Crm Collateral Ii Inc. v. Tri-county Metro. Transp. Dist. Of Or.
| Decision Date | 26 May 2010 |
| Docket Number | Nos. CV 08-1266-PK(LEAD), CV 09-1135-PK.,s. CV 08-1266-PK(LEAD), CV 09-1135-PK. |
| Citation | 715 F.Supp.2d 1143 |
| Parties | CRM COLLATERAL II, INC., Plaintiff, v. TRI-COUNTY METROPOLITAN TRANSPORTATION DISTRICT OF OREGON, Defendant. Mark Guetzko, Lisa Guetzko, Richard Altorfer, Seedorff Masonry, Inc., Dale Kartman, Susan Kartman, and Seedorff Partnership, LLP, Plaintiffs, v. CRM Collateral II, Inc., Intervenor Plaintiff, v. Keybank National Assoc., Defendant, v. Tri-County Metropolitan Transportation District of Oregon, Intervenor Defendant. |
| Court | U.S. District Court — District of Oregon |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
Jacob S. Gill, Keith A. Ketterling, Timothy S. Dejong, Stoll Stoll Berne Lokting & Schlachter, Portland, OR, Patrick M. Roby, Elderkin and Pirnie, PLC, Cedar Rapids, IA, for Plaintiffs.
Joel A. Mullin, Timothy W. Snider, Stoel Rives, LLP, Steven K. Blackhurst, Ater Wynne, LLP, Portland, OR, for Defendant.
Plaintiff CRM Collateral II, Inc. (“CRM”), and Richard Altorfer filed the lead case in this consolidated action against Tri-County Metropolitan Transportation District of Oregon (“TriMet”) and KeyBank National Association (“KeyBank”) on October 27, 2008. The parties' dispute arose out of Tri-Met's efforts to draw on a letter of credit as to which it was the beneficiary, KeyBank was the issuer, and CRM was the applicant. On November 4, 2008, Altorfer was voluntarily dismissed as a plaintiff. On November 10, 2008, TriMet filed a counterclaim for declaratory relief. CRM voluntarily dismissed KeyBank as a party to the action on January 20, 2009. On September 18, 2009, 2009 WL 3054959, the court denied the remaining parties' cross-motions for summary judgment, but invited supplemental briefing as to specified legal issues not addressed in the record then before the court.
On October 22, 2009, 2009 WL 5173495, the lead case was consolidated with Guetzko v. KeyBank, Case No. CV-09-1135-PK. At the time the cases were consolidated, KeyBank was subject to an injunction enjoining it from honoring TriMet's requests to draw on the letter of credit. On November 13, 2009, this court dissolved that injunction. The Guetzko plaintiffs' moved for reconsideration, and on November 30, 2009, the motion was denied. Immediately thereafter, TriMet successfully drew on the letter of credit in the amount of $3 million, the maximum amount available.
On December 22, 2009, the court determined that the surety defense of discharge was available to CRM, and on that basis disposed of TriMet's claims to be entitled as a matter of law to retain the proceeds from its draw.
On February 5, 2010, KeyBank filed a counterclaim against CRM, seeking reimbursement for the funds it paid out to TriMet. On February 16, 2010, CRM filed crossclaims against TriMet in the Guetzko action, for unjust enrichment, money had and received, breach of contract, breach of statutory warranty for falsely certifying CRM's default, and breach of statutory warranty premised on material fraud. On February 26, 2010, KeyBank filed a crossclaim against TriMet, to be considered in the alternative to its counterclaim against CRM, seeking repayment of the moneys paid out to TriMet.
Now before the court are KeyBank's (# 110) for summary judgment as to its crossclaim against TriMet, TriMet's motion (# 115) styled as a motion for summary judgment, but properly construed in part as a motion for reconsideration and only in part as a motion for summary judgment, and CRM's motion (# 118) for summary judgment. I have heard oral argument on behalf of the parties, and have considered the motions and all of the pleadings on file. For the reasons set forth below, KeyBank's motion is denied, TriMet's motion is granted in part and denied in part as discussed below, and CRM's motion is granted in part and denied in part as discussed below.
Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). Summary judgment is not proper if material factual issues exist for trial. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), cert. denied, 516 U.S. 1171, 116 S.Ct. 1261, 134 L.Ed.2d 209 (1996). The substantive law governing a claim or defense determines whether a fact is material. See Moreland v. Las Vegas Metro. Police Dep't, 159 F.3d 365, 369 (9th Cir.1998).
