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Seattle-First National Bank2/25/1992
Seattle First National Bank (Seafirst) instituted foreclosure proceedings to recover on secured loans it made to James R. and Patricia D. Siebol. After a bench trial, the court entered judgment for Seafirst in the amount of $431,858.49 plus interest, $50,000 in attorney fees, $106.20 in costs, and foreclosed the deeds of trust securing the debt. However, the court granted the Siebols an offset of $34,364 in damages resulting from Mr. Siebol's detrimental reliance on the bank's promise to provide financing for lot improvement and purchase of inventory for a new business venture. The Siebols appeal the amount of the offset and the award of attorney fees; the bank cross-appeals the award of the offset and its amount. We affirm.
Late in 1982, Mr. Siebol decided to reenter the used car business in Yakima. His assets consisted of the Pourhouse Tavern in Yakima, a seller's contract on the Caribou Motel in Oroville, a Circle-L gas station/minimart in Sunnyside and adjacent 6- and 60-acre ranches in the Yakima area. He later acquired a contract on a 35-acre leased orchard.
Mr. Siebol had banked with Seafirst since 1977 and loan officer Terry Wheat had been handling his accounts since April 1982. In January 1983, Mr. Siebol met with Mr. Wheat to discuss financing for his proposed dealership. Mr. Siebol represented he would need $50,000 for improvements to the lot he planned to lease and $250,000 for used car inventory. There are variations in the testimony of both Mr. Wheat and Mr. Siebol regarding the total amount the bank
would loan Mr. Siebol; however, the two pages of the bank's records which possibly could resolve the issue are missing. The court found Mr. Wheat represented to Mr. Siebol that he could obtain loans for him in those amounts, either as flooring and/or a line of credit, and that those loans would be in addition to approximately $117,000 which Mr. Siebol owed the bank at that time. Relying on Mr. Wheat's assurances, Mr. Siebol proceeded with necessary lot improvements and opened his used car business in April 1983.
At approximately the same time, Mr. Wheat submitted a flooring plan to the bank department in Seattle which handled that type of financing. On April 18, 1983, Mr. Siebol signed a master note for a credit line not to exceed $244,000, including the existing $117,799.77 debt which was rolled over into the note. As security, the bank took an assignment of the Caribou Motel contract and deed, and a first mortgage on the Pourhouse Tavern.
After the car lot opened, Mr. Wheat informed Mr. Siebol the bank would not floor his used car inventory, nor would it extend an additional line of credit. Although Mr. Wheat indicated he would continue trying to obtain financing for him, the court found Mr. Siebol knew in May 1983 he would not be receiving the entire amount promised for lot improvement and used car inventory. The court further found Mr. Siebol received an additional $115,000 through advances used to cover overdrafts, for a total of $359,000. "In effect, [Mr. Siebol] never received $58,000.00 of the funds [$417,000] he believed were to be made available to him in April, 1983", and which he reasonably anticipated.
On April 16, 1984, Mr. Siebol's $244,000 credit line and overdrafts were rolled over into a new secured $309,000 note and a new unsecured $50,000 note. Payments on the secured
note were amortized on a 15-year schedule subject to an annual review, but the note was technically due in 1 year. Additional security was taken in the form of a second mortgage on the Circle-L gas station/minimart and an assignment of the Circle-L lease proceeds. Ultimately, Seafirst held a security interest in all of th
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