Walter E. Heller Western, Inc. v. Tecrim Corp.

Tecrim Corporation (Tecrim) appeals from a summary judgment entered against it in favor of Walter E. Heller Western Incorporated (Heller) in a dispute arising out of a subordination agreement between the two parties. The issue on appeal is whether the trial court erred in granting summary judgment by finding the subordination agreement was supported by consideration and by not addressing the question whether Tecrim’s cross-complaint raised triable issues of material facts regarding rescission of contract based on fraud and mistake and the breach of duty of good faith and fair dealing issues which could not be resolved by a finding of consideration. For the reasons set forth below, we hold the trial court erred and reverse.

Facts and Proceedings Below

The pleadings reveal the following. Heller entered into a written Inventory Loan Security Agreement with Alpha Steel Tube & Shapes, Inc. (Alpha) on or about October 25, 1977. Among other things, this agreement granted Heller a security interest in all of the inventory then owned or thereafter acquired by Alpha. On or about November 13, 1981, Tecrim entered into a written consignment agreement with Alpha to deliver 619 coils…