Franklin Building Supply v. Aaron Hymas

Citations: 157 Idaho 632; 339 P.3d 357; 2014 Ida. LEXIS 316Docket: 41041

Court: Idaho Supreme Court; November 28, 2014; Idaho; State Supreme Court

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Franklin Building Supply Company, Inc. (FBS) initiated a lawsuit against Aaron Michael Hymas to recover funds owed for construction supplies and labor provided to Crestwood Construction, Inc., contending that Hymas acted as a guarantor for any unpaid balance on Crestwood’s account. The district court granted summary judgment in favor of FBS and later allowed FBS to correct an affidavit concerning the interest owed on the outstanding balance. Hymas sought to reconsider the summary judgment order twice, but both motions were denied, leading to his timely appeal.

FBS filed the complaint for breach of contract in October 2011 and moved for summary judgment in November 2012, supported by an affidavit from Richard C. Pietrucci, FBS’s corporate credit manager. The affidavit detailed that Hymas applied for credit on behalf of Crestwood and signed a personal guaranty to secure credit. The complaint included three attachments: the credit application signed by Hymas and another officer, the continuing guaranty, and a transaction report showing a balance of $671,667.50 for charges primarily incurred in early 2007.

Hymas opposed the summary judgment on three grounds: he argued that the claims were barred by the four-year statute of limitations for oral contracts, contended that the affidavit and transaction report did not demonstrate that the charges were authorized by designated personnel, and requested to depose Pietrucci to obtain further evidence on the authorization of charges. However, Hymas did not present any admissible evidence to support his opposition to the summary judgment.

The district court granted FBS’s motion for summary judgment, concluding that Hymas failed to address discovery issues through an appropriate I.R.C.P. 56(f) motion. It determined that the four-year statute of limitations did not bar the case, as the written guaranty is governed by a five-year statute under Idaho Code section 5-216. The court found FBS's evidence sufficient to support its breach of contract claim, placing the burden on Hymas to present admissible evidence to show a material question of fact, which he did not do.

FBS later filed a motion to correct the amount claimed owed, asserting that a prior affidavit mistakenly noted the date as October 31, 2012, instead of January 27, 2011, and sought to clarify the wording regarding the inclusion of interest. The court found this discrepancy to be a clerical error and granted the correction, establishing the owed amount as $934,332.44 as of January 17, 2013.

Hymas subsequently filed a motion for reconsideration, arguing that FBS’s invoices lacked signatures, casting doubt on whether the orders were authorized under the credit agreement. He noted issues with unauthorized orders by subcontractors and contested the interest rate applied to the balance owed. Additionally, Hymas introduced a new argument regarding the corporate status of Crestwood, claiming it was dissolved in 2005 and that the entity ordering materials in 2007 was different from the one for which he guaranteed an account.

The district court declined to consider Hymas’s corporate status argument because it was raised for the first time in his reply memorandum, and it disregarded the supporting materials attached since they were not submitted under oath. The court denied Hymas’s motion for reconsideration, reaffirming that FBS had sufficiently supported its breach of contract claim and that Hymas did not demonstrate a material factual dispute.

Hymas’ affidavit in support of reconsideration claimed that some purchases might have been made by unauthorized purchasers, but the court found these assertions to be conclusory and speculative, failing to meet Hymas' burden of proof. Additionally, the court dismissed Hymas' argument regarding the small font size of the interest provision in the credit agreement, as he did not provide supporting authority or arguments. On April 8, 2013, the court ruled in favor of FBS, awarding $961,162.07. Hymas filed another motion for reconsideration on April 19, 2013, which included an affidavit with articles of dissolution and sample invoices, but it was not properly entered into the record until May 17, 2013, due to a filing error. An earlier affidavit submitted on April 26 did not include the articles of dissolution. Hymas argued that because Crestwood Construction, Inc. was dissolved in 2005, there was a material question regarding his obligation under the guaranty agreement. The district court denied Hymas’ second motion for reconsideration, deeming it procedurally improper as a successive motion and noting that Hymas had multiple chances to present his argument but did not. Hymas appealed, contesting the summary judgment, the court's correction of the interest calculation, and the denial of both motions for reconsideration. The appeal raised five issues, including whether the district court erred in its summary judgment and reconsideration rulings. The standard of review for the summary judgment is that it is appropriate when there are no genuine issues of material fact, placing the burden on the nonmoving party to present contradicting evidence. The court evaluates motions to reconsider using the same standard employed for summary judgment.

