The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs, W.E. Davis, Donald R. Davis, and W.E. Davis & Sons
Construction Company, Inc. ("Davis Construction"), filed suit against
Defendant, Merrill Lynch Business Financial Services, Inc. ("Merrill
Lynch"), for breaching a financial services agreement. Presently before
the Court is Merrill Lynch's Motion for Summary Judgment on Counts I and
II. For the following reasons, that motion is Granted.
Summary judgment is appropriate when no genuine issue of material fact
exists and the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c); Cincinnati Ins. Co. v. Flanders Elec. Motor Serv.,
Inc., 40 F.3d 146, 150 (7th Cir. 1994). "One of the principal purposes of
the summary judgment rule is to isolate and dispose of factually
unsupported claims or defenses. . . ." Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Thus, although the moving party on a motion for
summary judgment is responsible for demonstrating to the court
why there is no genuine issue of material fact, the non-moving party must
go beyond the face of the pleadings, affidavits, depositions, answers to
interrogatories, and admissions on file to demonstrate, through specific
evidence, that a genuine issue of material fact exists and to show that a
rational jury could return a verdict in the non-moving party's favor.
Celotex, 477 U.S. at 322-27; Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
254-56 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586-87 (1986); Waldridge v. American Hoechst Corp.,
24 F.3d 918, 923 (7th Cir. 1994).
Disputed facts are material when they might affect the outcome of the
suit. First Ind. Bank v. Baker, 957 F.2d 506, 507-08 (7th Cir. 1992).
When reviewing a motion for summary judgment, a court must view all
inferences to be drawn from the facts in the light most favorable to the
opposing party. Anderson, 477 U.S. at 247-48; Popovits v. Circuit City
Stores, Inc., 185 F.3d 726, 731 (7th Cir. 1999). However, a metaphysical
doubt will not suffice. Matsushita, 475 U.S. at 586. If the evidence is
merely colorable or is not significantly probative or is no more than a
scintilla, summary judgment may be granted. Anderson, 477 U.S. at
The undisputed facts, for the purposes of this motion, taken from the
pleadings, and the parties' Local Rule 56.1(a) & (b) statements of
material facts (referred to herein as "Pl's 56.1" and "Defs 56.1") and
exhibits, are as follows.
On or about January 11, 2000, Merrill Lynch entered into a loan
agreement with Davis Construction called a Working Capital Management
Account*fn1 Loan and Security Agreement (the
"Loan Agreement"). Def's 56.1 ¶ 5. W.E. Davis and Donald R. Davis
executed unconditional guarantees in connection with the Loan Agreement.
Def.'s 56.1 ¶ 7. The original term of the Loan Agreement was to
expire on January 31, 2001. Def.'s 56.1 ¶ 6.
Davis Construction did not always maintain the requisite loan amount as
required by the terms of the Loan Agreement. PL's 56.1 ¶ 5. Merrill
Lynch honored checks written by Davis Construction from January 2000
through December 2000, even though the maximum credit line specified in
the loan agreement had been exceeded. Pl.'s 56.1 ¶ 7. Under the terms
of the Loan Agreement, Merrill Lynch had discretion as to whether it
would honor checks written by Davis Construction even where the maximum
amount of the loan had been exceeded. PL's 56.1 ¶ 8.
Sometime in late December 2000 or early January 2001, Merrill Lynch
determined that Davis Construction had non-bonded accounts less than 90
days old that amounted to $317,961.44. Therefore, according to the terms
of the Loan Agreement, the maximum line of credit available to Davis
Construction for this account amount was $254,369.15. Def.'s 56.1 ¶
11. On or around January 9, 2001, Davis Construction had outstanding loan
amounts from Merrill Lynch totaling $756,434.00. PL's Resp. to Def.'s
56.1 ¶ 13.
On January 11, 2001, Merrill Lynch notified Davis Construction that it
would not honor certain checks made by Davis Construction totaling
$85,693.32. Def.'s 56.1 ¶ 14. On January 12, 2001, Merrill Lynch
notified Davis Construction that it would not honor certain checks made
by Davis Construction totaling $36,091.70. Def.'s 56.1 ¶ 15. On
January 17, 2001, Merrill Lynch notified Davis Construction that it would
not honor certain checks made by Davis Construction totaling $50,025.83.
Def.'s 56.1 ¶ 16. At no time after January 2001 did Davis
Construction have access to its account line of credit with Merrill
Lynch. Pl.'s 56.1 ¶ 11.
On August 6, 2001 Merrill Lynch and Davis Construction entered into an
agreement called the "WCMA Termination and Payment Plan" (the "Original
Termination Agreement"). Def.'s 56. ¶ 17. On November 12, 2001,
Merrill Lynch and Davis Construction agreed to an amendment to the
Original Termination Agreement which adjusted the outstanding balance
payments that Davis Construction was to pay Merrill Lynch. Def.'s 56.1
¶ 19. Both the Amended Termination Agreement and the Original
Termination Agreement provided that the "[l]oan Documents shall continue
in full force and effect upon all of their terms and conditions."
Section 1.1(r) of the Loan Agreement provides:
"Maximum WCMA Line of Credit" shall mean, as of any
date of determination thereof, an amount equal to the
less of: (A) $1,000,000 or (B) 80% of Customer's
Accounts and Chattel Paper, as shown on its regular
books and records (excluding accounts over 90 days
old, Accounts arising out of bonded jobs, retainage,
directly or indirectly due from any person or entity
not domiciled in the United States or from any
shareholder, officer, or emplyoee of Customer of any
Section 2.2(b)(i) of the Loan Agreement states:
Subject to the terms and conditions hereof, during the
period from and after the Activation Date to the first
to occur of the Maturity Date or the date of
termination of the WCMA Line of Credit pursuant to the
terms hereof, and in addition to WCMA Loans
automatically made to pay accrued interest, as
hereafter provided: (i) [Merrill Lynch] will make WCMA
Loans to Customer in such amounts as Customer may from
time to time request in accordance with the terms
hereof, up to an aggregate outstanding amount not to
exceed the Maximum WCMA Line of Credit. . . .
Section 2.2(c) of the Loan Agreement provides:
Notwithstanding the foregoing, [Merrill Lynch] shall
not be obligated to make ...