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Seattle-First National Bank v. Crystal & Gold

April 28, 1997

SEATTLE-FIRST NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, RESPONDENT,
v.
CRYSTAL & GOLD, LTD., A WASHINGTON CORPORATION; AND PAUL S. FRIEDLANDER, JR., A SINGLE PERSON, APPELLANTS.



Appeal from Superior Court of King County. Docket No: 94-2-15173-8. Date filed: 07/21/95.

Petition for Review Denied October 7, 1997,

Authored by H. Joseph Coleman. Concurring: Walter E. Webster, Faye C. Kennedy.

The opinion of the court was delivered by: Coleman

COLEMAN, J. -- Paul Friedlander, Jr. personally guaranteed a loan from Seattle-First National Bank (SeaFirst) to Crystal & Gold, Ltd. SeaFirst did not perfect its security interest in the debtor's collateral. When Crystal & Gold defaulted in its payments, SeaFirst sought to collect the debt from Friedlander's assets. Despite Friedlander's claim that SeaFirst orally promised to secure and exhaust Crystal & Gold's assets before going after his property, the loan documents gave SeaFirst "uncontrolled discretion" in administering and collecting on the loan. The lower court granted summary judgment to SeaFirst and garnished Friedlander's personal securities. We affirm the summary judgment for SeaFirst and the dismissal of Friedlander's tort counterclaims because the alleged oral representations could not reasonably be relied upon to contradict the unambiguous writings allowing SeaFirst to act as it did.

Friedlander is Crystal & Gold's director and majority shareholder. In 1993, Crystal & Gold borrowed money from SeaFirst to finance a luxury goods store in Factoria Square. Friedlander and Crystal & Gold's President, Herman Brown, executed a promissory note on behalf of Crystal & Gold. The promissory note stated in part:

The undersigned [Crystal & Gold] agrees to take all necessary steps to administer, supervise, preserve, and protect the Collateral; and regardless of any action taken by Holder [SeaFirst], there shall be no duty upon Holder in this respect. A "Commercial Security Agreement" that Friedlander and Brown signed on Crystal & Gold's behalf also expressly relieved SeaFirst of any duty regarding collateral:

Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Collateral.

Friedlander personally guaranteed the loan. He signed a "Small Business Administration (SBA) Guaranty" that provided as follows:

The Undersigned [Friedlander] hereby grants to Lender full power, in its uncontrolled discretion and without notice to the undersigned . .

. to deal in any manner with the . . . collateral, including . . . the following powers:

(e) . . . to realize on the collateral or any part thereof . . .

or to forbear from realizing thereon, all as Lender in its uncontrolled discretion may deem proper[.]

The obligations of the Undersigned [Friedlander] shall not be released, discharged or in any way affected, nor shall the Undersigned have any rights or recourse against Lender, by reason of any action Lender may take or omit to take under the foregoing powers.

In case the Debtor [Crystal & Gold] shall fail to pay all or any part of the Liabilities when due, . . . the Undersigned, immediately upon the written demand of Lender, will pay to Lender the amount due and unpaid by the Debtor as aforesaid, in like manner as if such amount constituted the direct and primary obligation of the Undersigned. Lender shall not be required, prior to any such demand on, or payment by, the Undersigned, to make any demand upon or pursue or exhaust any of its rights or remedies against the ...


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