Ostroff v. FDIC

• Decision Date: 10 March 1994
• Docket Number: Civ. A. No. 92-0632-T.
• Citation: 847 F. Supp. 270
• Parties: Gina OSTROFF and Barry Ostroff, Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as liquidating Agent/Receiver for Attleboro Pawtucket Savings Bank, Janice Mathews, Moshe Vaknim and Spitz-Wattman Realtors, Defendants.
• Court: U.S. District Court — District of Rhode Island

847 F. Supp. 270

Gina OSTROFF and Barry Ostroff, Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as liquidating Agent/Receiver for Attleboro Pawtucket Savings Bank, Janice Mathews, Moshe Vaknim and Spitz-Wattman Realtors, Defendants.

Civ. A. No. 92-0632-T.

United States District Court, D. Rhode Island.

March 10, 1994.

COPYRIGHT MATERIAL OMITTED

Richard C. Tallo, Law Offices of Richard C. Tallo, Providence, RI, for plaintiffs.

Laurel K. Bristow, Partridge, Snow & Hahn, Providence, RI, for F.D.I.C.

Patrick T. Conley, Jr., Lynch & Greenfield, Providence, RI, for Spitz-Wattman Realtors.

ORDER

TORRES, District Judge.

The Report and Recommendation of United States Magistrate Judge Robert W. Lovegreen filed on February 4, 1994 is accepted pursuant to Title 28, United States Code, Section 636(b)(1)(B).

The defendant's motion for summary judgment is granted.

REPORT AND RECOMMENDATION

LOVEGREEN, United States Magistrate Judge.

The matter presently before the Court for judicial review is the defendant, Federal Deposit Insurance Corporation's ("FDIC"), motion for summary judgment pursuant to F.R.Civ.P. 56(c) on Counts I, II and V through X of the plaintiff's complaint. On or about April 15, 1991, plaintiffs brought this action in Providence County Superior Court, concerning plaintiffs' failed attempt to purchase property located at 733-735 North Main Street, Providence, Rhode Island ("the Premises"), against Attleboro Pawtucket Savings Bank ("the Bank"), Janice Mathews, a Vice President of the Bank, Moshe Vaknim ("Vaknim"), owner of the Premises and Spitz-Wattman Realtors, brokers for the attempted sale of the Premises. By agreement of the parties on or about October 29, 1991, the action was dismissed as to Janice Mathews. Subsequently, plaintiffs entered into a settlement agreement with Vaknim, who is no longer a defendant to this action.

On August 21, 1992, the Commissioner of Banks of the Commonwealth of Massachusetts declared the Bank insolvent and ordered its closure. The Federal Deposit Insurance Corporation ("FDIC") was appointed and accepted as Receiver and Liquidating Agent of the failed financial institution pursuant to an order of the Massachusetts Supreme Judicial Court in the case captioned In the Matter of Attleboro Pawtucket Savings Bank, C.A. No. 92-368 slip op. (MA S.J.C. August 20, 1992). Pursuant to its appointment, the FDIC succeeded to all rights, titles, powers and privileges of the Bank pursuant to 12 U.S.C. § 1821(d)(2). The contingent liability which is the subject of this action was retained by the FDIC.

The instant action, commenced in the Providence County Superior Court, was removed to this court by the FDIC. Plaintiffs thereafter successfully moved to amend the complaint, removing Vaknim as a party defendant and adding six additional counts.

This matter has been referred to me for preliminary review, findings and recommended disposition. 28 U.S.C. § 636(b)(1)(B); Local Rule of Court 32(c)(2). For the following reasons, I recommend the defendant's motion for summary judgment be granted.

Facts

In October of 1989, the record owner of the Premises was Moshe Vaknim. On October 12, 1989, Gina Ostroff entered into an agreement with Vaknim to purchase the Premises from him ("the Purchase and Sale Agreement"). Thereafter, plaintiffs claim to have spent some $100,000 renovating the Premises. At all times material hereto, Vaknim was in default under a $1,140,000 promissory note in favor of the Bank secured by a first mortgage on the Premises and other properties owned by Vaknim. In early 1990, the Bank, after numerous notices of default to Vaknim, notified him that it was accelerating his note and required him to pay the remaining balance owed in full by February 13, 1990. When Vaknim failed to pay, the Bank advertised a foreclosure sale to take place on April 13, 1990 pursuant to R.I.Gen. Laws § 34-11-22, the promissory note and the mortgage.

