Court Opinion

ID: 4921
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:00:34+00
Date Added: 2024-06-11T16:41:41.229956
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                        ________________________

                               No. 91-1822
                           (Summary Calendar)
                        ________________________

Joe Rosas and Henry Perez,
Individually and d/b/a Cleburne
Joint Venture No. One
and Beatrice Rosas,
                                               Plaintiffs-Appellants,

                                 versus

The United States Small Business
Administration, Meadowbrook
National Bank, Mel B. Wilde, and
Ray Collins, Substitute Trustee,
                                               Defendants-Appellees.

       ___________________________________________________

           Appeal from the United States District Court
                for the Northern District of Texas
       ___________________________________________________
                          (May 21, 1992)

Before JONES, DUHÉ, and WIENER, Circuit Judges.

Per Curiam:

     Plaintiffs-Appellants, Joe Rosas and Henry Perez, individually

and doing business as Cleburne Joint Venture No. One, and Beatrice

Rosas (collectively "Appellants" or "the Joint Venture"), appeal

summary judgments in favor of the United States Small Business

Administration   (the   SBA),   its   substitute   trustee   Ray   Collins

(Collins),    Meadowbrook   National    Bank    (Meadowbrook),     and   its

president Mel B. Wilde (Wilde).        Finding no reversible error, we

affirm.
                                I.

                      FACTS AND PROCEEDINGS

     In August of 1987, the Appellants obtained a $280,000 loan,

amortized over 20 years, from a third party bank, Independence

Mortgage (Independence), for permanent financing of a convenience

market to be constructed by the Joint Venture.   The SBA provided an

85 percent guaranty for the loan.    Another third party bank, the

First National Bank of Cleburne (First Bank) agreed to provide

interim funding and was given a first lien on the property.      In

less than a year, the Joint Venture became delinquent on the First

Bank loan because, according to Rosas and Perez, the $280,000 ran

out before construction was completed.

     The Joint Venture then obtained a commitment from Independence

to increase the amount of the permanent mortgage loan by $30,000,

but First Bank refused to advance the additional funds.        Even

without the additional funds, in July of 1988, Rosas and Perez

decided to open the market, despite incomplete construction and

lack of capital with which to purchase inventory.

     The next month, Rosas negotiated1 with Mel Wilde, president of

Meadowbrook National Bank, about providing the needed financing.

In early September, Meadowbrook issued a 60-day commitment to the

Joint Venture in which it agreed to fund a $400,000 loan amortized

over 20 years if the SBA agreed to an 80 percent guaranty.      The

     1
      There seems to be some disagreement with respect to whether
it was Rosas or Wilde who suggested that Meadowbrook consider
extending a loan to the Joint Venture. The discrepancy is not,
however, material to the summary judgment.

                                2
resulting SBA loan package, however, called for an amortization of

15 years instead of 20, and a guaranty of 85 percent instead of

80.2

       Later in September, First Bank as the initial interim lender

posted the market property for foreclosure, and demanded turnover

of all equipment and inventory securing its loan.

       In    December,   at    the    closing       of    the    $400,000    loan,   the

Appellants signed an SBA Authorization and Loan Agreement (the

Authorization), previously approved by the SBA, which reflected the

15 year amortization and 85 percent guaranty.                       The Authorization

specified the proportions of the $400,000 that were to be used for

the     purchase    of   land,       equipment,          and    inventory,    and    for

construction.       The Appellants claim to have protested the 15 year

amortization, stating they were told by Wilde to sign the note as

is, and he would later modify the amortization to 20 years.

       At the closing, Meadowbrook and the SBA also discovered that

several mechanics and materialmen's liens, aggregating $55,801.70,

for debts incurred by the Joint Venture in the initial construction

still stood against the market property.                       The Appellants contend

that the lien creditors had not performed their contracts in

accordance with specifications, and thus were not entitled to be

paid.      Nevertheless, the title insurance company would not issue a

title      policy   unless    the    liens       were    released,    so    Meadowbrook

negotiated lien payoffs with most of the creditors, and agreed to

       2
      Although Meadowbrook argues on appeal that the SBA would
only approve a 15 year payout, the guaranty application, made by
Wilde on behalf of Meadowbrook, requested only a 15 year payout.

