CHARLES R. BUTLER, Jr., Senior District Judge.
This matter is before the Court on a Motion for Summary Judgment filed by the Plaintiff, Branch Banking & Trust Company (BB&T). (Doc. 63.) This action arises from a series of loan transactions between the defendants and Colonial Bank and Colonial's successor-in-interest, BB&T. BB&T seeks to recover the balance due on commercial loans made to defendant Houma Dollar Partners, LLC and guaranteed by defendants Charles Reeves, Suzanne Reeves and Reeves Development, LLC. BB&T also seeks to recover on a personal loan to Charles and Suzanne Reeves. Defendants have raised affirmative defenses to BB&T's claims and have also asserted counterclaims against BB&T. BB&T has filed a motion seeking summary judgment its favor on all claims and counterclaims. Defendants have filed a response opposing summary judgment on most, but not all, claims and counterclaims. After considering the evidence presented in the light most favorable to the Defendants, the Court finds that BB&T's motion is due to be granted in its entirety.
BB&T is a banking organization with its principal place of business in Winston-Salem, North Carolina. On or about August 14, 2009, BB&T acquired the assets of Colonial Bank from the Federal Deposit Insurance Corporation (FDIC) as part of a purchase and assumption agreement following the FDIC's takeover of Colonial. Among the assets acquired were the obligations of defendant Houma Dollar Partners and its guarantors, Charles Reeves, Suzanne Reeves and Reeves Development Company, LLC.
Houma Dollar Partners, LLC (Houma) and Reeves Development Company, LLC (Reeves Development) are limited liability companies organized and existing in the State of Louisiana. Charles Reeves and Suzanne Reeves, both Louisiana citizens, are the only members of Houma Dollar and Reeves Development.
When Houma and Colonial began transacting business in 2006, Houma was in the business of developing Dollar General stores throughout the United States. Dollar General, Inc. would identify a new location for one of its stores and enter into a lease agreement with Houma. Houma would purchase the land, build the store (using Reeves Development as the contractor), and sell the already-leased store to investors. Houma financed each of these projects. In 2006, Houma decided to consolidate financing for all projects with one lender, rather than using various lenders as it had in the past. Houma chose Colonial Bank as its lender.
In 2006, Houma and Colonial entered into a one-year Guidance Line Loan Agreement (GLA), which gave Houma a maximum line of credit of $10 million dollars to acquire real property and fund construction of retail stores. At the same time, Houma and Colonial entered into a Master Construction Loan Advance Agreement (MCLAA), which set out the conditions for disbursing funds. Both agreements were amended and renewed twice—first for a period of one year, then for a period of six months—with generally the same terms as the original agreements. The Second (and final) Amended GLA and MCLAA were signed on April 2, 2009. Each GLA and MCLAA was executed by Houma, as borrower, and by Charles Reeves, Suzanne Reeves and Reeves Development, as Guarantors. In addition, the Guarantors each signed separate guaranty agreements covering all obligations of Houma to Colonial. By their terms, these guaranty agreements covered future loans and continued in effect until revoked in writing.
Under the GLA's, the property acquisition and construction for each location was considered to be a separate "Project". For each Project, Houma and Colonial agreed on a budget in advance, Colonial would loan up to a predetermined amount, and Houma would sign a closed-end promissory note ("Note") payable in one year if no demand was made before then. Interest was payable monthly. Construction was to begin within 120 days of execution and be completed by the maturity date.
The loan documents contained cross-default provisions, that is, default on one Note would put all Notes in default. They also contained cross-collateralization provisions, with each ongoing Project serving as collateral for other ongoing Projects. Unless there was a default, a Project would be released once the Note for that Project was paid off. Although the Second Amended GLA expired on September 17, 2009, its terms continued to govern each Project and Note and all Advances made prior to the expiration. Among the events of default the Second Amended GLA were the following:
(Pl.'s Ex. 3, Doc. 63, § 6.01.)
The Second Amended GLA could be modified or amended only in writing. (Id. § 8.09). "This Agreement ... may not be modified or amended except by a written agreement executed by the Borrower and Lender." (Id.§ 8.09.) Similarly, "[n]o modification amendment or waiver of any provision of this Agreement, the Note or other Loan Documents nor consent to any departure therefrom by the Borrower shall be effective unless the same shall be in writing and signed by the Lender." (Id. § 8.06.) Furthermore, "[n]either any failure nor any delay on the part of [the] Lender in exercising any right" under the Agreement, any Note or other loan documents, nor any course of dealing between the parties ... shall operate as a waiver thereof." (Id. § 8.05.)
