Pollock v. F.D.I.C. ( 1994 )


Menu:
  •                       United States Court of Appeals,
    
                                     Fifth Circuit.
    
                                      No. 92-9010.
    
                   Merlyn J. POLLOCK, Plaintiff-Appellant,
    
                                           v.
    
    FEDERAL DEPOSIT INSURANCE CORPORATION, As Receiver for First City
    Texas Dallas, Defendant-Appellee.
    
                                     April 4, 1994.
    
    Appeal from the United States District Court for the Northern
    District of Texas.
    
    Before GOLDBERG, JOLLY, and BARKSDALE, Circuit Judges.
    
          GOLDBERG, Circuit Judge:
    
          The parties in this case have separately orchestrated a series
    
    of    mortgage      transactions       and     have     fashioned      clashing
    
    interpretations of a common work.           Both Merlyn Pollock ("Pollock")
    
    and   the   Federal    Deposit    Insurance    Corporation      ("FDIC")     have
    
    attempted to present a melodious symphony to the court.                 Despite
    
    utilizing    the   same   notation,    the    same    sheet   music,   the   same
    
    instruments documenting their transaction, the parties produce
    
    contrapuntal arrangements whose dominant tones fail to generate
    
    harmonious melodies.      Although successful in individually creating
    
    euphonious arrangements, sung together, their mellifluous tunes
    
    degenerate into more cacophony than symphony.
    
          Because both sides to this dispute harmonize the instruments
    
    of the agreement in a reasonable fashion, we find that the relevant
    
    documents are essentially ambiguous.              We therefore reverse and
    
    remand the case to allow the district court to determine the most
    
    
                                           1
    melodic interpretation of the parties' intentions.
    
                                   I. Background
    
         We sound the opening notes of our composition by laying out
    
    the facts which form the background rhythms over which we can then
    
    lay out the conflicting melodies.          Merlyn Pollock entered into an
    
    agreement in August of 1986 to purchase from First City Bank—Valley
    
    View ("First City") the Kreck Foods meat processing plant and
    
    property ("meat plant").          Pollock executed a promissory note
    
    ("Original Pollock Note") in favor of First City to finance the
    
    acquisition of the meat plant.        The note, in the principal amount
    
    of $1,879,242, was secured by a deed of trust ("Original Deed of
    
    Trust").
    
         The   Original   Deed   of    Trust    pledged   the    meat    plant   as
    
    collateral   for   First   City    under    the   Original   Pollock     Note.
    
    Importantly, the Original Note was a non-recourse loan. Thus, upon
    
    default by Pollock, the meat plant itself was the only asset
    
    available as security for First City.             Pollock was to have no
    
    personal liability under the loan.
    
         In September of 1986, two weeks after signing the original
    
    loan documents, Pollock executed a security agreement ("Security
    
    Agreement") in favor of First City, pledging a Certificate of
    
    Deposit in   the   principal      amount   of   $89,179.71   to     secure   all
    
    existing and future indebtedness that Pollock had with First City.
    
    The Security Agreement provided that the Certificate of Deposit
    
    would remain as security on all Pollock's indebtedness until First
    
    City executed a written termination statement and returned the
    
    
                                          2
    collateral to Pollock.
    
         In March of 1987, Pollock and First City entered into an
    
    agreement to restructure Pollock's meat plant debt pursuant to
    
    which Pollock executed a second promissory note ("Renewal Note") in
    
    the principal amount of $1,975,000 in favor of First City.      As
    
    Pollock had made no payments under the Original Note, the entire
    
    amount of that debt was rolled into the Renewal Note.   As part of
    
    the renewal and extension of the Original Note, Pollock executed a
    
    second deed of trust ("Renewal Deed of Trust") in favor of First
    
    City to secure his continuing indebtedness.
    
         The Renewal Note contained, similar to the Original Note, a
    
    non-recourse provision that stated, "If this Note is not paid at
    
    maturity, ... Holder's sole remedy shall be to foreclose its
    
    security interest and lien upon the Property described in the Deed
    
    of Trust, and Maker shall have no personal liability to Holder for
    
    the Indebtedness herein described."   The accompanying Renewal Deed
    
    of Trust then described "mortgaged property" to include "any and
    
    all security and collateral of any nature whatsoever, now or
    
    hereafter given for the repayment of the Indebtedness or the
    
    performance and discharge of the Obligations."1
    
         When Pollock failed to make the first payment under the
    
    Renewal Note, the Note was accelerated and the meat plant property
    
    was posted for foreclosure.   After the property was sold and the
    
    proceeds applied to the indebtedness due under the Renewal Note,
    
         1
          The construction of the phrase "now or hereafter given" in
    the Renewal Deed of Trust is the central dispute in this
    controversy.
    
