ScanSource Inc. v. Dependable Technology Center LLC

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

ScanSource, Inc., Respondent,

v.

Dependable Technology Center, LLC and George G.
Moraru, Appellants.

Appellate Case No. 2022-001619

Appeal From Greenville County
Edward W. Miller, Circuit Court Judge

Unpublished Opinion No. 2024-UP-260
Submitted June 1, 2024 – Filed July 17, 2024

AFFIRMED

J. Falkner Wilkes, of Oakland, Mississippi, and William
R. McKibbon, III, of Greenville, both for Appellants.

Craig Horger Allen, of Craig H. Allen, P.A., of
Greenville for Respondent.

PER CURIAM: Dependable Technology Center and George G. Moraru appeal a
circuit court judgment of $149,379.07, arguing the circuit court erred by: (1)
issuing judgment against Appellants before they had an opportunity to present
evidence at trial, (2) finding as a matter of law that Moraru's individual personal
guarantee was valid and enforceable, and (3) granting judgment against Moraru in
an amount exceeding $5,000. We affirm.

Facts and Procedural History

On April 12, 2013, Dependable completed a credit application with ScanSource in
order to purchase goods on a short-term credit basis. That same day, Moraru
executed an individual personal guarantee (the Guarantee) covering Dependable's
indebtedness. The Guarantee stated:

In conjunction with my individual personal guarantee and
customer application to ScanSource, Inc. and its
subsidiaries and/or affiliates (hereinafter "Creditor") on
behalf of Dependable Tech Center (hereinafter "Debtor")
of which I, George G. Moraru . . . am an officer,
principal, partner, or major shareholder, I represent to
Creditor that neither Debtor nor any company in which I
have been an officer, principal, partner, or major
shareholder, nor have I personally never [sic]
experienced any type of insolvency including
bankruptcy.

I, for good and valuable consideration, including the
extension of trade credit to debtor which I hereby
acknowledge as having been received, do hereby
personally guarantee and promise to pay any obligation
to Creditor on demand for any indebtedness of Debtor to
Creditor now due and/or which may be hereafter become
due to Creditor for merchandise and other property
hereafter sold and delivered by it to Debtor. This
guarantee is one of payment, not of collection.

This guarantee is given individually, not in my capacity
as _________ of Dependable Tech Center.

This guarantee shall be an irrevocable guarantee and
indemnity to Creditor. Further, I hereby subrogate any
indebtedness of Debtor, which it may have to me to the
indebtedness of Creditor.
I do hereby waive notice of default, non-payment and
notice thereof and to jury trial and consent to (i) changes
in the terms of the guaranteed indebtedness and (ii) any
and all renewals or modifications of extension of trade
credit. I agree that Creditor may take any action with
regard to the disposition of the collateral, including
releasing it, and still enforce this guarantee without
foreclosing on the collateral first. I agree that this
guarantee shall be governed by the substantive law of the
State of South Carolina without regard to its provisions
concerning conflicts of law. I grant permission to
Creditor to obtain information from any and all sources
required to properly ascertain my capability to meet my
financial obligations.

On September 13, 2019, ScanSource filed an action seeking judgment against
Appellants following ScanSource's extensions of credit for the sale of goods and
services. ScanSource sought $72,923.39, plus one and a half percent interest, and
attorney's fees. To its complaint, ScanSource attached Dependable's September
10, 2014 credit application and Moraru's April 12, 2013 Guarantee. Appellants
answered, arguing that if Moraru's Guarantee were valid, his liability was limited
to $5,000—the credit limit requested in the September 2014 credit application.

At trial, ScanSource's Director of Financial Services, Steven Zielinski, identified
Dependable's initial April 2013 credit application and Moraru's Guarantee, and
testified that ScanSource opened a credit account for Dependable. ScanSource
conducted business with Dependable from 2013 to 2016, and during this time,
Dependable submitted three credit applications. Zielinski identified Dependable's
December 7, 2013 and September 10, 2014 applications, noting their terms were
similar to those of the initial April 2013 credit application. Zielinski explained that
ScanSource periodically requests updated credit applications from customers to
ensure it has accurate contact and legal entity information.

