## Facts

- French Broad Place, LLC developed a mixed-use construction project in Brevard, North Carolina, with an estimated total cost of about $19 million.
- In December 2007, the developer and Asheville Savings Bank executed a written loan commitment contemplating a $9,950,000 loan, subject to stated conditions (including pre-sale requirements).
- Before closing, the bank advised it could not obtain participation funding and would lend only $7,750,000, directing the developer to seek another lender for the remainder.
- In August 2008, the parties closed a $7,750,000 construction loan and executed formal loan documents (including a construction loan agreement, note, and deed of trust) containing an integration/merger clause superseding prior agreements.
- In November 2008, the developer requested an increase; the bank approved a written loan modification increasing the loan amount to $8,475,801.
- The bank disbursed the full $8,475,801 reflected in the executed loan documents and modification, and later declined to advance additional funds beyond that amount.
- The developer sued for breach of contract and breach of the implied covenant of good faith and fair dealing, alleging the bank failed to fund $9,950,000, underfunded and delayed funding, and failed to provide additional or “take-out” financing; the trial court granted summary judgment for the bank.

## Issues

1. Whether the bank breached an enforceable contractual obligation by not lending $9,950,000 or by refusing to provide financing beyond the amounts stated in the executed loan documents and written modifications.
2. Whether the integration clause in the executed construction loan documents barred reliance on the earlier commitment letter and alleged prior or oral understandings about “waterfall,” phased, or take-out financing.
3. Whether the implied covenant of good faith and fair dealing could supply duties to lend or restructure financing beyond the express terms of the written loan agreements.

## Decision

- The Court of Appeals affirmed summary judgment for Asheville Savings Bank on all claims.
- The executed construction loan documents and written modification(s) superseded the earlier commitment and any contrary prior understandings.
- The undisputed record showed the bank fully funded the total amount it agreed in writing to lend ($8,475,801); there was no contract requiring additional advances.
- Because the developer failed to forecast evidence of breach of an enforceable contractual duty, its contract and implied-covenant claims failed as a matter of law.

## Legal Principles

- Where parties execute an integrated written agreement with a merger clause, prior commitments, negotiations, and alleged oral assurances are superseded and generally are not enforceable to vary the written terms.
- A lender does not breach a construction loan agreement by refusing to advance funds beyond the amount expressly set out in the executed loan documents and written modifications.
- The implied covenant of good faith and fair dealing cannot expand, contradict, or create obligations beyond the parties’ express contractual duties.

## Conclusion

The court held that the bank’s obligations were defined by the integrated construction loan documents and their written modification; because the bank disbursed the full $8,475,801 required by those agreements and had no contractual duty to lend more, summary judgment for the bank was properly affirmed.


French Broad Place, LLC v. Asheville Sav. Bank, S.S.B., 816 S.E.2d 886 (N.C. Ct. App. 2018)