Hill v. Imperial Savings

• Decision Date: 21 December 1992
• Docket Number: No. A-91-CA-780.,A-91-CA-780.
• Citation: 852 F. Supp. 1354
• Parties: Larry HILL and Karen Hill Plaintiffs, v. IMPERIAL SAVINGS, Coldwell Banker, and Richard Allen Smith Company, a Texas Corporation, Defendants.
• Court: U.S. District Court — Western District of Texas

852 F. Supp. 1354

Larry HILL and Karen Hill Plaintiffs, v. IMPERIAL SAVINGS, Coldwell Banker, and Richard Allen Smith Company, a Texas Corporation, Defendants.

No. A-91-CA-780.

United States District Court, W.D. Texas, Austin Division.

November 24, 1992.

Final Judgment December 21, 1992.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

William F. Turman, William F. Turman, P.C., Austin, TX, for Larry Hill and Karen Hill.

Jay B. Goss, Bryan, TX, Kyle Hawthorne, Bruchez, Goss, Thornton, Meronoff, Michel & Hawthorne, P.C., Bryan, TX, for Richard Smith Co.

Richard E. Kammerman, Kammerman & Sakoncheik, Austin, TX, Adam I. Hauser, Brown McCarroll & Oaks Hartline, Austin, TX, Darlene Byrne, Travis County Attys. Office, Austin, TX, for Resolution Trust Corp./Imperial Federal Sav. Ass'n, Coldwell Banker.

MEMORANDUM OPINION ON RECEIVER'S MOTION FOR SUMMARY JUDGMENT

CAPELLE, United States Magistrate Judge.

Before the Court is the Motion for Summary Judgment filed by Defendant Resolution Trust Corporation as Receiver for Imperial Federal Savings Association ("Receiver") filed on July 6, 1992 (Clerk's Doc. # 45). The Plaintiffs filed a Response thereto on August 31, 1992. The Receiver filed its Reply, Objection to Plaintiff's Evidence, and Supplement to Receiver's Motion, and Brief in Support thereof on September 17, 1992.

The Court held a hearing on this Motion and on other pending motions on October 5, 1992.

I. THE RECEIVER'S MOTION FOR PARTIAL SUMMARY JUDGMENT

In the Motion and Supplemental Motion at hand, the Receiver requests the Court to deny the Plaintiff's claims asserted in its Second Amended Complaint because:

1. Plaintiffs are not entitled to reformation of the contract to purchase the home or to breach of contract or negligent misrepresentation damages based upon alleged oral statements regarding the Property due to the prohibition of the same under 12 U.S.C. § 1823(e) and the D'Oench, Duhme doctrine.

2. Because the Plaintiffs have no breach of contract claim, they are not entitled to attorney's fees.

3. Alternatively, if the contract is enforceable against the Receiver (which Receiver denies), Plaintiffs are not entitled to any breach of contract damages based upon any alleged misrepresentations about the property because Plaintiffs waived such claims pursuant to specific provisions of the earnest money contract and the addendum thereto.

4. Alternatively, if the contract is enforceable against the Receiver (which Receiver denies), Plaintiffs are not entitled to specific performance to purchase the property, and they have other adequate remedies at law.

5. The Receiver is entitled to declaratory action to expunge the lis pendens which the Plaintiffs filed on the subject property and thereby quiet title thereto. Further, the Receiver is entitled to damages it has suffered due to the lis pendens clouding title to the property.

II. THE COMPLAINT

A. The Plaintiffs' Claims.

In their Complaint, the Plaintiffs allege causes of action related to the purchase of a home in Austin, Texas. In early 1991, Plaintiffs began negotiations with Defendants regarding the sale of the home. Defendant Richard Allen Smith Company was the real estate agent for Defendant Imperial Federal Savings and Loan Association. As a result of the negotiations, the parties entered into an escrow contract. Plaintiffs allege that the Defendants specifically represented certain material facts regarding the physical condition of the property, and Plaintiffs relied upon these facts as an inducement to purchase the home. Specifically, Plaintiffs allege that they relied on the representation that the home had 8,750 square feet, and that the purchase price was derived by multiplying 8,750 times $85.00 per square foot. After the contract was signed, the Plaintiffs discovered that the square footage was less than 8,750 square feet and that approximately 1,200 square feet were contained in an illegal addition to the house and would have to be torn down due to the inadequacy of the septic field serving that large a home. Plaintiffs allege that at all times Defendants knew or should have known of the true square footage figure. Plaintiffs allege that they are fully able and ready to perform the contract at a figure of $85.00 times the correct, legal, and usable square footage of the home; and they request that the Court reform the contract to reflect such a price. Alternatively, Plaintiffs seek damages from Defendants in an amount equal to the difference between the true and the alleged misrepresented square footage times $85.00 per square foot, or to rescind the contract and receive their earnest money back. Further, Plaintiffs seek their attorney's fees.

