Court Opinion

ID: 2971402
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:34:34.336259+00
Date Added: 2024-06-11T13:15:15.159849
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
             Pursuant to Sixth Circuit Rule 206            2    Pressman v. Franklin Nat’l Bank, et al. No. 03-5592
    ELECTRONIC CITATION: 2004 FED App. 0304P (6th Cir.)
                File Name: 04a0304p.06                     WALLER, LANSDEN, DORTCH & DAVIS, Nashville,
                                                           Tennessee, for Appellees.
UNITED STATES COURT OF APPEALS                                                 _________________
               FOR THE SIXTH CIRCUIT                                               OPINION
                 _________________                                             _________________

 JERROLD S. PRESSMAN ,            X                           BOYCE F. MARTIN, JR., Circuit Judge. This dispute
                                   -                       arises from Franklin National Bank’s failure to make a loan
          Plaintiff-Appellant,                             to a partnership called Inglehame Farm, LP, of which Jerrold
                                   -
                                   -   No. 03-5592         S. Pressman was a limited partner. Pressman alleges that the
             v.                    -                       Bank is liable for breach of contract, fraud and civil
                                    >                      conspiracy, and that Gordon E. Inman – the founder of the
                                   ,                       Bank and president of the Bank’s parent company – is liable
 FRANKLIN NATIONAL BANK            -
 and GORDON E. INMAN ,                                     for procurement of breach of contract and civil conspiracy.
                                   -                       Following a nine-day bench trial, the district court entered
          Defendants-Appellees. -                          judgment in favor of the defendants on all claims. For the
                                   -                       reasons discussed below, we AFFIRM.
                                  N
       Appeal from the United States District Court                                      I.
     for the Middle District of Tennessee at Nashville.
    No. 00-00799—Todd J. Campbell, District Judge.           The Inglehame Farm partnership was formed to accomplish
                                                           one purpose: to purchase from different sellers several tracts
                Argued: August 10, 2004                    of land in Williamson County, Tennessee, combine the tracts
                                                           and develop them as a residential subdivision. The closing on
         Decided and Filed: September 9, 2004              one of the parcels of land, labeled the “Sharp property,” was
                                                           originally scheduled for August 1, 1996. The partnership
Before: KEITH, MARTIN, and ROGERS, Circuit Judges.         sought to rezone the property prior to the closing. Robert
                                                           Geringer, one of the general partners of the partnership, spoke
                   _________________                       with Charles Lanier, a loan officer at the Bank, about
                                                           obtaining an acquisition loan for the Sharp property. The
                       COUNSEL                             partnership had conducted business with the Bank on prior
                                                           occasions. Lanier told Geringer that the Bank would need to
ARGUED: Jeffrey Alan Greene, Nashville, Tennessee, for     obtain a participating bank to finance a portion of the loan
Appellant. Joseph A. Woodruff, WALLER, LANSDEN,            because the size of the loan would exceed the Bank’s legal
DORTCH & DAVIS, Nashville, Tennessee, for Appellees.       lending limit.
ON BRIEF: Jeffrey Alan Greene, Nashville, Tennessee, for
Appellant. Joseph A. Woodruff, W. Travis Parham,

                             1
No. 03-5592 Pressman v. Franklin Nat’l Bank, et al.           3    4     Pressman v. Franklin Nat’l Bank, et al. No. 03-5592

