Title: Richard A. Diamond v. Bank of Alabama (Appeal from Jefferson Circuit Court: CV-04-4920). Application Overruled; Opinion Modified

State: alabama

Issuer: Alabama Supreme Court

Document:

R e l : 
1 1 / 2 0 / 2 0 0 9 
R e l : 0 2 / 1 9 / 2 0 1 0 A s m o d i f i e d on d e n i a l o f r e h e a r i n g . 
Notice: T h i s 
o p i n i o n i s s u b j e c t t o f o r m a l 
r e v i s i o n b e f o r e 
p u b l i c a t i o n i n 
t h e 
advance 
s h e e t s o f 
Southern Reporter. 
R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e 
Reporter of 
Decisions, 
Alabama A p p e l l a t e C o u r t s , 300 D e x t e r Avenue, Montgomery, Alabama 36104-3741 ((334) 229¬
0 6 4 9 ) , o f 
any 
t y p o g r a p h i c a l o r 
o t h e r e r r o r s , i n 
o r d e r t h a t c o r r e c t i o n s may 
be 
made b e f o r e 
t h e o p i n i o n i s 
p r i n t e d i n 
Southern Reporter. 
SUPREME COURT OF ALABAMA 
OCTOBER TERM, 2009-2010 
1051033 
R i c h a r d A. Diamond 
v. 
Bank o f Alabama 
1051034 
Bank o f Alabama 
v. 
Premier Business C e n t e r s , Inc., R i c h a r d A. Diamond, and O. 
W i l l i a m Evans 
Appeals from J e f f e r s o n C i r c u i t 
Court 
(CV-04-4920) 
1 0 5 1 0 3 3 , 1051034 
PARKER, 
J u s t i c e . 
R i c h a r d A. Diamond 
a p p e a l s 
a n d Bank o f A l a b a m a 
("BOA") 
c r o s s - a p p e a l s , 
b o t h 
s e e k i n g 
r e l i e f 
f r o m a j u d g m e n t o f t h e 
J e f f e r s o n C i r c u i t C o u r t a w a r d i n g BOA $200,000 on a 
p r o m i s s o r y 
n o t e a n d a w a r d i n g BOA $ 1 3 2 , 6 0 1 . 6 7 i n a t t o r n e y 
f e e s 
i n an 
a c t i o n 
b r o u g h t b y BOA 
a g a i n s t 
Diamond a n d o t h e r s . 
Diamond 
d i s p u t e s 
t h e 
t r i a l 
c o u r t ' s 
h o l d i n g 
t h a t 
Diamond 
must 
r e i m b u r s e BOA f o r 
p a y m e n t s BOA made p u r s u a n t t o a l e t t e r o f 
c r e d i t . BOA c h a l l e n g e s t h e t r i a l 
c o u r t ' s 
f a i l u r e t o a w a r d BOA 
i n t e r e s t 
as p a r t o f i t s 
j u d g m e n t 
a g a i n s t 
Diamond, 
P r e m i e r 
B u s i n e s s C e n t e r s , I n c . ("PBC"), a n d O. W i l l i a m E v a n s .
1 B e c a u s e 
BOA was 
e n t i t l e d 
t o t h e r e i m b u r s e m e n t o f p a y m e n t s i t made 
p u r s u a n t t o t h e l e t t e r o f c r e d i t , we a f f i r m 
t h e j u d g m e n t o f 
t h e 
t r i a l 
c o u r t 
i n Diamond's 
a p p e a l 
( c a s e 
no. 1 0 5 1 0 3 3 ) . 
B e c a u s e i n 
BOA's c r o s s - a p p e a l 
( c a s e no. 1051034) we h o l d 
t h a t 
BOA was e n t i t l e d t o i n t e r e s t 
on t h e moneys a d v a n c e d p u r s u a n t 
t o t h e l e t t e r o f c r e d i t , 
we r e m a n d t h e c a s e f o r 
t h e 
t r i a l 
c o u r t t o d e t e r m i n e t h e a p p r o p r i a t e amount o f i n t e r e s t due BOA. 
B a c k g r o u n d a n d P r o c e d u r a l 
P o s t u r e 
1 P B C a n d E v a n s f i l e d a s e p a r a t e 
a p p e a l 
a g a i n s t BOA; 
t h i s 
C o u r t g r a n t e d PBC a n d E v a n s ' s m o t i o n t o d i s m i s s t h a t a p p e a l on 
November 25, 2008. See c a s e no. 1 0 5 1 0 7 3 . 
2 
1 0 5 1 0 3 3 , 
1051034 
Diamond was a d i r e c t o r o f HQ B i r m i n g h a m , I n c . , t h e name 
b y w h i c h PBC was f o r m e r l y known, a n d E v a n s was i t s p r e s i d e n t . 
When 
t h e name 
was 
c h a n g e d 
t o PBC,
2 
Diamond 
became t h e 
p r e s i d e n t a n d 5 0 % owner o f PBC, E v a n s owned 4 5 % o f t h e s t o c k 
o f PBC, a n d E v a n s ' s w i f e , D e n i s e , owned 5%. 
E f f e c t i v e 
A p r i l 
7, 2003, HQ B i r m i n g h a m , I n c . , e n t e r e d 
i n t o a l e a s e a g r e e m e n t w i t h G a t e w a y A l a b a m a P r o p e r t i e s , I n c . , 
p u r s u a n t t o w h i c h HQ B i r m i n g h a m a c q u i r e d 
19,984 s q u a r e f e e t 
o f 
r e n t a b l e 
s p a c e i n s u i t e no. 400, One C h a s e 
C o r p o r a t e 
C e n t e r , 
i n B i r m i n g h a m . HQ B i r m i n g h a m d i v i d e d a n d s u b l e t t h e 
o f f i c e s p a c e t o s m a l l b u s i n e s s e s 
a n d p r o v i d e d 
o t h e r 
s e r v i c e s 
t o t h e s u b l e s s e e s . 
The l e a s e 
w i t h G a t e w a y was e x e c u t e d b y 
E v a n s as t h e n p r e s i d e n t 
o f HQ B i r m i n g h a m . I t r e q u i r e d no 
r e n t a l p a y m e n t s f o r 
t h e f i r s t 
n i n e m o n t h s , a n d HQ B i r m i n g h a m 
was 
t o p r o v i d e 
a s t a n d b y 
l e t t e r 
o f c r e d i t 
f o r G a t e w a y ' s 
b e n e f i t t o s e c u r e HQ B i r m i n g h a m ' s o b l i g a t i o n s a n d t h e r e n t a l 
p a y m e n t s when d u e . 
On December 1, 2003, BOA, on a p p l i c a t i o n b y " P r e m i e r 
B u s i n e s s 
C e n t e r s , 
I n c . 
f / k / a HQ B i r m i n g h a m , 
I n c . , " 
i s s u e d a 
$ 2 0 0 , 0 0 0 s t a n d b y l e t t e r o f c r e d i t f o r 
t h e b e n e f i t o f G a t e w a y 
2 R e c o r d s o f t h e o f f i c e o f t h e A l a b a m a 
S e c r e t a r y o f S t a t e 
i n d i c a t e t h a t t h e name was c h a n g e d on A u g u s t 29, 2003. 
3 
1 0 5 1 0 3 3 , 1051034 
A l a b a m a P r o p e r t i e s , I n c . I n i t s commitment l e t t e r , BOA 
a d v i s e d 
D i a m o n d , who was n e g o t i a t i n g t h e t e r m s o f t h e l e t t e r o f c r e d i t 
on b e h a l f o f PBC, t h a t BOA r e q u i r e d 
c o l l a t e r a l i n t h e f o r m o f 
a b l a n k e t 
l i e n on f u r n i t u r e , f i x t u r e s , a n d e q u i p m e n t and j o i n t 
and 
p e r s o n a l 
g u a r a n t i e s b y D i a m o n d and E v a n s . The commitment 
l e t t e r 
a l s o p r o v i d e d 
t h a t t h e l e t t e r o f c r e d i t was t o be i n 
t h e amount o f $200,000 u n t i l A u g u s t 1, 2004, and i n t h e amount 
o f $120,000 f r o m A u g u s t 1, 2004, t h r o u g h A u g u s t 1, 2 0 0 5 . The 
i r r e v o c a b l e 
l e t t e r o f c r e d i t a c t u a l l y i s s u e d by BOA, h o w e v e r , 
was i n t h e amount 
o n l y 
o f $ 2 0 0 , 0 0 0 . I t r e a d s , i n 
p e r t i n e n t 
p a r t , as 
f o l l o w s : 
"We 
[ B O A ] 
h e r e b y 
e s t a b l i s h 
o u r 
C l e a n 
U n c o n d i t i o n a l 
I r r e v o c a b l e 
T r a n s f e r a b l e 
L e t t e r 
o f 
C r e d i t No. _ _ _ _ _ 
( t h e ' L e t t e r o f C r e d i t ' ) i n 
f a v o r 
o f 
G a t e w a y 
A l a b a m a 
P r o p e r t i e s , 
I n c . , a 
C a l i f o r n i a 
c o r p o r a t i o n , 
and 
i t s s u c c e s s o r s 
and 
p e r m i t t e d 
a s s i g n s 
( c o l l e c t i v e l y , t h e 
' B e n e f i c i a r y ' ) 
f o r 
an a g g r e g a t e amount 
n o t t o e x c e e d t h e amount 
i n d i c a t e d 
above 
[ $ 2 0 0 , 0 0 0 ] , 
e x p i r i n g 
a t 
o f f i c e 
l o c a t e d 
a t 
2340 
W o o d c r e s t 
P l a c e , 
S u i t e 
200, 
B i r m i n g h a m , AL 35209 ATTN: 
L e s t e r 
O. 
H a m i t e r 
w i t h 
o u r 
c l o s e o f b u s i n e s s on A u g u s t 1, 2004 ( t h e ' E x p i r y 
D a t e ' ) . 
