Bank v. Progressive Employer Serv. Ii

• Decision Date: 16 February 2011
• Docket Number: No. 4D09–1720.,4D09–1720.
• Citation: 55 So.3d 655
• Parties: PNC BANK, N.A., Appellant,v.PROGRESSIVE EMPLOYER SERVICES II, a Florida Limited Liability Company; Progressive Employer Services III, a Florida Limited Liability Company; Progressive Employer Services IV, a Florida Limited Liability Company; Progressive Employer Services V, a Florida Limited Liability Company; Progressive Employer Services VI, a Florida Limited Liability Company; Progressive Employer Services VII, a Florida Limited Liability Company; Progressive Employer Services, a Florida Limited Liability Company; and West Wind Holding Company, LLC, a Florida Limited Liability Company, Appellees.
• Court: Florida District Court of Appeals

55 So.3d 655

PNC BANK, N.A., Appellant,

v.PROGRESSIVE EMPLOYER SERVICES II, a Florida Limited Liability Company; Progressive Employer Services III, a Florida Limited Liability Company; Progressive Employer Services IV, a Florida Limited Liability Company; Progressive Employer Services V, a Florida Limited Liability Company; Progressive Employer Services VI, a Florida Limited Liability Company; Progressive Employer Services VII, a Florida Limited Liability Company; Progressive Employer Services, a Florida Limited Liability Company; and West Wind Holding Company, LLC, a Florida Limited Liability Company, Appellees.

No. 4D09–1720.

District Court of Appeal of Florida, Fourth District.

Feb. 16, 2011.

Don A. Lynn and Stephen T. Maher of Shutts & Bowen, LLP, Miami, for appellant.Roger Slade and Adam J. Shapiro of Pathman Lewis, LLP, Miami, for appellees.CIKLIN, J.

PNC Bank, N.A. appeals the trial court's final order granting summary judgment in favor of Progressive Employer Services, LLC, et al. (collectively referred to as “the borrowers”) on the borrowers' claim that PNC Bank breached the credit agreement entered into between the parties. We reverse as PNC Bank did not breach the credit agreement since the borrowers could only early terminate the fixed two-year agreement upon ninety days' advance notice which the borrowers admit that they did not provide.

In June 2005, PNC Bank and the borrowers executed a two-year revolving credit and security agreement (the “Agreement”) whereby PNC Bank provided the borrowers with a multi-million dollar working capital credit line. To secure any outstanding money lent, PNC Bank had a lien on the borrowers' accounts receivable. The Agreement was to remain in full force and effect until June 9, 2007. Paragraph 13.1 of the Agreement included the sole method for terminating the Agreement and releasing the lien, prior to June 9, 2007:

13.1. Term. This Agreement ... shall become effective on the date hereof and shall continue in full force and effect until June 9, 2007 (the “Term”) unless sooner terminated as herein provided.... Borrowers may terminate this Agreement at any time upon ninety (90) days prior written notice upon payment in full of the Obligations. In the event the Obligations are prepaid in full prior to the last day of the Term ..., Borrowers shall pay ... an early termination fee in an amount equal to ....25% of the Maximum Facility Amount if the Early Termination Date occurs on or after the first anniversary of the Closing Date to and including the date immediately preceding the second anniversary of the Closing Date.

In September 2006, about nine months before the end of the agreed term, the borrowers decided to terminate the credit line. The borrowers stipulated that they did not provide the required ninety days' prior written notice as set forth in the Agreement. PNC Bank contends that the borrowers only provided it with a one-day notice by sending a letter on September 19, 2006 advising the bank of their intention to terminate the Agreement the next day.

The borrowers acknowledged that they made a business decision to terminate the Agreement because they had obtained a credit line with another bank (HSBC) at a more favorable interest rate. The borrowers had figured that the only penalty would be the “early termination fee” of $23,750. As such, they requested that PNC Bank provide them with an “estoppel letter” stating the amount due for PNC Bank to release its lien on the borrowers' accounts receivable. In response to the borrowers' request, PNC Bank provided them with a letter (the “Estoppel Letter”) which set forth the total outstanding indebtedness owed to PNC Bank as of September 20, 2006. The Estoppel Letter set out the amounts that the borrowers would be required to pay PNC Bank for it to release its lien on their receivables the next day. The itemized list in the Estoppel Letter included an “Early Termination Fee” in the amount of $23,750, and a “90 Day Written Notice” charge in the amount of $153,048.28.¹

In an email dated September 20, 2006, in-house counsel for the borrowers wrote to PNC Bank's lawyer advising him that the borrowers did not dispute the Early Termination Fee but were protesting the “90 Day Written Notice” charge. In this email communication, the borrowers acknowledged that they would pay the “90 Day Written Notice” charge of $153,048.28, but claimed it was under coercion because of the “impending circumstances of having to close” their new loan that day. In this email, the borrowers' counsel wrote that the borrowers' decision to pay off the loan with PNC Bank, including the “90 Day Written Notice” amount, did not constitute a waiver of their rights under the loan documents. Upon receipt of the demand funds outlined in the Estoppel Letter, PNC Bank released its lien and terminated the credit line.

Within seven months of the release and termination, the borrowers followed up with a one-count complaint against PNC Bank seeking damages for breach of contract. The borrowers sought return of the $153,048.28 “90 Day Written Notice” charge plus interest, court costs and attorney's fees. In its answer and affirmative defenses, PNC Bank denied that it breached the Agreement and asserted the following affirmative defenses: (i) waiver and estoppel; (ii) accord and satisfaction; and (iii) anticipatory breach. PNC Bank did not assert a counterclaim in its initial answer.

The borrowers moved for summary judgment and PNC Bank filed a cross-motion for summary judgment. After a hearing on both motions, the trial court entered an order granting the borrowers' motion for summary judgment, denying PNC Bank's motion for summary judgment, and ordering PNC Bank to pay $193,050.49 to the borrowers ($153,048.28 for the “90 Day Written Notice” payment it had previously received and $40,002.21 as prejudgment interest).

PNC Bank filed a “Motion for Rehearing or, in the Alternative, Motion for Leave to File Counterclaim.” PNC Bank argued that prior to the trial court's granting the borrowers' motion for summary judgment, PNC Bank had suffered no damages as a result of the borrowers' breach. However, PNC Bank argued, because the trial court ordered PNC Bank to return the disputed funds, PNC Bank then had a viable claim for breach of contract against the borrowers for not providing them with ninety days' written notice prior to terminating the Agreement. The trial court denied PNC Bank's motion and PNC Bank appealed.

Review of an order granting summary judgment is de novo. Gomez v. Fradin, 41 So.3d 1068, 1070 (Fla. 4th DCA 2010). “Summary judgment is proper if there is no genuine issue of material fact and if the moving party is entitled to a judgment as a matter of law.” Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 130 (Fla.2000).

Furthermore, “[c]onstruction of a contract is a question of law which an appellate court may consider de novo provided that the language is clear and unambiguous and free of conflicting inferences.” Miller v. Kase, 789 So.2d 1095, 1097 (Fla. 4th DCA 2001). “The contract should be reviewed as a whole and all language given effect, and where the language is clear and unambiguous, the contract should be enforced as it reads.” Leisure Resorts, Inc. v. City of West Palm Beach, 864 So.2d 1163, 1166 (Fla. 4th DCA 2003). “[An]...