Court Opinion

ID: 9694781
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:54:30.621983+00
Date Added: 2024-06-11T12:09:39.541906
License: Public Domain

COYNE, Justice
(dissenting).
I respectfully dissent. To be sure, the Official Statement, the Indenture, the Loan Agreement, and the other documents to which reference is made are distinctly tough to read, as is the documentation involved in similar types of investments. But reading difficulty is not the same as ambiguity, and like the district court judge, I see nothing ambiguous about the provisions dealing with the expiration of the Letter of Credit and the mandatory redemption of the bonds on termination of the Letter of Credit unless an Alternate Credit Facility has been provided.
Printed in all capital letters on the face page of the Official Statement issued by HERC1 is the following description of the bonds:
THE SERIES 1986A BONDS ARE LIMITED OBLIGATIONS OF THE COUNTY, PAYABLE SOLELY FROM THE SOURCES SPECIFIED IN THE INDENTURE REFERRED TO HEREIN. THE SERIES 1986A BONDS AND PREMIUM, IF ANY, AND INTEREST THEREON DO NOT CONSTITUTE AN INDEBTEDNESS OF THE COUNTY WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND DO NOT CONSTITUTE OR GIVE RISE TO A CHARGE AGAINST THE COUNTY’S GENERAL CREDIT OR TAXING POWER. IN ADDITION, THE OBLIGATIONS OF THE PARTNERSHIP UNDER THE LOAN AGREEMENT REFERRED TO HEREIN ARE PAYABLE ONLY FROM THE PARTNERSHIP AND PARTNERSHIP INCOME AND ASSETS AND ARE NON-RECOURSE AGAINST BLOUNT ENERGY RESOURCE CORP., OTHER PARTNERS OF THE PARTNERSHIP AND BLOUNT, INC.
The face page also describes the Letter of Credit and the effect of its termination:
Payment of principal of the Series 1986 Bonds when due at the stated maturities thereof, upon acceleration or mandatory redemption, and interest accrued thereon will be payable from the proceeds of an irrevocable, direct-pay Letter of Credit, as described herein, to be issued simultaneously with delivery of the Series 1986A Bonds by the New York Branches of
CREDIT LYONNAIS and BANQUE INDOSUEZ
obligating each bank, jointly and severally, to pay an amount equal to the principal of and up to 240 days’ interest on the outstanding Series 1986 Bonds. The Letter of Credit expires on October 15, 1992, unless earlier terminated in accordance with its terms. If the Letter of Credit is not extended and an Alternate Credit Facility is not provided, all outstanding Series 1986 Bonds will be subject to mandatory redemption upon the termination of the Letter of Credit. (Emphasis supplied.)
*504The above-quoted paragraphs from the face or cover page of the Official Statement unmistakably inform even a casual reader that the Series 1986A Bonds do not constitute or give rise to a charge against Henne-pin County’s general credit or its taxing power. Furthermore, HERC’s obligation to make payment is limited to its assets and income. No recourse can be had against either its general or other (limited) partners or against Blount, Inc., the parent of HERC’s general partner. These severe limitations on sources of payment of the obligation of the bonds clearly inform a prospective investor that, without some further assurance of payment, the bonds issued to permit the construction and operation of a mass burn solid waste disposal facility unique and unproven in the United States constitute a high risk investment.
The further assurance of payment which justifies Moody’s “Aaa” rating is found in the provision for a Letter of Credit. The above-quoted paragraph informs prospective investors that simultaneously with the issuance of the 1986A Bonds Credit Lyonnais and Ban-que Indosuez will issue a direct-pay Letter of Credit irrevocably binding each of them jointly and severally to payment of the principal and accrued interest on the bonds when due at their various stated maturities or upon acceleration or mandatory redemption. The prospective investor is then unequivocally and unambiguously informed that unless it has already terminated according to its terms, the Letter of Credit expires on October 15,1992, and unless it has been extended or replaced by an Alternate Credit Facility “all outstanding Series 1986 Bonds will be subject to mandatory redemption upon the termination of the Letter of Credit.” In short, the prospective investors were notified that the safety net which assured bondholders of the security of their investment would expire on October 15, 1992. At that time either the bonds must be redeemed or some action must be taken to furnish a new safety net.
