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Whitney Bank v. SMI Companies Global, Inc. No. 18-31189

Before SMITH, DENNIS, and HAYNES, Circuit Judges.

AFFIRMED in part, REVERSED in part, and REMANDED. (February 3, 2020).

Judge HAYNES concurred in part, and dissented in part.

Whitney Bank brought the underlying suit against SMI Companies Global, Inc. (“SMI”) and its president and loan guarantor in order to collect under two loan agreements. Whitney complained that SMI allegedly defaulted on both agreements. In response, SMI filed several counterclaims. After a bench trial, the Magistrate Judge (“MJ”) required SMI to repay the amount it owed on the first loan plus interest, totaling more than $1.2 million, but relieved SMI of its obligation to repay the outstanding principal and interest on the second loan. The MJ determined that Whitney breached Loan 2 by failing to continue to advance funds to SMI as needed through completion of the project for which the loan was taken. The MJ found that Whitney, in breaching Loan 2, violated the duties of good faith and commercial reasonableness. The MJ then held that Whitney’s failure to fund the project to completion constituted a “substantial breach” and that, as a result, SMI and Lane were relieved from repaying the uncollected principal and interest under Loan 2. The MJ next ruled in SMI’s favor on its counterclaims for negligent misrepresentation, and tortious interference with business relations. The Fifth Circuit affirms the MJ’s ruling in favor of Whitney on its main demand for recovery under Loan 1, but reverses the ruling against Whitney on its main demand for recovery under Loan 2 and remanded for the MJ to render judgment in favor of Whitney on that claim. The Court reverses and remands for the MJ to render judgment in favor of Whitney on SMI’s counterclaims for breach of contract, negligent misrepresentation, tortious interference with business relations, and breach of duty to deal in good faith. A concurrence agrees with much of the judgment, but dissents on two points. First, the dissent would affirm the District Court’s holding that sufficient evidence supported the finding of malice necessary for a tortious interference claim. Second, the dissent would affirm the District Court’s finding on SMI’s bad-faith counterclaim.

On Appeals from the United States District Court for the Western District of Louisiana (Patrick John Hanna).
Attorney for Appellant – Andrew Russell Lee, New Orleans, La
Attorney for Appellee – Ryan Neil Ours, Baton Rouge, LA



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