Beal Bank United States v. Bus. Bank of St. Louis

• Decision Date: 13 June 2012
• Docket Number: No. 4:11 CV 561 DDN.,4:11 CV 561 DDN.
• Citation: 874 F.Supp.2d 837
• Parties: BEAL BANK USA, Plaintiff, v. The BUSINESS BANK OF ST. LOUIS, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

874 F.Supp.2d 837

BEAL BANK USA, Plaintiff,

v.The BUSINESS BANK OF ST. LOUIS, Defendant.

No. 4:11 CV 561 DDN.

United States District Court,

E.D. Missouri,

Eastern Division.

June 13, 2012.

Mark A. Shaiken, Stinson and Morrison, Kansas City, MO, for Plaintiff.

Jayme Major, John M. Hessel, Larry E. Parres, Lewis Rice, St. Louis, MO, for Defendant.

MEMORANDUM AND ORDER

DAVID D. NOCE, United States Magistrate Judge.

This action is before the court on the motion of plaintiff Beal Bank USA ¹ (Beal Bank) for summary judgment against defendant The Business Bank of St. Louis (BBSL). (Doc. 29.) Oral arguments were heard on February 22, 2012. For the reasons set forth below, the court grants partial summary judgment to Beal Bank and sets the action for a non-jury trial.

I. BACKGROUND

Beal Bank's claims

Beal Bank commenced this judicial action against BBSL, generally invoking for all of its claims the court's diversity of citizenship subject matter jurisdiction granted by 28 U.S.C. § 1332.² Beal Bank alleges that the Federal Deposit Insurance Corporation (FDIC), as the receiver of failed bank Champion Bank, transferred to Beal Bank an interest in certain loan repayment proceeds, which were an asset of Champion Bank, (Champion Bank participation) and that BBSL, the contractual promisor, has not paid to Beal Bank all the proceeds due it under a Participation Agreement to which Champion Bank had been a party.

In Count I, Beal Bank seeks a declaratory judgment that the FDIC had the authority to sell or assign to it, and that it acquired, the Champion Bank participation and that this transaction was valid.

In Count II, Beal Bank seeks a declaratory judgment that (a) any claim asserted by BBSL arises from the FDIC assignment of the Champion Bank participation to Beal Bank and relates to the independent, intervening acts or omissions of the FDIC; (b) any such claim by BBSL is cognizable, if at all, solely against the FDIC; (c) BBSL is required to pursue any such claims through the exclusive claims process provided by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101–73, 103 Stat. 183 (1989) (FIRREA); ³ (d) BBSL has failed to invoke, pursue, and exhaust these processes; (e) absent BBSL's compliance with the procedures required by FIRREA, BBSL's claims are jurisdictionally barred by 12 U.S.C. § 1821(d)(13)(D); and (f) any such claim cannot be used as a basis to deny payments to Beal Bank under the Participation Agreement.

In Count III, Beal Bank seeks a declaratory judgment that BBSL has no claim against it related to any alleged violation of the Participation Agreement that occurred before the transaction date.

In Count IV, Beal Bank seeks an order (a) directing BBSL to perform its duties under the Participation Agreement and to make payments to Beal Bank when due; ⁴ and (b) directing BBSL to account to Beal Bank for all amounts due under the Participation Agreement.

Finally, in Count V, Beal Bank seeks an award of attorneys' fees and costs.

BBSL's answer and counterclaims

In its answer and affirmative defenses, BBSL denies that Beal Bank is entitled to any of the relief it seeks, claims that Beal Bank is not a valid party to the Participation Agreement, and asserts that BBSL has performed all of its obligations under the Participation Agreement and has at all times acted in good faith.

In its Count I counterclaim, BBSL alleged that Beal Bank, under the terms of the FDIC assignment to it of the Champion Bank participation, assumed liability for the FDIC's failure to comply with the right-of-first-refusal provision in the Participation Agreement. BBSL sought monetary damages in excess of $75,000.00 for damages caused by this breach, as well as incidental damages, prejudgment interest, attorneys' fees, and litigation costs.

In its Count II counterclaim, BBSL sought (a) an order from this court directing Beal Bank to disclose the price it paid for the assignment of the Champion Bank participation; (b) rescission of the FDIC assignment and an order that BBSL be given the option to repurchase the Champion Bank participation; and (c) an award of costs, expenses, and attorneys' fees.

On August 8, 2011, the court sustained Beal Bank's motion to dismiss BBSL's counterclaims for lack of subject matter jurisdiction and because BBSL failed to join the FDIC as a necessary party to its counterclaims. The court held that BBSL failed to exhaust its administrative remedies against the FDIC under FIRREA and thus FIRREA's jurisdictional bar precluded subject matter jurisdiction. (Doc. 27); Beal Bank Nevada v. The Business Bank of St. Louis, No. 4:11 CV 561 DDN, 2011 WL 3444241 (E.D.Mo. Aug. 8, 2011).