Zielinski identified past due invoices and testified Dependable last made payment
to ScanSource on December 21, 2016. Although Dependable made payments
towards some invoices, an unpaid balance of $72,923.39 remained. According to
Zielinski, Dependable had not disputed the amount owed on the account.
On cross-examination, Appellants asked Zielinski about a May 21, 2013 email
from ScanSource denying Dependable's April 2013 credit application. Counsel for
ScanSource objected because he had not received the document in discovery.

ScanSource explained it served discovery and while it received a response to its
requests for admission, it never received any response to its interrogatories or
request for production of documents. Although Appellants did not deny that they
failed to respond to the discovery requests, they sought to introduce a chain of
emails between ScanSource and Appellants. Appellants' counsel stated:

Your Honor, this is a document from ScanSource, itself,
that specifically declines giving any credit to my
company. And, Your Honor, I haven't seen any of the
documents that they provided. In fact, the Plaintiff just
based the contract on a completely different document
than they pled in the complaint. The complaint tries to
make a claim for a 2014 contract and today comes in here
arguing about a 2013. We've never seen that. And the
Plaintiff is limited to pleading and proving the case as it
is pled. And that is not done.1

The circuit court allowed Appellants to make a proffer regarding the email chain.
Zielinski testified that if ScanSource emailed a customer stating it declined credit,
that meant ScanSource denied credit as to that particular application. When
Appellants noted Zielinski testified ScanSource accepted the 2013 application and
granted credit, Zielinski responded, "That's my understanding." After reviewing
the emails, Zielinski noted ScanSource denied Dependable's April 2013 credit
application because Dependable failed to respond to ScanSource's requests that it
update certain missing information, including an incomplete resale tax certificate.
However, on December 7, 2013, Dependable submitted a second credit
application, rectifying the issue of the missing tax information. ScanSource
approved this credit application, and Dependable made its first purchase in 2014.

Appellants then argued, "Your Honor, the point here is there is only one grouping
of documents that they allege created a contract with a personal guarantee by my
client. And that was April of 2013, and it was declined." The circuit court

1
Following this assertion, counsel for ScanSource explained he "never received
any discovery requests from them, Your Honor," noted he had never seen the
email, and reiterated his objection.
reviewed the documents and noted nothing in the Guarantee tied it to the April
2013 application. The circuit court explained, "[T]he document says it shall be an
irrevocable guarantee and indemnity to creditor. It doesn't say based on granting
an application in April of 2013." The circuit court stated it planned to rule as a
matter of law that the Guarantee was valid independent of the April 2013 credit
application and explained Dependable "satisfied whatever contingencies needed to
be satisfied" in December when ScanSource approved the second credit
application. Still, the circuit court found the email had impeachment value and
Appellants would be allowed to cross-examine Zielinski with it despite their failure
to answer ScanSource's interrogatories.

The circuit court then made three attempts to call the jury back for the completion
of Zielinski's cross-examination; however, Appellants' counsel interjected, stating:

Your Honor, at this point my client is going to confess
judgment on behalf of the LLC, which is a defunct LLC,
which Mr. Allen knows. We've talked about that a lot.
You've ruled as a matter of law as to the guarantee. And
we've not doubted the accounting. I believe that's going
to end the case.

....

[W]e don't doubt the debt from the company's standpoint.
And since you had ruled the guarantee is valid and
enforceable, I don't know how there's an issue left.

ScanSource responded by requesting a directed verdict. Additional discussion
followed, including the circuit court's inquiry as to whether ScanSource needed to
conduct a redirect examination of Zielinski. ScanSource declined, noting it had no
other witnesses. The circuit court then granted the directed verdict, made the email
chain a court's exhibit, and subsequently entered judgment for ScanSource in the
amount of $149,379.07 against Dependable and Moraru. Appellants timely
appealed.