The district court's decision to grant FBS's motion for summary judgment was upheld. A breach of contract claim requires: 1) existence of a contract, 2) breach of that contract, 3) damages caused by the breach, and 4) the amount of those damages. The court found that FBS provided sufficient evidence for each element. The burden then shifted to Hymas to present evidence showing a material question of fact, which he failed to do. Hymas contended that FBS did not establish a prima facie case due to potential unauthorized purchases on Crestwood's account, citing a credit application limiting authorization to three individuals. He argued that the customer transaction report and Pietrucci’s affidavit did not adequately demonstrate the amount owed. Although Hymas initially raised a statute of limitations defense, he later abandoned it on appeal, admitting that the transaction was not barred. Hymas asserted that without signed invoices, there was insufficient evidence for summary judgment. The district court countered that while detailed invoice verification could prove the debt, it was not the only method. The account summary itself was deemed sufficient evidence of proper authorization since only authorized individuals could charge to the account. Hymas failed to provide evidence disputing the account's accuracy or unauthorized charges, merely criticizing its reliability without justification. Therefore, the court concluded that the amount shown in the account summary was owed under the guaranty agreement, warranting summary judgment for FBS. Hymas also argued that he should have been allowed to depose Pietrucci before the summary judgment was granted, as per I.R.C.P. 56(f), which allows for continuances to secure necessary evidence.

A motion for continuance must be accompanied by an affidavit detailing the reasons for the request. In Golay v. Loomis, the court held that failure to file such a motion or supporting affidavit justified the denial of a continuance. Hymas, despite referencing Rule 56(f) in his opposition to summary judgment, did not formally file a motion or provide an affidavit, making it too late to claim he needed more time to respond to the Defendant's motion for summary judgment.

The district court correctly allowed FBS to amend its claim regarding the interest owed under the guaranty agreement due to a clerical error in the originally submitted affidavit. Pietrucci's affidavit, which erroneously cited the date as October 1, 2012, instead of January 27, 2011, stated that the amount owed was $671,667.05, including interest. FBS's subsequent motion sought to clarify that the amount owed as of January 17, 2013, was $934,332.44, reflecting additional interest. The district court accepted this correction, deeming it a clerical oversight. Hymas's objections lacked specific arguments or authority and were thus not considered.

The district court also did not err in denying Hymas's first motion for reconsideration. This motion reiterated his previous argument that FBS failed to demonstrate the legitimacy of charges to Crestwood’s account. Hymas contended that the invoices were unsigned, rendering it unclear whether the purchases were authorized or delivered. He introduced claims regarding unauthorized purchases on Crestwood’s account for the first time, attempting to raise a question of material fact about the amount owed under the guaranty agreement.

Hymas submitted an affidavit asserting that Crestwood Construction, Inc. had issues with unauthorized purchases of products from FBS by framers and subcontractors. He contended that the interest provision in the contract was ineffective due to its small font size. Additionally, in his reply memorandum, he claimed for the first time that Crestwood had dissolved before the relevant purchases. The district court rejected all of Hymas' arguments, granting summary judgment for FBS based on sufficient evidence presented, including Pietrucci's testimony and a customer transaction report. The court determined that the unsigned invoices did not invalidate the accuracy of the account or suggest that purchases were unauthorized. It concluded that the purchases were authorized and products were delivered, as only certain parties were allowed to make purchases. Hymas' assertion of prior unauthorized purchases was deemed insufficient to create a genuine issue of material fact, as he failed to provide concrete evidence of such claims. The court noted that mere speculation from Hymas did not meet the standard required to establish any material question of fact. Regarding interest, Hymas argued that the interest rate was unreadable due to the font size and claimed entitlement to a lower interest rate based on Idaho law for contracts lacking explicit interest terms.

