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               IN THE COURT OF APPEALS OF TENNESSEE
                            AT JACKSON
                              November 14, 2018 Session

         LAFARGE NORTH AMERICA v. WARREN MILLS ET AL.

                  Appeal from the Circuit Court for Shelby County
                    No. CT-002224-10 Mary L. Wagner, Judge
                     ___________________________________

                           No. W2017-00431-COA-R3-CV
                       ___________________________________


        The trial court granted summary judgment in favor of Appellee, finding that the
guaranty agreement Appellant executed was enforceable. At the time Appellant executed
the guaranty, Choctaw II, LLC (“Choctaw”), a company of which Appellant was a
member, owed approximately $275,000.00 to Appellee on an open credit line, which was
guaranteed by William Carrier, another owner of Choctaw. Mr. Carrier filed bankruptcy,
and Appellee closed the open credit line for lack of guaranty. In an effort to continue to
purchase materials from Appellee, Appellant signed a guaranty. After Appellant signed
the guaranty, Appellee sold an additional $75,000 worth of goods to Choctaw, and
Choctaw paid Appellee approximately $79,000 after Appellant signed the guaranty.
Appellee applied these payments to the $275,000 balance and then sought payment for
the $75,000 in goods from Appellant. The trial court held that Appellee properly applied
the payments to the older debt. We hold that the guaranty agreement is enforceable.
However, as to the application of the payments, we hold that Appellee was required to
apply the $79,000 to the debt guaranteed by Appellant. Because the payments were
sufficient to pay off the $75,000 in goods, Appellant owes nothing to Appellee under the
guaranty and is entitled to summary judgment. Reversed and remanded for entry of
summary judgment in favor of Appellant.

       Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                            Reversed and Remanded

KENNY ARMSTRONG, J., delivered the opinion of the court, in which RICHARD H.
DINKINS, and ARNOLD B. GOLDIN, JJ., joined.

Warren Mills, Collierville, Tennessee, appellant, pro se.

Earl W. Houston, II, Adam Jacob Eckstein, Memphis, Tennessee, and Craig A. Knot (pro
hac vice), Chicago, Illinois, for the appellee, LaFarge North America.
                                       OPINION

                                    I. Background

       Appellee LaFarge North America (“LaFarge”) is a Maryland Corporation in the
business of selling cement. LaFarge does business throughout the United States. In
Memphis, LaFarge sold goods to Choctaw. which was owned by Henry Carrier, Michael
Carrier, and Appellant Warren Mills. LaFarge opened a credit account for Choctaw,
which account was originally guaranteed by William Carrier under a January 2008
guaranty agreement. Under the agreement, Choctaw was to pay any balance “by the last
day of the month following the month in which those goods were shipped.” In 2009,
Choctaw owed $266,557.14 on its credit account with LaFarge. The same year, the
original guarantor, William Carrier, declared bankruptcy.

       Mr. Mills then appealed to LaFarge to continue selling goods to Choctaw on
credit. To this end, on December 22, 2009, Mr. Mills signed a credit application and
guaranty agreement, which LaFarge contends it accepted on the same date. The
agreement Mr. Mills signed was identical to the one Mr. Carrier had signed. In relevant
part, the agreement provides that, “In consideration for sales to applicant on open
account, the undersigned individually and unconditionally guarantees to LaFarge and its
successors, the prompt payment of said account if not paid when due by applicant.” The
agreement further states that, “All signatories below execute this agreement on behalf of
Applicant as well as individually.” Like the 2008 agreement, the 2009 agreement
provided that payment was due by the end of the month in which the goods were shipped
and further provided that Choctaw, or its guarantor, would pay 18% annual interest on
late payments in addition to LaFarge’s costs of collection.