" F u n d s u n d e r t h i s 
L e t t e r o f C r e d i t a r e p a y a b l e 
i n 
i m m e d i a t e l y 
a v a i l a b l e f u n d s o f [ B O A ] 
( ' I s s u e r ' ) 
t o 
B e n e f i c i a r y 
upon 
p r e s e n t a t i o n 
t o 
[ B O A ] 
o f 
B e n e f i c i a r y ' s 
o r i g i n a l o f t h e L e t t e r o f C r e d i t and 
a s i g h t d r a f t drawn on [ B O A ] , i n t h e f o r m 
a t t a c h e d 
as 
E x h i b i t 
'A' 
h e r e t o , 
o r upon 
p r e s e n t a t i o n 
t o 
I s s u e r 
o f B e n e f i c i a r y ' s 
o r i g i n a l 
o f t h e L e t t e r o f 
4 
1 0 5 1 0 3 3 , 1051034 
C r e d i t 
and 
a demand 
f o r p a y m e n t , 
n o t 
t o 
e x c e e d 
$ 2 0 0 , 0 0 . 0 0 , 
s t a t i n g 
t h a t : 
' B e n e f i c i a r y 
h e r e b y 
demands payment o f $ 
[ a sum n o t t o e x c e e d 
$ 2 0 0 , 0 0 0 . 0 0 ] u n d e r 
t h i s 
L e t t e r o f 
C r e d i t . ' 
" [ B O A ] s h a l l h o n o r t h e L e t t e r o f C r e d i t 
a g a i n s t 
c o n f o r m i n g 
d o c u m e n t s 
w i t h o u t 
i n q u i r y 
as 
t o 
t h e 
i n c u m b e n c y 
o r a u t h o r i t y o f t h e p a r t y 
e x e c u t i n g 
t h e 
s i g h t d r a f t on b e h a l f o f B e n e f i c i a r y , w h e t h e r o r n o t 
A p p l i c a n t 
d i s p u t e s 
t h e i n c u m b e n c y 
o r 
a u t h o r i t y 
o f 
t h e 
p a r t y 
e x e c u t i n g 
t h e 
s i g h t 
d r a f t 
on 
b e h a l f 
o f 
B e n e f i c i a r y . 
" M u l t i p l e 
demands 
f o r payment 
may 
be 
made 
h e r e u n d e r . 
" I t i s a c o n d i t i o n o f t h i s L e t t e r o f C r e d i t 
t h a t 
i t 
s h a l l be a u t o m a t i c a l l y e x t e n d e d w i t h o u t amendment 
f o r an 
a d d i t i o n a l p e r i o d 
o f one 
(1) y e a r f r o m t h e 
p r e s e n t o r e a c h f u t u r e E x p i r y D a t e , u n l e s s , a t l e a s t 
n i n e t y 
(90) d a y s p r i o r t o s u c h E x p i r y D a t e , we 
s e n d 
you a n o t i c e i n w r i t i n g by c e r t i f i e d m a i l , 
o v e r n i g h t 
c o u r i e r o r h a n d d e l i v e r y a t t h e above a d d r e s s , 
t h a t 
we e l e c t n o t t o renew t h i s L e t t e r o f C r e d i t f o r s u c h 
a d d i t i o n a l 
p e r i o d . " 
I n a s s o c i a t i o n w i t h t h e l e t t e r o f c r e d i t , PBC e x e c u t e d a 
p r o m i s s o r y 
n o t e 
t o 
BOA 
a g r e e i n g 
t o 
p a y 
up 
t o 
$ 2 0 0 , 0 0 0 
c o n d i t i o n e d 
on 
f u t u r e 
a d v a n c e s 
" u p o n 
p r e s e n t m e n t 
o f 
i r r e v o c a b l e 
c o m m e r c i a l 
l e t t e r 
o f 
c r e d i t 
i s s u e d 
t o G a t e w a y 
A l a b a m a P r o p e r t i e s , I n c . " O t h e r p r o v i s i o n s o f t h e n o t e 
r e q u i r e 
t h e 
payment 
o f 
" i n t e r e s t 
on 
t h e 
o u t s t a n d i n g 
p r i n c i p a l 
b a l a n c e , " t h e payment 
o f m o n t h l y 
a c c r u e d - i n t e r e s t 
p a y m e n t s 
" b e g i n n i n g 
0 1 / 0 1 / 2 0 0 4 , " 
and 
t h e payment 
o f 
p r i n c i p a l " a t 
5 
1 0 5 1 0 3 3 , 1051034 
m a t u r i t y on 08/01/2004 i f c a l l e d u p o n . " The n o t e c o n t a i n s t h e 
f o l l o w i n g 
"ADDITIONAL TERMS": 
"THIS NOTE IS SECURED BY BLANKET L I E N ON FURNITURE, 
FIXTURES AND 
EQUIPMENT. 
"THIS NOTE I S SUPPORTED 
BY IRREVOCABLE LETTER OF 
CREDIT 
DATED 
12/01/2003 
TO 
GATEWAY 
ALABAMA 
PROPERTIES, INC. 
"THIS 
NOTE 
IS 
FURTHER 
SUPPORTED 
BY 
UNLIMITED 
PERSONAL GUARANTY AGREEMENTS BY RICHARD A. DIAMOND 
AND O. WILLIAM EVANS." 
( C a p i t a l i z a t i o n i n o r i g i n a l . ) 
P a g e 2 o f t h e n o t e 
c o n t a i n s 
a d d i t i o n a l 
c o n d i t i o n s 
t h a t 
a r e i n c o r p o r a t e d b y v i r t u e o f t h e f o l l o w i n g 
s t a t e m e n t i n b o l d 
p r i n t l o c a t e d on page 1 i m m e d i a t e l y above t h e s i g n a t u r e 
b l o c k : 
"SIGNATURES: 
I AGREE TO THE TERMS OF THIS NOTE (INCLUDING 
THOSE ON PAGE 2 ) . " ( C a p i t a l i z a t i o n 
i n o r i g i n a l . ) 
Among t h e 
t e r m s on page 2 i s one t h a t s t a t e s t h a t 
" i n t e r e s t 
a c c r u e s on 
t h e p r i n c i p a l r e m a i n i n g u n p a i d f r o m t i m e t o t i m e , u n t i l 
p a i d 
i n 
f u l l . I f I r e c e i v e t h e p r i n c i p a l i n more t h a n one 
a d v a n c e , 
e a c h a d v a n c e 
w i l l 
s t a r t t o e a r n 
i n t e r e s t 
o n l y when I r e c e i v e 
t h e 
a d v a n c e . " 
A n o t h e r 
r e l e v a n t 
p r o v i s i o n 
i s 
t i t l e d 
"OBLIGATIONS INDEPENDENT" and s t a t e s , 
i n p a r t : 
"Any 
e x t e n s i o n 
o f new 
c r e d i t 
t o any o f u s , o r 
r e n e w a l o f t h i s n o t e by a l l o r l e s s 
t h a n a l l o f us 
w i l l 
n o t r e l e a s e me 
f r o m my 
d u t y t o p a y i t . (Of 
6 
1 0 5 1 0 3 3 , 1051034 
c o u r s e , 
you 
a r e 
e n t i t l e d 
t o 
o n l y 
one 
payment 
i n 
f u l l . ) 
I a g r e e 
t h a t 
you 
may 
a t y o u r 
o p t i o n e x t e n d 
t h i s n o t e o r t h e d e b t 
r e p r e s e n t e d b y 
t h i s n o t e , 
o r 
any 
p o r t i o n o f t h e n o t e o r d e b t , f r o m t i m e t o 
t i m e 
w i t h o u t 
l i m i t o r 
n o t i c e 
and 
f o r any 
t e r m 
w i t h o u t 
a f f e c t i n g my 
l i a b i l i t y f o r payment o f t h e n o t e . " 
The 
n o t e 
was 
s i g n e d 
by 
" P r e m i e r 
B u s i n e s s 
C e n t e r s , 
I n c . , 
R i c h a r d A. Diamond, P r e s i d e n t . " 
Diamond, as t h e n p r e s i d e n t o f PBC, 
a l s o e x e c u t e d a 
l i n e -
o f - c r e d i t 
a g r e e m e n t 
on 
b e h a l f 
o f 
PBC. 
T h a t 
a g r e e m e n t 
i d e n t i f i e s 
o n l y 
PBC 
as 
t h e 
b o r r o w e r , 
s t a t i n g 
t h a t " ' I ' 
i n c l u d e s 
e a c h 
b o r r o w e r 
a b o v e , 
j o i n t l y and 
s e v e r a l l y . " 
The 
l e n d e r i s i d e n t i f i e d as BOA, 
s t a t i n g t h a t " ' Y o u ' means l e n d e r , 
i t s 
s u c c e s s o r s and a s s i g n s . " The a g r e e m e n t p r o v i d e s : 
"You 
[ B O A ] 
have 
e x t e n d e d 
t o 
me 
[ P B C ] 
a 
l i n e 
o f 
c r e d i t 
i n t h e AMOUNT o f 
TWO 
HUNDRED THOUSAND 
AND 
00/100'S $ 2 0 0 , 0 0 . 0 0 . You 
w i l l make l o a n s t o me 
f r o m 
 
t i m e t o t i m e u n t i l 
... 0 8 / 0 1 / 2 0 0 4 . A l t h o u g h t h e 
l i n e 
o f 
c r e d i t 
e x p i r e s 
on 
t h a t 
d a t e , 
I 
w i l l 
r e m a i n 
 
o b l i g a t e d t o p e r f o r m my 
d u t i e s u n d e r t h i s a g r e e m e n t  
so 
l o n g as 
I owe 
money a d v a n c e d 
a c c o r d i n g t o 
t h e  
t e r m s o f t h i s a g r e e m e n t , as e v i d e n c e d by any n o t e o r 
n o t e s 
I 
h a v e 
s i g n e d 
p r o m i s i n g 
t o 
r e p a y 
t h e s e 
a m o u n t s . 
"AMOUNT: T h i s l i n e o f c r e d i t i s OBLIGATORY: You 
may 
n o t r e f u s e t o make a l o a n t o me u n d e r t h i s 
l i n e o f 
c r e d i t 
u n l e s s one 
o f t h e 
f o l l o w i n g 
o c c u r s : 
... 
e. 
UPON PRESENTMENT OF IRREVOCABLE COMMERCIAL LETTER OF 
CREDIT ISSUED TO GATEWAY ALABAMA PROPERTIES, 
INC. 
7 
1 0 5 1 0 3 3 , 1051034 
"PROMISSORY NOTE: I 
w i l l 
r e p a y any a d v a n c e s 
made 
a c c o r d i n g t o t h i s 
l i n e o f c r e d i t 
a g r e e m e n t as s e t 
o u t i n t h e p r o m i s s o r y n o t e , I s i g n e d on 12/01/2003 
The 
n o t e 
s e t s 
o u t t h e t e r m s 
r e l a t i n g 
t o 
m a t u r i t y , 
i n t e r e s t 
r a t e , r e p a y m e n t and a d v a n c e s . I f 
i n d i c a t e d i n t h e p r o m i s s o r y n o t e , t h e a d v a n c e s 
w i l l 
be made as f o l l o w s : UPON PRESENTMENT OF IRREVOCABLE 
COMMERCIAL 
LETTER 
OF 
CREDIT 
ISSUED 
TO 
GATEWAY 
ALABAMA PROPERTIES, INC. 
