Free Response to Motion - District Court of Federal Claims - federal

Case 1:05-cv-00507-JFM

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No. 05- 507C (Senior Judge Merow)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS
CRAIG- BUFF LIMITED PARTNERSHIP a Nevada Limited Partnership,

Plaintiff

THE UNITED STATES
Defendant.
PLAINTIFF' S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT

GORDON & SILVER , LTD. ERIC R. OLSEN , ESQ. 3960 Howard Hughes Parkway, 9th Fl.
Las Vegas , Nevada 89109 Tel: (702) 796- 5555 Fax: (702) 369- 2666

Attorneys for Plaintiff

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TABLE OF CONTENTS

PLAINTIFF' S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT. . .
MEMORANDUM OF POINTS AND AUTHORITIES.

INTRODUCTION
II.

STATEMENT OF

FACTS.....................................

III.

LEGAL ARGUMENT. .
Summary Judgment Standard. .
Summary of SBA' s Arguments
SBA Has Failed to Establish a Legal Theory

as a Matter of Law and Genuine Issues of Material Fact Exist Such That Summary
Judgment Should Be Denied. . .
1.

Even if an express a2:reement exists rather than an implied- in- fact-a2:reement,
Crai2:- Buffmav stiI recover Crai2:- Buff mav recover for SBA' s failure to

2.

provide correct pavoff information
3.

SBA' s intent behind its failure to disclose the correct pavoff information is a Question

of fact. . .
4.

This Court has iurisdiction to consider Crai2:- Buff's claim for detrimental reliance

IV.

CONCLUSION. . .

GORDON & SILVER ,

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ATTORNEYS AT LAW NINTH FLOOR

88003- 002/363757

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TABLE OF AUTHORITIES

FEDERAL CASES
Anderson v. Liberty Lobby, Inc 477 U. S. 242 , 249- 255 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bumside- Ott Aviation Training Center v. Dalton 107 F . 3d 854 , 860 (Fed. Cir. 1997)
Childers v. Pumping Systems, Inc.
968 F. 2d 565 , 571 (5th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Clicks Biliards, Inc. v. Sixshooters, Inc.
251 F. 3d 1252 , 1257 (9th Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Continental Ban, N. A. v. Everett
964 F . 2d 701 , 705 (7th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Eastman Kodak Co. v. Image Technical Servs., Inc. 504 U. S. 451 456 (1992) . ..

Ellison v. Robertson
357 F. 3d 1072 , 1075 (9th Cir. 2004)

Ethican , Inc. v. United States Surgical Corp. 135 F. 3d 1456 , 1466 (Fed. Cir. 1998)

Ferry v. Hayden 954 F. 2d 658 , 661- 62 (1Ith Cir. 1992)

L. Christian & Associates v. United States 312 F.2d 418 423 (Ct. Cl. 1963) . . . . . . .
Heckler v. Community Health Services of Crawford County, Inc.
467 U.S. 51 60 (1984)

Industrias Magromer Cueros y Pieles, S. A. v. Louisiana Bayou Furs, Inc. 293 F. 3d 912 , 921 (5th Cir. 2002). . . . . . . . . . . . . . . . . . . . . Inner City Broadcasting Corp. v. Cardenas
554 F. Supp. 42 , 47 (D. C. D. C. 1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

National Basketball Ass n v. SDC Basketball Club, Inc. 815 F . 2d 562 , 569 (9th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Offce of Personnel Management v. Richmond 496 U.S. 414 , 419 (1990)............................................ 9
GORDON & SILVER ,

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Postlewaite v. McGraw- Hill Inc
411 F. 3d 63 67 (2d Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ryder Truck Rental, Inc. v. Central Parking Co. 341 F. 2d 321 323 (10th Cir. 1965). . . . . . . . . . . .
Stern v. Dunlap Co. 228 F. 2d 939 , 942 (10th Cir. 1955) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stokes v. Georgia- Pacific Corp. 894 F. 2d 764 , 770 (5th Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

United Pacific Ins. Co. V. Roche
401 F. 3d 1362 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

United States v. Nickel 243 F.2d 924 , 927 (10th Cir. 1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. V. Basin Elec. Power Co-op 248 F. 3d 781 , 790 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FEDERAL STATUTES
R.C.P.

