22 F.3d 1472 (10th Cir. 1994), 92-6334, F.D.I.C. v. Hulsey

Docket Nº:92-6334.
Citation:22 F.3d 1472
Party Name:FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff-Appellee, v. Larry O. HULSEY, an individual; Larry O. Hulsey & Co., a Texas corporation, Defendants-Third Party Plaintiffs-Appellants, v. CONTINENTAL ILLINOIS NATIONAL BANK & TRUST COMPANY OF CHICAGO, a national banking corporation, Third-Party Defendant-Appellee.
Case Date:April 13, 1994
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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22 F.3d 1472 (10th Cir. 1994)

FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate

capacity, Plaintiff-Appellee,

v.

Larry O. HULSEY, an individual; Larry O. Hulsey & Co., a

Texas corporation, Defendants-Third Party

Plaintiffs-Appellants,

v.

CONTINENTAL ILLINOIS NATIONAL BANK & TRUST COMPANY OF

CHICAGO, a national banking corporation,

Third-Party Defendant-Appellee.

No. 92-6334.

United States Court of Appeals, Tenth Circuit

April 13, 1994

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Karen L. Howick (Anita M. Moorman and J. David Jacobson with her on the briefs) of Karen L. Howick & Associates, Oklahoma City, OK, for appellant.

Ricki Valerie Sonders (John C. Platt and Jane S. Eulberg of Edwards, Sonders & Propester, Oklahoma City, OK, with her on the briefs; Ann E. DuRoss, Asst. Gen. Counsel,

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Colleen B. Bombardier, Sr. Counsel, Christopher J. Bellotto, Counsel, of counsel, F.D.I.C., Washington, DC, with her on the briefs).

Before TACHA, Circuit Judge, BARRETT, Senior Circuit Judge, and KANE [*], District Judge.

BARRETT, Senior Circuit Judge.

Defendants-Appellants, Larry O. Hulsey & Co. (LOH & Co.), a Texas corporation, and Larry O. Hulsey (Hulsey) appeal from: the district court's Orders dismissing their counterclaims against the Federal Deposit Insurance Corporation (FDIC); the district court's Orders which granted summary judgment in favor of the FDIC on numerous affirmative defenses; and the district court's finding of facts and conclusions of law in its Final Journal Entry of Judgment. Hulsey, individually, also appeals the district court's Order granting summary judgment in favor of the FDIC which denied Hulsey exoneration as guarantor of the LOH & Co. loan.

Factual Background

LOH & Co. entered into a loan transaction in October, 1982, with Continental Illinois National Bank and Trust Company of Chicago (CINB). In exchange for a $5,000,000 revolving line of credit, LOH & Co. executed a Secured Note, a Secured Revolving Credit Agreement, as well as mortgages and pledges in oil and gas leaseholds. 1 Hulsey, President and sole owner of LOH & Co., personally guaranteed LOH & Co.'s debt and also executed mortgages covering his own oil and gas leaseholds as security. The mortgages were filed in the Oklahoma counties in which the oil and gas wells were located.

The original credit line was for $1,700,000 which allowed LOH & Co. to consolidate other loans, expand its business, and pay operating expenses. On November 14, 1983, and December 20, 1984, LOH & Co. and CINB executed amendments which increased the line of credit to $2,400,000 in 1983 and to $4,250,000 in 1984. The First Amendment in 1983 changed the maturity date of the note from October 1, 1987 to November 1, 1988 and included additional oil and gas properties under CINB's mortgage to secure the increased line of credit. (Appellants' Appendix at 104, 106). The Second Amendment in 1984 acknowledged that an informal amendment to the Credit Agreement increasing the loan to $3,400,000 had occurred after the First Amendment. Id. at 113.

Under the Third Amendment, effectuated in October, 1986, the credit line was converted to a conventional term loan of $4,500,000, equaling the amount of principal drawn on the credit line. Id. at 117-18. The parties agreed that the maturity date stated in the note was the original date of October 1, 1987. Id. at 118. The Third Amendment also closed LOH & Co.'s line of credit, adjusted the interest rate provisions, provided for repayment on a term basis, and provided for the grant of additional collateral to the Bank. Id. at 117. Moreover, in the Third Amendment, LOH & Co. waived any right to a trial by jury in any action or proceeding to enforce or defend any rights under the Credit Agreement or any amendments. Id. at 120.

At the time that LOH & Co. acquired its 1982 credit line, CINB was managing and liquidating, on behalf of the FDIC, numerous Oklahoma oil and gas properties which the FDIC had acquired from a separate insolvent bank. About the time of the First Amendment in November, 1983, CINB became insolvent, necessitating a subsequent bailout by the FDIC. On August 23, 1984, CINB and the FDIC entered into various agreements under which the FDIC assumed CINB's indebtedness in exchange for certain loan transfers and a note payable. As agreed, CINB could satisfy the note payable by conveying additional loans to the FDIC at any time. Moreover, under a service agreement, CINB would receive compensation for administering the loans which it had transferred to the FDIC.

