First Union Nat. Bank v. Richmont Capital
| Decision Date | 01 August 2005 |
| Docket Number | No. 05-03-01686-CV.,05-03-01686-CV. |
| Parties | FIRST UNION NATIONAL BANK n/k/a Wachovia Bank, N.A., Appellant, v. RICHMONT CAPITAL PARTNERS I, L.P., Appellee. |
| Court | Texas Supreme Court |
Brian J. Hurst and Daniel Patrick Elms, Baker & McKenzie, Dallas, for Appellant.
LaDawn H. Conway and Steven A. Harr, Munsch, Hardt Kopf & Harr P.C., Dallas, Dallas, for appellee.
Before Justices O'NEILL, LANG, and LANG-MIERS.
First Union National Bank n/k/a Wachovia Bank, N.A., intervenor-plaintiff below, appeals the trial court's final summary judgment that it take nothing against Richmont Capital Partners I, L.P., defendant below. The underlying suit involves an intricate web of financial transactions which includes, among others, several multi-million dollar loans, a guaranty, a lender participation agreement, intercreditor agreements, and an intervening bankruptcy of a central party to the transactions.
First Union raises three issues on appeal: (1) the trial court erred when it granted summary judgment finding that, as a matter of law, First Union does not have a security interest in Richmont's Guaranty; (2) the trial court erred when it granted summary judgment finding that, as a matter of law, First Union was not an intended third party beneficiary of Richmont's Guaranty; and (3) the trial court erred when it granted summary judgment finding that, as a matter of law, Richmont was not unjustly enriched.
We conclude that the trial court did not err by granting Richmont's motion for final summary judgment. First Union's issues on appeal are decided against it. The trial court's final summary judgment is affirmed.
From 1997 to March 30, 2000, First Union was the primary lender to Marketing Specialist Corporation, a food brokerage distribution company. This debt exceeded $34 million and was secured by a first lien security interest in a substantial amount of Marketing Specialist's assets.
On March 30, 2000, Marketing Specialist and The Chase Manhattan Bank entered into a Credit Agreement. The Credit Agreement gave Marketing Specialist an additional $50 million loan through a revolving credit facility from Chase. Richmont, a private venture capital firm, signed a Guaranty on March 30, 2000, guaranteeing payment to Chase of up to $10 million of the Chase $50 million loan.
Because First Union and Chase claimed an interest in the same collateral of Marketing Specialist, they executed an Intercreditor Agreement dated March 30, 2000. The Intercreditor Agreement set out the priority of rights in Marketing Specialist's collateral and the order of payment to the lenders. Richmont, the guarantor, was not a party to the Intercreditor Agreement.
Later, in November of 2000, Marketing Specialist needed additional financing. Hence, four additional agreements were executed which must be addressed in our analysis.
First, on November 17, 2000, in order to increase the Chase loan to $60 million, Marketing Specialist and Chase executed a Second Amendment to Credit Agreement. Under the terms of the Second Amendment to Credit Agreement, the $60 million loan from Chase was divided into two parts: (1) Tranche A, a $41 million loan; and (2) Tranche B, a $19 million loan. It also provided that all payments on the Chase loan were to be applied to Tranche A until the debt within that part of the facility was paid in full and then additional payments were to be applied to reduce the debt in Tranche B.
Second, on November 17, 2000, MS Acquisition, a third party and subsidiary of Richmont, entered into a Master Participation Agreement with Chase. Under the terms of the Master Participation Agreement, MS Acquisition: (1) purchased a 100 percent participation interest in the Tranche B component of the Chase credit facility; (2) gained the right to be paid any amounts received by Chase on the Tranche B portion of the loan; and (3) gave Chase the unilateral right to agree to "any amendment, modification, restructure, waiver, substitution, or release of any terms of any portion of the Loan Documents."
Third, on November 17, 2000, Richmont executed an Obligated Party Consent, which was attached to the Second Amendment to Credit Agreement between Chase and Marketing Specialist. The Obligated Party Consent expanded the Guaranty to cover the Tranche A and Tranche B components of the Chase credit facility, but the Guaranty remained limited to a total of $10 million.
