JAMES O. BROWNING, District Judge.
The parties do not contest the facts.
The Mortgage was recorded on April 27, 2006, as Document No. 600003210 at Book 458, Page 1559 of the Records of Curry County. See Memorandum ¶ 3, at 2-3 (setting forth this fact); Complaint ¶ 12, at 3-4 (setting forth this fact); Mortgage at 1-2, filed Aug. 11, 2011 (Doc. 1-3) (noting the filing date and time on the top of each page); Lockhaven Estates/V. Garcia Answer ¶ 3, at 1 (admitting this fact); Ellis Affidavit ¶ 4, at 2-3. The street addresses corresponding to the individual lots (the "Properties") within the Property are as follows:
Subdivision Addition Name Block No. Lot No. Address Lockhaven Estates Unit 1 4 1 3909 Madison Road Lockhaven Estates Unit 1 4 2 3905 Madison Road Lockhaven Estates Unit 1 4 3 3901 Madison Road Lockhaven Estates Unit 1 4 4 3833 Madison Road Lockhaven Estates Unit 1 4 5 3829 Madison Road Lockhaven Estates Unit 1 4 6 3825 Madison Road Lockhaven Estates Unit 1 4 7 3821 Madison Road Lockhaven Estates Unit 1 4 8 3817 Madison Road Lockhaven Estates Unit 1 4 9 3813 Madison Road
Lockhaven Estates Unit 1 4 Retention 3805 Madison Road pond Lockhaven Estates Unit 1 5 1 3801 Lockhaven Drive Lockhaven Estates Unit 1 5 2 3805 Lockhaven Drive Lockhaven Estates Unit 1 5 3 3809 Lockhaven Drive Lockhaven Estates Unit 1 5 4 3813 Lockhaven Drive Lockhaven Estates Unit 1 5 5 3817 Lockhaven Drive Lockhaven Estates Unit 1 5 6 3821 Lockhaven Drive Lockhaven Estates Unit 1 5 7 3825 Lockhaven Drive Lockhaven Estates Unit 1 5 8 3829 Lockhaven Drive Lockhaven Estates Unit 1 5 9 3621 Weston Lockhaven Estates Unit 1 5 10 3631 Weston Lockhaven Estates Unit 1 5 11 3828 Madison Road Lockhaven Estates Unit 1 5 12 3824 Madison Road Lockhaven Estates Unit 1 5 13 3820 Madison Road Lockhaven Estates Unit 1 5 14 3816 Madison Road Lockhaven Estates Unit 1 5 15 3812 Madison Road Lockhaven Estates Unit 1 5 16 3808 Madison Road Lockhaven Estates Unit 1 5 17 3804 Madison Road Lockhaven Estates Unit 1 5 18 3800 Madison Road Lockhaven Estates Unit 1 6 1 3801 Buchanan Court Lockhaven Estates Unit 1 6 2 3805 Buchanan Court Lockhaven Estates Unit 1 6 3 3809 Buchanan Court Lockhaven Estates Unit 1 6 4 3813 Buchanan Court Lockhaven Estates Unit 1 6 5 3817 Buchanan Court Lockhaven Estates Unit 1 6 6 3821 Buchanan Court Lockhaven Estates Unit 1 6 7 3825 Buchanan Court Lockhaven Estates Unit 1 6 8 3829 Buchanan Court Lockhaven Estates Unit 1 6 9 3833 Buchanan Court Lockhaven Estates Unit 1 6 10 3832 Lockhaven Drive Lockhaven Estates Unit 1 6 11 3828 Lockhaven Drive Lockhaven Estates Unit 1 6 12 3824 Lockhaven Drive Lockhaven Estates Unit 1 6 13 3820 Lockhaven Drive Lockhaven Estates Unit 1 6 14 3816 Lockhaven Drive Lockhaven Estates Unit 1 6 15 3812 Lockhaven Drive Lockhaven Estates Unit 1 6 16 3808 Lockhaven Drive Lockhaven Estates Unit 1 6 17 3804 Lockhaven Drive Lockhaven Estates Unit 1 6 18 3800 Lockhaven Drive Lockhaven Estates Unit 1 7 1 3800 Buchanan Court Lockhaven Estates Unit 1 7 2 3804 Buchanan Court Lockhaven Estates Unit 1 7 3 3808 Buchanan Court Lockhaven Estates Unit 1 7 4 3812 Buchanan Court Lockhaven Estates Unit 1 7 5 3816 Buchanan Court Lockhaven Estates Unit 1 7 6 3820 Buchanan Court Lockhaven Estates Unit 1 7 7 3824 Buchanan Court Lockhaven Estates Unit 1 7 8 3828 Buchanan Court Lockhaven Estates Unit 1 7 9 3832 Buchanan Court Lockhaven Estates Unit 1 8 1 3520 Weston Lockhaven Estates Unit 1 8 2 3524 Weston
Lockhaven Estates Unit 1 8 3 3528 Weston Lockhaven Estates Unit 1 8 4 3600 Weston Lockhaven Estates Unit 1 8 5 3604 Weston Lockhaven Estates Unit 1 8 6 3608 Weston Lockhaven Estates Unit 1 8 7 3612 Weston Lockhaven Estates Unit 1 8 8 3616 Weston Lockhaven Estates Unit 1 8 9 3620 Weston Lockhaven Estates Unit 1 8 10 3624 Weston Lockhaven Estates Unit 1 8 11 3628 Weston Lockhaven Estates Unit 1 8 12 3632 Weston Pierce Addition Unit 2 1 5 3220 Weston Pierce Addition Unit 2 1 6 3224 Weston Pierce Addition Unit 2 1 7 3228 Weston Pierce Addition Unit 2 1 8 3232 Weston Pierce Addition Unit 2 1 9 3236 Weston Pierce Addition Unit 2 1 10 3240 Weston Pierce Addition Unit 2 1 11 3244 Weston Pierce Addition Unit 2 1 12 3300 Weston Pierce Addition Unit 2 1 13 3304 Weston Pierce Addition Unit 2 1 14 3308 Weston Pierce Addition Unit 2 1 15 3312 Weston Pierce Addition Unit 2 1 16 313 Uvaldy Pierce Addition Unit 2 1 17 301 Uvaldy Pierce Addition Unit 2 2 8 3412 Weston Pierce Addition Unit 2 2 9 3416 Weston Pierce Addition Unit 2 2 10 3420 Weston Pierce Addition Unit 2 2 11 3424 Weston Pierce Addition Unit 2 2 12 3428 Weston Pierce Addition Unit 2 2 13 3432 Weston Pierce Addition Unit 2 3 1 3301 Weston Pierce Addition Unit 2 3 2 3305 Weston Pierce Addition Unit 2 3 3 3309 Weston Pierce Addition Unit 2 3 4 3313 Weston Pierce Addition Unit 2 3 5 3401 Weston Pierce Addition Unit 2 3 6 3405 Weston Pierce Addition Unit 2 3 7 3409 Weston Pierce Addition Unit 2 3 8 3413 Weston Pierce Addition Unit 2 3 9 3417 Weston Pierce Addition Unit 2 3 10 3421 Weston Pierce Addition Unit 2 3 11 3425 Weston Pierce Addition Unit 2 3 12 3429 Weston Pierce Addition Unit 2 3 13 3433 Weston Pierce Addition Unit 2 3 14 3501 Weston Pierce Addition Unit 2 3 15 3505 Weston Pierce Addition Unit 2 3 16 3509 Weston Pierce Addition Unit 2 3 17 3436 Vinton Pierce Addition Unit 2 3 18 3432 Vinton Pierce Addition Unit 2 3 19 3428 Vinton Pierce Addition Unit 2 3 20 3424 Vinton Pierce Addition Unit 2 3 21 3420 Vinton
Pierce Addition Unit 2 3 22 3416 Vinton Pierce Addition Unit 2 3 23 3412 Vinton Pierce Addition Unit 2 3 24 3408 Vinton Pierce Addition Unit 2 3 25 3404 Vinton Pierce Addition Unit 2 3 26 3400 Vinton Pierce Addition Unit 2 3 27 200 Uvaldy Pierce Addition Unit 2 4 5 3221 Weston Pierce Addition Unit 2 4 6 3225 Weston Pierce Addition Unit 2 4 7 3229 Weston Pierce Addition Unit 2 4 8 3233 Weston Pierce Addition Unit 2 4 9 3237 Weston Pierce Addition Unit 2 4 10 3241 Weston Pierce Addition Unit 2 6 6 3405 Vinton Pierce Addition Unit 2 6 7 3409 Vinton Pierce Addition Unit 2 6 8 3413 Vinton Pierce Addition Unit 2 6 9 3417 Vinton Pierce Addition Unit 2 6 10 3421 Vinton Pierce Addition Unit 2 6 11 3425 Vinton Pierce Addition Unit 2 6 12 3429 Vinton Pierce Addition Unit 2 10 2 3501 Vinton Pierce Addition Unit 2 11 1 301 Ventura Pierce Addition Unit 2 11 2 3517 Weston Pierce Addition Unit 2 12 1 3500 Weston Pierce Addition Unit 2 12 2 3504 Weston Pierce Addition Unit 2 12 3 3508 Weston Pierce Addition Unit 2 12 4 3512 Weston Pierce Addition Unit 2 12 5 3516 Weston
Memorandum ¶ 4, at 3-6 (setting forth this fact and the addresses); Complaint, ¶ 13, at 4-7 (setting forth this fact); Lockhaven Estates/V. Garcia Answer ¶ 3 (admitting these addresses correspond to the individual lots within the Property); Ellis Affidavit ¶ 5, at 3-6. As further security for payment of the Note, V. Garcia and M. Garcia executed an Unconditional Guaranty, guaranteeing payment of the Note and all indebtedness owed by Lockhaven Estates.
