Resolution Trust Corp. v. Juergens, 91-2451

• Citation: 965 F.2d 149
• Decision Date: 21 May 1992
• Docket Number: No. 91-2451,91-2451
• Parties: 18 UCC Rep.Serv.2d 484 RESOLUTION TRUST CORPORATION, as Receiver of Community Savings & Loan Association, Plaintiff-Appellee, v. Peter JUERGENS, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 149

965 F.2d 149

18 UCC Rep.Serv.2d 484

RESOLUTION TRUST CORPORATION, as Receiver of Community

Savings & Loan Association, Plaintiff-Appellee, v. Peter JUERGENS, Defendant-Appellant.

No. 91-2451.

United States Court of Appeals, Seventh Circuit.

Argued April 7, 1992.

Decided May 21, 1992.

Patricia M. Gibeault (argued), Catherine J. Furay, Axley & Brynelson, Madison, Wis., for plaintiff-appellee.

Patrick R. Burns, Machulak & Hutchinson, Brookfield, Wis. (argued), for defendant-appellant.

Before FLAUM and MANION, Circuit Judges, and SHADUR, District Judge. ^*

SHADUR, District Judge.

This lawsuit is yet another product of what is unfortunately one of our country's major growth industries: a proceeding by Resolution Trust Corporation ("RTC") to enforce an obligation due to a now-defunct savings and loan association for which RTC is receiver. As always, RTC seeks to call to its aid the special status accorded to it by judicial doctrine (the principle originally announced in D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942)) and by Congress (the codification of D'Oench, Duhme as to FDIC at 12 U.S.C. § 1823(e), made applicable to RTC by 12 U.S.C. § 1441a(b)(4)). ¹ This time, however, the result is driven primarily by provisions of the Uniform Commercial Code--more specifically its enactment in Wisconsin (Wis.Stat. ch. 403, the relevant provisions of which are cited here as "Section 403.---"). We affirm the summary judgment obtained by RTC below.

Facts

With the limited exceptions noted below as to some gaps in the factual record, the parties have no quarrel as to the underlying facts. What follows, then, borrows freely from the opinion of the district court setting out the undisputed evidence.

On May 31, 1984 Peter Juergens ("Juergens") executed and delivered to limited partnership National Select Placement XV ("National") a promissory note (the "Juergens Note") in the principal amount of $134,200--the purchase price for 20 "Interests" in the partnership. On June 29, 1984 National borrowed money from Community Savings & Loan Association ("Community"), evidenced by a note in the principal amount of $2,331,300 (the "National Note"). ² National indorsed the Juergens Note to Community as partial collateral for the National Note.

At some unknown date Community indorsed the Juergens Note to Admiral Insurance Company ("Admiral"). At some later but also unknown date before this case began, Admiral allegedly transferred the Juergens Note back to Community, though without an indorsement. We say "allegedly" because RTC has proffered no evidence to show when, how or why that transfer occurred. RTC did produce a copy of the Juergens Note as an exhibit to its Complaint, asserting that it found the Juergens Note among Community's assets when it took over as receiver. Juergens did not dispute in the trial court, but attempts to dispute before us, whether RTC has demonstrated that it really was in possession of the Juergens Note--an issue that is further discussed below.

Each of Juergens, National and Community appears to have suffered some financial calamity since entering into the transactions relevant to this case. National defaulted on the National Note, and it remains in default to the tune of $77,951.15 plus interest. Juergens has defaulted on the Juergens Note, owing $52,400 plus interest. And on February 17, 1989 Federal Savings & Loan Insurance Corporation ("FSLIC") declared Community insolvent and became conservator of its assets.

RTC came into existence as the result of the August 9, 1989 enactment of the Financial Institutions Reform, Recovery & Enforcement Act of 1989, and it then succeeded to the rights of FSLIC as conservator. Community went into receivership on February 9, 1990, and RTC was then appointed receiver. As receiver RTC succeeded to "all rights, titles, powers and privileges of [Community]" (Section 1821(d)(2)(A)(i)), including the power to "collect all obligations and money due [Community]" (Section 1821(d)(2)(B)(ii)).

Standard of Review

RTC prevailed below on its motion for summary judgment under Fed.R.Civ.P. ("Rule") 56. We review such a grant of summary judgment de novo (Matuszak v. Torrington Co., 927 F.2d 320, 322 (7th Cir.1991)). We may of course affirm on any ground that finds support in the record (Sims v. Mulcahy, 902 F.2d 524, 537 (7th Cir.1990)).

