Sun American Bank v. Fairfield Financial Services, Inc.

Fairfield Financial Services (Fairfield) (defendant) organized a large construction loan for a developer, Underwood, by entering a participation agreement with Sun American Bank (Sun) (plaintiff) and other lenders who each funded a share in exchange for proportional profits; the agreement obligated Fairfield to notify participants if Underwood's repayment ability deteriorated or if Fairfield downgraded the loan's credit rating. After the real estate market collapsed and Underwood's finances worsened, Fairfield disclosed only a minor loan restructuring in late 2007 but waited until April 2008 to reveal it had considered the loan a poor risk since late 2007; Sun then stopped funding draws, and when Fairfield refused to refund Sun's investment, Sun sued for breach of the participation agreement and moved for summary judgment.