55 So. 3d 655
Fla. Dist. Ct. App.2011Background
- PNC Bank and borrowers entered a two-year revolving credit and security agreement in June 2005 to fund working capital, with a lien on accounts receivable.
- The agreement remained in effect until June 9, 2007, and required 90 days' prior written notice and payment in full of obligations to terminate early (paragraph 13.1).
- In September 2006, about nine months before term end, borrowers decided to terminate but admit they did not provide the 90-day notice.
- The Estoppel Letter dated September 20, 2006 itemized the total outstanding debt and included an early termination fee and a separate 90-day written notice charge of $153,048.28.
- Borrowers indicated they would pay the 90-day charge and claimed the notice requirement was not waived, while PNC released the lien after receiving funds.
- Borrowers sued for breach of contract; the trial court granted summary judgment in their favor, and PNC appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did borrowers breach by terminating without 90 days' notice? | Borrowers contend termination could occur under the agreement with the applicable penalties. | PNC argues termination failed to comply with 13.1's 90-day notice and full payment requirements; no breach without proper notice. | No breach; termination not in accordance with terms due to missing 90-day notice. |
| Does the Estoppel Letter or related communications waive the 90-day notice requirement? | Borrowers rely on the Estoppel Letter as a release without the need for 90-day notice. | Estoppel Letter was a unilateral offer to release lien, not a waiver of the 90-day notice condition. | Estoppel Letter did not waive the 90-day notice requirement. |
| Should the trial court have allowed amendment to add a counterclaim for breach? | Borrowers assert cancellation of funds justified damages for breach. | PNC sought to amend to add a counterclaim for breach once damages were recognized. | The trial court should have permitted amendment; reversal and remand to allow amendment. |
Key Cases Cited
- Premier Ins. Co. v. Adams, 632 So.2d 1054 (Fla. 5th DCA 1994) (interpretation should give meaning to all contract provisions)
- Miller v. Kase, 789 So.2d 1095 (Fla. 4th DCA 2001) (contract interpretation and enforcement of clear terms)
- Dimick v. Ray, 774 So.2d 830 (Fla. 4th DCA 2000) (abuse of discretion standard for amendments to pleadings)
- Newman v. State Farm Mut. Auto. Ins. Co., 858 So.2d 1205 (Fla. 4th DCA 2003) (amendment of pleadings; futility and prejudice considerations)
- Yun Enters., Ltd. v. Graziani, 840 So.2d 420 (Fla. 5th DCA 2003) (pleading amendments and summary judgment context)
- Gomez v. Fradin, 41 So.3d 1068 (Fla. 4th DCA 2010) (de novo review of contract construction on appeal)
- Leisure Resorts, Inc. v. City of West Palm Beach, 864 So.2d 1163 (Fla. 4th DCA 2003) (contract interpretation to give reasonable meaning to all provisions)
- Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126 (Fla. 2000) (contract interpretation and de novo contract construction standard)