On August 22, 2008, the Office of the States Bank Commissioner's Division of Banking for the State of Kansas declared Columbian Bank insolvent after "a thorough investigation of [its] affairs and condition," and appointed the FDIC as receiver for Columbian Bank. Declaration of Insolvency and Tender of Receivership at 1, filed Mar. 26, 2012 (Doc. 35-1). The FDIC is thus the owner and holder of the Note and Mortgage, and all related loan and security documents. See Memorandum ¶ 6, at 7 (setting forth this fact) Ellis Affidavit ¶ 7, at 6; Declaration of Insolvency and Tender of Receivership; Letter from the FDIC to J. Thomas Thull, Bank Commissioner (dated August 22, 2008), filed Mar. 26, 2012 (Doc. 35-2)("Acceptance of Appointment as Receiver").
The relevant portions of the Loan Agreement, Note, Mortgage, and Unconditional Guaranty (collectively the "Loan Documents") provide in pertinent part:
Loan Agreement at 1-14. The Note provides in pertinent part:
Note at 1-2. The Mortgage provides in pertinent part:
Mortgage at 1, 6. The Unconditional Guaranty provides in pertinent part:
Unconditional Guaranty at 1, 3.
The Note has matured and all unpaid principal and interest is now due and payable. See Memorandum ¶ 7, at 7 (setting forth this fact); Complaint ¶ 16, at 7 (setting forth this fact); Ellis Affidavit ¶ 8, at 6. All necessary demand for the FDIC's recovery has been performed or has occurred.
The FDIC has employed attorneys to collect the amounts due on the Note, and to institute and prosecute this foreclosure suit, and has incurred an obligation for attorney's fees that Lockhaven Estates must, in accordance with the terms of the Note and Mortgage, pay. See Memorandum ¶ 9, at 7 (setting forth this fact); Note at 6; Mortgage ¶ 1.4, at 2; Ellis Affidavit ¶ 10, at 6. The Mortgage provides that if it is foreclosed the redemption period shall be one month in lieu of nine months. See Memorandum ¶ 10, at 7 (setting forth this fact); Complaint ¶ 21, at 8 (setting forth this fact); Lockhaven Estates/V. Garcia Answer ¶ 3, at 1 (admitting this fact); Mortgage at 6; Ellis Affidavit ¶ 11, at 7. As of August 5, 2011, the amounts due and owing on the Note are the principal amount of $1,800,000.00, plus outstanding interest due in the amount of $672,197.50, plus default rate adjustment of $403,312.50, and accruing thereafter at the rate of $900.00 per day, plus late charges of $123,356.25, plus title report fee of $537.81, plus other necessary costs, plus attorney's fees and costs incurred in connection with this foreclosure action. See Memorandum ¶ 7, at 7 (setting forth this fact); Ellis Affidavit ¶ 12, at 7. The City of Clovis, New Mexico, has assessed those
On August 11, 2011, the FDIC filed its Complaint for Foreclosure against Lockhaven Estates, V. Garcia, M. Garcia, as well as against LNV Corp. and Defendant Kurt Lambert. See Doc. 1 ("Complaint"). The FDIC filed this foreclosure action seeking multiple forms of relief, including: (i) judgment against Lockhaven Estates, V. Garcia, and M. Garcia, for the principal amount of the of $1,800,000.00, plus outstanding interest due on the Note in the amount of $672,197.50 through August 5, 2011, plus default interest in the amount of $403,312.50 through August 5, 2011, and accruing thereafter at the rate of $900.00 per day, plus late charges of $123,356.25, plus title report fee of $537.81, plus other necessary costs, plus attorney's fees and costs incurred in connection with this foreclosure action; (ii) that the FDIC be declared to have a first, prior, and paramount lien in and to the Property as against any and all right, title and interest of the Defendants and any party who may intervene or be joined as a Defendant; and (iii) that the lien of the Mortgage be foreclosed and the Properties securing the same be sold according to the law and practice of this Court; that the proceeds from the sale be applied first to the costs of sale; second, to the monies advanced by the FDIC to preserve and protect its interest; third, to the FDIC's Judgment as set forth above; fourth, to any junior liens recognized by the Court and prioritized according to law; and the balance, if any, as determined by the Court. See Complaint ¶¶ A, B, C, at 9. All of the Defendants filed an answer to the Complaint, denying one or more of the FDIC's allegations, except for Lambert. See LNV Corporation's Answer to Complaint; Lockhaven Estates/V. Garcia Answer; M. Garcia Answer. M. Garcia's Answer is verified, while Lockhaven Estates' and V. Garcia's Answer is not. See M. Garcia Answer at 4, compare Lockhaven Estates/V. Garcia Answer at 5. On December 13, 2011, the FDIC moved for default judgment against Lambert, as he had not filed an answer to the Complaint. See FDIC/Receiver's Motion for Default Judgment Against Kurt Lambert. See (Doc. 17). On December 14, 2011, the Clerk of the Court entered the Default of Lambert. See Clerk's Entry of Default, filed Dec. 14, 2011 (Doc. 20).