  When the rezoning hearing was set for a date that followed          The rezoning plan for the Sharp property was officially
the scheduled closing date, the partnership asked the sellers      approved on August 12. Nevertheless, Banker’s Bank
for an extension of the closing date, which was refused.           decided not to participate in the loan to the partnership, and
Lanier subsequently told Geringer that the loan had been           it notified the Bank of its decision. Lanier, in turn, advised
approved by the Bank’s loan committee. Still, however, the         Geringer that the Bank would not make the loan, but he
Bank needed to obtain a participating bank in order to provide     mentioned that Inman was still willing to make a private loan.
the loan. The Bank first asked its parent company, Franklin        Steve Morriss, another general partner of the partnership,
Financial Corporation, to participate in the loan, but Franklin    urged the partnership to accept Inman’s proposal. Geringer
Financial refused. The Bank then approached The Banker’s           again rejected the offer, however, and subsequently obtained
Bank of Atlanta, Georgia, which gave more consideration to         a loan elsewhere, though on less favorable terms than
the proposal. Shortly before the scheduled closing, Lanier         originally proposed by the Bank.
told Geringer that Banker’s Bank required approval of the
rezoning prior to participating in the loan. Geringer testified       The partnership suffered from in-fighting for the next two
that Lanier told him that this was the only impediment to          years, and eventually filed for bankruptcy. Pressman made an
Banker’s Bank agreeing to participate, but Lanier and the          offer to purchase all of the partnership’s claims as part of the
Bank denied that Lanier made such a representation. The            bankruptcy proceeding, which was approved by the
district court did not make a factual finding as to whether        bankruptcy judge over Morriss’s competing offer. Pressman
Lanier represented that the rezoning approval was the only         filed the instant lawsuit against the Bank and Inman. After a
impediment to Banker’s Bank participating in the loan.             nine-day bench trial, the district court issued a written
                                                                   memorandum and order entering judgment in favor of the
  Geringer later met with Inman, the founder of the Bank and       defendants on all claims.
the president of its parent company, who offered to make a
personal loan to the partnership on certain terms, including                                      II.
the payment of $15,000 per lot profit. Geringer rejected the
offer because, in his view, the terms were extremely                 On appeal from a judgment entered following a bench trial,
unfavorable to the partnership.                                    we review the district court’s factual findings for clear error
                                                                   and its legal conclusions de novo. Harrison v. Monumental
   Geringer then negotiated an extension of the closing date       Life Ins. Co., 333 F.3d 717, 721-22 (6th Cir. 2003).
on the Sharp property to August 15, at an additional, non-
refundable cost of $100,000. Geringer and the Bank                      A. Breach of Contract Claim Against the Bank
negotiated and executed a Commitment Letter, which was
dated July 31, 1996. The Letter, which expresses the Bank’s          Pressman’s breach of contract claim is premised upon two
intent to make the loan to the partnership subject to certain      theories: first, that the Bank breached its obligations under the
terms and conditions, forms the basis for Pressman’s breach        Commitment Letter by failing to make the loan to the
of contract claim. Pursuant to the Commitment Letter, the          partnership; and second, that the Bank breached its obligation
Bank’s obligation to make the loan to the partnership was          of good faith and fair dealing in connection with its search for
contingent on its ability to find a participating bank to fund a   a participating bank. We will address each theory in turn.
portion of the loan.
No. 03-5592 Pressman v. Franklin Nat’l Bank, et al.            5    6      Pressman v. Franklin Nat’l Bank, et al. No. 03-5592

             1. Participating Bank Condition                        subject only to final rezoning approval. Pressman’s argument
                                                                    lacks merit.
  The district court rejected Pressman’s claim that the Bank
breached its obligations under the Commitment Letter on the            First, even if Lanier had the authority to effect such a
ground that one of the conditions in the Letter – the so-called     waiver on behalf of the Bank, there is no evidence that he
“participating bank condition” – was not fulfilled. That            possessed the requisite “intent” to do so. Second, Lanier’s
condition, which is listed under the heading “Special               alleged representation predated the execution of the
Conditions for Loan,” provides as follows:                          Commitment Letter; in other words, at the time of Lanier’s
                                                                    alleged representation, the Bank had no rights under the
  (c) Participant. Lender shall obtain a participating              participating bank condition that could be waived. Third, a
  lender that will commit to fund an aggregate of at least          merger and integration clause contained in the Commitment
  $2,000,000 of the Loan on a pro-rata participation basis          Letter precludes Pressman from relying upon alleged
  and on other terms and conditions acceptable to both              representations made prior to the execution of the
  lenders. Should Lender be unable to locate an                     Commitment Letter. That clause provides:
  acceptable participant lender or to agree on the terms of
  the participation, then Lender shall refund the                       This Commitment Letter when accepted by Borrower
  Borrower’s Commitment Fee (or any portion thereof that                constitutes the sole and entire agreement between Lender
  has been paid to Lender), and Lender shall have no                    and Borrower regarding Lender’s commitment to lend
  obligation to make the Loan, and this Commitment Letter               money to Borrower and all previous negotiations, letters,
  shall be null and void . . . .                                        proposals, understandings and other communications
                                                                        are superseded by this Commitment Letter.
(Emphasis added).
                                                                    (Emphasis added.) Fourth, the Commitment Letter requires
The district court found that as of the date set for closing, the   any “waiver of [its] terms” to be “in writing” and “executed
Bank had been unable to locate a participating bank. For this       by both parties,” which was not done here.
reason, the district court held that “the Bank’s obligation to
make the loan was excused” because the participating bank              Pressman also makes a promissory estoppel argument on
condition in the Commitment Letter had not been satisfied.          appeal.       According to Pressman, Lanier’s alleged
                                                                    representation to the partnership that Banker’s Bank would
   Pressman argues that the district court’s conclusion was         accept the loan proposal so long as the rezoning plan was
erroneous because the Bank “waived” the participating bank          approved constituted a “promise on the part of the Bank to
condition. Under Tennessee law, a party may waive his or            make the loan if the final [rezoning] approval was granted,”
her known rights under a contract by either express                 upon which the partnership relied in paying $100,000 to
declarations or by acts manifesting an intent not to claim the      extend the closing date. Therefore, Pressman contends, the
rights. Jenkins Subway, Inc. v. Jones, 990 S.W.2d 713, 722-         Bank’s promise to pay the loan should be enforced to avoid
23 (Tenn. Ct. App. Nov. 18, 1998). According to Pressman,           injustice under the doctrine of promissory estoppel. Our
the Bank’s waiver occurred even before the Commitment               review of the record reveals that Pressman did not raise this
Letter was executed, when Lanier orally represented to the          issue in the district court, and the district court’s opinion does
partnership that the participating bank was ready to close,         not discuss it. “Issues not presented to the district court but
No. 03-5592 Pressman v. Franklin Nat’l Bank, et al.           7    8      Pressman v. Franklin Nat’l Bank, et al. No. 03-5592

