An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Proced ure.

NO. COA03-1565

NORTH CAROLINA COURT OF APPEALS

Filed: 7 December 2004

BB&T FACTORS CORPORATION, f/k/a
PHILLIPS FACTORS CORPORATION,
        Plaintiff,

v .                         Guilford County
                            No. 01 CVS 848
GLOBAL AIRWAYS FREIGHT
FORWARDING, INC., d/b/a GLOBAL
AIRWAYS AIR CARGO, PIEDMONT
SOUTHERN AIRWAYS, INC., JACK L.
FREEMAN, JR., Individually,
SCOTT GLASSER, Individually,
GEORGE P. HARRIS, Individually,
and CENTURA BANK,
        Defendants.

    Appeal by defendant George P. Harris from judgment entered 4 August 2003 by Judge Catherine C. Eagles in Guilford County Superior Court. Heard in the Court of Appeals 1 September 2004.

    Wyatt, Early, Harris & Wheeler, L.L.P., by Frederick G. Sawyer and Marc R. Tyrey, for plaintiff-appellee.

    Douglas, Ravenel, Hardy, Crihfield & Hoyle, L.L.P., by Robert D. Douglas, III and George P. Harris, for defendant-appellant George P. Harris.

    GEER, Judge.

    Defendant George P. Harris appeals from a summary judgment order entered in favor of plaintiff BB&T Factors Corporation("BB&T")   (See footnote 1)  on a guaranty signed by Harris in connection with a factoring agreement between BB&T and Global Airways Freight Forwarding, Inc. ("Global"). Harris argues on appeal that the trial court misconstrued the terms of his guaranty and that, in any event, the record contains sufficient evidence to support the defense of equitable estoppel. Based on the unambiguous language of the guaranty and Harris' failure to present sufficient evidence to establish the elements of equitable estoppel, we affirm the trial court's grant of summary judgment.

Facts
    On 30 September 1997, BB&T and Global entered into a contract entitled "Factoring and Security Agreement" (the "Agreement"). "Factoring" is an asset restructuring arrangement that involves "[t]he buying of accounts receivable at a discount. The price is discounted because the factor (who buys them) assumes the risk of delay in collection and loss on the accounts receivable." Black's Law Dictionary 630 (8th ed. 2004).
    BB&T and Global contracted that Global would sell to BB&T all its present and future accounts receivable arising from sales and services . The Agreement provided that all orders for sales and services would be subject to BB&T's credit approval and that Globalwould repurchase any account that did not receive this credit approval . The Agreement also contained an acceleration clause, providing that all of Global's obligations to BB&T would immediately become due in the event of a default by Global.
    On the same date that Global entered into its agreement with BB&T, Harris, Jack L. Freeman, Jr., and Charles A. Creech each signed a guaranty of Global's factoring agreement with BB&T. Because Harris refused to sign an agreement with the same terms as that of Freeman and Creech _ entitled "Guaranty (By Individual)" _ BB&T prepared a different guaranty entitled "Guaranty of Validity of Accounts" (the "Guaranty") that Harris did agree to sign.
    Ultimately, Global failed to repurchase certain accounts that it was obligated to repurchase under the Agreement. As a result, on 20 April 2001, BB&T filed suit against defendants Global and Piedmont Southern Airways, Inc. ("Piedmont") for breach of factoring agreements between the parties. BB&T also sought judgment against various individual and corporate guarantors of the Global and Piedmont contracts, including defendant Harris. All of these claims were eventually settled or stayed in bankruptcy proceedings with the exception of the claim against Harris.
    BB&T and Harris cross-moved for summary judgment. On 4 August 2003, Judge Catherine C. Eagles entered an order granting BB&T's motion, denying Harris' motion, and entering judgment againstHarris in the amount of $131,749.71, together with interest, costs, and attorneys' fees (in the sum of $19,762.45). Harris filed notice of appeal from this order on 2 September 2003.
Discussion    
    On appeal of a trial court's allowance of a motion for summary judgment, the appellate court must consider "whether, on the basis of materials supplied to the trial court, there was a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law." Summey v. Barker, 357 N.C. 492, 496, 586 S.E.2d 247, 249 (2003). Evidence presented by the parties is viewed in the light most favorable to the non-movant. Id. The non-movant may not rely only on his pleadings, but must instead respond to the motion by setting forth specific facts by affidavit, deposition, answers to interrogatories, admissions on file, documentary materials, or other evidence, as provided by N.C.R. Civ. P. 56(e). Strickland v. Doe, 156 N.C. App. 292, 294_95, 577 S.E.2d 124, 128, disc. review denied, 357 N.C. 169, 581 S.E.2d 447 (2003).
    In arguing that the trial court erred in granting BB&T's motion for summary judgment, Harris asserts that an issue of fact exists as to the terms of his Guaranty. He contends that he did not enter into an unconditional guaranty, but rather onlyguaranteed the validity of the accounts sold by Global to BB&T. The unambiguous terms of the Guaranty establish otherwise.
    The North Carolina Supreme Court held in Hagler v. Hagler, 319 N.C. 287, 294, 354 S.E.2d 228, 234 (1987) (internal quotation marks omitted):
            When the language of a contract is clear and unambiguous, construction of the contract is a matter of law for the court.