I. Enforceability of the Personal Guarantee

Appellants argue Moraru's Guarantee was executed specifically in conjunction
with the April 2013 credit application ScanSource denied. Appellants contend
ScanSource cannot rely on the Guarantee for claims related to later credit
applications; thus, in their view, the circuit court erred in finding the Guarantee
valid and in entering judgment for ScanSource. We disagree.

"[A] guarantor's liability is an independent contractual obligation." TranSouth Fin.
Corp. v. Cochran, 324 S.C. 290, 295, 478 S.E.2d 63, 65 (Ct. App. 1996); see also
Citizens & S. Nat. Bank of S.C. v. Lanford, 313 S.C. 540, 544, 443 S.E.2d 549, 551
(1994) ("The general rule in South Carolina, as noted in Rock Hill Nat'l Bank v.
Honeycutt, 289 S.C. 98, 344 S.E.2d 875 (Ct.App.1986), is that a guaranty of
payment is an obligation separate and distinct from the original note.").

The debtor is not a party to the guaranty, and the
guarantor is not a party to the principal obligation. The
undertaking of the former is independent of the promise
of the latter; and the responsibilities which are imposed
by the contract of guaranty differ from those which are
created by the contract to which the guaranty is
collateral.

CoastalStates Bank v. Hanover Homes of S.C., LLC, 408 S.C. 510, 519, 759 S.E.2d
152, 157 (Ct. App. 2014) (quoting Lanford, 313 S.C. at 543, 443 S.E.2d at 550).

"A guaranty is a contract and should be construed based on the language used by
the parties to express their intention." Cochran, 324 S.C. at 294, 478 S.E.2d at 65
"The cardinal rule of contract interpretation is to ascertain and give legal effect to
the parties' intentions as determined by the contract language." McGill v. Moore,
381 S.C. 179, 185, 672 S.E.2d 571, 574 (2009).

In addition to the presumption that the Guarantee and the underlying obligation are
separate contractual obligations, the language of the Guarantee supports the circuit
court's finding that the Guarantee is valid as to Dependable's ongoing indebtedness.
There is no language in the Guarantee tying it to a specific credit application, and
the word "optional" appears in bold, capital letters at the top of the document.
Under the terms of the Guarantee, Moraru agreed to pay any obligation for any
indebtedness of the Debtor to ScanSource, and the Guarantee addresses
indebtedness "hereafter due . . . for merchandise and other property hereafter sold
and delivered" by ScanSource to Dependable. Moraru agreed to personally
guarantee Dependable's indebtedness "hereafter due," and ScanSource extended
the anticipated credit. Therefore, the circuit court did not err in finding the
Guarantee was valid as a matter of law.
II. Directed Verdict

Appellants further argue the circuit court erred in granting ScanSource a directed
verdict because it failed to construe all evidence and inferences therefrom in
Moraru's favor. See Est. of Carr ex rel. Bolton v. Circle S Enters., Inc., 379 S.C.
31, 38, 664 S.E.2d 83, 86 (Ct. App. 2008) ("In ruling on a motion for directed
verdict, the trial court is required to view the evidence and the inferences that
reasonably can be drawn therefrom in the light most favorable to the party
opposing the motion and to deny the motion when either the evidence yields more
than one inference or its inference is in doubt.").

The crux of Appellants' argument on this point is that the circuit court failed to
consider the effect of ScanSource's denial of the April 2013 credit application in
conjunction with the Guarantee. For the reasons discussed in Section I, the court
properly found the Guarantee—by its own language—applied to the parties'
ongoing business relationship and credit extensions, and not merely to the declined
April 2013 application. Appellants then chose to confess judgment, despite the
circuit court's ruling that Appellants could cross-examine Zielinski with the email
declining the April 2013 credit application. 2 We find the circuit court did not err in
directing a verdict for ScanSource.

