Masek Distributing v. First State Bank & Trust Co.

• Decision Date: 09 November 1995
• Docket Number: No. 94-2393-JWL,94-2356-JWL.,94-2393-JWL
• Parties: MASEK DISTRIBUTING, INC., Plaintiff, v. FIRST STATE BANK & TRUST COMPANY, Defendant and third party plaintiff, v. E-Z PAY USED CARS, INC. d/b/a Northtown Truck & Auto and Paul Colyer, Third party defendants.
• Court: U.S. District Court — District of Kansas

908 F. Supp. 856

MASEK DISTRIBUTING, INC., Plaintiff, v. FIRST STATE BANK & TRUST COMPANY, Defendant and third party plaintiff, v. E-Z PAY USED CARS, INC. d/b/a Northtown Truck & Auto and Paul Colyer, Third party defendants.

Nos. 94-2393-JWL, 94-2356-JWL.

United States District Court, D. Kansas.

November 9, 1995.

Christine Y. Martin, Spencer, Fane, Britt & Browne, Kansas City, MO, Brian F. Stayton, Spencer, Fane, Britt & Browne, Overland Park, KS, James M. Worden, Professional & Business Center, Scottsbluff, NE, for Masek Distributing Inc.

Robert J. Fleming, Craig R. Richey, Wilbert & Towner, P.A., Pittsburg, KS, for First State Bank & Trust Company.

Richard D. Loffswold, Jr., Richard D. Loffswold, Jr., P.A., Girard, KS, for E-Z Pay Used Cars Inc., Paul Colyer.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

Masek Distributing, Inc. (Masek) brings this action to enforce a letter of credit it alleges E-Z Pay Used Cars, Inc. (Northtown) requested and First State Bank & Trust Company (First State) issued. The following motions are presently before the court: Masek's motion to amend the pre-trial order (Doc. # 49); Masek's motion for summary judgment (Doc. #25); and First State's motion for summary judgment (Doc. #23). For the reasons stated below, the court denies each motion.

I. Motion to Amend the Pretrial Order

Masek seeks to amend the pretrial order to include a negligence theory of liability. Masek, however, filed its motion out of time. Nevertheless, the court has considered and now denies Masek's motion.

Federal Rule of Civil Procedure 16(e) states that the pretrial order "shall be modified only to prevent manifest injustice." Masek has not demonstrated that, without its amendment, manifest injustice would result. Masek has made no showing that the facts on which it bases its motion did not exist or could not be synthesized before the deadline passed to amend the pretrial order. Further, permitting Masek to amend the pretrial order at this date would prejudice First State. Permitting Masek's proposed amendment would require the court to reopen discovery in order to give First State adequate opportunity to prepare. Absent an acceptable explanation by Masek for its tardiness, the court declines to do this. For these reasons, the court denies Masek's motion.

II. Motions for Summary Judgment

A. Facts¹

This dispute centers on a document titled "SLCA Letter—Sufficient Line of Credit Authorization." (SLCA) The one page SLCA is addressed to Masek and dated December 29, 1992. First State's name and address have been typed in as the issuing bank. In its entirety, the body of the SLCA reads:

In consideration of your company shipping merchandise to our customer and delivering to us the copies of Invoices or MSO's (evidence of title), we certify the following: That (Dealer Name) Northtown Truck and Auto Rt. 1 Box 984 Pittsburg, KS 66762 typed into blank space has established a sufficient line of credit with us for the purchase of Products distributed by Masek Distributing, Inc. We hereby agree to accept, honor and remit payment immediately on drafts by Masek Distributing, Inc., against Products ordered and shipped on open bill of lading to the above dealer. If indicated below, all orders must be approved by telephone contact with this bank prior to shipment. This authorization and agreement is valid until discontinued in writing by an officer of this bank received at your offices in Gering, Nebraska. In event of a decision to discontinue this Agreement, all drafts for the products already shipped to the dealer at the time written notice is received by Masek Distributing, Inc., will still be honored by this bank.

The signature of Ron Wehmeyer, then an Assistant Vice-President of First State, follows. The SLCA does not limit the amount of credit it purports to authorize. Blanks for telephone approval and other special instructions appear at the bottom of the SLCA. None of the blanks is marked. Neither party has found an original of the SLCA letter. Masek has submitted a facsimile copy.

On December 23, 1992, Wes Atkins, then an employee of Masek, gave a copy of the SLCA to Paul Colyer, an employee of Northtown. The copy did not have First State typed in as the issuing bank, did not have Northtown typed in as the dealer establishing a line of credit, and was not signed. The parties dispute whether or not Mr. Colyer ever took the blank copy of the SLCA to First State. Mr. Colyer does not remember.

