FDIC v. Condo Group Apartments

• Decision Date: 21 May 1992
• Docket Number: Civ. No. 3-91-CV-2433-H.
• Citation: 812 F. Supp. 694
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, in its Corporate Capacity, as Assignee of NCNB Texas National Bank, Plaintiff, v. CONDO GROUP APARTMENTS, Condo Group II Apartments, ISC Properties, Inc., Peter N. Manos, and Market Centre Ltd., Defendants and Third-Party Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for First RepublicBank Dallas, N.A., Intervenor and Third-Party Defendant, and NCNB Texas National Bank, Counter-Defendant.
• Court: U.S. District Court — Northern District of Texas

812 F. Supp. 694

FEDERAL DEPOSIT INSURANCE CORPORATION, in its Corporate Capacity, as Assignee of NCNB Texas National Bank, Plaintiff, v. CONDO GROUP APARTMENTS, Condo Group II Apartments, ISC Properties, Inc., Peter N. Manos, and Market Centre Ltd., Defendants and Third-Party Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for First RepublicBank Dallas, N.A., Intervenor and Third-Party Defendant, and NCNB Texas National Bank, Counter-Defendant.

Civ. No. 3-91-CV-2433-H.

United States District Court, N.D. Texas, Dallas Division.

May 21, 1992.

Barry S. Zisman, Louise H. Price, Rubenstein & Perry, Deborah W. Dawson, F.D.I.C., Asst. Transactions Section — Legal, Dallas, TX, for plaintiff.

Paul T. Nipper, Seeligson & Steinberg, Dallas, TX, for defendants.

C. Wade Cooper and Retta A. Miller, Jackson & Walker, Dallas, TX, for counter-defendant.

Barry S. Zisman, et al., Dallas, TX, for third-party defendant.

MEMORANDUM OPINION AND ORDER

SANDERS, Chief Judge.

Before the Court are,

(1) Federal Deposit Insurance Corporation as Receiver's ("FDIC-Receiver") Motion for Summary Judgement, and supporting brief and documents, filed January 13, 1992; FDIC-Receiver's Supplement to the Amended Motion for Summary Judgment, filed January 15, 1992; Defendants' Response, filed February 7, 1992; and FDIC as Receiver's Reply, filed February 28, 1992;

and

(2) NCNB Texas National Bank's First Amended Motion for Summary Judgment on Defendants' Counterclaim, and supporting brief and documents, filed March 2, 1992; Motion for Summary Judgment of the FDIC in its Corporate Capacity ("FDIC-Corporate"), and supporting brief and documents, filed March 2, 1992; Response and Brief of Defendants in Opposition to Plaintiff FDIC Corporate's and Counter-Defendant NCNB's Motions for Summary Judgment, filed April 3, 1992; FDIC-Corporate's Reply, filed April 16, 1992; Objections of FDIC-Corporate and NCNB to Affidavit of Peter Manos, filed April 16, 1992; NCNB's Reply, filed April 16, 1992; Letter from NCNB and FDIC-Corporate's Counsel, dated April 22, 1992; and Letter from Defendants' Counsel, dated May 15, 1992.

I. Factual Summary

On February 4, 1991 NCNB Texas National Bank ("NCNB") instituted this action in state court. This action was brought against Condo Group Apartments, Condo II Apartments, ISC Properties, Inc., Peter N. Manos and Market Centre, Ltd. ("Defendants") to recover the amounts due under certain promissory notes ("Notes") and unconditional guaranties ("Guaranties")¹. Defendants executed these Notes and Guaranties on March 1, 1988 in favor of First RepublicBank Dallas, N.A. ("First Republic") in an amount exceeding ten million dollars. The Notes matured on March 31, 1989, and all unpaid amounts became immediately due and payable.

On September 19, 1991 Defendants filed their Original Counterclaim and First Amended Original Answer ("Answer") against NCNB; Defendants' Counterclaim included specifically two counts of usury. FDIC as receiver of First Republic ("FDIC-Receiver") first became aware of the usury counterclaims on October 25, 1991. On November 9, 1991, believing that Defendants had sued the wrong party for usury, FDIC-Receiver intervened in this action, and removed it to this Court. Defendants have not challenged in their instant pleadings NCNB or FDIC-Receiver's argument that FDIC-Receiver is the proper party defendant as regards Defendants' usury counterclaim.

On July 29, 1988 the First Republic was declared insolvent, and the FDIC was appointed as receiver of First Republic, pursuant to 12 U.S.C. §§ 191 and 1821(c) (1989). Through a Purchase and Assumption Agreement ("P & A Agreement"), the FDIC-Receiver transferred the Notes and Guaranties to NCNB. The FDIC-Receiver retained unto itself, however, all contingent liabilities related to these instruments or to the conduct of First Republic before July 29, 1988; Defendants' usury counterclaims relate to these instruments and such conduct.

On November 30, 1991, NCNB transferred the Notes and Guaranties to their present owner, the FDIC-Corporate. FDIC-Corporate was substituted as Plaintiff in this litigation on December 24, 1991.