III. Opportunity to Present Evidence

Appellants next assert the circuit court erred in directing a verdict and entering
judgment before Appellants had the opportunity to present evidence. They
contend the circuit court's finding that the Guarantee was valid as a matter of law
"removed any defense Moraru had and effectively ended the case without Moraru
ever having the opportunity to offer Moraru's testimony or any other evidence on
the issue." Appellants argue the supreme court's opinion in Halsey v. Simmons,
432 S.C. 54, 849 S.E.2d 578 (2020) (per curiam) requires this court to reverse. We
disagree.

When the circuit court stated it planned to find the Guarantee valid as a matter of
law, Appellants did not seek to proffer Moraru's testimony—or any other
evidence—challenging the validity of the Guarantee or the invoices Zielinski
identified. In fact, Appellants' counsel noted in opening that there would be "no
dispute about goods that ScanSource has stated were sold to Dependable."
Although Appellants claim in their briefs to this court that the circuit court's ruling

2
This email was made a court's exhibit but was not admitted into evidence.
"constitutes a clear violation of Moraru's right to due process," no such argument
was made to the circuit court. Moreover, nothing in the record suggests Appellants
were denied the opportunity to continue with their cross-examination, present
evidence, or offer additional argument before voluntarily confessing judgment.

Halsey does not support Appellants' position. There, the plaintiffs filed an action
challenging the sale of their property at a delinquent tax sale. Id. at 55-56, 849
S.E.2d at 579. At trial, the plaintiffs allowed the defendants to present evidence
first, and the special referee granted defendants' motion to approve the sale before
the plaintiffs had an opportunity to present their own case. Id. at 56, 849 S.E.2d at
579. In their subsequent motion to amend the judgment, the plaintiffs
"summarized the factual presentation they were not permitted to make and
explained several theories on how those facts could have changed the outcome of
the case." Id. Such has not occurred here.

Appellants did not attempt to proffer any additional evidence they intended to
present, though they now argue on appeal that they were prejudiced by the lack of
such opportunity. Specifically, Appellants assert they were prejudiced by the
granting of a directed verdict prior to Moraru's testimony, but there is no indication
in the record what Moraru's testimony might have addressed—or how it might
have been helpful in challenging the plain language of his Guarantee. In Halsey,
the plaintiffs' post-trial summary of the evidence they would have presented
allowed the special referee an opportunity to amend the judgment, though he
declined to do so. Id. Appellants made no such showing here, either at trial or by
post-trial motion. The circuit court granted ScanSource's directed verdict motion
only after the defendants chose to confess judgment following the circuit court's
statement that the Guarantee was valid as to ScanSource's extensions of credit to
Dependable. We find no error by the circuit court.

IV. Judgment Exceeding $5000

Finally, Appellants contend that even if the Guarantee is valid, any judgment
against Moraru must be limited to $5,000 because the credit application attached
with the complaint requested a $5,000 limit. Again, we disagree.

In support of this argument, Appellants cite cases addressing the construction of
contemporaneously executed documents. However, the relevant documents here
were not executed at the same time—as noted above, the Guarantee is dated April
12, 2013, and Dependable's last credit application to ScanSource is dated
September 10, 2014. Appellants' various ScanSource credit applications and
invoices were admitted into evidence without objection. The April 2013
application requested a credit limit of "as much as p," the December 2013
application contained no specific amount, and the September 2014 application
requested a credit limit of $5,000. There is no other evidence in the record
addressing a capped credit limit applicable to Dependable's trade credit with
ScanSource, and the Guarantee provides no such limit. Nor does the Guarantee
cap Moraru's liability for ScanSource's extensions of credit. As contemplated by
the Guarantee, ScanSource extended trade credit to Appellants, and Appellants
accepted it. Appellants chose not to challenge the invoices and indebtedness
ScanSource presented at trial. For these reasons, the circuit court did not err in
entering a judgment exceeding $5,000 against Moraru.

AFFIRMED. 3

THOMAS, MCDONALD, and VERDIN, JJ., concur.

3
We decide this case without oral argument pursuant to Rule 215, SCACR.