B. The Receiver's Claims.

In its First Amended Answer, the Receiver denies any liability to Plaintiffs. At the time of the negotiations in early 1991, the home was owned by the RTC acting as conservator for Imperial Federal Savings Association. After the execution of the earnest money contract and the addendum thereto on March 26, 1991, the RTC was appointed Receiver for Imperial on April 19, 1991 and became owner of the Property. Thus, the Receiver denies it made any misrepresentations to the Plaintiffs regarding the square footage of the Property or that the sales price was determined on a square footage basis. The Receiver denies that Plaintiffs relied on any such representations to their detriment because Plaintiffs have not purchased the Property. To the extent any misrepresentations were made regarding the square footage, they were made by Defendant Smith and/or its agent Tex Steeg without authorization to make such representations; therefore, the Receiver is entitled to contribution and indemnity from Smith to the extent the Plaintiffs may be awarded damages.

Receiver denies that this Court has jurisdiction to award the Plaintiffs non-monetary relief due to Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA"), enacted in 1989, specifically 12 U.S.C. § 1821(j) which limits the remedial jurisdiction of the courts by prohibiting any "action" that would "restrain or affect" the RTC in performing its powers and functions as receiver for a failed institution. Further, the Receiver alleges that this Court lacks jurisdiction to award any monetary relief to the Plaintiffs due to their failure to comply with the administrative claims procedure of § 1821(d). This Court is to expunge the lis pendens under §§ 1821(d)(13)(c) and 1825(b)(2).

Receiver denies that Plaintiffs are entitled to: (1) reformation of the contract, (2) specific performance under Texas law because the Plaintiffs have failed to tender performance to purchase the Property, and they have other remedies of law, (3) breach of contract damages based on any alleged misrepresentations because the Plaintiffs waived the same pursuant to the contract, or (4) negligent misrepresentation damages based upon an oral statement regarding the Property due to the prohibition of the same by 12 U.S.C. § 1823(e) and the D'Oench, Duhme doctrine. Following this, the Receiver alleges that the Plaintiffs have no claim for attorney's fees.

Receiver requests declaratory relief to expunge the lis pendens and quiet title to the property. Further, Receiver requests the damages it incurred as the result of the cloud on the title caused by the Plaintiff's lis pendens making a sale to another buyer impossible.

C. Smith's Claims.

In its First Amended Original Answer, Smith denies any liability in the capacity sued. Smith admits that negotiations to purchase the Property began in early 1991 but denies all of the Plaintiff's other allegations regarding the subject sales transaction. Smith asserts that it relied on government documents, such as the Travis County Appraisal District Records, regarding the square footage of the Property and that such reliance was reasonable and the usual customary practice in the real estate business. Smith asserts that the Plaintiffs were aware of the source of the square footage figure both before and after signing the contract and that they had access to information regarding the square footage at the time of the contract. Smith asserts that Plaintiffs have never purchased the Property and are, therefore, not entitled to damages. Further, Plaintiffs are estopped to allege that Smith made any misrepresentations as to the Property's square footage by the provisions of the contract which waive any claim for misrepresentations.

Smith asserts that Plaintiffs have failed to state a claim upon which recovery can be had against Smith for specific performance, recision, reformation and attorney's fees. Smith seeks a declaratory judgment that Plaintiffs are not entitled to these remedies because Smith does not own the Property and Smith is not a party to the contract.

Smith denies the Receiver's cross-claim and asserts that the Receiver is contributorily negligent in that it failed to exercise ordinary care, caution or prudence in providing accurate information regarding the Property and failed to communicate to Smith any inaccuracies in the information published about the Property. Smith denies it is liable to indemnify Receiver and asserts that to any extent it may be held liable, it is entitled to contribution from Receiver.

Smith filed a Motion to Dismiss under Rule 12(b) in which it requests dismissal of Plaintiffs' requests for specific performance, rescission, reformation, and for the recovery of attorney's fees against Smith. The Plaintiffs have agreed, via their attorney of record's announcement at the hearing on this Motion, to dismiss all claims against Smith except for their claim of damages. Also in this Motion, Smith requests that the Court dismiss the Receiver's cross-claim for indemnity against Smith. At the hearing on this Motion, the Receiver agreed to dismiss this cross-claim but retain its claim for contribution from Smith should the Plaintiffs be awarded damages from the Receiver....