In conjunction with the Second Amended GLA, Charles Reeves, Suzanne Reeves and Reeves Development signed a Continuing Guaranty Agreement guaranteeing the $10 million dollar credit, any future extensions of credit and any renewals or extensions. The Continuing Guaranty Agreement continued in full force and effect until such time as it was revoked in writing. The guarantors expressly waived "any right to notice whatsoever, including any notice with regard to the creation, extension, or renewal of this indebtedness or ... notice of the Debtor's default or failure of performance." (Pl.'s Ex. 32, Doc. 63.)
BB&T seeks to recover on unpaid promissory Notes for seven Projects. Of those, two were in Indiana—Gary and Hobart—and five were in Texas—Ozona, Ranger, Maypearl, Austin (Ross Road) and Shallowater. Some of these original Notes were renewed and extended. The Notes, including renewals and extensions, are collectively referred to as "the Houma Notes".
The original date of execution for each Note as well as the latest maturity date are listed below:
The Notes were payable on demand or upon an event of default. Among the events of default listed in each Note were (1) failure to pay the Note at maturity and (2) a default by Houma on any other loan between Houma and the bank.
Each time a note was signed or extended Charles Reeves (both individually and on behalf of Houma) and Suzanne Reeves signed an "Acknowledgement of Balloon Payment" which stated:
(Pl.'s Exs. 10, 14, 16, 20, 24, 26, 28, 31, Doc. 63.)
In December 2008, Colonial announced that it had received funds from the United States government's Troubled Asset Relief Program (TARP). Reeves understood that the bank was in a distressed financial condition but believed that the TARP funds would stabilize it. However, Reeves subsequently learned that the TARP funds were conditioned on Colonial raising another $300 million in capital. In late January 2009, Reeves spoke with Nelson who told him that Colonial's management was stating that Colonial had multiple sources from which to raise the capital. Reeves claims that as a result of this statement he chose not to seek alternative funding for his business and continued to borrow against the Colonial line of credit.
Up through early 2009, the Houma loans had been performing well. Therefore, Charles Reeves was surprised in March 2009 when Colonial's loan committee rejected Houma's request to renew the GLA for another one-year term. The loan committee informed Reeves that Colonial no longer wanted to be involved with commercial construction loans. Colonial did agree to renew the GLA for six months, but with instructions that the line of credit would cease at the end of the period and no new loans would be made. The renewal allowed funding for Projects already underway (some of which were in the early stages), but the goal was to get Colonial out of the credit by the first quarter of 2010. Even though each promissory note was for a one-year term, Reeves had repeatedly discussed with Sam Nelson, Houma's Colonial loan officer, what would happen with Projects that were not yet complete when the loan period expired. Nelson's response was "that reasonable prudence was — or a reasonable standard would be that the lender would renew that promissory note for the period of time to get through the interim construction period." (Reeves Dep. 204, Defs.' Ex. 2, Doc. 70.)
Beginning in mid-2009, the loan renewal process became slower, causing delays in construction. On May 9, 2009, the FDIC issued a cease and desist order (CDO) prohibiting Colonial from making loans. In the summer of 2009, Colonial continued to renew Houma's notes for ongoing Projects, albeit slowly. On August 14, 2009, Colonial went into receivership and its assets were acquired by BB&T. The Second Amended GLA expired in early October 2009. By the last quarter of 2009, Houma was experiencing difficulties due to funding delays and impending winter weather. Reeves began negotiating a workout with BB&T to allow funding for completion of Projects underway.
Proceeds of each Note were disbursed in stages or "draws" according to the terms of the Second Amended GLA. The process included invoices, affidavits, inspections and reports. Once Colonial received all the required paperwork, a construction loan officer would review the information. Colonial would then wire to Houma's account as much of the requested amount as was supported by the documents. All draw requests made after May 9, 2009 (the date of the CDO), were processed and paid in a timely manner. Some requests were partially rejected, but those rejections were based on independent inspections and were in compliance with the loan documents.
