Thursday, December 26, 2013

Badgett v. Security State Bank case brief

Badgett v. Security State Bank case brief summary
786 P.2d 302 (1990)

Appellant bank customers challenged the decision of the Superior Court for Grays Harbor County (Washington), which granted summary judgment in favor of appellee bank dismissing the customers' claim for damages and entering judgment in favor of the bank on its counterclaim seeking foreclosure.

The customers had a loan agreement with the bank, which was modified several times over a six-year period. At one point, the bank agreed to modify the agreement to permit the customers to take part in a government termination program, but the customers later decided to continue operating the farm. Thereafter, the customers sought to renegotiate their agreement to allow them to participate in another termination program and the bank refused. After the customers defaulted on their loans, they filed an action against the bank and the bank filed a counterclaim seeking foreclosure of outstanding loans. The trial court entered summary judgment in favor of the bank.


  • On appeal, the court reversed and held that there were factual issues regarding whether the bank had breached its duty of good faith as set forth in Wash. Rev. Code § 62A: 1-203. 
  • The court found that there was evidence that the bank had routinely restructured the loans to meet the requirements of the customers' changing circumstances. 
  • The court also noted that there was substantial evidence that although the loan officer told the customers that he would submit their proposal to the bank's loan committee, he did not do so.

The court reversed the summary judgment entered against the bank customers on their claim against the bank and the judgment of foreclosure entered in favor of the bank. The court remanded the case for trial.

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