GORDON & SILVER,

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ATTORNEYS AT LAW NINTH FLOOR

88003- 002/363757

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Case 1:05-cv-00507-JFM

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Filed 09/26/2005

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
CRAIG- BUFF LIMITED PARTNERSHIP a Nevada Limited Parnership,

Plaintiff

No. 05- 507C

(Senior Judge Merow)

THE UNITED STATES
Defendant.

PLAINTIFF' S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT
Plaintiff, Craig- Buff Limited Partnership (" Craig- Buff' ), by and through its counsel of
record , the law firm , Gordon & Silver , Ltd. , hereby opposes the Defendant United States Small

Business Administration s (" SBA" ) Motion for Summar Judgment.

This Opposition is made and based upon the following Memorandum of Points and
Authorities , any attachments thereto , and the papers and pleadings already on fie
herein.

MEMORANDUM OF POINTS AND AUTHORITIES

INTRODUCTION
The plaintiff, Craig- Buff, seeks damages against the SBA based upon the SBA' s provi ding incorrect payoff information concerning Craig- Buffs SBA guaranteed loans. The com-

plaint alleges claims for damages in excess of $200 000 based upon breach of implied contract

breach of covenant of good faith and fair dealing, and detrimental reliance. Based upon the
SBA' s acknowledgment of an express agreement , made in the motion for summary judgment

Craig- Buff also seeks leave to amend and add a claim for breach of express contract.

STATEMENT OF FACTS
These facts are not disputed:

On or about October 1997 , Craig- Buff, a Nevada limited partnership, executed a
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Promissory Note in favor of CIT Small Business Lending Corporation , successor in interest to
AT&T Small Business Lending Corporation (" CIT" ), an SBA preferred lender , in the principal

amount of Seven Hundred Ninety-nine Thousand , Seven Hundred Thirty- two and 00/1 00 Dollars
($799 732. 00), which the SBA guaranteed (the " AT&T Loan
). On or about

November 1998

Craig- Buff executed a Promissory Note in favor of New Ventures Capital Development Com-

pany ("New Ventures ), an SBA preferred lender , in the principal amount of Six Hundred Fifty-

four Thousand and 00/100 Dollars ($654 000. 00), which the SBA guaranteed (the "New Ventures Loan ). The AT&T Loan and the New Ventures Loan were subsequently assigned to the

SBA , which consolidated and serviced both loans (the " Consolidated Loans

On or about October 28 , 1997 , Craig- Buff executed a Promissory Note (the " CIT Note

in favor ofCIT in the principal amount of Two Hundred Forty- five Thousand and 00/100 Dollars
($245 000. 00), which the SBA guaranteed (the " CIT Loan " and together with the Consolidated

Loans , the " SBA Loans

). A true and correct

copy of the CIT Note is attached hereto as Exhi-

bit "

. Craig- Buff,

CIT and SBA executed an Authorization and Loan Agreement (" Loan

Agreement" ) concerning the CIT loan , which set forth the obligations of the parties pursuant to

the CIT loan. A true and correct copy of the Loan Agreement is attached as Exhibit "

. Pur-

suant to the terms of the Loan Agreement , among other obligations , Craig- Buff was obligated to

make timely payments on the loan amount and at all times maintain proper books concerning the

account with Lender and SBA. (Loan Agreement

C).