The FDIC now moves for default judgment and/or summary judgment, pursuant
The FDIC asserts that "[t]here are no disputed material facts as to FDIC/Receiver's entitlement to recovery under said promissory note and FDIC/Receiver's entitlement to recovery under said promissory note and FDIC/Receiver's entitlement to the same." Memorandum at 1. The FDIC contends that summary judgment is also appropriate as to LNV Corp.'s junior interest in the subject property, and that default judgment pursuant to rule 55 is appropriate as to defaulting Lambert. See Memorandum at 1-2. The FDIC asserts that actions such as this one to collect on promissory notes "are among the most suitable classes of cases for summary judgment." Memorandum at 8 (citing Fed. Sav. and Loan Ins. Corp. v. Wilson, 722 F.Supp. 306, 309 (N.D.Tex.1989)). The FDIC contends: "To establish a prima facie case for summary judgment in such a case, the plaintiff must establish that the obligor executed and delivered the note, the plaintiff is the holder of the note, the note is due and payable, and the obligor failed to pay the amount due." Memorandum at 8-9 (citing Fed. Sav. and Loan Ins. Corp. v. Wilson, 722 F.Supp. at 309; N.M.S.A.1978, § 55-3-308). The FDIC argues that "governing federal law renders immaterial any facts proffered by Defendants in support of their defenses which, as a matter of law, cannot be asserted against the FDIC as Receiver for a failed financial institution." Memorandum at 9. The FDIC asserts that these defenses fail, because: (i) the terms of the loan documents do not provide for the obligations — i.e., failure to provide default notice, unclean hands as the FDIC is not a holder in due course — that the Defendants assert as defenses to foreclosure; (ii) any defenses that are counterclaims against Columbian Bank "are required under 12
The FDIC argues that the Defendants' defenses — that Columbian Bank breached the Loan Agreement by failing to timely and fully fund the loan, that Columbian Bank agreed to modify the loan, and that Columbian Bank agreed not to foreclose — fail, because the Loan Documents contradict these assertions. See Memorandum at 11. The FDIC asserts that the principal sum stated in the Note, the principal amount loaned under the Note, has been fully advanced and funded, that no agreement to modify the loan documents exists, and that the Loan Agreement's merger clause bars any agreements not on the face of the Loan Documents. See Memorandum at 15. The FDIC contends that the Loan Agreement provides that, if the loan is not timely paid, or if any other event constituting default occurs, the lender may accelerate the Note and declare it immediately due and payable without notice. See Memorandum at 12. To the extent that notice of default was "arguably required," the FDIC asserts that "notice of default and an opportunity to cure was given to the borrower and guarantors prior to this suit being filed." Memorandum at 12 (citing Ellis Affidavit ¶ 9, at 6).
The FDIC argues that summary judgment is appropriate as to the Defendants' assertions that Columbian Bank breached the Loan Agreement and that they were damaged as a result, because these claims constitute an improper claim against a bank receivership for which the Defendants have not exhausted their administrative remedies. See Memorandum at 16. The FDIC notes that Congress, in enacting FIRREA, provided:
Memorandum at 17 (12 U.S.C. § 1821(d)(13)(D)). The FDIC asserts that, because Lockhaven Estates and V. Garcia have not submitted claims to the FDIC for Columbian Bank's alleged breach of the Loan Agreement, the Court lacks subject matter jurisdiction over such claims. See Memorandum at 17 (citing Ellis Affidavit ¶ 13, at 7). The FDIC contends that "[t]he appropriate remedy for failure to comply with the administrative claims process is dismissal of judicial claims by the court." Memorandum at 17 (citing Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103, 106 (10th Cir.1991)).
The FDIC argues that the Defendants' defense that the FDIC is "equitably estopped" from foreclosing on the loan is barred by 12 U.S.C. § 1821(j) of FIRREA, which deprives courts of jurisdiction to grant any form of equitable relief against the FDIC in its role as receiver. Memorandum at 18 (quoting 12 U.S.C. § 1821(j)). The FDIC asserts that, because the Loan Documents for this loan and federal law prohibit enforcement of an unwritten agreement to extend or renew credit, the Defendants' assertion that the FDIC cannot foreclose on the loan, because there was an unwritten agreement in which Columbian Bank obligated itself to extend the term of the Note, to forebear from seeking foreclosure, or to release any defendant from liability, fails as the Defendants
Memorandum at 19. The FDIC asserts that "Section 1823(e) operates to bar both defenses and affirmative claims for relief.... [and that] [t]here is no equitable exception to the doctrine." Memorandum at 20 (citing Torke v. Fed. Deposit Ins. Corp., 761 F.Supp. 754, 756 (D.Colo.1991); Armstrong v. Resolution Trust Corp., 234 Ill.App.3d 162, 175 Ill.Dec. 195, 599 N.E.2d 1209, 1219 (1992), aff'd, 157 Ill.2d 49, 191 Ill.Dec. 46, 623 N.E.2d 291 (1993)). In response to Lockhaven Estates' and V. Garcia's contention that the FDIC is not a holder in due course, or a legal holder or owner of the Note and the Mortgage, the FDIC points to 12 U.S.C. § 1821(d)(2)(A)(i), which provides that the FDIC as receiver "shall, ... by operation of law, succeed to all rights, titles, powers, and privileges of the insured depository institution...." 12 U.S.C. § 1821(d)(2)(A)(i). The FDIC argues that, because the alleged side agreements that underlie the Defendants' contention that Columbian Bank agreed to modify the Loan Agreement and other Loan Documents are not in writing and the Columbian Bank Board of Directors did not approve alleged agreement, they fail to meet the requirements set forth in 12 U.S.C. § 1823(e) and are thus unenforceable against the FDIC. See Memorandum at 21. The FDIC asserts that, to avoid summary judgment on any of these alleged modifications to the Loan Agreement or other Loan Documents, the burden is on the Defendants to produce the document evidencing the alleged agreement. See Memorandum at 22 (citing Fed. Sav. and Loan Ins. Corp. v. Gemini Mgt., 921 F.2d 241, 243 (9th Cir.1990)).
In response to Lockhaven Estates' and V. Garcia's defense that Columbian Bank did not timely and fully fund the loan, the FDIC argues that "Courts construing claims and defenses based on such irregular alleged agreements to fund or extend by a failed financial institution uniformly enter and uphold summary judgment in favor of the bank receiver as against such claims or defenses." Memorandum at 23-24 (citing Resolution Trust Corp. v. Daddona, 9 F.3d 312, 317 (3d Cir.1993) (affirming the grant of summary judgment in favor of the plaintiff where bank letters referencing "initial" advances and "interim" funding were found insufficient to infer an obligation to make future loan advances for purposes of § 1823(e)); Fed. Sav. and Loan Ins. Corp. v. Two Rivers Assocs., Inc., 880 F.2d 1267 (11th Cir.1989) (affirming the district court's grant of summary judgment in favor of the plaintiff because, although the loan documents provided that the borrowers' agreement was "expressly conditioned on [the bank's] agreement to provide [] further funding... [,]" the loan documents did not evidence the bank's agreement to provide the funding); Mainland Sav. Ass'n v. Riverfront Assocs., Ltd., 872 F.2d 955, 956 (10th Cir.1989) (affirming summary judgment for the plaintiff, because the doctrine underlying 12 U.S.C. § 2183(e) barred assertion of the alleged oral agreement of the bank to fund a second loan)). The FDIC concludes by asserting:
Memorandum at 24.
On April 10, 2012, M. Garcia filed M. Garcia's Response, asserting: "Plaintiff's contention that since the terms of the Loan Agreement, Note and Mortgage did not provide for the obligations Defendant seeks to impose on the FIDC receiver that her Affirmative Defenses should not stand is incorrect." M. Garcia's Response at 2. M. Garcia contends that "[s]he is simply claiming that she executed the Guarantee based upon misrepresentations made at closing.... [and] that she should not be held liable as a Guarantor for any deficiency judgment." M. Garcia's Response at 2. M. Garcia states:
M. Garcia's Response at 3.
On April 24, 2012, the FDIC filed its FDIC/Receiver's Reply to Defendant Maria P. Garcia's Response to Plaintiff's Motion for Summary Judgment. See Doc. 38 ("Reply"). The FDIC asserts that M. Garcia's Response "demonstrates that summary judgment is appropriate to her.... [because] she presents no competent evidence of any material facts precluding summary judgment against her on her guaranty of the underlying obligation made the subject of this foreclosure action." Reply at 1. The FDIC points out that M. Garcia does not dispute any of the facts that it asserted in its Memorandum, except as to paragraph five, regarding the circumstances of her execution of the Unconditional Guaranty, and paragraph eight, regarding service of notice of default. See Reply at 1. The FDIC asserts: "Other than these two defenses, Maria Garcia does not attempt to support any other defense to the FDIC's case against her.... includ[ing] her assertion in her Answer of the homestead exemption, which is inapplicable to consensual mortgage liens." Reply at 2 (citing N.M.S.A. 1978, § 42-10-11; In re Yparrea, 16 B.R. 33, 34 n. 1 (Bankr.D.N.M.1981)). The FDIC argues:
Reply at 2. The FDIC points out that she asserts this defense in her answer as an equitable defense and that 12 U.S.C. § 1821(j) bars such defenses in actions where the FDIC is acting as a receiver. See Reply at 2 (quoting M. Garcia Answer). The FDIC contends that M. Garcia's "attempt to avoid liability under the Unconditional Guaranty because of her alleged misunderstanding of the documents or alleged misrepresentation made at closing is exactly the type of unwritten condition that is absolutely prohibited from being asserted against the FDIC under § 1823(e)." Reply at 2-3 (citing Resolution Trust Corp. v. Midwest Fed. Sav. Bank of Minot, 4 F.3d 1490, 1497-1502 (9th Cir.1993); Fed. Sav. & Loan Ins. Corp. v. Murray, 853 F.2d 1251, 1255 (5th Cir.1988)).
