Crowe v. Smith
| Decision Date | 23 February 1994 |
| Docket Number | Civ. A. No. 92-2164-M. |
| Citation | 848 F. Supp. 1248 |
| Parties | Larry D. CROWE, et al. v. James W. SMITH, et al. |
| Court | U.S. District Court — Western District of Louisiana |
Joseph R. Ward, Jr., Lynn H. Frank, Ward & Clesi, New Orleans, LA, for plaintiffs.
Leroy Smith, Jr., Tallulah, LA, for James W. Smith.
Russell Hart, pro se.
Robert S. Rooth, Corinne A. Morrison, James C. Young, Chaffe McCall Phillips Toler & Sarpy, Susan R. Laporte, Sobol & Pitts, New Orleans, LA, Anne B. Sobol, Slidell, LA, for Agrarian Development and MLM Services Inc.
J. Allen Harvey, Jr., Monroe, LA, for Vernon McCrory, James E. Wooldridge, Bobby Thrialkill, Hugh Roche, Dwight Vines and Malcolm Maddox.
Judy L. Burnthorn, Nancy J. Marshall, Deutsch Kerrigan & Stiles, New Orleans, LA, for Johnny Dollar.
Raymond J. Salassi, Jr., Jones Walker Waechter Poitevent Carrere & Denegre, New Orleans, LA, Kurt D. Engelhardt, Hailey McNamara Hall Larmann & Papale, Metairie, LA, for McLeod Swearingen Verlander et al.
Raymond J. Salassi, Jr., Jones Walker, New Orleans, LA, for Robert P. McLeod, Lawson L. Swearingen and David E. Verlander, III.
Kurt D. Engelhardt, Hailey McNamara Hall Larmann & Papale, Metairie, LA, Judy L. Burnthorn, Nancy J. Marshall, Deutsch Kerrigan & Stiles, New Orleans, LA, for Elmer G. Noah, II and Kirby O. Price.
Robert S. Rooth, Corinne A. Morrison, James C. Young, Chaffe McCall Phillips Toler & Sarpy, New Orleans, LA, for Resolution Trust Corp, Receiver obo Peoples Homestead Sav. Bank FSB.
Colette J. Winston, U.S. Dept. of Justice, Torts Branch, Civil Div., Washington, DC, for U.S.
RULING
Before the court are five Fed.R.Civ.P. 12(b)(6) Motions to Dismiss and alternative Motions for Summary Judgment filed on behalf of defendants Johnny E. Dollar; Vernon McCrory, James E. Woolridge, Bobby Thrialkill, Dwight Vines, and Malcolm Maddox (the McCrory defendants); Hugh Roche; Robert P. McLeod, Lawson L. Swearingen, David E. Verlander, III (the McLeod defendants); and Kirby O. Price and Elmer G. Noah, II (Price & Noah). These defendants urge the court to dismiss the claims of plaintiffs, Larry D. Crowe, Pioneer Produce Co. and Sue Ellen Silman as the administratrix of the succession of Reba Crowe (Crowe), on several identical grounds.
This lawsuit arises from a series of land development dealings centering on two properties known as Eagle Bend and Australia Island. In 1979, Crowe sold 410 acres of land known as the Forrest Tract and put up $700,000.00 in cash as a down payment to buy the 9,000 acre Morrissey Property in Mississippi. The total price of this land was $5.3 million. The Morrissey Family Trust financed the remaining $4.6 million owed on this property with a note payable over 30 years at a 6% rate of interest. This land became known as Eagle Lake Farms. Crowe took out an additional $800,000.00 in loans from the Farmer's Home Administration (FmHA) to develop the property and build 10 homes there.
In 1982, Crowe and James W. "Sonny" Smith became business partners and purchased 4,700 acres of land known as Australia Island from the Nelson Baker Hunt Trust. This property is located partly in Warren County, Mississippi (1,100 acres) and partly in Madison Parish, Louisiana (3,600 acres). The purchase price of this land was $5.2 million. The partners put up $400,000.00 as a cash down payment, borrowed $2.8 million from Deposit Guarantee Bank, and signed a promissory note in the amount of $2 million, made payable to the Hunt Trust. Each partner signed the notes individually and the property was conveyed to them individually.
Troubles began in 1985 when, in an effort to develop Eagle Lake Farms more rapidly, Crowe sought a loan from People's Homestead Federal Bank for Savings (People's). Instead of entering into a loan agreement, however, Crowe became a partner in a venture with a wholly-owned subsidiary of People's, Agrarian Development Corporation (Agrarian). People's board of directors approved the partnership in a meeting on March 19, 1985. The Crowe/Agrarian partnership became known as Eagle Bend Development. In that same meeting, the directors also voted to give Russell Hart, the president of People's, control over the operation of Eagle Lake Development. On April 3, 1985, Crowe conveyed Eagle Bend Farms to the Eagle Bend Development partnership.
Under the partnership agreement, People's assumed 50% of the Morrissey loan and 50% of the obligation to FmHA. People's also agreed to pay the sum of $3.5 million to liquidate debts on the property and to create a $1 million capital account to finance future development of the project. In exchange, Crowe transferred to the partnership a 50% interest in his Eagle Lake assets, including the farm land, condominiums, houses, a flying service, and farm equipment.