Craig- Buff subsequently made a request to the SBA for an increase in the principal

amount of the CIT Loan. The SBA approved Craig- Buffs request and the principal amount of
the CIT Loan was increased to Two Hundred Ninety- four Thousand and 00/100 Dollars
($294 000. 00). A true and correct copy of the SBA' s approval letter is attached hereto as Exhi-

bit "
The principal amount on the CIT Loan was disbursed to Craig- Buff by the SBA in
several installments as noted on the U.S. Small Business Administration Settlement Sheets (the
Settlement Sheets

), attached hereto as Exhibit "

. The Settlement Sheets indicate that the

SBA is to " participate in the loan " that the Settlement Sheets are to be returned to the SBA , and
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that Craig- Buff is to contact the SBA with any questions concerning the CIT Loan. Craig- Buff

made payments on the SBA Loans directly to the SBA. Any payments on the CIT Loan were

made to the SBA. CIT would then recover any payments due them from the SBA.
The SBA Loans were secured by that certain real property together with all improvements located in Clark County, Nevada and commonly known as 4620 East Russell Road, Las
Vegas , Nevada (the " Property

On or about April 7 , 2004 , Craig- Buff, as seller , entered into that certain Purchase and Sale Agreement (the " Purchase Agreement" ) with a third- pary buyer (the " Buyer ) for the sale

of the Property in the amount of Two Milion , Five Hundred Thousand and 00/100 Dollars
($2 500 000. 00) (the " Purchase Price
). From the proceeds of the sale ,

Craig- Buff was to payoff

the SBA Loans as well as several security deposits required by the Lease Agreement , totaling
Seventy Thousand , Eight Hundred and 00/100 Dollars ($70 800. 00).

The Buyer notified Craig- Buffin early June of 2004 that it was unable to fulfill all of the

conditions precedent to the Closing under the Purchase Agreement due to the Buyer s inability to
obtain financing for the Purchase Price of the Property. On or about June 23 2004 , in response to
Craig- Buffs request for a payoff amount on all SBA Loans , the SBA indicated to Craig- Buff

that the total pay-off amount on all SBA Loans was One Milion , Seven Hundred Sixty- three
Thousand , Six Hundred Forty- three and 62/100 ($1 763 643. 62) (the " Initial Pay Off Amount"
In

reliance on the SBA' s Initial Pay Off Amount for all of the SBA Loans , Craig- Buff

and the Buyer began negotiations to amend the Purchase Price ofthe Property under the Pur-

chase Agreement. On or about July 19 , 2004 , Craig- Buff contacted the SBA and confirmed the
Initial Pay Off Amount on all SBA Loans.
Craig- Buff and the Buyer entered into that certain First Amendment to Purchase and Sale

Agreement (the " First Amendment" ) on or about July 21 , 2004 , reducing the Purchase Price of

the Property to Two Million , Three Hundred Thousand and 00/1 00

Dollars ($2

300 000. 00) (the
Dollars

Amended Purchase Price ), a decrease of Two Hundred Thousand and 00/1 00
($200 000. 00).

On or about July 22 , 2004 , the SBA contacted Craig- Buff to indicate that the SBA had
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omitted the CIT Loan in its Initial Pay Off Amount and as such , the Initial Pay Off Amount in-

cluded only the Consolidated Loans. Accordingly, the SBA represented to Craig- Buff that the
true pay-off amount for the SBA Loans was Three Hundred Twelve Thousand , Two Hundred
Nine and 85/1 00 Dollars ($312 209. 85) more than the Initial Pay Off Amount.

The SBA forwarded Nevada Title Company, the escrow agent under the Purchase Agreement (the " Escrow
Agent" ),

a written pay-off demand on or about July 27 2004 , indicating that

the pay-off amount on the Consolidated Loans was One Millon , Seven Hundred Sixty- three
Thousand , Six Hundred Forty- three and 62/100 Dollars ($1 763 643. 62) and that the pay-off

amount on the CIT Loan was Three Hundred Twelve Thousand , Two Hundred Nine and 85/1
Dollars ($312 209. 85). A true and correct copy of the written pay-off demand is attached hereto

as Exhibit "

. Thus , according to the written pay-off demand from the SBA , the total pay-off

amount on the SBA Loans was Two Million , Seventy- five Thousand , Eight Hundred Fift- three
and 47/100 Dollars ($2 075 853.47) (the " Revised Pay Off Amount"
See
Exhibit "

Although the Revised Pay Off Amount would result in little to no proceeds to Craig- Buff
upon Closing, Craig- Buff was forced to proceed with the Closing or face potential liability, in-

cluding claims for specific performance and the Buyer s damages resulting from penalties in-

curred as a result of its failure to timely exchange property pursuant to Section 1031 of the
Internal Revenue Code , 26 U.
c. 9

1 et seq. Due to Craig- Buffs reliance on the Initial Pay Off
disbursements ,

Amount , the proceeds from the Closing did not cover Craig- Buffs

including the

security deposits due under the Lease Agreement.

