5636 Alpha Road v. NCNB Texas Nat. Bank, Civ. A. No. 3:93-CV-1304-D.

• Decision Date: 22 March 1995
• Docket Number: Civ. A. No. 3:93-CV-1304-D.
• Parties: 5636 ALPHA ROAD, a Joint Venture Consisting of Oscar Olchyk, Blaine A. Steinberg, Marianne R. Steinberg, J. Richard Whittington as Trustee for the Sara Crockett Whittington Trust, and Don Zelezny, Plaintiff, v. NCNB TEXAS NATIONAL BANK, n/k/a Nations Bank, Defendant.
• Court: U.S. District Court — Northern District of Texas

879 F. Supp. 655

5636 ALPHA ROAD, a Joint Venture Consisting of Oscar Olchyk, Blaine A. Steinberg, Marianne R. Steinberg, J. Richard Whittington as Trustee for the Sara Crockett Whittington Trust, and Don Zelezny, Plaintiff, v. NCNB TEXAS NATIONAL BANK, n/k/a Nations Bank, Defendant.

Civ. A. No. 3:93-CV-1304-D.

United States District Court, N.D. Texas, Dallas Division.

March 22, 1995.

COPYRIGHT MATERIAL OMITTED

Susan Barilich, Dallas, TX, for plaintiff.

Gordon M. Shapiro and Alan N. Greenspan of Jackson & Walker, L.L.P., Dallas, TX, for defendant.

FITZWATER, District Judge:

The instant motion for summary judgment presents questions concerning the liability of a bridge bank arising from a loan commitment made by its predecessor, a failed national bank. Among the issues presented is whether 12 U.S.C. § 1821(n)(4)(I), a provision of FIRREA,¹ should be applied retroactively.

I

This is an action by plaintiff 5636 Alpha Road, a Joint Venture ("Alpha"), against defendant NCNB Texas National Bank n/k/a NationsBank of Texas, N.A. ("NCNB").² Alpha contends NCNB is liable on theories of breach of contract, wrongful acceleration, usury, negligent misrepresentation, tortious interference with business relations,³ and negligent spoliation of evidence, in connection with a loan commitment made by InterFirst Bank-Oak Cliff ("IFB") to provide permanent financing for land and an office building that Alpha owned.

Alpha alleges that IFB promised to loan Alpha the sum of $700,000, at an interest rate of 13% per annum, pursuant to a written agreement dated February 25, 1983. Payments were to be amortized on a 20-year basis, Alpha was to execute a deed of trust promissory note in the amount of $700,000 (the "Note"), and a new note was to be executed every three years. IFB required Alpha to pay the sum of $7,000 as a 1% loan commitment fee, as well as certain closing costs. Alpha contends that IFB funded $250,000 of the amount promised, but refused to advance the balance of $450,000. Alpha alleges that IFB neither refunded any of the fees it charged to make the loan, nor did it accurately reduce the amount of interest charged. Alpha avers that although it made all Note payments in a timely manner, and that IFB renewed the Note in 1986 for the purpose of adjusting the interest rate, NCNB should have but did not renew the Note in 1989, 1992, and 1995. Instead, NCNB renewed the Note in early 1989, but misled Alpha concerning the renewal terms. In February 1990 NCNB advised Alpha that it would not honor the loan commitment and extend the loan for the remainder of the 15-year period.

Alpha contends NCNB never rebated interest to Alpha, even though interest was amortized on a 20-year basis and the loan was effectively made for only a seven-year period; that NCNB arbitrarily refused to extend the Note notwithstanding that the bank was significantly oversecured and that all Note payments had been timely made; and that NCNB's conduct obligated Alpha to finance within a very short time the entire principal balance of $221,015.54. Alpha alleges that as a result of NCNB's actions, it lost all fees paid under the IFB loan commitment; sustained damages in the form of lost opportunity costs and investment revenues and the costs of borrowing money, caused by its venturers' having to liquidate their savings and investments and borrow additional funds; and paid excessive interest charges.

By stipulation filed November 17, 1993, Alpha has waived all pre-receivership claims against the Federal Deposit Insurance Corporation ("FDIC")-Receiver, who has been dismissed as a party-defendant. Alpha seeks to recover from NCNB. NCNB moves for summary judgment as to all of Alpha's claims.

II

A

The court first considers Alpha's usury claim. NCNB contends this action is barred because (1) Alpha released the claim in a modification of the Note; (2) the usury claim is based on pre-insolvency conduct, which Alpha has waived pursuant to the stipulation of dismissal of FDIC-Receiver; (3) the two-year statute of limitations prescribed by 12 U.S.C. § 86 bars the claim; and (4) the modification in question contained a usury savings clause, thus negating the requirement of § 86 that NCNB "knowingly" received usurious interest.