                                             3
add $25,000 to the loan package to accomplish the lien payoff.

Wilde claims that Rosas and Perez disputed only one of the liens,

for which Meadowbrook escrowed the payoff pending a resolution.

      Once all of the settlement charges were paid, including lien

creditors and First Bank, there remained virtually no money for

completion of the market or purchase of inventory.           Therefore, the

Appellants closed the market and began searching for additional

funding.       After an aborted attempt to secure funding through

another bank, the Appellants returned to Meadowbrook. It agreed to

fund an additional $80,000 loan, again guaranteed by the SBA.              This

time Meadowbrook retained $25,000 of the $80,000 to pay off an

interim loan,3 and used another $24,206.36 to service the $400,000

debt.     Apparently, the Appellants received the remaining $30,000

for operating capital.

      The   Appellants       also   maintained   an   operating   account   at

Meadowbrook into which they deposited all receipts of the market.

The Appellants contend that in June of 1989, Meadowbrook began to

dishonor some checks drawn against the operating account despite

the presence of sufficient funds to pay the checks.               Meadowbrook

agrees that on at least one occasion it did refuse to honor a check

even though there were sufficient funds, justifying its action on

the   ground    that   the    Appellants    were   attempting     to   purchase

equipment in violation of the limitations set forth by the SBA's

Authorization and Loan Agreement for the $80,000.

      3
      It is not clear from the record whether this $25,000 is the
same $25,000 added to the original $400,000 to cover the payoff
of the creditors.

                                        4
      Late in 1989, the Appellants again approached Meadowbrook for

additional funding.            The Appellants were at least six months

delinquent     on    both   the     $400,000      note    and      the    $80,000       note.

Meadowbrook refused the additional funding.                        In January of 1990

Meadowbrook requested that the SBA purchase its guaranties, which

it agreed to do.        Thereafter, the SBA initiated foreclosure.

      The Appellants brought suit in Texas state court against the

SBA   and   Ray     Collins,      the    substitute      trustee,        for     promissory

estoppel and to enjoin the SBA's foreclosure action.                              They also

brought     actions    against      Meadowbrook       and     Wilde      for     breach     of

contract, negligent misrepresentation, breach of duty of good faith

and fair dealing, duress, and breach of depository agreement.                               The

SBA removed the action to federal district court.                        After initially

denying motions to dismiss and motions for summary judgment filed

by the SBA and Collins, the court granted summary judgment to

Meadowbrook, Wilde the SBA, and Collins.

      In its memorandum order, the district court rejected the

Appellants' contention that the statements made by Wilde at the

December      closing       of     the      $400,000        loan      were        negligent

misrepresentations.              Instead,       the   court     found          them   to    be

inadmissible      under     the    parol    evidence     rule.           The    court      also

rejected the Appellants' claim for breach of duty of good faith and

fair dealing, finding that Texas does not recognize such a duty

from lender to borrower.            And the court rejected the duress claim

because it found that the Appellants' assertions were conclusory

                                            5
and unsupported by fact or authority.     The court did not address

the breach of depository agreement claim.

     The Appellants timely appealed the district court's final

judgment.

                                 II.

                        STANDARD OF REVIEW

     This court reviews the grant of summary judgment motion de

novo, using the same criteria used by the district court in the

first instance.4   We "review the evidence and inferences to be

drawn therefrom in the light most favorable to the non-moving

party."5    Summary   judgment    is   proper   "if   the   pleadings,

depositions, answers to interrogatories, and admission on file

together with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law."6     Fed.R.Civ.P. 56(e) requires

that when a proper motion for summary judgment is made, the non-

moving party must set forth specific facts showing that there is a

genuine issue for trial.7   The mere existence of an alleged factual

dispute between the parties will not defeat an otherwise properly

supported motion for summary judgment.    A dispute about a material

     4
Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.
1988).
     5
      Baton Rouge Bldg. & Constr. Trades Council v. Jacobs
Constructors, Inc., 804 F.2d 879, 881 (5th Cir. 1986)(per
curiam)(citing Southmark Properties v. Charles House Corp., 742
F.2d 862, 873 (5th Cir. 1984)).
     6
      Fed.R.Civ.P. 56(c).
     7
      Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

                                  6
fact is genuine "if the evidence is such that a reasonable jury

could return a verdict for the nonmoving party."8 "Material facts"

are "facts that might affect the outcome of the suit under the

governing law."9

                               III.

