Opinion ID: 1121444
Heading Depth: 1
Heading Rank: 3

Heading: the equitable relief afforded first federal and the hospital district in the present case

Text: In its equitable order, the district court first noted that the limited partnership agreement was void insofar as it bound the hospital district. [8] The district court stated that the hospital district had received the benefits of the medical office building. The court stated as follows: The [m]edical [o]ffice [b]uilding is an integral part of the Community Hospital campus. It contains a special oncology unit and has, over the years, provided offices to doctors and others who perform services at the hospital. The hospital has also leased space within the building to itself and the Durango Cancer Center without payment of rent. The district court additionally noted that the medical office building had depreciated considerably since it was constructed due to changed economic and market conditions, and found that the market value of the medical office building was $1,140,000, its value as of December 15, 1988, the date upon which the appraiser testified at trial. The district court subsequently noted that [a]s of January 6, 1989, the amount of indebtedness owed First Federal as a result of the loan was $2,936,054.00 in principal and approximately $1,023,224.00 in interest, which includes credit for net rental proceeds paid to First Federal to that date. [9] The district court further noted that it had previously awarded First Federal a judgment, jointly and severally, against LPMCA ... and Usher in the sum of $2,936,054.60, plus accrued interest. The district court ruled that, [c]onsidering all of the factors in this case, the only remedy which affords equity to the lender (First Federal) and the District (recipient of the benefit of the loan) is to establish the adjusted value at $1,140,000.00 without further adjustments for payments or contributions made. The [hospital d]istrict is to be afforded the option to retain the building by paying the full adjusted price; or convey title to the building to First Federal. By either selected option, the [hospital d]istrict discharges in full any indebtedness arising from the loan transaction on which this foreclosure and related remedies are based. .... Regardless of which option is selected by the hospital [d]istrict, the amount of the adjusted value ($1,140.00) is to be considered as a partial satisfaction of the judgment awarded First Federal against Camelback, ... Meserole, Usher, and LPMCA (less the District). Thus, as in Normandy Estates, the hospital district, as a municipal corporation, received the option of either retaining the medical office building and paying its market value to First Federal, or conveying the title to the medical office building to First Federal. Under either option, the hospital district was released from any remaining liability. First Federal, on the other hand, was fully compensated for its loss: it received either $1,140,000 from the hospital district and $1,796,054.60 (totaling the amount due under the promissory note) from LPMCA and Usher, or it received title to the property (valued at $1,140,000) from the hospital district and $1,796,054.60 from LPMCA and Usher. Thus, the district court's equitable ruling regarding the municipal entity, the hospital district, and the private party, First Federal, accords with both the principles of Normandy Estates and the equitable relief approved therein. The present case differs from Normandy Estates, however, insofar as Normandy Estates did not contemplate what relief, if any, should be afforded to non-municipal defendants who remained liable on the contract from which the municipal defendant has been released from further liability. In the present case, there are additional defendants, LPMCA and Usher, who remain liable on the promissory note to First Federal. We now address their contentions.