Summary
holding that similar contract language "unambiguously reflect[ed] that defendant expressly agreed to repurchase the . . . loan upon plaintiff's request"
Summary of this case from CitiMortgage, Inc. v. Just Mortg., Inc.Opinion
Civil No. 00-824(DSD/FLN)
March 2, 2001
William R. Stoeri, Esq., Thomas L. Nuss, Esq. and Dorsey Whitney, Pillsbury Center South, Minneapolis, MN, counsel for plaintiff.
Boyd H. Ratchye, Esq., Ann S. Grayson, Esq. and Bassford, Lockhart, Truesdell Briggs, Minneapolis, MN, counsel for defendants.
ORDER
This matter is before the court on plaintiff's motion for summary judgment. Based on a review of the file, record, and proceedings herein and for the reasons stated, the court grants plaintiff's motion.
BACKGROUND
Plaintiff Residential Funding Corporation ("RFC") brings this motion for summary judgment against defendants General Mortgage Corporation ("GMC"), Joseph Shalla and Kristopher Dreyer. Plaintiff initiated this action asserting that defendants are in breach of contract.
GMC and RFC entered into two distinct contracts, one involving money advanced by RFC to GMC, and another involving the sale of residential mortgages by GMC to RFC. Defendants Shalla and Dreyer individually guaranteed repayment of the first contract. Plaintiff contends that the terms of the respective contracts are unambiguous and clearly set forth the parties' respective obligations. Moreover, plaintiff asserts that the undisputed facts demonstrate that defendant GMC has breached both contracts, and that defendants Shalla and Dreyer have failed to fulfill their obligations as guarantors under the first contract.
On or about November 13, 1998, plaintiff entered into two separate and independent guaranty agreements with defendants Shalla and Dreyer. The terms of each agreement were identical. Each guarantor gave an unconditional guarantee that he would assume liability for costs in amounts due that GMC did not pay pursuant to the warehousing contract. Plaintiff alleges that each guarantor is independently liable for the amounts arising from GMC's breach. Defendants Shalla and Dreyer did not file individual responsive papers nor have they individually contested plaintiff's motion for summary judgment.
On or about November 13, 1998, the parties entered into a warehouse lending agreement (the "warehousing contract"). Under this contract, RFC agreed to extend a line of credit to GMC, assuming certain delineated conditions were met, and GMC agreed to pay back all funds advanced plus interest and fees. This contract included a number of provisions regarding GMC's obligations to repay all amounts owed to RFC. Relevant provisions of the contract enumerated a number of events that would constitute a default on the part of GMC. One provision specifically provided that default would occur if GMC failed to pay any amounts owing to RFC when due.
Pursuant to the warehousing contract, RFC advanced GMC funds. Under the agreement, GMC was obligated to repay the advances, plus interest and fees for mortgage loans in the warehouse more than thirty days. On December 13, 1999, RFC demanded payment of certain funds reflecting advances exceeding thirty days. Neither party disputes that GMC failed to repay these advances. As a result of GMC's failure to repay, plaintiff exercised an option to terminate the warehousing contract on or about December 27, 1999, and exercised an additional option to demand payment in full of all amounts outstanding under the contract. GMC failed to pay the amounts due. By letter dated February 21, 2000, plaintiff made a final demand for payment. GMC again failed to pay the outstanding amounts in full.
The second matter in dispute arises from a contract entered on or about August 12, 1998, between RFC and GMC. The parties agree that this "correspondent client contract" governed the sale and servicing of mortgage loans sold by defendant to plaintiff. The contract expressly described and detailed the conditions on which plaintiff would purchase the mortgages. This contract also expressly delineated defendant's obligations to plaintiff.
Under the terms of this contract, defendant GMC sold to plaintiff on or about December 15, 1998, a loan made to a borrower, Mr. Larry Kennebrew (the "Kennebrew loan"). The loan appraisal done in connection with the Kennebrew loan represented the value of the loan property at $63,000. A review appraisal requested by plaintiff determined that the property's market value at the time the loan was made was approximately $50,000.
The parties do not dispute that, based upon the review appraisal, plaintiff determined that the Kennebrew loan did not comply with the provisions of the correspondent client contract and requested that defendant repurchase the loan as provided by the contract. The parties further agree that defendant has failed to repurchase the loan.
Plaintiff contends that summary judgment is particularly warranted in this case given the unambiguous language of both of the contracts in dispute and considering that there are no material facts in dispute. Defendant counters that ambiguities exist in both contracts sufficient to preclude summary judgment. Defendant also contends that summary judgment is inappropriate on the Kennebrew loan because the discrepancy in the appraisal value creates a material issue of fact sufficient to undermine plaintiff's motion. After a careful review of the record, file, and proceedings herein, the court concludes that there are no genuine issues of material fact in dispute. Thus, summary judgment is appropriate in this matter.