"RELATED DOCUMENTS: I h a v e 
s i g n e d t h e 
f o l l o w i n g 
d o c u m e n t s i n c o n n e c t i o n w i t h t h i s 
l i n e o f c r e d i t and 
n o t e ( s ) e n t e r e d i n t o i n a c c o r d a n c e w i t h t h i s 
l i n e o f 
c r e d i t : 
s e c u r i t y 
a g r e e m e n t 
d a t e d 
1 2 / 0 1 / 2 0 0 3 ; 
g u a r a n t y d a t e d 1 2 / 0 1 / 2 0 0 3 . 
"MISCELLANEOUS: 
T h i s 
l i n e 
o f 
c r e d i t 
may 
n o t be  
c h a n g e d e x c e p t by a w r i t t e n a g r e e m e n t s i g n e d b y you  
and me. The l a w o f t h e s t a t e i n w h i c h you [BOA] a r e 
l o c a t e d 
w i l l 
g o v e r n 
t h i s 
a g r e e m e n t . Any t e r m 
... 
c o n t r a r y t o a p p l i c a b l e l a w w i l l n o t be 
e f f e c t i v e , 
u n l e s s t h e l a w p e r m i t s you and me t o a g r e e t o s u c h 
a 
v a r i a t i o n . " 
( C a p i t a l i z a t i o n i n o r i g i n a l ; e m p h a s i s 
a d d e d . ) 
I n 
a d d i t i o n t o t h e n o t e and t h e l i n e - o f - c r e d i t a g r e e m e n t , 
Diamond 
and 
E v a n s 
e a c h 
p r o v i d e d 
a 
" g u a r a n t y " 
document 
p e r s o n a l l y g u a r a n t e e i n g t h e f u l l and p r o m p t payment when due 
o f 
d e b t s and o b l i g a t i o n s d e s c r i b e d i n t h e i d e n t i c a l 
g u a r a n t y 
d o c u m e n t s e x e c u t e d by Diamond and E v a n s on December 1, 2003. 
The g u a r a n t y d o c u m e n t s i d e n t i f y PBC as t h e b o r r o w e r and BOA as 
t h e 
l e n d e r . 
They 
s t a t e 
t h a t " t h e U n d e r s i g n e d 
g u a r a n t e e s t o 
L e n d e r t h e payment and p e r f o r m a n c e o f t h e d e b t , 
l i a b i l i t y o r 
8 
1 0 5 1 0 3 3 , 1051034 
o b l i g a t i o n o f B o r r o w e r 
t o L e n d e r 
e v i d e n c e d o r a r i s i n g o u t o f 
t h e 
f o l l o w i n g : 
$200,000 p r o m i s s o r y n o t e 
s e c u r i n g l e t t e r 
o f 
c r e d i t , 
o f e v e n d a t e . " 
E f f e c t i v e 
December 
31, 
2003, 
D e n i s e 
E v a n s 
p u r c h a s e d 
Diamond's 
s h a r e 
o f 
PBC 
by 
f o r m a l 
a g r e e m e n t . 
Diamond 
t h e n 
r e s i g n e d 
as 
p r e s i d e n t 
and 
as 
a member 
o f 
t h e 
b o a r d 
o f 
d i r e c t o r s 
o f PBC. 
Diamond's 
w i f e , 
S h e l l e y , 
who 
was 
a l s o 
a 
member o f t h e b o a r d 
o f 
d i r e c t o r s , 
r e s i g n e d h e r 
p o s i t i o n 
as 
p a r t o f t h e same a g r e e m e n t . Diamond's g u a r a n t y t o BOA, 
by i t s 
t e r m s , was r e v o c a b l e by t h e g u a r a n t o r , p r o v i d e d t h a t t h e r e was 
no " i n d e b t e d n e s s e x i s t i n g o r c o m m i t t e d 
f o r a t t h e t i m e o f t h e 
a c t u a l r e c e i p t o f s u c h n o t i c e 
[ o f r e v o c a t i o n ] by t h e 
L e n d e r . " 
Diamond, h o w e v e r , has p r e s e n t e d no e v i d e n c e 
i n d i c a t i n g 
t h a t 
he had r e v o k e d h i s g u a r a n t y . 
On A u g u s t 
10, 2004, BOA 
i s s u e d a c h e c k f o r $54,942.88 t o 
G a t e w a y a g a i n s t a s i g h t d r a f t p r e s e n t e d i n a c c o r d a n c e w i t h t h e 
p r e s e n t a t i o n 
t e r m s 
o f 
t h e 
l e t t e r 
o f 
c r e d i t . 
BOA 
t h e n 
p a i d 
G a t e w a y 
on 
a 
s i g h t 
d r a f t 
i n t h e amount 
o f $145,057.12 
on 
A u g u s t 
24, 
2004. 
On 
A u g u s t 
16, 
2004, when 
t h e y 
d i d 
n o t 
p r o m p t l y r e i m b u r s e BOA 
f o r t h e 
f i r s t p a y m e n t , BOA 
s u e d 
PBC, 
a l l e g i n g i n c o u n t 1 b r e a c h o f t h e p r o m i s s o r y n o t e , and Diamond 
9 
1 0 5 1 0 3 3 , 1051034 
and E v a n s , a l l e g i n g 
i n c o u n t 2 b r e a c h o f t h e i r g u a r a n t i e s . 
BOA 
l a t e r amended i t s c o m p l a i n t 
t o add 
c o u n t s 
3 and 
4, 
c l a i m i n g 
t h a t D i a m o n d had 
i n t e n t i o n a l l y m i s r e p r e s e n t e d h i s 
i n t e n t i o n s 
t o r e p a y t h e moneys a d v a n c e d and 
t h a t 
BOA 
had 
r e l i e d on 
h i s 
r e p r e s e n t a t i o n s 
t o 
i t s d e t r i m e n t ( c o u n t 
3 ) and 
t h a t D i a m o n d 
had 
n e g l i g e n t l y 
f a i l e d 
t o 
r e a d 
t h e 
g u a r a n t y 
document 
and 
u n d e r s t a n d 
h i s 
o b l i g a t i o n s u n d e r 
i t ( c o u n t 
4 ) . 
BOA 
s o u g h t 
a c t u a l damages o f $200,000 and p u n i t i v e damages o f $800,000 
on 
c o u n t 3, 
and 
a j u d g m e n t f o r a c t u a l damages o f $200,000 
p l u s 
i n t e r e s t 
and 
c o s t s 
and 
$500,000 i n p u n i t i v e damages on 
c o u n t 
4. 
PBC, 
D i a m o n d , and E v a n s a r g u e d t h a t b e c a u s e t h e 
l i n e - o f -
c r e d i t a g r e e m e n t and 
t h e 
g u a r a n t i e s 
had 
e x p i r e d 
on A u g u s t 
1, 
2004, BOA 
was 
n o t 
e n t i t l e d t o r e i m b u r s e m e n t f o r t h e p a y m e n t s 
i t had made t o G a t e w a y u n d e r t h e 
l e t t e r o f c r e d i t . The 
p a r t i e s 
moved f o r a summary j u d g m e n t , 
and 
on December 27, 
2005, 
t h e 
t r i a l 
c o u r t 
g r a n t e d , 
i n p a r t , BOA's summary-judgment m o t i o n 
and a w a r d e d BOA, 
f r o m PBC 
u n d e r i t s p r o m i s s o r y n o t e and 
f r o m 
D i a m o n d 
and 
E v a n s 
on 
t h e i r 
g u a r a n t i e s , 
$ 2 0 0 , 0 0 0 . 
The 
t r i a l 
c o u r t 
a l s o f o u n d t h a t BOA 
had 
n o t 
s u p p o r t e d i t s 
i n t e n t i o n a l -
m i s r e p r e s e n t a t i o n 
c l a i m 
a g a i n s t D i a m o n d i n c o u n t 
3 and 
t h a t 
10 
1 0 5 1 0 3 3 , 1051034 
A l a b a m a l a w d i d 
n o t s u p p o r t t h e " n e g l i g e n t f a i l u r e t o r e a d and 
u n d e r s t a n d " 
c l a i m BOA 
a s s e r t e d 
as c o u n t 4 o f t h e amended 
c o m p l a i n t . 
The 
t r i a l 
c o u r t 
t h e n d i s m i s s e d 
t h o s e 
c l a i m s 
w i t h 
p r e j u d i c e . 
A f t e r h e a r i n g a r g u m e n t s r e g a r d i n g BOA's a p p l i c a t i o n f o r 
o v e r $200,000 i n a t t o r n e y 
f e e s , t h e t r i a l 
c o u r t 
i s s u e d an 
o r d e r on M a r c h 24, 2006, a w a r d i n g BOA $132,601.67 i n a t t o r n e y 
f e e s . 
I t a d d e d 
t h a t 
amount t o t h e $200,000 o f 
p r i n c i p a l 
i n d e b t e d n e s s 
and 
e n t e r e d 
j u d g m e n t 
i n 
f a v o r 
o f BOA f o r 
$332,601.67 a g a i n s t PBC, D i a m o n d , a n d E v a n s , " w h i c h d e f e n d a n t s 
s h a l l be j o i n t l y and s e v e r a l l y o b l i g a t e d f o r t h i s 
j u d g m e n t . " 
B e c a u s e c r o s s - c l a i m s a s s e r t e d b y D i a m o n d a g a i n s t E v a n s and PBC 
and b y E v a n s and PBC a g a i n s t D i a m o n d r e m a i n e d p e n d i n g ,
3 t h e 
t r i a l 
c o u r t 
c e r t i f i e d t h e j u d g m e n t as f i n a l p u r s u a n t t o R u l e 
5 4 ( b ) , A l a . R. C i v . 
P., and BOA, D i a m o n d , and E v a n s and PBC 
a p p e a l e d s e p a r a t e l y f r o m t h e 
j u d g m e n t . The a p p e a l o f E v a n s and 
PBC 
h a s b e e n d i s m i s s e d , 
s e e s u p r a 
n o t e 1, l e a v i n g Diamond's 
a p p e a l 
( c a s e no. 1 0 5 1 0 3 3 ) and BOA's c r o s s - a p p e a l 
( c a s e no. 
1 0 5 1 0 3 4 ) . 
3 D i a m o n d ' s w i f e S h e l l e y was a p p a r e n t l y an i n t e r v e n o r and 
i s a p a r t y t o t h e c r o s s - c l a i m s . L i k e w i s e , E v a n s ' s w i f e 
D e n i s e 
i s 
a l s o a p a r t y t o t h e c r o s s - c l a i m s . 
