Law School Case Brief
Brown-Marx Assocs., Ltd. v. Emigrant Sav. Bank - 703 F.2d 1361 (11th Cir. 1983)
Under Alabama law failure to fulfill promises does not give rise to actionable fraud unless it is alleged and proved that the representations were made with intent to deceive and with no intent at the time the representations were made to carry them out. Failure to perform a promise is not of itself adequate evidence of intent to support an action for fraud. A mere breach of a contractual provision is not sufficient to support a charge of fraud.
This diversity case concerns a dispute between a prospective borrower and a bank over a $1.1 million loan commitment for financing an office building. Emigrant Savings Bank (Emigrant) refused to lend the money, maintaining among other things that Brown-Marx Associates (Brown-Marx), the would-be borrower, had failed to satisfy the minimum rental requirement of the commitment. Brown-Marx sued Emigrant alleging breach of contract and various tort theories of recovery. The matter was tried to a jury, which found for Brown-Marx on its contract claim. The district court granted Emigrant's motion for new trial, primarily on the ground it had erroneously instructed the jury on the applicable law. Later the court granted summary judgment for Emigrant on all claims.
Did the district court err in ruling that strict performance of the loan commitment's express terms was required for recovery, and that there was no basis upon which to find that Emigrant had waived strict performance?
The court found that the district court correctly ruled that strict performance of the loan commitment's express terms was required for recovery, and that there was no basis upon which to find that Emigrant had waived strict performance. It found that the fraud claim was properly denied because Brown-Marx failed to show that Emigrant did not intend to honor the commitment provided that its terms were met. As there was no wrong independent of the contract, the claim that Emigrant breached a duty to deal in good faith also failed.
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