Masek alleges that on December 29, 1992, First State issued the SLCA, which Masek maintains is a letter of credit, via facsimile to Masek. First State's phone records from June 1992 through February 1993 include no calls from First State to the area code where Masek received the facsimile.

In early September 1993, Mr. Wehmeyer and Mr. Colyer spoke about some correspondence from Masek concerning a letter of credit. Mr. Colyer stated that he did not request a letter of credit be issued to Masek. On September 7, 1993, Mr. Wehmeyer wrote a letter to Masek indicating that it would not honor any drafts concerning Northtown.²

On May 25, 1994,³ Masek drafted First State on the SLCA. First State refused to honor the draft. This suit ensued.

B. Standard for Summary Judgment

When considering a motion for summary judgment, the court must examine all the evidence in the light most favorable to the nonmoving party. Jones v. Unisys Corp., 54 F.3d 624, 628 (10th Cir.1995). A moving party who bears the burden of proof at trial is entitled to summary judgment only when the evidence indicates that no genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Anglemyer v. Hamilton County Hosp., 58 F.3d 533 (10th Cir.1995). If the moving party does not bear the burden of proof at trial, it must show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986).

Once the movant meets these requirements, the burden shifts to the party resisting the motion to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). The nonmovant may not merely rest on the pleadings to meet this burden. Id. Genuine factual issues must exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250, 106 S.Ct. at 2511; Tersiner v. Union Pacific R.R., 740 F.Supp. 1519, 1522-23 (D.Kan. 1990). More than a "disfavored procedural shortcut," summary judgment is an important procedure "designed `to secure the just, speedy and inexpensive determination of every action.' Fed.R.Civ.P. 1." Celotex, 477 U.S. at 327, 106 S.Ct. at 2555.

C. Discussion

The parties' cross motions for summary judgment raise essentially three⁴ issues: first, whether or not the SLCA meets the statutory requirements for a letter of credit; second, whether or not Mr. Wehmeyer had the authority to bind First State; and third, whether or not Masek complied with the terms of the SLCA. Each party makes various arguments that these issues warrant summary judgment on its behalf and preclude summary judgment in favor of its opponent. The court examines each issue in turn.

1. The Statutory Requirements for a Letter of Credit

K.S.A.⁵ § 84-5-102 states that chapter 84, article 5 applies "to a credit issued by a bank if the credit requires a documentary draft or a documentary demand for a payment." The statute defines a credit or letter of credit as "an engagement by a bank or other person made at the request of a customer and of a kind within the scope of this article (section 84-5-102) that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit." Id. § 84-5-103(1)(a). Although a letter of credit need not have a particular form of phrasing, it must be in writing and signed by the issuer. Id. § 84-5-104(1). Finally, if a document satisfies the preceding requirements a letter of credit is established when the beneficiary receives the letter. Id. § 84-5-106(1)(b).⁶

Masek states that the SLCA fully complies with the statutory requirements. First State contends, however, that material questions of fact exist regarding whether or not a customer requested a letter of credit and whether or not Masek ever "received" a letter of credit.⁷

As noted above, the definition of credit requires that a customer request be the impetus for a letter of credit. Id. § 84-5-103(1)(a). "A `customer' is a buyer or other person who causes an issuer to issue a credit." Id. § 84-5-103(1)(g). First State maintains that whether or not Northtown requested the letter of credit is a material question of fact. The court agrees.

In its statement of facts accompanying its motion, Masek contends that Northtown, through Mr. Colyer, requested the SLCA. Mr. Atkins, Masek's employee, delivered a blank copy of the SLCA to Mr. Colyer. Masek, however, has not cited any evidence indicating who filled in the blank SLCA form. Further, Mr. Colyer, who does not remember taking the SLCA to First State, testified at his deposition that he did not request a letter of credit on behalf of Masek. This evidence indicates that Masek has not satisfied its initial burden for summary judgment. The failure may stem from Masek's choice not to respond to this argument in its reply papers. Regardless, a question of fact exists concerning whether or not a customer requested the SLCA. This fact question precludes summary judgment in favor of Masek.

In addition to preventing summary judgment in favor of Masek, First State contends that the statutory requirements for a letter of credit compel an entry of summary judgment on its behalf. In its motion for summary judgment, First State argues that even if the SLCA met the definition of a letter of credit, that letter of credit was never "received". Masek has...