Court Opinion

ID: 3045825
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:17:26.147271+00
Date Added: 2024-06-11T12:46:39.136248
License: Public Domain

United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 08-1213
                                 ___________

Thomas & Wong General Contractor,    *
a Brunei Darussalam corporation,     *
                                     *
            Appellant,               *
                                     * Appeal from the United States
      v.                             * District Court for the
                                     * District of Minnesota.
The Lake Bank, N.A., doing business *
as The Lake Bank,                    *
                                     *
            Appellee.                *
                                ___________

                            Submitted: November 12, 2008
                               Filed: January 23, 2009
                                ___________

Before WOLLMAN, BEAM, and BENTON, Circuit Judges.
                          ___________

BENTON, Circuit Judge.

       Thomas & Wong General Contractor sued The Lake Bank for failure to perform
under a Collateral Transfer Agreement. Thomas & Wong appeals a summary
judgment in favor of Lake Bank. Having jurisdiction under 28 U.S.C. § 1291, this
court reverses and remands.

                                       I.

     The facts are stated in the light most favorable to Thomas & Wong, the non-
moving party. See Jenkins v. Winter, 540 F.3d 742, 744 (8th Cir. 2008).
       Lake Bank made loans to Beardmore Investments, Inc., secured by collateral
owned by John Beardmore, its president, director, and sole shareholder. John
Beardmore is also the president, director, and sole shareholder of BDV Investments,
Inc. In 2003, he informed Lake Bank that he was negotiating a financing package
with Thomas & Wong, and that some of the loan proceeds would pay Beardmore
Investments’ debt to Lake Bank. Beardmore orally instructed Lake Bank’s president
to assign the collateral to Thomas & Wong upon receipt of a $500,000 wire transfer.
BDV made a promissory note to Thomas & Wong; Thomas & Wong loaned BDV
$1,500,000.

      On March 12, 2003, Lake Bank’s president spoke with two of Thomas &
Wong’s agents, Edward Tarapaski and Jan Wallace, about wiring money to
Beardmore Investments’ account at Lake Bank. When asked if Thomas & Wong
“would send the money right away,” Wallace responded that Thomas & Wong would
“need something in writing from Lake Bank to verify the collateral again and to verify
that ownership would transfer to Thomas & Wong upon receipt of the funds.”
Wallace received a letter faxed from Lake Bank, entitled “Collateral Transfer to
Thomas and Wong General Contractor.” The Collateral Transfer Agreement states:

      Please be advised upon the receipt of wired funds The Lake Bank will
      assign the following collateral to Thomas and Wong General Contractor.

      A second mortgage on Mr. Beadmore’s [sic] Arizona home, the home is
      appraised at $2,000,000 with a first mortgage of $999,997. Equity
      $1,000,000.

      A 1999 Mercedes and a 2000 18 ft. Mystic Ski Boat with a Shorestation
      and lift total value of $50,000.

      A 22% interest in Founders Mezzanine Stock Fund estimated value
      $150,000. dividends in 2002 of $7,000. Superior Financial Holdings,
      Inc. stock value $200,000.

      We understand the $500,000 wire will be transferred today.

                                         -2-
The letter is signed on behalf of “The Lake Bank NA.” Later that day, Thomas &
Wong wired $500,000 to Beardmore Investments’ account at Lake Bank. Lake Bank
did not transfer the collateral upon receipt of the funds.

       BDV defaulted on its promissory note. Thomas & Wong requested that Lake
Bank verify retention of the collateral and confirm an intent to make it available for
liquidation. Lake Bank informed Thomas & Wong that it would maintain the
collateral, but not deliver it until BDV and Thomas & Wong agreed in writing to its
disposition. Correspondence between Lake Bank and Thomas & Wong continued into
the spring of 2004. In June 2004, Lake Bank sent Thomas & Wong documents related
to the collateral.

       Thomas & Wong sued in district court for Lake Bank’s failure to deliver the
collateral in a timely manner. The district court granted Lake Bank’s motion for
summary judgment, holding the suit was barred by the Minnesota credit-agreement
statute of frauds.

                                         II.

      This court reviews a district court’s grant of summary judgment de novo,
viewing the evidence most favorably to the non-moving party. Zhuang v. Datacard
Corp., 414 F.3d 849, 854 (8th Cir. 2005).

