DIAMOND v. BANK of Ala.
Decision Date | 19 February 2010 |
Docket Number | 1051033 and 1051034. |
Citation | 43 So.3d 552 |
Parties | Richard A. DIAMOND v. BANK OF ALABAMA. Bank of Alabama v. Premier Business Centers, Inc., Richard A. Diamond, and O. William Evans. |
Court | Alabama Supreme Court |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
W. Scott Simpson of Batchelor & Simpson, P.C., Birmingham, for appellant/cross-appellee Richard A. Diamond.
Romaine S. Scott III of Haskell Slaughter Young & Rediker, LLC, Birmingham, for appellee/cross-appellant Bank of Alabama.
Richard W. Lewis of Austill, Lewis & Simms, P.C., Birmingham, for appellees Premier Business Centers, Inc., and O. William Evams.
Richard A. Diamond appeals and Bank of Alabama ("BOA") cross-appeals, both seeking relief from a judgment of the Jefferson Circuit Court awarding BOA $200,000 on a promissory note and awarding BOA $132,601.67 in attorney fees in an action brought by BOA against Diamond and others. Diamond disputes the trial court's holding that Diamond must reimburse BOA for payments BOA made pursuant to a letter of credit. BOA challenges the trial court's failure to award BOA interest as part of its judgment against Diamond, Premier Business Centers, Inc. ("PBC"), and O. William Evans.1 Because BOA was entitled to the reimbursement of payments it made pursuant to the letter of credit, we affirm the judgment of the trial court in Diamond's appeal (case no. 1051033). Because in BOA's cross-appeal (case no. 1051034) we hold that BOA was entitled to interest on the moneys advanced pursuant to the letter of credit, we remand the case for the trial court to determine the appropriate amount of interest due BOA.
Diamond was a director of HQ Birmingham, Inc., the name by which PBC was formerly known, and Evans was its president. When the name was changed to PBC,2 Diamond became the president and 50% owner of PBC, Evans owned 45% of the stock of PBC, and Evans's wife, Denise, owned 5%.
Effective April 7, 2003, HQ Birmingham, Inc., entered into a lease agreement with Gateway Alabama Properties, Inc., pursuant to which HQ Birmingham acquired 19,984 square feet of rentable space in suite no. 400, One Chase Corporate Center, in Birmingham. HQ Birmingham divided and sublet the office space to small businesses and provided other services to the sublessees. The lease with Gateway was executed by Evans as then president of HQ Birmingham. It required no rental payments for the first nine months, and HQ Birmingham was to provide a standby letter of credit for Gateway's benefit to secure HQ Birmingham's obligations and the rental payments when due.
On December 1, 2003, BOA, on application by "Premier Business Centers, Inc. f/k/a HQ Birmingham, Inc.," issued a $200,000 standby letter of credit for the benefit of Gateway Alabama Properties, Inc. In its commitment letter, BOA advised Diamond, who was negotiating the terms of the letter of credit on behalf of PBC, that BOA required collateral in the form of a blanket lien on furniture, fixtures, and equipment and joint and personal guaranties by Diamond and Evans. The commitment letter also provided that the letter of credit was to be in the amount of $200,000 until August 1, 2004, and in the amount of $120,000 from August 1, 2004, through August 1, 2005. The irrevocable letter of credit actually issued by BOA, however, was in the amount only of $200,000. It reads, in pertinent part, as follows:
In association with the letter of credit, PBC executed a promissory note to BOA agreeing to pay up to $200,000 conditioned on future advances "upon presentment of irrevocable commercial letter of credit issued to Gateway Alabama Properties, Inc." Other provisions of the note require the payment of "interest on the outstanding principal balance," the payment of monthly accrued-interest payments "beginning 01/01/2004," and the payment of principal "at maturity on 08/01/2004 if called upon." The note contains the following "ADDITIONAL TERMS":
(Capitalization in original.)
Page 2 of the note contains additional conditions that are incorporated by virtue of the following statement in bold print located on page 1 immediately above the signature block: "SIGNATURES: I AGREE TO THE TERMS OF THIS NOTE (INCLUDING THOSE ON PAGE 2)." (Capitalization in original.) Among the terms on page 2 is one that states that Another relevant provision is titled "OBLIGATIONS INDEPENDENT" and states, in part:
The note was signed by "Premier Business Centers, Inc., Richard A. Diamond, President."
Diamond, as then president of PBC, also executed a line-of-credit agreement on behalf of PBC. That agreement identifies only PBC as the borrower, stating that "`I' includes each borrower above, jointly and severally." The lender is identified as BOA, stating that "`You' means lender, its successors and assigns." The agreement provides:
(Capitalization in original; emphasis added.)
In addition to the note and the line-of-credit agreement, Diamond and Evans each provided a "guaranty" document personally guaranteeing the full and prompt payment when due of debts and obligations described in the identical guaranty documents executed by Diamond and Evans on December 1, 2003. The guaranty documents identify PBC as the borrower and BOA as the lender. They state that "the Undersigned guarantees to Lender the payment and performance of the debt, liability or obligation of Borrower to...
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