Resolution Trust v. Wayne Coliseum Ltd., Civ. No. 4-91-238.

• Court: United States District Courts. 8th Circuit. United States District Court of Minnesota
• Writing for the Court: DOTY
• Citation: 793 F. Supp. 900
• Docket Number: Civ. No. 4-91-238.
• Decision Date: 15 May 1992
• Parties: RESOLUTION TRUST CORPORATION, an Instrumentality of the United States Government, as Receiver for Midwest Savings Association, F.A., a Federal Association, Plaintiff, v. WAYNE COLISEUM LIMITED PARTNERSHIP, an Indiana Limited Partnership, Rochelle Realty Corporation, an Indiana Corporation, Barry Lang, Stuart Lichter and Gerald Wendel, Defendants.

793 F. Supp. 900

RESOLUTION TRUST CORPORATION, an Instrumentality of the United States Government, as Receiver for Midwest Savings Association, F.A., a Federal Association, Plaintiff,
v.
WAYNE COLISEUM LIMITED PARTNERSHIP, an Indiana Limited Partnership, Rochelle Realty Corporation, an Indiana Corporation, Barry Lang, Stuart Lichter and Gerald Wendel, Defendants.

Civ. No. 4-91-238.

United States District Court, D. Minnesota, Fourth Division.

May 15, 1992.

793 F. Supp. 901

James Joseph Bertrand, Allen Irving Saeks, Leonard Street & Deinard, Minneapolis, Minn., for plaintiff.

Robert R. Weinstine, Steven C. Tourek, David A. Kristal, Winthrop & Weinstine, St. Paul, Minn., for defendants.

ORDER

DOTY, District Judge.

This matter is before the court on defendants Barry Lang, Stuart Lichter and Gerald Wendel's ("individual defendants") motion for summary judgment and on the plaintiff Resolution Trust Corporation's ("RTC") motion to dismiss the counterclaim of defendants Wayne Coliseum Limited Partnership ("Wayne Coliseum") and Rochelle Realty Corporation ("Rochelle Realty") (together "the defendants") for lack of subject matter jurisdiction. Based on the file, record and proceedings herein, the individual defendants' motion for summary judgment is denied and the RTC's motion to dismiss is granted.

BACKGROUND

In December 1985, Wayne Coliseum borrowed $6,200,000 from the City of Fort Wayne, Indiana ("Fort Wayne"). Wayne Coliseum borrowed the money to finance the construction and rehabilitation of manufacturing and warehousing facilities located in Allen County, Indiana. Fort Wayne issued industrial revenue bonds to raise the money it lent Wayne Coliseum.

In November 1987, the First Bank of Minneapolis ("First Bank") and Midwest Federal Savings and Loan of Minneapolis ("Midwest Federal") issued letters of credit to provide liquidity support for the bondholders. Specifically, First Bank issued a letter of credit in favor of the bondholders and Midwest Federal issued a letter of credit in favor of First Bank in order to provide First Bank with security in the event of a draw under First Bank's letter of credit.

The bonds were subject to mandatory redemption on November 1, 1990. After that date, the trustee of the bonds made two draws on the First Bank letter of credit in the approximate amount of $6,200,000. First Bank then made two draws against the Midwest Federal letter of credit. The RTC, as receiver for Midwest Savings Association,¹ thereafter demanded full payment from Wayne Coliseum for both draws against the Midwest Federal letter of credit.²

Individual Defendants' Liability

The RTC filed suit against Wayne Coliseum on March 29, 1991, after Wayne Coliseum did not comply with its demand for payment.³ The RTC alleges that both Wayne Coliseum and the individual defendants are liable for the obligations of the partnership because Wayne Coliseum held itself out to be a general partnership. Originally, Wayne Coliseum was organized

793 F. Supp. 902

as a limited partnership under the laws of the State of Indiana.⁴ Wayne Coliseum had one general partner, Rochelle Realty, and the individual defendants were limited partners of Wayne Coliseum. The individual defendants were also the officers of Rochelle Realty

On October 30, 1989, Indiana administratively dissolved Rochelle Realty. The RTC alleges that the dissolution of Rochelle Realty resulted in the dissolution of the Wayne Coliseum Limited Partnership. The RTC contends that since the dissolution of the limited partnership, Wayne Coliseum has held itself out as a general partnership. The RTC thus contends that both Wayne Coliseum and the individual defendants are liable for Wayne Coliseum's obligations.

The individual defendants contend that even though Indiana dissolved the general partner, Wayne Coliseum remained a limited partnership and that they remained limited partners of that partnership. In addition, the individual defendants contend that even if Wayne Coliseum held itself out as being a general partnership to the public, that fact is irrelevant for purposes of determining their personal liability because they are not liable as general partners to the RTC unless they led the RTC to believe that they were general partners. The individual defendants allege that there is no evidence that they led the RTC to believe that Wayne Coliseum became a general partnership or that they were general partners of Wayne Coliseum. The individual defendants thus move for summary judgment on the issue of their liability.

Defendants' Counterclaim

The defendants filed a counterclaim against the RTC alleging breach of contract and breach of a covenant of good faith and fair dealing. The RTC contends that the court lacks subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure because the defendants have not exhausted their administrative remedies. Generally, parties with a claim against the RTC must first exhaust their administrative remedies before filing that claim in court. See Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. § 1821(d)(13)(D).

Defendants contend that their counterclaim is properly before the court and that they need not exhaust their administrative remedies because the RTC failed to initiate FIRREA's administrative claims procedures by failing to timely publish a notice that defendants should present their claims to the RTC. See 12 U.S.C. §§ 1821(d)(3)(B) and 1821(d)(3)(C).

In the alternative, defendants allege that they have exhausted their administrative remedies. Defendants contend that correspondence it had with the RTC in November and December of 1990, demonstrates that defendants notified the RTC of their claims and that the RTC disallowed those claims. On November 30, 1990, counsel for defendants wrote a letter to the RTC setting forth defendants' positions with respect to the RTC's handling of the redemption of the bonds and the draws on the Midwest Federal letter of credit. On December 10, 1990, the RTC responded that defendant's failure to make the payments that the RTC requested constituted a default under the agreement between the parties and that the bond redemption or the draws on the letter of credit did not stem from the negligence or any inattention on the part of RTC. Defendants thus contend that they exhausted their administrative remedies and that the court has jurisdiction over their counterclaim.

The RTC contends that it complied with the notice provisions. The RTC also contends that even if the court were to determine that it did not comply with the notice requirement, its failure to comply does not constitute a waiver of the requirement that defendants must exhaust their administrative remedies. In addition, the RTC asserts that the correspondence between the parties in November and December of 1990, does not constitute an exhaustion of

793 F. Supp. 903

administrative remedies. The RTC thus moves to dismiss defendants' counterclaim for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure

DISCUSSION

Individual Defendants' Motion for Summary Judgment on Their Liability

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith 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 party is entitled to a judgment as a matter of law." This standard mirrors the standard for a directed verdict under Federal Rule of Civil Procedure 50(a), which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Stated in the negative, summary judgment will not lie if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. at 248, 106 S.Ct. at 2510. In order for the moving party to prevail, it must demonstrate to the court that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of...