            . . . .

            It is a well-settled principle of legal construction that it must be presumed the parties intended what the language used clearly expresses, and the contract must be construed to mean what on its face it purports to mean.

See also Carolina Place Joint Venture v. Flamers Charburgers, Inc.
, 145 N.C. App. 696, 699, 551 S.E.2d 569, 571 (2001) ("Under the general rules of contract construction, where an agreement is clear and unambiguous, no genuine issue of material fact exists and summary judgment is appropriate."); Corbin v. Langdon, 23 N.C. App. 21, 25, 208 S.E.2d 251, 254 (1974) (internal citation and quotation marks omitted) ("Where the language is clear and unambiguous, the court is obliged to interpret the contract as written, and cannot, under the guise of construction, reject what parties inserted . . . ."). An ambiguous contract exists only when "the language of the [contract] is fairly and reasonably susceptible to either of theconstructions asserted by the parties." Carolina Place, 145 N.C. App. at 699, 551 S.E.2d at 571 (internal quotation marks omitted).
    Upon review of the Guaranty at issue in this case, we conclude that its terms are unambiguous. The Guaranty recited that Harris unconditionally guaranteed (1) that all factored accounts were genuine, (2) that they were valid accounts, (3) that the amount represented as owed was the actual amount owed and not subject to any defense or contingency, (4) that proper entries had been made on Global's books reflecting that the accounts had been sold to BB&T, (5) that all money or other things of value received by Global with respect to the accounts would be transmitted to BB&T no later than the day after receipt, and (6) that Global would not commingle any such collections with its own funds. In addition, Harris unconditionally guaranteed that:
        [Global] will promptly repurchase from [BB&T] the full amount thereof each and every such account as to which (at any time prior to payment in full of the account) there may be a breach of [Global]'s warranties in respect of the matters hereinabove set forth or which [Global] is otherwise obligated to repurchase under the [Agreement] and that if [Global] fails to effect such repurchase for any reason then the undersigned will promptly effect such repurchase as the direct, primary and personal obligation of the undersigned . . . .

(Emphasis added.)     This last quoted provision thus recites in plain language that defendant "unconditionally guarantees . . . that [Global] will promptly repurchase from [plaintiff] the full amount [of] each and every account . . . which [Global] is . . . obligated to repurchase under the Factoring and Security Agreement" and that Global's failure to repurchase will make Harris primarily liable for doing so. This language unambiguously bound Harris to repurchase any accounts that Global was required to repurchase under the Agreement, but did not. We are not at liberty to construe the contract otherwise.
    Harris urges that since the subsections setting forth the Global warranties or actions guaranteed by Harris are connected by the conjunction "and," we should construe the Guaranty as requiring that BB&T show that Global has breached each and every warranty prior to being able to enforce the Guaranty against Harris. Under Harris' proposed interpretation, if an account was genuine, valid, and reflected the amount actually owed, but Global did not turn over to BB&T any funds received on that account _ although required to do so _ then BB&T would be barred from seeking relief from Harris for the wrongfully withheld funds. This suggested construction is not reasonable. The Guaranty recites that defendant is guaranteeing a list of seven actions or warranties by Global, and it is clear from the face of the contract that afailure to guarantee even one of the seven items would result in Harris' breach. Giving the language its ordinary meaning, the only reasonable construction is that BB&T is entitled to enforce each of the provisions separately.
    Harris also argues that the documents executed by his fellow guarantors, which he contends are phrased in broader terms, support his interpretation of his Guaranty. In Carolina Place, we held that, in construing an ambiguous contract, we may examine "all contemporaneously executed written instruments between the parties, relating to the subject matter of the contract." Carolina Place, 145 N.C. App. at 699, 551 S.E.2d at 571. Since, as we have concluded, the language of the contract is unambiguous, there is no need to examine the other guaranties.
    Harris further argues that the parties intended to limit Harris' liability to only those accounts with a defect in their validity. Harris bases this argument on an allegation made in his own affidavit:
        The Guaranty was prepared by [BB&T] and presented to me for execution by Jack Hawks . . . .

            . . . .

            . . . I was advised by Jack Hawks, an officer of [BB&T], that I was guaranteeing only that the accounts of the Defendant Global that were being factored pursuant to the Agreement were in fact valid accounts, andthat I was not liable for accounts for which payment was not made for a reason other than a defect in their validity.

