MEMORANDUM OPINION AND ORDER
This Mеmorandum Opinion constitutes the findings of fact and conclusions of law of the Court on Defendant’s motion for Summary Judgment which, for the reasons outlined below is granted.
Plaintiffs in this breach of contract diversity action were associated leasing companies which leased heavy equipment to lessee customers and sold tax sheltered interests in those leases to investors who obtained such tax advantages from their investments as credits and depreciation on the equipment leased. In order to purchasе this equipment, in September of 1980 Plaintiffs entered a $15 million umbrella contract with Defendant, a commercial lender which would be protected by a first-position secured interest in the equipment purchased, and by assignment was to receive direct from Plaintiffs’ lessees all rent *1222 al payments, which were to be equal to the principal and interest which Plaintiffs owed Defendant. The umbrella contract fixed the interest rate at 12.75% for a nine month term expiring on June 30, 1981. The period was one of nationally rising interest rates. In еxchange for the fixed interest rate, Plaintiffs paid Defendant $75,000, of which $50,000 was later refunded as an award for submitting fundable proposals. The contract provided, at page I, as follows:
Financing under this commitment must occur on or before June 30,1981. MHLC shall have no оbligation to finance any equipment to lessees/borrowers after that date.
On February 11, 1981, Plaintiffs and Defendant entered into a “Loan and Security Agreement” as contemplated by the umbrella contract, setting forth additional general conditions for transactions acceptable to Defendant for financing. Specifically, Section 1.2 required:
The obligation of Lender to make each loan contemplated hereby shall be subject to the fulfillment to the satisfaction of Lender on or beforе the Closing Date of the following conditions precedent: ... (k) The Related Lease and all ancillary documentation shall be satisfactory in form and substance to lender....
The umbrella contract and loan agreement required, in essence, that Plaintiffs submit to Defendant completely document ed proposals for financing each individual equipment purchase and lease, and required Defendant to issue a separate commitment letter indicating its approval and funding of each approved proposal.
The Loan and Security agreement provided specifically, in its Section 1.2, as follows:
The obligation of Lender to make each loan contemplated hereby shall be subject to the fulfillment to the satisfaction of Lender on or before the Closing Date of the following cоnditions precedent:
# # # >k * *
(b) Lender shall have received from Messrs. Fitzgerald, Young, Peters, Dak-mak & Bruno, Counsel for the Borrower, their opinion....
* * * * * *
(k) The related lease and all ancillary documentation shall be satisfactory in form and in substance to Lender ...
There is no dispute as to what documentation was required. Defendant did issue eight commitment letters under this arrangement, for a total of over $7 million. In June of 1981, however, as the expiration of the 12.75% fixed interest rate term approached, five other proposals failed to be funded.
On December 31, 1986, Plaintiffs filed this lawsuit, alleging Defendant’s breach of its contract to fund the five disрuted transactions and its breach of an implied covenant of good faith and fair dealings applicable to the contractual relationship. On May 15, 1989, this court granted Defendant’s motion for summary judgment and dismissed the lawsuit.
Plaintiffs appealed from this court’s judgment and the U.S. Court of Appeals for the Sixth Circuit, by a memorandum opinion of May 1, 1990, affirmed this court’s summary judgment on Plaintiffs breach of contract claim. However, it remanded the case because of this court’s failure to resolve the question of whether Michigan or New York law applied and, if governing law so requires, to resolve Plaintiffs remaining claim of breach of an implied covenant of good faith.
This memorandum constitutes this court's ruling on Defendant's renewed motion for summary judgment, made after remand and concerning only the remaining issue of the implied covenant.
A Michigan federal court sitting in diversity jurisdiction must apply the choice of law rules of the forum state, and Michigan authority requires that contracts be governed by the law of the state in which they are executed. In this case, inasmuch as Defendant’s offer was undis-putedly sent from its Michigan office to Plaintiffs’ Michigan representatives, who accepted it in Michigan, the court finds that Michigan law governs; and that an implied
*1223
covenant of good faith must be applied.
Ferrell v. Vic Tanny International, Inc.,
It should be noted, moreover, that even if New York law were аpplicable, this circuit has held when applying New York law that an implied covenant of good faith governs the contractual relationship.
KMC v. Irving Trust,
Accordingly, the court must examine Plaintiffs’ response to Defendant’s well-supported motion for summary judgment pursuаnt to Rule 56 of the Federal Rules of Procedure in accordance with the requirement of Rule 56(e) that:
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of thе adverse party’s response, by affidavits or as otherwise provided in this rule, but must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment if appropriate, shall be entered against the adverse party.
In this action, Plaintiffs bear the burden of proving that the five transactions in dispute were not funded because of Defendant’s breach of the implied covenant of good faith.