The FDIC asserts that, regardless whether FIRREA bars M. Garcia's defenses,
On July 16, 2012, M. Garcia filed notice of her Chapter 7 bankruptcy filing. See Notice of Filing of Bankruptcy (Doc. 55). Pursuant to the Court's request for the Parties' position on the breadth and scope of the Bankruptcy Court's automatic stay, all parties agreed that M. Garcia's bankruptcy filing caused the proceeding to be stayed as to her, but not as to any of the other Defendants. See Facsimile Transmission from William C. Salmon to the Court, dated July 30, 2012, filed July 30, 2012 (Doc. 58)("I represent Maria P. Garcia and I do not believe the Bankruptcy Stay applies to other Defendants and only applies to the debtor and I confirmed this with her bankruptcy attorney Steve Sessions."); Letter from Steven D. Ingram to the Court, dated July 30, 2012, filed July 30, 2012 (Doc. 59)(same position); Letter from Vincent J. Garcia to the Court, dated July 31, 2012, filed July 31, 2012 (Doc. 60)(same position).
At the hearing, the Court noted that everyone was in agreement that, because there was a stay in the proceeding as to M. Garcia because she was also involved in her bankruptcy case, no action could be taken in the case regarding her, but no parties objected to proceeding with the hearing as to all other parties involved. See Tr. at 3:17-23 (Court). The FDIC began by pointing out that Lockhaven Estates, V. Garcia, and LNV Corp. had not filed responses, and asserted that there "hasn't been any genuine issue shown as to any material fact and ... the FDIC is entitled to judgment as a matter of law." Tr. at 5:23-6:4 (Ingram). It stated that, because the Defendants — except for M. Garcia — have failed to file a response in opposition to its Summary Judgment Motion, and because Lockhaven Estates is a limited liability that cannot appear without counsel, it would object to any arguments V. Garcia would raise at the hearing in response to its Summary Judgment Motion. See Tr. at 6:4-14 (Ingram). The FDIC asserted that it was the Defendants' burden to produce the written document that they alleged modified Columbian Bank Bank's obligations and rights under the loan, and "that has not occurred...." Tr. at 10:9-13 (Ingram). The FDIC noted that there had previously been a stipulated judgment entered in this case as part of failed settlement that has since been set
V. Garcia stated: "The main part of the discussion for myself and for Lockhaven is that Columbian Bank and Trust, the failed institution, breached several of its lending agreements." Tr. at 12:17-19 (V. Garcia). That the FDIC has not produced any evidence that a demand letter was sent to the obligor or the borrower, V. Garcia contended, is evidence that there existed an agreement, whether or not in the loan documents, that Columbian Bank would not accelerate the mortgage and demand payment, and would not foreclose on the mortgage. See Tr. at 12:22-13:7 (V. Garcia). V. Garcia stated that he was not aware that he was required to file a response in opposition to oppose the Court granting the Summary Judgment Motion, but if he had known that one was required, he would have submitted a response. See Tr. at 13:8-14 (V. Garcia). V. Garcia also asserted that his counsel, who had recently ceased representing him and Lockhaven Estates in this case, did not inform him of the requirement that he and Lockhaven Estates were required to exhaust their administrative remedies before asserting their counterclaims. See Tr. at 13:15-18 (V. Garcia). "Had prior counsel done so," he asserted, he would have filed the administrative claims as required. Tr. at 13:18-19 (V. Garcia). V. Garcia stated that there are material issues that the Court should hear in this case before entering judgment, "things that the bank was doing that we think were malfeasance and bad faith on their part," such as Columbian Bank requiring him and Lockhaven Estates to draw on another loan with Columbian Bank to make interest payments on this loan. See Tr. at 14:9-16 (V. Garcia). V. Garcia asserted: "[P]laintiff's counsel says that the FDIC must be able to rely on the books and records of a finance institution; however, the FDIC closed this bank specifically because it could not rely on their books and records. And [FDIC] can't argue both sides of that." Tr. at 14:17-21 (V. Garcia). V. Garcia stated that he also believes that the loan on which the FDIC is attempting to foreclose is cross-collateralized with another loan and that the holder of that loan is not named as a Defendant in this case. See Tr. at 14:23-15:1 (V. Garcia).
The Court asked V. Garcia whether he is still married to M. Garcia. See Tr. at 15:5-6 (Court). V. Garcia responded that they are no longer married and that their marriage settlement agreement likely also has an effect on any judgment entered regarding the loan. See Tr. at 15:7-17 (V. Garcia). The Court asked M. Garcia, although the case was stayed as to her, whether there was anything that she wished to say on the motion beyond her assertion that she should not be liable for any deficiency judgment arising out of the foreclosure. See Tr. at 17:6-14 (Court, Salmon). M. Garcia responded that the Court is correct and that, for the reasons stated in her response, she should not be found liable for any deficiency. See Tr. at 18:2-6 (Court). She stated that, in light of her bankruptcy proceedings, even if the Court grants the FDIC's Summary Judgment Motion, she believes that a lift of the stay as to her in this case will require an in rem proceeding against her and that she will not be liable for any personal deficiency judgment. See Tr. at 18:6-20 (Salmon, Court). M. Garcia stated that, if the stay is lifted, she opposes the FDIC's Summary Judgment Motion only to the extent that the Court would grant a deficiency
LNV Corp. stated that it "has assigned its ... junior mortgage on the property and no longer has an interest in the mortgage...." Tr. at 20:7-9 (Walker). LNV Corp. noted that it would file its position with the Court. See Tr. at 20:9-10 (Walker). It stated that it therefore did not take a position on the Summary Judgment Motion. See Tr. at 20:19-22 (Walker).
The Court asked the FDIC whether it agreed with M. Garcia's representations on how the Court could proceed as to any interest that M. Garcia may have in the property once the bankruptcy stay is lifted. See Tr. at 21:4-9 (Court). The FDIC stated that it agreed with M. Garcia's representations and that it had prepared a proposed order lifting the stay, which it had provided to M. Garcia's counsel in her bankruptcy case. See Tr. at 21:10-20 (Ingram). The FDIC, in response to the issues that V. Garcia raised during his argument, stated that, even though the loan documents do not require notice to the debtor or guarantor before foreclosure, the FDIC nevertheless attempted to provide notice, as evidenced by the notice letters it attached to its Summary Judgment Motions. See Tr. at 23:6-19 (Ingram). It asserted:
Tr. at 23:5-24:6 (Ingram).
The Court then advised V. Garcia that, although he did not file an opposition in response, his appearance at the hearing on the Summary Judgment Motion would suffice to state his objection for the record. See Tr. at 24:15-18 (Court). The Court also extended V. Garcia the opportunity to file pro se or with counsel a response, after the hearing, in opposition to the motion in writing. Because Lockhaven Estates is a limited liability company, however, the Court advised V. Garcia that it can defend against the FDIC's lawsuit only by and through counsel:
Tr. at 24:18-26:10 (Court).