11 
1 0 5 1 0 3 3 , 1051034 
A n a l y s i s 
" I n 
r e v i e w i n g 
a summary j u d g m e n t , an a p p e l l a t e 
c o u r t 
l o o k s a t t h e same f a c t o r s t h a t t h e t r i a l 
c o u r t c o n s i d e r e d i n 
r u l i n g 
on t h e m o t i o n 
[ O ] n a p p e a l 
a summary 
j u d g m e n t 
c a r r i e s no p r e s u m p t i o n o f c o r r e c t n e s s . " H o r n s b y v . 
S e s s i o n s , 
703 S o . 2d 932, 938 ( A l a . 1 9 9 7 ) . 
" ' I n r e v i e w i n g t h e d i s p o s i t i o n o f a m o t i o n f o r 
summary j u d g m e n t , we 
u t i l i z e t h e same s t a n d a r d as 
t h a t o f t h e t r i a l 
c o u r t i n d e t e r m i n i n g 
w h e t h e r t h e 
e v i d e n c e b e f o r e t h e c o u r t made o u t a g e n u i n e 
i s s u e 
o f 
m a t e r i a l 
f a c t ' 
a n d 
w h e t h e r 
t h e movant 
was 
e n t i t l e d t o a j u d g m e n t as a m a t t e r o f l a w . 
When t h e 
movant makes a p r i m a f a c i e s h o w i n g t h a t t h e r e i s 
no 
g e n u i n e 
i s s u e o f m a t e r i a l 
f a c t , 
t h e b u r d e n 
t h e n 
s h i f t s 
t o t h e nonmovant 
t o p r e s e n t 
s u b s t a n t i a l 
e v i d e n c e 
c r e a t i n g 
s u c h 
an 
i s s u e . 
E v i d e n c e 
i s 
' s u b s t a n t i a l ' i f 
i t 
i s o f ' s u c h w e i g h t a n d q u a l i t y 
t h a t 
f a i r - m i n d e d 
p e r s o n s 
i n t h e 
e x e r c i s e 
o f 
i m p a r t i a l 
j u d g m e n t 
c a n 
r e a s o n a b l y 
i n f e r 
t h e 
e x i s t e n c e o f t h e f a c t s o u g h t t o be p r o v e d . ' " 
Ex p a r t e G e n e r a l M o t o r s C o r p . , 769 So. 2d 903, 906 ( A l a . 1999) 
( c i t a t i o n s 
o m i t t e d ) . 
"Our r e v i e w 
i s f u r t h e r s u b j e c t t o t h e 
c a v e a t 
t h a t t h i s C o u r t must r e v i e w t h e r e c o r d i n 
a l i g h t most 
f a v o r a b l e t o t h e nonmovant a n d must 
r e s o l v e 
a l l 
r e a s o n a b l e 
d o u b t s a g a i n s t t h e 
m o v a n t . " Hobson v . A m e r i c a n C a s t I r o n 
P i p e 
Co., 
690 So. 2d 3 4 1 , 344 ( A l a . 1 9 9 7 ) . 
C a s e No. 1051033 
Diamond a r g u e s t h a t b e c a u s e t h e l o a n d o c u m e n t s 
e x e c u t e d 
12 
1 0 5 1 0 3 3 , 
1051034 
i n s u p p o r t o f t h e l e t t e r o f c r e d i t h a d e x p i r e d b e f o r e BOA made 
t h e p a y m e n t s t o Gateway u n d e r t h e l e t t e r o f c r e d i t , t h e t r i a l 
c o u r t 
e r r e d when i t e n f o r c e d 
t h e d o c u m e n t s 
a g a i n s t h i m . He 
n e x t 
a r g u e s 
t h a t t h e t r i a l 
c o u r t 
e r r e d when i t d i s a l l o w e d 
p a r o l e v i d e n c e r e g a r d i n g n e g o t i a t i o n s t h a t o c c u r r e d 
a f t e r t h e 
e x e c u t i o n 
o f t h e 
l o a n 
d o c u m e n t s 
and n o t 
p r i o r 
t o , o r 
c o n t e m p o r a n e o u s l y w i t h , t h e s i g n i n g o f t h e l o a n d o c u m e n t s . 
T h e r e 
a r e 
f o u r 
l o a n 
d o c u m e n t s : 
t h e 
l i n e - o f - c r e d i t 
a g r e e m e n t , t h e p r o m i s s o r y 
n o t e , t h e p e r s o n a l 
g u a r a n t i e s , and 
a s e c u r i t y a g r e e m e n t .
4 The l i n e - o f - c r e d i t a g r e e m e n t 
p r o v i d e s 
f o r 
t h e c r e a t i o n o f a d e b t , t h e p r o m i s s o r y 
n o t e 
e v i d e n c e s 
PBC's 
o b l i g a t i o n t o r e p a y p a y m e n t s made u n d e r t h e l e t t e r o f 
c r e d i t , and t h e g u a r a n t i e s 
g u a r a n t e e t h e payment o f t h e d e b t 
e v i d e n c e d b y t h e p r o m i s s o r y 
n o t e . 
The l i n e - o f - c r e d i t a g r e e m e n t o b l i g a t e d BOA t o l o a n money 
t o 
PBC by 
h o n o r i n g 
i t s i r r e v o c a b l e 
l e t t e r 
o f 
c r e d i t 
t o 
G a t e w a y .
5 
Payment 
o f up t o $200,000 
was t o be made 
upon 
4 T h e s e c u r i t y a g r e e m e n t , a l t h o u g h a l o a n d o c u m e n t , i s n o t 
i m p l i c a t e d on t h i s 
a p p e a l . 
5 T h e 
l i n e - o f - c r e d i t 
a g r e e m e n t 
a c t u a l l y 
p r o v i d e s 
t h a t 
p r e s e n t m e n t o f t h e l e t t e r o f c r e d i t w o u l d a l l o w BOA t o r e f u s e 
t o 
make 
a 
l o a n , 
b u t 
t h i s 
l i t e r a l 
i n t e r p r e t a t i o n o f t h e 
p a r a g r a p h 
e n t i t l e d 
"Amount" ("You may n o t r e f u s e t o make a 
l o a n 
... u n l e s s 
one o f t h e f o l l o w i n g o c c u r s : 
... (e) upon 
[ s u b s t i t u t e d page 13] 
1 0 5 1 0 3 3 , 1051034 
p r e s e n t a t i o n 
" f r o m 
t i m e 
t o t i m e 
u n t i l 
... 
0 8 / 0 1 / 2 0 0 4 . " 
Diamond 
a r g u e s : 
"One e v e n t t h a t t e r m i n a t e d t h e r i g h t t o make a l o a n 
i s t h e e x p i r a t i o n o f t h e l i n e 
i t s e l f . 
The 
p a r t i e s 
a g r e e d t o c r e a t e t h e l i n e o f c r e d i t on December 1, 
2003 and t o c l o s e i t on A u g u s t 1, 2004. 
[PBC] was 
o b l i g a t e d t o p a y o n l y m o n i e s ' a d v a n c e d a c c o r d i n g t o 
t h e 
t e r m s o f t h i s 
a g r e e m e n t 
' I m p o r t a n t l y , 
none 
o f 
t h e t e r m s o f t h e a g r e e m e n t 
c o u l d 
be 
c h a n g e d 
e x c e p t 
by 
w r i t t e n 
a g r e e m e n t , 
s i g n e d 
b y BOA 
a n d 
[ P B C ] . BOA d o e s n o t have any s i g n e d document 
t h a t 
r e n e w s t h e l i n e o f c r e d i t a g r e e m e n t . ... BOA i s 
n o t 
aware 
o f any 
p r o v i s i o n 
i n t h e 
l i n e 
o f 
c r e d i t 
a g r e e m e n t 
t h a t 
c a u s e s t h e ... a g r e e m e n t 
t o renew 
a u t o m a t i c a l l y . 
... BOA c o n f i r m e d i n t e s t i m o n y 
t h a t 
t h e 
... a g r e e m e n t was ' d e s i g n e d ' t o e x p i r e on A u g u s t 
1, 2004 b e c a u s e BOA may h a v e b e e n r e q u i r e d t o r e d u c e 
t h e 
[ l e t t e r o f c r e d i t ] 
f r o m $200,000 t o $ 1 2 0 , 0 0 0 . 
"The P r o m i s s o r y N o t e 
"The p r o m i s s o r y n o t e e v i d e n c e d t h e d e b t c r e a t e d 
by 
t h e 
l i n e 
o f 
c r e d i t 
a g r e e m e n t . 
I t m a t u r e d on 
A u g u s t 1, 2004. As o f t h e m a t u r i t y d a t e , BOA h a d n o t 
a d v a n c e d 
any 
money 
u n d e r 
t h e 
l i n e 
o f 
c r e d i t 
a g r e e m e n t . 
The 
n o t e 
p r o v i d e d 
t h a t 
i t , and any 
a g r e e m e n t 
s e c u r i n g t h e n o t e , 
c o u l d n o t be m o d i f i e d 
u n l e s s t h e m o d i f i c a t i o n was i n w r i t i n g and s i g n e d b y 
[PBC] and BOA. The p r o m i s s o r y n o t e h a d a m a t u r i t y 
d a t e o f A u g u s t 1, 2004, w h i c h c o r r e s p o n d e d 
e x a c t l y 
w i t h t h e e x p i r a t i o n d a t e o f t h e [ l e t t e r o f 
c r e d i t ] . 
As o f A u g u s t 1, 2004, BOA h a d n o t a d v a n c e d any f u n d s 
on t h e l o a n on b e h a l f o f [ P B C ] . 
"The L i m i t e d G u a r a n t y 
"Mr. 
E v a n s and Diamond 
e a c h 
s i g n e d 
i d e n t i c a l 
p r e s e n t m e n t 
") h a s n o t b e e n a r g u e d . 
14 
1 0 5 1 0 3 3 , 
1051034 
l i m i t e d g u a r a n t i e s 
B o t h ... c h e c k e d t h e b o x ... 
t h a t 
c a l l e d 
f o r a 
l i m i t e d 
f o r m 
o f g u a r a n t y , 
as 
o p p o s e d t o an u n l i m i t e d 
g u a r a n t y . 