III
LEGAL ARGUMENT
Summary Judgment Standard

At the summary judgment stage " (t)he judge s function is not himselfto weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for
trial."

Anderson v. Liberty Lobby, Inc. , 477 U.S. 242 , 249- 255 (1986). At the summar judg-

ment phase , the court views all facts and inferences drawn from the evidence in the light most
favorable to the nonmoving party.

Eastman Kodak Co. v. Image Technical Servs., Inc. , 504 U.
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GORDON & SILVER ,

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ATTORNEYS AT LAW NINTH FLOOR

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1702) 796- 5555

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451

456 (1992);

Clicks Biliards, Inc. v. Sixshooters, Inc. , 251 F. 3d

1252 ,

1257 (9th Cir. 2001).

The movant bears the initial burden to affirmatively demonstrate that , with respect to every
essential issue of each count in the compliant , there is no genuine issue of fact. F.
Ellison v. Robertson , 357 F. 3d
1072

56;

1075 (9th Cir. 2004). A genuine issue of fact is one that
Anderson , 477 U. S. at 256.

could reasonably be resolved in favor of either party.

As set forth below , SBA has failed to establish the lack of a genuine issue of fact to be

determined at trial. SBA' s motion for summar judgment should therefore be denied.
Summary of SBA' s Arguments

SBA raises three arguments. First , SBA alleges that an express agreement , rather than an
implied- in- fact contract exists between Craig- Buff and SBA. SBA asserts that based on the ex-

press contract , there is no duty or obligation that SBA provide Craig- Buff with payoff informa-

tion. Second , SBA argues that Craig- Buff failed to establish a prima facie case for breach of the
implied covenant of good faith and fair dealing, because Craig- Buff has not shown bad faith on

the part of SBA in supplying the incorrect payoff amount to Craig- Buff. Lastly, SBA argues that
Craig- Buffs claim for detrimental reliance is really a claim for misrepresentation , which sounds

in tort and should be dismissed because this Court lacks jurisdiction to consider a tort claim.

Summar judgment based on each of the arguments should be denied.

SBA Has Failed to Establish a Legal Theory as a Matter of Law and Genuine Issues of Material Fact Exist Such That Summary Judgment Should Be Denied.
Even if an express a2:reement exists rather than an implied- in- fact a2:reement, Crai2:- Buff mav stiI recover.
SBA argues that Craig- Buffs first cause of action for breach of implied- in- fact contract

should be dismissed because an express agreement between SBA and Craig- Buff precludes such
a claim. l Assuming

arguendo that an express agreement exists between SBA and Craig- Buff

, SBA maintained the position that it was not responsible for the servicing of the CIT loan , but rather that all issues should be addressed directly to CIT because no agreement existed between SBA and Craig- Buff. Now that SBA has admitted there is an express agreement between CraigBuff and SBA , Craig- Buff respectfully request leave to amend its Complaint in order to add a claim for breach of express contract , as an alternative theory of recovery. (SBA essentially admitted an implied- in- fact contract exists between SBA and Craig- Buff by noting that the elements necessary to establish an express or implied- in- fact conGORDON & SILVER,

I It is important to note that at the onset of this dispute

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Craig- Buff is stil entitled to recovery because SBA breached its obligations under the express

agreement.

If possible , a court should view a single provision of a contract in a way that gives meaning to it.

Ethican, Inc. v. United States Surgical Corp. , 135 F. 3d

1456 ,

1466 (Fed. Cir. 1998).

Additionally, a court must interpret a contract as a whole in a manner that gives a reasonable
meaning to all its parts.