                                    3
    First City applied Pollock's Certificate of Deposit against the
    
    remaining deficiency.
    
         On January 25, 1991, Pollock filed a civil action in Texas
    
    state court, seeking recovery against First City, Texas—Dallas,
    
    successor in interest by merger with First City Bank, Valley View,2
    
    for the proceeds of the Certificate of Deposit.   Cross motions for
    
    summary judgment were filed, arguing that the Certificate of
    
    Deposit either did or did not collateralize the Renewal Note and
    
    therefore could or could not be applied against the deficiency
    
    incurred under that note.
    
         The state district court entered a judgment in favor of First
    
    City as a matter of law.    The court held that the loan documents
    
    evinced the parties' intention to utilize the Certificate of
    
    Deposit as security on Pollock's meat plant loan.        The Bank,
    
    according to the state court, had therefore acted properly in using
    
    the proceeds from the Certificate of Deposit as an offset against
    
    the deficiency on the loan.
    
         Pollock perfected an appeal to the state appellate court on
    
    January 15, 1992.    Oral argument was scheduled for November 4,
    
    1992.    On October 30, the Texas Banking Commission appointed the
    
    Federal Deposit Insurance Corporation as receiver for First City,
    
    and, on November 3, the FDIC intervened in this suit.      That same
    
    day, the FDIC removed the action to the United States District
    
    Court pursuant to 12 U.S.C. § 1819(b)(2)(B).   The federal district
    
    
         2
          For the sake of clarity, we will also refer to the
    successor organization as "First City."
    
                                     4
    court adopted the judgment of the state court and transferred the
    
    case to our court for review.
    
                                   II. Analysis
    
          For the central movement of this dispute, Pollock suggests two
    
    distinct thematics, one jurisdictional, the other substantive. His
    
    jurisdictional argument submits that the federal district court
    
    acted improperly in adopting and transferring the case to this
    
    court and that this case was improperly removed from the state
    
    court in the first place.           On the substantive side, Pollock
    
    contends that the state court erred in granting summary judgment in
    
    favor of First City because the Renewal Note and Deed of Trust did
    
    not   allow   recourse   to   the   Certificate   of   Deposit.    In   the
    
    alternative, Pollock asserts that the documents are ambiguous as to
    
    the collateralization of the Certificate of Deposit.           We begin by
    
    addressing     the   procedural      and   jurisdictional     issues    and
    
    subsequently confront the substantive questions raised against the
    
    judgment.
    
                         A. Federal Court Jurisdiction
    
           Pollock complains that we cannot have jurisdiction over his
    
    case because the adoption and transfer order issued by the district
    
    court does not constitute a "final decision."          As such there was no
    
    adjudication on the merits by the federal district court, and
    
    therefore, he claims there can be no order that could properly be
    
    appealed to this court.       His arguments have no merit in light of
    
    our recent en banc decision in In re Meyerland, 
    960 F.2d 512
     (5th
    
    Cir.1992), cert. denied, --- U.S. ----, 
    113 S. Ct. 967
    , 
    122 L. Ed. 2d 5
    123 (1993).
    
          The district court in the instant case precisely followed the
    
    instructions laid out in Meyerland and by subsequent rulings
    
    interpreting   that   decision.   In   Meyerland,   we   held   that   the
    
    district court should "take the state judgment as it finds it,
    
    prepare the record as required for appeal, and forward the case to
    
    a federal appellate court for review."     960 F.2d at 520.      This is
    
    precisely the course of action taken by the district court here.
    
    Meyerland continues:
    
          A case removed from state court simply comes into the federal
          system in the same condition in which it left the state
          system. Granny Goose Foods, Inc. v. Brotherhood of Teamsters,
          Etc., 
    415 U.S. 423
    , 435-36, 
    94 S. Ct. 1113
    , 1122-23, 
    39 L. Ed. 2d 435
     (1974).    For instance, if the notice of appeal was
          adequate in the state court system, it should be deemed
          adequate when it enters the federal courts, regardless of
          whether the state technical requirements for notice of appeal
          differ from the federal.
    
