Whitney Bank v. SMI Companies Global, Inc., No. 18-31189 (5th Cir. 2020)Annotate this Case
Whitney Bank filed suit against SMI and its president and loan guarantor in order to collect under two loan agreements upon which SMI allegedly defaulted. SMI filed several counterclaims.
The Fifth Circuit held that SMI's breach of contract claim against Whitney Bank failed for two reasons: first, under basic contract interpretation principles, the mere recital of the purpose of the loan, when read in conjunction with the rest of the document, did not require Whitney Bank to continue to provide funding to SMI until that purpose was fulfilled, regardless of SMI's default and failure to make payment as required under the loans; and second, the remainder of SMI's breach claims are based on unwritten purported oral agreements between Whitney Bank employees and SMI.
Therefore, the court affirmed the magistrate judge's ruling in favor of Whitney Bank on its main demand for recovery under Loan 1; reversed the magistrate judge's ruling against Whitney Bank on its main demand for recovery on Loan 2; and remanded and rendered judgment in favor of Whitney Bank on the Loan 2 claim. The court reversed and remanded for the magistrate judge to render judgment in favor of Whitney Bank on SMI's counterclaims for breach of contract, negligent misrepresentation, tortious interference with business relations, and breach of duty to deal in good faith. However, the court affirmed the magistrate judge's ruling that Whitney Bank was not entitled to recover from SMI for attorneys' fees and costs.