Buck's Sporting Goods, Inc. of Tulsa v. First Nat. Bank & Trust Co. of Tulsa, 78163

• Decision Date: 01 February 1994
• Docket Number: No. 78163,78163
• Citation: 868 P.2d 693,1994 OK 14
• Parties: BUCK'S SPORTING GOODS, INC. OF TULSA, an Oklahoma Corporation, Appellant, v. FIRST NATIONAL BANK & TRUST COMPANY OF TULSA, a national banking association, Appellee.
• Court: Oklahoma Supreme Court

Page 693

868 P.2d 693

1994 OK 14

BUCK'S SPORTING GOODS, INC. OF TULSA, an Oklahoma Corporation, Appellant, v. FIRST NATIONAL BANK & TRUST COMPANY OF TULSA, a national banking association, Appellee.

No. 78163.

Supreme Court of Oklahoma.

Feb. 1, 1994.

As Corrected Feb. 7, 1994.

Certiorari to the Court of Appeals, Division I, Daniel J. Boudreau, District Judge.

Buck's Sporting Goods, Inc. of Tulsa (Buck's/borrower) had a long-term revolving credit line with the appellee, First National Bank & Trust Company of Tulsa (First Tulsa/bank/lender). After Buck's posted a year-end loss for 1986, the parties negotiated a new agreement for a credit line of $425,000. Buck's claims that First Tulsa agreed to make an advance on October 7, 1987. However, the next day, First Tulsa refused to advance credit. Buck's asserts that First Tulsa's actions caused the company to fail. Buck's sued for breach of contract, tortious breach of contract, breach of fiduciary duty, constructive fraud, prima facie tort, gross negligence and interference with contractual relations. The trial judge, Honorable Daniel J. Boudreau, granted summary judgment to the bank. The Court of Appeals affirmed. We find that controverted material facts exist concerning the alleged breach of the credit agreement which must be resolved by the trier of fact.

Certiorari Previously Granted; Court of Appeals Opinion Vacated; Trial Court Reversed.

Thomas M. Klenda, Robert J. Getchell and John M. O'Connor, Tulsa, for appellant.

James L. Kincaid and Gary L. Betow, Tulsa, for appellees.

KAUGER, Justice.

Certiorari was granted to consider a single issue: whether there are material issues of fact in controversy concerning the alleged breach of the credit agreement which must be determined by the trier of fact. ¹ We find that there are.

FACTS

The appellant, Buck's Sporting Goods of Tulsa (Buck's/borrower), sold sporting goods. The majority of Buck's business came from selling equipment to schools. In 1964, Buck's entered into a line of credit agreement with the appellee, First National Bank & Trust Company of Tulsa (First Tulsa/bank/lender). The agreement was updated in 1980 and in 1987. Under the agreements, Buck's was given a maximum amount of revolving credit. When schools placed orders for equipment, Buck's ordered the goods from its factory suppliers; and when payments to the factories became due, Buck's borrowed on its line of credit with First Tulsa. After the schools paid for the equipment, Buck's used the money to reduce its line of credit.

To receive substantial discounts from its factories, Buck's was required to pay its accounts in full by April 10, for basketball season, and by October 10, for football season. For the twenty-three years that Buck's did business with First Tulsa, it always borrowed the maximum amount of its credit line on these dates. The bank was aware of this practice, and its economic importance to Buck's. ²

In 1986, Buck's reported a year-end loss. When it learned of the loss, First Tulsa met with Buck's. Buck's loan officer at First Tulsa, W.E. Beard (Beard), sent a letter to Buck's asking for a capital infusion; or, in the alternative, the bank requested other proposals to strengthen the relationship and to enable the bank to renew the line of credit. ³ On July 8, 1987, Buck's and First Tulsa entered into the "Amended, Revised and Restated Revolving Credit Agreement" (agreement/credit agreement). Although Buck's did not make a capital infusion, the bank approved the loan and increased Buck's line of credit to $425,000. As security, Buck's gave the bank: 1) a pledge of all the store assets; 2) a promise to deposit all receipts and cash into a collection, or blocked, account to which Buck's had no access; ⁴ 3) a mortgage on the home of Buck's president, Robert Duncan (Duncan); 4) a pledge of all benefits from Duncan's life insurance policies; and 5) personal guarantees On October 7, 1987, Buck's requested, via telephone, an advance of $212,519 for payment to its factory suppliers by October 10. ⁵ This would have raised Buck's outstanding balance to its credit line limit. According to Duncan, when he asked Beard about the advance, Beard replied that it "would be no problem." ⁶ Although Beard denied this; ⁷ the parties agree that on October 8, 1987, First Tulsa refused to make the advance. ⁸ This was two days before payments were due to the factories, leaving Buck's no time to obtain alternate financing. When Buck's asked Beard what to do about the factories on October 8th, Beard allegedly replied, "I guess you'll just have to let your factories ride." Buck's insists that no explanation was given for the refusal to advance the funds, and that Beard, the only person at First Tulsa completely familiar with the account, left for a ten-day vacation the next day. Because all of Buck's cash was in the blocked collection account, no funds were available to pay any suppliers by October 10. First Tulsa insists that the line of credit was never canceled, considered in default, nor was the debt accelerated. Buck's claims to be unaware of the account's standing. It assumed that the lending relationship with First Tulsa terminated when the advance was refused.

