Sterling Savings Bank v. Silverton Station, LLC et al

Filing 28

ORDER: Granting Plaintiff's Motion for Summary Judgment 12 . Signed on 11/12/10 by Chief Judge Ann L. Aiken. (lae)

Sterling Savings Bank v. Silverton Station, LLC et al

Doc. 28

FIi FIt' to t···10\/ 15 0'3:2EJJSItC-ORE

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

S T E R L I N G SAVINGS BANK, a Washington stock savings bank, Plaintiff, vs. SILVERTON STATION, LLC, an Oregon limited liability company; GLEN E. KENT and TAMMY KENT, husband and wife, and SILVER CREEK DEVELOPMENT, INC., an Oregon corporation Defendants.

Civ. No. 10-6121-AA OPINION AND ORDER

Charles R. Markley Sanford R. Landress Greene & Markley, P.C. 1515 SW Fifth Avenue, Suite 600 Portland, Oregon 97201 Attorneys for plaintiff Laurie R. Hager Sussman Shank LLP 1000 S.W. Broadway, Suite 1400 Portland, Oregon 97205-3089 Attorney for defendant

1- OPINION AND ORDER

Dockets.Justia.com

AIKEN, ChieŁ Judge: Plaintiff Sterling Savings Bank filed this action to recover on a promissory note, trust deed, and construction loan agreement executed by defendant Silverton Station and gUarantied by defendants Glen E. Kent and Tammy Kent, and separately guarantied by Silver Creek Development. Defendants filed

counterclaims alleging breach of contract, common law negligence, promissory estoppel, breach of the duty of good faith and fair dealing, breach of fiduciary duty, fraud, negligent

misrepresentation, and interference with prospective economic advantage. Plaintiff now moves for summary judgment on all of The motion is

its claims and all of defendants' counterclaims. granted. I. FACTUAL BACKGROUND

In October 2006, Silverton Station purchased real property in Marion County (the "Property"). In order to finance the

purchase, Silverton Station obtained a construction loan in the amount of $2,091,375.00 (the "Loan") from plaintiff. Silverton

Station executed a Promissory Note

("Note") and Deed of Trust Page 179, Then,

("Deed"), recorded under Recording Reference Reel 2724, which gave
plaint~ff

a security interest in the Property.

defendants Glen E. Kent and Tammy Kent signed a continuing guaranty securing the Loan, and Silver Creek Development signed an additional continuing guaranty. (The Loan, Note, Deed, and

2- OPINION AND ORDER

ranties are collect Documents."} .

ly re

red to as the "Loan

As of August 10, 2010, 1, accrued unpa Declo of Jeff Ilk, p. 2 . the Kent Guaranty Pla

defendants owed $2,212,808.05 in rest, and accrued s amount is also Silver Creek se at 4. t on the Loan, on the Loan, 24, 2010 through d late fees. owing under

iff also incurred an additional $3,900 aining a foreclosure As a result of rantee report. s' eventual de

iff initiated this lawsuit seeking erest, late
t

s, and fees from Mar Pl

date of judgment.

iff also seeks all other sums , taxes, items which may

under the Loan Documents for assessments, receiver's constitute liens upon t nonpayment, pl es and costs, and Property.

Additionally, in the event Trust Deed rty superior to any
Sf

iff seeks a declaration lien upon the

is a valid and subsist ,t that

le, lien, estate, or interest of all Property be sold at foreclosure.

and

, plaintiff

seeks its attorney's aga t defendants.

s, costs, and disbursements it incurred

II. STANDARD OF REVIEW Summary judgment is appropriate "if the scovery and disclosure materials. on file,
Sf

the

any affidavits

3- OPINION AND ORDER

show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The materiality of a fact is determined T.W. Elec. Serv., Inc. v. 630 (9th Cir. 1987)

by the substantive law on the issue.

Pac. Elec. Contractors Ass'n, 809 F.2d 626,

The authenticity of a dispute is determined by whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party. U.S. 242, 248 (1986). Anderson v. Liberty Lobby, Inc., 477

The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.

Special rules of construction apply to evaluating summary judgment motions: 1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and 2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
III. DISCUSSION

Plaintiff moves for summary judgment on its claims, arguing that defendants have defaulted on the Loan Documents, and

4- OPINION AND ORDER

p

iff is entitled to relief.

Defendants do not di

e

t

executed the Loan Documents or received the loan amount, nor do s dispute the amount due and owing. s rely on their asserted defenses in s posit De summary judgment is inappropriate at in that genuine issues of

r,
of ir

st

ct remain as to

promise to pay under the Loan Documents was an as pI
1
t

s

on

oral agreement between the parties to loan for more than $7 million. Apparent , defendants rty, De

s

to develop a condominium community on
t

land required the second loan.

plaintiff orally agreed to loan defendants

s

I

sum of money, and that, but for this oral would not have taken out the original Loan. al De
IS

s
also

plaintiff misrepresented its intent to s further funding. Thus, the main issue is to raise
r

of this alleged agreement is admiss issues of fact. Plaintiff asserts that the statute s from raising these de s,

precludes cause they all rely on

I Defendants' defenses include: 1) wa r; 2) estoppel; 3) unc hands; 4) recovery from collateral; 5) of contract; 6) excuse of performance; 7) tigate s; 8) offset and recoupment; 9) laches; and 10) no causation. .The remaining defense to state a claim ils because there is no dispute s took out the Loan or that defendants defaulted on Loan.

