Tri–Eagle Enters. v. Regions Bank
| Decision Date | 30 March 2010 |
| Docket Number | No. CA 09–271.,CA 09–271. |
| Citation | 2010 Ark. App. 64,373 S.W.3d 399 |
| Parties | TRI–EAGLE ENTERPRISES, Dewalt Acceptance, Inc., Randall Blythe, and Greta Blythe, Appellants v. REGIONS BANK, Appellee. |
| Court | Arkansas Court of Appeals |
OPINION TEXT STARTS HERE
Law Offices of James F. Swindoll, Little Rock, by: James F. Swindoll, for appellant.
Thompson and Llewellyn, P.A., Fort Smith, by: William P. Thompson; and Friday, Eldredge & Clark, LLP, Little Rock, by: Robert S. Shafer and William A. Waddell, Jr., for appellee.
[Ark. App. 1]This appeal involves a controversy over an interest-rate clause in a financing agreement executed by Tri–Eagle Enterprises and Regions Bank. The circuit court ruled that the agreement provided for a fixed-interest rate as a matter of law. Tri–Eagle and its owners and guarantors argue that the court erred in that ruling and in excluding the testimony of Tri–Eagle's expert witnesses. We reverse and remand on both points.
Tri–Eagle operated a used-car business and financed its inventory through a floor-plan arrangement with Regions Bank. On February 3, 2000, Tri–Eagle and Regions executed a $1,800,000 financing agreement that contained the following clause:
For advances for new goods, your interest rate is equal to the Commercial Base Rate plus9.00% fixed percentage points. For advances for used goods, your interest rate is equal to the Commercial Base Rate plus9.00% fixed percentage points.
[Ark. App. 2]Your interest rate is dependent upon the Commercial Base Rate announced by Regions Financial Corp. When the Commercial Base rate changes, your rate will increase or decrease correspondingly. Your rate may change each day the Commercial Base Rate changes.
(Strike-outs in original.) All parties agree that this clause reflected a fixed, 9% interest rate, and there is no controversy regarding this document on appeal.
The relevant document for our purposes is a second floor-plan agreement executed by Tri–Eagle and Regions on April 3, 2001. The interest-rate clause in section 1.8 of that contract read as follows:
For advances for New Goods, your interest rate is equal to the 8.25% index rate (the “Index”) plus 0 Basis Points and for advances for Used Goods, your interest rate is equal to the Index plus 0 basis points. When the Index changes, your interest rate will increase or decrease correspondingly. Such rate change may occur each day.
Later portions of the loan agreement defined “Index” as “the Index set forth in Paragraph 1.8.”
According to Randall Blythe, the president of Tri–Eagle, he understood that the 2001 floor-plan agreement contained a variableinterest rate. He later realized that Regions was charging Tri–Eagle a fixed rate, and he complained to Regions on several occasions. Regions insisted that the floor-plan agreement contained a fixed-interest rate, and this conflict persisted through 2005, after which Tri–Eagle defaulted on the floor-plan agreement and other obligations to Regions.
On March 1, 2006, Regions sued Tri–Eagle for $1,676,388.56 past due on the floor-plan agreement; $305,056.24 past due on a separate promissory note; and $54,511.11 in [Ark. App. 3]checking overdrafts. Tri–Eagle defended, in part, by asserting a set-off of $267,582.35 attributable to excess interest charged by Regions under the floor-plan agreement. Tri–Eagle also filed a counterclaim for breach of contract; constructive trust and breach of fiduciary duty; conversion; fraud; interference with prospective advantage; violation of federal banking laws; abuse of process and libel; and lender liability, based on payment of excess interest, loss of profits, and destruction of the value of its business. The circuit court dismissed the bulk of the counterclaim such that, by the time of trial, all that remained were Tri–Eagle's causes of action for breach of contract, conversion, and fraud based on Regions's charging excess interest.1 Tri–Eagle does not argue on appeal that the pretrial dismissals were in error.
At trial, Regions's witnesses testified that the 2001 floor-plan agreement contained a fixed interest rate rather than a variable rate. Executive Vice–President David Cravens, commercial loan officer Larry Randall, and former loan officer Jason Anderson explained that the term “index,” which was used in the agreement, generally indicates a variable rate calculated on a fluctuating benchmark, such as the prime rate or the London Interbank Offered Rate (LIBOR). However, they said, the “index” in Tri–Eagle's agreement was fixed at 8.25% and, consequently, no mechanism existed to vary that rate. They concluded, therefore, that it was a fixed rate. David Cravens also testified that Regions intended for the floor-plan agreement to contain a fixed rate, citing statements made in various bank memoranda and meeting minutes regarding the 2001 agreement.
[Ark. App. 4]On cross-examination, Regions's witnesses admitted that the 2001 floor-plan agreement did not contain the word “fixed” and they acknowledged that the agreement's language provided that the interest rate could change daily. However, they explained that this was the result of the bank's using the same loan-document form for both variable and fixed-rate loans.
Tri–Eagle presented testimony by Randall Blythe, who said that his loan officer told him that they would use a variable rate on the 2001 financing agreement. Blythe stated that he interpreted the interest-rate clause as reflecting a variable rate, based on the wording of the document. Tri–Eagle also called Dale Hepworth, a former Regions employee, who said that, although he was not suggesting that the 2001 floor plan contained a variable interest rate, the use of the term “index” was inconsistent with a fixed rate. Tri–Eagle additionally proffered the testimony of two expert witnesses, Dan Wojcik and Michael Woody, who interpreted the 2001 floor plan as having a variable interest rate. The circuit court excluded Wojcik's and Woody's testimony, based on Regions's arguments that the experts were not qualified and their opinions were unreliable.
