58 F.3d 1523 (10th Cir. 1995), 94-6096, F.D.I.C. v. Hamilton

Docket Nº:94-6096.
Citation:58 F.3d 1523
Party Name:FEDERAL DEPOSIT INSURANCE CORPORATION, acting in its corporate capacity, Plaintiff, v. Sandra B. HAMILTON, an individual; L.G. Hamilton, an individual, Defendants-Appellees, v. NCNB TEXAS NATIONAL BANK, and Nations Bank, Third-Party-Defendant-Appellant.
Case Date:July 07, 1995
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1523

58 F.3d 1523 (10th Cir. 1995)

FEDERAL DEPOSIT INSURANCE CORPORATION, acting in its

corporate capacity, Plaintiff,

v.

Sandra B. HAMILTON, an individual; L.G. Hamilton, an

individual, Defendants-Appellees,

v.

NCNB TEXAS NATIONAL BANK, and Nations Bank,

Third-Party-Defendant-Appellant.

No. 94-6096.

United States Court of Appeals, Tenth Circuit

July 7, 1995

Page 1524

Conner L. Helms (Drew Neville, Russell A. Cook, and Brinda K. White of Linn & Neville, P.C. with him on the briefs), of Woska, Hasbrook, Dowd, Underwood & Helms, Oklahoma City, OK, for appellees.

Kirk D. Fredrickson (Douglas N. Gould with him on the briefs), of Hall, Estill, Hardwick, Gable, Golden & Nelson, Oklahoma City, OK, for appellant.

Before ANDERSON, BARRETT and BALDOCK, Circuit Judges.

BARRETT, Senior Circuit Judge.

NationsBank of Texas, N.A. (NationsBank), formerly NCNB Texas National Bank, third party defendant, appeals from the judgment of the district court in favor of Sandra B. Hamilton and, her son, L.G. Brown Hamilton, collectively referred to as "the Hamiltons." 1

Page 1525

Facts

On October 12, 1990, the Hamiltons entered into a Real Estate Lease Purchase Contract (the Agreement) with NationsBank regarding an 11,584 square foot residential property located at 1512 West Plato Road, Duncan, Oklahoma (the Property). The Agreement provided for a three year lease term with an option to purchase at any time during the lease term.

The Agreement obligated the Hamiltons to pay $1,400 monthly in rent, additional amounts for insurance and property taxes, and to repair the swimming pool during the first year of the lease term. NationsBank was to reimburse one-half of the pool repair expenses if the purchase option was not exercised. Under the Agreement, NationsBank was responsible for "maintenance and repair of all functions of the property to the extent such repairs and maintenance exceed $1,000 per year." (Appellant's Appendix, Vol. I at 6).

The Agreement allowed the Hamiltons, at their own expense, to construct a recording studio in the garage area of the Property and provided that in the event the Hamiltons did not purchase the Property the cost of reconverting the studio back into a garage would be offset against the obligation to reimburse one-half of the pool repair expenses. The Hamiltons intended to operate a recording studio with overnight accommodations for studio guests.

In November, 1990, NationsBank's asset manager, Tom Grimland (Grimland), toured the Property with the Hamiltons and identified certain items which the Hamiltons asked to be repaired. Grimland agreed on behalf of NationsBank to make certain of these repairs. The repair work was assigned to Harvey Garrett, the original builder of the home.

In January, 1991, Ward Warren (Warren) replaced Grimland as asset manager for the Property. Warren learned that the Hamiltons were having difficulty with Garrett. Warren toured the Property with the Hamiltons and they presented him with a list of items in need of repair or replacement. Warren discussed the list with Grimland and concluded that due to the extent of the needed repairs it would be appropriate to engage a construction consultant to oversee the project.

In March, 1991, George Gibson (Gibson) was hired by NationsBank as a construction consultant to identify the deficiencies at the Property and to secure repair bids. Gibson toured the Property on March 29, 1991, with the Hamiltons and prepared a schedule of proposed repairs. Len Lawson (Lawson) was selected, by the Hamiltons, as the contractor to perform the repairs and was asked to provide a cost estimate for each item.

In April, 1991, NationsBank unilaterally advised the Hamiltons that rental payments could be deferred in order to allow the parties to determine what amount of repair expenses incurred by the Hamiltons should be credited against their lease obligation. At this time, the Hamiltons provided Gibson with a list of additional repair items, largely consisting of electrical repairs. This list was incorporated by Gibson into a seven-page document entitled Expenditure Summary and Reconciliation (the Repair Summary).

In late April, 1991, Gibson revised the Repair Summary to include the cost estimates obtained from Lawson and to reflect his personal recommendations as to the allocation of financial responsibility for various repair items. At this time, the aggregate cost of the repairs was $37,955.51.

In early May, 1991, Warren asked the Hamiltons to prioritize the repairs so that the most important items could be completed first. Warren then met with his supervisors and the decision was made to immediately repair the most critical items, to address the remaining items later in conjunction with negotiation for a more definite lease agreement, and to discuss the distinction between functional and cosmetic repair.

On June 13, 1991, Warren notified the Hamiltons of these decisions, stating that: (1) many of the items fall into the category of capital improvements and repairs which are beyond the scope of the typical landlord/tenant

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relationship; and (2) a portion of the items would be performed immediately as a gesture of good faith while the balance would be addressed as part of the discussions in connection with finalizing the Agreement.

NationsBank then entered into two construction contracts addressing the major repair items. The contract work was completed by mid-July, 1991, at a total cost of $20,022.43. (Appendix Vol. I at 107).

In July, 1991, following completion of the repair contracts, Warren and his supervisor, David Wells (Wells), met with the Hamiltons. Wells allegedly told the Hamiltons that NationsBank "wanted out of the deal" and suggested the parties discuss sale of the Property to the Hamiltons, as well as having the Hamiltons take responsibility for the remaining repairs with a corresponding reduction in the purchase price by the amount of...

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