      Between December 2009, when Mr. Mills executed the guaranty, and March 2010,
when Choctaw ceased operations, Choctaw purchased $75,990.20 in goods from LaFarge
and made payments of $79,890.94 during this same period. LaFarge applied these
payments against Choctaw’s oldest debts. By the end of April 2010, Choctaw had a
remaining balance of $275,435.09 on its credit account, which amount included principal
charges of $262,656.40 and finance charges of $12,778.69 through April 30, 2010.

       On April 30, 2010, LaFarge filed suit against Choctaw, William Carrier, and Mr.
Mills alleging breach of contract against Choctaw and breach of guaranty against Messrs.
Carrier and Mills. By its complaint, LaFarge sought to recover, from Choctaw and/or
Mr. Carrier, the $275,435.09 (principle and interest, see supra) plus a per diem finance
charge of $129.53 accruing from April 5, 2010. LaFarge also sought to recover, from
Mr. Mills, $99,135.96 plus a per diem finance charge of $48.89 accruing from April 30,
2010 through the date of collection. On June 21, 2010, Mr. Mills filed an answer and
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counterclaim alleging that Choctaw obtained no goods on the open credit account after
December 22, 2009 because it had paid for all goods, from that date, by check tendered at
the time of purchase. Accordingly, Mr. Mills alleged that no debts were incurred after
the date he executed his guaranty. Mr. Mills further alleged that LaFarge had
fraudulently induced him to sign the 2009 guaranty and that it was void ab initio.

        In 2014, the parties filed cross-motions for summary judgment. LaFarge also
moved for default judgment against Choctaw. On April 13, 2015, the trial court entered
an order granting LaFarge’s motion for default judgment against Choctaw and its motion
for summary judgment against Mr. Mills. Specifically, the trial court concluded that Mr.
Mills was a sophisticated businessman, the guaranty satisfied the Statute of Frauds, and
LaFarge reasonably and properly applied Choctaw’s payments of $79,890, which were
made after December 2009, to its oldest outstanding debts. On May 19, 2015, the trial
court entered a writ of inquiry order finding that LaFarge was entitled to $75,990.20 plus
post-judgment interest at the statutory rate of 7.25%. In the May 19 order, the trial court
further held that LaFarge was entitled to attorney’s fees against the defendants and
ordered the amount thereof to be reached through negotiation between the parties. The
negotiations were ultimately unsuccessful, and, by order of October 28, 2016, the court
awarded LaFarge $97,046.95 in attorney’s fees against Mr. Mills. On January 13, 2017,
the trial court entered an amended order on attorney’s fees to correct the certificate of
service. The substantive award of attorney’s fees remained the same.

        Mr. Mills filed a notice of appeal on February 13, 2017. On review, this Court
determined that the April 13, 2015 and May 19, 2015 orders did not constitute a final
judgment because the trial court had not adjudicated defendant Mr. Carrier. On remand,
the trial court entered an order on March 2, 2018 granting LaFarge’s voluntary dismissal
without prejudice as to Carrier.

                                        II. Issues

     The sole issue for review is whether the trial court erred in granting summary
judgment in favor of LaFarge and denying Mr. Mills’ motion for summary judgment.

                                III. Standard of Review

       We first note that while we are cognizant of the fact that Appellant represented
himself throughout these proceedings, it is well-settled that “pro se litigants are held to
the same procedural and substantive standards to which lawyers must adhere.” Brown v.
Christian Bros. Univ., No. W2012-01336-COA-R3-CV, 2013 WL 3982137, at *3 (Tenn.
Ct. App. Aug. 5, 2013), perm. app. denied (Tenn. Jan. 15, 2014). This Court has held
that “[p]arties who choose to represent themselves are entitled to fair and equal treatment
by the courts.” Hodges v. Tenn. Att’y Gen., 43 S.W.3d 918, 920 (Tenn. Ct. App. 2000);
Paehler v. Union Planters Nat’l Bank, Inc., 971 S.W.2d 393, 396 (Tenn. Ct. App.
                                           -3-
1997). Nevertheless, “courts must not excuse pro se litigants from complying with the
same substantive and procedural rules that represented parties are expected to observe.”
Young v. Barrow, 130 S.W.3d 59, 62-63 (Tenn. Ct. App. 2003); Edmundson v. Pratt,
945 S.W.2d 754, 755 (Tenn. Ct. App. 1996); Kaylor v. Bradley, 912 S.W.2d 728, 733 n.4
(Tenn. Ct. App. 1995).

