Bank One Texas Nat. Ass'n v. Morrison, 93-2046

• Decision Date: 07 July 1994
• Docket Number: No. 93-2046,93-2046
• Parties: BANK ONE TEXAS NATIONAL ASSOCIATION, Plaintiff-Appellee, Cross-Appellant, v. Gary E. MORRISON, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 544

26 F.3d 544

BANK ONE TEXAS NATIONAL ASSOCIATION, Plaintiff-Appellee Cross-Appellant, v. Gary E. MORRISON, Defendant-Appellant, Cross-Appellee.

No. 93-2046.

United States Court of Appeals, Fifth Circuit.

July 7, 1994.

Thomas Farrell, Earnest Wotring, Mayor, Day, Caldwell, & Keeton, Houston, TX, for appellant.

Michael D. Conner, Maxine I. Dachslager, Hirsch & Westheimer, Houston, TX, for appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before KING and WIENER, Circuit Judges, and ROSENTHAL ^*, District Judge:

PER CURIAM:

Appellant Gary E. Morrison ("Morrison") appeals from a judgment rendered against him on the basis of a guaranty he executed in favor of the predecessor to appellee Bank One Texas National Association ("Bank One"). Bank One cross-appeals from the district court's refusal to award attorneys' fees. Finding that the district court erred in disregarding pertinent jury findings, we reverse its judgment and render for Morrison. In light of our disposition of the case, we do not reach the issue of Bank One's attorneys' fees.

I. Background

A. The Note and Guaranty

Morrison and others formed Triple M Drilling Company ("Triple M") in January of 1984. In 1985, Triple M obtained a $200,000 line of credit from MBank Houston, N.A. ("MBank"). Morrison executed an unconditional personal guaranty in favor of MBank for that line of credit, as well as for any debt incurred after the issuance of the credit line (the "guaranty"). The guaranty expressly provided that Morrison could unilaterally cancel at any time by giving written notice and thereby limit his obligation to those sums previously borrowed by Triple M, protecting him from subsequently-incurred indebtedness. The evidence does not reflect that Morrison ever sent such a notice to MBank.

Triple M drew upon the line of credit, but quickly repaid the loan and never again borrowed money under that line of credit. Both Morrison, and Robert Baldwin ("Baldwin"), the MBank officer responsible for the loan, testified that the parties intended that the guaranty be cancelled upon repayment of the original $200,000 line of credit. Baldwin stated that MBank required the guaranty as to the $200,000 line initially because Triple M was a new company and had no receivables with which MBank could secure the loan. Once the company began generating receivables, he testified, MBank released the guaranty. Bank One did not offer any evidence to refute this testimony.

Baldwin additionally stated that he informed MBank's note department that the instruments were cancelled and instructed the employees to return the cancelled documents to Morrison. Although Baldwin testified that it was his normal practice to give such instructions in writing, no such writing is in evidence. MBank did, however, return a package of loan documents to Morrison, including the original $200,000 note and a copy of the guaranty, conspicuously stamped across the first page with the word "CANCELLED."

Morrison's assistant, Carolyn Harbeson ("Harbeson"), placed these documents in Morrison's safe, believing them to be originals. When she subsequently discovered that Morrison had received only a copy of the guaranty, she requested the original from Baldwin at MBank, who assured here that the original was in MBank's "dead files" and was therefore effectively cancelled.

In February of 1986, Triple M obtained a second line of credit in the amount of $500,000. MBank's official loan documents reflect that this line was not guaranteed. For example, the loan application discloses the guarantors as "none," and states that "[a]lthough [Morrison] has a strong personal financial statement, he has no personal liability on this loan." Further, when the credit line was renewed and increased to $750,000 in August of 1986, the loan application again specifically recited that there were no guarantors and that "[Morrison] does not guarantee this line; therefore [he] has no personal liability." Numerous additional MBank memoranda and official bank documents consistently reflect that this loan was not guaranteed.

B. The Triple M Suit

After the March 3, 1987, stated maturity date on the $750,000 note passed, MBank declared the note to be in default and seized as an offset approximately $400,000 in Triple M's payroll account at MBank, an action which apparently forced Triple M into bankruptcy. MBank did not, however, make demand upon Morrison to pay off the note. Triple M filed suit against MBank in state court alleging that, in seizing the payroll account, MBank breached an agreement to extend the maturity date of the note until the end of 1987 (the "Triple M suit"). Morrison intervened in the Triple M suit seeking damages that he claimed he suffered directly as a result of MBank's misconduct in connection with Triple M's $750,000 note.