    Id.   Meyerland 's reasoning upholding the adoption and transfer
    
    procedure has been routinely reaffirmed since the announcement of
    
    that decision.   See In re 5300 Memorial Investors, Ltd., 
    973 F.2d 1160
     (5th Cir.1992);    McMillan v. MBank Fort Worth, N.A, 
    4 F.3d 362
    
    (5th Cir.1993); NCNB Texas National Bank v. Johnson, 
    11 F.3d 1260
    ,
    
    1264 (5th Cir.1994).    Under the scheme set out in these cases, the
    
    lower court in this case acted properly and Pollock's argument as
    
    to this point is simply without merit.
    
          Pollock additionally challenges the removal to federal court
    
    by arguing that 12 U.S.C. § 1819(b)(2)(B) does not grant subject
    
    matter jurisdiction to the federal courts under the facts of this
    
    
    
    
                                      6
    case.3   That section makes clear that, except in very limited
    
    circumstances, all civil cases to which the FDIC is a party are
    
    deemed to arise under federal law.4   Pollock concedes the general
    
    rule of removal but asserts that this case falls within the
    
    exception expressed in 12 U.S.C. § 1819(b)(2)(D).       Under that
    
    provision, an action shall not be deemed to arise under the laws of
    
    the United States if it is an action:
    
         (i) to which the Corporation, in the Corporation's capacity as
         receiver of a State insured depository institution by the
         exclusive appointment by State authorities, is a party other
         than as a plaintiff;
    
         (ii) which involves only the preclosing rights against the
         State insured depository institution, or obligations owing to,
         depositors, creditors, or stockholders by the State insured
         depository institution; and
    
         (iii) in which only the interpretation of the law of such
         State is necessary
    
    12 U.S.C. § 1819(b)(2)(D).
    
         The resolution of this issue is found through a simple and
    
    straightforward application of the last requirement—this is not a
    
    case in which only the interpretation of state law is necessary.
    
    
    
    
         3
          12 U.S.C. § 1819(b)(2)(B) provides that "Except as provided
    in subparagraph (D), the Corporation may, without bond or
    security, remove any action, suit, or proceeding from a State
    court to the appropriate United States district court before the
    end of the 90-day period beginning on the date the action, suit,
    or proceeding is filed against the Corporation or the Corporation
    is substituted as a party."
         4
          12 U.S.C. § 1819(b)(2)(A) provides that "Except as provided
    in subparagraph (D), all suits of a civil nature at common law or
    in equity to which the Corporation, in any capacity, is a party
    shall be deemed to arise under the laws of the United States."
    
                                    7
    The FDIC has asserted the special defense of D'Oench Duhme5 and the
    
    codification of that defense set forth at 12 U.S.C. § 1823(e).   It
    
    is well settled that when such federal defenses are raised, the
    
    exception expressed in section 1819(b)(2)(D) is inapplicable. Diaz
    
    v. McAllen State Bank, 
    975 F.2d 1145
    , 1149 (5th Cir.1992).       In
    
    determining whether a case involves only the interpretation of
    
    state law, courts are "to consider the case as a whole—complaint
    
    and likely defenses as well."    Capizzi v. Federal Deposit Ins.
    
    Corp., 
    937 F.2d 8
    , 10 (1st Cir.1991).   Courts have abandoned the
    
    well-pleaded complaint rule under section 1819(b)(2)(D) in favor of
    
    a test which focuses on the question of whether the federal
    
    defenses are colorable.   Diaz, 975 F.2d at 1149-50, Capizzi, 937
    
    F.2d at 8.
    
         In this case the FDIC has asserted colorable D'Oench and
    
    federal statutory defenses to Pollock's claim.6       The district
    
         5
          The doctrine of D'Oench, Duhme & Co. v. Federal Deposit
    Ins. Corp., 
    315 U.S. 447
    , 
    62 S. Ct. 676
    , 
    86 L. Ed. 956
     (1942), as
    we have previously stated, "protects the FDIC, as receiver of a
    failed bank or as purchaser of its assets, from a borrower who
    has "lent himself to a scheme or arrangement' whereby banking
    authorities are likely to be misled." Bowen v. Federal Deposit
    Ins. Corp., 
    915 F.2d 1013
    , 1015 (5th Cir.1990) (quoting Beighley
    v. Federal Deposit Ins. Co., 
    868 F.2d 776
    , 784 (5th Cir.1989)).
         6
          We do not feel it necessary to express an opinion as to the
    merits of the D'Oench defenses in the present appeal. See Diaz,
    975 F.2d at 1150 (in determining whether a defense is colorable,
    the court "need not express an opinion on the merits of the
    case...."). These defenses will only become relevant upon remand
    when the lower court evaluates evidence extrinsic to the bank's
    records in determining the intent of the parties at the time of
    the formation of the loan agreements.
    