                             ANALYSIS

A.   Negligent Misrepresentation

     The district court rejected the Appellants' contentions that

Wilde's statement at the closing, indicating that he would convert

the loan from a 15 to a 20 year payout if the Appellants would sign

the note, was a negligent misrepresentation.   The court concluded

that the statement was inadmissible under the parol evidence rule.

We agree.

     Even assuming the Appellants' allegations are true, Wilde's

alleged representations fall squarely within the ambit of the parol

evidence rule making such representations inadmissible evidence.

As a basic rule of Texas contract construction, if a contract is

clear and unambiguous on its face, courts will not consider oral

representations by the parties in interpreting the contract.10

Parol agreements, negotiations and representations are inadmissible

     8
      Id. at 248.
     9
      Id.
     10
      R & P Enterprises v. La Guarta, Gavrel & Kirk, Inc., 596
S.W.2d 517, 519 (Tex. 1980).

                                   7
in Texas and cannot be used to alter the express terms of a written

contract.11

     In     an   attempt   to    escape       the    parol   evidence    rule,   the

Appellants maintain that they are not attempting to contradict the

terms of the $400,000 note, but are simply attempting to prove that

Wilde's representations induced them to execute a note containing

terms to which they did not agree.              Such an assertion cannot save

the Appellants.     Texas courts bind parties to the express terms of

the promissory notes they execute. As the Texas supreme court held

in a case involving a loan agreement,

     A party to a written agreement (promissory note) is charged as
     a matter of law with knowledge of its provisions and as a
     matter of law cannot claim fraud when he is bound to the
     provisions unless he can demonstrate he was tricked into its
     execution.12

Therefore to fall within this exception to the parol evidence rule,

a party must prove that he was fraudulently induced to enter a

contract.        Absent    a    showing   by        the   Appellants    that   Wilde

fraudulently induced them to execute the $400,000 note, evidence of

representations and negotiations prior to execution of the note is

inadmissible.

     In Simpson v. MBank Dallas, N.A.,13 a guarantor attempted to

avoid liability on a note by claiming that the bank represented

prior to execution that his signature was a "mere technicality" and

     11
      Texas Export Development Corp. v. Schleder, 519 S.W.2d
134, 137 (Tex. Civ. App. - Dallas 1974).
     12
      Town North National Bank v. Broaddus, 569 S.W.2d 489, 492
(Tex. 1978)(quoting Texas Export, 519 S.W.2d at 139).
     13
          724 S.W.2d 102 (Tex. Civ. App. - Dallas 1987).

                                          8
that MBank would not attempt to enforce its guaranty.             The court

upheld the trial court's grant of summary judgment for MBank,

stating:

     The law is well settled that in order for [the guarantor] to
     prove fraud in the inducement sufficiently to allow an
     exception to the parol evidence rule to come into play, he
     must show some type of trickery, artifice or device employed
     by MBank in addition to showing that MBank represented to him
     that he would not be liable on the guaranty.14

The Appellants have presented no evidence that the Meadowbrook or

Wilde employed any trickery, artifice or device other than Wilde's

alleged representation that he would restructure the loan from 15

to 20 years. In fact, the Appellants' evidence reflects that Wilde

and the Bank never engaged in a course of conduct calculated to

deceive     the   Appellants   into   believing   that   any   alleged   oral

agreement would also be honored on the note.

