Opinion ID: 3009711
Heading Depth: 4
Heading Rank: 8

Heading: a collateral assignment of a partnership

Text: interest by Novasau Associates in itself and in NLA Associates; and 7. a $250,000 promissory note payable on demand. Federal Deposit Ins. Corp. v. Bathgate et al., Civ. No. 91-2779 (consolidated), Memorandum and Order at 2-3 (D.N.J. Mar. 18, 1993) (see Bathgate defendants' App. I at 19-20). In 1989, Bathgate also executed an unconditional guaranty securing 25 percent of a $1.8 million Agreement for Commercial Letter of Credit between NLA Associates, LGP-I Limited Partnership, and Novasau Associates and the Bank. Id. at 3 (see Bathgate defendants' App. I at 20).0 Alan B. Landis secured the remainder of this obligation to the Bank. Bathgate defaulted on the $11,500,000 note by failing to make the required monthly and quarterly payments beginning on October 1, 1990. On February 15, 1991, Bathgate also defaulted on the $187,500 note by failing to make the required monthly payment. On February 26, 1991, the Bank wrote a 13-page letter to Bathgate regarding the $11,500,000 note, the $187,500 note, 0 Pursuant to the Agreement for Commercial Letter of Credit, NLA Associates, LGP-I Limited Partnership, and Novasau Associates agreed to pay the Bank on demand such amounts as the Bank paid to Chase Manhattan Bank pursuant to a $1,800,000 letter of credit issued by the Bank in favor of Chase. NLA also executed an undated demand promissory note in the amount of $l,800,000. The Bank advanced $1,688,178 under the terms of the letter of credit. 5 the $4,000,000 note, the $250,000 note, and the $1,800,000 unconditional guaranty. See Bathgate defendants' App. II at 629. This letter is at the heart of this action. The letter begins by stating that the Bank has agreed to modify and consolidate these obligations, and the majority of the letter details the terms and conditions of the modification. Id. The letter was signed by William Carlough, Senior Vice President, and indicated that he sent copies to Douglas Johnson, the Bank's President and CEO, and Charles R. Berman, an attorney at Bourne, Noll & Kenyon. Id. at 642. The following are the most significant provisions of the letter: (1) the commitment was subject to Bathgate's acceptance and return to the Bank, fully executed, by 2/26/91, id. at 641; (2) the commitment shall expire and shall be of no further effect if the transactions contemplated by this commitment are not closed by 4/1/91, id.; (3) the bank shall be represented in this transaction by the firm of Bourne, Noll & Kenyon, . . . which will prepare all documents in this transaction, id. at 637; and (4) [t]he Borrower and the Bank shall execute and deliver all documentation required by the Bank in connection with the issuance of the Loan and the Collateral[,] id. The February letter also identifies specific documents Bathgate was to furnish to the Bank counsel prior to the closing of the transactions contemplated by the letter, id. at 635-37 (see also Bathgate defendants' App. II at 603-05), 639- 6 40,0 and states that Bathgate must provide [s]uch other information, documents, certificates, financial statements or opinions reasonably required by the Bank and its counsel, id. at 637. Though Bathgate executed and delivered the February letter to the Bank on February 26, 1991, the proposed restructured loan never was closed. In a letter dated April 11, 1991, the Bank formally demanded payment of two notes on which Bathgate had failed to make payments (the $11,500,000 note and 0 These include the following items: (1) title insurance policies insuring the Bank's lien interest in the mortgaged properties; (2) insurance policies against hazards on the mortgaged properties; (3) insurance policies against floods on any areas designated as flood hazard areas; (4) proof that the mortgaged properties are not subject to the Environmental Cleanup Responsibility Act or other applicable environmental law and that all taxes and assessments against the properties have been paid; (5) a survey of each mortgaged property; (6) an approved attorney letter from a title insurance company indemnifying the Bank against fraud or failure by the closing attorney to comply with the closing instructions; (7) state and county UCC searches regarding Bathgate and any entities in which Bathgate has assigned his interest or which own collateral; (8) copies of all partnership agreements, charter documents and other organizational documents or agreements of entities in which . . . [Bathgate] has assigned interest or delivering or owning [c]ollateral in connection with the [l]oan; (9) [c]orporate resolutions adopted by the Board of Directors of Tuscol Development, Inc. and New Nas, Inc. - authorizing the issuance of applicable [c]ollateral documents in connection with the [l]oan; (10) [w]ritten consent of all partners of each partnership which grants or modifies a mortgage as collateral for the [l]oan or in connection with which the [b]orrower has granted a collateral assignment of his partnership interest, if required by the partnership agreement; (11) affidavits with respect to environmental matters; (12) good standing certificates and corporate status searches with respect to Tuscol Development, Inc. and New Nas, Inc.; and (13) appraisals on the mortgaged property paid for by Bathgate. See App. II at 603-05, 635-37, 639-40. 7 the $187,500 note) and three notes payable on demand (the $4,000,000 note, the $250,000 note, and the $1,800,000 note). Bathgate defendants' App. I at 310. On April 8, 1991, Bathgate failed to make a required payment on the $185,000 note. In a letter dated May 1, 1991, the Bank formally demanded payment of the $185,000 note, and in a second letter dated May 1, 1991, the Bank formally demanded payment of the $1,800,000 note by Bathgate, NLA, and Landis. Bathgate failed to make the payments demanded on these six notes, and NLA and Landis failed to make the payments demanded of them on the $1,800,000 note.