              The district court on remand will be faced with the
         question of whether D'Oench can be raised by the FDIC to
         preclude the admission of extrinsic evidence of side
    
                                    8
    court, therefore, properly found that it had jurisdiction pursuant
    
    to 12 U.S.C. § 1819(b)(2)(A) and (B) and that the exception to
    
    removal in section 1819(b)(2)(D) does not apply in this case.
    
    Believing that we have solved the jurisdictional conundrums raised
    
    by   Pollock,   we   proceed   to    a       discussion   of   his   substantive
    
    contentions.
    
                    B. Non-Recourse Loan v. Dragnet Clause
    
          The standard of review for summary judgments in cases that
    
    have been removed to federal court after final judgment by a state
    
    court was set forth in Walker v. Federal Deposit Ins. Corp., 
    970 F.2d 114
     (5th Cir.1992).       In Walker, we held:
    
               The standard of review is the same as if the federal
          court itself had entered the order.       In effect, we look
          through the federal district judge's eyes at the state court's
          justifications for these orders. Federal rather than state
          procedural law applies since federal law controls the course
          of proceedings from the point of removal.       We review the
          summary judgment award de novo, independently of the state or
          federal district court, and resolving all reasonable doubts
          and drawing all reasonable inferences in favor of the party
          opposing summary judgment.
    
    970 F.2d at 121 (citations removed). The grant of summary judgment
    
    must be affirmed when, in viewing the evidence in the light most
    
    favorable to the opposing party, there are no genuine issues of
    
    material fact to be tried.          See Anderson v. Liberty Lobby, Inc.,
    
    
    477 U.S. 242
    , 247, 
    106 S. Ct. 2505
    , 2509-10, 
    91 L. Ed. 2d 202
     (1986).
    
    As a result, summary judgment is proper "unless there is sufficient
    
    evidence favoring the nonmoving party for a jury to return a
    
    
          agreements in clarifying the ambiguous loan agreement.                We
          leave this issue to the district court which should be
          allowed not only the first bite at this apple, but an
          opportunity to consume the entire core.
    
                                             9
    verdict for that party.         If the evidence is merely colorable, or is
    
    not significantly probative, summary judgment may be granted." Id.
    
    at 249-50, 106 S.Ct. at 2510-11 (citations omitted).               Federal Rule
    
    of Civil Procedure 56(c) provides that a grant of summary judgment
    
    is proper where there is no genuine issue as to any material fact
    
    and the moving party is entitled to a judgment as a matter of law.
    
    Celotex Corp. v. Catrett, 
    477 U.S. 317
    , 
    106 S. Ct. 2548
    , 
    91 L. Ed. 2d 265
     (1986).
    
         The trial court granted summary judgment in favor of First
    
    City finding that the terms of the several loan agreements allowed
    
    the bank to offset the Certificate of Deposit against a deficiency
    
    on the meat plant property.            Pollock complains that this decision
    
    is in error because the documents in this transaction are ambiguous
    
    as to whether the Certificate of Deposit was properly subject to
    
    offset    against       the   loan.7     Because   we   find    that    the    loan
    
    transaction documents allow of two reasonable interpretations,
    
    neither of which is obviously preferable, we reverse the grant of
    
    summary judgment and remand for further proceedings to resolve the
    
    ambiguity.
    
             As common sense would have it, "[a] mortgage is governed by
    
    the same rules of interpretation which apply to contracts."                   Sonny
    
    Arnold,    Inc.    v.    Sentry    Savings    Ass'n,    
    633 S.W.2d 811
    ,   815
    
    (Tex.1982).       The initial determination of ambiguity is a question
    
         7
          The FDIC argues that Pollock failed to raise the issue of
    ambiguity in the court below. However, it is implicit in the
    argument that a document which is unambiguous in one direction
    necessarily involves some element that the instrument is, at
    least, not unambiguous in the other direction.
    
