Rhode Island Hosp. Trust Nat. Bank v. Howard Communications Corp.

• Decision Date: 05 November 1992
• Docket Number: No. 92-1524,92-1524
• Citation: 980 F.2d 823
• Parties: RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, Plaintiff, Appellee, v. HOWARD COMMUNICATIONS CORPORATION, et al., Defendants, Appellees, Robert T. Howard, et al., Defendants, Appellants. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 823

980 F.2d 823

RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, Plaintiff, Appellee, v. HOWARD COMMUNICATIONS CORPORATION, et al., Defendants, Appellees, Robert T. Howard, et al., Defendants, Appellants.

No. 92-1524.

United States Court of Appeals, First Circuit.

Heard Nov. 5, 1992.

Decided Dec. 9, 1992.

John F. Henning, Jr., for appellants.

Sabin Willett with whom Patricia J. Hill and Bingham, Dana & Gould, were on brief, for appellee.

Before BREYER, Chief Judge, CYR and BOUDIN, Circuit Judges.

CYR, Circuit Judge.

Between 1988 and 1990, appellants Robert Howard and Scott Robb held FCC licenses to operate several radio stations through two closely-held companies, Howard Communications Corporation and Citicom Radio of Pittsfield [hereinafter collectively, the "Companies"]. ¹ In 1990, the

                Companies defaulted on a $2.65 million loan, personally guaranteed by Howard and Robb.   Rhode Island Hospital Trust National Bank ["Hospital Trust"], the lender, sued for repayment and for the appointment of a receiver to take control of the Companies' assets, including their FCC licenses.   In apparent contravention of the ensuing receivership order, appellants took various dilatory actions designed to impede FCC approval of the license transfers to the court-appointed receiver.   Robb and Howard appeal the district court finding of civil contempt, and the summary judgment entered against them on their loan guaranty.   We affirm
                

I BACKGROUND

Viewing the pleadings, affidavits, and other competent submissions in the light most favorable to appellants, see Milton v. Van Dorn Co., 961 F.2d 965, 969 (1st Cir.1992), without crediting "conclusory allegations, improbable inferences, and unsupported speculation," Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990), the following facts emerge. ²

In 1988, appellants Howard and Robb, acting on the advice of their "financial consultant," Gregory L. Howard, approached Hospital Trust's Broadcast Lending Division in an effort to refinance a $1.1 million bank loan then held by Old Stone Bank. After extensive negotiations, Hospital Trust officials agreed to lend the Companies $2.65 million to refinance the loan and to pursue a program of expansion. A Loan Agreement and Revolving Credit and Term Note (hereinafter, collectively, the "loan agreement") were duly executed by Robert Howard, as president of the Companies, on October 28, 1988. Concurrently, appellants, as co-owners of the Companies, executed a Guaranty Agreement under which they personally guaranteed the Companies' loan agreement obligations. Until September 30, 1989, appellants were answerable under their guaranty whenever the Companies failed to make any payment in full, as it came due. After that date, appellants were liable on the occurrence of an event of default, as defined under § 5.08 of the loan agreement. Howard and Robb reluctantly signed the guaranty at the insistence of Hospital Trust, in order to permit the loan transaction to go forward. In all significant respects, the guaranty was valid and enforceable on its face. ³

No loan payments were made after January 30, 1990. On April 17, 1990, the Companies admitted their inability to make loan payments in a timely manner, and on June 26, 1990, the Companies admitted an event of default under § 5.08 of the loan agreement, thereby triggering appellants' liability on their guaranty. On October 17, Hospital Trust brought an action against the Companies under their loan agreement, and against appellants on the guaranty.

In February 1991, following several unsuccessful workout attempts, Hospital Trust moved for the appointment of a receiver to liquidate the Companies' assets in satisfaction of the unpaid loan balance. At the hearing held on the motion for the appointment of a receiver in July 1991, Robb orally represented to the district court that $2 million had been "segregated to [appellants'] account" for the purpose of settling the loan dispute. The court granted appellants' request to defer the appointment of a receiver, but no funds were forthcoming. On August 5, Howard filed an affidavit in support of a further request for deferral of the appointment of a receiver, representing to the court that the funds The procedural plot deepened on August 26, when Howard and Robb moved to stay enforcement of the receivership order pending FCC approval of the receiver's succession to the radio station license rights. The motion was denied. Although Howard and Robb could have appealed the receivership order, see 28 U.S.C. § 1292(a)(2) (conferring appellate jurisdiction of interlocutory appeals from receivership orders), no appeal was taken. Instead, on August 28, chapter 11 petitions were filed in behalf of the Companies, which resulted in an automatic stay of the district court receivership proceedings against the Companies. See 11 U.S.C. § 362(a)(1). In accordance with FCC regulations, see 47 C.F.R. 21-11(d), Howard and Robb thereupon submitted a Transfer of Control Application to the FCC requesting authorization to transfer the radio station licenses to the Companies, qua debtors-in-possession.

