Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-02098/USCOURTS-ca10-91-02098-0/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 

---

FIL ~ ..J l 

UNITED STATES COURT OF APPEALsl.Jnited sr~h~r:~ Appea.F 

TENTH CIRCUIT 

FEDERAL DEPOSIT INSURANCE CORPORATION, 

a corporation, 

Plaintiff-Appellee, 

and 

JOHN RELLA ADAMS, 

Plaintiff, 

v. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

NORMAN C. BLANKINSHIP; JACK A. CARDWELL;) 

BASIL DURWOOD REYNOLDS, JR., also known) 

as B.D. Reynolds; RUCELLE RUSSELL, ) 

Defendants, 

and 

GILBERT R. RUSSELL, also known as G.R. 

RUSSELL, 

Defendant-Appellant. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

ORDER AND JUDGMENT* 

DEC 3 0 1992 

ROBERT L. HOECKER 

Clerk 

No. 91-2098 

(D.C. No. CIV-88-1261JC) 

(D. N.M.) 

Before LOGAN, EBEL and KELLY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

* This order and judgment has no precedential value and shall not 

be cited~ or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

Appellate Case: 91-2098 Document: 010110155932 Date Filed: 12/30/1992 Page: 1 
assist the determination of this appeal. See Fed. R. App. P . 

34 (a ) ; 10th Cir. R. 34 .1. 9. The case is therefore o rde red submitted without oral argument. 

This appeal arises out o f the failure of Moncor Bank, N. A., 

f ormerly known as First National Bank of Lea County, Hobbs, New 

Mexico (the Bank) , and the s ubseque nt purchase o f certain Bank 

a ssets by the FDIC in its c orporate capacity. Defendant Gilbert R. Russell argues that the FDIC should be precluded from 

collecting on certain promissory notes he gave to the Bank because 

his real defense of duress defeats the interest of the FDIC. 

Because we agree with the district court that there is no genuine 

issue as to any material fact regarding the FDIC's claim against 

defendant, and that the FDIC is entitled to judgment as a matter 

of law, we affirm the district court. 

Defendant, along with two other persons not parties to this 

appeal, owned and operated a truck dealership in Hobbs, New 

Mexico. In April 1984, defendant executed and delivered to the 

Bank t wo promissory notes payable to the order of the Bank totaling approximately $3,400,000. Appellee's Supp. App. at 123-26. 

In addition to the promissory notes , defendant and the Bank also 

entered into an agreement, dated April 12, 1984, in which the Bank 

agreed to dismiss pending litigation against defendant, and defendant released the Bank from any claims he might have relating to 

past actions of the Bank. Id. at 9-12. 

In August 1985, the Office of the Comptroller of the Cu rrency 

declared the Bank insolvent, ordered the Bank closed, took possession of its assets and affairs, and appointed the FDIC receiver of 

-2-

Appellate Case: 91-2098 Document: 010110155932 Date Filed: 12/30/1992 Page: 2 
the Bank. The FDIC in its corporate capacity then purchased certain assets of the Bank from the FDIC as receiver, including the 

notes at issue here . No payment on the notes has been made since 

the Bank was closed, and demands made by the FDIC on defendant for 

payment have been unavailing. Id. at 6. The FDIC brought this 

action in its corporate capacity in an effort to collect on the 

notes. Defendant appeals from the district court's grant of summary judgment to the FDIC . 

We review a grant of summary judgment de novo, applying the 

same standard applied by the district court. Abercrombie v. City 

of Catoosa , 896 F.2d 1228, 1230 (10th Cir. 1990). Summary judgment should be granted only if " there is no genuine issue as to 

any material fact and ... the moving party is entitled to a 

judgment as a matter of law." Fed. R. Civ. P. 56(c). The nonrnoving party may not rely solely on his pleadings, however, but must 

provide specific facts to support a conclusion that genuine issues 

exist. Abercrombie, 896 F.2d at 1230. The Supreme Court has held 

that to defeat a motion for summary judgment, "the nonrnoving party 

[must] go beyond the pleadings and by [his] own affidavits, or by 

the 'depositions, answers to interrogatories, and admissions on 

file,' designate 'specific facts showing that there is a genuine 

issue for trial.'" Celotex Corp. v. Catrett, 477 U. S. 317, 324 

(1986 ) (quoting Fed. R. Civ. P. 56(e)). 

Defendant first argues that the notes and the April 12 agreement are invalid because he executed them under duress. He argues 

that neither federal statutory nor federal common law insulates 

the FDIC from a duress defense. Without addressing the latter 

- 3-

Appellate Case: 91-2098 Document: 010110155932 Date Filed: 12/30/1992 Page: 3 
po int, we conclude that defendant has failed t o show specifi c 

fa c ts e s tablishing a genu ine issue of duress. See Matsushita 

Elec . Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 58 6 - 87 

(1986 ) . 

Our review o f the record r eveals t he following references to 

defendan t's duress defense: 

(1 ) a statement in defendant's answer alleging that an 

officer of the Bank "exert[ed] superior economic power to compel 

defendant[] to sign and renew promissory notes and other 

purported loan documents dated April 4, 1 984 , and a release Agreement dated April 12 , 1984 .. ti Appellant's App. at 39; 

(2 ) statements from defendant's affidavit to the effect that 

he "is informed and believes" that the notes and agreement were 

unenforceable because of the real defense of duress; id. at 

147- 50 ; 

(3) statements from the affidavit of J .A. Cardwell , a 

co-owner of the trucking business, stating that 

in spite of my associates and I being represented by 

legal counsel, in the spring of 1984 I was contacted by 

Hal Daugherty of El Paso, Texas, a representative of the 

Mercantile Banking Group, from whom I and my business 

associates, had borrowed substantial money , with a 

request on behalf of Reed H. Chittim [president of the 

Bank and chief executive officer of First City Financial 

Corporation] that I enter into direct settlement talks 

with Reed H. Chittim the Chief Executive Officer of 

First City Financial Corporation, without the presence 

or participation of my attorney. 

id . at 157; and further that 

I and my business associates in the spring of 1984 

because of the lending climate that then existed, were 

economically compelled, against our will, without the 

advice of counsel to execute an agreement on the 12th 

day of April, 1984 . 

