Search by Case Name
Search by Case Number
Search by Keyword

#2116IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS





In Re:

TIFFANY GARDENS PARTNERS, L.P.,

DEBTOR

NO. 93-40413-11

CHAPTER 11

TIFFANY GARDENS PARTNERS, L.P.,

PLAINTIFF(S),

v.

RESOLUTION TRUST CORPORATION AS RECEIVER FOR PIONEER

SAVINGS AND LOAN ASSOCIATION,

DEFENDANT(S).

RESOLUTION TRUST CORPORATION AS RECEIVER FOR PIONEER

FEDERAL SAVINGS AND LOAN ASSOCIATION,

INTERVENOR-DEFENDANT.

ADV. NO. 93-7056

RULING ON SUMMARY JUDGMENT MOTION

The debtor filed this adversary proceeding to ask the Court to subordinate the claim of the Resolution Trust Corporation (RTC) to the claims of the debtor's other creditors. The RTC has filed a motion for summary judgment, seeking denial of the relief sought. The debtor is represented by counsel Donald E. Bucher of Moore, Bucher & Morrison of Kansas City, Missouri. The RTC is represented by counsel Robert L. Hamann of Hamann & South of Overland Park, Kansas.

FACTS

No facts material to this decision are in dispute.

In early 1988, Pioneer Savings and Loan Association (Pioneer) had in its portfolio a non-performing loan secured by the apartment complex the debtor now owns. The debtor's general partners had about $40,000,000 worth of real estate loans, covering a number of projects, with financial institutions controlled by Pioneer's CEO. According to the partners, Pioneer's CEO threatened to terminate their financial relationship unless the partners bought the apartment complex on terms dictated by the CEO. Presumably, terminating the relationship would have meant the CEO's institutions would not have (1) extended the maturity date or lent additional funds needed for a project the partners were developing, (2) granted extensions or refinancing of outstanding loans, or (3) provided any future financing. The partners agreed to purchase the complex, and a year later, caused it to be transferred to the debtor. In April of 1993, the RTC was appointed to serve as the receiver for Pioneer.(1)

DISCUSSION AND CONCLUSIONS

Federal Rule of Civil Procedure 56, governing grants of summary judgment, is made applicable to bankruptcy proceedings by Federal Rule of Bankruptcy Procedure 7056. FRCP 56 provides that this Court must grant summary judgment "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." In considering a motion for summary judgment, the Court must examine all the evidence in the light most favorable to the party against whom summary judgment is sought. Summary judgment is inappropriate if an inference can be deduced from the facts which would allow the nonmovant to prevail. The court must consider factual inferences tending to show triable issues in the light most favorable to the existence of those issues. Where different ultimate inferences may properly be drawn, summary judgment should be denied. United States v. O'Block, 788 F.2d 1433, 1435 (10th Cir. 1986).

In support of its motion for summary judgment, the RTC claims that under the D'Oench, Duhme doctrine (see D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942)) and various federal statutes applicable to the RTC (and the Federal Deposit Insurance Corporation) that the debtor's complaint must fail as a matter of law. The Court agrees.

Viewing the RTC's motion in the light most favorable to the debtor, assuming therefore that Pioneer committed the wrongful acts alleged, those acts cannot be imputed to the RTC. The allegedly coerced purchase occurred before Pioneer went into receivership. Although the alleged coercion resulted in the debtor's predecessor's agreement to purchase the apartment complex, the alleged acts of Pioneer's CEO were not memorialized in any written agreement. Pursuant to 12 U.S.C.A. §§1441(b)(4)(A) and 1823(e), statements or agreements that are not in writing cannot be used in a suit against the RTC as receiver. See In re CTS Truss, Inc., 868 F.2d 146 (5th Cir. 1989).

If true, the debtor's allegations would indicate Pioneer engaged in a probably illegal tying arrangement, but arguably the debtor would not be the aggrieved party since it did not exist until one year after the arrangement was carried out. Tying agreements that are not in writing fall within the D'Oench, Duhme doctrine. Newton v. Uniwest Fin. Corp., 967 F.2d 340 (9th Cir. 1992).

As a further defense, the RTC argues the debtor's claims are barred by a four-year statute of limitations on suits seeking damages based on illegal tying agreements. The statute of limitations defense is inapposite, however, because the debtor's complaint is really a defense to the RTC's claim, and seeks to subordinate it to the claims of other creditors, not to recover damages for the debtor. Statutes of limitation do not bar such relief. See e.g., Distribution Services, Ltd., v. Eddie Parker Interests, Inc., 897 F.2d 811, 812 (5th Cir. 1990) (defense that accrues from same contract or transaction as plaintiff's claim and would reduce plaintiff's claim is not barred by limitations even though affirmative action by defendant is barred).

The debtor contends that the RTC cannot be a holder in due course of Pioneer's claim against the debtor because the note on which the claim is based does not satisfy the Uniform Commercial Code's definition of a negotiable instrument. The UCC is state law, though, and federal law, which takes precedence over state law, makes the RTC a holder in due course in this situation. See Gunter v. Hutcheson, 674 F.2d 862 (11th Cir. 1982); RTC v. Davies, 824 F.Supp. 1002 (D.Kan. 1993).

For these reasons, the Court will enter summary judgment in favor of the RTC.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of March, 1995.











__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE



IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS









In Re: )

)

TIFFANY GARDENS PARTNERS, L.P., ) NO. 93-40413-11

) CHAPTER 11

DEBTOR(S). )

)

TIFFANY GARDENS PARTNERS, L.P., )

)

PLAINTIFF(S), )

v. ) ADV. NO. 93-7056

)

RESOLUTION TRUST CORPORATION )

AS RECEIVER FOR PIONEER )

SAVINGS AND LOAN ASSOCIATION, )

)

DEFENDANT(S). )

)

RESOLUTION TRUST CORPORATION )

AS RECEIVER FOR PIONEER )

FEDERAL SAVINGS AND )

LOAN ASSOCIATION, )

)

INTERVENOR-DEFENDANT. )

JUDGMENT

The debtor filed this adversary proceeding to ask the Court to subordinate the claim of the Resolution Trust Corporation (RTC) to the claims of the debtor's other creditors. The RTC filed a motion for summary judgment, seeking denial of the relief sought. The debtor was represented by counsel Donald E. Bucher of Moore, Bucher & Morrison of Kansas City, Missouri. The RTC was represented by counsel Robert L. Hamann of Hamann & South of Overland Park, Kansas.

The Court has issued its Ruling on Summary Judgment Motion. For the reasons stated therein, judgment is hereby entered denying the relief sought by the debtor in its complaint.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of March, 1995.















_______________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

1. 1The RTC apparently transferred many of Pioneer's assets, including the debtor's loan, to a new entity called Pioneer Federal Savings and Loan Association, and was or became the receiver for that entity as well. These facts, however, have no impact on the issues presented, and for purposes of this decision, the Court will refer to the RTC in all its capacities simply as the receiver for Pioneer.

 

Search by Case Name
Search by Case Number
Search by Keyword