Rule 56 requires that we rule in favor of the moving party--here RTC--if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Familiar Rule 56 principles impose on RTC as movant the burden of establishing the lack of a genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). For that purpose the court is called on to draw all "reasonable inferences, not every conceivable inference" in the light most favorable to nonmovant Juergens (De Valk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir.1987)).

But once it appears from RTC's presentation that it has met its burden in facial terms, Juergens cannot stave off summary judgment merely by saying that some "genuine" and "material" factual issue is in dispute. To demonstrate that an issue is genuine Juergens must cite to some evidence in the record sufficient to suggest that his view of the issue might be adopted by a reasonable factfinder (Anderson v Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Billups v. Methodist Hosp. of Chicago, 922 F.2d 1300, 1304 (7th Cir.1991)). To demonstrate that an issue is material Juergens must show that the issue is outcome-determinative under the applicable substantive law (Pritchard v. Rainfair, Inc., 945 F.2d 185, 191 (7th Cir.1991)).

RTC's Right To Recover

We begin with a look at RTC's status as holder of the Juergens Note, as defined by Wisconsin's enactment of the UCC. Wis.Stat. § 401.201(20) describes a "holder" as:

a person who is in possession of a document of title or an instrument or a certificated investment security drawn, issued or endorsed to him or her or to his or her order or to bearer or in blank.

Section 403.301 in turn sets out the enforcement rights of a holder:

The holder of an instrument whether or not he is the owner may transfer or negotiate it and [with an exception not relevant here] discharge it or enforce payment in his own name.

As long as the signatures on a note are established and admitted (which they were on both the Juergens and National Notes), the mere production of a note entitles the holder to recover "unless the defendant establishes a defense" (Section 403.307(2)). Lack of consideration forms a complete defense against payment to the original payee (In re Vogel's Estate, 259 Wis. 73, 76, 47 N.W.2d 333, 334 (1951)). But the rule is different as against a subsequent holder: There a lack of consideration requires the holder to prove that it is a "holder in due course" (Section 403.306(3))--that it took the note for value, in good faith and without notice of the lack of consideration or other applicable defenses (Section 403.302(1)).

In his brief below opposing RTC's motion for summary judgment, Juergens argued the existence of one and only one item that he identified as a genuine issue of material fact: that he had received no valuable consideration from National because the 20 Interests in the real estate partnership "were not worth what they were represented to be worth" (Juergens Br. 2-3). ³ That assertion, if proved, would have required RTC to prove it was a holder in due course--a somewhat heavier burden than proving mere holder status.

In support of his assertion Juergens proffered a supporting affidavit by his attorney Michael Finn and another by Juergens himself. Judge Stadtmueller excluded the Finn affidavit altogether, finding it to be "composed of nothing more than conclusions of law and factual assertions not based upon personal knowledge." As for the Juergens affidavit, the judge found that it provided no factual support for the purported lack of consideration. Juergens now challenges the exclusion of the Finn affidavit and the substantive rejection of the Juergens affidavit. Neither challenge has any merit.

Finn's purported "affidavit" was really a brief, laden with conclusory legal statements and barren of any relevant facts of which Finn had personal knowledge. Just as "One swallow does not make a spring," ⁴ so the mere attachment of a jurat does not automatically make an affidavit. After all, summary judgment is supposed to be a substitute for trial, and an affidavit in support of a Rule 56 motion is a substitute for live testimony--as Rule 56(e) reads in relevant part:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.

If Finn had been called to the stand at a trial in this case, he plainly could have contributed no admissible testimony. Exclusion of the Finn affidavit was thus entirely proper under Rule 56(e).

Juergens' affidavit poses a related problem, and it ultimately serves him no better. There Juergens asserts that he received no "good and valuable consideration" or "benefit of the bargain" from National when he executed the Juergens Note. Evidently he means to suggest that National was some kind of a sham operation and that Vishnevsky had flimflammed him in the transaction from which the Juergens Note emerged.

But Juergens has offered no documentary evidence, nor any evidentiary facts from personal knowledge, to support that assertion. Even when Juergens is accorded the favorable inferences required by Rule 56, it is clear that no reasonable factfinder could have found that Juergens could prove lack of consideration just by taking the stand and reciting legal buzzwords. So ...