On June 29, 1987, CINB transferred LOH & Co.'s loan to the FDIC. Following this

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transfer, LOH & Co. was notified that it must be liquidated to satisfy the loan. LOH & Co. contacted CINB, which was now administering the loan on the FDIC's behalf, to discuss a possible settlement.

Between June 29, 1987, and November 1, 1988, Hulsey met and corresponded with three different CINB/FDIC account officers. It is disputed whether an acceptable settlement agreement was reached during this time. However, it is clear that no formal agreement was executed. On November 1, 1988, CINB terminated its service agreement and thereafter the FDIC began administering LOH & Co.'s loan. Following the FDIC's takeover of the loan administration, LOH & Co. assigned some oil and gas production payments from one of its gas leases and continued to send financial information to the FDIC.

In July, 1989, the sixth consecutive account officer assigned to administer the LOH & Co. loan sent a demand letter for additional financial information so that settlement negotiations could continue. LOH & Co. provided the requested information. Later that year, all discussion between the FDIC and LOH & Co. broke down when the FDIC contacted third-party purchasers and operators of the oil and gas properties and began intercepting payments to LOH & Co. after October, 1989.

Procedural History

The FDIC filed its foreclosure action on September 7, 1990. In response, LOH & Co. and Hulsey, jointly, alleged a number of affirmative defenses and filed counterclaims seeking compensatory and punitive damages for fraud/intentional misrepresentation, constructive fraud/breach of fiduciary duty, tortious interference with business activities, intentional infliction of emotional distress, negligence, breach of contract, and breach of implied covenant of good faith and fair dealing. Also, LOH & Co. and Hulsey, jointly, filed a third party complaint against CINB which was settled and is not a part of this appeal.

The defenses and counterclaims, as applied to the FDIC, alleged that the FDIC was responsible for CINB's conduct during the period before the loan was transferred to the FDIC (pre-transfer), because of agency or contract assignment principles, as well as for its own conduct after the loan was transferred (post-transfer).

The FDIC, as well as LOH & Co. and Hulsey, jointly, moved for summary judgment on most of LOH & Co.'s affirmative defenses. Hulsey, individually, moved for summary judgment by exoneration under his guaranty agreement. The FDIC also moved to dismiss all counterclaims against it and it filed, in the alternative, a suggestion that the district court lacked jurisdiction to decide the contract counterclaim.

Thereafter, the district court dismissed most of the counterclaims 2 and granted summary judgment in favor of the FDIC on most of the affirmative defenses and on Hulsey's guaranty agreement. By subsequent Order, the court dismissed, without prejudice for lack of jurisdiction, the remaining portion of the breach of contract and implied covenant of good faith and fair dealing counterclaims which sought damages from the FDIC for breach of the post-transfer settlement agreement. The district court concluded that exclusive jurisdiction of those counterclaims was with the United States Claims Court (Claims Court) under 28 U.S.C. Secs. 1346(a) and 1491(a) because the amount in controversy exceeded $10,000.

When all of the Orders were filed, only the FDIC's foreclosure suit and two of LOH & Co.'s affirmative defenses remained for trial. The two remaining affirmative defenses were based on the FDIC's post-transfer actions in failing to preserve and protect the collateral and interfering with LOH & Co.'s correspondence. Before trial, LOH & Co. and Hulsey confessed judgment on the remaining issues in order to take an immediate appeal.

LOH & Co. and Hulsey thereafter filed suit for damages against the United States in the Claims Court on the same basis as their

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dismissed breach of contract and breach of the implied covenant of good faith and fair dealing counterclaims and filed this appeal. 3 After the appeal was taken, appellants filed a motion to transfer this appeal to the United States Court of Appeals for the Federal Circuit (Federal Circuit).

LOH & Co. and Hulsey set forth the issues on appeal as whether the district court erred in (1) dismissing for lack of jurisdiction and then granting summary judgment in favor of the FDIC on certain of the breach of contract and breach of the implied covenant of good faith and fair dealing counterclaims; (2) granting summary judgment in favor of the FDIC on its principal suit and the affirmative defenses relating to the diversion of the oil and gas proceeds; (3) dismissing the tort-based counterclaims; (4) granting summary judgment in favor of the FDIC on the promissory estoppel defense; (5) ruling that the FDIC was not subject to the affirmative defense of laches; (6) entering findings of fact and conclusions of law in its Journal Entry of Final Judgment; and (7) granting summary judgment in favor of the FDIC which denied Hulsey exoneration as guarantor of the LOH & Co. loan.

Discussion

I.

By counterclaim, the LOH & Co. and...

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