Opinion ID: 384735
Heading Depth: 2
Heading Rank: 1

Heading: Count I of Amended and Supplemental Complaint

Text: 20 As noted above, the Mortgage Company and the Bank, as a third-party beneficiary and assignee of the third-party beneficiary Trust, sued in Count I on a breach of contract theory. Steel moved for summary judgment with respect to the Bank on the argument that the Bank and Trust were not third-party beneficiaries of its participation agreement with the Mortgage Company. 4 Judge Steckler held that there was a genuine issue of fact as to whether the participation agreements were intended to benefit the Bank and Trust and therefore denied the motion (Steel App. 8-9). Steel contends this holding was erroneous because an intent to benefit the Bank and Trust does not affirmatively appear from the language of the document as required by Indiana law. We disagree. 21 The contractual obligation on which the Bank and Trust predicate their claims is Steel's duty to cooperate in efforts to protect the project and minimize loss-and the concomitant duty not to submarine the project to further its own hand (Plaintiffs' Br. 41). They rely on the clause in the participation agreements requiring Steel to reimburse the Mortgage Company for all extraordinary out-of-pocket costs and expenses incurred for the protection and preservation of security, for the minimizing of loss     (Steel App. 104, 106). In addition, there is, of course, an implied covenant of good faith and fair dealing by Steel. Photovest Corp. v. Fotomat Corp., 606 F.2d 704, 727-729 (7th Cir. 1979), certiorari denied, 445 U.S. 917, 100 S.Ct. 1278, 63 L.Ed.2d 601; Lesh v. Trustees of Purdue University, 124 Ind.App. 422, 116 N.E.2d 117, 120 (1953); Indiana Code § 26-1-1-203; 5 Williston on Contracts § 670, p. 159 (3d ed. 1961). 22 The Bank and Trust had a combined participation interest of 60% in the Cromwell project and stood to incur 60% of the losses. The participation agreements between Steel and the Mortgage Company expressly state that this 60% interest belonged to the Bank and Trust, not the Mortgage Company (Steel App. 103, 105). Thus Steel's obligation to minimize loss would necessarily and within the contemplation of the parties result in a direct benefit to the Bank and Trust. Jackman Cigar Mfg. Co. v. John Berger & Son Co., 114 Ind.App. 437, 52 N.E.2d 363, 367-368 (1944). Indeed, as plaintiffs point out, it is difficult to see whom the minimization of loss clause was intended to benefit if not the three risk-bearers. 23 For the foregoing reasons, we cannot agree with Steel that any benefit flowing from the contracts to the Bank and Trust was as a matter of law merely incidental. At best from Steel's viewpoint, the contract is ambiguous as Judge Steckler concluded, and therefore the question whether the contractual language in the circumstances of the transaction evidences an intent to benefit the Trust and Bank is an appropriate one for trial. See Jackman Cigar Mfg. Co. v. John Berger & Son Co., supra; Standard Land Corp. of Indiana v. Bogardus, 154 Ind.App. 283, 289 N.E.2d 803, 824-825 (1972); Shahan v. Brinegar, Ind.App., 390 N.E.2d 1036, 1041 (1979). Furthermore, we agree with plaintiffs that what is at issue here is the question who are the real parties-in-interest. If it is found at trial that the parties did not intend to benefit the Bank and Trust, that would not, of course, alter the Mortgage Company's capacity to sue in Count I for Steel's alleged breach of its duty of good faith. Rule 17(a), Fed.R.Civ.Pro. 24