       Minnesota law provides: “A debtor may not maintain an action on a credit
agreement unless the agreement is in writing, expresses consideration, sets forth the
relevant terms and conditions, and is signed by the creditor and the debtor.” Minn.
Stat. § 513.33, subd. 2. Thomas & Wong seeks to maintain an action on the
Collateral Transfer Agreement. At issue is whether the Collateral Transfer Agreement
is a credit agreement, and whether Thomas & Wong is a debtor.

                                         -3-
                                          A.

       A “credit agreement” is “an agreement to lend or forbear repayment of money,
goods, or things in action, to otherwise extend credit, or to make any other financial
accommodation.” § 513.33, subd. 1(1). The district court ruled that the Collateral
Transfer Agreement is a credit agreement because it is an agreement “to make any
other financial accommodation.”

       Minnesota cases broadly interpret “financial accommodation.” In Rural
American Bank v. Herickhoff, 485 N.W.2d 702 (Minn. 1992), a father agreed to
involvement in a loan to his son, on the condition that the father’s loan repayment
receive priority. The Minnesota Supreme Court found that the priority repayment plan
was “a financial accommodation with respect to a lending agreement” and “precisely
the kind of ‘financial accommodation’ intended to be covered by the statute.” Id. at
706. In Pako Corp. v. Citytrust, 109 B.R. 368 (D. Minn. 1989), an oral agreement was
allegedly attached to an underlying credit agreement. The court found that it was thus,
“in effect, an oral aspect of the underlying credit agreement” and “a financial
accommodation within the meaning of the statute.” Id. at 377. In both Herickhoff and
Pako, an agreement modifying an underlying credit transaction was found to be a
financial accommodation and therefore, itself a credit agreement.
       In this case, the Collateral Transfer Agreement modified Lake Bank’s loan to
Beardmore Investments. Lake Bank agreed to transfer the collateral in exchange for
payment of Beardmore Investments’ debt. Lake Bank thus elected to make a financial
accommodation regarding Beardmore Investments’ loan. The Collateral Transfer
Agreement is an agreement to make a financial accommodation and therefore, a credit
agreement.
                                           B.

      Although the Collateral Transfer Agreement is a credit agreement, it triggers
the Minnesota statute only if the suit is by a debtor. At issue is whether Thomas &
Wong is a debtor. “Debtor” means “a person who obtains credit or seeks a credit
agreement with a creditor or who owes money to a creditor.” § 513.33, subd. 1(3).

                                         -4-
The district court found that Thomas & Wong is a debtor because it sought a credit
agreement with Lake Bank.

      Each part of a statute should be construed in connection with every other part
and in the context of the statute as a whole. State v. Clark, 755 N.W.2d 241, 250
(Minn. 2008). Statutory provisions cannot be interpreted in isolation. See Clark v.
Pawlenty, 755 N.W.2d 293, 305 (Minn. 2008). Thomas & Wong is suing on the
Collateral Transfer Agreement, so the “credit agreement” is the Collateral Transfer
Agreement throughout the statute as applied here.

       Whether Thomas & Wong is a debtor under the statute depends on whether
Lake Bank is a creditor with regard to the Collateral Transfer Agreement. Under §
513.33, “creditor” means “a person who extends credit under a credit agreement with
a debtor.” § 513.33, subd. 1(2). A statute should be interpreted to give effect to all
of its provisions and no word, phrase, or sentence should be deemed superfluous,
void, or insignificant. State v. Larivee, 656 N.W.2d 226, 229 (Minn. 2003). That a
creditor is one who “extends credit under a credit agreement” cannot be ignored.1
Lake Bank is not extending credit under the Collateral Transfer Agreement, so Lake
Bank is not a creditor. Since Thomas & Wong is not seeking a credit agreement with
a creditor, Thomas & Wong is not a debtor with respect to the Collateral Transfer
Agreement. Therefore, suit is not barred by Minnesota’s credit-agreement statute of
frauds.

      1
         The parties cite interpretations of Colorado’s credit-agreement statute of
frauds. See Schoen v. Morris, 15 P.3d 1094, 1098 (Colo. 2000); Echo Acceptance
Corp. v. Household Retail Serv., 267 F.3d 1068, 1077-78 (10th Cir. 2001). Under the
Colorado statute, a “creditor” is “a financial institution which offers to extend, is asked
to extend, or extends credit under a credit agreement with a debtor.” Colo. Rev. Stat.
§ 38-10-124(1)(b) (emphasis added). Due to this different language, interpretations
of the Colorado statute are not illuminating on this point.
                                           -5-
                                  III.

The judgment of the district court is reversed and the case is remanded.
               ______________________________

                                  -6-