In re University Drive Professional Complex, Inc.

• Decision Date: 20 April 1989
• Docket Number: Adv. No. 88-0100-BKC-AJC-A.,Bankruptcy No. 88-00224-BKC-AJC
• Citation: 101 BR 790
• Parties: In re UNIVERSITY DRIVE PROFESSIONAL COMPLEX, INC., Debtor. UNIVERSITY DRIVE PROFESSIONAL COMPLEX, INC., and Warren Martin, Trustee, Plaintiffs, v. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, as Receiver for Sunrise Savings and Loan Association, et al., Defendants.
• Court: U.S. Bankruptcy Court — Southern District of Florida

101 B.R. 790 (1989)

In re UNIVERSITY DRIVE PROFESSIONAL COMPLEX, INC., Debtor.

UNIVERSITY DRIVE PROFESSIONAL COMPLEX, INC., and Warren Martin, Trustee, Plaintiffs, v. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, as Receiver for Sunrise Savings and Loan Association, et al., Defendants.

Bankruptcy No. 88-00224-BKC-AJC, Adv. No. 88-0100-BKC-AJC-A.

United States Bankruptcy Court, S.D. Florida.

April 20, 1989.

Valerie A. Jahn, Squire, Sanders & Dempsey, Miami, Fla., for FSLIC.

Stewart P. Chambers, Faircloth & Chambers, P.A., Arthur Neiwirth, Ft. Lauderdale, Fla., Kevin Gleason, Asst. U.S. Trustee, Miami, Fla., Warren Martin, Trustee, Hollywood, Fla., Jeffrey Beck, Ruden, Barnett, McClosky, Smith, Schuster & Russell, Ft. Lauderdale, Fla., Alexander D. Varkas, Jr., Law Offices of Robert A. Sweetapple, P.A., Miami, Fla., for Professional Custom Painting, Inc.

Mark A. Greenberg, Siegfried, Kipnis, Rivera, Lerner & Delatorre, Coral Gables, Fla., for Fire Sprinklers and Total Fire Sprinklers, Inc.

MEMORANDUM DECISION GRANTING FSLIC'S MOTION FOR SUMMARY FINAL JUDGMENT

A. JAY CRISTOL, Bankruptcy Judge.

THIS MATTER having come before the Court on March 6, 1989 at 10:30 a.m., and the Court having reviewed the pleadings, and affidavits on file and the documents presented by the Plaintiff, UNIVERSITY DRIVE PROFESSIONAL COMPLEX, INC., and having heard argument of counsel, and being otherwise fully advised in the premises, it is hereby

ORDERED AND ADJUDGED as follows:

The FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION as Receiver for Sunrise Savings and Loan Association's ("FSLIC as Receiver") Motion for Summary Judgment proffers several grounds upon which this Court could rely in granting Summary Final Judgment. Therefore, each argument shall be addressed separately herein.

UNDISPUTED FACTS

On August 5, 1983, UNIVERSITY DRIVE PROFESSIONAL COMPLEX, INC., a Florida corporation and Plaintiff herein ("UDPC") executed and delivered a promissory note in the principal amount of $1,500,000.00 (the "Note") to Sunrise Savings and Loan Association of Florida ("Old Sunrise") and further executed and delivered a mortgage securing payment of the Note to Old Sunrise (the "Mortgage"). The Mortgage encumbered Coral Springs Sunrise Tower, a 10-story office building in Broward County, Florida. In addition to executing the Note and Mortgage, UDPC executed and delivered other loan documents, including a Proceeds Agreement.

On January 12, 1984, UDPC executed and delivered a second note and mortgage in favor of Old Sunrise (the "Second Note" and "Second Mortgage"). The Second Note was in the principal amount of $19,230,000.00. The Second Mortgage also encumbered the Property. Also on January 12, 1984, the Note and Mortgage were modified by a Note and Mortgage Modification and Consolidation Agreement which consolidated the Mortgage and Second Mortgage and modified the Note. ("Hereafter the Note and Second Note will sometimes be referred to collectively as the "Notes" and the Mortgage and Second Mortgage will sometimes be referred to collectively as the "Consolidated Mortgage.")

On July 18, 1985, the Federal Savings and Loan Insurance Corporation ("FSLIC") was appointed by the Federal Home Loan Bank Board ("FHLBB") as sole receiver for Old Sunrise pursuant to Resolution 85-582 of the FHLBB. The FSLIC took possession of Old Sunrise on July 18, 1985 and succeeded to all the rights, title, powers and privileges of Old Sunrise.

On July 18, 1985, FSLIC transferred substantially all of the assets and liabilities of Old Sunrise to Sunrise Savings and Loan Association, a Federal Savings and Loan Association ("New Sunrise"), which continued the business of Old Sunrise.

On May 20, 1986, UDPC executed a Future Advance Promissory Note together with a Notice of Future Advance and also executed a Note and Mortgage and Loan Document Modification Agreement, all of which provided for the additional advance of $650,000.00 to be secured by the above-referenced Consolidated Mortgage and clearly established the relationship between UDPC and New Sunrise as that of Borrower and Lender.

On Friday, September 12, 1986, the FHLBB pursuant to Resolution 86-982 appointed FSLIC as sole receiver for New Sunrise. FSLIC as Receiver for New Sunrise pursuant to 12 C.F.R. § 547.7 took possession of New Sunrise and succeeded to all rights, titles, powers and privileges of New Sunrise.