Burnside- Ott Aviation Training Center v. Dalton , 107 F. 3d 854 , 860

(Fed. Cir. 1997). Furthermore the court may imply an obligation with respect to which a contract is silent when a consideration of the whole of its parts admits of no other reasonable construction.

Ryder Truck Rental, Inc. v. Central Parking Co. , 341 F.2d 321 , 323 (lOth Cir. 1965),

citing United States v. Nickel , 243 F. 2d 924 , 927 (lOth Cir. 1957).
But if it is clear from all the pertinent pars or provisions of the contract , taken together and considered in the light of the facts and circumstances surrounding the parties at the time of its execution that the obligation in question was within the contemplation of the parties or was necessary to carry their intention into effect , it will be implied and enforced. "

Ryder Truck Rental , 341 F.2d at 323 citing Stern v. Dunlap Co. , 228 F. 2d 939 942 (lOth Cir.

1955). Lastly, where a contract presents an ambiguity, " the granting of a motion for summary
judgment is improper because the interpretation of the instrument is a question of fact."

Childers

v. Pumping Systems, Inc. , 968 F.2d 565 571 (5th Cir. 1992).

In the present case , as asserted by SBA , the express Loan Agreement between SBA and
Craig- Buff sets forth the obligations of the parties pursuant to the CIT loan. (Defendant's

Motion , p. 9). SBA incorrectly argues that since the Loan Agreement is silent as to SBA' s obi i-

gation to provide payoff information regarding the CIT loan , SBA did not have an obligation to
provide payoff information to Craig- Buff. However , as case law indicates , mere silence wil
not

preclude an obligation that is otherwise reasonably inherent in a contract. Based on the terms of the Loan Agreement , Craig- Buff had the obligation to make timely
(continued)
tract are identical.)
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payments in the proper amount on the loan , notify the SBA of intent to prepay part of or all of
the loan , reimburse SBA for any expenses incurred in the making and administration of the loan

and maintain accurate account records relating to Craig- Buffs financial condition. (Loan Agreement , ~~3. A.03; 4. B; 4. C).
A reasonable

interpretation of these various provisions includes an

obligation on the part of SBA to provide payoff information to Craig- Buff. When read as a
whole , an implied obligation on the part of SBA to provide payoff information is especially rea-

sonable given the fact that Craig- Buff could not properly fulfill its obligations under the Loan

Agreement without payoff information. Certainly, Craig- Buff, as borrower, cannot be expected
to fulfill its various obligations of making timely payments and keeping accurate account records
without having information about the actual payoff amount of the CIT loan. In

fact , SBA readily

admits that Craig- Buff had an obligation... to maintain records itself (regarding amounts paid
and owing on its loans). "
(Defendant's Motion , p. 10).

SBA cannot claim a continuing obligation by Craig- Buff to maintain accurate records

concerning payoff amounts without recognizing its own continuing obligation to provide such
payoff information to Craig- Buff.
Even though the Loan

Agreement does not expressly provide

that SBA has a duty to provide accurate payoff information , a reasonable interpretation of the contract as a whole dictates recognition of an inherent duty upon SBA to provide such informa-

tion. This is especially true in light of Craig- Buff s obligations to make timely payments and
keep accurate records , and the Settlement Sheets , which provide that any questions concerning

the CIT loan should be directed to SBA. (Settlement Sheets). Therefore , since it was within the

reasonable contemplation of the parties that SBA would necessarily have an obligation to provide Craig- Buff

with payoff information so that Craig- Buff could carry out its obligations to

SBA , a duty on the part of SBA should be implied and enforced.
At best ,

there is ambiguity surrounding the issue of whether the Loan Agreement im-

posed an obligation upon SBA to provide payoff information such that a question of fact exists.

Since a genuine issue of material fact exists as to SBA' s obligation to provide Craig- Buff
payoff information , summary judgment on this issue should be denied.
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Crai2;- Buff mav recover for SBA' s failure to provide correct pavoff

information.
SBA argues that it provided Craig- Buff with correct payoff information and therefore

there is no material issue of fact regarding Craig- Buffs breach of the Loan Agreement. SBA'
argument , however , is without merit.

