473 S.W.3d 756
Tenn. Ct. App.2015Background
- In 2001 three trusts (the Trusts) and their trustees executed a promissory note and deed of trust to Enterprise National Bank (later Cadence Bank) to purchase Tennessee real property; trustees also executed guaranties and Trust Secretary’s Certificates. The note included periodic payments and a balloon due in 2006.
- The parties executed a 2006 Modification Agreement extending the loan (balloon to 2011) and a 2011 Change in Terms Agreement further extending maturity to September 10, 2011; Appellants claim Cadence repeatedly assured refinancing if payments were timely.
- Leading up to the 2011 maturity, Cadence requested financials and later ordered an appraisal (allegedly $350,000); Cadence then offered to refinance at 85% of appraisal ($297,500) with new terms, which Appellants did not accept.
- Cadence sued in Tennessee chancery court in 2012 for unpaid balance; Appellants counterclaimed for promissory estoppel/detrimental reliance and breach of the implied covenant of good faith and fair dealing, and moved to dismiss arguing Cadence was not properly doing business in Tennessee.
- The trial court granted summary judgment to Cadence on liability and dismissed Appellants’ counterclaims; it later ruled Cadence was authorized to sue in Tennessee. Appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tennessee may bar Cadence from suing for not having state certificate/registered agent | Appellants: Cadence must obtain certificate of authority and maintain a registered agent/office to transact business and sue in Tennessee | Cadence: As a national bank, the National Bank Act authorizes it to "sue and be sued" and federal law preempts state registration/agent requirements | Court: NBA preempts state certificate/agent requirements as applied to national banks; Cadence may sue in Tennessee with Comptroller-issued corporate existence certificate |
| Whether Cadence breached the implied covenant of good faith and fair dealing by failing to refinance on prior terms | Appellants: Bank repeatedly assured refinancing; they reasonably relied and bank acted in bad faith by not refinancing and withholding appraisal | Cadence: It offered refinancing in writing (Jan 18 and Feb 10, 2012 letters) on new terms; Appellants did not accept or make counteroffers; no contractual duty to refinance | Court: Affirmed summary judgment for Cadence — no breach under written agreements and alleged oral agreement too indefinite to form enforceable contract |
| Whether promissory estoppel/detrimental reliance bars Cadence’s claim | Appellants: They reasonably relied on bank’s promises to refinance, incurring detriment | Cadence: Promises were vague/conditional; bank made written offers later; Appellants did not accept; evidence insufficient | Court: Affirmed summary judgment — alleged promises were too indefinite to support promissory estoppel |
Key Cases Cited
- Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007) (NBA shields national banks from burdensome or duplicative state regulation)
- Wyeth v. Levine, 555 U.S. 555 (2009) (presumption against preemption; intent of Congress controls)
- Schneidewind v. ANR Pipeline Co., 485 U.S. 293 (1988) (framework for express and implied preemption analysis)
- Davis v. Elmira Savings Bank, 161 U.S. 275 (1896) (states may regulate national banks only to extent not conflicting with NBA)
- Kennedy v. City First Bank of D.C., N.A., 88 A.3d 142 (D.C. 2014) (NBA preempted local registration statute that would bar national bank from suing)
- Gurley v. King, 183 S.W.3d 30 (Tenn. Ct. App. 2005) (elements for enforceable oral contract; certainty and mutual assent)
- Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993) (summary judgment standards; courts must not weigh evidence and must draw inferences for nonmoving party)