        This case was decided on grant of summary judgment in favor of LaFarge.
Summary judgment is appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” Tenn. R. Civ. P. 56.04; Bain v. Wells, 936 S.W.2d 618,
622 (Tenn. 1997); see also Abshure v. Methodist Healthcare-Memphis Hosp., 325
S.W.3d 98, 103 (Tenn. 2010); Dick Broad. Co., Inc. of Tenn. v. Oak Ridge FM, Inc.,
395 S.W.3d 653, 671 (Tenn. 2013); Rye v. Women's Care Center of Memphis, MPLLC,
477 S.W.3d 235, 250 (Tenn. 2015). We review a trial court’s ruling on a motion for
summary judgment de novo, without a presumption of correctness. In doing so, we make
a fresh determination of whether the requirements of Rule 56 of the Tennessee Rules of
Civil Procedure have been satisfied. Id. (citing Estate of Brown, 402 S.W.3d 193, 198
(Tenn. 2013); Hughes v. New Life Dev. Corp., 387 S.W.3d 453, 471 (Tenn. 2012)). For
actions initiated on or after July 1, 2011, the standard of review for summary judgment is
governed by Tennessee Code Annotated Section 20-16-101. The statute provides:

       In motions for summary judgment in any civil action in Tennessee, the
       moving party who does not bear the burden of proof at trial shall prevail on
       its motion for summary judgment if it:

              (1) Submits affirmative evidence that negates an essential
              element of the nonmoving party’s claim; or
              (2) Demonstrates to the court that the nonmoving party's
              evidence is insufficient to establish an essential element of the
              nonmoving party’s claim.

Tenn. Code Ann. § 20-16-101.

                                       IV. Analysis

       In his appellate brief, Mr. Mills makes several arguments concerning whether the
guaranty he signed is a valid and enforceable contract. We have reviewed Mr. Mills’
arguments, including that the guaranty is ambiguous, that it does not satisfy the prima
facie elements for a valid contract, and that it violates the Statute of Frauds. We are not
persuaded that the guaranty is unenforceable. The document was undisputedly signed by
Mr. Mills, whom the trial court found to be “a sophisticated person that understands
personal guarantees and has been in the cement/concrete industry for decades.” The
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parties do not dispute this finding. The guaranty itself is not ambiguous, and we find no
violation of the Statute of Frauds. Accordingly, we agree with the trial court’s ruling that
the guaranty is an enforceable contract.

       From the remaining arguments and statements to this Court at oral argument, it is
clear that the gravamen of the dispute between these parties involves LaFarge’s
application of payments made by Choctaw, after Mr. Mills executed the guaranty, i.e.,
after December 22, 2009, to debt Choctaw had accrued on its open credit account during
the time Mr. Carrier’s guaranty was in place, i.e., before December 22, 2009. The
material facts concerning this question are not in dispute. In support of his motion for
summary judgment, Mr. Mills filed the affidavit of LaFarge’s Credit Manager, Paula
Varteresian. In relevant part, Ms. Varteresian stated:

       18. Prior to December 22, 2009, Choctaw owed LaFarge a principal
       balance in the amount of $266,557.14 and between December 22, 2009 and
       March 12, 2010, Choctaw purchased materials in the principal amount of
       $75,990.20 . . . .
       19. Between December 22, 2009 and March 12, 2010, Choctaw paid a total
       of $79,890.94 to LaFarge, which was applied to past due invoices[, i.e.,
       those invoices accrued prior to December 22, 2009 while Mr. Carrier’s
       guaranty was in place.].