... By 
c h e c k i n g 
t h e 
l i m i t e d g u a r a n t y b o x 
Diamond a g r e e d t o p a y 
o n l y t h o s e d e b t s 
c r e a t e d b y t h e t e r m s o f t h e L o a n 
D o c u m e n t s . Diamond c r o s s e d o u t p a r a g r a p h 'B,' w h i c h 
w o u l d h a v e o b l i g a t e d h i m t o p a y a l l i n d e b t e d n e s s o f 
[ P B C ] , 
f r o m any s o u r c e . 
I n o t h e r w o r d s , when t h e 
l o a n 
d o c u m e n t s 
e x p i r e d , 
t h e 
l i m i t e d 
g u a r a n t i e s , 
w h i c h s e c u r e d t h e L o a n Documents, a l s o 
e x p i r e d . 
" I n 
A l a b a m a , a 
l e t t e r 
o f c r e d i t 
t r a n s a c t i o n 
i n v o l v e s 
t h r e e 
s e p a r a t e and d i s t i n c t 
c o m m i t m e n t s : 
( 1 ) t h e 
a p p l i c a n t ' s 
a g r e e m e n t w i t h t h e b a n k , 
w h i c h 
o b l i g a t e s t h e b a n k t o i s s u e t h e l e t t e r and o b l i g a t e s 
t h e 
a p p l i c a n t t o r e i m b u r s e t h e bank ( i n 
t h i s 
c a s e , 
t h e 
[ l e t t e r o f c r e d i t ] and p r o m i s s o r y n o t e b e t w e e n 
BOA 
and 
[ P B C ] ) ; 
(2) 
t h e 
b a n k - b e n e f i c i a r y 
r e l a t i o n s h i p , 
i . e . , 
t h e l e t t e r o f c r e d i t 
i t s e l f ( i n 
t h i s 
c a s e t h e 
[ l e t t e r 
o f c r e d i t ] 
made by BOA i n 
f a v o r 
o f 
[ G a t e w a y ] ) ; 
and 
(3) 
t h e 
a p p l i c a n t -
b e n e f i c i a r y 
r e l a t i o n s h i p , 
i . e . , 
t h e 
u n d e r l y i n g 
c o n t r a c t 
( i n t h i s c a s e , t h e l e a s e a g r e e m e n t b e t w e e n 
[Gateway] and [ P B C ] ) . N o b e l I n s . 
Co. v. F i r s t N a t .  
Bank o f B r u n d i d g e , 
821 So. 2d 2 1 0 , 216-17 ( A l a . 
2 0 0 1 ) . T h u s , t h e l a w t r e a t s BOA's commitment u n d e r 
t h e 
[ l e t t e r o f c r e d i t ] t o [Gateway] as a 
s e p a r a t e 
and 
d i s t i n c t 
commitment 
f r o m 
t h e 
u n d e r l y i n g 
t r a n s a c t i o n 
b e t w e e n BOA and 
[ P B C ] . 
U n l e s s a b a n k 
d o c u m e n t s b o t h c o m m i t m e n t s i n one d e b t 
i n s t r u m e n t , 
a c o u r t s h o u l d a n a l y z e t h e c o n t o u r s o f e a c h document 
s e p a r a t e l y . S t a t e d d i f f e r e n t l y , t h e v i t a l i t y o f e a c h 
s e p a r a t e 
commitment 
r i s e s 
o r 
f a l l s 
on 
i t s own 
m e r i t s . "
6 
6 D i a m o n d c o n t i n u e s 
t h i s a r g u m e n t as f o l l o w s : 
" T h i s 
i s 
p r e c i s e l y 
why 
many 
b a n k s 
u s e a 
r e i m b u r s e m e n t a g r e e m e n t as a m e t h o d t o document [a 
l e t t e r - o f - c r e d i t ] 
t r a n s a c t i o n s u c h as t h i s , b e c a u s e 
i n a r e i m b u r s e m e n t a g r e e m e n t , a bank o b l i g a t e d t h e 
a p p l i c a n t t o ' r e i m b u r s e ' t h e bank w h e n e v e r a draw i s 
15 
1 0 5 1 0 3 3 , 
1051034 
Diamond's 
b r i e f , a t 25-28 ( e m p h a s i s i n o r i g i n a l ) . 
BOA a r g u e s t h a t t h e l o a n was n o t made 
a f t e r t h e l o a n 
d o c u m e n t s e x p i r e d on A u g u s t 1, 2004, b u t was a c t u a l l y made on 
December 1, 2003, when t h e p r o m i s s o r y n o t e was s i g n e d and 
t h e 
l e t t e r o f c r e d i t i s s u e d . "The l o a n was made and t h e d e b t owed 
by [PBC] b e f o r e A u g u s t 1, 2004." BOA's b r i e f , a t 3 1 . BOA 
c i t e s 
as 
a u t h o r i t y f o r t h i s 
a r g u m e n t 
S o u t h T r u s t Bank o f A l a b a m a ,  
N.A. v . W e b b - S t i l e s Co., 931 So. 2d 706, 710-11 ( A l a . 2 0 0 5 ) ( " A 
s t a n d b y 
l e t t e r o f c r e d i t i s e s s e n t i a l l y e q u i v a l e n t t o a l o a n 
b e i n g 
made 
by t h e i s s u i n g 
b a n k 
t o t h e a p p l i c a n t . " ) . 
I n 
S o u t h T r u s t Bank, 
t h i s 
C o u r t 
i n c l u d e d t h e above 
d e s c r i p t i v e 
p a i d 
u n d e r 
[a 
l e t t e r 
o f 
c r e d i t ] . 
BOA's 
c u r r e n t 
p r a c t i c e s 
now 
e m p l o y 
a 
r e i m b u r s e m e n t 
a g r e e m e n t 
i n s t e a d o f a c o m b i n a t i o n o f a l i n e o f c r e d i t and a 
p r o m i s s o r y n o t e . ... I f t h a t a g r e e m e n t h a d b e e n u s e d 
i n 
t h i s 
c a s e , 
i n s t e a d 
o f 
BOA's 
l i n e 
o f 
c r e d i t / p r o m i s s o r y n o t e d o c u m e n t a t i o n , t h e n t h e r e i s 
l i t t l e 
d o u b t t h a t t h e two c o m m i t m e n t s o f BOA w o u l d 
h a v e c o i n c i d e d p e r f e c t l y a n d p e r m i t t e d BOA t o demand 
payment f r o m [PBC] 
a n d t h e g u a r a n t o r s when [Gateway] 
drew-down t h e [ l e t t e r o f c r e d i t ] . 
However, b e c a u s e 
a r e i m b u r s e m e n t a g r e e m e n t was n o t u s e d i n t h i s 
c a s e , 
and b e c a u s e BOA o b l i g a t e d 
i t s e l f u n d e r t h e 
[ l e t t e r 
o f c r e d i t ] i n a way t h a t d i d 
n o t c o i n c i d e w i t h i t s 
t r a n s a c t i o n a l 
d o c u m e n t s 
w i t h 
[PBC] 
and 
t h e 
g u a r a n t o r s , BOA c a n n o t s u c c e s s f u l l y 
m a i n t a i n 
t h a t 
i t s 
r e n e w a l 
o f t h e 
[ l e t t e r 
o f 
c r e d i t ] 
somehow 
r e n e w e d , 
e x t e n d e d and m o d i f i e d 
BOA's i n d e p e n d e n t 
commitment 
w i t h 
[ P B C ] . " 
Diamond's 
b r i e f , a t 2 8 - 2 9 . 
16 
1 0 5 1 0 3 3 , 1051034 
s e n t e n c e i n a d i s c u s s i o n r e g a r d i n g n o t t h e o r i g i n a t i o n d a t e o f 
a l o a n , b u t t h e u s e o f t h e f r a u d e x c e p t i o n t o b l o c k a payment 
u n d e r a l e t t e r o f c r e d i t . H e r e , by t h e t e r m s o f t h e a g r e e m e n t , 
a d v a n c e s 
on 
t h e 
l e t t e r 
o f 
c r e d i t 
c r e a t e p r i n c i p a l 
b a l a n c e s 
upon w h i c h 
i n t e r e s t 
a c c r u e s . I t i s s i m p l y n o t 
t r u e , 
as 
BOA 
c o n t e n d s , t h a t 
t h i s C o u r t i n S o u t h T r u s t Bank h e l d t h a t a l o a n 
e x i s t s a t t h e t i m e a l e t t e r o f c r e d i t i s i s s u e d b u t b e f o r e any 
money c h a n g e s h a n d s . 
C i t i n g 
C i t r o n e l l e 
U n i t 
O p e r a t o r s 
C o m m i t t e e 
v. 
AmSouth  
Bank, N.A., 
536 So. 2d 1387 , 1390 
( A l a . 1 
98 8 
) , BOA 
a r g u e s 
t h a t 
t h e i s s u e r 
o f a l e t t e r o f c r e d i t i s a t r i s k f r o m t h e d a t e 
t h e 
l e t t e r o f c r e d i t i s i s s u e d t o t h e d a t e t h e l e t t e r o f c r e d i t i s 
r e t u r n e d 
t o 
i t . I n 
C i t r o n e l l e , 
t h i s 
C o u r t 
c o n f i r m e d 
t h e 
a p p l i c a n t ' s 
l i a b i l i t y f o r f e e s a s s o c i a t e d w i t h an open 
l e t t e r 
o f c r e d i t d u r i n g t h e 
l i f e o f t h e l e t t e r . I t i s u n d i s p u t e d t h a t 
t h e i s s u e r 
o f a s t a n d b y 
l e t t e r o f c r e d i t 
i s a t r i s k f r o m 
t h e 
d a t e 
o f 
i s s u a n c e o f t h e 
l e t t e r . 
T h a t , 
h o w e v e r , 
i s n o t 
t h e 
q u e s t i o n p o s e d h e r e . The q u e s t i o n h e r e i s n o t w h e t h e r BOA 
was 
a t r i s k d u r i n g t h e 
l i f e o f t h e l e t t e r o f c r e d i t i t i s s u e d , 
b u t 
w h e t h e r BOA 
s u f f i c i e n t l y 
o b t a i n e d i n d e m n i t y f o r t h e p a y m e n t s 
i t made p u r s u a n t 
t o t h e 
l e t t e r 
o f 
c r e d i t 
a f t e r 
t h e 
s t a t e d 
17 
1 0 5 1 0 3 3 , 1051034 
e x p i r a t i o n 
o f t h e 
l i n e - o f - c r e d i t 
a g r e e m e n t b e t w e e n BOA 
and 
PBC. 