raised for the first time on appeal are not properly before the     B. Exclusion of Evidence of Alleged Corruption Within
court.” Wyckoff & Assocs. v. Standard Fire Ins. Co., 936                                  the Bank
F.2d 1474, 1488 (6th Cir. 1991). For this reason, we decline
to address Pressman’s promissory estoppel argument.                  At the bench trial, Pressman sought to admit affidavits from
                                                                   Ken Kiel, a former officer of the Bank, and E.A. Gregory, a
              2. Good Faith and Fair Dealing                       Bank customer, in an attempt to show corruption within the
                                                                   Bank. Kiel’s affidavit stated that while employed at the
   Pressman also argues that the Bank breached its obligation      Bank, he had been instructed by his superior to decline a
of good faith and fair dealing in seeking a participating bank     customer’s transaction because Mr. Inman wished to do the
by failing to solicit more banks and failing to submit adequate    deal individually. Relatedly, Gregory’s affidavit indicated
proposal materials to the banks. The district court held that      that Inman had provided private loans to him that involved
it was enough for the Bank to solicit only two banks to            high rates of interest coupled with payments in cash of
participate, particularly given the Bank’s small size and the      additional amounts. This evidence was apparently offered in
short time until the closing date. The court also rejected         connection with the breach of contract claim, as evidence that
Pressman’s argument concerning the adequacy of the                 the Bank breached its obligation of good faith and fair
proposal materials, citing testimony from officers of Banker’s     dealing. The district court characterized this evidence as
Bank indicating that their decision not to participate had         “classic propensity evidence” and excluded it pursuant to
nothing to do with anything that the defendant Bank did or         Federal Rules of Evidence 404(b) and 403.
failed to do, and was based solely on the fact that the terms of
the proposal were not sufficiently favorable to Banker’s Bank.       We review the district court’s exclusion of evidence for
We agree with the district court’s reasoning and find no error     abuse of discretion, and reverse only if we are “firmly
in its conclusion that the Bank acted in good faith and used       convinced” of a mistake that affects “substantial rights” and
commercially reasonable efforts to secure a participating          amounts to more than harmless error. United States v.
bank.                                                              Copeland, 321 F.3d 582, 599 (6th Cir. 2003). Rule 404(b)
                                                                   states as follows:
   We also reject Pressman’s argument that the district court
used the wrong legal standard by focusing on whether the               Evidence of other crimes, wrongs, or acts is not
Bank acted in bad faith, rather than on whether it failed to act       admissible to prove the character of a person in order to
in good faith. This argument elevates semantics over                   show action in conformity therewith. It may, however,
substance. The district court cited and applied the proper             be admissible for other purposes, such as proof of
legal standard – which, as the district court recognized, is set       motive, opportunity, intent, preparation, plan,
forth in cases such as Wallace v. National Bank of Commerce,           knowledge, identity, or absence of mistake or accident
938 S.W.2d 684, 686 (Tenn. 1996) and Spectra Plastics, Inc.            ....
v. Nashoba Bank, 15 S.W.3d 832, 843 (Tenn. Ct. App. 1999).
The fact that its opinion also mentioned the phrase “bad faith”    A three-part test is used to determine whether evidence is
is simply of no consequence.                                       admissible pursuant to Rule 404(b):
                                                                       First, the district court must decide whether there is
                                                                       sufficient evidence that the other act in question actually
No. 03-5592 Pressman v. Franklin Nat’l Bank, et al.             9   10    Pressman v. Franklin Nat’l Bank, et al. No. 03-5592

