Third Bank v. Mcclure Properties Inc.

• Decision Date: 09 July 2010
• Docket Number: Civil Action No. 3:08-0210.
• Court: U.S. District Court — Southern District of West Virginia
• Parties: FIFTH THIRD BANK, Plaintiff, v. McCLURE PROPERTIES, INC., Victor McClure, Defendants.

724 F.Supp.2d 598

FIFTH THIRD BANK, Plaintiff,

v.McCLURE PROPERTIES, INC., Victor McClure, Defendants.

Civil Action No. 3:08-0210.

United States District Court, S.D. West Virginia.

July 9, 2010.

COPYRIGHT MATERIAL OMITTED.

Bruce M. Jacobs, Spilman Thomas & Battle, Charleston, WV, W. Eric Gadd, Spilman Thomas & Battle, Wheeling, WV, William T. Holmes, Spilman Thomas & Battle, Morgantown, WV, for Plaintiff.

John Patrick L. Stephens, Mark F. Underwood, Underwood & Proctor Law Offices, Huntington, WV, for Defendants.

MEMORANDUM OPINION ORDER

ROBERT C. CHAMBERS, District Judge.

Pending before the Court are Plaintiff Fifth Third Bank's (“Fifth Third”) Motion for Summary Judgment (Doc. 53) and Defendants Victor A. McClure and McClure Properties, Inc.'s (“Defendants”) Omnibus Motion in Limine (Doc. 69). For the following reasons, Plaintiff's motion is GRANTED and Defendants' motion is DENIED as moot.

Background

This case, filed on March 27, 2008, and as amended on May 2, 2008, concerns a commitment letter entered into by the parties, on November 5, 2004, and a series of commercial loans made by the Plaintiff Fifth Third to Defendant McClure Properties, following the November 2004 agreement. The loans at issue were executed and delivered on June 6, 2005, and May 26, 2006, for the sums of $1,500,000 and $2,240,000, respectively. Each loan was issued to McClure Properties with Defendant Victor McClure serving as personal guarantor. The loans were issued for the express purpose of providing McClure Properties with the capital to construct and open a gas station and convenience store at 1434-36 3rd Avenue, in Huntington (“the Huntington Project”). The real property located at 1434-36 3rd Avenue was owned by McClure Properties and served as collateral for the loans. Additionally, according to the 2004 commitment letter, a second property owned by McClure Properties was to serve as the collateral for a permanent loan the parties anticipated entering into, once construction of the Huntington store was complete. This second property, located in Cowen, West Virginia, is the site a gas station and convenience store owned and operated by McClure Properties (“the Cowen Store”). Finally, according to the disbursement schedule provided by Fifth Third, the May 2006 loan: (1) paid off the June 2005 loan, and (2) was fully disbursed on or before September 28, 2006. See Pl.'s Mot. for Summ. J., Ex. E (Doc. 53-5).

Fifth Third's Amended Complaint seeks action on the non-revolving draw note executed on May 26, 2006, for $2,240,000 plus interest, and on the personal guaranty provided by Mr. McClure on that same date. In the complaint, Fifth Third requests a finding of default against Defendant McClure Properties on the May 2006 note in the principal sum of $1,134,795.69, plus accrued but unpaid interest in the amount of $34,825.13 through January 11, 2008 and continuing thereafter at the rate of $240.36 per day; late fees of $2,670.85; and all other late fees, fines, expenses and advances that accrue on the note on and after January 11, 2008. Additionally, Plaintiff requests a judgment against Defendant McClure individually in the principal sum of $1,134,795.69, plus accrued but unpaid interest in the amount of $34,825.13 through January 11, 2008 and continuing thereafter at the rate of $240.36 per day; late fees of $2,670.85; and all other late fees, fines, expenses and advances that accrue on the note on and after January 11, 2008. ¹

The McClure Defendants answered Plaintiff's Amended Complaint on August 1, 2008, providing a general denial of all allegations against them and raising a series of counterclaims against Fifth Third. In their answer, the McClure Defendants admit: (1) that Exhibit A to the Plaintiff's complaint is a true and accurate copy of the May 2006 note, and (2) that Exhibit B is a true and accurate copy of Mr. McClure's guaranty of the same. See Defs.' Answer (Doc. 12), at ¶¶ 5 & 6. Nonetheless, the McClure Defendants deny liability for their default on the May 2006 note on the basis of their counterclaims. These counterclaims include claims against Fifth Third for: (1) breach of the terms of the November 5, 2004 commitment letter; (2) breach of fiduciary duty and/or of an implied duty to act in good faith; (3) fraud; (4) intentional misrepresentation; (5) negligent misrepresentation; and (6) negligence.