On September 5, 2012, the FDIC filed the Notice of Entry of Order Lifting Bankruptcy Stay (Doc. 62)("Order Lifting Stay"), providing notice of an entry of a bankruptcy court Order lifting the bankruptcy stay as to M. Garcia. See Order Lifting Stay at 1. The FDIC states that it "is entitled to proceed with this matter in order to obtain in rem relief regarding Maria P. Garcia's interest, if any, in the property made the subject of this foreclosure action, along with all relief requested against the other Defendants herein." Order Lifting Stay at 1. See In re Garcia, Case No. 12-12458-j7, Stipulated Order for Relief from Stay for FDIC/Receiver (Bankr.D.N.M. Aug. 31, 2012), filed Sept. 5, 2012 (Doc. 62-1).
Rule 56(a) of the Federal Rules of Civil Procedure states: "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(a). The movant bears the initial burden of "show[ing] that there is an absence of evidence to support the nonmoving party's case." Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991) (internal quotation marks omitted). See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant meets this burden, rule 56 requires the non-moving party to designate specific facts showing that there is a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S. at 324, 106 S.Ct. 2548; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The party opposing a motion for summary judgment must "set forth specific facts showing that there is a genuine issue for trial as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990). See Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10th Cir. 1993) ("However, the nonmoving party may not rest on its pleadings but must set forth specific facts showing that there is a genuine issue for trial as to those dispositive matters for which it carries the burden of proof." (internal quotation marks omitted)). Rule 56(c)(1) provides: "A party asserting that a fact ... is genuinely disputed must support the assertion by .... citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." Fed. R.Civ.P. 56(c)(1). It is not enough for the party opposing a properly supported motion for summary judgment to "rest on mere allegations or denials of his [or her] pleadings." Anderson v. Liberty Lobby, Inc., 477 U.S. at 256, 106 S.Ct. 2505. See Abercrombie v. City of Catoosa, 896 F.2d 1228, 1231 (10th Cir.1990); Otteson v. United States, 622 F.2d 516, 519 (10th Cir.1980) ("However, `once a properly supported summary judgment motion is made, the opposing party may not rest on the allegations contained in his complaint, but must respond with specific facts showing the existence of a genuine factual issue to be tried.'" (citation omitted)). Nor can a party "avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation." Colony Nat'l Ins. Co. v. Omer, No. 07-2123, 2008 WL 2309005, at *1 (D.Kan. June 2, 2008) (citing Fed.R.Civ.P. 56(e); Argo v. Blue Cross & Blue Shield of
Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.1992) (internal quotations, citations, and alterations omitted)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). "In responding to a motion for summary judgment, `a party cannot rest on ignorance of facts, on speculation, or on suspicion and may not escape summary judgment in the mere hope that something will turn up at trial.'" Colony Nat'l Ins. Co. v. Omer, 2008 WL 2309005, at *1 (quoting Conaway v. Smith, 853 F.2d 789, 794 (10th Cir.1988)).
To deny a motion for summary judgment, genuine factual issues must exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. at 250, 106 S.Ct. 2505. A mere "scintilla" of evidence will not avoid summary judgment. Vitkus v. Beatrice Co., 11 F.3d at 1539 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, 106 S.Ct. 2505). Rather, there must be sufficient evidence on which the factfinder could reasonably find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 251, 106 S.Ct. 2505 (quoting Schuylkill & Dauphin Improvement Co. v. Munson, 81 U.S. 442, 448, 14 Wall. 442, 20 L.Ed. 867 (1871)); Vitkus v. Beatrice Co., 11 F.3d at 1539. "[T]here is no evidence for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable ... or is not significantly probative, ... summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. at 249, 106 S.Ct. 2505 (citations omitted). "[T]he substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, 106 S.Ct. 2505. Where a rational trier of fact, considering the record as a whole, could not find for the non-moving party, there is no genuine issue for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
When reviewing a motion for summary judgment, the court should keep in mind certain principles. First, the court's role is not to weigh the evidence, but to assess the threshold issue whether a genuine issue exists as to material facts requiring a trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 249, 106 S.Ct. 2505. Second, the ultimate standard of proof is relevant for purposes of ruling on a summary judgment, such that, when ruling on a summary judgment motion, the court must "bear in mind the actual quantum and quality of proof necessary to support liability." Anderson v. Liberty Lobby, Inc., 477 U.S. at 254, 106 S.Ct. 2505. Third, the court must resolve all reasonable inferences and doubts in favor of the non-moving party, and construe all evidence in
A promissory note executed in exchange for a loan, secured by a mortgage on real property, is a negotiable instrument. See Huntington Nat. Bank v. Sproul, 116 N.M. 254, 258 n. 2, 861 P.2d 935, 939 (1993) (holding that a commercial loan note executed by the plaintiff bank and the defendant was a negotiable instrument governed by the Uniform Commercial Code as enacted in Article 3, Chapter 55 of the New Mexico Statutes Annotated 1978); Bank of Am. v. Quintana, No. 30,354, 2012 WL 1252723, at *2 (N.M.Ct.App. Mar. 12, 2012) ("There is no dispute that the note signed by the [defendants] is a negotiable instrument.")(citing N.M.S.A. § 1978, § 55-3-104), cert. granted, 33,611, 2012 WL 5873504 (N.M. June 5, 2012).
Congress enacted FIRREA in 1989 to remedy the problems that it saw in the then-existing regulatory scheme in the savings and loan industry. See Meliezer v. Resolution Trust Co., 952 F.2d 879, 881 (5th Cir.1992). See, generally, H.R. Rep.
To ensure that the FDIC could deal expeditiously with the failed depository institutions, Congress enacted 12 U.S.C. § 1821, creating a new claims determination procedure by which persons asserting claims against a failed institution may be required to present their claims first to the FDIC as receiver of the failed institutions before pursuing a judicial remedy. See Meliezer v. Resolution Trust Co., 952 F.2d at 881 (5th Cir.1992) ("To assure that the... [FDIC] could deal expeditiously with failed depository institutions, Congress created a new ... procedure by which the creditors of a failed institution may be required to first present their claims to the Receiver for [] consideration before pursuing a judicial remedy."). 12 U.S.C. § 1821(d)(13)(D) provides:
12 U.S.C.A. § 1821(d)(13)(D). The Tenth Circuit has held that completion of the FDIC's administrative review process is a prerequisite to federal subject-matter jurisdiction over such claims: "When a failed financial institution is placed into FDIC receivership, claims against the institution must be submitted to the FDIC for administration determination. The claims process is a mandatory prerequisite to judicial review. Federal Courts may exercise jurisdiction only after a claimant has completed the administrative claims process." In re George Love Farming, LC, 420 Fed. Appx. 788, 791 (10th Cir.2011) (unpublished)
Section 212(j) of FIRREA, codified as amended at 12 U.S.C. § 1821(j), provides: "Except as provided in this section, no court may take any action, except at the request of the Board of Directors by regulation or order, to restrain or affect the exercise of powers or functions of the Corporation as a conservator or a receiver." This section has been construed uniformly to restrain courts' powers to grant equitable relief when the FDIC is acting pursuant to its statutorily prescribed powers. See, e.g., Lloyd v. FDIC, 22 F.3d 335, 336 (1st Cir.1994) (noting that, pursuant to 12 U.S.C. § 1821(j), "[a] district court lacks jurisdiction to enjoin the FDIC when the FDIC is acting pursuant to its statutory powers as receiver"); Ward v. Resolution Trust Corp., 996 F.2d 99, 102 (5th Cir.1993) ("[B]y virtue of § 1821(j) the courts lack the ability to enjoin actions that are within the statutory powers of the RTC as conservator or receiver.")(internal quotations omitted); Gross v. Bell Sav.
Freeman v. FDIC, 56 F.3d 1394, 1398 (D.C.Cir.1995) (citing H.R. Rep. 101-54 at 307, 1989 U.S.C.C.A.N. at 103). Because "[s]ection 1821(j) ... effect[s] a sweeping ouster of courts' power to grant equitable remedies to parties ... [a] district court [cannot] grant[] ... pleas for nonmonetary remedies, including injunctive relief, declaratory relief, and rescission of [a] promissory note." Freeman v. FDIC, 56 F.3d at 1399. Courts cannot restrain the FDIC's power acting as conservator or receiver of a failed bank "regardless of the likelihood of success on the merits of [the] underlying claims." Freeman v. FDIC, 56 F.3d at 1399.
