Background
Podium Mining, LLC obtained mining equipment on credit and staffing services from Jennmar-related companies. Podium’s owner, Robert Dustin Rowe, signed a credit application containing language that purported to guarantee Podium’s indebtedness. The application referenced equipment purchases and granted a purchase-money security interest, but it did not describe the parties’ staffing arrangement. Although Jennmar’s representative promised a detailed sales order and agreement covering the staffing services and their costs, no such document appeared in the trial record.
After approximately six months of missed payments, Jennmar Services demanded $706,180.34 in unpaid mining-labor invoices. The amount was undisputed, but Rowe denied personal liability. The Floyd Circuit Court entered judgment against Podium for the debt, interest, and attorney’s fees, while dismissing Jennmar’s guaranty claim against Rowe because the credit application did not satisfy Kentucky’s statutory requirements for a valid guaranty.
The Court’s Holding
The Kentucky Court of Appeals affirmed. Under KRS 371.065(1), a guaranty must be written on or expressly refer to the instrument being guaranteed. Otherwise, the signed writing must specify both the guarantor’s maximum aggregate liability and the guaranty’s termination date. Rowe’s guaranty did not expressly identify any staffing-services obligation, state a maximum liability, or provide a termination date.
The court rejected Jennmar’s argument that the guaranty was written on the instrument being guaranteed. The credit application was an information-gathering tool used to assess Podium’s creditworthiness, not the promised staffing-services agreement containing complete contractual terms. The guaranty page alone also failed to establish an enforceable contract because it did not identify the staffing offer, its acceptance, or its complete terms.
The court declined to consider the guaranty’s Pennsylvania choice-of-law clause because Jennmar first raised that issue on appeal. Although Jennmar did not properly preserve that alternative argument, the court declined Podium’s request to dismiss the entire appeal because Jennmar had preserved its principal argument under Kentucky law.
Key Takeaways
- A Kentucky guaranty must satisfy KRS 371.065(1) by identifying the guaranteed instrument or by stating both a maximum aggregate liability and a termination date.
- A guaranty printed on a credit application does not necessarily cover a separate transaction whose promised contract was never supplied and whose material terms do not appear in the application.
- A contractual choice-of-law argument raised for the first time on appeal is not preserved for appellate review.
Why It Matters
The decision underscores the risk of relying on broad guaranty language in a general credit application to impose personal liability for obligations arising from a separate business arrangement. Creditors seeking an owner’s guaranty should expressly identify the covered agreement and debt or include the statutory liability cap and termination date.
The opinion also reinforces that a choice-of-law clause does not secure appellate consideration of foreign law when the issue was never presented to the trial court.