It is undisputed that SBA initially told Craig- Buff that the payoff amount of all of its
SBA loans was $1 763 643. 62. (Defendant's Motion , p. 5). However , on or about July 22 2004 , the SBA contacted Craig- Buff to indicate that the SBA had omitted the CIT loan in its ini-

tial payoff amount and that the true payoff amount was $2 075 853.47 , which was $312 209.

more than the initial payoff amount provided by SBA. (Defendant's Motion , p. 5). Even though
SBA clearly provided an incorrect amount , SBA argues that since Craig- Buff did not specifically

inquire about the CIT loan, SBA did in fact provide correct information because it provided the
payoff information on the two consolidated SBA loans.

This argument is completely without merit given the fact that SBA , on its own volition
contacted Craig- Buff

when the SBA realized its own error. (Defendant's Motion , p. 5). Ifthe

SBA' s argument were right , then there would have been no need for SBA to later contact Craig-

Buff and correct its initial payoff amount because , based on SBA' s argument , there was nothing
to correct. However , SBA did contact Craig- Buff, and it did so because it realized it made a mis-

take in failing to include the CIT loan in its payoff amount. SBA understood Craig- Buffs request to mean both consolidated loans and the CIT loan , thus the need for it to correct its mistake.

Moreover , SBA serviced both the consolidated loans and the CIT loan. Not only was the

principal amount on the CIT loan disbursed to Craig-Buff by the SBA , but also all payments on

the CIT loan were made directly to SBA. Clearly, Craig- Buffs request for the payoff amount of
all

SBA loans included both the consolidated loans and the CIT loan; any other interpretation

was unreasonable. Since there is a material issue of fact regarding SBA' s failure to provide correct payoff information , summary judgment on this issue should be denied.

Alternatively, SBA argues that even if this court finds that SBA provided incorrect inforGORDON & SILVER, LTD,
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mation , SBA' s failure to provide correct information is not actionable. SBA cites two cases in

support of its proposition that Craig- Buff cannot recover money damages based on the government' s failure to provide correct payoff information.
See Offce of Personnel Management v.

Richmond , 496 U. S. 414 (l990);

United Pacific Ins. Co. v. Roche , 401 F. 3d 1362 (Fed. Cir.

2005). However , the cases cited by SBA are completely inapplicable to the facts of the instant
case. Specifically, both cases cited by SBA involve a claim for equitable estoppel , not a breach
of contract. Since

SBA admits that an express agreement exists between it and Craig- Buff

Craig- Buffs

claim

against SBA invokes a breach of contract theory, rather than the doctrine of

equitable estoppel.

Moreover , at no time has Craig- Buff raised a claim for equitable estoppel , rather Craig-

Buff asserts that a valid contract exists between it and SBA such that SBA is liable for breach of
contract. It is well-settled that
When the Governent enters into a contract , it has rights and it ordinarily incurs responsibilities similar to those of a private person who is a party to a contract.. . and if the Governent (breaches) . the Government becomes liable for all the damages resulting from the wrongful act."

L. Christian & Associates v. United States , 312 F.2d 418 , 423 (Ct. Cl. 1963). Additionally, in
a breach of contract case , the " objective is to put the injured party in as a good a position pecu-

niarily as he would have been in if the contract had been (properly) performed. Id. at 423. Since SBA breached its obligations under its express agreement with Craig- Buff, Craig- Buff is

entitled to damages. There being a genuine issue of material fact regarding SBA' s breach of the
Loan Agreement , summary judgment should be denied.
SBA' s intent behind its failure to disclose the correct pavoff amount is a Question of fact

SBA argues it is entitled to summary judgment on Craig- Buffs claim for breach ofim-

plied covenant of good faith and fair dealing, because Craig- Buff has not alleged sufficient facts
to establish SBA' s intent. However

when the intent of the parties becomes a matter of inquiry,

a question of fact is presented which canot be resolved on a motion for summary judgment."
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Postlewaite v. McGraw- Hil

Inc ,

411 F. 3d 63 , 67 (2d Cir. 2005).

See also National Basketball

Ass n v. SDC Basketball Club, Inc. , 815 F. 2d 562 , 569 (9th Cir. 1987) (holding that evidence of

intent is a question of fact). Since Craig- Buff has alleged that SBA acted in bad faith when it
failed to disclose the correct payoff amount on all of the SBA loans , there exists a question of
fact regarding SBA' s intent. As a result , SBA is not entitled to summary judgment on the issue

of breach of implied covenant of good faith and fair dealing.