Redemption of the bonds is discussed at some length in the body of the Official Statement. Following a section entitled Notice and Effect of Redemption is a section entitled Optional Redemption which advises the prospective bondholder of the price (including a premium) of redemption of some bonds at the option of the County with HERC’s consent (but the County’s option is limited to a redemption which does not exceed the amount of money on deposit in the Redemption Fund) or by the County acting on HERC’s request to redeem all or part of the bonds with moneys to be deposited by HERC with the Trustee, such options being exercisable on October 1, 1996 and thereafter. The next section, entitled Extraordinary Optional Redemption, advises that if the Facility is damaged so that it cannot be efficiently operated, the bonds could be redeemed at the option of the County and HERC by payment of principal and accrued interest. The Statement warns that the Letter of Credit does not secure such a redemption. The next six sections deal with mandatory redemption: (1) Mandatory Redemption from Unused Proceeds, (2) Mandatory Redemption in 36 Months If Necessary To Preserve Tax Exemption, (3) Mandatory Sinking Fund Redemption, ⅜) Mandatory Redemption upon Expiration of Letter of Credit or Alternate Credit Facility, (5) Mandatory Redemption upon Certain Events Relating to Construction, Acceptance or Operation of the Facility, and (6) Mandatory Redemption upon Condemnation of the Facility. The section entitled Mandatory Redemption upon Expiration of Letter of Credit or Alternate Credit Facility provides as follows:
If 45 days before the stated expiration date of the extant Letter of Credit or any Alternate Credit Facility the Partnership or the Banks have not furnished to the Trustee evidence satisfactory to it of the extension of the expiration date of the extant Letter of Credit or the issuance of an Alternate Credit Facility complying with the provisions of the Indenture, all Outstanding Series 1986A Bonds are subject to mandatory redemption on a date occurring not less than five days prior to such expiration date, at a redemption price equal to the principal amount thereof plus interest accrued to the redemption date. The Letter of Credit has a stated expiration date of *505October 15, 1992. (See “ALTERNATE CREDIT FACILITY.”)
Once again the prospective bondholder is put on notice that the Letter of Credit expires on October 15,1992, and that unless the Trustee has received evidence satisfactory to it of either the extension of the extant Letter of Credit or the issuance of an Alternate Credit Facility at least 45 days before the expiration date, all of the Series 1986A Bonds are subject to mandatory redemption not later than 5 days before the expiration date. Then the reader of the Statement is directed to the section entitled ALTERNATE CREDIT FACILITY which expressly provides that any Substitute Letter of Credit or Alternate Credit Facility must be approved by the County as well as HERC and Blount.
If the terms which might result in termination of the Letter of Credit prior to October 15,1992 were of interest to a prospective bondholder, the form of the Letter of Credit to be issued on issuance of the bonds was appended to the Official Statement as Exhibit C. Finally, the Official Statement informs the prospective bondholder that, on request, the County will furnish copies of the Loan Agreement, the Indenture, and other documents referred to in the Statement.
The Loan Agreement provides at Sections 2.01 and 2.02 for issuance of the Series 1986A Bonds, the disposition of the bond proceeds, the title to the Project building and equipment (see also Section 3.09), HERC’s agreement to operate the Facility on its completion, and to repay the loan in an amount sufficient to pay the bonds, together with interest and premium (if any) thereon.2
Article IV of the Loan Agreement is entitled LOAN PAYMENTS AND DEPOSITS. Section 4.01 sets out the County’s agreement to lend the bond proceeds to HERC. Section 4.02 deals with HERC’s obligation to repay the loan and describes required payments to the Bond Fund, to the Sinking Fund, to the Reserve Fund, and to the Redemption Fund. Section 4.03 provides for certain additional payments by HERC, and Section 4.04 provides that HERC’s obligations pursuant to the agreement are absolute and unconditional and that HERC may not assert a claim of set-off except that it has the right to set off against loan repayments any service fee or adjusted service fee due and payable from the County, but only if it has furnished security satisfactory to the County when the service fee is disputed. Section 4.05 specifies the amount of interest payable by HERC on any delinquent installment of loan repayment.
Section 4.06 grants HERC the option to prepay the loan and require the County to redeem the bonds “at the times and prices and in the circumstances provided for optional redemption in Section 3.01(a) of the Indenture.” The balance of Section 4.06 requires HERC to give written notice to the County and the Trustee at least 121 days prior to the date on which prepayment is to be made and within the same time period to pay to the Trustee for deposit in the Redemption Fund an amount sufficient to redeem all or such part of the outstanding bonds as HERC specifies. In addition, Section 4.06 accords the County a right of optional redemption “with the consent of [HERC],” if and only to the extent there is money in the Redemption Fund available for redemption pursuant to paragraph (d) or (e) of Section 5.06 of the Indenture. That the exercise of the County’s option is not only subject to HERC’s consent but that the option is available only in very limited circumstances is confirmed by the succeeding sentence of Section 4.06:
Except for moneys deposited and available pursuant to paragraph (d) or (e) of Section 5.06 of the Indenture and for mandatory redemption of Bonds at the time and in the circumstances provided for in Section 3.01 of the Indenture, Series 1986 Bonds shall be called for redemption by the County only upon the direction of the Company \i.e., HERC],
Since Article IV is entitled LOAN PAYMENTS AND DEPOSITS, it is not too surprising that the following section, Section 4.07, deals with mandatory redemption:
In addition to mandatory redemption under Section 3.01(b), Section 3.01(c), Section *5063.01(d) and Section 3.01(f) of the Indenture * * * the Series 1986 Bonds are subject to mandatory redemption, and the Company shall prepay the loan, upon the occurrence of any of the following events:
(a) * * * *
Clauses (a) through (e) of Section 4.07 which have been omitted from the above quotation all describe events which precipitate mandatory redemption. In summary form, these clauses invoke mandatory redemption for the following reasons:
(a) if certain conditions specified in Sections 2.01 and 2.02 of the Service Agreement between the County and HERC, such as securing all government permits and licenses necessary for construction and provision by HERC of construction bonds and insurance as required by the agreement are not satisfied prior to the Contingency Termination Date (January 1, 1988 unless extended with the consent of the issuers of the Letter of Credit); or
(b) if the conditions specified in Section 4.04(a) of the Indenture for disbursement of funds from the Construction Account have not been met by the Contingency Termination Date; or
(c) if the County has not accepted the Project by February 1, 1991 unless the date has been extended by the County and HERC pursuant to the Service Agreement; or
(d) in the event of permanent shutdown of the Facility as the result of an act or omission on the part of either HERC or the County in breach of the Service Agreement; or
(e) in the event of permanent shutdown of the Facility as a result of a change in the law.
