Contract – Personal Guarantee – Owner’s Personal Liability for Company’s Debt

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The trial court erred in ruling the personal guarantee was valid and enforceable.

We reversed and remanded for a new trial on the validity and enforceability of Petitioner’s personal guarantee.

ScanSource, Inc. brought a collection action against Petitioners Dependable Technology Center, LLC (DTC) and its owner, George G. Moraru. The court of appeals affirmed the trial court’s ruling that Moraru’s personal guarantee agreement was valid and enforceable as a matter of law and directing a verdict in favor of ScanSource. During trial, DTC confessed judgment, and there is now no dispute DTC owes ScanSource $149,379.07. The only question before us was whether Moraru is also liable for this debt based on the personal guarantee.

The collection action proceeded to trial before a jury. As its first witness, ScanSource called its Director of Financial Services, Steven Zielinski. Zielinski testified DTC submitted its first credit application to ScanSource in April 2013. Simultaneously, Moraru executed and delivered his personal guarantee. ScanSource then had admitted into evidence, without objection, two later credit applications it had received from DTC. Zielinski testified ScanSource began doing business with DTC in 2013 and first issued an invoice to DTC in 2014. He testified DTC currently owed $149,379.07 on the account. On cross examination, Petitioners’ counsel asked Zielinski why ScanSource had denied DTC’s April 2013 application. ScanSource objected, noting it had not seen any documents or discovery to support proof of the denial. The trial court allowed the lawyers to argue their positions outside the jury’s presence. Petitioners’ counsel proffered an email chain from ScanSource employees advising that DTC’s April 2013 application was in fact denied. The trial court, no doubt surprised by the rush of events, engaged in a lengthy discussion with counsel in an attempt to understand the turn in the evidence and the discovery history of the case. To that end, the trial court reviewed the personal guarantee and deemed it “valid.” At that point, the dialogue digressed, and ultimately the trial court granted ScanSource’s motion for directed verdict against both Petitioners.

We held the trial court erred in ruling the personal guarantee was valid and enforceable as a matter of law. As with any contract, a guarantee agreement must be formed with an offer, acceptance, valuable consideration, and a meeting of the minds as to all essential terms. The proffered email exchange provides an inference that the guarantee may not have been accepted or been otherwise enforceable. Petitioners’ defenses—that the guarantee lacked consideration, was never accepted, and was otherwise unenforceable—should have been decided by a jury. We therefore reversed and remanded for a new trial as to Moraru’s personal liability for DTC’s debt.

Reversed and remanded.

ScanSource Inc. v. Dependable Technology Center LLC (Lawyers’ Weekly No. 013-005-25, 3 pp.) (Per Curiam) Appealed From Greenville County Circuit Court (Edward W. Miller, J.) J. Falkner Wilkes, of Oakland, MS, and William R. McKibbon, III, of Greenville, both for Petitioners; Robert Alan Pohl, of POHL, PA, of Greenville, for Respondent. South Carolina Supreme Court Unpublished