Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-06276/USCOURTS-ca10-90-06276-1/pdf.json

Parties Involved:
Mustang Partners
Appellant
Resolution Trust Corporation
Appellee

Document Text:

FI LED 

Uoiced Staces Court of Appeals 

Tenth Cirruit 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

AUG 6 1991 

RESOLUTION TRUST CORPORATION, in its 

capacity as Conservator for Savers 

Savings Association, 

Plaintiff-Appellee, 

v. 

MUSTANG PARTNERS, a Missouri Limited 

Partnership, 

Defendant-Appellant, 

v. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

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) 

} 

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RESOLUTION TRUST CORPORATION, in its ) 

capacity as Receiver for Savers Federal) 

Savings and Loan Association, ) 

Third-partydefendant-Appellee. 

) 

) 

) 

ORDER AND JUDGMENT* 

.ROBERT L. HOECKER 

Clerk 

No. 90-6276 

(D.C. No. CIV-89-420-P) 

(W.D. Okla.) 

Before LOGAN, MOORE, and BALDOCK, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

* 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: 90-6276 Document: 010110130260 Date Filed: 08/06/1991 Page: 1 
34(a); 10th Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

Defendant Mustang Partners (Mustang) appeals the district 

court's order of July 27, 1990, in favor of the plaintiff 

Resolution Trust Corporation (RTC-conservator), in its capacity as 

conservator for Savers Savings Association (SSA), allowing 

RTC-conservator to have and recover judgment on certain promissory 

notes and to foreclose certain mortgages. Mustang also appeals 

the district court's order of July 17, 1990, granting summary 

judgment to counterclaim defendant Resolution Trust Corporation 

(RTC-receiver), in its capacity as receiver for Savers Federal 

Savings and Loan Association (Savers) and against Mustang on 

Mustang's counterclaims. On appeal, Mustang specifically asserts: 

(1) The district court abused its discretion in finding that 

Mustang was in default under the terms of the promissory notes, 

and (2) Mustang should be allowed to assert its counterclaims 

against RTC-receiver. 1 We affirm. 

In December 1985, Mustang executed and delivered two loan 

agreements, three promissory notes, and two leasehold mortgages to 

Savers. The notes, one in the amount of $4,175,000.00 (note #1), 

one in the amount of $508,218.56 (note #2), and one in the amount 

of $200,000.00 (note #3), were secured by leasehold mortgages on 

Mustang's interest in an apartment complex. On August 29, 1988, 

Savers filed suit in Oklahoma state court to obtain a judgment on 

1 RTC notes in its brief that Mustang's brief incorrectly 

stated this point as "counterclaims against the RTC-conservator." 

RTC further notes that it confirmed with Mustang that this was a 

typographical error and that the correct reading is 

"RTC-receiver." 

2 

Appellate Case: 90-6276 Document: 010110130260 Date Filed: 08/06/1991 Page: 2 
the notes and to foreclose on the leasehold mortgages. Subsequent 

to filing suit, on February 10, 1989, Savers was placed in the 

conservatorship of the Federal Savings and Loan Insurance 

Corporation (FSLIC). On March 10, 1989, FSLIC removed the state 

court action to the United States District Court for the Western 

District of Oklahoma. 

On October 5, 1989, Savers' conservatorship was replaced with 

a receivership and plaintiff Resolution Trust Corporation was 

named as receiver. The Office of Thrift Supervision (OTS) 

immediately chartered Savers Savings Association appointing RTC as 

conservator of the new entity. On October 16, 1989, the district 

court substituted RTC-conservator as the plaintiff, and RTCreceiver as the counterclaim defendant in this action. 

I. 

Mustang first contends that the district court erred in 

concluding that Mustang was in default under the terms of note #1. 

The interpretation of the construction of a written instrument is 

a question of law which we review de novo. 

Fed. Sav. & Loan Ass'n of Colo., 837 F.2d 

See Caven v. American 

427, 430 (10th Cir. 

1988). "The language in a contract is given its plain and 

ordinary meaning .... " United Bank & Trust Co. v. Kansas 

Bankers Sur. Co., 901 F.2d 1520, 1522 (10th Cir. 1990). 

Under the terms of the loan agreement, in the event of 

default, Mustang was allowed ten days (plus three days for 

mailing) following written notice in which to cure the default. 