     Parties to a promissory note are charged as a matter of law

with knowledge of its provisions, and as a matter of law cannot

claim fraud unless they demonstrate that they were tricked into its

execution.15      The Appellants executed the note with full knowledge

of the facts that they claim constituted fraud.           They knew at the

time they signed the note that it required a 15 year payout and

that they were responsible for payment under that note.                  They

     14
      Id. at 108 (emphasis added). See also Town North, 569
S.W.2d at 492; Clark v. Dedina, 658 S.W.2d 293, 296 (Tex. App. -
Houston (1st Dist.) 1983). As the district court noted in the
present case, "[c]learly an action for negligent
misrepresentation could not, by definition, include evidence of
artifice or trickery necessary to meet the requirements of this
exception" to the parol evidence rule.
     15
          Town North, 569 S.W.2d at 492.

                                       9
cannot now be heard to complain that Wilde deceived them into

signing the note based on a promise to vary its terms in the

future.

     If fraud could be predicated on a party's allegation of any

oral promise to vary the express terms of the note, then any

collateral parol agreement might be asserted to contradict, vary or

even abrogate any written contract.                The result would destroy the

parol     evidence     rule      altogether     resulting   in     uncertainty   and

confusion       in   the   law    of   contracts    in   general    and   negotiable

instruments in particular.16

     There is no genuine fact issue here, and it is clear that the

Appellees should prevail on the law.                 The Appellants signed the

loan documents at closing, agreeing to a 15 year payout under the

note, and cannot now avoid their contractual obligation based on an

alleged parol representation.

B.   Duress

     The district court concluded that the Appellants failed to

present any evidence of duress.               The Appellants contend, however,

that their affidavits submitted in opposition to the summary

judgment motions           illustrate    the    "extreme    precarious    financial

position" in which they found themselves at the time of the

December closing.          Rosas stated that "[a]t the December Closing,

Wilde threatened that unless the Joint Venture accepted the terms

which had been negotiated, [First Bank] would foreclose on [its]

     16
          Id.

                                           10
first lien."      The Appellants also assert that the fact that the

disbursements planned for the $400,000 loan did not comply with the

SBA authorization is further evidence of duress.               We fail to see,

however, how these statements can be deemed evidence of duress.

     Texas courts have held that there can be no duress unless (1)

there is a threat to do some act that the party threatening has no

legal right to do, (2) there is some illegal exaction or some fraud

or deception, and (3) the restraint must be so imminent as to

destroy a party's free agency without present means of protection.17

Neither the Appellants' complaint nor the affidavits allege any

action by Wilde that meets the elements set forth above.                Simply

stated, the alleged acts constitute no threat to undertake an

unauthorized, deceptive, fraudulent or illegal act.                   Both the

"threat" not to fund the loan and the "threat" that First Bank

would     foreclose   on   the   Joint    Venture    alleges   no   illegal   or

fraudulent act.       Both scenarios were within the respective banks'

legal rights.

     The Appellants also failed to articulate how Wilde's alleged

threats     destroyed   the   Appellants'     free   agency.18      Instead   of

attempting to address each of the elements of a duress cause of

action, the entirety of the Appellants' arguments on the duress

issue focuses on the Joint Venture's "extreme precarious financial

     17
      Tower Contracting Co. v. Burden Brothers, Inc., 482 S.W.2d
330, 335 (Tex. Civ. App. - Dallas 1972); See also Palmer Barge
Line, Inc. v. Southern Petroleum Trading Co., 776 F.2d 502, 505
(5th Cir. 1985).
     18
          Tower Contracting, 482 S.W.2d at 335.

                                         11
position."         The affidavits set forth no facts demonstrating that

Wilde,       and   not     the   Joint    Venture's     financial    hardship,     was

responsible for forcing the Appellants to execute the $400,000

note.       The district court recognized that the Appellants' argument

"is supported         by    neither      legal   authority    nor   by   any   factual

clarification of Wilde's alleged threats." As a consequence of the

Appellants' failure to plead the elements of duress properly, there

is no issue whatsoever, either legal or factual.                     Therefore, the

district court was correct in rejecting the Appellants' claim of

duress.

