EDWARD GADINSKY AND GADCO OCALA 202, INC., APPELLANTS,
v.
MELLON BANK, N.A., A NATIONAL BANKING ASSOCIATION, APPELLEE
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Plaintiffs appealed the dismissal of their breach of contract claims against Mellon Bank regarding a collateral agreement for a two-stage loan. The court affirmed the dismissal, holding that since the $1.5 million secondary portion of the loan was never repaid, plaintiffs were not entitled to the return of their collateral as a matter of law.
As a matter of law, plaintiffs were not entitled to the return of their collateral because the $1.5 million secondary portion was never repaid. The bank properly applied the letter of credit proceeds to the $23.4 million primary portion, as the letter of credit was given to secure the primary portion, not the secondary portion.
[1] A party is not entitled to the return of collateral securing a loan when the loan has not been repaid.
[2] A bank is not required to apply proceeds from a letter of credit to a different portion of a loan than that which the letter of credit was intended to secure.
Previewing 2 of 3 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“Because the $1.5 million secondary portion of the loan was never repaid, we conclude that, as a matter of law, the plaintiffs were not entitled to the return of their collateral on that part of the loan.”
Establishes the core holding that failure to repay the secondary portion precludes return of collateral
Previewing 1 of 2 key quotes on this case — the court’s exact language, pinpointed for members.
Join FLexlaw to unlock all legal intelligenceGarden East Plaza, Ltd. obtained a two-stage loan from Mellon Bank consisting of a $23.4 million primary portion and a $1.5 million secondary portion.…
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PER CURIAM.
This is an appeal by the plaintiffs Edward Gadinsky and Gadco Ocala 202, Inc. from a final order dismissing their breach of contract claims against the defendant Mellon Bank, N.A. Contrary to the plaintiffs’ arguments, we agree with the trial court that the contract claims failed to state a cause of action for breach of the collateral agreement between the parties given to secure a portion of a loan made by the bank to Garden East Plaza, Ltd.; we accordingly affirm.
The collateral agreement provided that upon payment of a $1.5 million secondary portion of a two-stage loan to the defendant bank, the collateral given to secure this loan would be returned to the plaintiffs. Without dispute, Garden East Plaza, Ltd. defaulted on the entire loan it received from the bank, and the plaintiff Edward Gadinsky defaulted on his personal guaranty for such loan. Upon this default, the bank cashed the $1.1 million letter of credit previously given to secure the $23.4 million primary portion of the subject loan and applied it to reduce the amount due and owing on that portion of the loan. Because the $1.5 million secondary portion of the loan was never repaid, we conclude that, as a matter of law, the plaintiffs were not entitled to the return of their collateral on that part of the loan.
Moreover, we cannot agree that the defendant bank should have applied the proceeds of the letter of credit to the $1.5 million secondary portion of the loan, as this is clearly contrary to the terms of the underlying loan documents. The letter of credit was given to secure the $23.4 million primary portion of the loan, not the $1.5 million secondary portion of the loan. City Nat’l Bank v. Citibank, N.A., 373 So. 2d 703, 707 (Fla. 3d DCA 1979) (quoting State v. Wesley Constr. Co., 316 F.Supp. 490, 495 (S.D.Fla.1970), aff'd, 453 F. 2d 1366 (5th Cir.1972)); see Townsend v.
First Fed. Sav. & Loan Ass’n, 153 Fla. 535, 15 So. 2d 199, 200 (1943); Ross v. Savage, 66 Fla. 106, 63 So. 148, 155 (1913); Jerry’s, Inc. v. City of Miami, 591 So. 2d 1000, 1001-02 (Fla. 3d DCA 1991); Izadi v. (Gus) Machado Ford, Inc., 550 So. 2d 1135, 1138 (Fla. 3d DCA 1989); South Fla. Beverage Corp. v. Figueredo, 409 So. 2d 490, 495 (Fla. 3d DCA 1981), rev. denied, 417 So. 2d 329 (Fla.), cert. denied, 459 U.S. 881, 103 S.Ct. 178, 74 L.Ed.2d 146 (1982); Transport Rental Sys., Inc. v. Hertz Corp., 129 So. 2d 454, 456 (Fla. 3d DCA 1961).
Affirmed.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Authorities Cited (13 total)
- Ross v. Savage, 66 Fla. 106 (Fla. 1913)
- Transp. Rental Sys., Inc. v. HERTZ Corp., 129 So. 2d 454 (Fla. 3d DCA 1961)
- S. Fla. Bev. Corp. v. Efrain Figueredo, 409 So. 2d 490 (Fla. 3d DCA 1981)
- Davis v. United States, 453 F.2d 1366 (5th Cir. 1971)
- City Nat'l Bank OF Miami v. Citibank, 373 So. 2d 703 (Fla. 3d DCA 1979)
- Happy Day, Inc. v. Kentucky, 459 U.S. 881 (U.S. 1982)
- Figueredo v. S. Fla. Bev. Corp., 459 U.S. 881 (U.S. 1982)
- Palacio v. Palacio, 550 So. 2d 1135 (Fla. 3d DCA 1989)
- Knapp v. Fin. Planning Ins. Corp. of Miami, Inc., 550 So. 2d 1135 (Fla. 3d DCA 1989)
- Jerry's, Inc. v. City OF Miami, 591 So. 2d 1000 (Fla. 3d DCA 1991)