The precipitating event at issue in this case is described at clause (f) of Section 4.07 in these words:
(f)The Company or the Banks shall not have furnished to the Trustee extension of the expiry date in form satisfactory to the Trustee or issuance and acceptance of a Substitute Letter of Credit or other Alternate Credit Facility complying with the provisions of Section 12.04 of the Indenture at least 4.5 days prior to the expiry date of the Letter of Credit or Alternate Credit Facility then held by the Trustee. (Emphasis supplied.)
Although the Loan Agreement does not obligate the County to deliver to the Trustee an extension or new Letter of Credit or other Alternate Credit Facility, the Agreement does provide that unless either HERC or the issuing banks furnish an extension or new Letter of Credit or other Alternate Credit Facility at least 45 days prior to the expiration date of the current Letter of Credit, the bonds are subject to mandatory redemption. There is no dispute that neither HERC nor the Banks submitted such an instrument to the Trustee prior to September 1,1992. But although the Loan Agreement does not require the County to submit the replacement bondholder safety net to the Trustee on expiration of the Letter of Credit, at Section 6.13 the agreement does require, contrary to the plaintiffs’ allegation that renewal or replacement of the Letter of Credit depended solely on the option of the issuing banks, “not at the option of HERC or the County,” and equally contrary to the majority’s declaration that “if an option to renew the letter of credit exists, * * * ⅛ belongs to HERC and to the Banks, not to the County,” that in the event the Banks offer to renew the Letter of Credit, both the County and HERC must agree to acceptance of the offer. Moreover, the form of any renewal had to be satisfactory to the Trustee.
If, as the majority contends, the option to renew the Letter of Credit “belongs to HERC and to the Banks, not to the County,” the County was not in a position to frustrate issuance of a renewal or new Letter of Credit. It is undisputed, however, that neither HERC nor the Banks furnished to the Trustee an extension or renewal or substitute Letter of Credit.
Now it is indeed true that the “option” to offer to renew the Letter of Credit or not to offer to renew belongs to the Banks. Neither HERC nor the County had any right to require the Banks to extend or renew the Letter of Credit. But the Banks’ “option” is *507not an option to renew or extend, in the legal sense; the Banks have not acquired by payment of consideration a right to demand that the Letter of Credit be renewed. The Banks simply have the right to offer or decline to offer to renew the Letter of Credit; in order for renewal of the Letter of Credit to actually take place, the Banks must offer to renew and the offer must be accepted by both the County and HERC. The Loan Agreement provision with respect to renewal, Section 6.13, is quite straightforward:
In the event that the Banks offer to renew the Letter of Credit, the acceptance of such offer shall require the agreement of both the County and the Company.
⅜ ‡ ⅜ ⅜ ⅜ ⅜
Having rejected out of hand the plain language of Section 6.13 which requires the agreement of both the County and HERC for acceptance of an offer to renew the Letter of Credit, the majority leaps to the remarkable conclusion that Section 6.13 imposes on the County and HERC the obligation “to ensure that the terms of the renewed or extended Letter of Credit are sufficient to protect the bondholders’ investment.”
In an earlier footnote the majority had cited Section 12.04 of the Indenture as providing that the Trustee can prevent mandatory redemption by accepting a substitute Letter of Credit. The footnote went on to state “Section 12.04 proceeds to outline circumstances pursuant to which the Trustee shall accept a Substitute Letter of Credit.” (Emphasis supplied in majority opinion.)
If the majority’s footnotes are intended to indicate that the Trustee can cut off mandatory redemption by accepting a Substitute Letter of Credit to which either HERC or the County or both refuse to consent, the majority simply disregards the basic element of contract law. A Letter of Credit is a contract; a contract requires the making of an offer by one party to the contract and the acceptance of that offer by the other party to the contract. The bond documents contemplate an offer by the Banks, which agree to provide funds when called upon following the occurrence of certain events and acceptance of that offer by HERC and the County, the parties responsible for payment of the sizea-ble consideration for the Banks’ undertaking. Although the Indenture places on the Trustee the duty to draw on the Letter of Credit on the happening of one of several specified events, the Trustee is not a party to the Letter of Credit and is not authorized to accept an offer of a Letter of Credit on behalf of either HERC or the County.