C.     Breach of Good Faith and Fair Dealing

       The district court also rejected the Appellants' claim that

the Bank and Wilde breached a duty of good faith and fair dealing

because Texas courts do not recognize such a duty from lender to

borrower.19        On appeal, the Appellants characterize this claim as

one for breach of the implied promise not to interfere or hinder

the Appellants' right to perform their contract.20                   The Appellants

apparently base their argument on Meadowbrook's alleged deviation

from the guidelines set forth in the SBA authorizations with

respect to disbursement of the proceeds.                     In effect, they argue

that    Meadowbrook        disbursed      the    loan   proceeds    to   benefit   its

       19
      See Victoria Bank and Trust Company v. Brady, 779 S.W.2d
893, 902 (Tex. App. - Corpus Christi 1989), aff'd in part, rev'd
in part on other grounds, 811 S.W.2d 931 (1991).
       20
      See Texas National Bank v. Sandia Mortgage Corp., 872 F.2d
692 (5th Cir. 1989).

                                            12
position       as   mortgagee    and    not     in   accordance      with   the    SBA's

authorizations.         This argument is without merit.

       SBA regulations with respect to the purpose of the loan

authorization provide helpful guidance.                     Section 122.5-521 reads,

"[i]f SBA approves a loan request, a loan authorization is issued.

The authorization states the terms and conditions on which SBA is

willing to make, participate in or guarantee a loan but it is not

a contract to loan money."             Section 120.202-522 provides that the

       SBA shall be released from obligation to purchase its share of
       the guaranteed loan unless the Lender has substantially
       complied with all of the provisions of these regulations, the
       Guaranty Agreement and the Loan Authorization, and has not
       failed to disclose material facts, and had made no material
       misrepresentations to SBA with respect to the loan; or upon
       the happening of any one or more of the following events:
            (a) Defective Closing. Failure of the Lender to close
            and disburse the loan substantially in accordance with
            the terms and requirements of the loan instructions
            (including the loan authorization), or to service the
            loan in a prudent manner, either of which may result in
            a substantial loss on the loan.23

Read    together,       these    regulations         make    clear   that    the     loan

authorization is not a contract to lend.                         Rather, it is an

agreement between the SBA and the lending institution defining

under what conditions the SBA will honor its guaranty.                      The SBA is

obligated to perform only if the Bank substantially complies with

the conditions of the agreement.              When the Joint Venture defaulted

on     the     notes,   the     SBA    conducted      a     prepurchase     review    of

Meadowbrook's distribution of the loan funds prior to purchasing

       21
            13 C.F.R. § 122.5-5.
       22
            13 C.F.R. § 120.202-5.
       23
            Emphasis added.

                                           13
its 85 percent guaranty.       The SBA apparently concluded that the

distribution complied with the SBA's loan authorizations because it

honored its guaranty.       We find it incongruous that Meadowbrook

could have both managed the loans in an inequitable manner and

comported with the SBA authorizations.      The SBA's determination as

to whether the Bank's actions comport with its guidelines is

dispositive of the issue.24

D.   Breach of Depository Agreement

     Although the Appellants claimed before the district court that

Meadowbrook   breached   its   depository   agreement   and   wrongfully

dishonored checks when there were sufficient funds in the operating

account, the district court made no mention of this claim in its

memorandum order.   Instead, in its judgment, the court declared,

"for the reasons stated in the memorandum order of this date, it is

ordered that plaintiffs take nothing on their claims against

defendants in this case."      Although the court's opinion does not

discuss the cause of action for breach of the depository agreement,

this in no way renders invalid the court's dismissal of that claim.

A court is not required, after disposing of all the issues in a

judgment, to explain its determination on each and every issue in

an attached memorandum.25

     24
      See also Klehm v. Grecian Chalet, Ltd., 164 Ill. App. 3d
610, 518 N.E.2d 187 (1987).
     25
      Murdaugh Volkswagen, Inc. v. First National Bank, 741 F.2d
41, 44 (4th Cir. 1984).

