Heller v. Namer

• Decision Date: 01 February 1982
• Docket Number: No. 79-2579,79-2579
• Citation: 666 F.2d 905
• Parties: Mitchell T. HELLER and M & M Investment Company, Plaintiffs-Appellees, v. David I. NAMER and National Financial Management, Inc., both d/b/a Financial Management Services, Defendants-Appellants. NATIONAL FINANCIAL MANAGEMENT SERVICES, INC., d/b/a Financial Management Services, Plaintiffs-Appellants, v. Mitchell T. HELLER, II, Mitchell T. Heller, III, Golden West Corporation, Inn Crowd and Kent White, Defendants-Appellees. FIDELITY FINANCIAL OF FLORIDA, INC., Plaintiff-Appellant, v. Mitchell T. HELLER, II, Mitchell T. Heller, III, Golden West Corporation, Inn Crowd and Kent White, Defendants-Appellees. . Unit A *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 905

666 F.2d 905

Mitchell T. HELLER and M & M Investment Company, Plaintiffs-Appellees, v. David I. NAMER and National Financial Management, Inc., both d/b/a Financial Management Services,

Defendants-Appellants.

NATIONAL FINANCIAL MANAGEMENT SERVICES, INC., d/b/a

Financial Management Services, Plaintiffs-Appellants, v. Mitchell T. HELLER, II, Mitchell T. Heller, III, Golden West

Corporation, Inn Crowd and Kent White,

Defendants-Appellees.

FIDELITY FINANCIAL OF FLORIDA, INC., Plaintiff-Appellant, v. Mitchell T. HELLER, II, Mitchell T. Heller, III, Golden West

Corporation, Inn Crowd and Kent White, Defendants-Appellees.

No. 79-2579.

United States Court of Appeals Fifth Circuit.

Unit A ^*

Feb. 1, 1982.

Terry A. Bell, Gretna, La., for defendants-appellants.

Stone, Pigman, Walther, Wittmann & Hutchinson, Stephen H. Kupperman, Campbell C. Hutchinson, New Orleans, La., for defendants-appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before BROWN and POLITZ, Circuit Judges. ^**

JOHN R. BROWN, Circuit Judge:

This diversity action arises from the alleged breach of a contract to secure from a savings and loan association a commitment to finance the acquisition of a hotel. As part of the contract, for processing the application fee, the finance company received two checks-the first of which was dishonored by the bank for payment and the second, a replacement for the dishonored check. Subsequently, the first check was re-presented by the payee and paid by the drawee bank. The finance company retained the funds from both checks presumably as partial payment of its fee for securing the loan. The District Court granted summary judgment to the borrower for the amount of both checks and dismissed the counterclaim of the finance company. Finding that no genuine issue of material fact exists since as a matter of law no commitment to finance was issued, we affirm the granting of summary judgment as to the refund of both checks. We find, however, that due to a missing transcript we are unable to review the lower court determination of personal liability and therefore remand for a determination of this limited issue.

The Inn Crowd

In 1977, Mitchell T. Heller (Heller) was seeking a standby loan commitment to help finance the acquisition of a hotel in Odessa, Texas, the Inn of the Golden West. If financing were secured, the hotel was to be acquired by Inn Crowd, a partnership to be formed by Heller, his father, M. T. Heller, II, and Kent White. Frederick Wohlfeld, a loan broker employed by Fidelity Financial of Florida (Fidelity), suggested that Heller contact David Namer to assist in procuring the loan. Namer was president of National Financial Management, Inc. d/b/a Financial Management Services (Financial) in New Orleans. Apparently, Namer and Heller had prior dealings within the previous year, but that transaction aborted prior to securing a loan. ¹ Heller came to New Orleans to meet with Namer on September 12, 1977, at which time Heller executed an application form for the loan and delivered to Namer: (1) a check for $25,000, drawn on Heller's father's account in the Arizona Bank maintained under the name "M & M Investment Company," a nonexistent entity, and (2) a transmittal letter. ² The check was a good faith deposit required to accompany the submission of the application for a loan. At this meeting, the name of the payee of the check was changed from Management Service Consultants to Financial Management Services and the notation on the bottom was also modified. ³ The transmittal letter, signed by Heller's father, was also corrected by the addition of two paragraphs, one correcting the name of the addressee to indicate that "Name of the corporation is Financial Management Services, and not Management Services Consultants," and one amending the provisions concerning the handling of the deposit. ⁴ The application form provided for Financial to receive $104,000 in fees if an acceptable (i.e., substantially in accordance with the application conditions) commitment was "granted and/or offered", less the application deposit of $25,000. ⁵ The terms of liquidated damages for failure to accept the commitment and return of the application fee if the commitment was not acceptable were also covered by the form. Fidelity, for its assistance in securing the loan, was also to receive 11/2% fee "payable 1/2% on acceptance of the Namer commitment and 1% on funding." ⁶

