Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-11-07121/USCOURTS-caDC-11-07121-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 20, 2012 Decided January 25, 2013

No. 11-7121

A. HUDA FAROUKI,

APPELLEE

v.

PETRA INTERNATIONAL BANKING CORPORATION, ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 1:08-cv-02137)

John R. Fornaciari argued the cause for appellants. With 

him on the briefs was Robert M. Disch.

Grayson D. Stratton argued the cause for appellee. With 

him on the brief were Robert J. Mathias and David Clarke, Jr.

Before: ROGERS and KAVANAUGH, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge KAVANAUGH. 

KAVANAUGH, Circuit Judge: In 1986, A. Huda Farouki 

personally guaranteed a loan made by Petra International 

Banking Corporation to American Export Group International 

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Services, or AEGIS. But all was not well with AEGIS, which 

filed for bankruptcy in 1987. Although AEGIS’s bankruptcy 

triggered Petra’s right to sue Farouki under the terms of the 

Guaranty Agreement, Petra did not do so. Indeed, Petra 

continued administering loans to AEGIS for the next decade. 

In late 2008, Farouki sued Petra in the United States 

District Court for the District of Columbia, seeking a 

declaratory judgment that he did not have any obligations 

under the Guaranty Agreement. Petra counter-sued in early 

2009, seeking to enforce the Guaranty Agreement. The 

District Court dismissed Petra’s claim, concluding that it was

time-barred under the relevant D.C. statute of limitations, and 

granted Farouki summary judgment. Petra now appeals. 

We agree with the District Court that Petra’s claim is 

time-barred. Much of the briefing is devoted to whether the 

Guaranty Agreement is under seal. If so, under D.C. law a 

12-year statute of limitations would apply. If not, a three-year 

statute of limitations typically used in contract disputes would 

apply. See D.C. Code § 12-301(6)-(7). But we need not 

decide that question because Petra’s claim is time-barred even 

assuming that the 12-year statute of limitations applies. The 

limitations period began in 1987, when AEGIS declared 

bankruptcy and Farouki was obligated to pay Petra under the 

Guaranty Agreement, and the limitations period expired in 

1999. But Petra did not sue Farouki to enforce the Guaranty 

Agreement until 2009, which was far too late. 

To try to surmount the 12-year limitations bar, Petra

argues that its efforts, through 1997, to collect on the original 

loan, tolls the limitations period until after it filed its 

counterclaim in 2009. But under United States v. Rollinson,

the due date of a loan may be postponed through “a binding 

agreement supported by consideration” between the principal 

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debtor and creditor. 866 F.2d 1463, 1470 (D.C. Cir. 1989) 

(quoting FDIC v. Petersen, 770 F.2d 141, 143 (10th Cir. 

1985)). Rollinson simply does not speak to any effect that 

ongoing collection efforts might have on the statute of 

limitations. Collection efforts through 1997 are irrelevant to 

the limitations question under Rollinson and, indeed, under the 

terms of the Guaranty Agreement itself: As the District Court 

correctly concluded, the Guaranty Agreement did not require 

exhaustion of collection efforts as a pre-condition to accrual of 

a cause of action. 

Petra separately contends that the District Court entered 

summary judgment sua sponte in favor of Farouki improperly 

because it afforded Petra neither notice nor opportunity to 

respond, as required by Federal Rule of Civil Procedure 

56(f)(3). We have previously held that erroneous entries of 

summary judgment may be harmless under Rule 56 where “a 

nonmoving party could not have produced any evidence 

sufficient to create a substantial question of fact material to the 

governing issues of the case.” Colbert v. Potter, 471 F.3d 

158, 168 (D.C. Cir. 2006) (internal quotation marks and 

citation omitted). We cannot conclude that was the case here. 

The question, under Rollinson, was whether the parties 

modified their contract such that a new accrual date fell within 

12 years of Petra filing its counterclaim. At the time the 

District Court made its decision, it did not know whether Petra 

could have met the standard announced in Colbert. And while 

nothing in the record or a proffer on appeal indicates that the 

modification, if it occurred, occurred at a time where the 

accrual date would fall within the limitations period, notice and 

opportunity to respond might have produced evidence of 

consequence bearing on the factual issue at hand. Petra 

should have the opportunity to produce such evidence.

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* * *

We vacate the District Court’s grant of summary judgment 

and remand for further proceedings. 

 

So ordered.

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