                would be available on or before August 15.   Again the court acceded, but no funds were forthcoming.   On August 23, the court appointed Robert Maccini, a media consultant, as receiver, effective August 26, and directed him to obtain control of the Companies' properties, including their FCC licenses.   Appellants were enjoined to cooperate in the delivery of the Companies' properties and to refrain from "disturb[ing] or imped[ing] the receiver in the performance of his duties in any way."
                

As the district court proceedings against Howard and Robb were unaffected by the Companies' initiation of chapter 11 proceedings, see, e.g., In re Supermercado Gamboa, Inc., 68 B.R. 230, 232 (Bankr.D.P.R.1986), on October 9, Hospital Trust moved for partial summary judgment against appellants on their loan guaranty. ⁴ Summary judgment was granted on April 1, 1992.

The intervening dismissal of the Companies' chapter 11 proceedings on January 9, 1992, lifted the automatic stay of the receivership proceedings. See 11 U.S.C. § 362(c)(1) & (2)(B). The receiver accordingly moved to take control of the Companies' assets and, on or about January 17, 1992, in order to assume control of the FCC licenses from the former debtors-in-possession, forwarded license transfer applications to Howard and Robb for execution. Howard signed the transfer applications on January 22 and returned them to the receiver on January 28. In the meantime, however, on January 20, Robb had filed a separate set of license transfer applications, seeking authorization to retransfer the FCC licenses from the Companies, qua debtors-in-possession, to the Companies, qua former debtors-in-possession. Moreover, Robb notified the receiver that the receiver's license transfer applications should not be filed until appellants' applications had "cleared" the FCC. The receiver's transfer applications were not filed with the FCC until February 4. On February 9, in response to the filing of the receiver's license transfer applications with the FCC, appellants filed a so-called "Transferor's Statement of Circumstances," signed by Robb and supported by Howard's affidavit. The statement and affidavit opposed the receiver's license transfer applications and alleged a litany of illegal and abusive activities on the part of the receiver. The district court later found these accusations false, misleading, and violative of the receivership order.

Simultaneously with the filing of the Transferor's Statement of Circumstances, the FCC received a so-called "Petition to Deny and Impose Forfeiture," signed by "Denise Harris" and purportedly submitted in behalf of the "HCC/CRP Creditors Committee." Although appellants' names do not appear on the "petition," upon further investigation it was discovered that Denise Harris was a receptionist for Robb's law firm. The creditors committee petition reiterated the false allegations against the receiver, urged disallowance of the request for transfer of the Companies' licenses to the receiver, and recommended imposition of "the highest possible penalty" against the receiver and Hospital Trust. If the HCC/CRP Creditors Committee was anything other than a vehicle utilized by appellants On April 1, the district court found Howard and Robb in civil contempt for interposing (1) the unnecessary post-bankruptcy license retransfer, (2) the creditors committee's petition through Harris, and (3) the "Statement of Circumstances" opposing the FCC license transfer to the receiver. Appellants were ordered to reimburse Hospital Trust and the receiver for the attorney fees incurred in responding to the dilatory FCC filings by and in behalf of appellants. See Chambers v. NASCO, Inc., --- U.S. ----, ----, 111 S.Ct. 2123, 2133, 115 L.Ed.2d 27 (1991) (upholding inherent power of federal district court to shift counsel fees as sanction for contemptuous conduct which included, inter alia, false and frivolous FCC petitions); Hutto v. Finney, 437 U.S. 678, 689, 98 S.Ct. 2565, 2572, 57 L.Ed.2d 522 (1978). Howard and Robb appeal.

                to impede the license transfer to the court-appointed receiver, the record does not substantiate it.   In any event, Howard and Robb now admit their responsibility for filing the petition signed by Harris, which the district court found to be a flagrant violation of its order enjoining appellants to refrain from "disturb[ing] or imped[ing] the receiver...."
                

II DISCUSSION

1. Summary Judgment

Summary judgment was appropriate on the loan guaranty only if Hospital Trust demonstrated (1) the absence of any genuine issue of material fact, and (2) its right to judgment as a matter of law. See Fed.R.Civ.P. 56(c); FDIC v. Singh, 977 F.2d 18, 20 (1st Cir.1992). We view the evidence in the light most favorable to the non-moving parties, see Bank One Texas, N.A. v. A.J. Warehouse, Inc., 968 F.2d...