Resolution Trust Corp. v. Murray, 90-3148

• Decision Date: 10 July 1991
• Docket Number: No. 90-3148,90-3148
• Citation: 935 F.2d 89
• Parties: RESOLUTION TRUST CORPORATION, as Receiver of Delta Savings & Loan Association, Inc., Plaintiff-Appellee, v. Paul J. MURRAY, Jr., and June Leblanc Murray, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 89

935 F.2d 89

RESOLUTION TRUST CORPORATION, as Receiver of Delta Savings &amp Loan Association, Inc., Plaintiff-Appellee, v. Paul J. MURRAY, Jr., and June Leblanc Murray, Defendants-Appellants.

No. 90-3148.

United States Court of Appeals Fifth Circuit.

July 10, 1991.

Denechaud & Denechaud, Don M. Richard, Richard W. Martinez, Sharon L. Andrews, New Orleans, John C. Anderson, Baton Rouge, La., for defendants-appellants.

George Denegre, Jr., Edward J. Gay, III, Liskow & Lewis, New Orleans, La., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before BROWN, SMITH and WIENER, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

A savings and loan institution brought this Louisiana diversity action to enforce two promissory notes made by Paul and June Murray (the Murrays). The Murrays counterclaimed asserting that the S & L failed to credit against the notes certain services under the Louisiana law of compensation, that it reneged on an oral pledge to provide further loans to the Murrays entered into contemporaneously with the promissory notes, and that the S & L violated the Louisiana Unfair Trade Practices Act (LUTPA), La.R.S. 51:1401 et seq. While the suit was pending, the S & L was declared insolvent, and the Resolution Trust Corporation (RTC) ultimately became the institution's successor in interest in the suit. The district court thereafter granted RTC's motions for summary judgment on both the principal demand and the Murrays' counterclaims. We affirm.

Promises, Promises

On July 18, 1985, the Murrays executed a promissory note (First Note) for $819,000 payable to Delta Savings & Loan, Inc. (Delta Inc.). The First Note was secured by a mortgage and bore interest at the annual rate of 13 percent. It required monthly payments of interest and payment on August 1, 1986, of all principal and interest due. The balloon payment was not made. On October 30, 1987, the Murrays executed another promissory note (Second Note) for $100,898.50 payable to Delta Inc., and bearing interest at the annual rate of 7 percent. On its face, this Second Note required eleven monthly payments of $645.38 and one final balloon payment on October 29, 1988, of all principal and interest due.

Delta Inc. filed suit on the two notes in Louisiana state court on February 1, 1989, praying for judgment against the Murrays for the balance due on the notes, recognition of the mortgage securing the First Note, and attorneys' fees for bringing the action. The Murrays filed an answer and a reconventional demand against Delta Inc., asserting that Delta Inc. violated the LUTPA by engaging in unfair, deceptive, unethical, oppressive, and unscrupulous conduct and by preventing the Murrays from successfully developing certain real estate. In addition, the Murrays claimed that Delta Inc. refused to honor its commitment to make additional loans to the Murrays.

Singing the Delta Blues

On August 7, 1989, about five months after Delta Inc. filed suit against the Murrays, the Federal Home Loan Bank Board (FHLBB) declared Delta Inc. to be insolvent, terminated its powers, and appointed the Federal Savings and Loan Insurance Corporation (FSLIC) as Delta Inc.'s Receiver and Liquidator. The FHLBB also organized Delta Savings & Loan Association, F.A. (Delta FA), transferred substantially all of the assets (including the two Murray notes) and certain liabilities of Delta Inc. to Delta FA, and appointed the FSLIC as Conservator of Delta FA. General liabilities, including the Murrays' counterclaims against Delta Inc., were not assigned.

Effective with the passage of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) on August 9, 1989, RTC succeeded to the FSLIC's roles as Conservator of Delta FA and Receiver of Delta Inc. See FIRREA Sec. 501, 12 U.S.C. Sec. 1441a. On September 6, 1989, on RTC's motion the state court substituted RTC as Receiver of Delta Inc. as party plaintiff and defendant-in-reconvention but failed to recognized RTC in its capacity as Conservator as a party to the action. That same day, RTC removed the case to federal court.