In March of 1989, MBank was declared insolvent, and the FDIC was appointed as receiver. After its appointment, the FDIC intervened in the Triple M suit and removed it to federal court. After the Deposit Insurance Bridge Bank, N.A., n/k/a Bank One, acquired substantially all of MBank's assets (including the note and guaranty at issue) as part of a purchase and assumption transaction with the FDIC, Bank One attempted to intervene in the action and, although it originally permitted Bank One to do so, the district court changed its mind on rehearing, declining to exercise any supplemental jurisdiction over that dispute, and struck the intervention.

C. The Instant Case

Bank One filed this lawsuit against Morrison in state court on January 21, 1991, asserting the continued validity of the guaranty and seeking to recover the balance of the $750,000 note. Morrison counterclaimed against Bank One and made certain allegations regarding MBank. Perceiving that Morrison had stated claims against the defunct MBank, the FDIC intervened as receiver for MBank and removed the case to federal court. Curiously, the FDIC moved for, and was granted, partial summary judgment on some of Morrison's affirmative defenses. In response to the FDIC's motion, Morrison asserted that his counter-claim was based solely upon the conduct of Bank One in filing suit against him on an alleged guaranty obligation that it knew from its own records had been cancelled, but that he did not challenge any action of MBank in the instant action. After Morrison made clear that his surviving claims were asserted only against Bank One and not against MBank, the FDIC withdrew from the case with the consent of the parties and the court. Upon the FDIC's dismissal, Morrison moved unsuccessfully to dismiss the case for lack of subject matter jurisdiction.

At trial, the court submitted, over objections from both parties, a jury question asking whether Bank One had released Morrison from the guaranty. The jury found that Bank One did not. ¹ The jury also found that the guaranty was not intended to apply to the $750,000 note. The court, however, disregarded the jury's finding on the parties' intentions, deeming that answer to be irrelevant in the face of what it considered to be an unambiguous guaranty contract, and entered judgment in favor of Bank One. The court also disregarded the jury's finding that $12,000 would adequately compensate Bank One for its attorneys' fees and entered a final judgment on February 11, 1993. Morrison timely appealed the judgment notwithstanding the verdict, and Bank One cross-appealed, contesting the district court's failure to award attorneys' fees.

II. Analysis

A. Morrison's Appeal

1. Subject matter jurisdiction

Morrison first contends that the district court erred in failing to dismiss or remand the case for want of subject matter jurisdiction. He argues that the FDIC was never made a proper party to the litigation because it had no legitimate interest in the case; consequently, no right to a federal forum ever arose, and removal was improper. See NCNB Texas Nat'l Bank v. Fennell, 942 F.2d 934, 936 (5th Cir.1991) (assuming that the FDIC must have a legitimate interest in the case in order to be a "proper" party); FSLIC v. Griffin, 935 F.2d 691, 696 (5th Cir.1991) (same), cert. denied, --- U.S. ----, 112 S.Ct. 1163, 117 L.Ed.2d 410 (1992); see also Bank One, Texas, N.A. v. Elms, 764 F.Supp. 85, 89-90 (N.D.Tex.1991) (remanding cause to state court upon determination that the FDIC had no legitimate interest). Resolution of this contention turns on whether Morrison actually stated claims against MBank in his counter-claim. According to Morrison, the reference to MBank in his counter-claim--which the FDIC used as the basis of its intervention and subsequent removal--was a mere clerical error, and the misnomer should have been apparent from the face of the pleading.

Although we share Morrison's concern that federal jurisdiction should not be manipulated by the FDIC's simple intervention in a given case, we find that, under the circumstances presented, the FDIC had an interest in the case at bar sufficient to support its intervention. Morrison's counter-claim refers to "counter-defendant MBank, Bank One's predecessor," and asserts that "[t]he actions of MBank and Bank One constitute a fraud on Gary Morrison and an attempt to unjustly enrich themselves." The relief sought was against "counter-defendant." Interspersed among his defenses, Morrison challenges the guaranty as having been "executed under duress, that there was a failure of consideration and that his signature was obtained by fraud," defenses which clearly go to the actions or omissions of MBank. The combination of allegations in the counter-claim leads us to conclude that the FDIC validly perceived that Morrison was asserting claims against the MBank receivership estate and that its intervention was proper.

Further, Morrison never moved to dismiss any claims against the FDIC or request a remand on the basis that federal jurisdiction was lacking--even though it was clear that the FDIC's only...