DISCUSSION
Under Rule 56, Federal Rules of Civil Procedure, summary judgment is appropriate if the movant has shown that "there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In order to avoid summary judgment, the opposing party must come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." In order for the moving party to prevail, it must demonstrate to the court that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Fed.R.Civ.P. 56(c). A fact is material only when its resolution affects the outcome of the case. See Anderson, 477 U.S. at 248. A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. See id. at 252. On a motion for summary judgment, all evidence and inferences are to be viewed in a light most favorable to the nonmoving party. See id. at 250.
Summary judgment is especially appropriate in resolving disputes involving the interpretation of unambiguous contracts. See Howard v. Russell Stover Candies, Inc., 649 F.2d 620, 623 (8th Cir. 1981) (granting summary judgment for insured on contractual duty to defend). Whether or not a contract term is ambiguous is a question of law. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979). A contract term is ambiguous if it is reasonably susceptible to more than one construction. Republic Nat'l Life Ins. Co. v. Lorraine Realty Corp., 279 N.W.2d 349, 354 (Minn. 1979). If a contract term is determined to be unambiguous, its interpretation is a question of law. Cooper v. Lakewood Eng'g Mfg. Co., 874 F. Supp. 947, 953 (D.Minn. 1994). In other words, when a contract is unambiguous, it is appropriately before the court for construction. See Lakeland Tool Eng'g, Inc. v. Thermo-Serve, Inc., 916 F.2d 476, 481 (8th Cir. 1990). See also, Atkins v. Hartford Cas. Ins. Co., 801 F.2d 346, 348 (8th Cir. 1986) ("[i]f the court determines that there is no ambiguity, then the . . . interpretation of the contract is for the court to determine, as garnered from the four corners of the document") (citations omitted).
After a careful review, the court finds that the terms of the two contracts at issue are unambiguous. Furthermore, upon interpretation of the contracts in light of the undisputed facts, the court concludes that plaintiff is entitled to summary judgment.
A. The Warehousing Contract
The warehousing contract unambiguously sets forth the responsibilities of the parties. Plaintiff agreed to advance funds to defendant GMC under the conditions set forth in the contract, and defendant agreed to repay the advances as set forth under the specific terms of the contract. Failure to repay any amounts due constituted an event of default under the express terms of the contract. Furthermore, the court concludes that the contract unambiguously proscribes that in the event of default, plaintiff may terminate its commitment to make advances to defendant and may declare all of defendant's obligations immediately due.
Defendant does not dispute the existence of the agreement nor contests the money owed. Rather, defendant attempts to argue that there are ambiguities in the contract that preclude summary judgment. Defendant, however, implicitly concedes that this dispute is ripe for resolution upon the court's interpretation of the terms of the warehousing contract. (Def.'s Br. at 9.) Moreover, the court notes that defendant primarily relies upon the subsequent correspondence between the parties, not the contract itself, as the basis for any alleged ambiguities.
After a careful review of the relevant provisions of the contract, the court determines that the warehousing contract terms are clear and unambiguous. No reasonable person could conclude that confusion exists with respect to the definition of key words, terms, or phrases within the contract. The court therefore is not persuaded by defendant's argument that the contract is ambiguous. Since no ambiguity exists, and since defendant does not dispute that it received financial advances pursuant to the contract and has failed to repay these advances despite plaintiff's repeated demands, plaintiff is entitled summary judgment on the warehousing contract.
B. The Kennebrew Loan
Defendant also does not directly dispute that it is obligated to repurchase loans sold to plaintiff that fail to comply with the terms of the correspondent client contract. Defendant instead argues that summary judgment is inappropriate here on two bases, first, a discrepancy in the appraisal value purportedly creates a genuine issue of material fact, and second, the terms of the correspondent client contract are ambiguous. The court is not persuaded by either argument.
Contrary to defendant's argument, any discrepancy in appraisal value does not create a material issue of factual dispute sufficient to preclude summary judgment given plaintiff's clear right to request repurchase under the specific discretionary terms of § 8(A)(2) of the contract. Under the unambiguous terms of this section, "the option to accept or repurchase of any loan is at the sole discretion of [plaintiff]." (Dallman Aff. ¶ 6 and Ex. D.) The court thus concludes that the contract unambiguously reflects that defendant expressly agreed to repurchase the Kennebrew loan upon plaintiff's request. The court also finds that the terms and language of this contract are clear and unambiguous. Thus, since defendant does not dispute that it has failed to repurchase the Kennebrew loan upon request, plaintiff is entitled to summary judgment.
The court further notes that the record reflects that the review appraisal was conducted after both plaintiff's inspection of the subject property and review of the original appraisal report. The review appraiser discovered that the comparable houses used in the original appraisal to estimate the value of the subject property were unreliable. The review appraisal then determined that the actual value of the subject property at the time that it was sold to plaintiff was less than the value represented by defendant. Thus, the review appraisal revealed that the information provided at the time defendant sold the loan was not complete and accurate, thereby reflecting that an adequate factual basis also existed to support plaintiff's decision to exercise the contract's repurchase obligation.
CONCLUSION
For the foregoing reasons, IT IS HEREBY ORDERED that plaintiff's motion for summary judgment is granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.