On or about September 23, 1977, Heller was informed that his bank had refused to pay the $25,000 check because of the change in the name of the payee and had returned the check to Namer. After notifying Namer of this wrinkle and negotiating with him, Heller agreed to send Namer a replacement check, but this time for $26,000. This $1000 increase in the amount of the second check reflected the change in the amount of the loan being requested. Although Heller was supposed to deposit 1% of the total loan sought, he had anticipated only a.$2.5 million loan in early September and Namer had agreed to accept the smaller deposit. Apparently, the first check was subsequently re-presented for payment and cleared sometime prior to October 14, 1977. Thus through a fortuitous series of events, at least from Mr. Namer's standpoint, Financial came to hold $51,000 (the amount of the first check and the replacement check), rather than a $25,000 deposit.

Standing By

On October 11, 1977, Heller and Namer spoke by telephone, during which conversation Namer informed Heller that a commitment would be issued and that Heller should be in New Orleans not later than October 21 to accept the commitment and pay, by cashier's check, the balance of the fee. Heller apparently was not particularly receptive to paying the fees without first receiving a copy of the commitment to review, but Namer agreed to send Heller sample language which arrived in Heller's Arizona office on October 13, 1977. On or about October 14, Heller discovered that the first check for $25,000, previously dishonored, had been paid by his bank and requested Namer to return the excess funds. On October 19, 1977, Heller received a telegram stating that a commitment had been issued and requesting that the remaining $53,000 balance of the fees ($104,000 minus deposits of $26,000 and $25,000), now due, be forwarded by October 21 and informing Heller that the commitment would expire if not accepted prior to October 28, 1977. This telegram was also confirmed by a letter dated October 19, 1977. Heller responded to the telegram and letter with another demand for return of the $25,000, informing Namer that the retention of these funds constituted a breach of contract. According to Namer's brief, he never agreed with Heller to return the excess funds because he believed they were already earned and because of the problems he had had in prior dealings with Heller. Counsel for Namer admitted ⁷ that his client decided unilaterally to retain the full $51,000. Namer responded on October 21, 1977 to Heller's letter, clarifying that the contract was with Financial Management Services as a corporate entity, not David Namer, and stating that Financial had "granted and offered" a commitment substantially in accordance with the terms of the application, both verbally and in writing on October 12, 1977 and on October 19, 1977. ⁸

Namer's Show and Tell

On October 27, 1977, Heller, his attorney, and a secretary met in Namer's office with Namer, Wohlfeld of Fidelity, and Namer's attorney. At that time Heller demanded return of the $25,000 which Namer refused, declaring that a commitment had been issued and that all fees were then due. According to Namer, a commitment was tendered and refused. Namer declined to show Heller the commitment or tell who the purported lender would be until Heller either (1) proved that funds sufficient to pay all fees were present in New Orleans or (2) paid all fees. ⁹ At this meeting, which carried over to October 28, Heller and his attorney were eventually provided with a copy of the "commitment", but with the name of the lender and all signatures whited out. Considerable discussion occurred about the substantive aspects of the commitment, including whether any problems existed in complying with state usury laws and whether Heller would be able to obtain an interim lender based on the commitment. Heller and his attorney were not convinced that the commitment was substantially in accordance with the application and were not willing to pay any fees without first knowing the name of the issuer to verify the stability of that institution. ¹⁰ Namer asserts that Heller had no intention of complying with his obligations under the application or of accepting the commitment. Concerning the issue of the anonymity of the proposed lender, Namer points to Wohlfeld's statement that he (Wohlfeld), knowing the name of the lender, believed the commitment was proper, that he could obtain an interim lender on the basis of the commitment, and that he had verified its financial integrity. The meeting of October 28, 1977 ended after Heller demanded a return of his money and Namer refused to return the funds.

Apparently on the same day as the first meeting, October 27, 1977, Heller filed an action in federal court to sequester $25,000 (the amount of the dishonored first check subsequently re-presented and paid) in the bank account of Financial. ¹¹ A writ of sequestration did issue on November 1, 1977, but no funds were present in the account sequestered. ¹² Heller's amended complaint demanding a return of $51,000 named Financial as an additional defendant. The defendants counterclaimed for damages in the amount of $250,000 caused by the allegedly wrongful sequestration and for additional damages caused by the plaintiff's initiating of allegedly improper criminal complaints with state and local governmental authorities. Financial instituted a separate action in federal court against...