Pressman v. Franklin Nat. Bank, 03-5592.

• Decision Date: 09 September 2004
• Docket Number: No. 03-5592.,03-5592.
• Citation: 384 F.3d 182
• Parties: Jerrold S. PRESSMAN, Plaintiff-Appellant, v. FRANKLIN NATIONAL BANK and Gordon E. Inman, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

384 F.3d 182

Jerrold S. PRESSMAN, Plaintiff-Appellant, v. FRANKLIN NATIONAL BANK and Gordon E. Inman, Defendants-Appellees.

No. 03-5592.

United States Court of Appeals, Sixth Circuit.

Argued: August 10, 2004.

Decided and Filed: September 9, 2004.

Appeal from the United States District Court for the Middle District of Tennessee, Todd J. Campbell, J.

COPYRIGHT MATERIAL OMITTED

Jeffrey Alan Greene (argued and briefed), Nashville, TN, for Plaintiff-Appellant.

Joseph A. Woodruff (argued and briefed), W. Travis Parham (briefed), Waller, Lansden, Dortch & Davis, James D. Kay, Jr., Kay, Griffin, Enkema & Brothers, Nashvill, TN, for Defendant-Appellee.

Before: KEITH, MARTIN, and ROGERS, Circuit Judges.

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

This dispute arises from Franklin National Bank's failure to make a loan to a partnership called Inglehame Farm, LP, of which Jerrold S. Pressman was a limited partner. Pressman alleges that the Bank is liable for breach of contract, fraud and civil conspiracy, and that Gordon E. Inman — the founder of the Bank and president of the Bank's parent company — is liable for procurement of breach of contract and civil conspiracy. Following a nine-day bench trial, the district court entered judgment in favor of the defendants on all claims. For the reasons discussed below, we AFFIRM.

I.

The Inglehame Farm partnership was formed to accomplish one purpose: to purchase from different sellers several tracts of land in Williamson County, Tennessee, combine the tracts and develop them as a residential subdivision. The closing on one of the parcels of land, labeled the "Sharp property," was originally scheduled for August 1, 1996. The partnership sought to rezone the property prior to the closing. Robert Geringer, one of the general partners of the partnership, spoke with Charles Lanier, a loan officer at the Bank, about obtaining an acquisition loan for the Sharp property. The partnership had conducted business with the Bank on prior occasions. Lanier told Geringer that the Bank would need to obtain a participating bank to finance a portion of the loan because the size of the loan would exceed the Bank's legal lending limit.

When the rezoning hearing was set for a date that followed the scheduled closing date, the partnership asked the sellers for an extension of the closing date, which was refused. Lanier subsequently told Geringer that the loan had been approved by the Bank's loan committee. Still, however, the Bank needed to obtain a participating bank in order to provide the loan. The Bank first asked its parent company, Franklin Financial Corporation, to participate in the loan, but Franklin Financial refused. The Bank then approached The Banker's Bank of Atlanta, Georgia, which gave more consideration to the proposal. Shortly before the scheduled closing, Lanier told Geringer that Banker's Bank required approval of the rezoning prior to participating in the loan. Geringer testified that Lanier told him that this was the only impediment to Banker's Bank agreeing to participate, but Lanier and the Bank denied that Lanier made such a representation. The district court did not make a factual finding as to whether Lanier represented that the rezoning approval was the only impediment to Banker's Bank participating in the loan.

Geringer later met with Inman, the founder of the Bank and the president of its parent company, who offered to make a personal loan to the partnership on certain terms, including the payment of $15,000 per lot profit. Geringer rejected the offer because, in his view, the terms were extremely unfavorable to the partnership.

Geringer then negotiated an extension of the closing date on the Sharp property to August 15, at an additional, non-refundable cost of $100,000. Geringer and the Bank negotiated and executed a Commitment Letter, which was dated July 31, 1996. The Letter, which expresses the Bank's intent to make the loan to the partnership subject to certain terms and conditions, forms the basis for Pressman's breach of contract claim. Pursuant to the Commitment Letter, the Bank's obligation to make the loan to the partnership was contingent on its ability to find a participating bank to fund a portion of the loan.

