Opinion ID: 197449
Heading Depth: 2
Heading Rank: 2

Heading: Does the Participation Agreement Contemplate the Renewal?

Text: 16 Courts faced with ambiguity in a contract resort to subordinate rules of construction, see Isbrandtsen, 556 A.2d at 85, including consideration of extrinsic evidence, see Abbiati v. Buttura & Sons, Inc., 161 Vt. 314, 639 A.2d 988, 991 (1994), to determine the proper construction of the contract. The proper construction is that which reflects or effectuates the intent of the parties. See Abbiati, 639 A.2d at 991. In any given case relevance guides the use of extrinsic evidence. Some of the same evidence that may bear on whether a written contract is ambiguous may also cast light on the proper interpretation of the language upon a finding of ambiguity. See, e.g., id. at 991 (indicating that circumstances under which the contract arose are relevant in determining intent of parties). 17 Generally, the construction of a contract is a question of law. See Morrisseau v. Fayette, 164 Vt. 358, 670 A.2d 820, 826 (1995). [W]here the meaning of a contract is uncertain, however, the intent of the parties becomes a question of fact. Housing Vt. v. Goldsmith & Morris, 685 A.2d 1086, 1088 (Vt.1996). In this case, therefore, we must determine whether the record contains sufficient evidence from which a reasonable jury could conclude that Baybank did not intend to participate in the renewal. We conclude that the record in this case allows for no such dispute. Instead it reflects that the parties intended the participation agreement to extend to the renewal, and, therefore, the district court appropriately granted summary judgment in favor of Vermont National. 18 From Baybank's negotiations with Vermont National prior to June 5, 1988, the date that Baybank now claims marked the end of its participation period, until September of 1993, when Baybank filed its complaint, Baybank repeatedly reaffirmed its understanding that its participation extended to the renewal. George Todd Marchant, Vice President in Baybank's commercial loan department and member of Baybank's loan committee, negotiated the initial participation agreement with Louis Dunham, Executive Vice President of Vermont National. 4 Marchant testified that he and Dunham discussed the anticipated renewal of the Liftline loan scheduled to occur six weeks after Baybank purchased its participation, and that the loan committee's approval of participation in the Liftline loan included participation in the renewal. 5 Marchant further testified that a handwritten note in the top corner of one of the loan documents produced from Baybank's file read per Lou, this note will be renewed on the same terms. 6 19 From September 1991 to spring 1993, David Hobert, then an account officer with Baybank, served as the participating agent in the loan. In this capacity, Hobert oversaw the relationship between Baybank and Vermont National pertinent to the Liftline loan and worked with officials at Vermont National in administering the direction of the loan and foreclosure. Hobert testified that when he assumed oversight of the loan, nearly two years after the maturity date to which Baybank now clings, it was understood that [Baybank] had a 90% participation. 20 On behalf of Baybank, Hobert worked closely with Vermont National as the two banks considered their options and planned their workout strategies. 7 Hobert visited the Liftline lodge in 1992, nearly four years after the maturity date Baybank claims, to examine the collateral and participate in negotiations with the lodge owners on clearing the debt. Hobert testified that he made this trip because Baybank was a 90% participant in the loan, and he was invited to inspect the property with the lead bank. On behalf of Baybank, Hobert also proposed a settlement with Liftline's guarantors and proposed that Baybank and Vermont National form a corporation of which Baybank would own 90% and Vermont National would own 10%, for the purpose of taking title to the property and other assets of Liftline. 21 Documentary evidence from Baybank's files throughout the life of the loan further undermines Baybank's renewal claim. In October 1988 and again in 1989, Baybank sent Vermont National audit confirmation notices requesting Vermont National to submit information regarding Baybank's interest in the Liftline loan. Both of the notices reflect a due date or maturity date of June 5, 1993, which corresponds with the maturity date of the renewed loan. Watch List Reports, in which Baybank lists troubled loans requiring additional monitoring, listed the Liftline loan and specifically indicated an origination date of April 25, 1988 and a maturity date of June 5, 1993. 22 As indicated, the question of the intent of the parties to an ambiguous agreement is one of fact. See Housing Vt., 685 A.2d at 1088. In this case Baybank has failed to identify any evidence that would place its intent to participate in the renewal in dispute. Instead, the record in this case establishes beyond question that Baybank intended to and did participate in the renewal of the Liftline loan. Accordingly, the district court correctly granted summary judgment in favor of Vermont National. 8 C. Did Vermont National Commit Other Breaches of the Participation Agreement? 23 Baybank contends that even if the participation agreement did extend to the renewal, Vermont National breached the agreement by failing to provide it with certain information the agreement required. Baybank also claims that Vermont National settled a claim against the individual guarantors over Baybank's objection in contravention of the participation agreement. 9 We find neither of these arguments persuasive. The participation agreement provides: 24 As long as the Participating Bank continues to have an ownership interest in the Loan, the Originating Bank agrees to regularly provide the Participating Bank with complete and current credit related and other information concerning the Borrower, the Loan and the collateral securing the Loan.... 25 Baybank points us to the deposition testimony of Kathleen Mullin and David Hobert, Baybank employees who oversaw the loan at different points during its existence. The district court reviewed both of these sources and determined that they failed to establish even a dispute of fact as to whether Vermont National breached the participation in this way. 26 We need not revisit this evidence in detail. Mullin testified that she could not remember specifically what Vermont National had failed to provide and what she had or had not received. Hobert professed no knowledge as to why Baybank had not received certain documents, specifically, whether it was due to Vermont National's delinquency or that of the debtors or guarantors. Mullin and Hobert simply could not recollect exactly what information Baybank had in its possession, what information Baybank sought and what information Vermont National failed to produce. In short, we agree with the district court that their testimony fails to raise any genuine issue of material fact on this claim. 27 Finally, Baybank argues that Vermont National breached the participation agreement by settling a claim against the individual guarantors of the Liftline loan. The participation agreement prohibited Vermont National from waiv[ing] or releas[ing] any claim against any Borrower and/or against any co-maker, guarantor or endorser under the Loan. Baybank directs us to the affidavit of Richard Butler, Senior Vice President of Baybank, who claims that Vermont National settled against the guarantors in contravention of Baybank's instructions. This conclusory assertion simply mischaracterizes the record. 28 The record reveals that on April 15, 1993, Mark LaPointe of Vermont National and David Hobert met with attorneys for the guarantors. Hobert, not LaPointe, proposed a settlement but failed to reach an agreement with the guarantors. A memorandum dated April 20, 1993, the veracity of which Baybank does not dispute, memorializes this meeting. The guarantors then moved to enforce a settlement agreement in bankruptcy court despite the fact that none of the parties had agreed to final terms of settlement. Vermont National and Baybank both opposed the motion. The bankruptcy court, however, granted the motion, effectively forcing settlement upon the banks. Butler's conclusory allegations fail to raise a genuine issue of material fact.