The district court rejected Hymas's argument regarding the font size of the credit agreement, pointing out that he did not claim unawareness of the interest provision when signing and failed to provide authority to support his position on font size affecting enforceability. On appeal, Hymas seemingly abandoned this argument, merely asserting that interest should be calculated at the contract rate of 12% instead of 18%, without addressing the font size issue. The court noted that issues mentioned without substantial argument cannot be considered.

In his reply memorandum for reconsideration, Hymas introduced a new argument concerning the dissolution of Crestwood Construction, Inc. in February 2005, claiming that FBS was seeking payment for services rendered to Crestwood, Inc., not the entity he guaranteed. He supported this claim with documentation of dissolution and incorporation. However, the district court rejected this argument because it was raised for the first time in the reply memorandum, which is not permissible as it deprives the opposing party of addressing it. Additionally, the documents were not part of the evidentiary record since they were not submitted with the initial motion or an affidavit.

The documents indicated that Crestwood Construction, Inc. was dissolved effective December 31, 2004, and Crestwood, Inc. was incorporated on February 11, 2005, using the assumed name of Crestwood Construction, Inc. The record did not clarify the reasons behind these corporate changes, which could suggest an attempt to evade personal guarantees. However, the motivations for these changes were deemed irrelevant to the appeal's outcome.

The district court acted within its discretion by declining to consider an argument presented for the first time in a reply brief during Hymas's motion for reconsideration. However, Hymas retained the opportunity to file a timely additional motion for reconsideration under I.R.C.P. 11(a)(2)(B) to present new evidence or arguments. The court noted that Hymas's argument lacked supporting evidence in the summary judgment record, which requires the trial court to assess the pleadings, depositions, admissions, and affidavits to identify any genuine issues of material fact. Hymas failed to attach relevant documents to a sworn affidavit, leading the court to properly dismiss his unsupported argument.

Hymas filed a second motion for reconsideration on April 19, 2013, focusing on the distinction between Crestwood Construction, Inc. and Crestwood, Inc., but it was deemed procedurally improper as it followed a final judgment made on April 8. Although I.R.C.P. 11(a)(2)(B) allows reconsideration of interlocutory orders within fourteen days of final judgment, the court was concerned about the potential for endless motions for reconsideration. However, the court's reasoning was flawed, as the rule explicitly permits a motion for reconsideration of an order denying a previous motion for reconsideration. This was supported by precedent in Agrisource, Inc. v. Johnson, which clarified that a party can seek to reconsider an order denying a prior motion for reconsideration.

A motion to reconsider an order denying a previous motion for reconsideration is effectively a request to reconsider the underlying interlocutory order, here being the summary judgment. According to I.R.C.P. 11(a)(2)(B), any motion for reconsideration must be filed within fourteen days of the final judgment. Hymas filed his motion within this timeframe but did not file his supporting affidavit until twenty-two days after the judgment, which is outside the required period. I.R.C.P. 7(b)(3)(B) mandates that affidavits must accompany motions, and the district court was justified in refusing to consider Hymas' untimely affidavit. Additionally, Hymas could not rely on a promise to later support his motion, as established in prior case law. The district court indicated it would not have permitted an untimely affidavit even if requested. Ultimately, Hymas’ motion lacked factual support due to the late filing, justifying the court's denial of the motion, albeit for the incorrect reason. FBS is entitled to attorney fees on appeal based on the guaranty contract and relevant statutes, while Hymas, as the non-prevailing party, is not entitled to such fees. The judgment of the district court is affirmed, with FBS awarded its costs and fees on appeal. Chief Justice Burdick and Justices Eismann, Horton, and Pro Tem Walters concur.