Meridian Mortg. v. First Hawaiian Bank

• Decision Date: 21 November 2005
• Docket Number: No. 25799.,25799.
• Citation: 122 P.3d 1133
• Parties: MERIDIAN MORTGAGE, INC., Plaintiff-Appellant, v. FIRST HAWAIIAN BANK, a Hawaii Corporation, Defendant-Appellee, and John and Jane Does 1-10; Doe Business Entities 1-10; and Doe Governmental Entities 1-10, Defendants.
• Court: Hawaii Supreme Court

Page 1133

122 P.3d 1133

MERIDIAN MORTGAGE, INC., Plaintiff-Appellant, v. FIRST HAWAIIAN BANK, a Hawaii Corporation, Defendant-Appellee, and John and Jane Does 1-10; Doe Business Entities 1-10; and Doe Governmental Entities 1-10, Defendants.

No. 25799.

Intermediate Court of Appeals of Hawai'i.

October 12, 2005.

As Corrected October 13, 2005.

Certiorari Denied November 21, 2005.

James J. Bickerton, Honolulu, (K. Bartlett Durand, Jr. with him on the briefs), Bickerton Saunders & Dang, on the briefs, for Plaintiff-Appellant.

Carter K. Siu, Honolulu, (John T. Komeiji, Randall Y. Yamamoto, Honolulu, and Patsy H. Kirio with him on the brief), Watanabe Ing Kawashima & Komeiji, on the briefs, for Defendant-Appellee.

FOLEY, Acting C.J., FUJISE, J., and Circuit Judge CHAN in Place of LIM, J., Recused.

Opinion of the Court by FOLEY, J.

Plaintiff-Appellant Meridian Mortgage, Inc. (Meridian) appeals from the Final Judgment filed on April 30, 2003 in the Circuit Court of the First Circuit (circuit court).¹ The circuit court entered judgment in favor of Defendant-Appellee First Hawaiian Bank (FHB) against Meridian as to all of Meridian's claims. Meridian contends on appeal that the circuit court erred by granting summary judgment in favor of FHB. We disagree and affirm the Final Judgment.

I.

A. Factual History

In 1999, TT Keaau, Inc. (TTK) was attempting to refinance a past-due mortgage loan that Kona Village Associates (KVA) had with Long Term Credit Bank of Japan.² TTK owned 60% of KVA, which was a partnership that held the leasehold right and the ownership of Kona Village Resort (KVR).³

In March 1999, various FHB employees were contacted by representatives of Tokyo General Corporation (Tokyo General) and TTK/KVA/KVR with respect to obtaining a refinancing loan. FHB had a prior business relationship with either TTK or KVA; the relationship consisted of business checking accounts and credit card merchant services for Kona Village Hotel. Eventually, the FHB senior vice-president/regional manager for the Island of Hawai'i met with the "controller" of KVR, and the FHB senior vicepresident/deputy manager of the commercial real estate division met with the general manager of Kona Village. These discussions did not lead to a financial transaction.

Thereafter, Michael Nagumo (Nagumo), an officer of Tokyo General, asked Henry Fong (Fong) to help find a refinancing loan. Fong was vice-president of TTK. Fong contacted Jerry Park (Park), the president of Meridian.

On or about June 25, 1999, representatives of Meridian and TTK signed a "Real Estate Financing Agreement" (REFA). The REFA provided in relevant part:

1. Exclusive Right to Procure: [TTK] . . . ("Client") hereby grants MERIDIAN MORTGAGE, INC., . . . ("Broker"), the exclusive right to procure a real estate financing commitment, including debt, equity, joint venture, guarantee, sale of notes and mortgages and/or loans or any other type of financing (the "Commitment") from any investor, lender, and/or insurance company listed on the attached Exhibit "A" (an "Investor") upon terms acceptable to Client. The term of this Agreement shall start on the date of execution by Client and terminate at midnight, 180 days thereafter (the "Term").

2. Financing Placement Fees: Client agrees to pay Broker a financing placement fee equal to the two (2)% [sic] of the gross amount of the Commitment, including any earnouts (the "Fee"). Client agrees that the fee shall be fully earned when a Commitment is procured from an Investor listed on Exhibit "A" by Broker, Client, or any other person, and delivered to Client during the Term, and is thereafter accepted by Client.

. . . .

9. Other Investors: Upon execution of this Agreement, Client shall refer all pending and future negotiations to Broker and conduct such negotiations only through Broker. Broker has the right, from time to time, to identify additional investors and to amend Exhibit "A" by the addition of such investors.

10. Current Investor: If, during the Term, Client accepts a Commitment from any current investor not on the list described in Exhibit "A", including a refinancing extension, or modification of debt, which replaces the Commitment to be procured by Broker, under this Agreement, then the Client shall pay to Broker one-half of the Fee specified in Section 2 above upon the closing of such Commitment.

It is unclear whether the aforementioned "Exhibit A" was attached to the REFA; it does not appear in the record before this court. Park subsequently sent two Memorandums of Agreement to Fong, adding several lenders: Merrill Lynch — Western Region, FINOVA Capital Corp., Banc One Commercial Mortgage, JT Capital, SWH Funding, Salomon Brothers — New York Office, and Paine Webber — New York Office.