As to the implication that Section 12.04 mandates acceptance of a proffered Substitute Letter of Credit, the majority fails to mention that Section 12.04 provides that the Trustee shall accept the Substitute Letter of Credit only if seven conditions, many of which depend upon the opinion of bond counsel, are all met to the Trustee’s satisfaction.
In short, the majority’s view of the import of Section 6.13 of the Loan Agreement and Section 12.04 of the Indenture has no basis in the documents themselves. To say, as does the majority, that the “bond agreements” are ambiguous with respect to the effect of expiration of the Letter of Credit and to deprive the County and HERC of their contractual right to reject any renewal offer from the Banks is not only to rewrite the Loan Agreement; but it is also to impose on the County and HERC the obligation “ ‘to consider the bondholders’ best interests, and not [their] own,’ when deciding whether to renew the letter of credit,” the same obligation which the court of appeals imposed on the County — the obligation which the majority says it rejects.
In my view the court of appeals’ interpretation of the declaration at Section 8.09 of the Loan Agreement that the bondholders were third-party beneficiaries of the covenants and agreements in the Loan Agreement to require the County “to consider the bondholders’ best interests, and not its own” amounts to a shocking disregard of the primary obligation of county commissioners — their obligation to the taxpayers of the County. Moreover, even absent the commissioners’ duty to their constituents, the idea that when parties engage in what each supposes is an arm’s length transaction, one party is required to subvert his own interests and advance the interests of the other party is to stand both the law and commerce on their *508respective heads. Accordingly, I am in full accord with the majority’s expressed rejection of the court of appeals’ interpretation of Section 8.09. I am, however, at a loss to understand how the majority managed to arrive at the same result.
The Indenture, a form of mortgage given by the County to First Trust Company, Inc., as Trustee, sets out a description of the form, maturities, interest rates, and numeration of the Series 1986 Bonds at Section 2.01A. Section 2.01B provides that in the event the Initial Letter of Credit is not renewed and an Alternate Credit Facility is not issued and accepted by the Trustee, “the County shall refund the Series 1986 Bonds which have been called for redemption in accordance with the provisions of Section 3.01(e) hereof and Section 4.07(f) of the Loan Agreement.”
Article III of the Indenture, Redemption of Bonds, sets out the circumstances under which the Series 1986 Bonds are subject to redemption prior to maturity, the terms on which the bonds are to be redeemed, and the duties of the Trustee, the County and HERC with respect to any redemption. Section 3.01, Redemption of Series 1986 Bonds, provides as follows:
The Series 1986 Bonds shall be subject to redemption prior to maturity only as follows:
* ⅜ * ⅜ * *
Clause (a) of Section 3.01 provides that the Series 1986A Bonds maturing after October 1,1996 are subject to redemption in whole or in part at the option of the County with HERC’s consent if, and to the extent that, money is available in the Redemption Fund pursuant to paragraph (d) or (e) of Section 5.06 of the Indenture or at the option of the County acting at the request of HERC pursuant to HERC’s option granted by Section 4.06 of the Loan Agreement. Clause (a) goes on to specify the redemption dates and the amount of premium to be paid on such redemption.
Clauses (b) through (f) of Section 3.01 set out the various circumstances under which the bonds are subject to mandatory redemption: In summary form these clauses invoke mandatory redemption for the following reasons:
(b) If and to the extent the bond proceeds have not been expended within 36 months of the date of issue unless the Trustee is advised by Bond Counsel that failure to redeem does not affect the federal income tax exemption of interest on the bonds.
(c) In the event of condemnation of the Project.
(d) The Series 1986A Bonds maturing in 2006 are subject to redemption beginning in 2002 and those maturing in 2010 are subject to redemption beginning in 2007 at par plus accrued interest by application of money held in the Sinking Fund.
(e) Clause (e) follows verbatim:
The series 1986 Bonds are subject to mandatory redemption in whole, but not in part, at par plus accrued interest, upon the occurrence of any of the events specified in paragraph (a), (b), (c), (d), (e) or (f) of Section 4.07 of the Loan Agreement, upon the terms and conditions prescribed in said Section 4.07 of the Loan Agreement.
(f) The Series 1986A Bonds maturing in 1995 through 2001 are subject to mandatory redemption, in part, on the next interest payment date at least 90 days after the Completion Date, from the unexpended funds remaining in the Construction Account.
(g) Provides for extraordinary optional redemption in the event of certain kinds of damage to or destruction of the Facility.
