The opinion of the court was delivered by: Paul A. Engelmayer, District Judge:
Pending before the Court are competing motions for summary judgment in this breach of contract case. Plaintiff First American International Bank ("FAIB") argues that, under its contract with defendant The Community's Bank ("TCB"), it is entitled to an equal, 50% share of a federal grant award received by TCB; TCB argues the contrary. Both parties urge that this issue, which turns on a question of contractual interpretation, can be resolved in their favor as a matter of law by the Court, on summary judgment. For the reasons that follow, both motions for summary judgment are denied.
A.The Parties' Agreement, and TCB's $432,000 Award
FAIB is a commercial bank, headquartered in New York. TCB is a smaller, community bank located in Bridgeport, Connecticut. Each bank is a certified Community Development Financial Institution ("CDFI"). TCB 56.1 ¶¶ 1--2.
This case arises out of an agreement between TCB and FAIB with regard to the potential sharing of certain awards from the Community Development Financial Institutions Fund ("CDFIF" or the "Fund"). The background to that agreement is as follows.
On October 3, 2008, an executive at the National Community Investment Fund ("NCIF"), a private entity which invests in CDFIs and is a shareholder of both parties, contacted executives at FAIB and TCB. NCIF proposed that FAIB and TCB work together, or "participate," in certain commercial loans that FAIB had already made to its New York business customers. In effect, the proposal contemplated that TCB would participate in FAIB loans of its choosing, in a specific, but different, percentage for each loan. Specifically, as to particular loans that FAIB had already made, (1) TCB would purchase a determinate portion of the loan; and (2) when FAIB received payment from a borrower, FAIB would forward a portion of that payment to TCB, keyed to the interest TCB had purchased in that loan. Id. ¶¶ 3--5; Declaration of Peter Harvey in Support of TCB's Motion for Summary Judgment ("Harvey Decl.") (Dkt. 47) Ex. 3.
Ultimately, of the $8 million participation interest proposed by FAIB, TCB agreed to participate in four loans originated by FAIB, and to take on an aggregate $2.4 million of those loans. TCB 56.1 ¶ 8.
On November 25, 2008, an FAIB official emailed TCB to propose an additional term: "sharing 50/50 [of] any BEA award that [TCB] may be awarded in 2009" with respect to loans made in 2008. FAIB asked TCB whether it was "agreeable to such terms." Id. ¶ 6; Harvey Decl. Ex. 8. A "BEA award" denoted a Bank Enterprise Award (an "Award"). Such an Award is a cash grant payable to a CDFI for lending activities in a geographic area deemed by the CDFIF to be distressed. Id. The CDFIF, in turn, is a regulatory body, organized under the United States Department of the Treasury, whose mission is to "increase economic opportunity and promote community development investments for underserved populations and in distressed communities in the United States." Community Development Financial Institutions Fund, Who We Are, http://www.cdfifund.gov/who_we_are/about_us.asp (last visited Sept. 5, 2012).
TCB was willing to agree to the request as a financial matter. TCB 56.1 ¶ 10. Its Board had approved the loan participation without assuming receipt of any BEA Award. See Harvey Decl. Ex. 10 (credit memoranda submitted to TCB Board). However, TCB did not know at the time whether sharing of an Award would be lawful, and it had not sought a legal opinion as to that point. TCB 56.1 ¶¶ 7--10; Affidavit of Orville G. Aarons in Support of TCB's Motion for Summary Judgment ("Aarons Aff.") (Dkt. 46) ¶¶ 5--6. Accordingly, at the request of Orville Aarons, the TCB executive handling the transaction, the parties put their understandings into two distinct sets of documents. The first set consists of four parallel agreements, dated December 30, 2008, which address the terms under which TCB was to participate in existing loans of FAIB; these agreements do not address a potential BEA Award (the "Loan Participation Agreements").
See Harvey Decl. Ex. 2 (copies of the four Loan Participation Agreements). The second set of agreements, dated the same day, consists of four letter agreements regarding the sharing of any Award that TCB might receive (the "Letter Agreements"). TCB 56.1 ¶ 12; Harvey Decl. Ex. 1 (copies of the four Letter Agreements). Each Letter Agreement reads, in relevant part:
FAIB and Participant Bank [TCB] acknowledge and agree that (i) Participant Bank intends to apply for an award relating to the Loan, under the 2009 BEA Program and (ii) that the Participants will share any BEA Award with 50% to be received by each Participant, provided it is determined that that [sic] (x) Participant Bank is eligible to apply for a BEA award relating to the Loan, and (y) said application and award sharing is permitted under all applicable laws, rules and regulations.
. . . . . . in the event that the aforesaid sharing of the 2009 BEA Award is contrary to law or regulation, then Participant Bank agrees to share the highest amount permissible up to fifty (50%) percent with FAIB.
Harvey Decl. Ex. 1. Each Letter Agreement was signed by Al Lau, FAIB's president, and Orville Aarons, TCB's executive vice president. Id. The Letter Agreements were drafted by FAIB, and appear on FAIB letterhead. Id.; TCB 56.1 ¶ 12.
On December 30, 2008, to consummate the purchase of its participation interest in the four loans, TCB wired $2.4 million to FAIB. TCB 56.1 ¶ 16.
In March 2009, TCB applied for a 2009 BEA Award, based on the loans to which the four Loan Participation Agreements applied. TCB 56.1 ¶ 17; Harvey Decl. Ex. 9. On August 20, 2009, CDFIF informed TCB that TCB had been selected to receive an Award, and that receipt of the Award proceeds was conditioned on TCB's agreement to abide by the Award's terms and conditions (the "Award Agreement"). Harvey Decl. Ex. 17; TCB 56.1 ¶¶ 17--18. TCB's Award was for $432,000. TCB 56.1 ¶ 23; FAIB 56.1 ¶ 16.
As relevant here, Paragraph 8.3 of the Award Agreement provided that an Award recipient "may not assign, pledge or otherwise transfer any rights, benefits or responsibilities . . . under this Award Agreement without the prior written consent of the ...