Diamond's 
e n t i r e a r g u m e n t i s b a s e d 
on t h e p r e m i s e 
t h a t 
t h e 
l o a n d o c u m e n t s had 
e x p i r e d b e f o r e BOA 
p a i d G a t e w a y 
any 
moneys u n d e r t h e 
l e t t e r o f c r e d i t and 
t h a t , a l t h o u g h BOA 
was 
o b l i g a t e d t o p a y , i t had n o t s e c u r e d i n d e m n i f i c a t i o n by PBC 
o r 
by Diamond and E v a n s , 
as g u a r a n t o r s , b e y o n d A u g u s t 
1, 2004, 
t h e 
e x p i r a t i o n 
d a t e 
o f 
t h e 
l o a n 
d o c u m e n t s . 
We 
t h e r e f o r e 
e x a m i n e t h e l o a n d o c u m e n t s i n t h e same manner as d i d t h e 
t r i a l 
c o u r t 
t o 
t e s t 
w h e t h e r 
t h e r e 
was 
s u b s t a n t i a l 
e v i d e n c e 
s u p p o r t i n g Diamond's d e n i a l 
o f 
l i a b i l i t y , 
i . e . , e v i d e n c e 
o f 
" s u c h 
w e i g h t 
and 
q u a l i t y 
t h a t 
f a i r - m i n d e d p e r s o n s 
i n 
t h e 
e x e r c i s e 
o f 
i m p a r t i a l 
j u d g m e n t 
c a n 
r e a s o n a b l y 
i n f e r 
t h e 
e x i s t e n c e o f t h e f a c t s o u g h t 
t o be p r o v e d . " West v. 
F o u n d e r s 
 
L i f e 
A s s u r a n c e 
Co. 
o f 
F l o r i d a , 
547 
So. 
2d 
870 , 
87 1 ( A l a . 
1 9 8 9 ) . 
The 
l e t t e r 
o f 
c r e d i t , 
by 
i t s 
t e r m s , 
was 
t o 
be 
a u t o m a t i c a l l y e x t e n d e d f o r one y e a r b e y o n d i t s o r i g i n a l 
A u g u s t 
1, 2004, e x p i r a t i o n d a t e and e a c h s u b s e q u e n t 
e x p i r a t i o n 
d a t e 
u n l e s s BOA 
n o t i f i e d G a t e w a y i n w r i t i n g and by s e c u r e 
d e l i v e r y 
t h a t i t i n t e n d e d n o t t o renew t h e 
l e t t e r o f 
c r e d i t . 
18 
1 0 5 1 0 3 3 , 1051034 
In 
t h e p e r s o n a l g u a r a n t y he s i g n e d , Diamond s t a t e d 
t h a t 
he 
" a b s o l u t e l y and u n c o n d i t i o n a l l y g u a r a n t e e s t o [BOA] 
t h e 
f u l l 
and p r o m p t payment when due, w h e t h e r a t 
m a t u r i t y o r e a r l i e r 
... as f o l l o w s : A. I f t h i s [x] 
i s 
c h e c k e d , 
... 
t h e 
payment 
... 
o f 
t h e 
d e b t 
e v i d e n c e d 
by 
o r 
a r i s i n g 
o u t 
o f 
t h e 
f o l l o w i n g : 
$200,000 p r o m i s s o r y n o t e 
s e c u r i n g 
l e t t e r o f 
c r e d i t 
o f 
e v e n 
d a t e 
and 
any 
e x t e n s i o n s , 
r e n e w a l s 
o r 
r e p l a c e m e n t s 
t h e r e o f . " 
The 
l i f e 
o f t h e p e r s o n a l g u a r a n t y , 
by i t s own 
t e r m s , i s 
e x t e n d e d t o t h e e x t e n t t h e p r o m i s s o r y n o t e i s e x t e n d e d . 
The p r o m i s s o r y n o t e , s i g n e d b y PBC, on i t s f a c e 
s t a t e s 
t h a t 
i t was 
s u p p o r t e d 
b y 
u n l i m i t e d 
p e r s o n a l 
g u a r a n t y 
a g r e e m e n t s e x e c u t e d b y Diamond and E v a n s . On page 2, u n d e r t h e 
h e a d i n g 
"OBLIGATIONS INDEPENDENT," t h e r e a r e two 
s e n t e n c e s 
r e l e v a n t t o t h i s i s s u e . The f i r s t 
r e a d s : "Any e x t e n s i o n o f new 
c r e d i t t o any o f u s , o r r e n e w a l o f t h i s n o t e by a l l 
o r 
l e s s 
t h a n a l l o f us 
w i l l 
n o t r e l e a s e me f r o m my d u t y t o p a y 
i t . " 
The o t h e r r e a d s : " I a g r e e t h a t you may a t y o u r o p t i o n 
e x t e n d 
t h i s n o t e o r t h e d e b t r e p r e s e n t e d b y t h i s n o t e , o r any p o r t i o n 
o f t h e n o t e o r d e b t , f r o m t i m e t o t i m e w i t h o u t l i m i t o r n o t i c e 
and f o r 
any t e r m w i t h o u t a f f e c t i n g my 
l i a b i l i t y 
f o r 
payment o f 
t h e 
n o t e . " 
BOA 
h a d t h e 
r i g h t 
t o e x t e n d 
t h e n o t e 
w i t h o u t 
n o t i c e . 
19 
1 0 5 1 0 3 3 , 1051034 
The l i n e - o f - c r e d i t a g r e e m e n t d e f i n e s t h e c o n d i t i o n s u n d e r 
w h i c h BOA was a u t h o r i z e d t o make l o a n s t o PBC, t h e b o r r o w e r 
u n d e r t h a t a g r e e m e n t . The l i n e - o f - c r e d i t a g r e e m e n t r e a d s , i n 
p e r t i n e n t p a r t : 
"You have e x t e n d e d t o me a l i n e o f c r e d i t 
i n t h e 
AMOUNT 
o f 
TWO 
HUNDRED 
THOUSAND 
AND 
00/100'S 
$ 2 0 0 , 0 0 0 . 0 0 . You 
w i l l 
make 
l o a n s t o me 
... 
u n t i l 
0 8 / 0 1 / 2 0 0 4 . A l t h o u g h t h e l i n e o f c r e d i t 
e x p i r e s on 
t h a t d a t e , I w i l l r e m a i n o b l i g a t e d t o p e r f o r m a l l 
o f 
my d u t i e s so l o n g as I owe money a d v a n c e d u n d e r 
t h i s 
a g r e e m e n t , as e v i d e n c e d b y a n y n o t e s I have 
s i g n e d 
p r o m i s i n g t o r e p a y 
t h e s e 
a m o u n t s . 
f i 
"PROMISSORY NOTE: I 
w i l l 
r e p a y 
any a d v a n c e s made 
a c c o r d i n g t o t h i s 
l i n e o f c r e d i t 
a g r e e m e n t as s e t 
o u t i n t h e p r o m i s s o r y 
n o t e , I s i g n e d on 1 2 / 0 1 / 2 0 0 3 . 
f i 
"MISCELLANEOUS: 
T h i s 
l i n e 
o f 
c r e d i t 
may 
n o t be 
c h a n g e d e x c e p t b y a w r i t t e n a g r e e m e n t s i g n e d b y you 
and me." 
( C a p i t a l i z a t i o n 
i n o r i g i n a l . ) 
The 
l i n e - o f - c r e d i t 
a g r e e m e n t 
l i s t s a " s e c u r i t y a g r e e m e n t d a t e d 1 2 / 0 1 / 2 0 0 3 " and a 
" g u a r a n t y 
d a t e d 1 2 / 0 1 / 2 0 0 3 , " b u t nowhere d o e s i t p u r p o r t t o i n c o r p o r a t e 
t h e 
t e r m s 
o f 
t h o s e 
d o c u m e n t s 
i n t o 
t h e 
l i n e - o f - c r e d i t 
a g r e e m e n t . I t r e q u i r e s a m u t u a l l y s i g n e d w r i t i n g t o c h a n g e t h e 
t e r m s o f t h e a g r e e m e n t , and t h e r e i s no p r o v i s i o n i n t h e 
document f o r 
an e x t e n s i o n o f t h e t e r m o f t h e a g r e e m e n t . The 
20 
1 0 5 1 0 3 3 , 1051034 
l i n e - o f - c r e d i t a g r e e m e n t , b y i t s t e r m s , d i d e x p i r e on A u g u s t 
1, 
2004. 
BOA a r g u e s 
t h a t , 
" e v e n i f 
t h e L i n e o f C r e d i t A g r e e m e n t i n t h i s 
c a s e 
d i d n o t a d o p t t h e m a t u r i t y o f t h e N o t e , i t e x p r e s s l y 
s t a t e s 
t h a t t h e Bank c a n make l o a n s t o [PBC] u n t i l 
A u g u s t 1, 2004, and t h e l o a n s o u g h t t o be 
c o l l e c t e d 
by 
[BOA] on 
t h i s 
a c t i o n was made on December 1, 
2003, when t h e L e t t e r o f C r e d i t was 
i s s u e d . " 
BOA's b r i e f , a t 33. As d i s c u s s e d 
e a r l i e r i n t h i s o p i n i o n , 
t h i s 
a r g u m e n t i s 
n o t s u p p o r t e d b y C i t r o n e l l e , 
s u p r a , t h e c a s e 
c i t e d 
by BOA i n s u p p o r t o f i t s a r g u m e n t , and i t 
i s c o n t r a r y t o 
t h e 
p l a i n l a n g u a g e o f t h e l o a n d o c u m e n t s d r a f t e d and e x e c u t e d b y 
BOA. The l i n e - o f - c r e d i t 
a g r e e m e n t 
s t a t e s n o t t h a t "you h a v e 
l o a n e d me" o r "as o f t h i s d a t e you l o a n me" b u t t h a t 
" [ y ] o u 
w i l l make l o a n s t o me f r o m t i m e t o t i m e . " The p r o m i s s o r y n o t e 
p r o v i d e s n o t t h a t "you h a v e l o a n e d me" o r " t o d a y you l o a n me" 
b u t 
t h a t 
" t h e p r i n c i p a l 
sum shown above 
[$200,000] i s 
t h e 
maximum amount o f p r i n c i p a l 
t h a t 
I c a n b o r r o w 
u n d e r 
t h i s 
n o t e . " I t i s o b v i o u s t h a t on t h e d a t e t h e l o a n d o c u m e n t s were 
e x e c u t e d BOA m e r e l y assumed an o b l i g a t i o n t o make 
l o a n s t o 
PBC. 
I t 
i s e q u a l l y o b v i o u s t h a t no moneys 
were owed by PBC t o 
BOA on A u g u s t 1, 2004, as t h e r e s u l t o f d r a w s 
a g a i n s t t h e 
l e t t e r o f c r e d i t , b e c a u s e no draw a g a i n s t t h e l e t t e r was made 
21 
1051033, 
1051034 
u n t i l A u g u s t 10, 2004. 