To be sure, the foregoing excerpts and discussion of the information disclosed in the 33-page Official Statement and the various pertinent provisions of the 73-page Loan Agreement and 133-page Indenture make neither scintillating nor titillating reading. The excerpts do, however, demonstrate that all three documents are, like others of their kind, well and carefully drafted but interrelated and exceedingly complex. Their length and complexity may explain why — in all probability — few, if any, bondholders have ever read them. It is obvious, however, from a review of the quoted portions of the Official *509Statement, the Loan Agreement, and the Indenture that a prospective bondholder is apprised four times in perfectly plain and understandable language that the Letter of Credit issued contemporaneously with issuance of the Series 1986A Bonds would expire no later than October 15, 1992 and that unless that Letter of Credit was extended or replaced by a new Letter of Credit or some Alternate Credit Facility the bonds would be redeemed at par plus accrued interest.3 The language of the documents varies somewhat to meet the purpose of the particular document: While the Official Statement is intended to provide the information material to the reader’s decision whether to become a bondholder, the Loan Agreement spells out the rights and duties of the County and HERC inter se, and the Indenture governs the rights and duties of the Trustee and the County. The majority characterizes the optional redemption provision as “an allocation of financial risk,” while declaring that mandatory redemption is for the protection of the bondholders “in the event of some unforeseen happening that would jeopardize the investment value of the bonds.” That pronouncement is wrong on two counts: First, optional redemption has nothing to do with allocation of financial risk; there is no financial risk in redemption. Optional redemption has to do only with the profitability of the bonds. Second, there can be no doubt that mandatory redemption protects the bondholders on the occurrence of an event that jeopardizes the investment value of the bonds — an event that alters the financial risk — but there is absolutely nothing in any of the bond documents that limits the invocation of mandatory redemption to “some unforeseen happening.” Of the various bases for mandatory redemption, condemnation and permanent shutdown as a result of change in the law are not events which are expected to occur, but they are events whose occurrence has been foreseen and provision for mandatory redemption made in the event of occurrence. Although damage to or destruction of the Facility may be both unforeseen and beyond the control of the parties, it does not precipitate mandatory redemption but only extraordinary optional redemption. The other bases of mandatory redemption are either scheduled to occur at a specified time or they are or probably are within the control of one or more of the parties. In my opinion a specified event which is within the control of one or more of the parties to a transaction can hardly qualify as an “unforeseen happening.” Some of the parties may prefer that it not happen, but that does not make it unforeseen — merely unwelcome. The provision with respect to the expiration of the Letter of Credit is unique: expiration of the letter during the life of the Series 1986A Bonds can hardly be characterized as unforeseen. Bondholders are repeatedly advised that if not sooner terminated, the Letter of Credit will expire on October 15, 1992. Its expiration without extension, renewal, or replacement by either a substitute Letter of Credit or Alternate Credit Facility may or may not be within the control of either HERC or the County. It may be that in 1992, for reasons not apparent when the bonds were issued in 1986, no qualified bank is willing to offer a Letter of Credit and no Alternate Credit Facility is available. Or it may be that the terms of an offer are unacceptable to the County and HERC, or it may simply be that either the County or HERC, for reasons of its own, chooses to reject any offer.4 Nothing in either the Loan Agree*510ment or the Indenture requires the County or HERO to justify or even to identify the reason for rejection. It is enough that the documents protect the safety of the bondholders’ investment, and by triggering mandatory redemption the documents do just that. The financial risk has been allocated in toto to the Banks which issued the Letter of Credit, for the Indenture provides that if the Trustee has not received a new Letter of Credit or Alternate Credit Facility acceptable to the Trustee 45 days prior to the expiration date of the current Letter, the Trustee must draw on the Letter of Credit funds sufficient for payment of the principal and accrued interest. The Trustee and the Banks performed in accordance with their respective undertakings, and on October 9, 1992, 6 days before the expiry date of the Letter of Credit, the Series 1986 Bonds were redeemed at par plus interest to October 9, 1992. As the plaintiffs concede, they delivered their bonds for redemption and they were paid and accepted payment of the par value of their bonds, together with interest to October 9,1992. In short, the plaintiffs have recovered their complete investment, together with interest to the redemption date. Their complaint is not that they lost all or even part of their principal investment but only that they did not make as much profit as they had hoped to make. Of course, they have had the use of the funds since October 9, 1992 and may have since invested them with sizeable success.
The following observation by the United States District Court for the Southern District of New York, quoted by the majority in support of their mistaken notion that “the structure and placement of the mandatory redemption provisions suggest they were not to be invoked voluntarily, but were intended for the protection of the bondholders in the event of some unforeseen event that put the value of the bondholders’ investment at risk” is instructive:
[T]he significant fact, which accounts in part for the detailed protective provisions of the typical long-term debt financing instrument, is that the lender (the purchaser of the debt security) can expect only interest at the prescribed rate plus the eventual return of the principal. Except for possible increases in the market value of the debt security because of changes in interest rates, the debt security will seldom be worth more than the lender paid for it. * ⅜ * It may, of course, become worth much less. Accordingly, the typical investor in a long-term debt security is primarily interested in every reasonable assurance that the principal and interest will be paid when due. * * * Short of bankruptcy, the debt security holder can do nothing to protect himself against actions of the borrower which jeopardize its ability to pay the debt unless he * * ⅜ establishes his rights through contractual provisions set forth in the debt agreement or indenture.
Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 716 F.Supp. 1504, 1518 (S.D.N.Y.1989) (emphasis added by Metropolitan Life court) (quoting American Bar Foundation, Commentaries on Indentures, 1-2 (1971)).
In Metropolitan Life, generally known as the MetLife case, the bondholders complained that RJR Nabisco had, by entering into a leveraged buy-out, undertaken an enormous new debt which jeopardized its ability to repay the bonds and drastically impaired the security for the bonds. Because some of the bonds had been purchased only 3 months before RJR Nabisco’s CEO proposed the leveraged buy-out, it seems unlikely that the new debt was “unforeseen” by RJR Nabisco when those bonds were purchased. The complaints of the MetLife bondholders paralleled those of the plaintiffs in the present case. Rejecting their claim that the bond documents were ambiguous and that RJR Nabisco had violated an implied covenant of good faith, the court had this to say about the language of typical bond documentation, what the court called the “customary, or boilerplate, provisions” of detailed indentures used and relied on throughout the security market:
‘[Bjoilerplate provisions are * * * not the consequences of the relationship of particular borrowers and lenders and do not depend upon particularized inten*511tions of the parties to an indenture. There are no adjudicative facts relating to the parties to the litigation for a jury to find and the meaning of boilerplate provisions is, therefore, a matter of law rather than fact. Moreover, uniformity in interpretation is important to the efficiency of capital markets. * * * Whereas participants in the capital market can adjust their affairs according to a uniform interpretation, whether it be correct or not as an initial proposition, the creation of enduring uncertainties as to the meaning of boilerplate provisions would decrease the value of all debenture issues and greatly impair the efficient working of capital markets. * * * Just such uncertainties would be created if interpretation of boilerplate provisions were submitted to juries sitting in every judicial district in the nation.’
[Quoting Sharon Steel Corp. v. Chase Manhattan Bank, N.A., 691 F.2d 1039, 1048 (2d Cir.1982), cert. denied, 460 U.S. 1012, 103 S.Ct. 1253, 75 L.Ed.2d 482 (1983) ]; see also Morgan Stanley & Co. v. Archer Daniels Midland Co., 570 F.Supp. 1529, 1535-36 (S.D.N.Y.1983) (Sand, J.) (“Plaintiff concedes that the legality of [the transaction at issue] would depend on a factual inquiry. * * * This case-by-case approach is problematic. * * * [Plaintiffs theory] appears keyed to the subjective expectations of the bondholders ⅜ * * and reads a subjective element into what presumably should be an objective determination based on the language appearing in the bond agreement.”).
MetLife, 716 F.Supp. at 1515-16.
The MetLife court concluded that the indenture at issue there addressed the eventuality of a merger and that although no explicit provision either permitted or prohibited a leveraged buy-out, “such contractual silence itself cannot create ambiguity.” Id. at 1515. Pointing out that RJR Nabisco had not breached its contractual obligation to make periodic and regular payments of interest and that there was no reason to believe that the principal would not be paid when it became due, the court concluded that the indenture did not include an implied covenant that would prevent incurring new debt to facilitate the leveraged buy-out and that “there [was] no implied covenant restricting any action that might subject plaintiffs’ investment to greater risk of non-payment.” Id. at 1519 n. 24.
No doubt the huge increase in RJR Nabisco’s debt attendant upon the leveraged buyout gave the MetLife bondholders cause for their concern about the safety of their investment. Not so for the Series 1986 bondholders who are the plaintiffs here. The investment of these plaintiffs has been repaid in full, with interest to October 9, 1992, when redemption took place. Had the Trustee failed to draw timely on the Letter of Credit, jeopardizing the ability of the County and HERC to redeem the bonds, I have not the least doubt the plaintiffs would be before us with a legitimate complaint — that the County and HERC had breached their mandatory obligation to redeem the bonds not less than 5 days prior to the expiration of the Letter of Credit.
That the subjective expectations of the bondholders do not convert clearly stated bond provisions into ambiguities is forcefully demonstrated by the holding in Lucas v. Florida Power & Light Co., 765 F.2d 1039 (11th Cir.1985). Lucas, one of the class of plaintiff-bondholders, complained that Florida Power & Light Co. (FPL) had been vague, omissive, and obscure regarding the susceptibility of FPL first mortgage bonds issued on March 13, 1975 to replacement fund redemption, causing a widespread market belief that the bonds were nonredeemable until March 1, 1980. The interest rate on this $125 million bond issue was 10⅜ percent, the highest ever paid by FPL. The opening paragraph of the prospectus given prospective bondholders had this to say about redemption:
The New Bonds will be redeemable, in whole or in part, upon not less than 30 days’ notice at the general redemption prices and, under certain circumstances, at the special redemption prices as described herein, provided that, prior to March 1, 1980, no redemption may be made at a general redemption price through refunding at an effective interest cost to the *512Company of less than 10.052% per annum. Such limitation does not, however, apply to redemptions at a special redemption price for the replacement fund or with certain deposited cash or proceeds of released property. The special redemption prices for the New Bonds are 101.67% of the principal amount through February 29, 1976 and decrease thereafter to 100% for the twelve months ending February 28, 2005. See “New Bonds — Redemption and Purchase of Bonds” herein.
