IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 96-30594

JERRY BONNEAU; JERRY BONNEAU, MRS.; 

ELLIS ERWIN; ELLIS ERWIN, MRS.; 

CHARLES AMES; J. W. WILLIAMS,

Plaintiffs-Appellants, 

versus

FARM CREDIT BANK OF TEXAS, 

doing business as FCS Servicing; 

AGAMERICA FCB doing business as 

FCS Servicing; AG FIRST FARM 

CREDIT BANK doing business as 

FCS Servicing; AGRIBANK FCB; 

COBANK doing business as FCS 

Servicing; FARM CREDIT BANK OF 

WICHITA doing business as FCS 

Servicing; ST. PAUL BANK doing 

business as FCS Servicing; 

WESTERN FARM CREDIT BANK doing 

business as FCS Servicing, 

Defendants-Appellees. 

Appeal from the United States District Court

for the Western District of Louisiana

(96-CV-12)

March 13, 1997
* Pursuant to Local Rule 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Local Rule 47.5.4.

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Before GARWOOD, WIENER and DeMOSS, Circuit Judges. 

PER CURIAM:*

Plaintiffs-Appellants (“Makers”) in this uncertified class

action suit complain on appeal that the district court erred in

granting motions —— the first filed by Farm Credit Bank of Texas

(FCBT) and the rest seriatim by the remaining defendants —— to

dismiss the Makers’ action pursuant to Federal Rule of Civil

Procedure 12(b)(6). More specifically, the Makers have urged on

appeal that their pleadings were sufficient to entitle them to go

forward with efforts to prove that the defendants had (1) breached

loan contracts by failing to adjust the interest rates on

promissory notes executed by the Makers, (2) breached fiduciary

duties owed to the Makers, and (3) violated the RICO and mail fraud

statutes of the United States. 

After hearing the oral arguments of counsel, reviewing the

Makers’ pleadings, studying the briefs of the parties and the

record, such as it is at the Rule 12(b)(6) level, and analyzing the

opinion of the district court, our plenary review of this case

convinces us beyond doubt that the Makers can prove no set of facts

under their pleadings that would entitle them to any of the relief
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sought. 

The Makers’ positions are grounded in the contention that

their respective promissory notes given to the now-defunct Federal

Land Bank of Jackson (FLBJ), which was put into receivership by the

Farm Credit Administration (FCA), were “variable interest rate”

notes. Stripped of all obfuscatingly complex mischaracterizations

and misapprehensions, that contention is facially false. Unlike

true variable interest rate notes, the interest on which fluctuates

on the basis of objective economic indicia, either at stated

intervals or on objectively determined occurrences —— and not on

the volition of one of the parties alone —— the instant notes were,

as a matter of law, tantamount to fixed rate notes bearing interest

at the most recent rate established from time to time by the FLBJ

if, but only if, the FLBJ exercised its unilateral option —— not

obligation —— to change that rate. No future holder of the notes,

such as the FCBT, was empowered to take any action to vary the

interest rate of the note, whether up or down, from the interest

rate last established by the FLBJ. Neither did any maker of a note

have the contractual right to insist that the interest rate on his

note be varied. 

The operable facts alleged or implied by the Makers in the

pleadings and accepted as true for Rule 12(b)(6) purposes are that

(1) after the FLBJ went into receivership, at a time when its

established interest rate for such loans was 12.25% per annum, the

Makers’ notes were acquired by the FCBT; (2) the established
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interest rate at the FLBJ had not changed for several years prior

to such acquisitions, has never changed since, and is unlikely ever

to be changed, given FLBJ’s insolvency and receivership status;

(3) the interest rate of 12.25%, which had been in effect since

1985, was therefore going to be treated by the FCBT as “fixed” (not

converted unilaterally by the FCBT to a fixed rate note) because

FCBT did not have the right under either the contract documents or

federal law to adjust the interest rates on the notes; (4) the

Makers’ stock in the FLBJ had been retired by its receiver and the

stock’s par value applied to reduce the balance of the Makers’

loans; and (5) the FCBT had invited each Maker and all others

similarly situated to join the FCBT in executing a modification

agreement that would, inter alia, authorize the FCBT to adjust

interest rates on such notes (a result of which would be an

immediate reduction to 11.25% per annum) and to become members of

the FCBT’s farm bank cooperative by purchasing stock therein ——

which could be accomplished without additional cash outlay from the

Makers by their authorizing the FCBT to transfer the par value of

the Makers’ former stock in the FLBJ (which had been credited

previously to their loan balance) to finance the purchase of stock

in the FCBT, thereby further reducing the interest rates on the

Maker’s note to equal the rate that the FCBT was charging its own

stockholders on their loans. In light of these allegations and the

inferences therefrom, we agree with the district court that the

Makers could prove no set of facts that would alter the conclusions
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that (a) they had no legal right to demand a reduction in their

rate of interest as long as no action was taken by the FLBJ’s

receiver to change the longstanding 12.25% per annum interest rate

of that institution; (b) they had no legal right to insist on any

modification of the terms of their notes; (c) the proposal of the

FCBT was purely gratuitous and if accepted by the Makers would,

without cost or expense to the Makers, place them on an even

footing with the FCBT’s own member-borrowers; (d) the modifications

proposed by the FCBT could only be accomplished through a bilateral

amendment executed by the Makers and the FCBT; and (e) the FCBT’s

reduction of the rate of interest on the notes in the absence of

such a bilateral modification would itself constitute a breach of

contract, not the opposite as contended by the Makers, i.e., that

the FCBT’s refusal to reduce the interest rates on the loans

unilaterally placed the FCBT in violation of the FCA and in breach

of the contract. Given these conclusions that are apparent from

the Makers’ pleadings, we are firmly convinced that the legal

position asserted by Makers in the district court —— and, even

more so, their prosecution of the instant appeal —— are

unmeritorious, approaching frivolousness, and thus constitute

proper grist for the Rule 12(b)(6) mill. For the Makers to

institute litigation of this nature and prosecute it on appeal in

the face of the FCBT’s gratuitous and facially fair and reasonable

modification invitation impresses us as a classic example of the

maxim, “No good deed goes unpunished.” 
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For essentially the same reasons that are reflected in the

district court’s thorough opinion, its order dismissing the Makers’

action is, in all respects. 

AFFIRMED.