Hill v. Seattle First Nat. Bank, 890375

• Decision Date: 24 February 1992
• Docket Number: No. 890375,890375
• Citation: 827 P.2d 241
• Parties: Brent C. HILL, Audrey Hill, Russell W. Mangum, Carole Mangum, and Hill-Mangum Investments, a Utah general partnership, Plaintiffs and Appellants, v. SEATTLE FIRST NATIONAL BANK, Defendant and Appellee.
• Court: Utah Supreme Court

Page 241

827 P.2d 241

Brent C. HILL, Audrey Hill, Russell W. Mangum, Carole Mangum, and Hill-Mangum Investments, a Utah general partnership, Plaintiffs and Appellants, v. SEATTLE FIRST NATIONAL BANK, Defendant and Appellee.

No. 890375.

Supreme Court of Utah.

Feb. 24, 1992.

Frederick N. Green, Julie V. Lund, Salt Lake City, for plaintiffs and appellants.

W. Cullen Battle, P. Bruce Badger, Salt Lake City, for defendant and appellee.

ZIMMERMAN, Justice:

Plaintiffs Brent C. Hill, Audrey Hill, Russell W. Mangum, Carole Mangum, and Hill-Mangum Investments (collectively "Hill-Mangum") brought suit against Seattle First National Bank ("Seattle First") alleging, inter alia, that it breached a contractual obligation to Hill-Mangum when it improperly tendered a loan to Hill-Mangum to First Security for its purchase. As a result of the improper tender, First Security did not purchase the loan, to Hill-Mangum's detriment. The trial court granted summary judgment for Seattle First, finding inter alia, that a prior federal court decision collaterally estopped Hill-Mangum from claiming contractual rights against Seattle First.

On appeal, Hill-Mangum challenges this summary judgment. Because we hold that the prior federal court proceeding never fully explored the contractual relationship between Hill-Mangum and Seattle First, collateral estoppel does not prevent Hill-Mangum from relitigating the issue. In addition, we conclude that Hill-Mangum has presented affidavit evidence that raises an issue of material fact, precluding summary judgment.

When reviewing a grant of summary judgment, we accord the trial court's legal determinations no deference because summary judgment disposes of the action as a matter of law. Utah R.Civ.P. 56(c); Pratt v. Mitchell Hollow Irrigation Co., 813 P.2d 1169, 1171 (Utah 1991); Landes v. Capital City Bank, 795 P.2d 1127, 1129 (Utah 1990). To determine whether a genuine issue of material fact precludes summary judgment, we view the facts in a light most favorable to the nonmoving party. Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1385 (Utah 1989); Arrow Indus. v. Zions First Nat'l Bank, 767 P.2d 935, 937 (Utah 1988). We recite the facts in this case accordingly.

In 1980, Hill-Mangum began development of a ten-story, multimillion-dollar condominium complex in Salt Lake City. Hill-Mangum approached First Security for construction financing. Although First Security originally agreed to finance the project, ultimately it was unable to provide the loan. Instead, it offered Hill-Mangum a "take-out loan commitment," an agreement to purchase the loan in the future, subject to certain conditions. Having such a commitment would assist Hill-Mangum in obtaining a loan from another lending institution. When Hill-Mangum sought a loan from The Citizens Bank in Ogden, Utah, First Security agreed to extend the take-out loan commitment to Citizens and did so on March 31, 1980. Citizens, which Seattle First was in the process of acquiring, tentatively agreed to provide the initial financing. However, because of the size of the loan, Citizens requested that Hill-Mangum go to Seattle First's main office in Seattle, Washington, to obtain final approval of the agreement. During a meeting in Seattle, Hill-Mangum met with representatives of Seattle First, who approved the loan and stated that Citizens in Ogden would handle the paperwork. However, Seattle First never acquired Citizens.

In April 1980, Hill-Mangum executed a promissory note for $3,300,000 to Citizens evidencing the loan. In October 1981 and April 1982, Hill-Mangum modified the original note by executing two subsequent notes to Citizens for $3,800,000 each. Seattle First purchased a 90 percent participation interest in the first note, a 100 percent interest in the second note, and a 90 percent interest in the third. Citizens retained a 10 percent interest in the notes in which Seattle-First had a 90 percent interest.

The note matured on May 1, 1983. When Citizens presented the loan to First Security for purchase under the terms of the take-out loan commitment, First Security refused to purchase the loan. The loan then went into default, which spawned federal and state litigation involving Hill-Mangum, Citizens, and Seattle First. Because this appeal involves issues of collateral estoppel, we will examine the prior proceedings in some detail. We will then address Hill-Mangum's claims on appeal.

