* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### OCT 17 1997 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

NATIONAL ENTERPRISES, INC.,

Plaintiff-Appellant,

v. FIRST WESTERN FINANCIAL CORPORATION, a New Mexico corporation; HOWARD T. VAN PELT; and JAMES E. HAWORTH,

Defendants-Appellees. No. 96-2168 (D.C. No. CIV 94-1012 JC/LFG)

(D. N.M.)

ORDER AND JUDGMENT *

Before BRORBY, LOGAN, and HENRY, Circuit Judges.

After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not materiallyassist the determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The c ase is therefore ordered submitted without oral argument.-2-

Plaintiff National Enterprises, Inc., the assignee and holder of a $100,000 promissory note, commenced this action to collect f rom the maker, defendant First Western Financial Corporation, and the guarantors, defendants Howard T. Van Pelt and James E. Haworth. On cross motions fo r summary judgment, the district court entered judgment in favor of defenda nts, based on its determination that a settlement agreement reached in an earlier a ction unambiguously encompassed the promissory note. We exercise appel late jurisdiction over the district court’s judgment and final order pursuant to 28 U.S.C. § 1291 and

we reverse.

BACKGROUND On December 1, 1985, Las Lomas Joint Venture (Las L omas), an entity 50% owned by First Western Financial Corporation (F irst Western) and 50% owned by VMH Partners, a general partnership formedby Van Pelt, Haworth, and another individual, borrowed $8.9 million from Sand ia Federal Savings & Loan Association (Sandia) for development of an apartment and day-care facility in El Paso, Texas (the project). The loan was evidenc ed by an $8.9 million promissory note, guaranteed by the individual partn ers in VMH Partners, and secured by a deed of trust on the joint venture’s p roperty. The first deed of trust provided that it would also secure “all other direct and indirect indebtedness now or at any time in the future owing or to be owing-3-

by [Las Lomas to Sandia], regardless of how evidenc ed or incurred, it being understood that it is contemplated that [Las Lomas] will become further indebted to [Sandia] in the future.” Appellee’s Suppl. App. at 195. According to defendants, the parties anticipated the need for an additional $500,000 loan, due to Sandia’s failure to honor its previous commi tment to participate in the project as an equity partner. Sandia’s internal do cuments show requests from First Western for loans “in conjunction with financ ing” the project. Appellant’s App. at 51-52. The project did experience a budget shortfall. On July 16, 1986, Sandia loaned $100,000 to First Western, which was “used i n connection with the operations” of the project. Appellant’s App. at 46 . The promissory note evidencing this loan is the subject of this action. Both Sandia and the project experienced financial d ifficulties. In 1989, Sandia failed and was placed into receivership by t he Resolution Trust Corporation (RTC). Las Lomas defaulted on the $8.9 million loan; First Western defaulted on the $100,000 loan. In July 1990, Las Lomas filed a lender liability action against the RTC as receiver for Sandia, alle ging that Sandia had caused the project’s deficiencies by, among other things, reneging on its agreement to participate in the project and breaking its commitm ent to loan the additional $500,000. The Complaint did not mention the $100,0 00 loan to First Western.-4-

The RTC, Las Lomas, and the guarantors settled the lender liability action in July 1992. The Compromise and Settlement Agreem ent (the agreement) resolved “the remaining balance owed under the Loan and . . . all matters, claims, causes of action, rights, liabilities and obligatio ns between and among them relating to or arising out of the Loan, the Loan Do cuments, and the Suit.” Id. at 16. According to the agreement definitions, (1) “the Loan” was the $8.9 million loan, id. at 14; (2) the “Loan Documents” consisted of the $ 8.9 million note, deed of trust, guaranty agreements, assignment of leases and rents, financing statements, and “any and all other documents, instr uments and agreements executed in connection with or to secure the Note,” id. at 14-15; (3) the “Suit” was the lender liability action, id. at 15; and (4) the “Borrower” was Las Lomas, id. at 14. To settle the suit, Las Lomas relinquished possessi on and control of the project and paid $500,000 to the RTC. In return, t he RTC agreed, “for itself and its successors and assigns, [to] RELEASE, ACQUI T and FOREVER DISCHARGE Borrower and Guarantors . . . from any an d all claims, demands, obligations, and causes of action of any nature whatsoever relating to or in any way arising out of the Note and the Loan Documents. ” Id. at 17-18. The RTC, however, did not “waive any rights it may have agai nst any person not a party hereto.” Id. at 20. Las Lomas and the guarantors released the RTC from all1 National Enterprises was substituted as a party andthe RTC was dismissed

on September 14, 1995. Generally, “jurisdiction is to be determined by facts existing at the time of filing suit.” Penteco Corp . Ltd. Partnership v. Union Gas Sys., Inc. , 929 F.2d 1519, 1522 n.2 (10th Cir. 1991). We not e, however, that the Third Circuit recently refused to apply the “time o f filing” rule to jurisdiction under § 1441a. See New Rock Asset Partners, L.P. v. Preferred Entity Advancements, Inc. , 101 F.3d 1492, 1503-04 (3d Cir. 1996). Although the logic underlying the New Rockdetermination may have merit, this court has not considered or adopted this exception to the time of filing rule.