The rezoning plan for the Sharp property was officially approved on August 12. Nevertheless, Banker's Bank decided not to participate in the loan to the partnership, and it notified the Bank of its decision. Lanier, in turn, advised Geringer that the Bank would not make the loan, but he mentioned that Inman was still willing to make a private loan. Steve Morriss, another general partner of the partnership, urged the partnership to accept Inman's proposal. Geringer again rejected the offer, however, and subsequently obtained a loan elsewhere, though on less favorable terms than originally proposed by the Bank.

The partnership suffered from in-fighting for the next two years, and eventually filed for bankruptcy. Pressman made an offer to purchase all of the partnership's claims as part of the bankruptcy proceeding, which was approved by the bankruptcy judge over Morriss's competing offer. Pressman filed the instant lawsuit against the Bank and Inman. After a nine-day bench trial, the district court issued a written memorandum and order entering judgment in favor of the defendants on all claims.

II.

On appeal from a judgment entered following a bench trial, we review the district court's factual findings for clear error and its legal conclusions de novo. Harrison v. Monumental Life Ins. Co., 333 F.3d 717, 721-22 (6th Cir.2003).

A. Breach of Contract Claim Against the Bank

Pressman's breach of contract claim is premised upon two theories: first, that the Bank breached its obligations under the Commitment Letter by failing to make the loan to the partnership; and second, that the Bank breached its obligation of good faith and fair dealing in connection with its search for a participating bank. We will address each theory in turn.

1. Participating Bank Condition

The district court rejected Pressman's claim that the Bank breached its obligations under the Commitment Letter on the ground that one of the conditions in the Letter — the so-called "participating bank condition" — was not fulfilled. That condition, which is listed under the heading "Special Conditions for Loan," provides as follows:

(c) Participant. Lender shall obtain a participating lender that will commit to fund an aggregate of at least $2,000,000 of the Loan on a pro-rata participation basis and on other terms and conditions acceptable to both lenders. Should Lender be unable to locate an acceptable participant lender or to agree on the terms of the participation, then Lender shall refund the Borrower's Commitment Fee (or any portion thereof that has been paid to Lender), and Lender shall have no obligation to make the Loan, and this Commitment Letter shall be null and void....

(Emphasis added).

The district court found that as of the date set for closing, the Bank had been unable to locate a participating bank. For this reason, the district court held that "the Bank's obligation to make the loan was excused" because the participating bank condition in the Commitment Letter had not been satisfied.

Pressman argues that the district court's conclusion was erroneous because the Bank "waived" the participating bank condition. Under Tennessee law, a party may waive his or her known rights under a contract by either express declarations or by acts manifesting an intent not to claim the rights. Jenkins Subway, Inc. v. Jones, 990 S.W.2d 713, 722-23 (Tenn.Ct.App. Nov.18, 1998). According to Pressman, the Bank's waiver occurred even before the Commitment Letter was executed, when Lanier orally represented to the partnership that the participating bank was ready to close, subject only to final rezoning approval. Pressman's argument lacks merit.

First, even if Lanier had the authority to effect such a waiver on behalf of the Bank, there is no evidence that he possessed the requisite "intent" to do so. Second, Lanier's alleged representation predated the execution of the Commitment Letter; in other words, at the time of Lanier's alleged representation, the Bank had no rights under the participating bank condition that could be waived. Third, a merger and integration clause contained in the Commitment Letter precludes Pressman from relying upon alleged representations made prior to the execution of the Commitment Letter. That clause provides:

This Commitment Letter when accepted by Borrower constitutes the sole and entire agreement between Lender and Borrower regarding Lender's commitment to lend money to Borrower and all previous negotiations, letters, proposals, understandings and other communications are superseded by this Commitment Letter.

(Emphasis added.) Fourth, the Commitment Letter requires any "waiver of [its] terms" to be "in writing" and "executed by both parties," which was not done here.

Pressman also makes a promissory estoppel argument on appeal. According to Pressman, Lanier's alleged representation to the partnership that Banker's Bank would accept the loan proposal so long as the rezoning plan was approved constituted a "promise on the part of the Bank to make the loan if the final [rezoning] approval was granted," upon which the partnership relied in paying $100,000 to extend the closing date. Therefore, Pressman contends, the Bank's promise to pay the loan should be enforced to avoid...