Buck's Sporting Goods, Inc. of Tulsa v. First Nat. Bank & Trust Co. of Tulsa

Buck's Sporting Goods, Inc. of Tulsa v. First Nat. Bank & Trust Co. of Tulsa
1994 OK 14
868 P.2d 693
65 OBJ 449
Case Number: 78163
Decided: 02/01/1994
Modified: 02/07/1994
Supreme Court of Oklahoma

BUCK'S SPORTING GOODS, INC. OF TULSA, AN OKLAHOMA CORPORATION, APPELLANT,
v.
FIRST NATIONAL BANK & TRUST COMPANY OF TULSA, A NATIONAL BANKING ASSOCIATION, APPELLEE.

Certiorari to the Court of Appeals, Division I, Daniel J. Boudreau, District Judge.

¶0 Buck's Sporting Goods, Inc. of Tulsa (Buck's/borrower) had a long-term revolving credit line with the appellee, First National Bank & Trust Company of Tulsa (First Tulsa/bank/lender). After Buck's posted a year-end loss for 1986, the parties negotiated a new agreement for a credit line of $425,000. Buck's claims that First Tulsa agreed to make an advance on October 7, 1987. However, the next day, First Tulsa refused to advance credit. Buck's asserts that First Tulsa's actions caused the company to fail. Buck's sued for breach of contract, tortious breach of contract, breach of fiduciary duty, constructive fraud, prima facie tort, gross negligence and interference with contractual relations. The trial judge, Honorable Daniel J. Boudreau, granted summary judgment to the bank. The Court of Appeals affirmed. We find that controverted material facts exist concerning the alleged breach of the credit agreement which must be resolved by the trier of fact.

Certiorari Previously Granted; Court of Appeals Opinion Vacated; Trial Court Reversed.

Thomas M. Klenda, Robert J. Getchell and John M. O'Connor, Tulsa, for appellant.

James L. Kincaid and Gray L. Betow, Tulsa, for appellees.

KAUGER, Justice.

[868 P.2d 695]

¶1 Certiorari was granted to consider a single issue: whether there are material issues of fact in controversy concerning the alleged breach of the credit agreement which must be determined by the trier of fact.

FACTS

¶2 The appellant, Buck's Sporting Goods of Tulsa (Buck's/borrower), sold sporting goods. The majority of Buck's business came from selling equipment to schools. In 1964, Buck's entered into a line of credit agreement with the appellee, First National Bank & Trust Company of Tulsa (First Tulsa/bank/lender). The agreement was updated in 1980 and in 1987. Under the agreements, Buck's was given a maximum amount of revolving credit. When schools placed orders for equipment, Buck's ordered the goods from its factory suppliers; and when payments to the factories became due, Buck's borrowed on its line of credit with First Tulsa. After the schools paid for the equipment, Buck's used the money to reduce its line of credit.

¶3 To receive substantial discounts from its factories, Buck's was required to pay its accounts in full by April 10, for basketball season, and by October 10, for football season. For the twenty-three years that Buck's did business with First Tulsa, it always borrowed the maximum amount of its credit line on these dates. The bank was aware of this practice. and its economic importance to Buck's.

¶4 In 1986, Buck's reported a year-end loss. When it learned of the loss, First Tulsa met with Buck's. Buck's loan officer at First Tulsa, W.E. Beard (Beard), sent a letter to Buck's asking for a capital infusion; or, in the alternative, the bank requested other proposals to strengthen the relationship and to enable the bank to renew the line of credit.

¶5 On October 7, 1987, Buck's requested, via telephone, an advance of $212,519 for payment to its factory suppliers by October 10.5

¶6 Although Buck's obtained a new line of credit with Western National Bank on October 20, 1987, all of the factory discounts were lost. Buck's claims that it was put on credit hold by the factories, that it was charged late fees and interest, and that it lost credibility with its school clients. Buck's eventually filed a Chapter 11 bankruptcy proceeding, alleging that it could never recover from the economic harm caused by First Tulsa's refusal to make the advance.

¶7 On December 23, 1987, Buck's sued alleging breach of contract, tortious breach of contract, breach of fiduciary duty, constructive fraud and prima facie tort. Buck's claims that because of the implied duty of good faith and because of a continuous course of dealing with the bank, First Tulsa [868 P.2d 697] should have given reasonable notice before refusing to make the credit line advance. On June 15, 1989, Buck's amended its petition to add claims for gross negligence and interference with contractual relations. On April 11, 1990, First Tulsa filed its first motion for summary judgment. Buck's filed a cross-motion for summary judgment on June 4. The trial judge granted an interlocutory summary adjudication to First Tulsa on all counts except the breach of contract claim.

¶8 In an order entered on December 19, 1990, the trial court gave Buck's time to amend its petition. Buck's amended the petition on December 20, restating its breach of contract and fraud claims. First Tulsa again moved for summary judgment. The trial court sustained the motion holding there was no breach. It relied on contract language providing that "First Tulsa is not obligated to make any particular loan or advance requested by Buck's."

