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SK Food Corp. v. FirstBank

Court of Appeals of Tennessee, Nashville

February 28, 2017

SK FOOD CORPORATION, ET AL.
v.
FIRSTBANK

          Session January 17, 2017

         Appeal from the Circuit Court for Davidson County No. 15C3254 Thomas W. Brothers, Judge.

         Three corporations approached a lender seeking to refinance an existing loan secured by a deed of trust on certain commercial properties. The parties entered an agreement specifying that the lender's security interest would be a "first lien deed of trust" and requiring the borrowers to pay a nonrefundable "commitment fee." The borrowers executed the agreement and paid the commitment fee, but the loan did not close due to the discovery of a prior lien on one of the properties. The borrowers filed suit against the lender for damages arising out of the lender's refusal to lend or to refund the commitment fee. The trial court granted the lender's motion for summary judgment but denied the lender's request for attorneys' fees. Discerning no error, we affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed.

          Thomas J. Kinsland, Nashville, Tennessee, for the appellants, SK Food Corporation, J & J International Food Corporation, and JC Sun Investment, Inc.

          Peter C. Sales and Frankie N. Spero, Nashville, Tennessee, for the appellee, FirstBank.

          W. Neal McBrayer, J., delivered the opinion of the Court, in which Andy D. Bennett and Richard H. Dinkins, JJ., joined.

          OPINION

          W. NEAL McBRAYER, JUDGE

         I.

         In March 2013, James G. Sun and his counsel, Vivien Wang, approached FirstBank on behalf of SK Food Corporation, J & J International Food Corporation, and JC Sun Investment, Inc. (collectively, the "Borrowers") seeking to refinance an existing loan with First Tennessee Bank. The First Tennessee Bank loan was secured by a deed of trust on properties located at 5861 Charlotte Pike and 4529 Nolensville Pike in Nashville, Tennessee.

         On June 26, 2013, Mr. Sun and his wife, Chon Kim, executed a commitment letter with FirstBank. The commitment provided for a loan to Borrowers of up to $3 million secured by the Charlotte Pike and Nolensville Pike properties and a third property located at 320 Lellyett Avenue, also in Nashville. The commitment specified that FirstBank's security interest would be a "first lien deed of trust." The commitment also specified that the loan must be closed in accordance with the terms of the commitment prior to July 27, 2013.

         In connection with the commitment letter, JC Sun Investment paid a commitment fee of $30, 000. The commitment letter provided that "[t]he Commitment Fee will be deemed earned upon the signing of the Commitment and will be non-refundable."

         The loan did not close. Due to a lien on the 4529 Nolensville Pike property held by an entity other than First Tennessee Bank, Borrowers could not grant FirstBank a first lien deed of trust as required by the commitment letter. A document[1] signed later by Mr. Sun stated that the property was "encumbered with a loan from a life insurance company that precludes second liens."

         Borrowers filed suit against FirstBank in the Circuit Court for Davidson County, Tennessee, seeking damages for breach of the commitment letter, conversion of the commitment fee, and violations of the Tennessee Consumer Protection Act. On FirstBank's motion for partial dismissal for failure to state a claim, the trial court dismissed the claim for violations of the Tennessee Consumer Protection Act and ...


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