Plaintiffs began negotiating with the Bank in March, 1990 for a loan to finance the purchase of the Premises. On April 9, 1990, the Bank issued a commitment letter to Gina Ostroff approving her mortgage loan request in the amount of $162,000, subject to certain conditions. The plaintiffs and the FDIC concur that the Bank required the loan to Gina Ostroff be secured by a first mortgage on the Premises, as well as a first mortgage on Unit A3 North View Condominiums, 1801 Mineral Spring Avenue, North Providence, Rhode Island, owned by Gina Ostroff. It also required the sum of $180,000 be paid to the Bank to release the mortgage the Bank already had on the Premises. Gina Ostroff executed the commitment letter the same day it was issued.

On April 10, 1990, Gina Ostroff caused to be filed in the Land Evidence Records for the City of Providence a "Notice of Intention to do Work or Furnish Materials, or Both" with respect to the Premises, in the amount of $100,000, thereby, initiating a lien against the Premises under the provision of the Rhode Island Mechanics' Lien Law. R.I.Gen. Laws § 34-28-1 et seq.

Also, following the issuance of the commitment letter, but prior to any scheduled closing or the date of foreclosure, the Bank learned that the Internal Revenue Service had recorded a tax lien in the amount of $25,574.77 against the Premises and all other property owned by Vaknim. The Bank then informed Gina Ostroff of the tax lien.

Due to the substantial liens on the Premises, the Bank concluded that clear title could not be conveyed by Vaknim to Gina Ostroff. Therefore, Gina Ostroff could not give the Bank a first mortgage on the Premises as required. Consequently, the closing on the Premises did not take place, and the foreclosure sale went forward on April 13, 1990 as advertised. Both the Bank and the plaintiffs were present and bid at the foreclosure sale, but the Bank was successful and purchased the Premises.

Discussion

I. Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) states that a party shall be entitled to a summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving part is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). When determining a motion for summary judgment, I must review the evidence in the light most favorable to the nonmoving party and must draw all reasonable inferences in the nonmoving party's favor. Mesnick v. General Electric Co., 950 F.2d 816, 820 (1st Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 2965, 119 L.Ed.2d 586 (1992); Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990). Summary judgment should be granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." F.R.Civ.P. 56(c); see Goldman v. First Nat'l Bank of Boston, 985 F.2d 1113, 1116 (1st Cir.1993); Lawrence v. Northrop Corp., 980 F.2d 66, 68 (1st Cir.1992).

Summary judgment is a procedure that involves shifting burdens between the moving and the nonmoving parties. Initially, the burden requires the moving party to aver "an absence of evidence to support the nonmoving party's case." Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir.1990) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986)). Once the moving party meets this burden, the onus falls upon the nonmoving party, who must oppose the motion by presenting facts that show that there is a "genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986) (citing F.R.Civ.P. 56(e)); see Goldman, 985 F.2d at 1116; Lawrence, 980 F.2d at 68; Garside, 895 F.2d at 48 ("A `genuine issue' exists if there is `sufficient evidence supporting this claimed factual dispute' to require a choice between `the parties' differing versions of the truth at trial.'" (quoting Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976)). To oppose the motion successfully, the nonmoving party "may not rest upon mere allegation or denials of his pleading." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Moreover, the evidence presented by the nonmoving party "`cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve at an ensuing trial.'" Mesnick, 950 F.2d at 822 (quoting Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181 (1st Cir.1989)). Indeed, "even in cases where elusive concepts such as motive or intent are at issue, summary judgment may be appropriate if the nonmoving party rests merely upon conclusory allegations, improbable inferences, and unsupported speculation." Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990). Thus, to defeat a properly supported motion for summary judgment, the nonmoving party must establish a trial-worthy issue by presenting "enough competent evidence to enable a finding favorable to the nonmoving party." Goldman, 985 F.2d at 1116 (citing Anderson, 477 U.S. at 249, 106 S.Ct. at 2511).

II. Count I — Breach of Contract

Count I of the Amended Complaint alleges that the Bank breached its financing contract with the plaintiffs, Gina and Barry Ostroff. (Amended Complaint ¶ 25.) As a preliminary matter, Barry Ostroff was not a party to the financing contract. The commitment letter dated April 9, 1990 is addressed to Gina Ostroff only and is executed as accepted by Gina Ostroff only. Therefore, the FDIC should be granted summary judgment on Barry Ostroff's claim under Count I of the Amended Complaint.

The FDIC should similarly be granted summary judgment on Gina Ostroff's claim that the Bank breached their finance agreement as sh...