¶9 CONTROVERTED MATERIAL FACTS EXIST CONCERNING THE ALLEGED BREACH OF THE CREDIT AGREEMENT WHICH MUST BE RESOLVED BY THE TRIER OF FACT.

¶10 Buck's insists that there are controverted material facts concerning the 1987 credit agreement and the conduct between itself and First Tulsa's loan officer which militate against the grant of summary judgment. It argues that: 1) once Beard told Duncan by telephone on October 7 that it "would be no problem" to advance the maximum credit limit that an agreement was reached; and 2) First Tulsa's refusal to advance the funds on October 8 constituted a breach of the credit agreement. First Tulsa relies upon the express language of paragraph 2.1 of the contract providing that the Bank is under no obligation to make any loan or advance

¶11 Pursuant to Rule 13, 12 O.S. 1991, Ch. 2 App., Rules for the District Courts, a motion for summary judgment may be filed if the pleadings, depositions, interrogatories, affidavits, and other exhibits reflect that there is no substantial controversy pertaining to any material fact.

¶12 Contractual intent is determined from the entire instrument. Whenever possible, an interpretation will be adopted which gives effect to all provisions of the contract.

". . . The bank may, in its discretion, agree to make one or more advances of loan funds requested by telephone by Borrower and on a date other than a Weekly Settlement Date. In any instance where an advance of loan funds shall be made by the Bank to the Borrower on a telephonic request the Borrower shall furnish a Loan Request to the Bank for such advance on the next ensuing banking day . . ."

It is unnecessary to strike any one of these provisions to give effect to all. First Tulsa does not assert that there was some defect in the guaranties in place for the line of credit,

¶13 This Court will not diminish a borrower's right clearly and specifically provided in a contract.

CONCLUSION

¶14 Summary judgment is properly granted when there is no substantial controversy as to any material fact.27Controverted material facts exist concerning a possible breach of the commercial contract which must be determined by the trier of fact. These unanswered questions of fact militate against the granting summary judgment.

¶15 CERTIORARI PREVIOUSLY GRANTED; COURT OF APPEALS OPINION VACATED; TRIAL COURT REVERSED.

¶16 OPALA, ALMA WILSON, SUMMERS and WATT, JJ., concur.

¶17 HODGES, C.J., and SIMMS and HARGRAVE, JJ., dissent.

¶18 LAVENDER, V.C.J., dissents. I would deny certiorari.

Footnotes:

1We have previously addressed the issue of a bad faith breach in the commercial context. Rodgers v. Tecumseh Bank, 756 P.2d 1223, 1227 (Okla. 1988) and First Nat'l Bank & Trust Co. of Vinita v. Kissee, 859 P.2d 502, 509 (Okla. 1993).

2Beard testified on p. 72 of his deposition:

"Q. What is your understanding of the importance of October 10?

A. I understand that it's important to Buck's.

Q. Why?

A. Because that's the period in which they pay their bills that have been going on for sometime and they have some discounts in connection with some of them."

3The letter, dated February 12, 1987, provides in pertinent part:

". . . As we discussed today, the capital impairment of the company has become critical and steps should be taken to remedy this situation as quickly as possible. It is my opinion that a minimum capital infusion of $150M should be made and should occur by April 1, 1987. By capital infusion I mean an investment in the company which could be in the form of common stock, preferred stock, or capital notes. Bob, should the foregoing not be feasible or only partly feasible, the Bank would welcome other proposals that would strengthen the relationship and enable the Bank to renew the line of credit for the coming season. . . ."

4In the 1987 Agreement, paragraph 3.3 explains the collection account. It provides in pertinent part:

". . . Until the Bank shall otherwise instruct the Borrower in writing the Borrower will diligently attempt to market its inventories in the ordinary course of business (but not otherwise) and to collect all moneys due to it arising out of such sales and owed to it upon its Accounts, Instruments, Chattel Paper and other obligations of its customers to pay moneys to it. Until notified otherwise by the Bank, all collections, including all checks and cash receipts from sales of inventory, shall be deposited in a special collection account with the Bank with respect to which Borrower shall have no right of withdrawal. . . ." (Emphasis supplied.)

5The loan agreement in paragraph 2.6 provides in pertinent part:

". . . The bank may, in its discretion, agree to make one or more advances of loan funds requested by telephone by Borrower and on a date other than a Weekly Settlement Date. In any instance where an advance of loan funds shall be made by the Bank to the Borrower on a telephonic request the Borrower shall furnish a Loan Request to the Bank for such advance on the next ensuing banking day . . ."

6The president of Buck's, Robert Duncan, stated in his deposition:

"A. Okay. On Wednesday, we had to - Mr. Beard was going on vacation, and we had to close our books early, and I had instructed my bookkeeper, Carolyn Rotert, to make sure that you've got the books closed, so that we know the receivables, we know what our inventory is, and we will know what our loan balance is, so we know how much that we can request to borrow. And we requested to borrow up to the maximum amount of the line of credit, which was up to $425,000. And the amount that we were requesting was $212,000 and I don't know the balance of the figure, but at $212,000 that would have brought the Note to $425,000, and he [Beard] was informed of that on Wednesday [October 7, 1987]. So the amount was already established.

