Maryland Nat. Bank v. Traenkle

Decision Date05 August 1996
Docket NumberCivil No. K-90-2731.
Citation933 F. Supp. 1280
CourtU.S. District Court — District of Maryland


David S. Musgrave and Susan S. Sands, Baltimore, Maryland, for Plaintiff.

David F. Gould, III, Doylestown, Pennsylvania, for Defendants.

FRANK A. KAUFMAN, Senior District Judge.

Plaintiff Maryland National Bank ("the Bank") brought the within action against defendants Robert H. Traenkle and Christine D. Traenkle ("the Traenkles") to collect a debt allegedly owed to the Bank. Defendants filed a counterclaim and an amended counterclaim. Plaintiff moved for summary judgment as to both its case in chief and the amended counterclaim. This Court will grant plaintiff's motion as to the case in chief and deny that motion as to the counterclaims, except insofar as the counterclaims are precluded, as discussed infra.

I Facts

The following facts are, in all material respects, undisputed: The Bank instituted this action on October 18, 1990, to collect the remaining balance allegedly owed under a promissory note ("the note"), signed by the Traenkles and dated August 22, 1989, in the principal amount of $850,000. The note was part of a transaction in which the proceeds of a loan made by the Bank were disbursed to Egg Harbor Yacht Company ("Egg Harbor"). Robert Traenkle was chairman of the board of Egg Harbor. Payment of the note was secured by a security interest in, and by a preferred ship's mortgage on, a yacht known as the "Honey Bear," which originally was owned by Egg Harbor. In the late summer or early fall, 1990, the Traenkles defaulted on the loan.

On October 31, 1990, J.D. Tubbs, a former captain of the Honey Bear, brought an admiralty action against the Honey Bear in the United States District Court for the Southern District of Florida ("the Florida court") for nonpayment of wages. Pursuant to 46 U.S.C. § 31325, the Bank filed an intervening complaint in that Florida action against the Honey Bear in rem and against the Traenkles in personam. The Bank sought both foreclosure of the mortgage on the Honey Bear and damages from the Traenkles. The Traenkles were personally served with a summons and a copy of the intervening complaint on December 12, 1990, at their residence in Pennsylvania.

Tubbs' claim subsequently was dismissed by the Florida court, and the Bank became the sole plaintiff in the admiralty action. The Traenkles did not appear or file an answer on behalf of either themselves or the Honey Bear. On February 12, 1991, the Florida court entered a default judgment against the Traenkles and the Honey Bear. On March 23, 1991, the Florida court entered a final in personam judgment for the balance due on the note against the Traenkles and also a final in rem judgment against the Honey Bear, and directed the United States Marshal to sell the Honey Bear. The Traenkles were appropriately sent copies of the judgments and notice of the impending sale.

At a marshal's sale on April 23, 1991, the Bank, as the highest bidder, purchased the Honey Bear for $550,000. On April 30, 1991, the Florida court entered an order confirming the sale. On August 2, 1991, the Florida court credited the proceeds of the sale against the in personam judgment, and entered a final deficiency judgment ("the final deficiency judgment") in the amount of $406,035.59 in connection therewith.

The Bank then attempted to enforce the final in personam deficiency judgment in Pennsylvania, where the Traenkles own property. On June 10, 1991, the Bank recorded the final deficiency judgment with the Court of Common Pleas for Bucks County, Pennsylvania ("the Pennsylvania court"). On October 21, 1991, the Traenkles filed a petition with the Pennsylvania court to strike the final deficiency judgment on the grounds that the Florida court lacked personal jurisdiction over the Traenkles and that the final deficiency judgment was not entitled to full faith and credit. On September 17, 1993, the Pennsylvania court entered a one-sentence order striking the final deficiency judgment. As will be discussed infra, the Pennsylvania order apparently did not relate in any way to the in rem portion of the Florida judgments.

Meanwhile, the within Bank's action to collect on the note remained pending in this Court. The Traenkles filed a counterclaim and, subsequently, an amended counterclaim, alleging breach of contract, duty of good faith and fair dealing (Count I), conversion (Count II), punitive damages (Count III) and breach of fiduciary duty (Count IV). Judge Howard of this Court deferred ruling on the Bank's motion to dismiss certain counts of the amended counterclaim, pending resolution of the Pennsylvania action, and closed the case on February 11, 1992. This Court reopened the case on May 30, 1995, at the request of the Bank.


Summary judgment

Summary judgment is appropriate when "there is no genuine issue of material fact and when the moving party is entitled to judgment as a matter of law." Fed.R.Civ. Pro. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986); Barwick v. Celotex Corp., 736 F.2d 946, 958 (4th Cir. 1984). The non-moving party is entitled to have "all reasonable inferences ... drawn in its respective favor." Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1129 (4th Cir. 1987). Any party resisting summary judgment must "go beyond the pleadings and by its own affidavits, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).


