Unpublished Disposition, 905 F.2d 1540 (9th Cir. 1990)

MEMORANDUM^** 

Lewis appeals the summary judgment entered in favor of American Savings and Loan dismissing his complaint for breach of contract and other claims stemming from American's failure to provide Lewis with additional construction financing. Lewis also appeals the district court's entry of summary judgment as to his liability on American's counterclaim seeking damages for fraud and misrepresentation in connection with Lewis' loan application. We affirm.

* A grant of summary judgment is reviewed de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989). Summary judgment may be granted where the pleadings, depositions, affidavits, and other elements of the record show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c). A motion for summary judgment must be granted against a party who "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

II

The essential elements of a binding contract include an offer that is sufficiently definite to make the promised performance reasonably certain. 1 B. Witkin, Summary of California Law (9th Ed.1987), Contracts, Sec. 128. "Unless an agreement to restructure a loan embodies definite terms, capable of enforcement, it is not a legally valid contract." Price V. Wells Fargo Bank, 213 Cal. App. 3d 465, 483, 261 Cal. Rptr. 735 (1989). The essential terms of a loan agreement are "the amount of the loan, the rate of interest, the terms of repayment, applicable loan fees and charges." Kruse v. Bank of America, 202 Cal. App. 3d 38, 60, 248 Cal. Rptr. 217 (1988), cert. denied, 109 S. Ct. 87 (1989).

The district court held that Lewis' claim for breach of contract was "fatally deficient as a matter of law" because " [a]n essential term, namely, the amount of the loan, was never agreed to." Lewis' testimony does not create a triable issue of fact that the loan amount was agreed to in these initial discussions. When asked if the additional loan would be for $1.2 million, Lewis testified, " [w]ell to be honest with you I never asked him how much. I assumed it was whatever funding we needed." Lewis presents no other material evidence that the amount of the loan was agreed to.

Additionally, " [a] manifestation of willingness to enter a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intent to conclude a bargain until he has made a further manifestation of assent." Kruse v. Bank of America, 202 Cal. App. 3d at 59 (quoting Restatement (Second) of Contracts Sec. 26).

There is no genuine issue of fact regarding Lewis' knowledge that the American loan officer had limited lending authority. Lewis was specifically told that the American loan officer conducting the loan negotiations had no authority to approve a loan but had to submit a loan package to the loan committee for review. Lewis also testified that the loan officer explained the loan approval process to him. Further, there is no evidence that the loan committee approved the additional loan commitment. Therefore, the district court properly concluded that the discussions between Lewis and Carter were best characterized as "preliminary negotiations," not the functional equivalent of a valid contract.

Lewis also argues that American agreed to fund completion of the project in return for the execution of a parking license agreement.¹  Lewis argues that the testimony of Kirk Randall and the declaration of Charles Zaloumis provide sufficient evidence to create a triable issue that the additional loan agreement existed from the parking license discussions.

Randall's testimony shows that the purpose of the licensing agreement was to provide American with consideration for releasing existing loan funds to pay vouchers for construction work already completed. The money to complete the project was to come from escrows opened by potential buyers of the property. Consequently, Randall's testimony does not create a triable issue of fact that Lewis' grant of the parking license to American was consideration for an additional loan to complete the project. Nor does Zaloumis' declaration, which states in part that at a December 1983 meeting to discuss the execution of a parking license to provide parking, a vice president of American "acknowledged that American would release funds in escrow and supply funds to complete construction of [the] building as part of the consideration for the parking license," provide evidence that there was an agreement between American and Lewis as to the essential terms of the additional loan.

Since Lewis has failed to establish that there was a binding contract between Lewis and American for the additional loan funds, there can be no breach of contract or of the implied covenant. Palmer v. Ted Stevens Honda, Inc., 193 Cal. App. 3d 530, 538-39, 238 Cal. Rptr. 363 (1987).

III

Lewis concedes that misrepresentations were made on his loan application. Lewis argues, however, that American's counterclaim for fraud cannot lie because American failed to show that Lewis' representations were material or that American reasonably relied on these representations. This argument has no merit. American presented an affidavit stating that the information regarding a loan applicant's financial commitments and potential liability from legal obligations is essential for determining a borrower's creditworthiness and ability to repay a loan. Lewis presented no evidence to create a triable issue of fact on this issue.

The district court also held that American justifiably relied upon Lewis' representations on his loan application. First, American was under no duty to search court or other public records to confirm Lewis' representations. Brown v. Oxtoby, 45 Cal. App. 2d 702, 706, 114 P.2d 622 (1941). Second, when a misrepresentation is made to intentionally induce reliance, reliance is justified unless the plaintiff's conduct in light of his or her own "intelligence and information was manifestly unreasonable." Hefferan v. Freebairn, 34 Cal. 2d 715, 719, 214 P.2d 386 (1950). Lewis presents no material evidence that American's reliance was unreasonable. Therefore, the district court properly granted summary judgment on American's counterclaim.

AFFIRMED.