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RESOLUTION TRUST CORP. v. MINASSIAN

November 6, 1991

RESOLUTION TRUST CORP., AS CONSERVATOR FOR RIVERSIDE FEDERAL BANK, FORMERLY KNOWN AS RIVERSIDE SAVINGS BANK, S.L.A., PLAINTIFF
v.
LEON MINASSIAN, DEFENDANT.



The opinion of the court was delivered by: Wolin, District Judge.

OPINION

Before the Court is plaintiff Resolution Trust Corporation's ("RTC's") motion for summary judgment on its foreclosure action and on defendant Leon Minassian's counterclaim. Minassian's cross-motion for partial summary judgment on one count of

  his counterclaim is also before the Court. For the following reasons, the RTC's motion will be granted, and Minassian's motion will be denied.

BACKGROUND

This case arises from two loans made by Riverside Savings Bank ("Riverside") to Minassian in 1987 for two different real estate development projects. The first loan, for $3.5 million, was made to finance the development of a condominium project in Hackensack, New Jersey ("the Hackensack loan"). A second loan, for $1.72 million, was made to finance the renovation and expansion of commercial property in Fairview, New Jersey ("the Fairview loan").

Riverside commenced an action in foreclosure of the Fairview property in the state courts of New Jersey after Minassian had defaulted on the Fairview loan. Minassian asserted a counterclaim against Riverside, which included counts related to the Hackensack loan.

Riverside was subsequently placed in receivership by the RTC, which, pursuant to a Purchase and Assumption Agreement, sold Riverside's assets to Riverside Federal Savings Bank ("Riverside Federal"). The RTC was substituted as a party for Riverside in this action, as a conservator for Riverside Federal. Minassian thereafter removed the action from state court to this Court.

RTC has moved for summary judgment on its foreclosure action, and seeks an order and final judgment of foreclosure. Minassian concedes that he is in default of the Fairview loan, but claims that the Hackensack loan was unenforceable because it was usurious, and that he is entitled to setoff the recoverable amount of the allegedly usurious loan against the Fairview loan. The RTC also contends that it is entitled to summary judgment on Minassian's counterclaim because it is based on theories of recovery cutoff by the D'Oench, Duhme doctrine, and on an untenable theory of usury. By way of cross-motion, Minassian asserts that he is entitled to summary judgment on part of the first count of his counterclaim, which alleges that the Hackensack loan was usurious.

DISCUSSION

Both parties agree that there are no material facts in dispute. Therefore, the motions are ripe for summary judgment. Fed.R.Civ.P. 56 (c). Further, Minassian does not oppose the RTC's motion for summary judgment on part of count one and all of counts two, four and five of his counterclaim. Those counts relate to claims based on fraudulent oral agreements or assurances in connection with the two loans, and are clearly barred by the D'Oench, Duhme doctrine. See Adams v. Madison Realty & Development, Inc., 937 F.2d 845 (3d Cir. 1991).

A. Did Minassian Waive His Right to Setoff and Counterclaim?

Minassian's opposition to the RTC's motion for summary judgment on the Fairview loan foreclosure action is based solely on a claim of usury with respect to the Hackensack loan. Minassian claims that the Hackensack loan was usurious, and that he is entitled to offset the RTC's liability for usury on the Hackensack loan against his liability under the Fairview loan agreements. Therefore, if no right to setoff exists, the RTC is entitled to summary judgment on the foreclosure action without regard to the merits of Minassian's usury claim concerning the Hackensack loan.

A setoff is a claim "arising out of a completely independent and unrelated transaction," which is asserted to offset liability for another claim. Guarantee Co. of North America v. Tandy & Allen Construction Co., 66 N.J. Super. 285, 289, 168 A.2d 860 (Law Div. 1961), aff'd, 76 N.J. Super. 274, 184 A.2d 426 (App. Div. 1962). Waiver of the right to assert a setoff or counterclaim, therefore, merely prevents a defendant from asserting the unrelated claim as a defense to liability in an action brought against him. It does not extinguish the unrelated liabilities, but merely prevents their assertion as a defense to liability to, the plaintiff for an unrelated

  debt. Thus, if the waiver is effective, Minassian is not barred from asserting the usury claim, but its assertion will not preclude entry ...

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