Plaintiff's case in chief

The promissory note contains a clause stating that Maryland law will govern the application of the note, except where preempted by federal law, and both parties now agree that Maryland law should apply. Courts will generally enforce the agreement of the parties as to which law will apply. See Kronovet v. Lipchin, 288 Md. 30, 43-45, 415 A.2d 1096 (1980) (Rodowsky, J.). Accordingly, this Court will look to Maryland law to construe the note.

On its face, the promissory note indicates that the Traenkles are personally liable pursuant to its terms. The note contains no indication that either Robert or Christine Traenkle signed in any capacity other than as individuals. Robert Traenkle was chairman of the board of Egg Harbor at the time he signed the loan documents, but the promissory note does not refer to Egg Harbor or to Robert Traenkle's position or capacity as chairman.

Defendants contend that the note was part of a broader financing arrangement and that the Bank had orally assured the Traenkles that Egg Harbor was responsible for making payments on the note.1 That contention requires this Court to consider the parol evidence rule, under which "in the absence of fraud, duress or mistake ... parol evidence of conversations or alleged oral agreements made before or at the time of the integration of the contract into the writing must be excluded from evidence ..." Foreman v. Melrod, 257 Md. 435, 441, 263 A.2d 559 (1970). The rationale for excluding such evidence is that a "different rule would increase the temptations to commit perjury and often render instruments of little value. All prior and contemporaneous negotiations are merged in the written instrument, which is treated as the exclusive medium for ascertaining the extent of their obligations." Id. at 441, 263 A.2d 559 (quoting Markoff v. Kreiner, 180 Md. 150, 154-55, 23 A.2d 19 (1941)).

In applying the parol evidence rule, courts first look to determine whether the contract at issue is fully integrated. Integration is a preliminary question to be determined by the trial judge, rather than the finder of fact, upon consideration of all relevant evidence. Restatement (Second) of Contracts § 209(2) & cmt. c (1981). "Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression." Restatement (Second) of Contracts § 209(3) (1981). In the within case, the writing, on its face, appears to be a complete expression of the parties' intent, and defendants therefore have the burden of showing that the written documents did not constitute a final expression of the agreement. Defendants contend that the parties' course of dealing indicates an intent to make Egg Harbor, not the Traenkles, liable on the note. They argue that the Traenkles were merely a straw man and that the real parties to the transaction were Egg Harbor and the Bank. They note, for example, that Egg Harbor, not the Traenkles, made payments on the yacht before the default. They assert, without providing the type of support required under Federal Civil Rule 56, that the Bank communicated solely with Egg Harbor officials — and not with either of the Traenkles — with regard to the loan and the default. They assert, again without proper Rule 56 support, that the Bank did not title the Honey Bear in the Traenkles' names for more than a year, even though the Bank reserved the power so to do. Finally, defendants point out that the note does not contain an integration clause.

Defendants have failed to support their assertions with the types of affidavits or other documentary support required under Federal Civil Rule 56. Celotex Corp., 477 U.S. at 324, 106 S.Ct. at 2553. Furthermore, even if this Court were to accept defendants' unsupported assertions as true, this Court nonetheless would conclude that the note was the final, complete agreement of the parties. Defendants would have this Court substitute the name of Egg Harbor for the Traenkles' names on the note, and thereby relieve the Traenkles of any responsibility for the note they signed. The contract is a straightforward promissory note...

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    • U.S. District Court — District of Maryland
    • March 14, 2002
    ...transmit copies of the Memorandum Opinion and this Order to counsel for the parties. 1. SCAA argues that in Maryland National Bank v. Traenkle, 933 F.Supp. 1280, 1289 (D.Md.1996), the court allowed a plaintiff to pursue parallel claims of breach of duty of good faith and fair dealing and br......
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    ...Elec. Coop., 812 F.Supp. 1139, 1149 (D.Kan.1993), aff'd, 17 F.3d 1302, 1994 U.S.App. LEXIS 3299 (10th Cir.1994); Md. Nat'l Bank v. Traenkle, 933 F.Supp. 1280, 1288 (D.Md.1996), aff'd, 10 Fed. Appx. 194, 2001 U.S.App. LEXIS 11521 (4th Cir.2001); Dee-K Enter., Inc. v. Heveafil SDN. BHD., 985 ......
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  • G. [§ 2.11] Implied Covenants of Good Faith and Fair Dealing—Not An Independent Cause of Action
    • United States
    • Maryland State Bar Association Pleading Causes of Action in Maryland (MSBA) (2022 Ed.) Chapter 2 Contracts
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