Three loans that originated in the spring and summer of 2008 matured during the summer of 2009—Austin, Gary and Hobart. The Gary loan matured on June 25, 2009 and was renewed on July 29, 2009. The Hobart loan matured on July 14, 2009. The Austin loan originally matured on May 14, 2009 and was renewed to July 14, 2009. On July 29, 2009, all three loans were renewed until September 17, 2009. According to Charles Reeves, Colonial delayed in "booking" these loans. Presumably, the funds were not available for draws during this delay.
By the time the Austin, Gary and Hobart notes came due in September, BB&T had taken over. Reeves informed Nelson, who continued to be the Houma loan officer, that the Hobart lease has been cancelled. Reeves also told Nelson that all three loans needed to be extended to prevent potential defaults on Hobart and Austin from affecting completion of the Gary Project. On October 2, 2009, the loan committee approved these loan extension through March 31, 2010. The Gary and Hobart loans were processed on October 14, 2009. The Austin loan was not processed until November 18, 2009.
Even though the Gary loan was processed and funds were available, Reeves was uneasy about beginning construction on the Gary store until the Austin loan was processed. Therefore, Houma did not begin construction of the Gary store until October 20, 2009 and proceeded slowly until the Austin renewal was complete. This delay prevented Houma from completing the Gary store before winter weather set in. That meant that Gary would not be complete before the note matured. Consequently, Houma faced the real possibility of default on all three notes.
In December 2009, Reeves submitted a workout plan to BB&T that would fund completion of the remaining Projects. As part of that plan, Reeves wanted compensation "for funds lost as a result of the previous months of issues." (Reeves Decl. ¶ 29.) Reeves informed Houma's new loan officer, Emily Miles, that Houma would not go forward with the impending sale of a store in Waco, Texas if the parties could not reach an agreement on the workout plan by the end of the year. Miles asked Reeves to get an extension on the Waco sale to give BB&T time to approve the plan, but the buyer could not agree. Reeves suggested to Miles that "if she could obtain a commitment to move forward judiciously and seek approval for the proposed workout, [Reeves] would allow the Waco sale to go forward with the cash escrowed in lieu of a loan payoff to allow funds for the cash portion of the workout agreement." (Reeves Decl. ¶34.)
The Waco sale went forward, and the funds were escrowed by agreement. The written escrow agreement, signed by Reeves, states:
(Pl.'s Exs. 154-A & 154-B.)
Reeves submitted a final workout proposal to Miles on January 13, 2010. Some issues remained to be worked out regarding some of the notes. A February 17, 2010 e-mail from Miles to Reeves indicated that the renewal package was almost ready to go before the loan committee.
On March 11, Reeves emailed Miles to inquire about the status of the loan renewal. In his e-mail Reeves stated:
(Pl.'s Ex. 79, Doc. 63.) Susan Bell, Senior Vice President of BB&T's Acquired Assets Group, considered this email to be "written admissions of an extremely material and probably irreversible condition . . . of the financial condition of Houma Dollar." (Bell. Aff. ¶ 16, Pl.'s Mot. Summ. J., Ex. 146, Doc. 63.) In Bell's [and BB&T's] opinion "that [financial condition] impaired BB&T's security and increased its risk, which was an Event of Default under section 6.01(L) of the Second Amended GLA." (Id.)
This was not the only event of default. The first was the Maypearl Note, which occurred prior to Reeves' March 11th e-mail. The Maypearl note came due in December 2009, as the parties were attempting to negotiate a workout agreement. Though the Note was mentioned in the negotiations, it was never paid and default was not waived. The potential funding sources that could be used to satisfy that note were part of the discussions between Reeves and Miles, and no immediate demand for payment was made. However, the outstanding balance was never satisfied, and the note remained in default.
On March 24, 2010, Reeves took part in a conference call with Bell and BB&T's attorneys. During this call, BB&T informed Reeves that it was applying the escrowed Waco funds to the principal balance of the note. Reeves informed BB&T that no workout agreement would be possible unless the cash from the Waco escrow was released to Houma. More defaults occurred shortly thereafter—the Austin note came due on March 25, 2010, and the Gary and Hobart loans came due on March 31, 2010. None were paid.