In the event the default was not cured within the allotted time, 

Savers could accelerate the entire balance and foreclose all 

3 

Appellate Case: 90-6276 Document: 010110130260 Date Filed: 08/06/1991 Page: 3 
security interests. Payments on note #1 

January 1, 1986, and consist of interest 

January 1, 1991, when payments of principal 

were to commence 

only payments until 

and interest would 

commence. The first twenty-four payments were to be in the amount 

of $34,356.70 per month. Mustang was to pay $17,395.77 of this 

amount with the balance paid as a draw from loan #2. Commencing 

on January 1, 1988, Mustang was to pay $26,093.68, of the 

$34,356.70, per month with the balance to be paid as a draw from 

loan #2. 

On February 4, 1988, Savers mailed Mustang notice of default 

on note #1, demanding curative payment in the amount of 

$139,827.93 for the months of November and December 1987, and 

January and February 1988. On February 13, 1988, Mustang paid 

$34,791.34 to Savers. On February 16, 1988, Savers notified 

Mustang by letter that an additional $52,184.56 was still owing in 

order to cure the default. Mustang subsequently remitted 

$26,093.58 on February 18, 1988, and an additional $52,187.16 on 

April 4, 1988. These last two payments were made outside the 

thirteen days allowed to cure the default. No further payments 

were made by Mustang. 

Mustang claims that because the amount stated as owed in the 

February 4, 1988 notice of default was "incorrect," the "second 

notice of default" sent on February 16, 1988, "served to modify it 

and allow Mustang additional time to comply with the notice of 

default." Appellant's Brief at 10. Mustang further alleges that 

because interest was to be paid in arrears, it was not in default 

at the time the suit was filed. 

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Appellate Case: 90-6276 Document: 010110130260 Date Filed: 08/06/1991 Page: 4 
Giving total credence to its argument that interest was to be 

paid in arrears, the amount owed by Mustang on February 4, 1988, 

2 to cure the default was, by its own calculation, $60,884.92. Id. 

at 11. Mustang paid $34,791.34 on February 13, 1988. This was 

the only payment made within the thirteen days allowed for curing 

the default. According to either party's calculation, the amount 

was not sufficient to cure. 

Mustang relies heavily on the Oklahoma case of Murphy v. Fox, 

278 P.2d 820 (Okla. 1955) to support its argument that it was 

guilty of only technical default which does not warrant 

foreclosure. In Murphy, the mortgagee refused to accept proffered 

payment, thereby causing default. The Oklahoma Supreme Court 

stated that equity can relieve a mortgagor from acceleration and 

foreclosure "where there has been a technical default due to a 

mistake or mere venial inattention and of no damage to the 

mortgage security or prejudice to the mortgagees." Id. at 826. 

Savers' statement of the amount owed by Mustang to cure the 

default was inclusive of the amount to be drawn from note #2 and 

late charge penalties. Even were we to consider this an error, 

the error did not cause or propagate the default, nor does it 

equate with mistake or inattention of the magnitude that would 

excuse Mustang's default or delay Mustang's obligation to cure. 

It is clear that Mustang was in default on the date that 

Savers mailed the required notice. It is equally clear that, by 

2 The district court stated that "[t]he promissory note dated 

December 30, 1985, in the original principal amount of 

$4,175,000.00 ("Note l") is unambiguous in its requirement that 

interest be prepaid monthly." Appellant's Brief, Findings of Fact 

and Conclusions of Law, Tab Cat 2. 

5 

Appellate Case: 90-6276 Document: 010110130260 Date Filed: 08/06/1991 Page: 5 
anyone's mathematics, Mustang failed to cure the default prior to 

expiration of the allotted time. We can find no authority which 

would support Mustang's argument that they were entitled to 

additional time to cure because of Savers' alleged "mistake" in 

stating the amount owed by Mustang to cure the default. Mustang 

was notified and did not dispute the default. By its own 

admission, Mustang conceded knowledge of the amount owed to cure 

the default even if interest was to be paid in arrears. Mustang 

failed to cure the default. 

Mustang further refutes the district court's conclusion, 

without elaboration, that its additional defenses were ineffective 

against RTC-conservator. In its reply brief, Mustang defines 

these defenses as (1) "an invalid Notice of Default;" (2) 

"estoppel for acceptance and application of payments prior to 

acceleration after the invalid February 4, 1988 Notice;" and (3) 

"latches for SFSLA's remaining silent for the period of time 

between the invalid Notice of Default on February 4, 1988, and the 

alleged acceleration on August 25, 1988." Appellant's Reply Brief 

at 8. Although it is unclear upon what basis the district court 

made its decision regarding Mustang's right to assert these 

defenses, due to our disposition in this case, and because these 

defenses are based upon Mustang's erroneous assertion that the 

February 4, 1988, notice of default was invalid, we find that a 

discussion of the merits of the parties' arguments regarding this 

issue would be moot. We therefore conclude that the district 

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Appellate Case: 90-6276 Document: 010110130260 Date Filed: 08/06/1991 Page: 6 
court was correct in entering judgment allowing RTC-conservator to 

have and recover judgment on the notes and to foreclose. 