On October 9, 1989, after removal was complete, RTC mysteriously moved the state court to issue an Amended Substitution Order reflecting that RTC as Conservator of Delta FA is the party plaintiff and that RTC as Receiver of Delta Inc. is the defendant-in-reconvention. On October 30, RTC filed in the federal district court an Ex Parte Motion and Proposed Order for leave to file an Amended Notice of Removal to reflect the distinct capacities in which RTC is a party to the proceedings. The district court granted the motion by order, stating that RTC as Conservator of Delta FA is the party plaintiff to enforce the promissory notes, with RTC as Receiver of Delta Inc. the proper party to defend the Murrays' reconventional demand.

In December 1989, RTC, in both of its capacities, moved for summary judgment on the principal and reconventional demands. Attaching the affidavit of Delta FA Assistant Vice President Cedric Harrison, RTC stated that the First and Second Notes were in default and that, although the Murrays had tendered some payments on the First Note between June and December of 1988, they were returned because they were insufficient to cure the default on that note. RTC sought judgment in the amount of $837,604.07, ¹ plus costs, late charges, interest accruing after November 1989, and attorneys' fees.

The Murrays' formal opposition, accompanied by the affidavit of Paul Murray, reasserted their reconventional demand that Delta Inc. had failed to fulfill further loan commitments in violation of the original agreement on the Second Note, and also had violated the LUTPA. The Murrays in the opposing papers also asserted that they had made payments on both notes from June to December of 1988 and that, in December 1988, Delta Inc. had wrongly returned payments which would have brought the First Note current. Finally, for the first time, the Murrays claimed that they were entitled to a set-off against the notes for architectural and sewerage treatment services they provided Delta Inc.

RTC thereafter filed a Supplemental Affidavit of Cedric Harrison in which Harrison admitted that the Murrays had indeed made payments from June through November 1988 and that these were accepted by Delta Inc. However, Harrison stated that the original mistaken affidavit statement did not affect the RTC's correct balance due on the notes. Furthermore, he stated that the checks which the Murrays tendered in December 1988 were in fact returned because "they were insufficient to cure the default on the First Note."

The court entered summary judgment in favor of the RTC as Conservator on the principal demand and recognized the security, and in favor of the RTC as Receiver on the Murrays' reconventional demand. The Murrays bring this appeal.

Standard of Review

We review the district court's grant of summary judgment in this case de novo. As we have often repeated, summary judgment is proper only if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202, 212 (1986). In opposition the Murrays must present more than "evidence [which] is merely colorable or is not significantly probative"; rather, they may only defeat RTC's motion with "significant probative evidence demonstrating the existence of a triable issue of fact." Southmark Properties v. Charles House Corp., 742 F.2d 862, 877 (5th Cir.1984).

RTC as Conservator Crashes the Party

The Murrays first contend that RTC's attempt to correct its capacities and properly make RTC as Conservator the party plaintiff in the removed case was ineffective because it involved the state court after removal. The Murrays are correct that a state court has no power to proceed with a case which has been properly removed to federal court. See 28 U.S.C. Sec. 1446(d) (state court powerless in case after its removal to federal court); Murray v. Ford Motor Co., 770 F.2d 461, 463 (5th Cir.1985) (state court had no power to set aside default judgment after removal had been perfected). We therefore cannot recognize the state court's October 9, 1989, Amended Substitution Order reflecting RTC as Conservator of Delta FA as the party plaintiff and RTC as Receiver of Delta Inc. as the defendant-in-reconvention.

The federal district court, however, identified RTC as Conservator of Delta FA as party plaintiff to the proceeding when it allowed RTC's October 30, 1989, Amended Notice of Removal. Although the original Notice was not in proper form, the Amended Notice indicated the proper capacities in which RTC is a party to the proceedings. Because the district court accepted the revision, we cannot allow the Murrays' proposed hypertechnical application of Sec. 1446, especially after our Farina v. Mission Investment Trust, 615 F.2d 1068 (5th Cir.1980). In Farina, a case which had been removed from Texas state court, we held that, where a party fails to make a F.R.Civ.P. 24(c) formal petition to intervene but judgment is rendered in its favor, it is within the district court's discretion to treat a motion to remove as also a motion to intervene, both granted by the court in "obvious acceptance" of the party as properly in the suit. Id. at 1074-75. To hold the opposite, we stated,

would render federal pleadings excessively technical, contrary to Rule 8(e)(1), which states that "No technical forms of pleadings or motions are required," and Rule 8(f) which states that "All pleadings shall be so construed as to do substantial justice."

Id. at 1074. Although the actions of RTC in both state and federal court has required much unnecessary labor on the part of all, we nevertheless hold that the federal district court's October 1989 action puts the legal imprimatur for formal substitution of the proper RTC part...