Fong understood the terms of the REFA to mean that if TTK entered into negotiations with anyone else during the term of the REFA, TTK would have to refer those negotiations to Park. Fong also understood that Meridian had the right to add new lenders to Exhibit A at any time.

In September or October 1999, Kinsuke Hosogai (Hosogai), the vice-president/manager of Japan Business Development at FHB, made a courtesy visit to Katsumi Iida (Iida), the president and chairman of Tokyo General, to ask how FHB could be of assistance with Iida's business in Hawai'i. Iida told Hosogai that he was still looking for a lender to refinance the KVR loan.

After meeting with Iida, Hosogai spoke with John Landgraf (Landgraf), executive vice-president of FHB. Hosogai communicated to Landgraf that Iida needed a loan secured by the end of the calendar year and had been unable to obtain one. Hosogai asked if FHB could help Iida find financing for KVA, and Langraf advised Hosogai that FHB would not reconsider being a direct lender, but would be willing to possibly introduce Kona Village to another lender. It was Landgraf's understanding that Hosogai would communicate that to Iida.

Landgraf then contacted Gary Pinkston (Pinkston), the owner of MP Financial Group Limited dba Meridian Pacific Limited (MPFG) (no relation to Plaintiff-Appellant).⁴ Landgraf communicated to Pinkston that the amount of the loan request was larger than FHB would consider and the leasehold nature of the property was not acceptable to FHB.

Prior to Landgraf's contact with Pinkston, Pinkston's office had "cold-called" Fong in July 1999. At Pinkston's instruction, Pinkston's staff routinely made calls to all the major hotels in Hawai'i to solicit loan business. Pinkston's office had called Fong to ask if the Kahala Mandarin Oriental Hotel needed any financing help.⁵ Fong informed Pinkston's office that he did not need anything for the Kahala Mandarin, but he had another project that might need financing. Pinkston and Fong met at the Kahala Mandarin, and Fong revealed he was looking for financing for Kona Village. Fong also informed Pinkston that he was working with Park and suggested that Pinkston contact Park.⁶ Pinkston called Park, but his call was never returned. It appears there was no further contact between Pinkston and Park.

In September 1999, Fong met with Hosogai and thereafter began supplying FHB with financial information about Kona Village Resort and KVA.

On or about October 15, 1999, Landgraf sent a confirmation letter to Pinkston, stating:

Tokyo General Corporation is seeking $25 million in connection with its Kona Village Resort project. Funds will be utilized to pay down an existing note with Long Term Credit Bank of Japan, $12 million, and to buy out the minority partner's 40% [sic] interest in the property, $13 million.

. . . .

This will confirm our agreement and fee arrangement to equally split all loan fees collected in connection with this loan between First Hawaiian Bank and [MPFG].

On or about November 19, 1999, an employee of FHB faxed to Fong a draft of a term sheet with the instructions that "[t]he term sheet is `for your eyes only' as it has not been reviewed by our lending administration." The draft term sheet was marked on the bottom of each page, "[f]or discussion purposes only. This is not an extension of a commitment by the Bank." The draft term sheet outlined in relevant part:

                   REQUEST: $25,000,000.00 — term loan to refinance existing debt, bifurcated as follows
                            1) $15,000,000 — commercial mortgage loan
                            2) $10,000,000 — term loan supported by a standby letter of credit issued
                                                   by a "AAA" rated U.S. bank acceptable to FHB
                  . . . 
                  FEE:      1) 2% of the loan amount ($30,000)
                            2) 1% of the loan amount ($10,000)
                

By November 23, 1999, Credit Suisse First Boston Mortgage Capital LLC (Credit Suisse) had indicated to Pinkston that it would fund the loan to KVA subject to all the "normal reviews."

On or about November 23, 1999, MPFG faxed to Landgraf a financing proposal for Kona Village Resort. Landgraf was MPFG's contact person for TTK/KVA. On or about November 26, 1999, Landgraf faxed the proposal back to MPFG with the notation, "[p]er our discussions, I changed the marked sections." The MPFG proposal that Landgraf faxed back⁷ stated in relevant part:

The following is a summary of terms and conditions on which MP Financial Group, Ltd./First Hawaiian Bank, its successor, assign or designee ("Lender") proposes to provide a loan (the "Loan") to Kona Village Associates or an affiliate thereof ("Borrower") with respect to the above-referenced property [Kona Village Resort] (the "Property"). This proposal is subject to completion of due diligence and the issuance of a Commitment, as set forth herein.

                  . . . 
                Principal Amount: $18,000,000 to
                          $22,000,000
                  . . . 
                Origination Fee: 2-2.5% of the Principal
                            Amount, payable at closing
                

The figures "2-2.5%" were circled. Landgraf forwarded the proposal to Nagumo and summarized the application, indicating the loan amount was for $18-22 million and the loan fees were 2-2.5 points.⁸

Sometime after MPFG...