A l t h o u g h t h e l i n e - o f - c r e d i t a g r e e m e n t 
e x p i r e d on A u g u s t 
1, 2004, b e f o r e BOA made i t s f i r s t payment t o Gateway 
u n d e r 
t h e 
l e t t e r o f c r e d i t , t h e p r o m i s s o r y n o t e a n d t h e g u a r a n t i e s 
c o u l d be e x t e n d e d w i t h o u t 
n o t i c e , a n d t h e y a r e v a l i d as t o 
moneys p a i d o u t p u r s u a n t t o t h e l e t t e r o f c r e d i t w h e t h e r o r 
n o t 
l o a n s were made u n d e r t h e l i n e - o f - c r e d i t 
a g r e e m e n t . The 
p r o m i s s o r y n o t e t h a t r e q u i r e s PBC t o r e p a y any p a y m e n t s made 
u n d e r t h e l e t t e r o f c r e d i t does n o t r e l y on t h e l i n e - o f - c r e d i t 
a g r e e m e n t . 
I t m e r e l y d o c u m e n t s 
PBC's a g r e e m e n t 
t o p a y BOA 
$200,000 f o r a d v a n c e s made on p r e s e n t m e n t o f t h e l e t t e r o f 
c r e d i t by Gateway. 
E v e n t h o u g h no moneys were a d v a n c e d u n d e r 
t h e 
l i n e - o f - c r e d i t 
a g r e e m e n t 
w h i l e 
t h a t 
a g r e e m e n t 
was i n 
e f f e c t , t h e p r o m i s s o r y n o t e a n d t h e g u a r a n t i e s 
r e q u i r e 
t h a t 
BOA be r e i m b u r s e d f o r t h e moneys i t p a i d 
p u r s u a n t t o t h e 
l e t t e r o f c r e d i t . 
F u r t h e r , as BOA a r g u e s , r e i m b u r s e m e n t i s 
r e q u i r e d u n d e r A l a b a m a l a w when an i s s u e r p a y s u n d e r a l e t t e r 
o f 
c r e d i t . BOA a r g u e s : 
"When 
[ P B C ] , E v a n s 
a n d Diamond 
e n t e r e d 
i n t o t h e 
t r a n s a c t i o n f o r t h e l e t t e r o f c r e d i t , t h e y s u b m i t t e d 
t o be g o v e r n e d by A l a b a m a l a w . ... Among t h o s e l a w s 
... 
i s an A l a b a m a 
s t a t u t e 
i m p o s i n g 
l i a b i l i t y 
on 
[PBC] t o r e i m b u r s e [BOA] i m m e d i a t e l y f o r amounts 
p a i d 
u n d e r 
t h e L e t t e r 
o f 
C r e d i t 
r e g a r d l e s s 
o f 
w h e t h e r 
t h e r e was an e f f e c t i v e 
N o t e a n d L i n e o f 
22 
1 0 5 1 0 3 3 , 
1051034 
C r e d i t 
A g r e e m e n t . 
See A l a . Code 
[1975,] § 7-5-
1 0 8 ( i ) ( 1 ) ( 2 0 0 2 ) . " 
BOA's b r i e f , a t 36-37. The s t a t u t e BOA r e f e r e n c e s -- § 7-5-
1 0 8 ( i ) ( 1 ) , A l a . Code 1975 -- r e a d s as f o l l o w s : 
" ( i ) An 
i s s u e r 
t h a t h a s h o n o r e d a p r e s e n t a t i o n 
as p e r m i t t e d o r r e q u i r e d b y 
t h i s 
a r t i c l e : 
(1) i s e n t i t l e d t o be 
r e i m b u r s e d 
b y t h e 
a p p l i c a n t 
i n i m m e d i a t e l y 
a v a i l a b l e f u n d s n o t l a t e r t h a n t h e 
d a t e o f i t s payment o f f u n d s . " I n i t s 
o r d e r e n t e r i n g a p a r t i a l 
summary j u d g m e n t i n r e s p o n s e t o BOA's m o t i o n , t h e t r i a l 
c o u r t 
s t a t e d : 
" [ T ] h e C o u r t 
r e g a r d s t h e n o t e , t h e g u a r a n t i e s , 
t h e 
l i n e o f c r e d i t a g r e e m e n t and t h e L e t t e r o f C r e d i t as p a r t o f 
one 
t r a n s a c t i o n . 
To t h e e x t e n t 
r e a s o n a b l y 
p o s s i b l e , 
t h e s e 
i n s t r u m e n t s a r e t o be i n t e r p r e t e d and c o n s t r u e d t o g e t h e r t o 
a s c e r t a i n t h e p a r t i e s ' 
i n t e n t i o n . " 
The 
t r i a l 
c o u r t 
a g r e e d 
w i t h 
t h e h o l d i n g 
i n C i t r o n e l l e , h o w e v e r , 
t h a t 
a 
l e t t e r o f 
c r e d i t 
s t a n d s as a d i s t i n c t and i n d e p e n d e n t i n s t r u m e n t as a 
c o n t r a c t b e t w e e n t h e i s s u e r and t h e b e n e f i c i a r y , and t h a t t h e 
o b l i g a t i o n o f t h e i s s u e r o f a l e t t e r o f c r e d i t i s i n d e p e n d e n t 
o f t h e b e n e f i c i a r y ' s 
r e l a t i o n s h i p w i t h t h e i s s u e r ' s 
c u s t o m e r . 
The 
t r i a l 
c o u r t 
t h e n s a i d : " I n t h i s c a s e , h o w e v e r , t h e o t h e r 
i n s t r u m e n t s e s t a b l i s h c r u c i a l t i e s w i t h t h e l e t t e r o f c r e d i t . " 
We 
a g r e e . 
23 
1 0 5 1 0 3 3 , 1051034 
"A 
l e t t e r - o f - c r e d i t 
t r a n s a c t i o n t y p i c a l l y 
i n c l u d e s 
t h r e e 
s e p a r a t e 
c o m m i t m e n t s : 
(1) 
t h e 
a p p l i c a n t ' s 
a g r e e m e n t w i t h t h e b a n k , w h i c h o b l i g a t e s t h e bank t o 
i s s u e 
t h e 
l e t t e r 
and 
o b l i g a t e s 
t h e 
a p p l i c a n t 
t o 
r e i m b u r s e 
t h e 
b a n k ; 
(2) 
t h e 
b a n k - b e n e f i c i a r y 
r e l a t i o n s h i p , i . e . , t h e 
l e t t e r o f c r e d i t 
i t s e l f ; 
and 
(3) 
t h e 
a p p l i c a n t - b e n e f i c i a r y r e l a t i o n s h i p , 
i . e . , 
t h e u n d e r l y i n g 
c o n t r a c t . " 
S o u t h e r n E n e r g y Homes, I n c . v. AmSouth Bank o f A l a b a m a , 
7 
0 
9 
So. 
2d 1180, 
1185 
( A l a . 19 9 
8 ) ( e m p h a s i s a d d e d ) . The 
commitment 
i n 
q u e s t i o n 
h e r e 
i s t h e 
a p p l i c a n t - b a n k 
r e l a t i o n s h i p . 
I t i s 
s e p a r a t e 
and 
d i s t i n c t f r o m t h e two 
o t h e r 
r e l a t i o n s h i p s . T h i s 
d i s t i n c t i o n 
i s e v i d e n c e d 
by 
t h e 
f a c t 
t h a t 
" ' [ a ] 
B e n e f i c i a r y 
[ u n d e r a l e t t e r o f c r e d i t ] can i n no c a s e a v a i l h i m s e l f o f 
t h e 
c o n t r a c t u a l 
r e l a t i o n s h i p s 
e x i s t i n g 
b e t w e e n 
t h e 
b a n k s 
o r 
b e t w e e n t h e A p p l i c a n t 
and 
t h e 
I s s u i n g Bank.'" 709 
So. 
2d 
a t 
1185 
( q u o t i n g 
A r t . 
3, 
UCP, 
1993 
R e v i s i o n , 
I n t e r n a t i o n a l 
Chamber o f Commerce, Pub. 
No. 
5 0 0 ) . 
I n 
i t s o r d e r , 
t h e 
t r i a l 
c o u r t 
d i s c u s s e d 
t h e A u g u s t 
1, 
2004, e x p i r a t i o n d a t e and 
t h e p r o v i s i o n s f o r t h e e x t e n s i o n 
o f 
t h e l e t t e r o f c r e d i t , t h e p r o m i s s o r y 
n o t e , and t h e 
g u a r a n t i e s . 
The 
t r i a l 
c o u r t d i d n o t d i s c u s s t h e 
l i n e - o f - c r e d i t a g r e e m e n t , 
w h i c h , Diamond a r g u e s , i s t h e o n l y document u n d e r w h i c h a l o a n 
t o 
PBC 
c o u l d 
be 
made. As 
n o t e d , 
t h a t 
document 
e x p i r e d 
on 
A u g u s t 1, 2004, and by i t s t e r m s , i t c o u l d be e x t e n d e d o n l y 
by 
24 
1 0 5 1 0 3 3 , 1051034 
a 
w r i t i n g 
s i g n e d 
by b o t h 
p a r t i e s . On i t s f a c e , 
i n w o r d s 
d r a f t e d 
by BOA, 
t h e 
l i n e - o f - c r e d i t 
a g r e e m e n t 
s t a t e s 
t h a t 
"[BOA] 
w i l l make l o a n s t o [PBC] f r o m t i m e t o t i m e 
u n t i l 
... 
0 8 / 0 1 / 2 0 0 4 . A l t h o u g h t h e l i n e o f c r e d i t e x p i r e s on t h a t 
d a t e , 
[PBC] 
w i l l r e m a i n o b l i g a t e d t o p e r f o r m [ i t s ] d u t i e s u n d e r 
t h i s 
a g r e e m e n t so l o n g as [PBC] o w e [ s ] money a d v a n c e d a c c o r d i n g t o 
t h e 
t e r m s o f t h i s 
a g r e e m e n t " and t h a t PBC 
" w i l l 
r e p a y any 
a d v a n c e s made a c c o r d i n g 
t o t h i s 
l i n e o f c r e d i t a g r e e m e n t as 
s e t o u t i n t h e p r o m i s s o r y 
n o t e . " 
( E m p h a s i s added.) 