K.M.C. Co., Inc. v. Irving Trust Co.,
The implied covenant of good faith under Michigan law, as well as under the law of other jurisdictions having persuasive effect, neither overrides nor replaces any express contractual term.
Hubbard Chevrolet, suyra; General Aviation, supra; Cardinal Stone Co., Inc. v. Rival Mfg. Co.,
A lender which enters a contract for a line of credit with a borrower does not thereby becomе the borrower’s fiduciary. The lender remains entitled to advance its own interests by enforcement of contract terms, and is not required to forego enforcement of contract terms to put the borrower’s interests ahead of its own.
Production Credit Ass’n. v. Croft,
*1224 The relevant provisions in the umbrella contract and the Loan and Security Agreement are unambiguous, and Plaintiffs do not contend otherwise. Those provisions required Plaintiffs to supply to Defendant all required documents by June 30, 1981, as a condition precedent to any obligation of Defendant to make a requested loan, and there is no dispute as to the documentation both parties knew was required. Plaintiffs must, therefore, raise some question of material fact that they did fulfill the mutually аgreed conditions precedent, thereby requiring Defendant to fund the transactions. Defendant cannot be required by a good faith covenant to forego its right to fulfillment of all conditions precedent.
Plaintiffs have conceded through counsel at oral argument that they do not claim that all documents required were timely submitted for the disputed transactions, and that there is no evidence of any prior course of dealing which would suggest that less than full performance of all conditions precedent had еver been accepted by Defendant. Moreover, Plaintiffs have submitted no evidence of complete submissions in the disputed transactions, and their deposed witnesses have admitted not only that they cannot testify to full submissions for those transactions, but that sоme documentation was, to their knowledge, missing.
As to Plaintiffs' claims on three of the five disputed transactions, Economics Laboratory No. 2, RCA No. 2, and Dow Chemical No. 6, there is undisputedly no evidence of record that all contractually required documentation was timely submitted to Defendant. Plaintiffs have raised an argument, after six years of litigation, that "sufficient" documentation was submitted to require funding of those transactions. However, as the good faith covenant does not require waiver of contractual rights, and аs there is no evidence that a practice of such waivers had ever developed, between these parties, and finally as Plaintiffs are unable to identify exactly what documentation was indeed timely submitted so that its sufficiency can be determined, that argument must fail. Plaintiffs further argue that the case of TCP Industries, Inc. v. Uniroyal,
The failure of the EL No. 2, RCA No. 2 and Dow No. 6 transactions to fund was not the result of any breach by defendant of the implied covenant of good faith, because that cоvenant would not require Defendant either to waive full performance of the conditions precedent to lending, or to extend the express expiration date of the umbrella contract to provide Plaintiffs more time to fulfill those conditions.
The fourth of the disputed transactions, RCA No. 1, has a different history. Defendant, undisputedly, stopped work on it at approximately June 25, 1981. Thereafter, however, on July 7, 1981, Defendant agreed to proceed with it at the interest rate which had governed the then-expired contract.
This court found in its prior summary judgment and the Sixth Circuit Court of Appeals affirmed, that the brief time period between Defendant's refusal to go forward and its subsequent decision to proceed was no more than a temporary nonprejudicial failure tо cooperate, and not a breach of contract. There is evidence that RCA Corporation remained willing to proceed with this transaction as late as August, 1981, and none to the contrary. *1225 Plaintiffs have therefore failed to present any еvidence that RCA abandoned the transaction because of the delay, or that Defendant’s lapse had any prejudicial effect whatsoever on Plaintiffs. It therefore remains undisputed that the actions of Defendant did not contribute to the ultimate fаilure of the RCA No. 1 transaction to fund. As the delay was without effect or disadvantage, it cannot constitute a breach of the good faith covenant.
As was previously held by this court and the Sixth Circuit, the last transaction, for Chemical Network, was not funded due to assignmеnts made by Plaintiffs of their interest in the pertinent lease agreement to third parties in violation of the express condition of the Loan and Security Agreement requiring Plaintiffs to first request Defendant’s consent prior to making any assignment. Section 2.11 of the Loan and Sеcurity Agreement Provides:
Without the prior written consent of the lender, the borrower will not: ... (c) sell, mortgage, transfer, assign, or hypothe-cate ... its interest in the equipment or in a lease or any part thereof or in any proceeds thereof.
The implied good faith covenant does not require waiver of an express contractual right.
Accordingly, for all the reasons outlined above, the court finds that there is no issue raised as to any material fact suggesting Defendant’s breach of the implied covenant of good faith, and that Summary Judgment must enter for Defendant.
IT IS SO ORDERED.