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Public Loan Co. v. Federal Deposit Insurance Corp.

filed: October 7, 1986.

PUBLIC LOAN COMPANY, INC., A CORPORATION OF THE STATE OF NEW YORK; PREFERRED EQUITIES CORPORATION, A CORPORATION OF THE STATE OF NEVADA; LEONARD ROSEN; AND AMERICAN FUNDING LIMITED, A LIMITED PARTNERSHIP OF THE STATE OF NEW JERSEY
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, DEFENDANT AND THIRD PARTY PLAINTIFF V. EQUITY 1 NATIONAL MARKETING, INC., A BODY CORPORATE OF THE STATE OF FLORIDA, THIRD PARTY DEFENDANT, PUBLIC LOAN COMPANY, INC., PREFERRED EQUITIES CORPORATION, LEONARD ROSEN, AND AMERICAN FUNDING LIMITED, APPELLANTS



Appeal from the United States District Court for the District of New Jersey - Newark (D.C. Civil No. 82-3606)

Author: Aldisert

Before ALDISERT, Chief Judge, and HIGGINBOTHAM and HUNTER, Circuit Judges.

ALDISERT, Chief Judge.

This appeal from summary judgment entered in favor of Federal Deposit Insurance Corporation (FDIC) requires us to decide whether a provision of the Federal Deposit Insurance Act, 12 U.S.C. § 1823(e),*fn1 bars the defense of an oral accord and satisfaction in a claim on a promissory note and whether the maker and guarantors of a second promissory note properly raised a material question of fact concerning failure of consideration. We must also decide whether the district court abused its discretion in discovery rulings. We find that the district court neither erred in its application of § 1823(e) nor abused its discretion in its discovery ruling and that the record failed to disclose a material question of fact as to consideration for the second promissory note. We will therefore affirm.

I.

The historical facts before the district court were somewhat complicated and extended. See Public Loan Co. v. Federal Deposit Ins. Corp., F. Supp. (D.N.J. No. 82-3606 June 7, 1985), reprinted in app. at 66a-86a. For review purposes we will summarize only the adjudicative facts. The litigation centers on the liability of makers and guarantors of two promissory notes. One note in the amount of $1.5 million was executed and delivered by S.N.L. Realty Company to the Metropolitan Bank and Trust Company in August 1980. The second, also payable to Metropolitan, was executed and delivered by Equity 1 National Marketing Company in the amount of $250,000 in August 1981. In February 1982 Metropolitan became insolvent and the FDIC was appointed its liquidator. In its capacity as liquidator, FDIC sold, assigned, and transferred to itself in its corporate capacity the two notes that are the subject of this appeal.

The 1980 S.N.L. Realty note was secured by five separate letters of credit which equalled the total amount of the note. Public Loan Company obtained one letter for $750,000 from the Equitable Trust Company of Baltimore. Two appellants here, Preferred Equities Corporation and Leonard Rosen, served as guarantors of Public Loan's letter of credit. This letter of credit is the only aspect of the 1980 note involved in this appeal. The issue on appeal regarding Equity 1's 1981 note centers on the liability of its guarantors, the four appellants here who were plaintiffs below: Public Loan, Preferred Equities, Leonard Rosen, and American Funding, Ltd. The issues are joined from an attempt by the makers of the notes to obtain a judicial declaration against the FDIC of no liability and counterclaims by the FDIC asserting the validity of obligation.

A.

On July 29, 1982, the FDIC presented a sight draft drawn on Public Loan's letter of credit to the Equitable Trust Company for $132,669.23, the amount of interest due from S.N.L. to Metropolitan on the 1980 note. In a previous suit, Public Loan sued Equitable and the FDIC in the United States District Court for the District of Maryland seeking injunctive and declaratory relief - a restraining order to prohibit Equitable from honoring the FDIC's sight draft; declaring the letter of credit as having been paid, satisfied, and retired; restraining the FDIC from making a demand against Equitable on the letter of credit; and for other relief. The Maryland district court held against Public Loan and permitted the FDIC to collect the $132,669.23 from Equitable. Public Loan was then obligated to reimburse Equitable in the same amount.

B.

As to the 1981 note, Equity 1 drew out the full $250,000 advanced by Metropolitan and then defaulted on the note it executed for security. The terms of the note provided that payment was due, with interest, 90 days after the date of each draw, and that interest would accrue at 1% over Metropolitan's prime rate. After the institution of this suit, the FDIC filed a third party complaint against Equity 1 seeking repayment on the note. The FDIC also counterclaimed against plaintiffs as guarantors of the Equity 1 note.

C.

On October 27, 1982, appellants filed a six count complaint in the district court of New Jersey against the FDIC. Counts I through IV were identical claims by the four guarantors of the 1981 note contending that any guarantee they made on the obligation of Equity 1 to Metropolitan was either nonexistent, made without consideration, made without proper authority, fraudulently induced, or otherwise defective see app. at 3a, and further contending that Metropolitan defrauded the guarantors by agreeing and then failing to provide certain financial accommodations to Equity 1, causing Equity 1 to fail in business. Id. at 3a-4a.

Count I of the complaint asserted jurisdiction under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671, and under the Federal Deposit Insurance Act (FDIA), 12 U.S.C. § 1823, which authorizes the FDIC to act as a liquidator. The FDIC moved to dismiss the complaint and for summary judgment, arguing that the complaint should be dismissed because appellants had not complied with the notice provision of the FTCA and that summary judgment should be granted in its favor on both appellants' complaint and the FDIC's counterclaim because plaintiffs' defenses to their Equity 1 guarantees were invalid under § 1823(e) of the FDIA. The district court agreed, determining that "the claims asserted in Court I through IV should in tort, not in contract," and dismissed those claims because appellants had not complied with the notice provision of the FTCA. App. at 79a. The court held that it would grant summary ...


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