Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association

291 P.3d 316, 55 Cal. 4th 1169 (2013)

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Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association

Supreme Court of California
291 P.3d 316, 55 Cal. 4th 1169 (2013)

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Facts

Lance and Pamela Workman (plaintiffs) failed to make loan payments to Fresno-Madera Production Credit Association (Fresno-Madera) (defendant). Consequently, Fresno-Madera restructured the Workmans’ debt in a revised agreement that required the Workmans to make regular, specific payments. Fresno-Madera gave the Workmans a three-month grace period after which Fresno-Madera could take legal action against the Workmans for their failure to pay. The Workmans pledged eight separate parcels of real property as additional collateral under the terms of the new agreement. The Workmans signed the agreement without reading the terms. Within one year, the Workmans failed to make the payments as required. Fresno-Madera recorded a notice of loan default and initiated foreclosure proceedings on the Workmans’ eight parcels of real property. Eventually, the Workmans repaid the loan, and Fresno-Madera dismissed its foreclosure proceedings. The Workmans individually, and Lance as the president of Riverisland Cold Storage, Inc. (plaintiff), filed suit against Fresno-Madera, asserting claims for rescission and reformation of the agreement and seeking damages for fraud and negligent misrepresentation. The Workmans claimed that a Fresno-Madera executive had verbally informed them two weeks prior to the execution of the new agreement that Fresno-Madera would extend the loan for two years in exchange for additional collateral consisting solely of two ranches. The trial court granted summary judgment for Fresno-Madera, relying on Bank of America etc. Association v. Pendergrass, 48 P.2d 659 (Cal. 1935). The court of appeal reversed. The Supreme Court of California granted certiorari to review.

Rule of Law

Issue

Holding and Reasoning (Corrigan, J.)

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