Zip Lube, Inc. v. Coastal Savings Bank

• Decision Date: 23 April 1998
• Citation: 709 A.2d 733
• Parties: ZIP LUBE, INC. v. COASTAL SAVINGS BANK.
• Court: Maine Supreme Court

Page 733

709 A.2d 733

1998 ME 81

ZIP LUBE, INC. v. COASTAL SAVINGS BANK.

Supreme Judicial Court of Maine.

Submitted on Briefs Jan. 16, 1998.

Decided April 23, 1998.

John D. Clifford, IV, Clifford & Golden, P.A., Lisbon Falls, for plaintiff.

Deirdre M. Smith, Drummond Woodsum & MacMahon, Portland, for defendant.

Before WATHEN, C.J., and ROBERTS, RUDMAN, DANA, LIPEZ and SAUFLEY, JJ.

DANA, Justice.

¶1 Zip Lube, Inc. appeals from a summary judgment entered in the Superior Court (Kennebec County, Atwood, J.) in favor of Coastal Savings Bank on Zip Lube's breach of contract claim contending that the court erred when it determined that Zip Lube presented no admissible evidence of a contract. Finding no error, we affirm the judgment.

¶2 In early 1995, Northern Pride Car Wash Systems, Inc. defaulted on a mortgage note held by Coastal Savings Bank and, after a threat by Coastal to foreclose on the mortgaged property, filed a petition for protection pursuant to Chapter 11 of the Bankruptcy Code. Coastal anticipated taking over the car wash as either a mortgagee-in-possession or purchaser and engaged the services of Joseph Malone, a commercial real estate broker, who identified Philip Sewall, the president and principal owner of Zip Lube, as a party interested in purchasing or operating the car wash. Throughout the spring of 1995, Sewall and Coastal engaged in negotiations for the purchase of the car wash that resulted in several successive written offers to purchase by Sewall, as each previous offer expired without being accepted by the seller or approved by the Bankruptcy Court.

¶3 At some point during the negotiations with Coastal, Sewall was contacted by Northern Pride's attorney, who suggested an arrangement whereby Sewall would assist the debtor in taking the property out of bankruptcy and eventually become sole owner of the car wash. Sewall rejected the proposal, telling Northern Pride's representative "immediately, I don't do business that way." Sewall then called Coastal to inform representatives at the bank that he had been contacted by Northern Pride. The bank made it clear to Sewall that it would not finance any deal that involved the debtor. Sewall also spoke to the bank's attorney, who purportedly told Sewall that the bank would make sure that he got the property. Sewall subsequently called Northern Pride's attorney and told him yet again that he would not deal with the debtor.

¶4 Sometime in June, Yvon Pellerin contacted Coastal through his real estate broker, Karen Rich, to express his interest in purchasing the car wash. Coastal did not pursue Pellerin's interest because it already had a buyer in Zip Lube. On July 12, 1995, the Bankruptcy Court held a hearing on a joint motion brought by Coastal and the debtor for an order authorizing the sale of the debtor's assets. Neither Sewall nor his lawyer were present when the hearing began. At some point during the hearing, the debtor's attorney brought Pellerin's offer to the Bankruptcy Court's attention. Coastal's representative responded by requesting that the court approve the sale to Zip Lube, asserting there was no financing for Pellerin's offer. Nevertheless, the court inquired of Pellerin as to whether he would make a substantially higher offer in order to obtain a larger dividend for the debtor's unsecured creditors, whereupon Pellerin raised his $340,000 offer by ten percent to $374,000. Rich, Pellerin's broker, informed the court, however, that Pellerin could not purchase the property without receiving financing from Coastal. The court ordered a recess and instructed the parties to discuss Pellerin's offer. During the recess, Pellerin, Rich, the bank's attorney, and Janet Ross, a commercial loan officer and vice-president at Coastal, discussed the financing terms and contingencies Pellerin would require to complete the sale.

¶5 At the conclusion of this conference, the bank's attorney presented the terms of Pellerin's offer to the Bankruptcy Court. Compared to Sewall's offer, the Pellerin offer yielded a greater net gain to the bankrupt estate through a higher purchase price and lower commissions. Sewall and his attorney were present in court by this time, and Sewall informed the court that he would not waive the remaining contingencies in his offer to purchase if the Bankruptcy Court approved the parties going forward with Pellerin's offer for the property. Sewall also advised the court that negotiations with Pellerin might lead him to drop out of...