  occurred. Second, if so, the district court must decide           other partners of the Inglehame Farm partnership. Pressman
  whether the evidence of the other act is probative of a           asserts that Morriss had been engaged in a scheme to defraud
  material issue other than character. Third, if the evidence       his partners from the initial formation of the partnership, and
  is probative of a material issue other than character, the        that the Bank and Inman provided financing to support the
  district court must decide whether the probative value of         scheme, knowing that Morriss’s intent was to defraud the
  the evidence is substantially outweighed by its potential         partnership.
  prejudicial effect.
                                                                       In Tennessee, a civil conspiracy is a “combination between
United States v. Trujillo, No. 02-1521, 2004 WL 1630518, at         two or more persons to accomplish by concert an unlawful
*8 (6th Cir. July 22, 2004) (citations omitted).                    purpose, or to accomplish a purpose not in itself unlawful by
                                                                    unlawful means.” Chenault v. Walker, 36 S.W.3d 45, 52
  Pressman argues that “the excluded evidence showed that           (Tenn. 2001) (citation and quotation marks omitted). “Each
Mr. Inman had the power and opportunity to cause officers of        conspirator must have the intent to accomplish this common
the Bank to make business decisions based on his personal           purpose, and each must know of the other’s intent.” Brown
interests and that the motivation of the Bank and Mr. Inman         v. Birman Managed Care, Inc., 42 S.W.3d 62, 67 (Tenn.
in these matters was to advance Mr. Inman’s personal                2001).
interests, not to engage in normal banking practices.”
According to Pressman, these allegations are relevant to               The district court acknowledged that there was some
whether the Bank breached its obligation of good faith and          evidence indicating that Morriss may have been involved in
fair dealing. The events to which Kiel and Gregory testified,       a scheme to defraud the partnership, though it made no formal
however, are wholly unrelated to the facts of this case.            findings on this issue. The court reasoned, however, that even
Therefore, the probative value of the excluded testimony is         if Morriss was involved in such a scheme, the evidence did
extremely slight, and is outweighed by its prejudicial effect.      not establish that either the Bank or Inman possessed the
Under these circumstances, the district court did not abuse its     requisite intent to be liable as civil conspirators. The relevant
discretion in excluding these affidavits.                           evidence, as recited by the district court, is as follows:
C. Claim of Procurement of Breach of Contract Against                   The evidence indicates that Mr. Morriss, through a
                      Inman                                           company controlled by him, purchased property adjacent
                                                                      to the Inglehame development (the “Hollis Property”)
  Pressman argues that Inman is liable for procurement of the         that would have been valuable to the Partnership for the
Bank’s breach of contract. In light of our holding that the           access it provided to Wilson Pike, without disclosing that
Bank committed no breach of contract, however, Inman                  purchase to the Partnership. The evidence also indicates
cannot be held liable for the procurement of that alleged             that the Bank refinanced the loan on that property.
breach.
                                                                         The evidence indicates that Mr. Morriss purchased a
D. Civil Conspiracy Claim Against the Bank and Inman                  large amount of stock in the holding company that owns
                                                                      the Bank; and that, at that same time, Defendant Inman
 Pressman argues that the Bank and Inman, along with                  was selling a substantial number of shares of stock he
Morriss and others, conspired to defraud Pressman and the             owned in the holding company. That stock was later
No. 03-5592 Pressman v. Franklin Nat’l Bank, et al.        11

  used as collateral for one of the loans Mr. Morris[s] or
  one of his companies received from the Bank.
    Plaintiff has also established that the Bank made
  several loans to Mr. Morriss or to companies controlled
  by him on terms that were exceptionally favorable to the
  borrower, and “out of policy.” The evidence also
  indicates that two of those companies to which the Bank
  provided loans, Pete’s Landscaping and Mid-Tenn
  Utilities, were used by Mr. Morriss to harm the
  Partnership.
    Finally, the evidence indicates that Mr. Morriss
  conducted certain of his business with the Bank through
  Defendant Inman, and that the two men travel[ed] to
  California together in 1996.
  We agree with the district court that this evidence does not
establish that either the Bank or Inman intended to defraud
the partnership – or even that the Bank or Inman knew that
Morriss intended to defraud the partnership. Therefore, the
district court properly awarded judgment in favor of the Bank
and Inman on Pressman’s civil conspiracy claim.
 For these reasons, the district court’s judgment is
AFFIRMED.