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