On February 23, 2010, Fifth Third moved for summary judgment on all issues and claims. Essentially, Fifth Third argues that this is a simple breach of contract action to enforce the May 2006 promissory note and the loan agreement guaranty. Additionally, Fifth Third claims that it is entitled to all cost and expenses incurred in enforcement, including attorney fees, pursuant to section 11.03 of the loan agreement. The McClure Defendants oppose summary judgment on the basis of their counterclaims. Accordingly, these counterclaims are discussed below.

Standard of Review

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is proper if “the pleadings, the discovery and disclosure of materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The availability of summary judgment therefore turns on whether a proper jury question exists in a pending case. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

When considering a motion for summary judgment, the Court will not “weigh the evidence and determine the truth of the matter[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Rather, the Court considers the facts in the light most favorable to the nonmoving party, Adickes, 398 U.S. at 159, 90 S.Ct. 1598, drawing any permissible inference from the underlying facts in a manner that supports the nonmovant. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The party opposing summary judgment “must do more than simply show that there is some metaphysical doubt as to material facts,” however. Id. at 586, 106 S.Ct. 1348. It must offer some “concrete evidence from which a reasonable juror could return a verdict in his favor[.]” Anderson, 477 U.S. at 256, 106 S.Ct. 2505.

Analysis

Neither the applicable law nor the general facts are in dispute. From 2004 to 2006, Plaintiff Fifth Third Bank and the McClure Defendants entered into a series of commercial contracts, which included the May 2006 promissory note for an interim construction loan and the related personal guaranty. In their answer, the McClure Defendants admit to the truth and accuracy of these 2006 contracts. Further, the McClure Defendants do not contest that they are in default of these agreements. As a result, this case is a simple contract enforcement action, and the question raised by Plaintiff's motion is whether the counterclaims asserted by Defendants establish a genuine issue of material fact regarding a legal defense sufficient to prevent summary judgment.

Defendants' Claim that Fifth Third Breached First Because It Failed to Fulfill Its Obligations Under the 2004 Commitment Letter

One claiming rights under a contract must be able to show that he has performed his duties thereunder. Hupp v. Sasser, 200 W.Va. 791, 490 S.E.2d 880, 889 (1997); see also Restatement (Second) of Contracts § 237 (1981).

The rule is based on the principle that where performances are to be exchanged under an exchange of promises, each party is entitled to the assurance that he will not be called upon to perform his remaining duties of performance with respect to the expected exchange if there has already been an uncured material failure of performance by the other party. The central problem is in determining which party is chargeable with the first uncured material failure of performance. Restatement (Second) of Contracts § 237, cmt. b.

The McClure Defendants argue that they cannot be held liable for their default on the May 2006 loan agreement or personal guaranty because Fifth Third breached first, by failing to fulfill its obligations under the November 2004 commitment letter.

As ruled at the pretrial conference, the Court finds the 2004 commitment letter is a legally enforceable contract. “The fundamentals of a legal ‘contract’ are competent parties, legal subject-matter, valuable consideration, and mutual assent.” Syl. Pt. 9, Ways v. Imation Enterprises Corp., 214 W.Va. 305, 589 S.E.2d 36 (2003). Fifth Third argued that the 2004 commitment letter failed to qualify as a legal contract due to a lack of mutual assent. The Court disagrees. The McClure Defendants and Fifth Third are each sophisticated business entities, or individuals, competent to enter into a commercial contract. ² The commitment letter concerned a legal matter; an agreement by the bank to loan McClure Properties “up to” $2,200,000 “for the construction of a new gas station and convenience store in Huntington, WV [,]” for a set term (9 months), at a given interest rate (prime plus 1%). See 2004 Commitment Letter (Doc. 53-3), Ex. C. Moreover, McClure Properties provided valuable consideration for Fifth Third's commitment to loan. It agreed to pay interest on the loan and $500 in loan fees. Additionally, McClure Properties provided a security interest in the Huntington Property and Victor McClure provided a personal guaranty. Finally, the plain language of the commitment letter demonstrates a clear intent, on the part of all parties, to be bound. See id. (“[T]he actual loan documents will include other terms and conditions not outlined herein.”) (emphasis supplied); id. (“ Survival: This Loan Agreement shall survive the closing of the Loan.”). Accordingly, the Court finds the commitment letter is a valid and enforceable contract, which represents a portion of the mutual obligations agreed to by the...