Defendants assert affirmative defenses of usury, wrongful offset of a depository account, estoppel, and improper endorsement/lack of capacity. Defendants additionally assert counterclaims against NCNB for usury, wrongful setoff of a depository account and attorneys' fees.

Plaintiff FDIC-Corporate is seeking summary judgment on its claims as well as on Defendants' affirmative defenses to such claims. FDIC-Corporate is seeking judgment against Defendants for amounts of principal and interest due on the Notes and Guaranties. NCNB is seeking summary judgment on Defendants' counterclaims. FDIC-Receiver is seeking summary judgment on Defendants' usury counterclaims, originally asserted against NCNB.

II. Standard for Summary Judgement

"Summary judgment reinforces the purpose of the Rules, to achieve the just, speedy, and inexpensive determination of actions, and, when appropriate, affords a merciful end to litigation that would otherwise be lengthy and expensive." Fontenot v. Upjohn Co., 780 F.2d 1190, 1197 (5th Cir.1986).

Summary judgment is proper when the pleadings and evidence on file show that no genuine issue exists as to any material fact and that the moving party is entitled to judgment or partial judgment as a matter of law. See Fed.R.Civ.P. 56. As the Fifth Circuit stated in Christophersen v. Allied-Signal Corp., 902 F.2d 362, 364 (5th Cir. 1990), "before a court may grant summary judgment, the moving party must demonstrate that it is entitled to judgment as a matter of law because there is no actual dispute as to an essential element of the plaintiff's case."

The threshold inquiry, therefore, is "whether ... there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). A movant for summary judgment need not support the motion with evidence negating the opponent's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Rather, the burden is on the respondent to the motion to make a showing sufficient to establish each element as to which he will have the burden of proof at trial, provided that he has an adequate opportunity for discovery. See id. at 324, 106 S.Ct. at 2553. All evidence, however, must be viewed in the light most favorable to the motion's opponent. See Gremillion v. Gulf Coast Catering Co., 904 F.2d 290, 292 (5th Cir.1990).

The party with the burden of proof, Defendants in this case, who opposes a motion for summary judgment must point out specific facts showing that there is a genuine issue for trial.

Factual specificity is required because summary judgment is designed to go beyond the pleadings in order to assess the proof and ascertain whether a claim is baseless and should be dismissed or, alternatively, whether a genuine fact issue exists and trial is necessary. Because the opponent of a summary judgment motion must designate specific facts, it is not enough that he merely restate his claims — general allegations and self-serving conclusions unsupported by specific facts are not adequate.

Castillo v. Bowles, 687 F.Supp. 277, 280 (N.D.Tex.1988), cert. denied, 493 U.S. 827, 110 S.Ct. 92, 107 L.Ed.2d 57 (1989) (citations omitted).

Summary judgment is particularly appropriate in cases involving promissory notes. Federal Deposit Insurance Corp. v. Cardinal Oil Well Servicing Co., 837 F.2d 1369, 1371 (5th Cir.1988).

III. Analysis

Plaintiff's summary judgment evidence satisfies the three elements necessary to recover on the Notes. See FSLIC v. Atkinson-Smith, 729 F.Supp. 1130, 1132 (N.D.Tex.1989). Plaintiff is the present owner of the Notes; the Notes were executed by the Defendants; and the Notes are in default. See generally Affidavits of Deborah Bacon and Leslyee Sullivan, and attached exhibits. Plaintiff's right to recovery on the Guaranties is similarly satisfied. See B.L. Nelson & Associates v. Sunbelt Savings, FSB, 733 F.Supp. 1106, 1109-10 (N.D.Tex.1990). Defendants do not dispute the validity of the Notes and Guaranties.

Plaintiff, FDIC-Receiver and NCNB have further made a prima facie showing by virtue of their summary judgment evidence that all Defendants defenses and counterclaims are without merit. In their response, Defendants have focused their argument almost exclusively on opposing application of the Federal Holder in Due Course Doctrine to their defenses and counterclaims.² To the extent that Defendants do not challenge the remaining grounds upon which their defenses and counterclaims fail as a matter of law, summary judgment against Defendants is warranted. See Atkinson-Smith, 729 F.Supp. at 1131 ("failure of the nonmovants to carry their burden at this point mandates entry of judgment against them"). Reassertion of claims, without designation of specific facts in support of the claims, is not sufficient to defeat summary judgment. See supra page 696.

Defendants' defenses and counterclaims are considered seriatim.

Usury

Defendants assert two usury defenses and counterclaims. First, they claim a usury defense based upon First Republic's cross-collateralization of the Notes in March 1988 in violation of Alamo Lumber v. Gold, 661 S.W.2d 926 (Tex.1983)³. Second, they claim that NCNB charged a usurious rate of interest because it used NCNB's prime rate to calculate interest after First Republic failed instead of First Republic rates. Both of Defendants' usury defenses fail.

Usury can not be asserted against FDIC-Corporate as a matter of law. Usury statutes are penal in nature. Federal Deposit Ins. Corp. v. Tito Castro Const., Inc., 548 F.Supp. 1224, 1227 (D.P.R.1982), aff'd, 741 F.2d 475 (1st Cir.1984). FDIC-Corporate, as an instrumentality...