Diamond 
a r g u e s t h a t PBC, t h e s i g n e r o f t h e l i n e - o f - c r e d i t 
a g r e e m e n t , 
owed no money u n d e r t h a t a g r e e m e n t on A u g u s t 1, 2004, t h e d a t e 
t h e a g r e e m e n t e x p i r e d . A l t h o u g h i t 
i s t r u e t h a t no money h a d 
b e e n a d v a n c e d d u r i n g t h e p e r i o d t h e l i n e - o f - c r e d i t 
a g r e e m e n t 
was i n e f f e c t , Diamond's r e l i a n c e on t h a t f a c t i s m i s p l a c e d . 
The 
p r o m i s s o r y n o t e , w h i c h 
r e f e r r e d 
t o o n l y t h e l e t t e r o f 
c r e d i t 
and t h e g u a r a n t i e s , 
was 
p r o p e r l y 
e x t e n d e d b y BOA 
w i t h o u t 
n o t i c e . Diamond's g u a r a n t y , w h i c h r e f e r r e d o n l y t o 
t h e 
l e t t e r 
o f 
c r e d i t 
and 
t h e 
p r o m i s s o r y 
n o t e , 
was 
a l s o 
a u t o m a t i c a l l y 
e x t e n d e d t o c o v e r t h e p r o m i s s o r y 
n o t e . 
The 
l i n e - o f - c r e d i t a g r e e m e n t i s n o t i n c o r p o r a t e d 
i n t o e i t h e r t h e 
p r o m i s s o r y n o t e o r t h e g u a r a n t y t h a t Diamond s i g n e d , and t h e 
e x p i r a t i o n o f t h e l i n e - o f - c r e d i t a g r e e m e n t , t h e r e f o r e , h a s no 
25 
1 0 5 1 0 3 3 , 1051034 
e f f e c t on t h e o b l i g a t i o n s s e t f o r t h i n t h e p r o m i s s o r y 
n o t e 
and 
t h e g u a r a n t y d o c u m e n t . 
" I f 
t h e 
t e r m s 
w i t h i n 
a 
c o n t r a c t 
a r e 
p l a i n 
and 
u n a m b i g u o u s , t h e 
c o n s t r u c t i o n o f 
t h e 
c o n t r a c t 
and 
i t s l e g a l 
e f f e c t 
become 
q u e s t i o n s 
o f 
l a w 
f o r 
t h e 
c o u r t 
and, 
when 
a p p r o p r i a t e , 
may 
be 
d e c i d e d 
by 
a summary j u d g m e n t . 
D i l l 
v. 
 
B l a k e n e y , 
568 
So. 
2d 
774 
( A l a . 1 9 9 0 ) . " M c D o n a l d v. 
U.S. 
D i e 
 
C a s t i n g & Dev. 
Co., 
585 
So. 
2d 853, 
855 
( A l a . 1 9 9 1 ) . No 
p a r t y 
has 
a s s e r t e d 
t h a t 
t h e 
l o a n 
d o c u m e n t s 
u n d e r l y i n g 
t h e 
t r a n s a c t i o n 
t o w h i c h 
BOA, 
Diamond, 
and 
PBC 
a r e 
p a r t i e s 
a r e 
a m b i g u o u s . The 
t r i a l 
c o u r t 
d i d n o t 
f i n d 
t h e d o c u m e n t s t o 
be 
a m b i g u o u s . 
I n 
t h e 
p r o m i s s o r y 
n o t e , 
PBC 
a g r e e d 
t o 
pay 
BOA 
$200,000 f o r p a y m e n t s made upon t h e p r e s e n t a t i o n o f t h e 
l e t t e r 
o f c r e d i t . Diamond g u a r a n t e e d t h e r e p a y m e n t o f money p a i d 
o u t 
u n d e r t h e "$200,000 p r o m i s s o r y 
n o t e s e c u r i n g 
[ t h e ] 
l e t t e r 
o f 
c r e d i t o f e v e n d a t e . " A c c o r d i n g l y , t h e 
t r i a l c o u r t d i d n o t 
e r r 
i n 
e n t e r i n g a summary j u d g m e n t f o r BOA, 
and 
t h a t j u d g m e n t i s 
a f f i r m e d . 
C a s e No. 
1051034 
BOA 
p r e s e n t s 
t h r e e i s s u e s i n i t s c r o s s - a p p e a l .
7 BOA 
f i r s t 
7One o f t h e 
i s s u e s BOA 
a s k e d t h i s C o u r t t o d e t e r m i n e 
was 
w h e t h e r t h e 
t r i a l c o u r t e x c e e d e d i t s d i s c r e t i o n i n a w a r d i n g i t 
26 
1 0 5 1 0 3 3 , 1051034 
a s k s : 
" [ D ] i d t h e t r i a l 
c o u r t e r r i n e n f o r c i n g t h e 
e x p r e s s 
t e r m s and c o n d i t i o n s o f t h e p r o m i s s o r y 
n o t e , 
l i n e o f c r e d i t 
a g r e e m e n t , and g u a r a n t i e s ? " I n c a s e no. 1051033 we h e l d 
t h a t 
t h e 
t r i a l c o u r t c o r r e c t l y e n f o r c e d t h e t e r m s o f t h e p r o m i s s o r y 
n o t e and t h e g u a r a n t i e s . The l i n e - o f - c r e d i t a g r e e m e n t e x p i r e d 
on 
A u g u s t 1, 2004, b u t i t s 
e x p i r a t i o n d i d n o t c o m p r o m i s e 
Diamond's 
o b l i g a t i o n s u n d e r 
t h e p r o m i s s o r y 
n o t e 
and h i s 
g u a r a n t y . 
The 
n e x t i s s u e BOA p r e s e n t s on c r o s s - a p p e a l i s " d i d t h e 
t r i a l c o u r t e r r 
i n f a i l i n g t o a w a r d [BOA] i n t e r e s t on t h e d e b t 
as p r o v i d e d b y t h e n o t e ? " BOA's b r i e f , a t 6. 
The 
p r o m i s s o r y 
n o t e 
i n c l u d e s 
t h a t 
f o l l o w i n g p r o v i s i o n 
r e l a t e d t o i n t e r e s t : 
"INTEREST: 
I 
a g r e e 
t o 
p a y 
i n t e r e s t 
on 
t h e 
o u t s t a n d i n g 
p r i n c i p a l b a l a n c e 
f r o m 12/02/2003 a t 
t h e 
r a t e o f 4.000% p e r y e a r 
u n t i l t h e FIRST RATE CHANGE. 
l e s s t h a n t h e t o t a l 
a t t o r n e y 
f e e s 
a c t u a l l y p a i d by BOA. The 
a r g u m e n t p r e s e n t e d 
i n s u p p o r t 
o f t h e r e q u e s t , 
h o w e v e r , was 
d i r e c t e d 
a g a i n s t 
a r g u m e n t s made b y E v a n s and PBC, 
e n t i t i e s 
t h a t a r e n o t p a r t i e s t o t h i s 
c a s e . Our e x a m i n a t i o n 
o f BOA's 
n o t i c e o f a p p e a l t o t h i s C o u r t and t h e a s s o c i a t e d 
d o c k e t i n g 
s t a t e m e n t 
r e v e a l no m e n t i o n o f an i s s u e 
r e g a r d i n g 
a t t o r n e y 
f e e s . We t h e r e f o r e p r e t e r m i t any d i s c u s s i o n o f t h e 
a w a r d o f 
a t t o r n e y 
f e e s b y t h e t r i a l 
c o u r t o r o f BOA's c o n t e n t i o n 
t h a t 
t h e 
t r i a l 
c o u r t 
s h o u l d have a w a r d e d a t t o r n e y 
f e e s u n d e r t h e 
A l a b a m a L i t i g a t i o n A c c o u n t a b i l i t y A c t , § 1 2 - 1 9 - 2 7 2 , A l a . Code 
1975. 
27 
1 0 5 1 0 3 3 , 1051034 
" V a r i a b l e 
R a t e : 
T h i s 
r a t e 
may 
t h e n c h a n g e 
as 
s t a t e d b e l o w : 
" I n d e x R a t e : 
The 
f u t u r e r a t e 
w i l l 
be 
0.000% 
GREATER 
THAN 
t h e 
f o l l o w i n g 
i n d e x 
r a t e : PRIME RATE AS DEFINED 
AS 
THE HIGHEST RATE PUBLISHED IN THE WALL 
STREET JOURNAL AS 
'PRIME RATE'" 
( C a p i t a l i z a t i o n 
i n 
o r i g i n a l . ) 
The 
t r i a l 
c o u r t 
d i d 
n o t 
a d d r e s s 
BOA's 
r e q u e s t 
t h a t 
i n t e r e s t 
be 
a w a r d e d . 
B e c a u s e 
BOA 
c l e a r l y 
has 
a 
r i g h t 
t o 
i n t e r e s t u n d e r t h e n o t e , we 
f i n d t h a t t h e 
t r i a l c o u r t e r r e d i n 
n o t 
a d d r e s s i n g 
t h e 
i s s u e , 
and 
t h e 
c a s e 
i s 
remanded 
f o r 
a p p r o p r i a t e 
c o n s i d e r a t i o n o f t h a t 
i s s u e . 
C o n c l u s i o n 
The 
t r i a l 
c o u r t 
d i d 
n o t 
e r r 
i n 
e n f o r c i n g 
t h e 
l o a n 
d o c u m e n t s a g a i n s t Diamond. The 
t r i a l 
c o u r t d i d e r r , h o w e v e r , 
i n 
n o t 
a d d r e s s i n g 
t h e 
i s s u e 
o f 
i n t e r e s t 
due 
BOA 
u n d e r 
t h e 
t e r m s 
o f 
t h e 
p r o m i s s o r y 
n o t e . 
A c c o r d i n g l y , 
we 
a f f i r m 
t h e 
j u d g m e n t o f t h e 
t r i a l 
c o u r t 
i n c a s e no. 
1 0 5 1 0 3 3 , and 
i n c a s e 
no. 
1051034 
we 
remand 
t h e 
c a s e 
t o 
t h e 
t r i a l 
c o u r t 
f o r 
a p p r o p r i a t e 
p r o c e e d i n g s 
i n r e g a r d 
t o an a w a r d o f 
i n t e r e s t 
t o 
BOA. 
1051033 -- AFFIRMED. 
1051034 -- AFFIRMED IN PART AND 
REMANDED. 
28 
1 0 5 1 0 3 3 , 1051034 
Cobb, C . J . , and L y o n s , 
W o o d a l l , 
S t u a r t , 
S m i t h , 
B o l i n , 
M u r d o c k , and Shaw, J J . , c o n c u r . 
29