Farm Credit Bank v. FCB Ltd. Partnership

In December 1986, Farm Credit Bank (Farm Credit) (plaintiff) and FCB Limited Partnership (FCB) (defendant) entered into an agreement whereby Farm Credit loaned funds to FCB to finance a purchase of real property. Pursuant to the agreement, Farm Credit as tenant obtained a leasehold estate in the real property from FCB as owner and landlord. In late 1987 and early 1988, Farm Credit and FCB negotiated with a third party, Omega Development Corporation and Omega Investments, Inc. (collectively, Omega) (defendant) for subleasing part of the real property. Omega allegedly represented FCB and acted as its agent throughout the negotiations. Farm Credit alleged that P. Tomas Mann (defendant), the president of Omega, represented Omega in the negotiations. On January 4, 1988, Mann wrote a letter to Farm Credit proposing terms of the sublease and amending the borrower-escrow-fund provision in the 1986 agreement. The letter provided Farm Credit with a space for execution and was signed on January 13, 1988. After executing the letter, Farm Credit learned that FCB had not authorized and would not recognize the agreement. On September 12, 1990, Farm Credit filed a diversity suit against FCB, later amending its complaint to include Mann and Omega for breach of implied warranty of authority to contract and to argue the discovery rule of accrual applied. Mann and Omega filed a motion for summary judgment against Farm Credit, arguing Farm Credit’s cause of action was a contract claim and barred by the three-year statute of limitations from the date Mann signed the letter agreement.