-4-

Appellate Case: 91-2098 Document: 010110155932 Date Filed: 12/30/1992 Page: 4 
id.; and finally 

(4) a statement from the deposition of a co-defendant, Norman 

Blankinship, that his personal presence was requested to meet with 

Bank officials in Albuquerque and that during that meeting he was 

requested to sign the April 12 agreement. Id. at 166. 

These conclusory allegations are insufficient to resist a 

motion for summary judgment. Defendant points to no specific 

facts demonstrating a genuine issue of duress for trial. 1 '"Duress does not exist merely where consent to an agreement is 

secured because of hard bargaining positions or the pressure of 

financial circumstances.'" Resolution Trust Corp. v. Ruggiero, 

756 F. Supp. 1092, 1095 (N.D. Ill. 1991) (quoting Higgins v. 

Brunswick Corp., 395 N.E . 2d 81, 85 (Ill. App . Ct. 1979)), aff'd, 

977 F.2d 309 (7th Cir. 1992) . Rather, the one charged with duress 

must be shown to be guilty of some fraud or wrongdoing. Alexander 

v. Standard Oil Co., 423 N.E.2d 578, 582-83 (Ill. App. Ct. 1981); 

see also Pecos Constr. Co. v. Mortgage Inv. Co., 459 P.2d 842, 

844-45 (N .M. 1969) (one guilty of duress must have acted wrongfully) . Defendant has not identified any specific instances of 

fraud or wrongdoing on the part of the Bank relating to the notes 

1 Defendant goes to some length in his brief to detail circumstances surrounding a transaction that allegedly occurred in 1982 

in which he and others were coerced by the Bank into purchasing 

shares in the soon- to- be- formed First City Financial Corporation, 

an entity that eventually became the holding company for the Bank. 

Defendant states that the Bank threatened to call his loan and 

those of the other parties to the transaction if they did not pur- chase the s tock. The stock was paid for with promissory notes in 

the amount of $150,000 each, payable to Security National Bank in 

Lubbock, Texas. There is no indication in the record , h owever, 

that these notes were in any way related to the notes that are the 

subject of this appeal. 

-5-

Appellate Case: 91-2098 Document: 010110155932 Date Filed: 12/30/1992 Page: 5 
at issue here. Defendant's allusion to the Bank's greater e co -

nomic strength is insufficient t o substantiate a claim o f coercion 

or duress. Alexander, 423 N.E.2d at 583 . "[D]uress cannot result 

from the exercise of a legal right." B & W Constr. Co . v. N. C. 

Ribble Co ., 734 P.2d 226 , 228 (N. M. 1 987 ) ; cf. Western Bank v. 

Aqua Leisure, Ltd. , 737 P . 2d 537, 540 (N.M. 1987) ( "Agreeing t o 

forbear from collection action on a delinquent account in exchange 

f or a guaranty does not constitute economic coercion or duress." ) . 

Because we conclude that defendant has not raised any spec ific 

facts supporting a duress defense, we need not address his argu -

ment regarding the FDIC's status as a holder in due course . 

Defendant also argues that the notes here are unenforceable 

because they are the result of an illegal tying agreement prohibited by the Bank Holding Company Act, 12 U.S.C. §§ 1971-1978. We 

initially note that much of defendant's anti-tying argument is 

directed to the circumstances sur rounding the 1982 purchase of 

stock in First City Financial Corporation. As we have determined, 

those circumstances are irrelevant to the enforceability of the 

notes at issue here. However, defendant also contends that the 

releases contained in the April 12 agreement somehow evidence an 

illegal tying scheme . Appellant's Br. at 10. To prevail on a 

claim of illegal tying, defendant "must show that the practice 

complained of is anticompetitive, that the practice results in 

unfair competition or could lessen competition, and that the practice benefits the bank in some way other than merely allowing the 

bank additional asset protection." Palermo v. First Nat'l Bank & 

Trust Co., 894 F.2d 3 63, 368 {i 0th Cir. i 990) . Defendant has 

-6 -

Appellate Case: 91-2098 Document: 010110155932 Date Filed: 12/30/1992 Page: 6 
failed to make a sufficient showing on any of these factors. The 

Bank's requirement that defendant, in return for renegotiating 

past due indebtedness, release it from any claims relating to past 

actions of the Bank, was not improper: 

As a condition to renegotiating debts, banks can 

properly require additional collateral and impose other 

terms designed to ensure payment of the extended loans. 

Banks can and should also be allowed to require their 

debtors to waive defenses to those debts. Such a condition is a legitimate attempt by a bank to protect its 

investment. After all, the debtor is asking the bank to 

put off enforcing its rights, and the bank should be 

entitled to ask for reciprocal concessions. 

FDIC v. Linn, 671 F. Supp. 547, 562 (N.D . Ill. 1987) (citation 

omitted) . We therefore agree with the district court that there 

is no genuine issue as to any material fact in this case and that 

the FDIC is entitled to judgment as a matter of law. The judgment 

of the United States District Court for the District of New Mexico 

is AFFIRMED. 

Entered for the Court 

James K. Logan 

Circuit Judge 

-7-

Appellate Case: 91-2098 Document: 010110155932 Date Filed: 12/30/1992 Page: 7