Consideration of this assertion would violate the parol evidence rule: the well-established axiom that "'no verbal agreement between the parties to a written contract, made before or at the time of the execution of such contract, is admissible to vary its terms or to contradict its provisions.'" Borden, Inc. v. Brower, 284 N.C. 54, 60, 199 S.E.2d 414, 418 (1973) (quoting Jefferson Standard Life Ins. Co. v. Morehead, 209 N.C. 174, 175, 183 S.E. 606, 607 (1936)).
    We also note that, even if the parol evidence rule were not operative here, the last paragraph of the Guaranty specifically provides that "[n]o modification, waiver or discharge of the liability of the undersigned shall be valid unless in writing, signed and subscribed by [BB&T]." Since Harris has acknowledged that no such writing exists, we cannot give any effect to his affidavit's claim that BB&T orally limited the scope of the Guaranty.
    Furthermore, since Harris placed his signature on the Guaranty, we are bound to hold him to its plain language:
        [O]ne who signs a paper writing is under a duty to ascertain its contents, and in the absence of a showing that he was willfully misled or misinformed . . . as to these contents, or that they were kept from him infraudulent opposition to his request, he is held to have signed with full knowledge and assent as to what is therein contained.

Williams v. Williams, 220 N.C. 806, 809_10, 18 S.E.2d 364, 366 (1942). Harris has argued neither fraud nor willful misinformation. Accordingly, Harris' argument that he is only liable for invalid accounts, instead of all accounts not repurchased, is without merit.
    Harris also contends that summary judgment was inappropriate as to his defense of equitable estoppel. As the North Carolina Supreme Court has recently reiterated, the doctrine of equitable estoppel applies when:
        any one, by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence induces another to believe certain facts exist, and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. In such a situation, the party whose words or conduct induced another's detrimental reliance may be estopped to deny the truth of his earlier representations in the interests of fairness to the other party.

Whitacre P'ship v. Biosignia, Inc., 358 N.C. 1, 17, 591 S.E.2d 870, 881 (2004) (internal quotation marks and citations omitted). In order to defeat summary judgment, Harris was obligated to submit to the court sufficient evidence to establish each of the elements of this defense. He could not rest on his pleadings.    Harris identifies three issues of fact relating to his equitable estoppel defense: (1) whether an officer of BB&T told third parties that Harris was released from the Guaranty; (2) whether Harris justifiably relied on BB&T's release of Harris' obligations under the Guaranty; and (3) whether BB&T had a duty to disclose Global's unstable financial condition to Harris. Even viewing the evidence in the light most favorable to Harris, as we must, we can find no issues of fact that exist on any of these issues.
    As to the first two issues, Harris relies upon his own affidavit in which he states:
            7. On or about March 30, 1999, I sold my interest in the Defendant Global to the Defendant Freeman. After that date, I had no involvement in the operation of the Defendant Global, nor the financial dealings between the Defendant Global and the Plaintiff. I was advised by the Defendant Freeman that the Plaintiff stated that my Guaranty would be terminated on account of the sale of my interest in the Defendant Global.

            8. The Defendants Creech and Freeman met with Jack Hawks, Senior Vice President of the Plaintiff in the spring of 2001, at the office of the Defendant Global . . . . At that meeting, Hawks advised them that I should have been released from my Guaranty since I was no longer associated with the Defendant Global, and that the failure to release me was an oversight on the part of the Plaintiff.
As BB&T points out, these statements are hearsay and inadmissible under Rule 802 of the Rules of Evidence. Harris has identified no basis for admitting them as exceptions to the hearsay rule. As a result, the trial court was required to disregard these assertions in deciding the parties' summary judgment motions. Strickland, 156 N.C. App. at 295, 577 S.E.2d at 128 ("'If an affidavit contains hearsay matters or statements not based on the affiant's personal knowledge, the court should not consider those portions of the affidavit.'" (quoting Williamson v. Bullington, 139 N.C. App. 571, 578, 534 S.E.2d 254, 258 (2000), aff'd by an equally divided court, 353 N.C. 363, 544 S.E.2d 221 (2001))). Since Harris offered no other evidence on these two issues, they cannot defeat summary judgment.
    As to the third issue, the Guaranty signed by Harris contains an express waiver of any such notice: "The undersigned hereby . . . waives notice of default, nonpayment, partial payment, presentment, demand, protest and all other notices to which the undersigned might be otherwise entitled . . . ." Harris has suggested no reason why this provision's plain language does not absolve BB&T of any duty to notify Harris of Global's financial troubles.
    Accordingly, we hold that Harris has not offered sufficient evidence to establish a genuine issue of material fact as to eitherBB&T's contractual claim or his equitable estoppel defense. The trial court properly denied Harris' motion for summary judgment and properly granted BB&T's motion for summary judgment.

    Affirmed.
    Judges LEVINSON and THORNBURG concur.
    Report per Rule 30(e).


Footnote: 1
    BB&T Factors Corporation was formerly known as Phillips Factors Corporation.

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