SECOND NATIONAL BANK OF CLEAR-WATER, APPELLANT,
v.
WESTLAKE DEVELOPMENT CORPORATION, APPELLEE
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Second National Bank appealed a summary judgment ordering it to execute a satisfaction of mortgage after the borrower, Westlake Development Corporation, tendered full payment of the principal and accrued interest. The court held that a liquidated damages clause in the loan agreement, which conditioned the bank's right to financing future phases on a right of first refusal, was inapplicable when the borrower paid off the entire loan rather than seeking partial releases.
The court held that paragraph 34(t) applies only when the borrower seeks releases from the mortgage for property composing Phases II and/or III. Because the borrower tendered full payment without seeking such releases, the liquidated damages clause was inapplicable, and the bank was required to execute and deliver the satisfaction of mortgage.
[1] A lender is not entitled to liquidated damages for the failure to receive a right of first refusal to finance future phases of a development when the borrower has satisfi…
[2] A loan agreement provision for liquidated damages, triggered by the failure to provide a right of first refusal for future financing, is only applicable when the borrower…
Previewing 2 of 4 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“Paragraph 34 (t) is clear and unambiguous that it would only apply in the event appellee sought releases from the mortgage of the real property composing Phase II and/or Phase III of the planned development.”
Establishes the court's interpretation that the liquidated damages clause was limited in scope to situations involving requests for releases.
Previewing 1 of 3 key quotes on this case — the court’s exact language, pinpointed for members.
Join FLexlaw to unlock all legal intelligenceWestlake Development Corporation executed a $3,400,000 promissory note and mortgage with Second National Bank for Phase I of a three-phase development…
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HOBSON, Acting Chief Judge.
Appellant, defendant below, appeals a summary judgment directing it to execute and deliver a satisfaction of mortgage to the-appellee. The appellee executed a promissory note and mortgage to appellant in the amount of $3,400,000. The proceeds from the note were to be used for the construction of Phase I of what was to be a three-phase development. Simultaneously with the execution of a note and mortgage, appellee and appellant executed a loan agreement. This loan agreement was made a part of a mortgage by reference.
Subsequently, the appellee tendered to the appellant the principal balance due on the mortgage with accrued interest and requested a satisfaction thereof. The appellant refused to execute and deliver a satisfaction of the mortgage on the ground that under paragraph 34 (t) of the loan agreement it was entitled to liquidated damages for the failure of the appellee to give the appellant a right of first refusal to finance the construction of Phase II and Phase III of the development.
Paragraph 34(t) of the loan agreement reads as follows:
“It is anticipated that BORROWER will develop portions of the above described Property in two (2) additional Phases, identified as Phases II and III for the purposes of this Loan Agreement. In addition to the payment of $250,000.00 for each of said releases, as is set forth in Exhibit ‘D,’ it is understood and agreed that BORROWER will pay to LENDER a fee of Thirty Thousand Dollars ($30,000.00) for each phase to be released, or one per cent (1%) of the actual construction loan required to develop Phases II and III, whichever is greater. Full credit will be given to the Commitment fees which may be imposed for Phase II and Phase III construction loans, if said loans are made by the LENDER. These release fees shall be considered liquidated damages should the LENDER not be given first right of refusal for a bankable construction loan for the Phase II and Phase III buildings. A comparable package as is outlined in the LENDER’S Letter of Commitment, dated January 24, 1973, shall be deemed a bankable package, as meeting the requirements of this condition.”
The appellee contended, and the trial court agreed, that paragraph 34 (t) should not be considered where the appellee tendered to appellant the entire principal balance due, together with accrued interest thereon. Paragraph 34 (t) is clear and unambiguous that it would only apply in the event appellee sought releases from the mortgage of the real property composing Phase II and/or Phase III of the planned development. There being no releases sought by appellee, the trial court was eminently correct in entering summary judgment for appellee.
AFFIRMED.
GRIMES and SCHEB, JJ., concur.
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Commercial Air Transp. Sales Corp. v. Lundberg, 398 So. 2d 492 (Fla. 3d DCA 1981)…DCA 1981). See, Aetna Casualty & Surety Co. v. Warren Bros. Co., Div. of Ashland Oil, Inc., 355 So. 2d 785 (Fla. 1978); Font v. Lazarus Homes Corp., 339 So. 2d 258 (Fla.3d DCA 1976); Second National Bank of Clearwater v. Westlake Development Corp., 329 So. 2d 326 (Fla.2d DCA 1976). Affirmed.…