In evaluating a motion for summary judgment, the district courts of the United States must draw all reasonable inferences in favor of the nonmoving party, and may neither make credibility determinations nor perform any weighing of the evidence. See, e.g., Lytle v. Household Mfg., Inc., 494 U.S. 545, 554-55, 110 S.Ct. 1331, 108 L.Ed.2d 504 (1990); Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). On cross-motions for summary judgment, the court must consider each motion separately to determine whether either party has met its burden with the facts construed in the light most favorable to the other. See Fed.R.Civ.P. 56; see also, e.g., Fair Hous. Council v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir.2001). A court may not grant summary judgment where the court finds unresolved issues of material fact, even where the parties allege the absence of any material disputed facts. See id.
It is appropriate to alter or amend a judgment under Federal Civil Procedure Rule 59(e) if “(1) the district court is presented with newly discovered evidence, (2) the district court committed clear error or made an initial decision that was manifestly unjust, or (3) there is an intervening change in controlling law.” United Nat'l Ins. Co. v. Spectrum Worldwide, Inc., 555 F.3d 772, 780 (9th Cir.2009), quoting Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir.2001).
In November 2005, TriMet entered into Contract No. RH030433LE (the “Contract”) with third party Colorado Railcar Manufacturing, LLC (“Colorado Railcar”), pursuant to which Colorado Railcar would manufacture and TriMet would purchase three railcars and one trailer. TriMet's price for the railcars and trailers was initially fixed at $17,821,806, but was subsequently reduced, first to $17,481,135 and later to $17,299,135. The Contract required Colorado Railcar to maintain an irrevocable standby letter of credit in the amount of $3 million continuously from the time it issued notification that manufacture would begin to the final delivery of railcars and trailers to TriMet.
CRM was incorporated November 13, 2006, for the purpose, among other potential legal purposes, of maintaining a letter of credit in the amount of $3 million as Colorado Railcar was required to do under the Contract. Colorado Railcar's CEO, Thomas Rader, is one of CRM's two corporate directors, and Colorado Railcar's CFO, John Thompson, was CRM's registered agent at the time CRM was incorporated. CRM's second corporate director and its sole corporate officer (both its President and its Treasurer) was Scott State, 1 who worked with Colorado Railcar as a consultant from 2004 through 2007.
On November 17, 2006, CRM obtained the Letter of Credit from KeyBank. The Letter of Credit identified CRM as the “applicant” and TriMet as the “beneficiary.” The terms of the Letter of Credit required TriMet to certify in writing that CRM was in default under the Contract-although CRM was not at that time a party to the Contract-in order to draw on the letter as its beneficiary. As originally issued, the expiration date of the Letter of Credit was November 15, 2007.
Simultaneously with obtaining the Letter of Credit, CRM entered into a Letter of Credit Reimbursement Agreement (the “reimbursement agreement”) with KeyBank, the terms of which required CRM to reimburse KeyBank in the amount of any payment KeyBank made to TriMet under the Letter of Credit, plus interests, charges, and expenses. On that same day, November 17, 2006, Colorado Railcar, CRM, and the Guetzko plaintiffs entered into an Investment Agreement whereby Colorado Railcar agreed to pay the Guetzko plaintiffs a fee in exchange for their promise to provide collateral to secure CRM's obligation to reimburse KeyBank in the event TriMet drew on the Letter of Credit.
In April 2007, TriMet learned for the first time that CRM, rather than Colorado Railcar, was the applicant on the Letter of Credit. Effective April 20, 2007, TriMet, Colorado Railcar, and CRM agreed to a written modification of the Contract (Modification No. 1), pursuant to which CRM became a party to the Contract for the sole purpose of making a default by Colorado Railcar under the Contract constitute a default by CRM for purposes of the Letter of Credit. Rader represented CRM in the negotiation of Modification No. 1, and State signed Modification No. 1 on CRM's behalf. In addition, in connection with Modification No. 1 CRM supplied to TriMet certain organizational resolutions issued by CRM's board of directors providing that only officers of the corporation-namely, Scott State and no other person-were authorized to enter into or negotiate any agreements on CRM's behalf.
In October 2007, the parties agreed to extend the Letter of Credit's expiration date from November 15, 2007, to May 15, 2008. Rader and Thompson participated in the extension negotiations, and Scott State did not, although he ultimately signed the amendment that effected the extension.
On January 16, 2008, TriMet and Colorado Railcar entered into a Project Monitoring Agreement (the “PMA”) that...
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