2 In the district court, defendants also claimed thatthey were entitled to (continued...) -5- claims, “whether known or unknown, present or futur e, relating to or in any way arising out of the Note, the Loan Documents, th e Property and the Suit . . . .” Id. at 17. Miscellaneous terms included an integratio n clause, a statement that the parties entered into the agreement to “avoid litigation and buy peace,” and a provision requiring the agreement to be interpreted under Texas law. Id. at 19-20. On behalf of Las Lomas, the agreement was signed byVan Pelt, as president of general partner First Western, and Haworth, as partner of general partner VMH Partners. Haworth and Van Pelt also signed as guar antors. See id. at 21. In September 1994, the RTC filed this collection ac tion on the $100,000 note and then assigned the note to National Enterpr ises. 1 On cross motions for summary judgment, the district court determined that the settlement agreement was unambiguous and that it “resolve[d] all loans and issues concerning the Las Lomas project.” Id. at 158. The court therefore granted defendants’ m otion for summary judgment. 2 National Enterprises now appeals.2 (...continued)

summary judgment because National Enterprises does not have the original note in its possession and the note lacks proper endorse ment. The district court did not evaluate these contentions, defendants do not pursu e them on appeal, and we do not address them in this order and judgment.

-6- DISCUSSION “We review the grant of summary judgment de novo, applying the same standard as the district court. Summary judgment i s appropriate when there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law. We consider the record in the light most favorable to the non-moving party.” United States v. Sackett , 114 F.3d 1050, 1051 (10th Cir. 1997) (quotations and citations omitted). “Where, as here, the parties file cross motions for summary judgment, we are entitled to as sume that no evidence needs to be considered other than that filed by the parti es, but summary judgment is nevertheless inappropriate if disputes remain as to material facts.” James Barlow Family Ltd. Partnership v. David M. Munson, Inc. , No. 96-1202, 1997 WL 525196, *2 (10th Cir. Aug. 26, 1997). As with any other contract, the presence of ambigui ty in a term of a settlement agreement is to be determined as a matte r of law. See Carland v. Metropolitan Life Ins. Co. , 935 F.2d 1114, 1120 (10th Cir. 1991). “Under Tex as law, a contract is ambiguous if, after applying est ablished rules of interpretation,-7-

the written instrument remains reasonably susceptib le to more than one meaning.” Triad Elec. & Controls, Inc. v. Power Sys. Eng’g, I nc. , 117 F.3d 180, 191 (5th Cir. 1997) (quotations and citations omitted). Ambiguity may be patent, that is, evident on the fa ce of the contract, or it may be latent. A latent ambiguity arises when a contract which is unambiguous on its face is applied to the subject matter with whic h it deals and an ambiguity appears by reason of some collateral matt er. If a latent ambiguity arises from this application, parol evide nce is admissible for the purpose of ascertaining the true intention of the parties as expressed in the agreement. National Union Fire Ins. Co. v. CBI Indus., Inc. , 907 S.W.2d 517, 520 (Tex. 1995) (citations omitted). Once a writing is found to be ambiguous, determination of the parties’ intent through extrin sic evidence presents a question of fact. See Watkins v. Petro-Search, Inc. , 689 F.2d 537, 538 (5th Cir. 1982) (applying Texas law). In this instance, the release language of the agree ment is apparently clear. A latent ambiguity emerges, however, when the focus is on whether the agreement releases First Western and the guarantors from liab ility on the $100,000 note. The circumstances surrounding the execution of the agreement suggest two reasonable meanings. The district court accepted defendants’ position th at the “agreement . . . resolve[d] all loans and issues concerning the enti re Las Lomas project.”-8-

Appellants’ App. at 158. This expansive view of “d ocuments . . . executed in connection with” the $8.9 million note and “matters . . . relating to or arising out of the Loan,” Appellants’ App. at 15-16, is plausib le, in that (1) the parties contemplated additional loans for the project at th e time they closed the $8.9 million loan; (2) the parties agreed that the deed of trust securing the $8.9 million note would also secure later borrowings; (3) the pr oceeds from the $100,000 loan went toward the project; and (4) the parties expres sed their intention to buy peace and avoid litigation. On the other hand, an intention to exclude the $100 ,000 note from the scope of the agreement is suggested by the specific listing of only the $8.9 million loan, the accompanying documents, and the lender li ability suit. Support for this narrower interpretation can be found in several asp ects of the parties’ dealings: for instance, (1) First Western, not Las Lomas, was the maker of the $100,000 note; (2) First Western signed the agreement solelyin the capacity of general partner of Las Lomas; (3) Las Lomas made no mentionof the $100,000 note in its lender liability complaint; (4) Sandia evidently fa iled to link the two loans in its3 In its brief, National Enterprises argues that the D’Oench, Duhme doctrine

bars defendants’ efforts to link the $100,000 and $ 8.9 million loans. See D’Oench, Duhme & Co. v. FDIC , 315 U.S. 447 (1942) (holding that borrowers or guarantors are estopped from using unrecorded side agreements to defend against efforts by the FDIC or its assignees to collect on promissory notes acquired from a failed banking institution); 12 U.S.C. § 1823(e) (codifying the doctrine). The D’Oenchdoctrine plays no part in our determination that t he settlement agreement contains a latent ambiguity, and we do not address the doctrine in this order and judgment. We note, however, that an analysis of th e doctrine may become necessary on remand if the defendants continue to a rgue that the note was to be “repaid, if at all, only from the project’s positiv e cash flow or from the ultimate sale of the apartments from proceeds in excess of t he first mortgage balance.” Appellant’s App. at 47. -9- records; 3 and (5) the RTC was released from known or unknownclaims relating to the Las Lomas property, as well as the note, loan d ocuments, and lawsuit. Because the agreement is reasonably susceptible to more than one meaning, it is ambiguous. Moreover, the determination of th e agreement’s scope is a question of fact which cannot be resolved on this r ecord. The parties’ contradictory versions of the circumstances surroun ding the execution of the agreement create a genuine issue of material fact a s to whether the parties intended to discharge defendants from liability und er the $100,000 note. Summary judgment is therefore inappropriate.-10-

We REVERSE the district court's grant of summary ju dgment in favor of defendants, and REMAND for further proceedings.

Entered for the Court
Robert H. Henry Circuit Judge