FIRREA section 217, codified as amended at 12 U.S.C. § 1823, provides:
12 U.S.C.A. § 1823(e)(1). The Tenth Circuit noted that 12 U.S.C. § 1823(e) is the codification of the common-law doctrine the Supreme Court of the United States articulated in D'Oench Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), which "declared that the maker of a demand note is estopped from asserting as a defense against the FDIC the parties' `secret agreement' not to enforce the note." FDIC v. Oldenburg, 34 F.3d 1529, 1550 (10th Cir.1994) (quoting D'Oench Duhme & Co. v. FDIC, 315 U.S. at 460, 62 S.Ct. 676). The Tenth Circuit has recognized:
LNV Corp. admitted at the hearing, in accord with its Answer and the Mortgage, that its mortgage on the Properties made the subject of this foreclosure action is junior to the FDIC's lien on the Properties. See Tr. at 20:7-10 (Walker). The Court, therefore, finds that the FDIC/Receive has a first, prior, and paramount lien as against all the Defendants herein and to the Properties made the subject of this foreclosure action. The Court also finds that, because the FDIC has "shown by affidavit or otherwise" that Defendant Lambert has failed to plead or otherwise defend against the FDIC's suit, and because the Clerk of the Court has already entered its Entry of Default as to Lambert, it is entitled to default judgment against Lambert. Fed.R.Civ.P. 55(a). The Court, therefore, will grant default judgment in the FDIC's favor against Lambert, pursuant to rule 55 of the Federal Rules of Civil Procedure.
The undisputed facts establish that the FDIC is entitled to summary judgment as a matter of law against Lockhaven Estates, V. Garcia, and M. Garcia. The FDIC has established that it is entitled to enforce the Note and to foreclose on the Properties that the Mortgage secures. The affirmative defenses that Lockhaven Estates, V. Garcia, and M. Garcia raise in opposition to the FDIC's foreclosure action fail, because: (i) the Loan Documents' plain language precludes many of the defenses, (ii) the Court lacks jurisdiction to hear any defenses asking the Court to offset or decrease the judgment against Lockhaven Estates and V. Garcia, because of alleged damages that Columbian Bank caused them, as the Defendants have not exhausted their administrative remedies; (iii) certain defenses ask the Court to grant equitable relief, which the Court is precluded from granting in actions where the FDIC is acting pursuant to its statutory power as a receiver; or (iv) the defenses rest upon alleged agreements varying the terms of the loan, separate from the Loan Documents that the FDIC possesses, and Lockhaven Estates and V. Garcia fail to show that there is a genuine issue of material fact that any such alleged agreement exists. The Court will thus grant summary judgment in personam in the FDIC's favor against Lockhaven Estates, V. Garcia, and LNV Corp., and will grant summary judgment in rem in the FDIC's favor against M. Garcia.
"[A] cause of action against the maker of a promissory note is established if the plaintiff proves that: (1) plaintiff is the holder of the note on which [the plaintiff] sues; (2) defendant signed the note; (3) the note became due and payable; and (4) defendant has not paid the amount due and owing." Fed. Sav. and Loan Ins. Corp. v. Wilson, 722 F.Supp. at 309. See Enforcement of Instruments, N.M.S.A. 1978, Chapter 55, Article 3, Part 3. The Office of the State Bank Commissioner for the State of Kansas, on August 22, 2008, appointed the FDIC as receiver of Columbian Bank. See Declaration of Insolvency and Tender of Receivership at 1. On the same day, the FDIC accepted its appointment as receiver. See Acceptance of Appointment as Receiver at 1. First, the FDIC has thus established that it is owner and holder of the Note, the Mortgage, the Loan Agreement, and the Unconditional Guaranty, and having produced these documents to the Court, has therefore proved the first element required to show that it is entitled to judgment against Lockhaven Estates for the amount on the Note, and V. Garcia and M. Garcia for the same amount as guaranteed in the Unconditional Guaranty. See Note at 1; Mortgage at 1; Loan Agreement at 1; Unconditional Guaranty at 1. In regards to the second element, Lockhaven Estates, and V. Garcia as its managing member, signed the Note. See Note at 7. The loan matured, and the Note became due and payable on April 27, 2008. See Note at 1. The Unconditional Guaranty provides that the FDIC as owner and holder of the Note can "resort to Guarantor for full payment of all or any portion of the indebtedness" owing on the Note without first resorting to any others liable for the debt. Unconditional Guaranty ¶ 2(e), at 1. Lockhaven Estates, V. Garcia, and M. Garcia have failed to pay the amount due and owing. See Ellis Affidavit ¶ 12, at 7; Letter from the FDIC to Lockhaven Estates at 1; Letter from the FDIC to V. Garcia at 1; Letter from the FDIC to M. Garcia at 1. The FDIC, therefore, has made out a prima-facie case showing that it is entitled to judgment against Lockhaven Estates, V. Garcia, and M. Garcia for the principal amount of the Note, plus costs.
Lockhaven Estates and V. Garcia argue that Columbian Bank breached the Loan Agreement by failing to timely and fully fund the loan, and that Columbian Bank failed to comply with Loan Documents' terms and conditions for providing notice of default. See Lockhaven Estates/V. Garcia Answer ¶¶ 6, 9 at 2, 4. M. Garcia argues that she should be excused from her obligation as guarantor, because she was never served with notice of default, and because she "was induced to sign the loan documents[,] including the loan agreement and guaranty[,] without understanding what obligations where being guaranteed... and executed the guarantee based on misrepresentations that as spouse of
In regards to Lockhaven Estate's and V. Garcia's contention that Columbian Bank breached the Loan Agreement, or that the amount owing on the note is incorrect as Columbian Bank failed to timely and fully fund the loan, the Note, the Mortgage, and the Unconditional Guaranty — all executed on April 27, 2006 — state that the Borrower or Guarantor promised to pay and were executed in favor of Columbian Bank for "value received," "for consideration paid," and in exchange for "valuable consideration," respectively. Note at 1; Mortgage at 1; Unconditional Guaranty at 1. Absent from the record is any evidence disputing that the loan was funded timely and fully on April 27, 2006. There is no agreement to modify the Note, Mortgage, or Unconditional Guaranty on the face of the Loan Agreement, or anywhere else within the Loan Documents. Because the Lockhaven Estates' and V. Garcia's contention that the loan was not timely and fully funded is without evidentiary support in the record, the undisputed evidence therefore establishes as fact that the loan was timely and fully funded.
The plain language of the Loan Documents also precludes Lockhaven Estates', V. Garcia's, and M. Garcia's contention that they cannot be held liable for the amount owing on the loan because they were not provided with notice of default. The Loan Agreement provides that, "[o]n the occurrence of an Event of Default and after expiration of any applicable grace period, Lender may ... [d]eclare the Note and all other obligations owed Lender by Borrower immediately due and payable without notice...." Loan Agreement ¶ 7.2, at 11 (emphasis added). The Note provides: "Upon a default hereunder, Lender may, at its option, declare the entire unpaid principal balance of this Note, all accrued unpaid interest thereon and any other obligations arising in connection with the Loan immediately due and payable, without notice or demand, and Borrower will pay that amount...." Note at 2 (emphasis added). Similarly, the Unconditional Guaranty, in which V. Garcia and M. Garcia "absolutely, irrevocably, and unconditionally, jointly and severally, guarantee and promise to pay ... [Columbian Bank] any and all indebtedness owed by Lockhaven Estates," provides for Columbian Bank to hold V. Garcia and M. Garcia primarily liable for the amount of indebtedness, "[u]pon such terms and at such times as it deems best and without notice to Guarantor...." Unconditional Guaranty at 1 (emphasis added). None of the Defendants have provided competent evidence of a supplemental agreement or amendment that modifies this language in the Loan Documents. Because the record is without evidence that Columbian Bank was required to provide notice of default to Lockhaven Estates, V. Garcia, or M. Garcia, the FDIC has established that neither it nor Columbian Bank were required to provide written notice to Lockhaven Estates before taking action against it on its obligation in the Note, or before taking action against V. Garcia or M. Garcia on their guaranty of Lockhaven Estates' Note.
