This аppeal concerns a commercial foreclosure action which was initiated by Appellant, Summitbridge Credit Investments III, LLC (“Lender”), against Appellee, Carlyle Beach, LLC (“Borrower”), for failure to comply with financial covenants and timely pay property taxes.
On appeal, Lender challenges the court’s findings and argues that: (1) the failure to remit financial disclosures was a material breach justifying foreclosure; (2) Borrower’s belated payment of the property taxes did not preclude foreclosure in this case; (3) the court erred in denying it essential discоvery; and (4) the court misapplied equitable concepts in denying it relief on its non-equitable claims. Borrower cross-appeals and argues that: (1) Lender had no standing to initiate the forеclosure action; and (2) the court erred in finding that Borrower committed a technical breach as compliance with the financial covenants was not required at the time of the alleged breach. We affirm the trial court’s rulings challenged in Lender’s issues 2, 3, and 4, and Borrower’s cross-appeal issue 1, without further comment. For reasons discussed below, however, we agree with Bоrrower on its cross-appeal issue 2 and reverse and remand for entry of final judgment in its favor.
By way of background, Lender purchased Borrower’s commercial loan from the original lender in 2012. Prior to the purchase, there were a series of loan modifications between the original lender and Borrower. Relevant to this appeal is the final loan modification evidеnced by a Loan Agreement dated May 27, 2008 (“Loan Agreement”). Section 7 of the Loan Agreement provided, inter alia, that Borrower was required to comply with a number of covenants “so long as credit is available under this Agreement and until the Bank is repaid in full.” Included amongst those different covenants was the requirement that Borrower provide periodic financial statements аnd related financial documents for both guarantors.
Shortly after purchasing the loan, Lender requested the financial reporting documentation as provided for in Section 7 of the Loаn Agreement. Borrower did not comply, prompting Lender to file a foreclosure and breach of contract action against Borrower. At trial, Lender’s position was that Borrower was required to comply with the financial covenants listed in Section 7 of the Loan Agreement up and until the time the loan was paid in full, and that failure to comply with the financial covenants сonstituted a material breach justifying foreclosure.
Attempting to reconсile the language in the Loan Agreement providing that Borrower was only required to comply with financial reporting “so long as credit is available,” Lender maintained that “credit” essentially meant “loan.” Notably, per the testimony of its own witnesses, at the time Lender requested the financial documents, no credit was available to Borrower under the Loan Agreement. In fact, as оf 2009, no loan advances were available to Borrower under the Loan Agreement.
Following the bench trial, the court made the following relevant findings in connection with the issue before us. With rеgard to the applicability of Section 7 of the Loan Agreement, the court found that the clear and unambiguous language of that section, particularly the sentence providing that “Bоrrower agrees, so long as credit is available under this Agreement and until the Bank is repaid in full,” required the disclosure of financial information up and until the bank was repaid in full. In other words, the court implicitly found that the “so long as credit is available under this Agreement” and “until the Bank is repaid in full” conditions were one and the same. Therefore, because Borrower conceded at trial that it never provided Lender with the financial disclosures required under Section 7, the court found that Borrower defaulted on the Loan Agreement. However, the court also found “that a defаult on the Mortgage by [Borrower] was merely technical and not as a result of the [Borrower] deliberately failing to pay the monthly principal,” and that “[Lender] failed to prove that [Borrower’s] failure to comply with the terms of the Loan Agreement placed the security in jeopardy.” Based on the above findings, the trial court entered final judgment in favor of Lender but denied it any rеlief.
“ ‘The interpretation or construction of a contract that is clear and unambiguous is a matter of law that is reviewed de novo.’ Whether an ambiguity exists in a contract also is a question of law.” Smith v. Shelton,
In the present case, Section 7 of the Loan Agreement clearly and unambiguously provides that Borrower agrees to comply with the financial covenants listed in that section: “so long as credit is available under this Agreement and until the Bank is repaid in full.” The plain and ordinary meaning of this prоvision, including the use of the word “and,” makes clear that compliance with the financial covenants is required if two conditions are met: (1) there is credit available under the Loan Agreement; and (2) the loan has not yet been paid in full. See McDonald,
In finding that the above provision required Borrower to comply with Section 7 s financial covenants until the loan was paid off, the trial court essentially equated the word “credit” as meaning the samе thing as “debt.” This interpretation ignores not only the plain language meaning of the words “credit” and “debt” but also ignores the first condition of that provision. See Debt, Black’s Law Dictionary (10th ed. 2014) (defining the word “debt” as mеaning “a specific sum of money due by agreement or otherwise” (emphasis added)); Credit, Black’s Law Dictionary (10th ed. 2014) (defining the word “credit” as meaning “[o]ne’s ability to borrow money” and '“[tjhe- availability of funds either from a financial institution o'r under a letter of credit” (emphases- аdded)); see also Pinnock,
We therefore hold that the phrase “сredit is available” means' the availability of an ongoing line of credit. Accordingly, the trial court erred in interpreting Section 7 as requiring the disclosure of financial information up and until ¡the time thе entire debt is repaid in full regardless of the availability of credit, and in finding that Borrower committed a technical breach of the Loan Agreement. We reverse the final judgment and remand for entry of a final judgment in favor of Borrower.
Affirmed in part, and reversed in part.
Notes
. Appellees Teresa Cardenas and Metropolitan Trucking, Inc. guaranteed the subject loan.