Additionally, SBA incorrectly argues that a claim for breach of implied covenant of good

faith and fair dealing is limited to enforcing the express terms of the contract. " Since good faith is merely a way of effectuating the paries intent in unforeseen circumstances , the implied covenant has ' nothing to do with the enforcement of terms actually negotiated.

S. v. Basin Elec.

Power Co-op , 248 F. 3d
964 F.2d 701 ,

781 ,

790 (Fed. Cir. 2001),

quoting Continental Bank, N. A. v. Everett

705 (7th Cir. 1992). While SBA correctly argues that the implied covenant cannot

be used to create obligations not contemplated by the parties , SBA fails to recognize that SBA' obligation to provide payoff information was an inherent obligation , and that it was consistent on
the obligations of Craig- Buff to make timely payments and maintain accurate accounts. Con-

trary to SBA' s assertions , Craig- Buffs claim for breach of implied covenant of good faith and

fair dealing does not attempt to create a new obligation , but rather directly relates to an existing

obligation contained in the Loan Agreement. Once again , the interpretation of the Loan Agreement to determine SBA' s obligations raises a question of fact such that summary judgment is not

appropriate.

Finally, SBA argues that its failure to provide accurate payoff information did not interfere with Craig- Buffs reasonable expectations of the fruits of the Loan Agreement. SBA erro-

neously argues that Craig- Buffs expectations were limited to receiving a loan for $245 000.
However , SBA fails to consider its and Craig- Buffs continuing obligations under the Loan
Agreement. The relationship did not end the day the loan was received. Craig- Buff had a con-

tinuing obligation to make timely payments on the loan and keep accurate accounts of its finan-

cial situation including all SBA loans. SBA argues that since its failure to provide accurate payGORDON & SILVER,

Lm.

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off information did not affect Craig- Buffs ability to make timely payments , SBA did not interfere with Craig- Buffs expectations. Yet , SBA' s failure to provide the accurate payoff amount

substantially interfered with Craig- Buffs reasonable expectations that SBA , as servicing agency
of the SBA loans , would provide Craig- Buff with accurate information so that it could make in-

formed financial decisions and keep accurate financial accounts as required by the Loan Agreement.

In short , there are material issues of fact raised by Craig- Buffs

claim

for breach ofim-

plied covenant of good faith and fair dealing. As a result , summary judgment on this issue
should be denied.

This Court has jurisdiction to consider Crai2;- Buff's claim for detrimental reliance.
SBA argues that this Court lacks jurisdiction over Craig- Buffs
claim

for detrimental

reliance because a claim for detrimental reliance sounds in tort. It is well-setted , however , that a
cause of action alleging detrimental reliance sounds in contract and under the Tucker Act falls

within the exclusive jurisdiction of the Cour of Claims.
Cardenas , 554 F. Supp. 42 , 47 (D. C. D. C. 1982);
770 (5
Cir. 1990) (holding detrimental reliance claim in

Inner City Broadcasting Corp. v.
Stokes v. Georgia- Pacific Corp. , 894 F. 2d 764

not based on tort) (emphasis added).

Additionally, to " successfully invoke equitable estoppel based on governent-supplied misinformation , plaintiff must show detrimental reliance.

Ferry v. Hayden 954 F. 2d 658 , 661-

(l1 th Cir. 1992). In order to prevail on a claim for detrimental reliance , plaintiff must establish
that (1) defendant made a promise; (2) the plaintiffs
reasonable; and (3) the plaintiffs
reliance
reliance on this

represented promise was
Industrias

caused a change in position to its detriment.