                                             10
    of law subject to de novo review on appeal.             Guidry v. Halliburton
    
    Geophysical     Servs.,    Inc.,   
    976 F.2d 938
    ,   940    (5th   Cir.1992);
    
    Childers   v.    Pumping    Systems,     Inc.,   
    968 F.2d 565
    ,    569   (5th
    
    Cir.1992).      If the court can ascertain that the contract is
    
    "reasonably susceptible to more than one interpretation, it is
    
    ambiguous."     Childers, 968 F.2d at 569;         Towers of Texas, Inc. v.
    
    J & J Systems, Inc., 
    834 S.W.2d 1
    , 2 (Tex.1992) ("A written
    
    instrument is ambiguous when its meaning is uncertain and doubtful
    
    or it is reasonably susceptible to more than one meaning, taking
    
    into consideration the circumstances present when the instrument
    
    was executed").     Additionally, we note that "[a] contract is not
    
    ambiguous merely because the parties disagree upon the correct
    
    interpretation." D.E.W., Inc. v. Local 93, Laborers' International
    
    Union, 
    957 F.2d 196
    , 199 (5th Cir.1992).
    
         We also recognize that "mortgages to secure other indebtedness
    
    will be effective to secure only items of indebtedness that were
    
    within the reasonable contemplation of the parties at the time the
    
    mortgage was executed."       Bank of Woodson v. Hibbitts, 
    626 S.W.2d 133
    , 134 (Tex.App.—Eastland 1981, writ ref'd n.r.e.). The court in
    
    Bank of Woodson noted that where a deed of trust is unambiguous, an
    
    objective reading of the language of the instrument determines what
    
    the parties reasonably contemplated would be secured.                 Id. at 134-
    
    35 (citing Kimbell Foods, Inc. v. Republic National Bank of Dallas,
    
    
    557 F.2d 491
     (5th Cir.1977), aff'd, 
    440 U.S. 715
    , 
    99 S. Ct. 1448
    , 
    59 L. Ed. 2d 711
     (1979)).
    
          With these principles in mind, we turn to the language of the
    
    
                                             11
    documents that make up the meat plant transaction to determine
    
    whether the parties unambiguously intended the Certificate of
    
    Deposit to secure the meat plant loan.      A revisitation of the loan
    
    documents demonstrates that they are susceptible to two reasonable
    
    interpretations.
    
         Pollock refers us to the Renewal Note and Deed of Trust which
    
    specifically provide that the loan will be non-recourse with the
    
    bank's sole remedy upon default being foreclosure upon the real
    
    estate described in the Deed of Trust.       Pollock was to have "no
    
    personal liability" under the arrangements.
    
         The FDIC notes, however, that two weeks after signing the
    
    Original loan documents, Pollock executed the Security Agreement
    
    covering the Certificate of Deposit.     That agreement contained a
    
    dragnet clause stating that the collateral specified therein (the
    
    Certificate of Deposit) secured all present and future loans and
    
    obligations   maintained    by   Pollock.       Under   the   original
    
    arrangements, a non-recourse loan and a dragnet clause, we find a
    
    prelude to the disharmony in the documentation of the Pollock-First
    
    City Renewal documents.
    
         The Renewal Deed of Trust increased the dissonance by securing
    
    First City under the Renewal Note with "any and all other security
    
    and collateral of any nature whatsoever, now or hereafter given for
    
    the repayment of the Indebtedness or the performance and discharge
    
    of the Obligations."   We are forced into contractual confusion by
    
    the phrase "now given".    We have searched for some language in the
    
    contract which establishes the connection or lack thereof, between
    
    
                                      12
    the Certificate of Deposit and the Renewal loan transaction.
    
    Unfortunately, we have not found the interpretation of the "now
    
    given" phrasing that can bring us out of this choral dissonance.
    
         Pollock      urges   that    "now    given"     was   intended   to     mean
    
    concurrently given with the Renewal Deed of Trust.                    That is,
    
    Pollock claims that only if the Certificate of Deposit was given
    
    over to First City simultaneously with the execution of the Renewal
    
    Deed of Trust, would it secure the non-recourse loan.                 However,
    
    since the Certificate of Deposit was given to First City prior to
    
    the execution of the Renewal Deed of Trust, Pollock contends that
    
    it was not intended to collateralize the meat plant property
    
    transaction.
    
