Ryder Intern. Corp. v. First American Nat. Bank, Civ. A. No. CV90-PT-253-M.
| Decision Date | 10 October 1990 |
| Docket Number | Civ. A. No. CV90-PT-253-M. |
| Citation | 749 F. Supp. 1569 |
| Parties | RYDER INTERNATIONAL CORPORATION, a corporation, Plaintiff, v. FIRST AMERICAN NATIONAL BANK, a national bank, Defendant. |
| Court | U.S. District Court — Northern District of Alabama |
Samuel H. Franklin, & John M. Johnson, Lightfoot Franklin White & Lucas, Birmingham, Ala., for plaintiff.
David B. Anderson and Elizabeth Allen Champlin, Cabaniss Johnston Gardner Dumas & O'Neal, Birmingham, Ala., for defendant.
This cause comes on to be heard on defendant's Motion for Summary Judgment filed on August 10, 1990. The plaintiff has voluntarily dismissed all its claims except those pursuant to § 12(2) of the 1933 Securities Act1 and § 8-6-19 of the Alabama Blue Sky Law. Both parties acknowledge that the basic elements of the federal and state causes of action are the same and that Alabama courts have looked to federal case law construing § 12(2) in interpreting § 8-6-19.
This case presents interesting legal issues which the parties acknowledge are, to a degree, of first impression.2 The court is satisfied that the legal issues predominate.3
The facts of this case, although extensive, are not as complex with regard to underlying pertinent issues as might appear on first blush. The pertinent facts viewed most favorably (as to reasonable inferences) to the plaintiff will follow. The court will not attempt to specifically or accurately state all names, positions, departments, divisions or dates.
Sometime prior to the subject transactions involving the purchase by plaintiff of Integrated Resources (I.R.) commercial paper, plaintiff's management had been contacted (in about 1987) by a representative of the defendant about transferring some of plaintiff's banking business to the defendant. The representative had been previously employed by another bank with which the plaintiff did business.
In the course of the early discussions, it was made known that, from time to time, the plaintiff desired to have its excess cash funds invested in securities which would presumably afford a higher rate of return than mere interest on deposits or Certificates of Deposit. The defendant's representatives stated that it had a "Capital Markets Division" ("Capital") which could obtain such securities. One of the type securities which was discussed was corporate commercial paper. In this regard, the plaintiff's president made it known that he had previously experienced difficulty with similar type investments and that he wanted relatively risk free investments. He specifically made reference to, as was noted by the defendant on its Capital document, "Inquiries and Contacts," a "GMAC benchmark" with reference to commercial paper. There is a reasonable inference that this meant that a general requirement was that commercial paper purchased by plaintiff be of GMAC investment quality or better.4
Prior to the subject transactions, I.R. was a loan customer of the defendant. In this connection, certain officers, agents or employees of the defendant in another division than Capital gathered information, which, if not public information, was confidential as between it and I.R. This information was arguably negative with regard to its impact on the advisability of purchasing I.R.'s commercial paper.5 There is no evidence that the Capital division had any knowledge of this information. After the loan division had the aforesaid knowledge, the subject commercial paper was purchased by plaintiff through defendant's Capital division.
Plaintiff's liaison officer for dealings with defendant's Capital division was one Wallace Case, its Vice-President of Finance. His contact man at Capital was defendant's employee, Mike Casey. Early in the relationship, plaintiff's president (Ryder) had made known to defendant's agents that defendant "would be dealing with Wallace and I trusted Wallace to look after my interests." Ryder testified in deposition that, he "trusted Wallace Case at that point to make good investments for the plaintiff." Further that, at the time of the subject purchases, "Wallace Case made the ultimate decision as to what commercial paper for Ryder to purchase within the guidelines that he had."
The two subject purchases of I.R. commercial paper were made on March 20 and April 19, 1989. The two purchases were each in the $200,000.00 range. There is no evidence to rebut evidence that, on the first occasion on which the I.R. commercial paper was purchased, Case called Casey and asked for "rates on 90-day paper for $200,000.00."6 Defendant's Capital agent gave Case the rates on several investments, including I.R. paper, other commercial paper, Government obligations and C.D.'s. Case checked the Wall Street Journal for trades in I.R.'s common stock and certain Standard and Poor information and he concluded that I.R. commercial paper "was a good investment at the yield quoted." Case called the defendant and placed an order for the I.R. commercial paper. The April 19 transaction was handled in a similar manner. Case stated that he "bought Integrated Resources for 65 days to June 23, probably in comparison to a rate for Deere and Chrysler who are also A2P2 rated." There is no evidence that any agent of the defendant gave Case or any other employee of plaintiff any information concerning I.R. paper other than the rate, yield, Standard and Poor rating, and the maturity date, along with similar information about other securities.7
In addition to Case, plaintiff had, on a substantial monetary retainer, one Krupp, who monitored plaintiff's financial matters and advised with reference to them. Krupp's deposition reflects, inter alia, the following:
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