Lockhaven Estates and V. Garcia raise as an affirmative defense that
12 U.S.C.A. § 1821(d)(13)(D). As the United States Court of Appeals for the Ninth Circuit has stated: "[Section] 1821(d)(13)(D) divests courts of jurisdiction over both counterclaims and affirmative defenses asserted in response to a claim brought by the RTC until the appropriate administrative remedies are exhausted." Resolution Trust Corp. v. Midwest Fed. Sav. Bank of Minot, 36 F.3d at 792.
V. Garcia admits that neither he nor Lockhaven Estates filed a claim with the FDIC to review their allegations that they were damaged by Columbian Bank's actions regarding the loan. See Tr. at 13:18-19 (V. Garcia). Accord Ellis Affidavit ¶ 13, at 7. While V. Garcia stated at the hearing that he was unaware that he had to first exhaust his administrative remedies to seek review of them from the Court, and that had he known, he would have done so, see Tr. at 13:15-19 (V. Garcia), in the intervening five months since the hearing on this matter, as reflected in the Court's record and to the Court's knowledge, no Defendant in this lawsuit has filed a claim with the FDIC. To the extent that Lockhaven Estates and V. Garcia contend that they are entitled damages that "should be offset and credited against any amounts for which Lockhaven and/or Garcia are [] adjudicated liable in this action," Lockhaven Estates/V. Garcia Answer ¶ 7, at 2, or that their liabilities should otherwise be lessened because "Columbian and the FDIC failed to mitigate their losses by avoiding and prolonging attempts by Borrower to settle the loan," Lockhaven Estates/V. Garcia Answer ¶ 8, at 3, FIRREA precludes such an offset or credit. While an offset for damages may not be a "payment from" the FDIC's assets, the Court's determination that Lockhaven Estates and V. Garcia are entitled to damages, and that the damages should offset the amount that they owe on the loan, reduces the FDIC's assets. Lockhaven
Lockhaven Estates and V. Garcia argue that the Court should exercise its equitable power to deny the FDIC "the equitable remedy of foreclosure," because the FDIC comes to the Court with "unclean hands" and that "[t]he Complaint is barred by operation of the doctrine of laches." Lockhaven Estates/V. Garcia Answer ¶¶ 10, 11, 12, at 4. The FDIC contends that these "attempts to assert any equitable defenses or equitable right of relief against FDIC are barred by 12 U.S.C. § 1821(j) of FIRREA." Memorandum at 18. Section 1821(j) provides: "Except as provided in this section, no court may take any action, except at the request of the Board of Directors by regulation or order, to restrain or affect the exercise of powers or functions of the Corporation as a conservator or a receiver." As the Fifth Circuit has noted, "by virtue of § 1821(j) the courts lack the ability to enjoin actions that are within the statutory powers of the [FDIC] as conservator or receiver." Ward v. Resolution Trust Corp., 996 F.2d at 102 (internal quotations omitted). Thus, "[s]ection 1821(j) ... effect[s] a sweeping ouster of courts' power to grant equitable remedies to parties.... [A] district court [cannot] grant[] ... pleas for nonmonetary remedies, including injunctive relief, declaratory relief, and rescission of [a] promissory note." Freeman v. FDIC, 56 F.3d at 1399. Accord Glenborough N.M. Assocs. v. Resolution Trust Corp., 802 F.Supp. at 393 (citing to 12 U.S.C. § 1821 for the proposition that "[i]njunctive relief is specifically barred by FIRREA"); Hoxeng v. Topeka Broadcomm, Inc., 911 F.Supp. 1323 (D.Kan.1996) ("[E]quitable relief [the plaintiff seeks] ... ha[ve] been prohibited by Congress pursuant to 12 U.S.C. § 1821(j) ...")(quoting Pyramid Constr. Co. v. Wind River Petroleum, Inc., 866 F.Supp. 513, 517 (D.Utah 1994)). In light of the clearly established law that 12 U.S.C. § 1821(j) of FIRREA prevents the Court from providing a defendant equitable relief when the FDIC is acting pursuant to its powers as receiver for a failed depository institution, the Court is precluded from entertaining any of the equitable defenses that the Defendants raise "regardless of the likelihood of success on the merits of [the] underlying claims." Freeman v. FDIC, 56 F.3d at 1399.
M. Garcia's "conten[tion] that she should not be held liable as a Guarantor for any deficiency judgment," because "she executed the Guarantee [sic] based upon representations made at closing," Garcia's Response at 2, also fails, as it asks the Court to grant her the relief of equitable rescission. As a preliminary matter, the Court notes that rescission is not solely an equitable remedy; rescission may also be a legal remedy. Legal rescission is defined as "[r]escission that is effected by the legal agreement of the parties." Black's Law Dictionary 1421 (9th ed. 2009). As Professor Douglas Laycock has explained:
Douglas Laycock, Modern American Remedies 627-28 (3d. ed. 2002)(emphasis added). M. Garcia's request that the Court cancel the Unconditional Guaranty as to her because of her misunderstanding or a misrepresentation at closing is, as Professor Laycock recognizes, a request for the Court to grant equitable rescission. That M. Garcia requests equitable rescission is also revealed from her answer to the FDIC's Complaint, in which she "asserts equitable defenses as to Plaintiff's claims against her personally as she did not understand the documents or the loan transaction and only executed the same based on misrepresentation that as spouse of [V.] Garcia that her signature was required...." M. Garcia Answer ¶ 4, at 2.
Aside from § 1821(j)'s broad restriction on courts' abilities to grant equitable relief generally, courts have consistently applied § 1821(j) to bar claims for rescission specifically. See, e.g., Tri-State Hotels, Inc. v. FDIC, 79 F.3d 707, 715 (8th Cir.1996); Freeman v. FDIC, 56 F.3d at 1399; Ward v. Resolution Trust Corp., 996 F.2d at 103-04; United Liberty Life Ins. Co. v. Ryan, 985 F.2d 1320, 1329 (6th Cir.1993). In Tri-State Hotels, Inc. v. FDIC, the United States Court of Appeals for the Eighth Circuit held that § 1821(j) barred a plaintiff's claim against the FDIC for rescission of a loan agreement where it was established that the insolvent bank breached the agreement before going into receivership. See 79 F.3d at 710, 715. Here, as in Tri-State Hotels, Inc. v. FDIC, M. Garcia is contending that Columbian Bank breached the Loan Agreement and the Unconditional Guaranty by not providing her with notice of default. Even if the Court had not found above that it was not required to do so, and even though the FDIC has attempted to do so, see Letter from the FDIC to M. Garcia at 1, as the Eighth Circuit concluded in Tri-State Hotels, Inc. v. FDIC, 12 U.S.C. § 1821(j) precludes the Court from granting rescission even in such circumstances. Her main argument, however, is not that she is entitled to legal relief, but that the Court should not enter a deficiency judgment because "she was induced to sign the ... loan agreement and guaranty without understanding what obligations were being guaranteed ... and [that she] executed the guarantee based on misrepresentations that as spouse of Vincent J. Garcia she was required to sign the documents...." M. Garcia's Response ¶ 2, at 1. Whether the Court might be inclined to grant such equitable relief in certain circumstances, under the circumstances of this case, 12 U.S.C. § 1821(j) precludes the Court from granting her such relief. To the extent that M. Garcia, Lockhaven Estates, and V. Garcia request the Court to deny the FDIC's requested relief in its Summary Judgment Motion on equitable grounds, the Court is thus precluded from granting the requests. The Court, therefore, dismisses Lockhaven Estates', V. Garcia's, and M. Garcia's defenses to the extent they rely on requests for the Court to exercise its equitable powers.
