Trident Center v. Connecticut General Life Ins. Co. – Case Brief

Posted by LawRiotAdmin on March 30th, 2010

Contracts

Brief

Trident Center v. Connecticut General Life Ins. Co.

Procedural History:

Facts:

In 1983 Security First Life Insurance Company and the law firms of several attorneys formed a limited partnership for the purpose of constructing an office building complex.
The partnership, Trident Center sought and obtained financing for the project from the defendant.
Loan:
- $56,500,000 at 12.5% interest for a term of 15 years secured by a deed of trust on the project.
- “Maker shall not have the right to prepay the principle amount hereof in whole or in part for the first 12 years.
- In years 13-15, the loan may be prepaid, subject to a sliding prepayment fee.
- In the case of default during years 1-12, Connecticut General has the option of accelerating the note and adding a 10 percent prepayment fee.
Everything was fine for a few years until interest rates began to drop.
The 12.5% no longer seemed reasonable and Trident started looking for ways of refinancing the loan to take advantage of the lower rates.
Connecticut General would not oblige.
Trident brought a suit in state court seeking a declaration that it was entitled to prepay the loan now, subject only to a 10 percent prepayment fee.

Issue:

Holding:

Reasoning:

Trident argues the contract is ambiguous and that under California Law, even seemingly unambiguous contracts are subject to modification by parol or extrinsic evidence.
The court initially point to the traditional rule but Trident points that California does not follow the traditional rule.
“If one side is willing to claim that the parties intended one thing but the agreement provides for another, the court must consider extrinsic evidence of possible ambiguity.”
Although the court disagrees with the outcome of the case, they must reverse and remand to give the plaintiffs an opportunity to present extrinsic evidence.