Opinion ID: 4016114
Heading Depth: 3
Heading Rank: 2

Heading: Meaning of “Financing”

Text: The district court held that Team Systems’ allegations failed to state a claim for breach of contract based on the procurement of financing. In reaching that conclusion, the district court applied the following definition of “financing”: “‘the act or process or an instance of raising or providing funds; also: the funds thus raised or provided.’” Aplt. App. at 164 (quoting Webster’s New Collegiate Dictionary (available at http://www.merriam-webster/dictionary/financing)); see also Financing, Black’s Law Dictionary (10th ed. 2014) (same). It further determined that performance and payment bonds “do not raise capital or provide funding for a business project; they merely guarantee that payment or performance will be made during the project.” Aplt. App. at 165. Thus, the district court concluded that accepting allegations of the second amended complaint as true, Team Systems had 5 failed to state a plausible claim for contingent compensation based on obtaining “financing.” Team Systems challenges this conclusion, arguing that Black’s Law Dictionary defines “finance” as “to supply with funds,” including through the issuance of bonds. Aplt. Opening Br. at 14 (quoting Finance, Black’s Law Dictionary 630 (6th ed. 1991)). Moreover, Team Systems argues that Black’s Law Dictionary defines “funds” as “[m]oney or other assets, such as stocks, bonds, or working capital, available to pay debts, expenses, and the like.” Aplt. Reply Br. at 6 (quoting Fund, Black’s Law Dictionary (10th ed. 2014) (def. 2, “usu. pl.”) (emphasis in Reply Br.)). But as the district court held, the common definitions of “payment bond” and “performance bond” indicate these instruments do not constitute “financing” under these circumstances. Aplt. App. at 164–65 (quoting www.sba.gov/content/suretybonds-basics (last accessed April 28, 2015)). Indeed, Black’s Law Dictionary defines “payment bond” as “[a] bond given by a surety to cover any amounts that, because of the general contractor’s default, are not paid to a subcontractor or materials supplier” and “performance bond” as “[a] bond given by a surety to ensure the timely performance of a contract” or “[a] third party’s agreement to guarantee the completion of a construction contract upon the default of the general contractor.” Bonds, Black’s Law Dictionary 630 (10th ed. 2014); Performance Bond, id.; see also United Fire & Cas. Co. v. Boulder Plaza Residential, LLC, 633 F.3d 951, 959 (10th Cir. 2011) (“A performance bond . . . guarantees the contractor will satisfactorily perform the contract.”); Travelers Cas. & Sur. Co. v. Dormitory 6 Auth.-State of N.Y., 734 F. Supp. 2d 368, 373 n.7 (S.D.N.Y. 2010) (defining “payment bond” as “an undertaking by which a surety agrees to compensate subcontractors and suppliers who have furnished labor or supplies to the surety’s ‘principal’ (often a general contractor), but who have not been paid by that principal,” and “performance bond” as “an undertaking by which a surety agrees to be financially responsible to the owner of a construction project if that surety’s principal fails to fulfill its contractual obligations to the owner”). The Federal Circuit recognized this distinction, stating “[a] ‘financing institution’ supplies financing. That is its business. It lends money or provides capital.” Fireman’s Fund. Ins. Co. v. England, 313 F.3d 1344, 1350 (Fed. Cir. 2002) (applying federal Anti-Assignment Act). There, the court rejected an insurance company’s claim that it qualified as a “financing institution,” holding instead that it was “an insurance company writing insurance policies that protect[ed] against risks, including the furnishing to the United States government of [necessary] performance and payment bonds.” Id. We agree that the plain and ordinary definition of “financing” does not include arranging for payment and performance bonds. Team Systems contends, however, that unless the payment and performance bonds are construed as “financing,” a clause in the Engagement Agreement would be rendered meaningless. See Okla. Stat. tit. 15, § 157 (“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.”). The clause in question states that Team Systems would “not be responsible for any fees, expenses or commissions payable to 7 any other advisors, underwriters or agents (if any) utilized or retained by [FSAI] in connection with the . . . Financing.” Aplt. App. at 37. But Team Systems does not claim that this clause is limited to (or even refers to) the acquisition of payment or performance bonds, nor does it explain why the clause could not apply to fees, expenses, and commissions charged in a commercial lending transaction. Team Systems failed to state a claim for relief because the allegations that it obtained payment and performance bonds do not plausibly support a finding that it arranged “financing” as contemplated by the plain language of the agreement, considering the whole contract, taken together, as required by Oklahoma statute.