Magromer Cueros y Pieles, S. A. v. Louisiana Bayou Furs, Inc. , 293 F. 3d 912 921 (5th Cir.
2002).
Essentially, a claim for detrimental reliance is based on promissory estoppel.

Stokes , 894

F.2d at 770. Although the doctrine of equitable estoppel is rarely invoked against the government , there is " no flat rule that estoppel may not in any circumstances run against the Govern-

GORDON & SILVER ,

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ment."

Heckler v. Community Health Services of Crawford County, Inc. , 467 U. S.
See also

51

, 60

(1984).

Office of Personnel Management v. Richmond , 496 U.S. 414 , 419 (l990). In

Heckler , the Supreme Court explained that

We are hesitant to say that there are no cases in which the public interest in ensuring that the Governent can enforce the law free from estoppel might be outweighed by the countervailing interest of citizens in some minimum standard of decency, honor and reliability in their dealings with their Governent."
Heckler , 467 U. S. at 61.

In the instant case , this Court has exclusive jurisdiction over Craig- Buffs claim for detrimental reliance , because a detrimental reliance claim sounds in contract. Additionally, Craig-

Buff has properly made out a prima facie case to support its claim of detrimental reliance. Specifically, SBA made two promises to Craig- Buff regarding the payoff amount of all the SBA
loans. On June 23

2004 , SBA told Craig- Buff that the payoff amount of all SBA loans was 2004 , Craig- Buff contacted SBA to re-confirm the payoff amount of

763 643. 62.

On July 19

all the SBA loans and SBA once again assured Craig- Buff that the amount was $1 763 643. 62.

As a result of these two promises Craig- Buff reasonably relied on the payoff amount provided by

SBA. Craig- Buffs reliance was reasonable especially given the fact that SBA serviced all the
SBA loans , which included the two consolidated loans and the CIT loan , and all payments on

these loans were made directly to SBA.

Based on these two promises by SBA , Craig- Buff entered into negotiations with the
Buyer to reduce the Purchase Price of the Property by $200 000. In fact , Craig- Buff did not fin-

alize the Purchase Agreement until after it received the two assurances from SBA that the payoff
amount of the SBA loans was $1 763 643. 62. Contrary to SBA' s argument , Craig- Buff did not

lower the Purchase Price simply because the Buyer could not secure the original price of $2.
milion. Rather , once Craig- Bufflearned

the Buyer could not secure a loan for $2. 5 milion

Craig- Buff immediately contacted SBA to inquire about the payoff amount of all of the SBA

loans. It was not until assurances were provided by SBA regarding the payoff amount that
Craig- Buff finalized its negotiations with the Buyer and agreed to lower the Purchase Price by
GORDON & SILVER , LTD,
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$200 000. In other words , Craig- Buff lowered the Purchase Price because it stil expected to

realize a profit based on its understanding of the payoff amount of all the SBA loans. Had CraigBuff known the true payoff amount , Craig- Buff would not have agreed to reduce the purchase
price by $200 000. As a result , Craig- Buff detrimentally relied on SBA' s promise regarding the

payoff amount and is entitled to relief.

Accordingly, there is a genuine issue of material fact regarding Craig- Buffs claim for
detrimental reliance and since Craig- Buff has made a prima facie case for detrimental reliance

SBA should not be granted summary judgment on this issue.

CONCLUSION
For the reasons stated above , Defendant' s Motion for Summary Judgment should be
denied by this Court.
Dated thIS

day of September , 2005.
GORDON & SILVER , LTD.

Eric R. Olsen Nevada Bar No. 3127
3960 Howard Hughes Pkwy. , 9th Floor

Las Vegas , Nevada 89109 (702) 796- 5555 Attorneys for Plaintiff

CERTIFICATE OF FILING
I hereby certify that on September

2005 , a copy of the foregoing Opposition to
fied electronically.

Defendant's Motion for Summary Judgment was

I understand that notice of

this fiing wil be sent to all paries by operation of the Court' s electronic fiing system. Parties
may access this filing through the Court' s system.

Rosemary C. Dittrich

GORDON & SILVER , LTD.
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