Cases 2013-14
Greater Midwest Builders, Ltd. v. FDIC
2002 Irrevocable Trust for Richard C. Hvizdak v. Huntington National Bank
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 Article: Greater Midwest Builders, Ltd. v. FDIC Published in: Cases 2013-14 Link: http://localhost:82/content/tfb/legalcases/LC2014_43.htm?l1=Trade+Finance&l2=Legal+Case+Summaries&l3=Cases+2013-14
No. 2:11-CV-4225-FJG, 2013 WL 5435531 (W.D. Mo. Sept. 27, 2013); No. 2:11-CV-4225-FJG, 2013 WL 1969647 (W.D. Mo. May 13, 2013) [USA]
Topics: Repudiation; FIRREA; FDIC Bank Receivership
Prior History: Greater Midwest Builders, Ltd. v. FDIC, No. 2:11-CV-4225-FJG, 2012 WL 6146634 (W.D. Mo. Dec. 11, 2012) noted in 2013 ANNUAL REVIEW OF INTERNATIONAL BANKING LAW & PRACTICE at 402.
Note: To assure completion of residential improvements, Greater Midwest Builders, Ltd. (Builder/Applicant) obtained three standby LCs issued by Premier Bank (Issuer) in favor of the City of Wildwood, Missouri (Local Municipality/ Beneficiary). Subsequently, Issuer was placed in receivership and the U.S. Federal Deposit Insurance Corporation (Receiver) was appointed to administer its assets. Builder/Applicant defaulted on the repayment of loans made to it. Receiver then sent Builder/Applicant notices of repudiation of the three standbys and of default on the loans. The loans were guaranteed by Paul Campbell and Sarajane Campbell.
Builder/Applicant then filed a claim with Receiver, alleging damages and setoff due to the repudiations. This claim was disallowed, and Receiver sold its rights against Builder/Applicant to a third party, CADC/RADC Venture 2011-1, L.L.C. (Assignee). Builder/Applicant sued Receiver and Assignee for damages and setoff due to the repudiation, alleging that the repudiation of the standbys caused default of its obligations to Local Municipality/Beneficiary and rendered it impossible for it to meet its obligation to the Local Municipality/Beneficiary or to complete the project. Assignee counterclaimed against Builder/Applicant, and filed a third-party complaint against Builder/Applicant's guarantors, in particular, Sarajane Campbell (Guarantor). Receiver moved for summary judgment which the U.S. District Court for the Western District of Missouri, Gaitan, J., granted.
Assignee also moved for summary judgment on its counterclaim against Builder/Applicant, its third-party complaint against Guarantor, and Builder/ Applicant's claims against Assignee. The Judge granted Assignee's motion for summary judgment as to the counterclaim, third-party complaint, and Builder/Applicant's claim for setoff. However, the Judge did not make a monetary award of damages because Assignee did not request that a damages award be entered in its motion for summary judgment.
Subsequently, Assignee moved the same court to alter or amend the judgment to include damages, and Guarantor moved for reconsideration and to alter or amend the judgment. In its judgment of 13 May 2013, the Judge directed Assignee to file a motion for summary judgment on its request for damages along with a schedule for briefing and denied Guarantor's motion for reconsideration and to alter or amend the judgment.
In its motion to alter or amend the judgment, Assignee argued that the amounts at issue were straightforward calculations and uncontroverted. In response, Builder/Applicant and Guarantor argued that Assignee should not now be granted a damages award after it failed to include one in its motion for summary judgment. The Judge believed that the briefing associated with a motion for summary judgment provided the best opportunity for the parties to present their cases.
As for the motion for reconsideration and alter or amend judgment, Guarantor argued that under Frontenac Bank v. T.R. Hughes, Inc., No. ED 97499, 2012 WL 4486312 (Mo. Ct. App. Sept. 25, 2012), there was a significant change in Missouri law since the case considered whether a spouse's personal guaranty fell within the Missouri's tenancy by the entireties law. However, the Judge disagreed, finding that the Frontenac Bank decision was based on prior case law and therefore did not represent a significant change in the law.
In the judgment of 27 September 2013, the Judge granted Assignee's motion for summary judgment as to damages. Assignee argued that there was no genuine issue of material fact related to the question of whether the loans were defaulted on, were guaranteed by Guarantor, and had been properly transferred to Assignee. The Judge agreed, but disagreed with the requested damage calculation, requesting additional briefing to determine the amount of damages.
[MJB]
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