                                   14
       Clearly, the district court dismissed the Appellants' claim

because      they    failed   to   present     the    requisite   testimony   and

documentary evidence to raise a fact issue in response to the

motions for summary judgment filed by Meadowbrook and Wilde.                  The

Appellants'         affidavits     fail   to   meet     the   requirements    for

specificity to raise a fact issue and thereby defeat summary

judgment under the standard set forth by Anderson v. Liberty Lobby,

Inc.        There,   the   Supreme   Court     held   that,   "when   a   properly

supported motion for summary judgment is made, the adverse party

must set forth specific facts showing that there is a genuine issue

for trial."26

       Rosas and Perez submitted the following affidavit testimony in

response to the motions for summary judgment:

       Rosas:

       Meadowbrook did deposit some loan funds in the operating
       account which the Joint Venture maintained, but often refused
       to honor checks, even though the Joint Venture account balance
       wa much greater than the face amount of the check. Attached
       hereto as Exhibit "K" are true and correct copies of return
       check notices sent to the Joint Venture by Meadowbrook, which
       show that Meadowbrook dishonored checks despite there being
       sufficient funds in the Joint Venture Account.

       Perez:

       Meadowbrook did deposit funds in the operating account which
       the Joint Venture maintained, but often refused to honor
       checks, even though the Joint Venture account balance was much
       greater than the fact amount of the check.

       26
477 U.S. at 250. See also Miller v. Soliz, 648 S.W.2d
734, 737 (Tex. Civ. App. - Corpus Christi 1983); Westland Oil
Development Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 907 (Tex.
1982).

                                          15
     To   bolster    this   testimony,   the   Appellants    attached   two

document pages listing four checks totaling $350.           The documents,

however, are vague and are not self-explanatory.27

     In Wilde's affidavit in support of his motion for summary

judgment, he averred that

     There were several occasions in which Meadowbrook denied
     payment on Cleburne Joint Venture checks written on a
     Operating Account at Meadowbrook due to Cleburne Joint Venture
     maintaining insufficient funds in the account. Only once did
     Meadowbrook refuse payment on a check despite sufficient funds
     existing in the account. This occurred when Cleburne Joint
     Venture attempted to purchase approximately $600.00 of
     equipment not authorized by the SBA in the Authorization and
     Loan Agreement.

There is no genuine issue with respect to the fact that checks were

dishonored even though there were sufficient funds in the account

to cover them.      The Appellants presented no evidence, however, to

counter Wilde's statement that the checks were for unauthorized

purchases.   In fact, the Appellants have never explained what the

checks were for.

     Moreover, the Appellants have never asserted the specific

damages they might have suffered.        Tex. Bus. & Comm. Code § 4.402

provides in pertinent part, "A payor bank is liable to its customer

for damages proximately caused by the wrongful dishonor of an

item....Whether any consequential damages are proximately caused by

the wrongful dishonor is a question of fact to be determined in

     27
      They show that on two different dates, the balance in the
account was $11,334.69 and $19,028.07. The legend indicates that
the balance in the account was insufficient to pay the items
listed. The documents also purport to show that three of the
four checks were returned, and one was paid. But this was done
by hand-lining through the word "paid" so that only the word
"returned" remained.

                                    16
each case."28      An element of a cause of action under this section

is that the customer suffer damages.                 The Appellants made the

conclusory statement in their response to the summary judgment

motions that "damages for loss of credit, loss of time, loss of

money, loss of use of money and mental anguish" were genuine issues

of material fact.       But the Appellants have done nothing to place

those "facts" in issue.           Such unsupported statements are wholly

insufficient to defeat summary judgment.

E.   The SBA and Collins

     In the district court the Appellants asserted claims of breach

of contract and promissory estoppel against the SBA and Collins

based on the SBA's alleged promises to the Appellants to purchase

and service the promissory notes from Meadowbrook.                Before the SBA

responded to the Appellants' discovery requests, the district court

granted     summary    judgment    in   favor   of    the   SBA   and   Collins,

concluding that as a matter of law the Appellants could not invoke

estoppel against the government, and that any agreement, even had

it existed, could not be enforced against the government.                      On

appeal, the Appellants contend that the district court erred in

ruling     on   the   summary   judgment     motion    before     discovery   was

complete.       We disagree.

