Law School Case Brief
RNR Invs. Ltd. P'ship v. Peoples First Cmty. Bank - 812 So. 2d 561 (Fla. Dist. Ct. App. 2002)
The party moving for summary judgment bears the heavy burden of proving a negative the nonexistence of a genuine issue of material fact. If the record reflects even the possibility of a material issue of fact, or if different inferences can be drawn reasonably from the facts, the doubt must be resolved against the moving party and summary judgment must be denied. Where the moving party offers evidence to support its claim of the nonexistence of a genuine issue of material fact, the nonmoving party must demonstrate the existence of such an issue or issues either by countervailing facts or justifiable inferences from the facts presented.
RNR Investments Limited Partnership (RNR) is a Florida limited partnership formed to purchase vacant land in Destin, Florida, and to construct a house on the land for resale. The agreement of limited partnership provided for various restrictions on the authority of the general partner, including restrictions on his ability to borrow, spend partnership funds and encumber partnership assets, if not specifically provided for in the Approved Budget. RNR, through its general partner entered into a into a construction loan agreement, note and mortgage with the Peoples First Community Bank (the Bank) in the principal amount of $ 990,000. The bank disbursed the aggregate sum of $ 952,699, by transfers into RNR's bank account. RNR defaulted under the terms of the note and mortgage. The Bank filed a complaint seeking foreclosure. RNR in its answer, alleged that the general partner had no authority to borrow funds for the limited partnership. On motion, the trial court entered summary judgment in favor of the Bank. RNR appealed the summary judgment of insisting on the general partner’s lack of authority to bind the limited partnership. Under section 620.8301(1), Florida Statutes (2000), however, the Bank could rely upon the general partner's apparent authority to bind RNR, unless the Bank had actual knowledge or notice of his restricted authority. In opposing summary judgment, RNR produced no evidence showing that the Bank had actual knowledge or notice of restrictions imposed on the authority of RNR's general partner.
Are the agreements binding against RNR despite the general partner’s lack of authority to borrow for the partnership?
The appellate court found that under Fla. Stat. ch. 620.8301(a), the bank could rely upon a general partner's apparent authority to bind the partnership, unless it had actual knowledge or notice of his restricted authority. In opposing summary judgment, the partnership produced no evidence showing the bank had actual knowledge or notice of such restrictions on the partnership's general partner. Accordingly, no issues of material fact were in dispute. While the partners may have agreed upon restrictions that would limit the general partner to borrowing no more than $ 650,000 on behalf of the partnership, the partnership did not contend, and nothing before the court showed, that the bank had actual knowledge or notice of any restrictions on the general partner's authority. The partnership could have protected itself by filing a statement pursuant to Fla. Stat. ch. 620.8303 or by providing notice to the bank of the specific restrictions on the authority of the general partner. Because there was no disputed issue of fact concerning whether the bank had actual knowledge or notice of restrictions on the general partner's authority to borrow, summary judgment was proper.
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