Crowe alleges that, soon after the formation of the partnership, Russell Hart, the officers and directors of People's,1 Dollar, the law firm of McLeod, Swearingen, Verlander, Dollar, Price & Noah, and Sonny Smith devised a plan to fraudulently acquire Crowe's interest in Eagle Bend and to squeeze him out of his interest in Australia Island. The defendants' purported scheme involved whipsawing Crowe in a flurry of legal proceedings (including the fraudulent institution of bankruptcy proceedings, liquidation actions, and foreclosure proceedings), starving Crowe for cash, and overpowering Crowe through their greater resources, such as their retainer of attorneys Dollar and Robert McLeod.
We need not detail the complex chronology of events Crowe alleges took place between 1986 and 1990 in furtherance of the defendants' scheme to divest him of his interest in Eagle Bend and Australia Island. Instead, a brief, noncomprehensive listing of the allegations shall suffice. Crowe claims that the defendants2 ousted him as farm manager; refused to allow Eagle Bend's participation in a U.S. Department of Agriculture farm subsidies program; instituted a fraudulent foreclosure proceeding in West Carroll Parish, claiming that Crowe had used property there to cross-collateralize crop loans taken by the two farm partnerships; created an emergency situation to justify their obtaining Chapter 11 and Chapter 7 bankruptcy orders; refused to pay for the construction of sewers and streets at Eagle Bend, thus preventing the sale of condominiums; forbade leasing land to farmers whose rent payments might have covered the note obligations; and demanded his payment, but not that of his partners Smith and Agrarian, of crop loans for Eagle Bend and Australia Island. Crowe, now claiming he was financially exhausted and unable to continue litigation, entered into a Compromise Agreement with Agrarian. People's incorporated MLM Systems, Inc. which, pursuant to the Compromise Agreement, acquired Crowe's 50% interest in Eagle Bend Development. Crowe claims that People's/Agrarian violated the Compromise Agreement by preventing Crowe from gaining title to an airplane and by failing to obtain his release from the FmHA mortgages on Eagle Bend.
Further confusing matters, the Resolution Trust Corporation (RTC) placed People's into receivership on October 19, 1989. RTC acted as conservator, reorganizing the bank as People's Homestead Savings Bank, FSB.
After RTC put Eagle Bend up for sale, Crowe sought to repurchase the property and found financing with a group of Tennessee investors, who submitted a written purchase offer. RTC rejected the offer, ruling that the offer did not meet bidding conditions. On January 25, 1990, Crowe filed suit seeking to enjoin the sale of Eagle Bend. Crowe alleges that RTC attorneys told the court that the property was not for sale; accordingly, the motion for injunctive relief was denied. See Larry Dean Crowe v. Eagle Bend Development, et al, No. 90-356 (La. Dist.Ct. 4th April 24, 1990). Subsequently, Sonny Smith purchased Eagle Bend for $10.00 and an assumption of the Morrissey note.
Crowe filed this suit on December 2, 1992, naming 19 separate defendants.3 The Complaint, as amended, seeks relief for violations of 18 U.S.C. § 1962(a), (b), (c) and (d) (civil RICO); sets forth causes of action for fraud, unfair trade practices, intentional infliction of emotional distress, breach of fiduciary duty, tortious interference with contract rights, and breach of contract; asks for a declaration that Mississippi court judgments are null and void; and prays for money damages from the RTC pursuant to the Federal Tort Claims Act, 28 U.S.C. §§ 2671, et seq.
The instant Motions to Dismiss and alternative Motions for Summary Judgment all refer to and adopt arguments submitted by other parties, leaving us with a virtual Gordian knot comprised of intertwined motions. The McCrory defendants and Roche adopt by reference the Motion to Dismiss and the alternative Motion for Summary Judgment filed by Dollar. The McLeod defendants have filed a separate Motion to Dismiss in addition to a Motion to Dismiss and an alternative Motion for Summary Judgment which adopts Dollar's motion by reference. Price & Noah adopt Dollar's motion by reference, as well as the McLeod defendants separate Motion to Dismiss. Dollar also adopts the McLeod defendants' Motion to Dismiss. This Ruling does not attempt to serve as Alexander's sword, swiftly cutting through the intricate weave of motions. Instead, we try to unravel the coil of motions a thread at a time. In particular, this Ruling addresses Dollar's Motion to Dismiss and alternative Motion for Summary Judgment and those motions adopting Dollar's motion by reference, but does not address the portions of the Price & Noah and Dollar motions which adopt the McLeod motion by reference.
Dollar asks us to dismiss, based on the D'Oench, Duhme doctrines, all of Crowe's claims arising from pre-receivership events. Dollar also requests us to dismiss, pursuant to Fed.R.Civ.P. 56, Crowe's claims relating...
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Crowe v. Smith
...and void; and prays for relief from the RTC under the Federal Tort Claims Act, 28 U.S.C. §§ 2671, et seq. By Rulings dated February 23, 1994, 848 F.Supp. 1248, and March 28, 1994, 848 F.Supp. 1258, this court dismissed all of plaintiffs' claims against Dollar, the Law Partners, the Bank Dir......
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