5- OPINION AND ORDER

the al
If

oral agreement as statute of frauds, ORS 41.580
f

of the second loan. [is a] substant
[]

[T]

of contract law that promoters] commercial certainty by allowing contracting parties to rely on
t

imate written terms of their

ssion of

ir

ement as embodying

"

~~~~~~~~~~~~~~~~~~~~~~~,

315 Or. 149, 163, 843 284 Or. 523, 530, 588 [or]

P.2d 890 (1992) P.2d 603

(citing Thus,

~~~~~~~~~,

(1978)).

s "to lend money, writing.

se extend credit" must 41.580(1) (h). "de Revis not The Oregon 1

Or. Rev. Stat. § that

slature has explicit

s and exceptions created by provisions of the Statutes or recognize[d] by the courts of this state do ly to" the statutory re rement that agreements to loan
§

must be evidenced by a written agreement. 41. 580 (2) (a). Financial institutions must include agreements to. Id. § 41. 580 (3) (a).

t

loan must

documents a warning statement writing to be en

Plaintiff thus argues that Or. Rev. Stat. § 41.580(1) (h) and (2) (a) prevent defendants from presenting ement to contest ir igation under t of an oral Loan Documents,

and without such evidence plaintiff is entitled to summary
j

on all claims and In response, de s not preclude t
r

fendants'

counte statute of frauds y relied on

s maintain that that they reas

6- OPINION AND ORDER

plaintiff's misrepresentat that they would not not available. (1950) (involving an

regarding addit to the Loan if such 190 Or. 161, 220 P.2d 89

and was

lease agreement); Smith v. Mills, 207 (1956) (involving oral agreement to execute Inc., 474 F. Supp. 1192 It (D.

Or. 546, 296 P.2d 481

a mortgage); Tucker v. Oregon Aero, Or. 2007) (involving oral

ement to pay contractor However, none of cases

s
by

assignment of patents). defendants involve lend additional money. "defenses and sed Statutes or

s to lend money or an oral promise to r, the language of
§

41.580(2) (a)

created by provisions of by the courts of this state do not

to subsection (1) (h) of this section" is unambiguous. (Emphasis added). plaintiff's alleged oral dispute their obligation to klternatively, de
sa

fendants cannot rely on se to lend additional y the loan. that evidence of to

agreement can be found in the Loan Documents, pointing to an isal estimating the cost of vert at more than $7 million.
t

lly developing the land appraisal clearly lists at $2,788,500, commensurate

However,

estimate of the improved the current loan amounts.

discrepancy exists because

fendants only applied for a lot-improvement loan rather than a loan vertical construction. Oecl. of Kelly Francis, p. 2,

7- OPINION AND ORDER

Ex. 1, p.

2.

Thus, there is no evidence within the four corners

of the original agreement that indicates plaintiff agreed to loan more than $7 million to defendants to vertically develop the condominiums. Defendants also maintain that the Loan Documents are the "First Phase Loan documents," and that the second loan would be the "Second Phase." However, defendants' argument is

unpersuasive because the Loan Documents make no mention of a Second Phase. While defendants maybe correct that the appraisal

shows they intended to vertically develop the condominiums, it does not suggest that plaintiff agreed to fund that vertical development. Moreover, in each of the Loan Documents, plaintiff included a disclaimer, as required by statute, that oral agreements to loan money are not enforceable. This language is directly above

the signature line of each of the loan documents, thus reinforcing plaintiff's argument. Consequently,
§

41.580(1) (h)

and (2) (a) exclude any evidence of an alleged oral agreement between the parties and render inapplicable any defenses or exceptions created by Oregon courts. Plaintiff also moves for summary judgment on defendants' counterclaims asserted against plaintiff: 1) breach of contract; 2) negligence; 3) promissory estoppel; 4) breach of duty of good faith and fair dealing; 5) breach of fiduciary duty; 6) fraud; 7)

8- OPINION AND ORDER

negl

misrepresentation; Defendants

8)

erference with

ct

economic advantage.
f

size that the statute of or negligent s offer no evidence

cannot limit claims of sentation. However,

mis

there was anything fraudulent contained within the Loan Documents or imp de r in the execution of the Loan Documents. s allege that pia
i

Inst

iled to follow an oral by the statute of frauds. il because they 1 rely on

, which is explicitly Thus, fendants' countercla ssible evidence of the all

oral agreement ..

IV. CONCLUSION In conclusion, I find that defendants have s
1

to

sent

ficient evidence to survive summary judgment against ir asserted countercla Summary Judgment (doc. 12) is

plaintiff's claims or on

Therefore, plaintiff's Motion GRANTED. IT IS SO ORDERED. Dated this

I} ~ay

November 2010.

Ann Aiken
U n i t e d States District Judge

9- OPINION AND ORDER