II. 

Mustang's second contention is that the district court erred 

in its determination that its failure to submit a proof of claim 

within ninety days of its receipt of RTC's notice to creditors 

serves to bar its counterclaims against RTC-receiver, and that its 

grant of summary judgment to RTC-receiver on this issue is in 

error. Our review of the district court's grant of summary 

judgment involves the same standard employed by the district court 

under Fed. R. Civ. P. 56(c). Osgood v. State Farm Mut. Auto. Ins. 

Co., 848 F.2d 141, 143 (10th Cir. 1988). We review the record to 

determine if any genuine issue of material fact exists and if the 

moving party is entitled to judgment as a matter of law. Id. In 

addition, we must construe all facts and reasonable inferences in 

a light most favorable to the opposing party. Anderson v. 

Department of Health & Human Servs., 907 F.2d 936, 946-47 (10th 

Cir. 1990). 

Pursuant to the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 (FIRREA), RTC-receiver is required to give 

notice to all creditors of a failed institution that they have 

ninety days in which to file a proof of claim with the 

RTC-receiver. 12 U.S.C. § 1821(d)(3)(B)(i). It is undisputed 

that RTC-receiver complied with the notice requirement to Mustang 

on October 13, 1989, and that Mustang failed to present any claim 

within the ninety-day period. 

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However, Mustang argues that because the suit was pending at 

the time RTC was named receiver, RTC-receiver had ample notice of 

Mustang's counterclaims, and no further notice of Mustang's claims 

was required. "The starting point for interpretation of a statute 

'is the language of the statute itself.'" Kaiser Aluminum & Chem. 

Corp. v. Borjorno, 110 S. Ct. 1570, 1575 (1990)(quoting Consumer 

Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 

(1980)). When it is determined that the language of a statute is 

plain and unambiguous, the court may only enforce it in 

conformance with the language. Frieouf v. United States, No. 

90-6036, slip op. at 8 (10th Cir. July 10, 199l)(citations 

omitted); see also Wilson v. Stocker, 819 F.2d 943, 948 (10th Cir. 

1987)("[w]hen the terms of [a] statute are clear and unambiguous, 

that language is controlling absent rare and exceptional 

circumstances."). 

We agree with the district court's determination that a 

thorough reading of the applicable provisions in FIRREA fails to 

produce any language which could be construed to support Mustang's 

argument that the claim procedures can be dispensed with in cases 

where suit was filed prior to the appointment of the receiver. We 

also concur with RTC-receiver's argument that the language in 

FIRREA, allowing parties with claims to file suit "or continue an 

action commenced before the appointment of the receiver" in the 

event the claim is disallowed, serves to controvert Mustang's 

argument. 12 u.s.c. § 1821(d)(6)(A)(emphasis added). The statute 

clearly requires that each creditor 

§ 182l(d)(3)(B)(i). In the event 

8 

file a claim. 12 u.s.c. 

the claim is disallowed, the 

Appellate Case: 90-6276 Document: 010110130260 Date Filed: 08/06/1991 Page: 8 
creditor can then file suit or continue to pursue a suit already 

filed. No interpretation is possible which would excuse this 

requirement for creditors with suits pending, or allow the filing 

of suit to substitute for the claim process. 

Mustang further relies on 12 u.s.c. § 1821(d)(5)(f)(ii) which 

states: "Subject to paragraph (12), the filing of a claim with 

the receiver shall not prejudice any right of the claimant to 

continue any action which was filed before the appointment of the 

receiver." Again we are in agreement with the district court that 

this provision cannot be construed in any way to support Mustang's 

contention that its counterclaims survive its failure to comply 

with FIRREA's claim requirements. On the contrary, we conclude 

that Mustang's right to continue pursuing its pending lawsuit is 

dependent upon its compliance with FIRREA's claims provisions. 

See 12 U.S.C. § 1821(d)(6)(B). 

The judgment of the United States District Court for the 

Western District of Oklahoma is AFFIRMED. 

Entered for the Court 

John P. Moore 

Circuit Judge 

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