Id. 765 F.2d at 1041 (emphasis supplied by Lucas court).
The replacement fund to which the prospectus refers was created by a provision in FPL’s original 1944 mortgage, which required FPL to spend a certain sum each year for the maintenance and replacement of the mortgaged property or for the redemption of bonds. Any deficiency in the expenditures for maintenance and replacement was to be made up by the deposit of cash in the maintenance and replacement fund. The replacement fund had, for all practical purposes, never been used to redeem bonds; but in March 1977, just about 2 years after issuance of the bonds, FPL announced that it was considering refinancing $63.7 million of 10 1/8 percent bonds due March 1, 2005 at a special redemption price of 101.65. Id. at 1042.
The bondholders complained that they had been led to believe that the bonds could not be refunded at an effective interest cost of less than 10.052 percent before March 1, 1980, and then only at a price of 109.76. In essence, the bondholders contended that omissions and misstatements in the prospectus did not provide an investor with the information essential for evaluation of the vulnerability of the bonds to redemption through the replacement fund, especially during the 5-year period of refunding protection. In particular, the bondholders cited FPL’s failure to disclose the size of the 1974 deficiency ($54 million) which FPL was required to deposit in the replacement fund.
Initially, it was held that the above-quoted first paragraph of the prospectus made it clear that prior to March 1, 1980, “the bonds were, simply stated, nonrefundable5 for 5 years after issuance.” Id. at 1041.
The trial court ruled that the prospectus did not contain misrepresentations or omissions, then went on to say this:
The likelihood at the time of issue that FPL would later redeem some or all of the bonds at a special redemption price was unknown and unknowable and, therefore, not a material fact.
Id. at 1045.
Affirming judgment in favor of FPL, the circuit court stated:
The possibility of a special redemption was clear on the face of the prospectus; the vulnerability or likelihood of such a redemption was a matter of speculation at the time.
Id. (emphasis in original).
Similarly in the present case the expiration date of the Letter of Credit and the possibility of mandatory redemption for lack of a renewal or replacement safety net were clear on the face of the Official Statement; and the vulnerability or likelihood of such a mandatory redemption was a matter of speculation at the time. In 1986 when these bonds were issued economists and financial experts were of two minds about the future of interest rates; some were of the opinion that interest rates would rise but others opined a future decrease in interest rates. In all probability, however, even the experts would concede that prognostication about the course of interest rates 6 years later — in 1992 — would be nothing more than speculation. It seems to me unlikely that Hennepin County had any clearer vision of the 1992 interest rates than did either the experts or the bondholders. Consequently, I consider the implication that the County and HERC set a hidden-redemption-option-without-premium trap for unwary investors completely unjustified.
*513In any case, even the most unsophisticated investor could not fail to understand that if interest rates dropped sufficiently in the early months of 1992 to justify the cost of refinancing the bonds, neither the County nor HERC would be likely to consider a proposal for or even an offer of a new Letter of Credit acceptable and that if a replacement Letter of Credit or Alternate Credit Facility were not delivered to the Trustee at least 45 days prior to October 15, 1992, or if the Trustee were not satisfied that the new Letter of Credit or Alternate Credit Facility submitted to it met all the requirements of the Indenture, the bonds would be redeemed on or before October 10, 1992. In fact, the bonds were redeemed, and the plaintiffs here concede that their bonds were redeemed by payment of their full face value plus accrued interest. In short, the bondholders did not lose any money; they just did not profit quite as handsomely as they had hoped.
Finally, I do not understand that Minnesota has ever recognized a cause of action for breach of an implied covenant of good faith and fair dealing independent of an underlying breach of contract claim. If a party proves breach of an express term of the contract, there is, of course, no reason to reach the question whether there has been a breach of an implied covenant. Therefore, it may be more appropriate to say that breach of an implied covenant is actionable only if the implied covenant will only aid and further the express terms of the contract and “will never impose an obligation “which would be inconsistent with other terms of the contractual relationship.’ ” Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 716 F.Supp. at 1517.
With respect to contracts like indentures— “[A]n implied covenant ... derives its substance directly from the language of the Indenture, and ‘cannot give the holders of Debentures any rights inconsistent with those set out in the Indenture.’ [Where] plaintiffs’ contractual rights [have not been] violated, there can have been no breach of an implied covenant.” [Emphasis added in original].
Id. at 1517 (citing Gardner & Florence Call Cowles Foundation v. Empire Inc., 589 F.Supp. 669, 673 (S.D.N.Y.1984), vacated on procedural grounds, 754 F.2d 478 (2d Cir.1985) quoting Broad v. Rockwell, 642 F.2d 929, 957 (5th Cir.) (en banc), cert. denied, 454 U.S. 965, 102 S.Ct. 506, 70 L.Ed.2d 380 (1981)).