Negotiations continued. Reeves made several proposals to save some of the outstanding projects, but BB&T's insistence on a total release from liability was a stumbling block. By early April, BB&T refused to allow any more loan draws. On April 26, 2010, BB&T wrote to Houma and the Guarantors to notify them of default and demand payment. Meanwhile, Houma secured a buyer for its Shallowater store. On May 3, 2010, BB&T provided a loan payoff amount for the Shallowater property. That payoff letter stated:
Because of the cross-default provisions in all of the Houma notes, BB&T's April 26, 2010 demand letter declared all the outstanding notes to be in default and demanded payment on all. The total amount of principal due on the notes is $4,606,410.81. If successful in this lawsuit, BB&T is also entitled to prejudgment interest, which amounts to $1,551,524.61. Thus, the total amount of principal and interest due is $6,157,935.42. BB&T is also entitled to recover attorney's fees and costs.
In February 2008, Charles and Suzanne Reeves obtained a loan from Colonial Bank and signed a promissory note in the amount of $421,200. Along with the note, the Reeves also signed an acknowledgement of balloon payment. The note was due on March 5, 2010, was not paid, and is in default. The total amount due, excluding attorney's fees and costs, is $514,937.55, consisting of outstanding principal in the amount of $385,960.63 plus prejudgment interest in the amount of $128,976.92. The Reeves are also liable for attorney's fees and costs under the terms of the note.
On May 21, 2010, BB&T filed the instant action. The complaint asserts claims against all Defendants for breach of contract based on the default on the Houma Notes and the Guaranty Agreement. It also asserts a breach of contract claim against Charles Reeves and Suzanne Reeves for default on the personal loan. Defendants responded with an answer and counterclaims for negligent misrepresentation (Count I), breach of loan documents (Count II), breach of the duty of good faith (Count III), wrongful interference with business relationships/failure to fund draw requests (Count IV) and wrongful interference with business relationships/destroying the Shallowater deal (Count V). BB&T filed a motion to dismiss the counterclaims. In response, Defendants dismissed Count III. All remaining claims survived the motion to dismiss.
Summary judgment should be granted only if "there is no issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The party seeking summary judgment bears "the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial." Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). Once the moving party has satisfied his responsibility, the burden shifts to the nonmoving party to show the existence of a genuine issue of material fact. Id.
United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991) (citations and internal quotation marks omitted). In this case, the BB&T seeks summary judgment on both claims for which it bears the burden of proof at trial (i.e., BB&T's breach of contract claim and claims for which the Defendants bear the burden of proof (i.e., Defendants' counterclaims).
BB&T asserts that it is entitled to summary judgment on its breach of contract claims and on each of the Defendants' counterclaims against it. In their response, Defendants address some, but not all, of the issues raised by BB&T. Defendants do not dispute BB&T's ability to prove both breach of contract claims, but they do raise an affirmative defense they claim would defeat summary judgment with respect to the Houma Notes. Defendants do not address BB&T's factual or legal arguments regarding the misrepresentation counterclaim, but they do oppose summary judgment on the remaining counterclaims.
BB&T has presented sufficient evidence to prove its right to recovery under the Houma Notes and the related Guaranty Agreements. BB&T has proved its breach of contract claim against Houma, the borrower, with evidence demonstrating the existence of the notes, the amounts due, and lack of payment. See Griffin v. American Bank, 628 So.2d 540, 543 (Ala. 1993). To obtain recovery from the guarantors, BB&T must prove: (1) "the existence of the guaranty contract," (2) "default on the underlying contract by the debtor," and (3) "nonpayment of the amount due from the guarantor under the terms of the guaranty." Sharer v. Bend Millwork Sys., Inc., 600 So.2d 223, 225-26 (Ala. 1992) (citation omitted). Those facts have also been established without dispute.
Defendants assert that BB&T should be equitably estopped from enforcing the Houma Notes or Guaranty Agreements. Equitable estoppel is an affirmative defense, the purpose of which "is to promote equity and justice in an individual case by preventing a party from asserting rights under a general rule of law when his own conduct renders the assertion of such rights contrary to equity and good conscience." Pierce v. Hand, Arendall, Bedsole Greaves & Johnston, P.C., 678 So.2d 765, 768 (Ala. 1996). The party asserting an equitable estoppel defense has the burden of proving:
BSI Rentals, Inc. v. Wendt, 893 So.2d 1184, 1187 (Ala. Civ. App. 2004) (internal quotations omitted).