                                            ***

       21. As of April 30, 2010, due and owing to LaFarge from Mills the sum of
       $75,990.20 plus finance charges which continue to accrue at the rate of
       $48.89 per diem from April 30, 2010.

In its response to Mr. Mills’ statement of undisputed facts, LaFarge relies on the
foregoing facts and cites to Ms. Varteresian’s affidavit. Accordingly, for purposes of
summary judgment, these facts are not in dispute.

        From the undisputed facts, after Mr. Mills signed his guaranty, Choctaw received
$75,990.20 in goods from LaFarge. Choctaw paid LaFarge $79,890.94. LaFarge applied
the $79,890.94 to the $266,557.14 debt owed on Choctaw’s open credit account, which
debt was originally guaranteed by Mr. Carrier, who filed bankruptcy. Throughout these
proceedings, Mr. Mills has maintained that LaFarge’s application of the $79,890.94 to
debt that Mr. Mills did not guarantee was error. Mr. Mills contends that the $79,890.94
that Choctaw paid after the date of Mr. Mills’ guaranty should have been applied to the
invoices for goods Choctaw received after December 22, 2009, which goods totaled
$75,990.20. Accordingly, Mr. Mills contends that any amounts guaranteed by him were
satisfied by the payment of the $79,890.20 and that he owes nothing further to LaFarge
under the guaranty. LaFarge does not dispute that Choctaw made payments in excess of
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the goods it received after December 22, 2009 but argues that it had a right to apply the
$79,890.94 to Choctaw’s oldest debt, i.e., the $266,557.14.

       In its order granting LaFarge’s motion for summary judgment, the trial court held,
in relevant part:

       It is undisputed that Choctaw made $79,890.94 in payments to LaFarge
       after the [Mills’] Guaranty was signed. LaFarge properly applied these
       payments to the oldest open invoices on Choctaw’s account and its
       application of payments made to Choctaw’s oldest debts is typical and
       consistent with good business practice. Mr. Mills requested and was
       granted credit. The payments made were on the ongoing open account with
       LaFarge and LaFarge was entitled to apply them to the oldest debt.

       In defending the trial court’s determination that it properly applied the $79,890.94
to Choctaw’s oldest debt, LaFarge relies on the case of Bussey v. Gant’s Administrator
and Heirs, 29 Tenn. 238 (1859). From our review, Bussey does not support LaFarge’s
argument. In Bussey, the debtor owed two different debts to the same person and
tendered a “general payment” to the creditor without indicating which debt the debtor
was paying. In addressing the issue of proper application of the payment, the Court held:

               The general rule in respect to the appropriation of payments is, that a
       debtor, owing different debts to the same person, has the right to apply the
       payment, at the time when made, to either; but, if he fails to do so, and the
       payment be general, the creditor may apply it; and where no appropriation
       is made by either party, the law will apply it according to the intrinsic
       justice and equity of the case.
               The right of the creditor to apply the payment is not unlimited. It is
       not always essential that there should have been an express declaration by
       the debtor, at the time of payment, to which of two accounts he intends the
       money to be applied. There are cases in which, though the payment be
       general, the creditor is not allowed to apply the payment to which account
       he pleases.
               The doctrine upon this subject, both of the English and American
       courts, seems to have been borrowed from the civil law. The rule of that
       law was, that where the application was not made by the parties, and where
       it became necessary to direct it by a court of justice, it ought to be applied
       to the debts which lie heaviest on the debtor, and which it concerned him
       most to discharge. . . . So a payment will be applied to a debt where the
       debtor has given a power or mortgage, rather than to a simple contract debt.
       In the case of Heyward v. Lomax (1 Vern. 24), it was held, that a general
       payment should be applied to a mortgage; “because,” say the court, “it is
       natural to suppose that a man would rather elect to pay of the money for
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      which interest is to be paid, than the money due on account, for which no
      interest is payable.”