The court also held that, without having the FDIC present in this case, there was not then in the record a sufficient basis for deciding whether the FDIC repudiated BBSL's right of first refusal. This ruling was consistent with a similar decision by a judge of this court in Bank of Commerce v. Business Bank of St. Louis, No. 4:11 CV 428 JCH.

Now before the court is the motion of Beal Bank for summary judgment. (Doc. 29.)

II. MOTION FOR SUMMARY JUDGMENT

Summary judgment must be granted when the pleadings and proffer of evidence demonstrate that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Ashanti v. City of Golden Valley, 666 F.3d 1148, 1150 (8th Cir.2012). The court must view the evidence in the light most favorable to the nonmoving party and accord it the benefit of all reasonable inferences. Ashanti, 666 F.3d at 1150. A fact is “material” if it could affect the ultimate disposition of the case, and a factual dispute is “genuine” if there is substantial evidence to support a reasonable jury verdict in favor of the non-moving party. Die–Cutting Diversified, Inc. v. United Nat'l Ins. Co., 353 F.Supp.2d 1053, 1054–55 (E.D.Mo.2004).

Initially, the moving party must demonstrate the absence of an issue for trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once a motion is properly made and supported, the nonmoving party may not rest upon the allegations in its pleadings but must instead proffer admissible evidence that demonstrates a genuine issue of material fact. Fed.R.Civ.P. 56(e); Crawford v. Van Buren Cnty., Ark., 678 F.3d 666, 670–71 (8th Cir.2012). Even if all of the relief sought by the movant is not granted, the court may make findings of undisputed facts that will guide the court in the further disposition of the case. SeeFed.R.Civ.P. 56(g).

The relevant undisputed facts

The following facts are undisputed although the parties dispute their legal effect:

1. On or before September 6, 2007, The Business Bank of St. Louis (BBSL) loaned to Matthew J. and Toni Ratteree $4.9 million.Under the loan agreement, the Ratterees were obligated to make periodic payments to BBSL.

2. Effective September 6, 2007, BBSL entered into a Participation Agreement with Champion Bank,⁵ whereby BBSL sold to Champion Bank an undivided 82% interest (Champion Bank participation) in the Ratteree loan.

3. The Participation Agreement provides in relevant part as follows:

2. Payments. Any payments made on the Loan, and any proceeds of any collateral for the Loan, shall be divided between Originating Bank and Participating Bank as set out in Exhibit A. Originating Bank shall receive all payments of principal, interest, default penalties, collateral proceeds and other amounts payable on the Loan. All payments shall be first applied to advances of principal, then to accrued interest, and then to repayment of advances made to pay fees and expenses. Originating Bank shall, within ten (10) business days after receipt of each payment, report and remit, by wire transfer or as otherwise directed by Participating Bank, the portion of such payment to which Participating Bank is entitled. If there are not sufficient funds to repay Participating Bank's interest in full, Participating Bank shall have no claim against Originating Bank for any remaining balance.

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11. Assignability; Right to Repurchase. Without the prior written consent of Originating Bank, Participating Bank may not assign its obligation to fund disbursements or expenditures in connection with the Loan or sell, pledge or otherwise transfer its Participation in the Loan without first offering to Originating Bank the right to repurchase the Participation. Originating Bank shall have no obligation to repurchase the Participation under any circumstances. Participating Bank shall provide to Originating Bank a written agreement from a third party to purchase the Participation, and Originating Bank shall have fifteen (15) days from the receipt of such agreement to notify Participating Bank that Originating Bank will repurchase the Participation on the same terms set out in such agreement. Participating Bank shall have the right, if Originating Bank does not notify Participating Bank that it is exercising its right to repurchase the Participation within such fifteen (15) day period, to assign or transfer the Participation to such third party.

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14. Attorney's Fees and Costs. Each party to this Agreement shall pay its own attorneys' fees incurred in connection with the negotiation and execution of this Agreement. If any lawsuit or proceeding is brought by either party to enforce the terms of this Agreement, the unsuccessful party agrees to pay the prevailing party's court costs and reasonable attorneys' fees incurred in bringing or defending such action.

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17. Governing Law. This Participation Agreement is executed under and shall be governed and construed in accordance with the laws of the State of Missouri, and the parties hereto submit to jurisdiction of the courts of Missouri.

(Doc. 1–1 at 1–5.)

4. Exhibit A to the Participation Agreement states, “Payments on the Loan (including accrued interest and...