Citizens commenced the original foreclosure action against Hill-Mangum in state court on December 13, 1984. Hill-Mangum filed a counterclaim against Citizens and a third-party complaint against Seattle First. In the counterclaim and third-party complaint, Hill-Mangum raised a number of claims, two of which bear on this appeal. ¹ It alleged, first, that Citizens and Seattle First breached an agreement to tender the purchase of the construction loan to First Security in accordance with the specific terms of the take-out loan commitment given by First Security, and second, that Citizens and Seattle First failed to provide financing for individual purchasers of condominiums in breach of an oral agreement with Hill-Mangum. The third-party complaint was never served on Seattle First.

Citizens went into receivership in 1985. The Utah Department of Financial Institutions took over its operation and named the Federal Deposit Insurance Corporation ("the FDIC") as receiver. The FDIC removed the case to federal court. The court granted partial summary judgment to the FDIC on the foreclosure of the note and on Hill-Mangum's counterclaim. FDIC v. Hill-Mangum Investments, No. 86C-1020J, slip op. at 4 (D.Utah May 2, 1988). Judgment for $3,960,874 in favor of Citizens was entered on April 13, 1990. No appeal was taken, and that judgment became final.

In granting judgment for Citizens on Hill-Mangum's counterclaims, the federal court addressed only one of the issues now before this court, i.e., Hill-Mangum's claim that Citizens had failed to properly tender the loan to First Security in accordance with the requirements of the take-out agreement. The court found that Hill-Mangum had withdrawn its second claim, which alleged that Citizens and Seattle First had failed to abide by the terms of an oral agreement that required them to provide financing for individual condominium sales.

In disposing of the claim of improper tender, the court reasoned that Hill-Mangum had no rights under the take-out agreement between Citizens and First Security because it was not a party to the agreement and because the take-out loan commitment lacked specific language upon which third-party rights in favor of Hill-Mangum might be based. The court relied on W.T. Langley v. Federal Deposit Ins. Corp., 484 U.S. 86, 108 S.Ct. 396, 98 L.Ed.2d 340 (1987). There, the United States Supreme Court held that in cases against the FDIC, evidence outside the written terms of an agreement cannot be used to establish contractual liability. Id. Based on Langley, the federal trial court ruled inadmissible any evidence of oral representations that might establish a contract. Accordingly, the court found that to any extent that Hill-Mangum claimed rights under the alleged oral commitment as against the FDIC, Langley barred its claims as a matter of law.

After the federal court's decision, Hill-Mangum brought the same claims against Seattle First in state court, alleging, inter alia, that Seattle First breached an agreement to tender the take-out loan to First Security and that Seattle First failed to provide financing for individual condominium purchasers in breach of an oral contract with Hill-Mangum.

Seattle First moved for summary judgment on January 25, 1989, contending that there was no contract, either oral or written, between it and Hill-Mangum. In addition, Seattle First argued that res judicata and collateral estoppel barred relitigation of that issue and that the statute of limitations barred any claim asserting Seattle First's failure to provide financing to individual condominium purchasers. Alan C. Espey, a Seattle First vice president, provided an affidavit in support of the motion for summary judgment.

Initially Hill-Mangum's previous counsel did not respond to Seattle First's motion, and the court granted summary judgment for Seattle First, dismissing all Hill-Mangum's claims with prejudice. Hill-Mangum moved to set aside the judgment of dismissal, and the court granted the motion. In Hill-Mangum's memorandum in support of the motion to set aside, it addressed the issues raised in Seattle First's motion for summary judgment. Specifically, Hill-Mangum presented, by way of affidavit, evidence that established it did have a contract with Seattle First, based in part on parol evidence, and that the failure to provide financing to individual condominium purchasers occurred within the period of the statute of limitations. As for Seattle-First's reliance on collateral estoppel, Hill-Mangum contended that the doctrine had no application because under the Langley rule, which is applicable only in suits against the FDIC, the federal court had refused to consider any parol evidence of an agreement to present the loan for take-out.

During the hearing opposing summary judgment, Hill-Mangum took the position that although Citizens and Seattle First were both involved in the negotiation and supervision of the loan, Seattle First was really the party with whom Hill-Mangum had contracted. Hill-Mangum identified a number of factors in support of this position, including the March 1980 meeting in Seattle, additional meetings that occurred over the period of the loan in both Seattle and Utah, Seattle First's purchased participation in the loan, Seattle First's supervision of the marketing of the condominium complex, Seattle First's alleged promise to finance...