NCNB's fourth argument is dispositive of Alpha's usury claim. 12 U.S.C. § 86 provides that a national bank forfeits usurious interest when its conduct is "knowingly done." In order to avoid NCNB's limitations and release arguments, Alpha bases its usury claim upon the payment of usurious interest in August 1990. See P.Resp. at ¶¶ 8-9 (arguing that claim arose in August 1990, when Alpha paid off loan, and "NCNB caused its previous collection of unearned interest payments to become usurious."). As of August 1990, however, Alpha and NCNB had already entered into a Renewal, Extension, and Modification Agreement (the "Fifth Modification"), dated January 25, 1990. See Tom Cathey ("Cathey") Aff.Ex. A-8. Pursuant to the Fifth Modification, Alpha's debt was due and payable on July 26, 1990. Id. at ¶ 4. This modification contained ¶ 18, a savings clause.⁴ When NCNB accelerated the Note, it did so pursuant to the Fifth Modification, including ¶ 18. NCNB could not knowingly have committed usury, as required by § 86, because the savings clause precluded it from acting "knowingly."

To avoid summary judgment, Alpha relies on a Texas decision concerning the intent required for usury, and cites a page from the Cathey deposition, in which Cathey testified that NCNB did not refund to Alpha any interest or loan origination fees, and did not calculate any such refunds in the payoff amounts. See Cathey Dep. at 109. It is settled, however, that "in general, Texas courts recognize the validity of usury savings clauses and enforce those clauses to defeat claims of usury." FDIC v. Claycomb, 945 F.2d 853, 860 (5th Cir.1991) (footnote omitted). To determine the effect of a usury savings clause, the court must consider the terms of the clause as a whole in light of the circumstances surrounding the transaction, and give effect to the objective intention of the parties as reflected by the written documents associated with the transaction. Id. Moreover, the court must presume that the parties intended to obey the law unless a contrary intention clearly manifests itself. Id. "The court must, if reasonably possible, give effect to the savings clause and interpret the savings clause so as to deny the right to usurious interest." Id. (footnote omitted). In Claycomb the Fifth Circuit affirmed the district court's conclusion that usury savings clauses set forth in the loan documents defeated a usury claim. Id. (citing Woodcrest Assocs., Ltd. v. Commonwealth Mtg. Corp., 775 S.W.2d 434, 439 (Tex.App.1989, writ denied)). The usury savings clauses in the notes at issue in Claycomb, 945 F.2d at 860 n. 24, are similar to ¶ 18. Paragraph 18 of the Fifth Modification evinces the intent of NCNB and Alpha that NCNB would not under any circumstances — including, but not limited to, prepayment, default, demand for payment, or acceleration of the maturity of any obligations or any part thereof — contract for, charge, or receive under the Note or otherwise exceed the maximum interest permitted by law. Under the controlling jurisprudence, the court is to presume that NCNB and Alpha intended to obey the law. Claycomb, 945 F.2d at 860. Accordingly, Alpha's usury claim is barred as a matter of law, and is dismissed with prejudice.

B

NCNB next contends it cannot be held liable for breach of contract. It argues that (1) no breach occurred because the IFB loan commitment did not obligate the bank to provide financing for 15 years, but instead provided that the loan would be reviewed every three years; (2) Alpha cannot meet the elements of 12 U.S.C. § 1821(n)(4)(I); (3) the merger doctrine bars consideration of the alleged loan agreement; and (4) the terms of the Note control the conflicting terms of the alleged loan commitment.

NCNB's contention that the loan commitment should not be read to obligate IFB to provide financing for 15 years, but should be interpreted only to mean that the bank would evaluate triennially whether to continue to lending relationship, is baseless. The commitment provides, in pertinent part:

The purpose of this letter is to evidence the commitment of Interfirst to carry the Permanent Financing on the land and office building reflected on said Deed of Trust Note for a term of 15 years. The Joint Venture and Interfirst agree that the loan ($700,000.00) will be reviewed every three years during such term and the interest rate for the remaining balance owing shall be negotiated between the parties at each three year period.

Cathey Aff.Ex. F. It reflects the intent of the parties that IFB would "carry the Permanent Financing ... for a term of 15 years," and that the Note would be reviewed every third year so that the interest rate for the remaining balance could be renegotiated. NCNB is not entitled to summary judgment on this ground.

NCNB maintains next that it cannot be held liable for breach of contract because Alpha cannot meet the requirements of 12 U.S.C. § 1821(n)(4)(I).⁵ NCNB contends there is no evidence in the minutes of the IFB loan committee or board of directors that either body approved the loan commitment between Alpha and IFB.

Although Alpha raises a number of objections to NCNB's reliance on § 1821(n)(4)(I), it does not challenge NCNB's attempt to apply this provision of FIRREA retroactively. The court has consistently declined to do so when FIRREA's application will impinge upon vested rights.⁶ The Fifth Circuit has in the past avoided this issue on the ground that the same result would be reached under a pre-FIRREA application of the common law D'Oench, Duhme⁷ doctrine and/or 12 U.S.C. § 1823(e). See RTC v. Camp, 965 F.2d 25, 30-31 (5th Cir.1992); Kilpatrick v. Riddle, 907 F.2d 1523, 1526 n. 4 (5th Cir. 1990), cert. denied, 498 U.S. 1083, ...