Union Bank, a California Corporation v. Winnebago Industries, Inc., an Iowa Corporation

Before WRIGHT and WALLACE, Circuit Judges, and POWELL, District Judge.

Union Bank, a California corporation, filed suit in the Los Angeles County Superior Court against Winnebago Industries, Inc. (Winnebago), an Iowa corporation, on a contract claim. Based upon diversity of citizenship, Winnebago removed the action to federal district court pursuant to 28 U.S.C. § 1441 . The district court thereafter granted a motion for summary judgment for Union Bank and, in addition, awarded attorney’s fees based upon a finding of bad faith by Winnebago. We affirm the granting of the summary judgment; we reverse the award of attorney’s fees.

Winnebago is a manufacturer and wholesale distributor of recreational motor vehicles. It sells these vehicles through franchised retail dealers who often finance their inventory by “flooring” arrangements with lending institutions. A flooring arrangement is an extension of credit between a bank and a dealer. The dealer orders and receives vehicles from the manufacturer; the manufacturer’s invoice is paid directly by the bank and the dealer repays this amount plus interest to the bank upon reselling the vehicle at retail.

Prior to 1972, Winnebago…