Here the County did not violate the bondholders’ rights when it exercised its own contractual right to reject the Banks’ offer to renew the Letter of Credit if the Banks made such an offer. Accordingly, the bondholders have not stated a claim of breach of implied covenant upon which relief can be granted, and on that issue, on which the court of appeals did not rule, I would reverse the trial court and, since there has been no breach of an express term of the contract, dismiss any claim of breach of implied covenant of good faith and fair dealing, which the plaintiffs concede they did not plead as a separate claim.
In conclusion I am obliged to reiterate my observation that the Official Statement, the Loan Agreement, and the Indenture are typical bond documents — well crafted but lengthy and extremely complex. Complex documents are, of course, attractive targets for contrived complaints of ambiguity. If, however, the order in which the numbered sections appear in the Loan Agreement and the Indenture executed in connection with the issuance of the Series 1986 Bonds can be said to create an ambiguity and if the plain language of the provisions governing the Letter of Credit and Redemption — whether mandatory or optional or extraordinary optional — can be declared ambiguous, then all bond documents are ambiguous and subject to whatever subjective expectations any reader wishes to impress upon them. Like the United States Court of Appeals for the Second Circuit, which sits at the heartland of this nation’s financial market, I regard uniformity of interpretation and application of the customary provisions of detailed documents used and relied on throughout the securities market as essential to the operation of capital markets. To treat standardized language as ambiguous in order to achieve a desired result seems to me commercially, as well as legally, unsound. As *514the Second Circuit Court of Appeals put it in the Sharon Steel Corp. case—
Whereas participants in the capital market can adjust their affairs according to a uniform interpretation, whether it be correct or not as an initial proposition, the creation of enduring uncertainties as to the meaning of boilerplate provisions would decrease the value of all debenture issues and greatly impair the efficient working of capital markets.
691 F.2d at 1048.
I fear this decision sounds the death knell of the Minnesota municipal bond market, for it requires a municipality either to issue bonds, the terms of which will be unknown until some judge decides how the ambiguous bond documents will be interpreted or to issue bonds callable at will — a choice which is unlikely to appeal either to issuers or purchasers and which may well have a depressing effect on the market value of such bonds. The majority wishes to characterize the requirement that any offer to renew the Letter of Credit be accepted by both the County and HERC as the equivalent of a provision making the Series 1986 Bonds “callable at will.” In fact the opportunity to accept or reject an offer to renew the Letter of Credit or to issue a new Letter of Credit could arise only during a limited period of time just before September 1, 1992 — from whenever the Banks chose to make an offer to August 31, 1992. Of course, we do not know if the Banks made an offer, but if they had and if the County and HERC had accepted that offer, then neither the County nor HERC could have triggered mandatory redemption by rejecting a proffered Letter of Credit until the expiry date of the Letter of Credit issued in 1992.
For the foregoing reasons I would reverse the court of appeals and direct the entry of judgment in favor of the County of Hennepin and Hennepin Energy Resource Co. Limited Partnership.

. Because the majority opinion has chosen to identify defendant Hennepin Energy Resource Co. Limited Partnership by its initials HERC, it will continue to be identified as HERC in this dissenting opinion. However, in the Official Statement Hennepin Energy Resource Co. is called the "Partnership” and in the Loan Agreement and the Indenture it is called the "Company.”

. This oversimplified description of the promises to lend and to repay is intended only as a reminder of the nature of the 73-page loan agreement between Hennepin County and HERC.

. Inasmuch as only a single clause of the Indenture deals with optional redemption — clause (a) of Section 3.01 — while five clauses deal with mandatory redemption- — clauses (b) through (f) of Section 3.01, one of which — clause (e) — incorporates the six additional bases for mandatory redemption set out at Section 4.07 of the Loan Agreement, there seems to me no justification for the majority’s assumption that a bondholder is entitled to utterly ignore the description of the ten events which invoke mandatory redemption and to read only the provision for optional redemption and extraordinary optional redemption and, by ignoring the provisions for mandatory redemption, complain that any exercise by the County or HERC of their clearly stated contractual rights constitutes an express breach of contract and/or a breach of an implied covenant of good faith and fair dealing.

. The necessity for acceptance, if it occurs at all, will occur within a predictable and limited period of time. Unless a decrease in interest rates sufficient to justify refunding the bonds coincided with the time for acceptance or rejection of the banks’ offer of a new Letter of Credit, acceptance would lock the County and HERC into the exist*510ing bond requirements until expiration of the new Letter of Credit.

. In a footnote the Lucas court pointed out that the terms "nonrefundable,” "nonredeemable,” and "noncallable” were often used loosely and that the almost interchangeable use may have contributed to investor misunderstanding. The court then pointed out that "refunding” means a sale of bonds to redeem an earlier series of bonds. Id. at 1041 n. 7.