Bussey, 29 Tenn. at 242-43 (some internal citations omitted). Contrary to LaFarge’s
reading of the case, Bussey does not stand for the proposition that general payments on
competing debts should be applied first to the oldest debt; it stands for the proposition
that the creditor should apply the payment to the debts “which lie heaviest on the debtor.”
Id.

        The Restatement (Second) of Contracts §260(2)(b)(ii) provides that, in applying a
debtor’s payments, preference should be given to “an unsecured or precarious debt rather
than one that is secured or certain of payment” Importantly, Tennessee has not adopted
the Restatement approach. Rather, in Blackmore v. Granbery, 98 Tenn. 277, 39 S.W.2d
229 (1897), the Tennessee Supreme Court rejected the common law rule of giving
preference to “the most precarious debt” and adopted the civil law rule, which states that
a court should apply payments “to discharge debts for which a surety is bound, rather
than to one where the debtor has given no surety.” Id. at 230. In other words,
“application [of payment] ought to be made to the debt for which the debtor has given
securities, rather than to those he owes singly.” Id. at 230-31 (quotation marks omitted).
In the subsequent case of Southern Construction Co. v. Halliburton, the Supreme Court
reiterated its holding in Blackmore, stating:

      The old doctrine of the “civil law” is invoked to the effect that, when the
      court makes an application of a payment by a debtor owing several debts to
      the same creditor, the application will be made to that debt for which the
      debtor has given a personal surety. The reason of this rule was that the
      debtor’s honor was said to be more concerned in the payment of such a
      debt. This doctrine did not prevail at common law, but has been accepted
      in Tennessee to an extent. Bussey v. Gant's Adm'r, 29 Tenn. (10 Humph.)
      238, Blackmore v. Granbery, 98 Tenn. 277, 39 S. W. 229.

Southern Construction Co. v. Halliburton, 149 Tenn. 319, 258 S.W. 409, 414-15
(1923). The existing law in Tennessee is perhaps more succinctly stated in 20 Tenn. Jur.
Payment § 13, which provides, in relevant part, that “[p]ayments will be applied to
discharge debts for which a surety is bound, rather than to one where the debtor has given
no surety.”

       At oral argument before this Court, LaFarge’s attorney conceded that, on the
issuance of the stay in Mr. Carrier’s bankruptcy case, Choctaw’s outstanding debt of
$266,557.14, which was secured by Mr. Carrier’s personal guaranty, became unsecured
debt. Therefore, the $75,990.20, which Choctaw accrued after Mr. Mills signed his
guaranty, was the only debt for which the surety, i.e., Mr. Mills, was bound. For the
reasons discussed above, the trial court’s ruling that LaFarge properly applied the
                                         -7-
$79,890.94 to the $266,557.14 debt is not in line with Tennessee law. Under existing
Tennessee law, the $79,890.94 should have been applied first to the debt “for which a
surety is bound,” i.e., the $75,990.00. It is undisputed that, after Mr. Mills executed the
guaranty, Choctaw made payments more than sufficient to cover the $75,990.00 in goods
it received. Proper application of this amount to the guaranteed debt extinguishes that
debt such that Mr. Mills’ guaranty is satisfied. As such, Mr. Mills is entitled to summary
judgment in his favor and is not liable for any interest, costs, or attorney’s fees.

                                     V. Conclusion

       For the following reasons, we reverse the trial court’s order granting summary
judgment in favor of LaFarge and its award of interest, attorney’s fees, and costs in favor
of LaFarge. We remand the case for entry of summary judgment in favor of Mr. Mills.
Costs of this appeal are assessed to the Appellee, LaFarge North America, for which
execution may issue if necessary.




                                                 _________________________________
                                                 KENNY ARMSTRONG, JUDGE




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