     It is "the established law of this Circuit that a plaintiff's

entitlement to discovery prior to a ruling on a summary judgment

motion may be cut off when, within the trial court's discretion,

     28
          Tex. Bus. & Comm. Code Ann. § 4.402 (Vernon 1968).

                                        17
the record indicates that further discovery will not likely produce

facts necessary to defeat the motion."29             As the issues to be

decided by the district court were purely legal in nature, the

court did not abuse its discretion in deciding the summary judgment

motion prior to completion of discovery.

     Although the Supreme Court has not completely foreclosed the

possibility     that     an   estoppel    claim   might   lie   against   the

government, it has noted that its use is severely restricted.30            In

fact, recently in OPM v. Richmond31 the Court noted that it has

reversed every circuit court finding of estoppel against the

government that it has reviewed.32 Particularly, the Court declared

that "claims for estoppel cannot be entertained where public money

is at stake."33

     The Appellants argue that their estoppel claim is not a claim

for payment of money from the public treasury, but instead seeks to

enforce the SBA's alleged promise to service the promissory notes.

The Appellants fail to recognize, however, that public monies are

indeed at stake.       They borrowed a half a million dollars secured by

     29
      Fisher v. Metropolitan Life Ins. Co., 895 F.2d 1073, 1978
(5th Cir. 1990).
     30
      See Heckler v. Community Health Services, Inc., 467 U.S.
51, 60 (1984). See also Schweiker v. Hansen, 450 U.S. 785, 789
(1981)(Government will not be estopped in civil litigation
without a showing that government agents engaged in affirmative
misconduct.)
     31
          110 S. Ct. 2465 (1990).
     32
          Id. at 2470.
     33
          Id. at 2473.

                                         18
the guaranty of the SBA.         When the loan went into default, the SBA

honored its guaranty with payments from the federal treasury.

Estopping the government by enforcing a promise to service the

notes would bar further proper and legitimate attempts to recover

that    money.       Therefore,    estoppel   will   not   lie   against   the

government.

       The Appellants' claim of breach of contract against the SBA

also must fail.           It is a familiar tenet of government contracts

that the government cannot be bound by the unauthorized acts of its

agents.34      In U.S. v. R & D One Stop Records, Inc.35 we held that the

representation of certain SBA officials that no individual recourse

would be taken against the guarantors was outside the authority of

the SBA agents, and the government was entitled to summary judgment

as a matter of law.             The same is true in this case.             Any

representation made by an SBA official that the SBA would purchase

and service the promissory notes clearly exceeded the official's

scope of authority.          As we expressed in

R & D One Stop,

       The possible misrepresentations by SBA representatives are of
       no help to guarantors in their defense of fraud or mutual
       mistake. Even assuming such misrepresentations were made, the
       United States is not bound by actions of its agents exceeding
       their scope of authority.36

       34
      Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384
(1947).
       35
            661 F.2d 433 (5th Cir. 1981).
       36
            Id. at 434.

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Furthermore, it was incumbent upon the Appellants to ascertain

whether the officials with whom they dealt acted within the scope

of their authority.37      Not having done so, they cannot now be heard

to complain that the officials exceeded that scope.

                                        IV.

                                     CONCLUSION

     The Appellants were victims of a faltering economy and an

unfortunate set of difficulties in the construction of their

market,   not    the    least   of    which   were    their   apparent   lack    of

experience and judgment.             They were not, however, victims of

Meadowbrook, Wilde, or the SBA.               The Appellants were unable to

demonstrate to the district court that there were any genuine

issues of material fact sufficient to overcome the Defendants'

motions for summary judgment, or that the actions taken by Wilde

and Meadowbrook constituted negligent misrepresentation, placed the

Appellants      under   duress,      breached   any   duty,   or   breached     the

depository agreement.       In addition, the Appellants failed to show

that they could prevail on any claim against the SBA and Collins.

Therefore, the district court committed no reversible error in

granting summary judgment in favor of the Defendants.                    For the

foregoing reasons, we AFFIRM.

     37
      Merrill, 332 U.S. at 384.           See also U.S. v. Lowell, 557
F.2d 70, 72 (6th Cir. 1977).

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