Defendants contend that three statements or actions by Colonial and/or BB&T misled Houma to believing that the loans would be extended. Those statements, as set forth by the Defendants, are:
Defs.' Summ. J. Br., Doc. 70, 19. Houma contends that in reliance on these statements it committed additional capital to Projects and did not seek alternative funding for its Projects. Houma claims it will be materially harmed if it is forced to repay the loans. For numerous reasons, Defendants' equitable estoppel defense falls short.
First, the statements that form the basis of their defense do not actually exist in the record. Sam Nelson's 2009 promise to "work with Houma to complete all projects then under development" is supported by cites to Reeves' deposition, page 47, and to Exhibit 8, which is a memo from Nelson to the Loan Committee. Reeves' cited testimony says nothing about any promise to work with Houma to complete projects.
(Defs.' Ex. 8, Doc. 70-7 (emphasis added)). Nothing in this memo indicates an intention, much less a promise, to fund any project after September 19, 2009. Furthermore, this document is an internal memo, and there is no evidence that its contents were ever communicated to the Defendants. Even if the memo indicated an intention to fund projects to completion, it would not provide evidence of a promise made to Houma.
Defendants also lack support for their claim that "Colonial assured Houma Dollar that it .. . would continue to fund [projects underway] in due course until completion." Again, Defendants' citation to Charles Reeves' deposition testimony is far off base. Reeves testified:
Reeves Dep. 204 (emphasis added). An opinion of reasonable prudence is hardly a promise to act. Furthermore, Defendants claim to have been misled in this instance not simply by the promise to fund projects, but by the promise to fund them in "due course." From the context of Defendants' argument, what they mean by "due course" is without delay. Nowhere could such a promise be gleaned from the testimony cited.
Finally, BB&T's alleged statement "that it would work with Houma to restructure and workout Houma Dollars loans" is another claim spun from whole cloth. Defendants cite paragraphs 36 and 37 of Reeves' declaration. In paragraph 36, Reeves states that he submitted a "final workout proposal" to Emily Miles on January 13, 2010. Paragraph 37 states:
Reeves' Decl. ¶ 37.
The equitable estoppel doctrine is akin to a fraud action in that the Defendants must prove both that the statements they relied on were misleading and that BB&T/Colonial
Coley v. Lang, 339 So.2d 70, 74-75 (Ala. Civ. App. 1976) (quoting Cosby v. Moore, 259 Ala. 41, 47, 65 So.2d 178, 182 (1953)).
Even if the statements were as Defendants assert, none of them would amount to a "misrepresentation or deliberate conduct designed to consciously and unfairly mislead" the Defendants. There is no evidence that in March 2009 Colonial did not intend to "work with Houma Dollar to complete all Projects then under development." It did, in fact, renew several loans for projects under development after March 2009. The phrase "work with" does not necessarily contemplate that the outcome will be successful or that projects will necessarily be funded. Likewise, BB&T's purported promise to "work with" Houma to restructure and renew loans was not a representation of any particular outcome. As Defendants' own evidence demonstrates, Miles did "work with" Reeves on the loan renewals but the result was not favorable.
Each of Defendants' equitable estoppel claims relies on an oral agreement that fall within Alabama's statute of frauds. Alabama Code, § 8-9-2 (1975) requires that [e]very agreement or commitment to lend money, delay or forebear repayment thereof or to modify the provisions of such an agreement or commitment except for consumer loans with a principal amount financed less than $25,000" be in a writing which states consideration and is signed by the party against whom the agreement is to be enforced. In this instance, each statement—whether it relates to funding projects, funding projects "in due course" or restructuring and renewing loans—involves "an agreement to lend money, to forebear repayment of money or to modify an agreement to lend money" in an amount exceeding $25,000. Consequently, Defendants' equitable estoppel defense is precluded by the statute of frauds. Cf. Southland Bank v. A&A Drywall Supply Co., Inc. 21 So.3d 1196, 1220 (Ala. 2008) (rejecting tort claims for negligence and wantonness because claims relied on oral contract to lend money which violated statute of frauds).
