940 F. Supp. 2d 1359
M.D. Ala.2013Background
- Plaintiff extended an unsecured line of credit from $50,000 to $500,000 over years with successive ownership changes of the bank.
- On March 18, 2009, Plaintiff renewed Defendant's line via a commercial note in the principal amount of $497,908.81.
- Defendant signed but did not read the Promissory Note, which required monthly payments and matured on September 11, 2014.
- Defendant defaulted, and Plaintiff demanded payment in full by letter dated June 29, 2010.
- Plaintiff filed suit for breach of contract and unjust enrichment to recover under the Note.
- The court granted in part and denied in part Plaintiff’s motion for summary judgment, ultimately ruling on breach, mitigation, and unjust enrichment defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract prima facie established | Capel established a prima facie case by producing a properly executed Note | Trotman disputes defenses to breach | GROUNDED: Capel shows prima facie breach; facts show default |
| Fraudulent inducement defense viable | Capel cannot prove reliance on oral misrepresentation | Trotman relied on bank's representations that it was a renewal | DENIED: Defendant cannot prove reasonable reliance; defense fails |
| Mitigation of damages defense | Capel argues bank must mitigate by accepting settlement | Trotman asserts bank failed to mitigate via non-acceptance | DENIED: No duty to accept offer; mitigation not applicable to change in terms under acceleration clause |
| Unjust enrichment claim viability | No distinct relief where express contract exists | Quasi-contract relief applicable despite express contract | DISMISSED: Express contract precludes unjust enrichment claim |
Key Cases Cited
- Griffin v. American Bank, 628 So.2d 540 (Ala. 1993) (bank entitled to summary judgment on note with undisputed default evidence)
- Oakwood Mobile Homes, Inc. v. Barger, 773 So.2d 454 (Ala. 2000) (reliance requires reading written documents; illiteracy exception)
- Foremost Ins. Co. v. Parham, 693 So.2d 409 (Ala. 1997) (reasonable reliance standard for fraud in the inducement)
- Potter v. First Real Estate Co., Inc., 844 So.2d 540 (Ala. 2002) (illiteracy exception; ambiguity in documents affects reliance)
- White v. Microsoft Corp., 454 F. Supp. 2d 1118 (S.D. Ala. 2006) (quasi-contract claim cannot lie where express contract exists)