of Buck's principals to its previous owner worth $1.4 million.

Although Buck's obtained a new line of credit with Western National Bank on October 20, 1987, all of the factory discounts were lost. Buck's claims that it was put on credit hold by the factories, that it was charged late fees and interest, and that it lost credibility with its school clients. Buck's eventually filed a Chapter 11 bankruptcy proceeding, alleging that it could never recover from the economic harm caused by First Tulsa's refusal to make the advance.

On December 23, 1987, Buck's sued alleging breach of contract, tortious breach of contract, breach of fiduciary duty, constructive fraud and prima facie tort. Buck's claims that because of the implied duty of good faith and because of a continuous course of dealing with the bank, First Tulsa In an order entered on December 19, 1990, the trial court gave Buck's time to amend its petition. Buck's amended the petition on December 20, restating its breach of contract and fraud claims. First Tulsa again moved for summary judgment. The trial court sustained the motion holding there was no breach. It relied on contract language providing that "First Tulsa is not obligated to make any particular loan or advance requested by Buck's." ⁹ The court also ruled that there is no implied-in-law duty to act reasonably in a revolving credit agreement if the parties do not impose the duty in the contract itself, and that the evidence did not support Buck's contention that the bank telephonically agreed to grant the requested advance. The Court of Appeals affirmed. Certiorari was granted on June 14, 1993, to determine whether there are material issues of fact in controversy concerning the alleged breach of the credit agreement.

should have given reasonable notice before refusing to make the credit line advance. On June 15, 1989, Buck's amended its petition to add claims for gross negligence and interference with contractual relations. On April 11, 1990, First Tulsa filed its first motion for summary judgment. Buck's filed a cross-motion for summary judgment on June 4. The trial judge granted an interlocutory summary adjudication to First Tulsa on all counts except the breach of contract claim.

CONTROVERTED MATERIAL FACTS EXIST CONCERNING THE ALLEGED

BREACH OF THE CREDIT AGREEMENT WHICH MUST BE

RESOLVED BY THE TRIER OF FACT.

Buck's insists that there are controverted material facts concerning the 1987 credit agreement and the conduct between itself and First Tulsa's loan officer which militate against the grant of summary judgment. It argues that: 1) once Beard told Duncan by telephone on October 7 that it "would be no problem" to advance the maximum credit limit that an agreement was reached; and 2) First Tulsa's refusal to advance the funds on October 8 constituted a breach of the credit agreement. First Tulsa relies upon the express language of paragraph 2.1 of the contract providing that the Bank is under no obligation to make any loan or advance ¹⁰ for the proposition that there was no breach. The bank asserts that there was no breach, because there was no obligation to make the advance.

Pursuant to Rule 13, 12 O.S.1991, Ch. 2 App., Rules for the District Courts, a motion for summary judgment may be filed if the pleadings, depositions, interrogatories, affidavits, and other exhibits reflect that there is no substantial controversy pertaining to any material fact. ¹¹ Even when basic facts are undisputed, motions for summary judgment should be denied, if from the evidence Contractual intent is determined from the entire instrument. Whenever possible, an interpretation will be adopted which gives effect to all provisions of the contract. ¹⁶ The 1987 Agreement between Buck's and First Tulsa contains at least three clauses which appear to limit the circumstances under which an advance will be made. As First Tulsa notes, paragraph 2.1 provides that First Tulsa was not required to make any loans. ¹⁷ Paragraph 4.1 indicates that First Tulsa was not required to make advances "unless there shall remain in full force and effect unconditional written guaranties." ¹⁸ Finally, paragraph 6.1 provides that First Tulsa had "no further obligation to make any loan" after notice of default. ¹⁹ However, paragraph 2.6 specifically states that:

                reasonable persons might reach different inferences or conclusions from the undisputed facts. 12  Summary judgment is proper only when the pleadings, affidavits, depositions, admissions, or other evidentiary materials establish that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. 13  All conclusions drawn from the evidentiary material submitted to the trial court are viewed in

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