         If   First    City   had    intended     to   specifically    include    the
    
    Certificate of Deposit as collateral under the Renewal Deed of
    
    Trust, Pollock suggests that the Renewal Deed of Trust would have
    
    to refer to all security and collateral "now, heretofore, and
    
    hereafter given".     Since the actual Renewal Deed only states "now
    
    or hereafter given" it does not indicate an intention to include
    
    collateral given prior to the Renewal Deed of Trust.              Because there
    
    was no explicit reference to the Security Agreement in any of the
    
    Renewal documents, Pollock argues the Security Agreement, which was
    
    "given" six months earlier, cannot be "now given".
    
         Sounding an entirely different tune, the FDIC alleges that the
    
    term "now given" should not be given such a narrow construction.
    
    Instead, it claims that "now given" refers to all collateral given
    
    by Pollock up to and including the time of the execution of the
    
    
                                             13
    Renewal transaction.        The reference of "now given" should be given
    
    a more expansive interpretation which, it urges, is the more
    
    natural reading of the contract.
    
         The       FDIC   additionally      argues     that    it    can     offer    an
    
    interpretation of the instruments which brings all the documents
    
    into accord. Texas law requires that courts construe a contract so
    
    as to bring its various provisions into harmony.                Chapman v. Orange
    
    Rice Milling Co., 
    747 F.2d 981
     (5th Cir.1984).             The FDIC points out
    
    that the Security Agreement provided that the Agreement would
    
    continue in full force and effect until First City executed a
    
    written    termination      statement     and    reassigned     to     Pollock   the
    
    Certificate of Deposit. The Security Agreement had a definite date
    
    of inception and a ritual for termination.                Because the evidence
    
    establishes that there has been no such termination, the FDIC
    
    concludes that the Security Agreement was in continuing effect at
    
    the execution of the Renewal Deed of Trust and should therefore be
    
    considered "now given".
    
         As    a    postlude,    the   FDIC      argues   that      even    under    the
    
    interpretation of "now given" suggested by Pollock, the Renewal
    
    Deed of Trust would include the Certificate of Deposit as security
    
    on the meat plant loan as long as there was language in the Renewal
    
    Deed of Trust specifically referring to the Security Agreement in
    
    such a way that it could be considered given simultaneously.                     The
    
    FDIC notices that Section 11.1 of the Renewal Deed of Trust
    
    expressly provides for the survival of all security previously
    
    given for the debt.         Section 11.1 of the Renewal Deed of Trust
    
    
                                            14
    states:      "Each and all of the Obligations shall survive the
    
    execution     and     delivery     of     the    Security       Documents,         and     the
    
    consummation of the loan called for therein, and shall continue in
    
    full force and effect, until the Indebtedness shall have been paid
    
    in full." In its definition of the Security Documents, the Renewal
    
    Deed includes        "any   and    all    other      documents       now     or    hereafter
    
    executed by [Pollock] or any other person or party to evidence or
    
    secure the payment of the Indebtedness...."
    
           The thrust of these provisions, according to the FDIC, is that
    
    the    Security      Agreement      was     referenced          in     the    renewal      of
    
    obligations.        The Security Agreement, given six months previous,
    
    must be considered "now executed" under the terms of this renewal
    
    section in order for this provision to make sense.                            That is, it
    
    would not be necessary to provide for the survival of documents
    
    executed     at     the   time    of     renewal      since     a    document        created
    
    simultaneously with the renewal would not require renewal.                            Thus,
    
    the FDIC argues that this section implicitly includes the Security
    
    Agreement in the survival provision of the Renewal Deed of Trust.
    
    In other words, the FDIC claims that section 11.1 renews the giving
    
    of    the   Certificate     of    Deposit       in   such   a    way    as    to    make    it
    
    simultaneously given with the Renewal Deed of Trust and thus within
    
    the mortgaged property available to secure the meat plant loan.
    
           Our own reading of the documents shows that the loan contracts
    
    and security agreements allow for the interpretations advanced by
    
    both parties.       We have a genuine ambiguity, and the case will have
    
    to be returned to the lower court for consideration of extrinsic
    
    
                                               15
    evidence in order to discover which interpretation most closely
    
    follows the intent of the parties.8          See Childers, 968 F.2d at 574.
    