Q. How do you know he was informed of that on Wednesday?

A. Because I called him and gave him those figures right off of our report.

Q. On the telephone?

A. Yes, sir, which is customary. We've always done that in advance of actually taking it down, so he has an idea of what it is, because he hasn't seen our report at this point. . . .

Q. And were the numbers that you gave him by telephone the same numbers that appear in [the Loan Request]?

A. Yes, sir.

Q. Which you, then, delivered on the following day?

A. Yes, sir.

Q. Now, what was his response when you gave him those numbers [on Wednesday in the telephone conversation]? . . .

A. He said, `well, this, basically, brings your borrowing base up to the limit of $425,000.' And he said, `we have no problem with that.' . . .

Q. So you gave him the numbers, and he said, `we have no problem with that'?

A. That's right."

7Although Duncan's testimony indicates that he gave figures to Beard during the October 7th telephone conversation, see note 6, supra, Duncan insists that the first time he was aware of the figures was when the written information was submitted on October 8.

8First Tulsa advanced $50,000 to Buck's to pay for operating expenses and payroll.

9The Amended 1987 agreement is a 17-page document. The pertinent parts are as follows:

"2.1 Bank Not Obligated To Make Advances. The Bank shall not be obligated to make any particular loan or advance requested by Borrower . . .

4.1 Guaranties. The Bank shall not be obligated to make any loan or advance to the Borrower at any time unless there shall remain in full force and effect unconditional written guaranties in form acceptable to Bank covering all Secured Indebtedness of the Borrower to the Bank . . .

6.1 Defaults . . . the Bank shall be entitled upon notice to the Borrower to declare all of the Secured Indebtedness to be immediately due and payable . . . From and after any such notice the Bank shall have no further obligation to make any loan or advance to the Borrower hereunder whether or not any prior defaults shall be cured." (Emphasis supplied.)

10Paragraph 2.1, Amended 1987 agreement, see note 9, supra.

11Buckner v. General Motors Corp., 760 P.2d 803, 812 (Okla. 1988); Rule 13, 12 O.S. 1991, Ch. 2 App. provides in pertinent part:

"a. A party may move for judgment in his favor on the ground that the depositions, admissions in the pleadings, stipulations, answers to interrogatories and to requests for admissions, affidavits, and exhibits on file . . . show that there is no substantial controversy as to any material fact . . .

b. If the adverse party . . . wish[es] to oppose the granting of the motion, they shall serve on the moving party and file . . . a concise written statement of the material facts as to which he or they contend a genuine issue exists . . . The adverse party shall attach to the statement affidavits and other materials containing facts that would be admissible in evidence . . ."

12Federal Deposit Ins. Corp. v. Moss, 831 P.2d 613, 620 (Okla. 1991); Wofford v. Eastern State Hosp., 795 P.2d 516, 520 (Okla. 1990); Roach v. Atlas Life Ins. Co., 769 P.2d 158, 163 (Okla. 1989).

13Buckner v. General Motors Corp., see note 11, supra.

14Ross v. City of Shawnee, 683 P.2d 535, 536 (Okla. 1984).

15Hadnot v. Shaw, 826 P.2d 978, 985 (Okla. 1992).

16Title 15 O.S. 1991 § 157 provides:

"The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the others."

Mercury Inv. Co. v. F.W. Woolworth Co., 706 P.2d 523, 529 (Okla. 1985).

17Paragraph 2.1, Amended 1987 agreement, see note 9, supra.

18Paragraph 4.1, Amended 1987 agreement, see note 9, supra.

19Paragraph 6.1, Amended 1987 agreement, see note 9, supra.

20In fact, the collateral for the loan was increased substantially before the 1987 agreement was finalized. See discussion, p. 695, supra.

21Rodgers v. Tecumseh Bank, see note 1 756 P.2d at 1225, supra. See also, Rist v. Westhoma Oil Co., 385 P.2d 791, 796 (Okla. 1963).

22Listed under "undisputed facts" in First Tulsa's motion for summary judgment is an assertion that Beard did not have the full facts surrounding the advance until a written request was received by the bank. Beard's deposition testimony also indicates that some telephone advances had been made in the past, but that he had not discussed the advance before the denial on the morning of October 8.

23Pertinent deposition testimony appears in note 6, supra.

24Beard's deposition provides in pertinent part:

". . . Q. Okay. What was discussed during these telephone conferences to arrange a meeting?

A. There was nothing discussed, except it was imperative that Mr. Duncan and I have a conference.

Q. Did Mr. Duncan give you his borrowing base figures over the phone during any of these telephone conversations?

A. I don't recall. . . ."

25Paragraph 2.6, Amended 1987 agreement, see note 5, supra.

26Ohio Fuel Co. v. McKain, 103 Okla. 121, 229 P. 414, 416 (1923).

27Buckner v. General Motors Corp., see note 11, supra.