On August 20, 1986, UDPC defaulted on its obligations to New Sunrise and FSLIC as Receiver for New Sunrise and FSLIC as Receiver commenced a lawsuit to foreclose the Consolidated Mortgage as modified and collect the indebtedness represented by the Notes, as modified, which complaint was filed June 4, 1987 in the Nineteenth Judicial Circuit (the "State Court Action").

In the State Court Action, UPDC and the guarantors, Edward Haas and James Laughlin, filed an Answer and Affirmative Defenses ("the Answer"). Pursuant to a motion by the FSLIC as Receiver, a receiver was appointed in the State Court Action.

On January 22, 1988, UDPC filed for protection under Chapter 11 of the Bankruptcy Code. This Court granted FSLIC as Receiver's motion for relief from stay and thereafter, FSLIC as Receiver filed a motion for summary judgment in the State Court Action. A hearing was held on the Motion for Summary Judgment on March 2, 1988.

The state court granted the Motion for Summary Judgment, and entered a Final Judgment of Foreclosure in accordance with its March 17, 1988 Memorandum Decision. In its Memorandum Decision the state court specifically rejected UDPC's arguments that Old Sunrise was a joint venturer with UDPC and further rejected UDPC's arguments that New Sunrise and FSLIC as Receiver (a) knew of this relationship and (b) conducted themselves in such a manner so as to be precluded from seeking the relief requested in the State Court Action:

"This court has carefully considered the affirmative defenses raised and counterclaim asserted by the Defendants and heard argument of counsel in support of those defenses and counterclaim. Those defenses and counterclaim must fail, as a matter of law, because those defenses and counterclaim are based upon parol evidence which would necessarily vary, contradict or modify the clear and unambiguous language of the loan documents. The defenses are insufficient as a matter of law under the parol evidence rule. See e.g., Central Bank & Trust Co. v. Diaz, 442 So.2d 1005 (Fla. 3d DCA 1983); General Motors Acceptance Corp. v. Marlar, 761 F.2d 1517 (11th Cir.1985). The affirmative defenses and counterclaim asserted by Defendants are legally insufficient, and must fail, under the theory enunciated in D\'Oench, Duhme & Co. v. FDIC, 325 315 U.S. 447 62 S.Ct. 676, 86 L.Ed. 956 (1941), and as recently addressed in FDIC v. Langley, 56 U.S.L.W. 4026 484 U.S. 86, 108 S.Ct. 396, 98 L.Ed.2d 340 (December 1, 1987), an alleged oral modification or alleged oral agreement with respect to the terms of loan documents is not a valid defense in an action prosecuted by the FSLIC, as receiver for a failed savings and loan association."

Warren Martin, as Bankruptcy Trustee of UDPC filed a Motion for Rehearing in the State Court Action, which motion was denied on April 11, 1988.

I. This Court has Subject Matter Jurisdiction

FSLIC as Receiver has renewed its argument that this Court lacks jurisdiction to consider this matter pursuant to the decision in North Mississippi Savings & Loan Association v. Hudspeth, 756 F.2d 1096 (5th Cir.1985) cert. denied, 474 U.S. 1054, 106 S.Ct. 790, 88 L.Ed.2d 768 (1985).

The Court is cognizant of the recent U.S. Supreme Court decision in Coit Independence Joint Venture v. FSLIC, as Receiver of Firstsouth, F.A., ___ U.S. ___, 109 S.Ct. 1361, 103 L.Ed.2d 602 (1989). This brand new opinion confirms the Court's own belief that the Seventh Circuit's decision in Morrison-Knudsen Co. v. CHG International, Inc., 811 F.2d 1209 (9th Cir. 1987) is more persuasive. Therefore, the motion must again be denied on this basis.

II. Plaintiff's Action is Barred By the Doctrines of Res Judicata and Collateral Estoppel

FSLIC as Receiver next argues that the instant adversary proceeding attempts to reassert the allegations of UDPC's answer, affirmative defenses and counterclaim from the State Court Action filed by the FSLIC prior to UDPC's Chapter 11 petition, and is therefore barred by the doctrines of res judicata and/or collateral estoppel.

Pursuant to the Full Faith and Credit Clause codified in 28 U.S.C. § 1738, in determining whether res judicata or collateral estoppel applies, this Court must apply the law of the State of Florida. "It is now settled that a federal court must give to a state court judgment the same preclusive effect as would be given that judgment under the law of the state in which the judgment was rendered." Migra v. Warren City School District Board of Education, 465 U.S. 75, 81, 104 S.Ct. 892, 896, 79 L.Ed.2d 56 (1984). See Casines v. Murcheck, 766 F.2d 1494 (11th Cir.1985); Acquisition Corp. of America v. The Federal Savings and Loan Insurance Corporation, Case No. 87-04707-BKC-AJC (Nov. 4, 1988).

The doctrines of res judicata and collateral estoppel, although different, are closely related. The Florida Supreme Court has recently addressed the elements which must be present to find either res judicata or collateral estoppel.

Where the second suit is upon the same cause of action and between the same parties as the first, res judicata applies. The first judgment is conclusive as to all matters which were or could have been determined . . . It has been well settled by this Court that several conditions must occur simultaneously if a matter is to be made res judicata: identity of the thing sued for; identity of the cause of action; identity of parties; identity of the quality in the person for or against whom the claim is made . . . When the second suit is between the same parties, but based upon a different cause of action from the

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