summary judgment was proper. See Lemay
Bank & Trust Co. v. Harper, 810 S.W.2d 690, 693 (Mo. Ct. App. 1991)
(finding summary judgment against guarantor appropriate when
guaranty was unambiguous, underlying debtor used loans pursuant to
guaranty, and debtor defaulted on loans).
The district court's certification of the judgment pursuant to
Rule 54(b) and its grant of partial summary judgment against Brown
are affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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