At the close of the evidence, Regions moved for a directed verdict, asking the circuit court to interpret the 2001 interest-rate clause as unambiguously containing a fixed rate. The court did so, and instructed the jurors that they would hear no further evidence or arguments regarding overpayment of interest. Thereafter, the court submitted Regions's claims for the amounts due on the floor plan, the promissory note, and checking overdrafts to the jury. The [Ark. App. 5]court also submitted a claim by Tri–Eagle for fraud related to matters other than the interest rate. Following deliberations, the jury awarded Regions $1,593,921.41 due on the 2001 floor plan; $377,855.72 due on a promissory note; and nothing for checking overdrafts. The jury also awarded Tri–Eagle nothing on its fraud claim. The circuit court entered judgment on December 4, 2008, and Tri–Eagle filed a timely notice of appeal. Tri–Eagle now argues that the court erred in ruling that the 2001 floor plan unambiguously contained a fixed interest rate and that the court abused its discretion in excluding the testimony of Tri–Eagle's expert witnesses.
The circuit court ruled that the following language in the 2001 floor-plan agreement unambiguously reflected a fixed interest rate:
For advances for New Goods, your interest rate is equal to the 8.25% index rate (the “Index”) plus 0 Basis Points and for advances for Used Goods, your interest rate is equal to the Index plus 0 basis points. When the Index changes, your interest rate will increase or decrease correspondingly. Such rate change may occur each day.
Tri–Eagle contends that the rate was unambiguously variable or, alternatively, that the meaning of the clause presented a factual question for the jury.2
When a contract is free of ambiguity, its construction and legal effect are questions of law for the court to determine. [Ark. App. 6]Roberts Contracting Co. v. Valentine–Wooten Rd. Pub. Facility Bd., 2009 Ark. App. 437, 320 S.W.3d 1. When contracting parties express their intention in a written instrument in clear and unambiguous language, it is the court's duty to construe the writing in accordance with the plain meaning of the language employed. Fryer v. Boyett, 64 Ark.App. 7, 978 S.W.2d 304 (1998). However, when ambiguous language is used in the contract, other rules apply. Language is ambiguous if there is doubt or uncertainty as to its meaning and it is fairly susceptible to more than one equally reasonable interpretation. Roberts Contracting, supra. The determination of whether ambiguity exists is ordinarily a question of law for courts to resolve. Id. The court may also interpret an ambiguous contract as a matter of law when the ambiguity can be resolved by reference to the contract language itself. See Zulpo v. Farm Bureau Mut. Ins. Co., 98 Ark.App. 320, 255 S.W.3d 494 (2007). But, when a contract is ambiguous as to the intent of the parties, and the meaning of the language depends on disputed extrinsic evidence, the issue is a question of fact for the jury. Perry v. Baptist Health, 358 Ark. 238, 189 S.W.3d 54 (2004). See also Minerva Enters., Inc. v. Bituminous Cas. Corp., 312 Ark. 128, 851 S.W.2d 403 (1993).
In the present case, the language in the 2001 interest-rate clause is ambiguous and its meaning presents a factual question. Unlike the 2000 agreement, which used the term “fixed” with regard to the interest rate, the 2001 agreement omits that term, thus rendering the nature of the interest rate unclear and susceptible to more than one equally reasonable interpretation. The agreement does recite an 8.25% “index rate” for new goods. However, it simply mentions an “index rate” for used goods. Further, even if the mention of a specific, 8.25% [Ark. App. 7]figure constitutes a fixed interest rate—and it may not,...
To continue reading
Request your trial
-
Five Forks Hunting Club, LLC v. Nixon Family P'ship
...See Fayetteville Express Pipeline, LLC v. Ark. Pub. Serv. Comm'n , 2017 Ark. App. 557, 533 S.W.3d 106 ; Tri-Eagle Enters. v. Regions Bank , 2010 Ark. App. 64, 373 S.W.3d 399. Moreover, our supreme court has stated that any vehicle that would be needed for the maintenance or operation of the......
-
Lowder v. Gregory
...she was prejudiced by its exclusion. It is the appellant's burden to demonstrate and explain reversible error. Tri–Eagle Enters. v. Regions Bank, 2010 Ark. App. 64, 373 S.W.3d 399. That has not been done here. Eddie also makes a brief argument that the circuit court should not have held the......
-
Fayetteville Express Pipeline, LLC v. Ark. Pub. Serv. Comm'n
...in not considering obsolescence. It is an appellant's burden to demonstrate and explain reversible error. See Tri–Eagle Enters. v. Regions Bank, 2010 Ark. App. 64, 373 S.W.3d 399 ; Parker v. Parker, 97 Ark. App. 298, 248 S.W.3d 523 (2007). Here, the parties' experts testified as to their me......
-
Crittenden Cnty. v. Davis
...is free of ambiguity, its construction and legal effect are questions of law for the court to determine. Tri–Eagle Enters. v. Regions Bank, 2010 Ark. App. 64, 373 S.W.3d 399. When contracting parties express their intentions in a written instrument in clear and unambiguous language, it is t......