Fourth, on November 17, 2000, Marketing Specialist, Chase, First Union, MS Acquisition, and Richmont executed an Amended Intercreditor Agreement, which added an "Additional Collateral" category. In section 2.21 of the Amended Intercreditor Agreement, the parties agreed that each secured party would not accept as security for the Chase or First Union loans any "Additional Collateral," unless each secured party is granted a perfected security interest in the "Additional Collateral." Section 2.6 of the Amended Intercreditor Agreement directs that proceeds from "Shared Collateral" will be applied first to Tranche A of the Chase loan, second to the First Union loan, and third to Tranche B of the Chase loan in which MS Acquisition purchased a 100 percent participation interest.
Marketing Specialist filed for chapter 11 bankruptcy protection on May 24, 2001. This triggered a suit by Chase against Richmont for payment under the Guaranty. First Union intervened in the litigation asserting: (1) a right to payment under the Guaranty by seeking enforcement of its security interest in MS Acquisition's right to payment under the Guaranty; (2) in the alternative, claiming it was an intended third party beneficiary of the Guaranty and seeking enforcement of payment under the Guaranty directly to First Union; and (3) in the alternative, claiming that Richmont was unjustly enriched through its failure to pay the proceeds of the Guaranty to MS Acquisition.
Richmont filed its first motion for traditional summary judgment seeking judgment, as a matter of law, on First Union's claims. The trial court granted Richmont's first motion for traditional summary judgment, in part, concluding First Union had no security interest in the Guaranty and denied the motion, in part, with respect to First Union's remaining claims.
After Richmont's first motion for summary judgment and, while First Union's remaining claims were still pending, Chase and Richmont settled their dispute. Their settlement reduced Richmont's liability to Chase from $10 million to $7.8 million. Then, Chase accepted $7.8 million in exchange for a release of its claims.
Richmont filed a second motion for traditional summary judgment seeking judgment, as a matter of law, against First Union on its claim that it is a third party beneficiary of the Richmont Guaranty. The trial court granted this motion. Then, Richmont filed a third motion for traditional summary judgment seeking judgment, as a matter of law, on First Union's remaining unjust enrichment claim. The trial court granted the motion and issued its final summary judgment ordering that First Union take nothing on any of its claims.
In three issues, First Union appeals the trial court's final summary judgment. Our analysis will proceed from First Union's third issue regarding whether it had a security interest in the Guaranty, to First Union's second issue regarding whether it is a third party beneficiary of the Guaranty, and finally to First Union's first issue regarding its unjust enrichment claim. The conclusions on each of First Union's issues build logically in that sequence to a conclusion.
The standard for reviewing a traditional summary judgment is well-established. See Sysco Food Servs. v. Trapnell, 890 S.W.2d 796, 800 (Tex.1994); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985). We review a summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dickey v. Club Corp. of Am., 12 S.W.3d 172, 175 (Tex.App.-Dallas 2000, pet. denied). A party moving for traditional summary judgment carries the burden of establishing that no material fact issue exists and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex.2000) (per curiam). A matter is conclusively established if ordinary minds could not differ as to the conclusion to be drawn from the evidence. Triton Oil & Gas Corp. v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex.1982). When reviewing a motion for summary judgment, the court takes the nonmovant's evidence as true, indulges every reasonable inference in favor of the nonmovant, and resolves all doubts in favor of the nonmovant. Willrich, 28 S.W.3d at 23-4. When a trial court's order does not specify the grounds for its summary judgment, an appellate court must affirm the summary judgment if any of the theories presented to the trial court and preserved for appellate review are meritorious. Provident Life and Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex.2003).
In its third issue on appeal, First Union argues the trial court erred when it granted summary judgment finding that, as a matter of law, First Union does not have a security interest in Richmont's Guaranty. First Union claims that: (1) because there is no specific definition of "Additional Collateral" in the Amended Intercreditor Agreement, there is a fact issue regarding whether the parties intended Richmont's Guaranty to be included within the provision entitled, "Additional Collateral"; (2) "the parties' failure to specifically exclude guaranties from this broad definition [of `Additional Collateral'] evidences their intent to include them" [emphasis in orig.]; and (3) Marketing...
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