Although Lockhaven Estates and V. Garcia do not specifically allege the existence of a formal supplemental agreement or amendment to the Loan Agreement that supersedes the Loan Agreement, throughout their Lockhaven Estates/V. Garcia Answer, they argue that the Court should restrain the FDIC from enforcing the Note and foreclosing on the loan, because of collateral agreements that they made with Columbian Bank. See Lockhaven Estates/V. Garcia Answer ¶ 7(a), at 2 ("The amount claimed due on the Note in the Complaint is incorrect. Columbian Bank agreed with Lockhaven to modify the Loan Agreement...."); id. ¶ 7(b), at 3 ("Columbian Bank agreed with Lockhaven that it would not foreclose on the property, but that it would instead schedule repayment at restructured and renegotiated rates of interest until and as the subdivision's lots were sold."); id. ¶ 7(c), at 3 ("Columbian Bank insinuated a third party ... into the subject loan and relationship with Defendants, and without the knowledge or consent of Defendants...."). The FDIC contends that Lockhaven Estates and V. Garcia cannot meet their burden under 12 U.S.C. § 1823(e) to assert such an agreement or agreements as a defense to the FDIC's foreclosure action. See Memorandum at 19. Section 1823(e) provides:
12 U.S.C.A. § 1823(e)(1). "This [provision] places limits on the use to which `side deals' can be put to defeat obligations created in documents on file in a bank." Resolution Trust Corp. v. Midwest Fed. Sav. Bank of Minot, 36 F.3d at 789. The definition of an agreement under 12 U.S.C. § 1823(e) has been "broadly" interpreted. FDIC v. Oldenburg, 34 F.3d at 1551. See Langley v. FDIC, 484 U.S. at 91-93, 108 S.Ct. 396 (construing agreement to cover not only a bank's promise to perform, but also "a condition upon performance," including a "misrepresentation concerning an existing fact"). "The burden of establishing that an applicable agreement satisfies the requirements of section 1823(e) lies with [the borrower]." FDIC v. Oldenburg, 34 F.3d at 1551.
The undisputed facts thus establish that Lockhaven Estates, V. Garcia, and M. Garcia are not entitled to the affirmative defenses asserted in their answers. The FDIC has established a prima-facie case for enforcement of the Note against Lockhaven Estate, and the Unconditional Guaranty against V. Garcia and M. Garcia, to which they have no defenses. There is also no genuine issue of material fact about the amounts owed, or the terms of repayment and the consequences of nonpayment. Accordingly, the Court concludes that the FDIC is entitled to the remaining requests in its Summary Judgment Motion.
1. Grants summary judgment in personam in favor of the Plaintiff Federal Deposit Insurance Corporation, as Receiver for the Columbian Bank & Trust Company, against Defendants Lockhaven Estates, LLC and Vincent J. Garcia, in the principal amount of $1,800,000.00, plus outstanding interest due in the amount of $672,197.50 as of August 5, 2011, plus default rate adjustment of $403,312.50, and accruing thereafter at the rate of $900.00 per day, plus late charges of $123,356.25, plus title report fee of $537.81, plus attorney's fees and costs incurred in connection with this foreclosure action in the amount of $19,264.88, plus court costs of $1,508.65, plus other necessary costs;
2. Grants summary judgment in rem in the FDIC's favor against Defendant Maria P. Garcia's property, in the principal amount of $1,800,000.00, plus outstanding interest due in the amount of $672,197.50 as of August 5, 2011, plus default rate adjustment of $403,312.50, and accruing thereafter at the rate of $900.00 per day, plus late charges of $123,356.25, plus title
3. Orders that the lien of FDIC's Mortgage on the Properties be foreclosed and the Properties securing same be sold according to New Mexico law; that the proceeds from the sale be applied to the payment of the amounts due FDIC as set forth above, with FDIC having judgment for any deficiency — except as to M. Garcia — in the proceeds of sale compared to the amount due FDIC; and that any proceeds remaining after sale be held pending further order of the Court;
5. That Wayne Chew or his designee is appointed Special Master to advertise and sell the Properties at public auction to the highest bidder for cash as provided by law, and that the FDIC is allowed to bid its judgment as cash;
6. That such foreclosure sale shall be subject to a one month right of redemption;
7. That a Writ of Assistance be issued at the request of FDIC or any purchaser at the foreclosure sale if the Defendants or those claiming by, through, or under them refuse to vacate the properties.
Response by Defendant Maria P. Garcia to Plaintiff's Motion for Summary Judgment at 1, filed Apr. 10, 2012 (Doc. 36)("M. Garcia's Response"). D.N.M.LR-Civ. 56.1(b) provides:
D.N.M.LR-Civ. 56.1(b). The local rules regarding summary judgment thus require the responding party to "specifically controvert[]" the movant's fact, or else the fact is deemed admitted. D.N.M.LR-Civ. 56.1(b). M. Garcia's Response does not specifically controvert that she and V. Garcia executed the Unconditional Guarantee, but rather raises a defense to the Court's enforcing the guarantee as to her. The Court, therefore, deems the fact undisputed.
Although M. Garcia raises as a defense in her M. Garcia's Response that she did not understand her obligations in signing the Unconditional Guaranty, and that she relied on misrepresentations at signing, she does not refer the Court to evidence that would allow a factfinder, or the Court, to conclude that any misrepresentations were made. As a preliminary matter, M. Garcia's Response cannot be relied upon to dispute facts that the FDIC sets forth. The United States Court of Appeals for the Tenth Circuit has noted, a non-moving party cannot, as a matter of law, rely on statements in its unverified pleadings or its briefs to dispute a fact set forth by the moving party:
Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.1992) (internal quotations, citations, and alterations omitted)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). She argues that, because she was induced to sign the Unconditional Guaranty, the Court should rescind the Unconditional Guaranty as to her. See M. Garcia's Response at ¶ 2, at 1. Similarly, in M. Garcia Answer, she states that, "she was induced to sign the documents." M. Garcia Answer ¶ 2, at 2. However, M. Garcia does not set forth any "specific facts" regarding any misrepresentation made at closing in either her Response or her Answer. Both are conclusory regarding any such misrepresentations. Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d at 1024. Moreover, her Answer does not allege, nor does her M. Garcia's Response assert that, it was Columbian Bank that made the misrepresentation, only that there was a misrepresentation. Such a conclusory allegation, without facts sufficient for a factfinder to conclude that Columbian Bank made a misrepresentation at closing, is insufficient to establish that there is a dispute whether Columbian Bank made a misrepresentation. See Otteson v. United States, 622 F.2d 516, 519 (10th Cir.1980) ("[O]nce a properly supported summary judgment motion is made, the opposing party may not rest on the allegations contained in his complaint, but must respond with specific facts showing the existence of a genuine factual issue to be tried.")(emphasis added). Because M. Garcia fails to set forth specific facts in her verified M. Garcia Answer, and because her M. Garcia's Response cannot be relied upon to dispute a fact for summary judgment purposes, there is no competent evidence establishing a dispute as to the FDIC's proposed fact that all necessary demand for recovery has been performed. The Court, therefore, deems this fact — that all necessary demand for the FDIC's recovery has been performed or has occurred — undisputed.
FDIC v. Oldenburg, 34 F.3d at 1538 (internal citations omitted)(quoting O'Melveny & Myers v. FDIC, 512 U.S. 79, 87, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994)). No party asserts whether federal law or state law should provide the substantive law applied to enforcement of the promissory note. The FDIC, however, cites to New Mexico substantive law throughout its Summary Judgment Motion, see e.g., Summary Judgment Motion at 8-9 (citing to N.M.S.A.1978, § 55-3-308 as providing a prima facie case for enforcement of the promissory note), and the substantive law cited, the New Mexico Statutes Annotated 1978, Chapter 55, is New Mexico's adoption of the Uniform Commercial Code. Because the Court could not find any federal law conflicting with N.M.S.A.1978, § 55-3-308, which is presumed adequate, and could not find any federal common-law rule regarding enforcement of promissory notes exchanged for mortgages, the Court concludes that New Mexico state law provides the basis for whether the Note is enforceable.