The Second Amended GLA contains specific provisions that defeat Defendants' equitable estoppel defense. First, the agreement could not "be modified or amended except by a written agreement executed by the Borrower and Lender." (Second Am. GLA § 8.09.) Also, "[n]o modification amendment or waiver of any provision of this Agreement, the Note or other Loan Documents nor consent to any departure therefrom by the Borrower shall be effective unless the same shall be in writing and signed by the Lender." (Id. § 8.06.) Furthermore, "[n]either any failure nor any delay on the part of [the] Lender in exercising any right" under the Agreement, any Note or other loan documents, nor any course of dealing between the parties ... shall operate as a waiver thereof." (Id. § 8.05.) Equitable estoppel will not defeat a breach of contract claim where, as here, the claim is based on an oral representation or course of dealings and the contract contains a non-waiver provision and requires that all modifications be in writing. Bass v. Southtrust Bank, 538 So.2d 794, 799 (Ala. 1989).
There is no dispute that Houma is in default on all the Houma Notes. Its attempts to avoid payment by invoking equitable estoppel are to no avail. Therefore, Houma is liable to BB&T for the amounts due and owing on those notes. Likewise, the Guarantors are jointly and severally liable with Houma. BB&T is entitled to summary judgment against these defendants on its breach of contract claim.
Charles and Suzanne Reeves have asserted no defense to the breach of contract claim based on the default on their individual loan. BB&T has proved its breach of contract claim against the Reeves with evidence demonstrating the existence of the note, the amounts due, and lack of payment. See Griffin v. American Bank, 68 So.2d 540, 543 (Ala. 1993). Accordingly, BB&T is also entitled to summary judgment on this count.
The Defendants appear to have abandoned their counterclaim for negligent misrepresentation, and for good reason. BB&T points out numerous deficiencies in the Defendants' misrepresentation claim. The Court need not address all of the issues raised by BB&T because one alone—the D'Oench, Duhme doctrine—is sufficient to defeat Defendants' counterclaim. In D'Oench, Duhme& Co., Inc. v. FDIC, 315 U.S. 447 (1942), the Supreme Court held that an unwritten agreement between a bank and a private party cannot be enforced against the FDIC. As insurer of a bank's deposits, the FDIC is not liable for "`any obligation not specifically memorialized in a written document such that the agency would be aware of the obligation when conducting an examination of the institution's records.'" Murphy v. FDIC, 208 F.3d 959, 963 (11th Cir. 2000) (quoting Baumann v. Savers Fed. Sav. & Loan Ass'n, 934 F.2d 1506, 1515 (11th Cir. 1991)). D'Oench, Duhme also applies to the FDIC's successors. First Union Nat. Bank of Florida v. Hall, 123 F.3d 1374, 1376 (11th Cir. 1997).
Defendants' negligent misrepresentation claim arises from a statement made by Colonial Bank representative Sam Nelson to Reeves in January 2009 Reeves allegedly told Nelson that Colonial's management had stated that they had multiple sources from which to raise the capital Colonial needed. Reeves apparently took this to mean that Colonial's financial position was sound and did not seek alternative sources of funding.
Defendants assert that BB&T is liable to them under a breach of contract theory because BB&T/Colonial breached the loan documents. The elements of a breach of contract claim are well-established. The party asserting a breach of contract must prove: "`(1) the existence of a valid contract binding the parties in the action, (2) his own performance under the contract, (3) the opposing party's nonperformance, and (4) damages.'" Employee's Benefit Assoc. v. Grissett, 732 So.2d 968, 975 (Ala. 1998) (quoting Southern Medical Health Systems, Inc. v. Vaughn, 669 So.2d 98, 99 (Ala. 1995)). In their Answer and Counterclaim, Defendants described the breach as the bank's "failure to fund draw requests." BB&T has presented evidence that all draw requests were processed and paid in a timely manner. BB&T/Colonial advanced to Houma as much of the requested amount as was supported by the documents. Some requests were partially rejected based on independent inspections and in compliance with the loan documents.
In the face of BB&T's evidence that all draw requests were honored (or, partially rejected) in a timely manner and in accordance with the terms of the agreement, Defendants respond with a brand new claim. Specifically, Defendants argue:
Defs.' Summ. J. Br., 23-24, Doc. 70 (citations omitted, emphasis added).
Put simply, Defendants have no evidence that BB&T/Colonial breached the provisions of the loan documents by failing to fund draw requests that were actually submitted. Instead, they claim that BB&T should be held liable for failing to fund draw requests that were not submitted. That is nonsense. Defendants imply that BB&T is liable for wrongdoing because of "delays in booking the loans."