          Obviously the documents in the present context were not
    
    paradigms of clarity.        The lower court will have to bring some
    
    pellucidity to their words.         This can be done by reference to the
    
    environment at the time of the formation of the agreement as well
    
    as to the discussions which surrounded the execution of the loan
    
    documents.
    
          It is impossible to determine based on the loan documents
    
    alone,    without    reference     to   extrinsic   evidence,   whether      the
    
    certificate of deposit was intended to secure the Renewal Note. We
    
    have a non-recourse loan conflicting with a security agreement
    
    containing a dragnet clause purporting to secure Pollock's entire
    
    indebtedness.       Furthermore, the Renewal Deed of Trust includes
    
    language which suggests the Certificate of Deposit was intended to
    
    come within the ambit of secured property under the meat plant loan
    
    while concurrently stating that Pollock will bear no personal
    
    liability under that loan.
    
          In sum, we find that the loan documents dispute, which is
    
    properly before this court, can only be resolved by evaluating the
    
    circumstances of the formation of the contract. The dissonance can
    
    be   harmonized     by   looking   to   extrinsic   evidence    in   order    to
    
    determine the parties' intentions as to whether the Certificate of
    
    Deposit was intended to secure the meat plant property loan.                 The
    
          8
          As noted above, the court on remand will have to consider
    the merits of the D'Oench defenses in this regard. See supra
    note 6.
    
                                            16
    case is remanded for additional proceedings to make the required
    
    findings of fact.9    For the preceding reasons, we remand this case
    
    for further action.
    
                               III. Conclusion
    
         The judgment of the lower court is REVERSED, and we REMAND
    
    this case for further proceedings in accordance with this opinion.
    
    
    
    
         9
          See supra note 6.
    
                                      17
    

Document Info

DocketNumber: 92-09010

Filed Date: 4/4/1994

Precedential Status: Precedential

Modified Date: 3/3/2016

Authorities (22)

NCNB Texas Nat. Bank v. Johnson , 11 F.3d 1260 ( 1994 )

D'Oench, Duhme & Co. v. FDIC , 315 U.S. 447 ( 1942 )

Granny Goose Foods, Inc. v. Teamsters , 415 U.S. 423 ( 1974 )

United States v. Kimbell Foods, Inc. , 440 U.S. 715 ( 1979 )

Anderson v. Liberty Lobby , 477 U.S. 242 ( 1986 )

Celotex Corporation v. Myrtle Nell Catrett, Administratrix ... , 477 U.S. 317 ( 1986 )

kimbell-foods-inc-fka-kimbell-milling-company-dba-kimbell-grocery , 557 F.2d 491 ( 1977 )

William C. Chapman v. Orange Rice Milling Company, and ... , 747 F.2d 981 ( 1984 )

Harold v. Beighley v. Federal Deposit Insurance Corporation,... , 868 F.2d 776 ( 1989 )

James N. And Betty G. Bowen v. Federal Deposit Insurance ... , 915 F.2d 1013 ( 1990 )

Michael J. Capizzi v. Federal Deposit Insurance Corporation,... , 937 F.2d 8 ( 1991 )

D.E.W., Inc. v. Local 93, Laborers' International Union of ... , 957 F.2d 196 ( 1992 )

in-the-matter-of-meyerland-co-and-william-m-adkinson-debtors-federal , 960 F.2d 512 ( 1992 )

Carroll Childers v. Pumping Systems, Inc. , 968 F.2d 565 ( 1992 )

ted-g-walker-and-james-d-brunson-v-federal-deposit-insurance , 970 F.2d 114 ( 1992 )

in-the-matter-of-5300-memorial-investors-ltd-debtor-5300-memorial , 973 F.2d 1160 ( 1992 )

Iago Xes Rodriguez Diaz v. McAllen State Bank, Federal ... , 975 F.2d 1145 ( 1992 )

Anthony G. Guidry v. Halliburton Geophysical Services, Inc.,... , 976 F.2d 938 ( 1992 )

john-v-mcmillan-john-dipalma-and-palmnold-mcmillan-joint-venture-v-mbank , 4 F.3d 362 ( 1993 )

Towers of Texas, Inc. v. J & J SYSTEMS, INC. , 834 S.W.2d 1 ( 1992 )

View All Authorities »