Defendants actually assert two claims for intentional interference with business relationships. The first is based on BB&T's alleged failure to honor draw requests which, for reasons discussed immediately above, lacks evidentiary support. That leaves only one intentional interference counterclaim—based on BB&T's refusal to provide a payoff amount for the Shallowater property which led to the collapse of potential sale of that property to a third party. To prevail on a claim for intentional interference with business relationships, Defendants must prove: "(1) the existence of a protectible [sic] business relationship; (2) of which the defendant knew; (3) to which the defendant was a stranger; (4) with which the defendant intentionally interfered; and (5) damage." White Sands Group, L.L.C. v. PRS II, LLC, 32 So.3d 5, 14 (Ala. 2009) (White Sands II). BB&T argues that it is not liable because mere "refusal to deal" does not amount to intentional interference, see e.g,. Bear Creek Enterprises, Inc. v. Warrior & Gulf Navigation Co., Inc., 529 So.2d 959 (Ala. 1988), and also because its conduct was justified.
The Alabama Supreme Court has held that "the tort of intentional interference with business relations was intended to provide a remedy for situations where a third party intentionally interferes with the relationship of two contracting parties, not as a remedy for situations where an allegedly breached contract between two parties. . . affects the relationship of one of the parties with a third party." Cahaba Seafood, Inc. v. Central Bank of the South, Inc., 567 So.2d 1304, 1306 (Ala. 1990). Cahaba involved a line of credit between the plaintiffs and the defendant bank. The parties' written agreement provided for a $25,000 line of credit and also stated that the bank "would advance up to 80 percent of accounts receivable of the business." Id. The bank's interpretation was that the 80 percent figure was subject to the $25,000 cap on the line of credit, and refused to extend credit beyond $25,000. The plaintiffs contended that the agreement called for a line of credit in the amount of $25,000 plus an amount equal to 80 percent of the accounts receivable. The plaintiffs filed suit for breach of contract and for intentional interference with business relationships. With respect to the latter claim, the plaintiffs asserted that bank's actions affected their relationship with one of their customers, the Wynfrey Hotel. The Alabama Supreme Court rejected the intentional interference claim, holding:
Id. at 1306.
In the instant case the argument against an intentional interference claim is even more compelling. The Cahaba plaintiffs based their intentional interference claim on an alleged breach of contract, i.e., a wrongful act. Defendants' claim arises from BB&T's lawful exercise of its rights under the contract. BB&T had the right to maintain a lien on the Shallowater property and therefore was not obligated to provide a payoff amount for the Shallowater sale.
The Eleventh Circuit's decision in MAC East, LLC v. Shoney's, 535 F.3d 1293 (11th Cir. 2008), provides a different, yet equally viable, basis for rejecting Defendants' intentional interference claim. That case involved a dispute between two parties to a lease agreement. Shoney's, the lessor, refused to give permission to MAC East, the lessee, to sublease the leased property to a third party. Under the lease agreement, Shoney's retained the right to approve any sublease. MAC East filed suit against Shoney's asserting several claims, including one for intentional interference with business relationships. The Eleventh Circuit rejected this claim for several reasons, one of which was the contractual relationship between the parties. As noted, one of the elements of an intentional interference claim is that the party against whom the claim is asserted must be a "stranger" to the relationship with which he allegedly interfered. Alabama law defines "stranger" in the negative, that is, "a defendant is not a stranger when . . . `both the defendant and the plaintiff are parties to a comprehensive interwoven set of contract or relations.'" Id. at 1297 (quoting Waddell & Reed, Inc. v. United Investors Life Ins. Co., 875 So.2d 1143, 1156 (Ala. 2003)).
The Shallowater property was collateral securing all Houma Notes. Just as Shoney's had the contractual right to control aspects of the sublease, BB&T had the contractual right to place a lien on any Property subject to the Second Amended GLA and Houma Notes. BB&T was not a "stranger" to the relationship between Houma and the potential Shallowater buyer because Houma was attempting to sell property in which Houma, by contract, had a legal interest. For that reasons, also, there can be no cause of action for intentional interference.
For the reasons set forth above, the Court finds that the Plaintiff, BB&T, is entitled to summary judgment on its claims against all Defendants and is also entitled to summary judgment on Defendants' counterclaims against it. Accordingly it is
