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USCA1 Opinion

April 7, 1993

[NOT FOR PUBLICATION]


UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________

No. 92-1740
FLEET BANK OF MAINE,
Plaintiff, Appellee,
v.
HARVEY E. PRAWER and GILBERT PRAWER,
Defendants, Counterclaim Plaintiffs, Appellants,
and
FEDERAL DEPOSIT INSURANCE CORPORATION,
Counterclaim Defendant, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Campbell and Bownes, Senior Circuit Judges.
_____________________

____________________

Joseph J. Hahn with whom Bernstein, Shur, Sawyer & Nelson was
______________
_________________________________
brief for appellants.
Alexandra L. Treadway with whom P. Benjamin Zuckerman and Verr
_____________________
_____________________
____
& Dana were on brief for appellees.
______
____________________
____________________

CAMPBELL, Senior Circuit Judge.


____________________
brought this action against
Gilbert

Prawer,

promissory

to

appellants, Harvey E. Prawer and

collect

notes the

Maine Savings Bank

money owed

appellants had

to

it

under

two

personally guaranteed.

The bank alleged that Limehouse Corporation ("Limehouse"), of


which Harvey Prawer was the president, defaulted on the notes
when

it

stopped

Appellants argued
defenses
Limehouse
reneged

and

making
below, as

their

stopped

monthly

the basis of

counterclaims
making

on an agreement

interest

payments

their affirmative

against
because

to provide even

payments.1

the bank,
the

bank

that
had

more financing for

their real estate project.


for the District

The United States District Court

of Maine granted

bank's successors in interest,

summary judgment for

the

appellees Fleet Bank of Maine

and the FDIC, and we affirm.

I.
I.
The district court found
undisputed.
behalf of

the following facts to be

In 1987 appellants Harvey and Gilbert Prawer, on


Limehouse, of

began negotiations

which Harvey Prawer

with Maine Savings Bank

was president,
("the Bank") for

the financing of the purchase and development of 122 acres of

____________________
1.
Limehouse Corporation is not a party to this action.
The bank sued only Harvey E. Prawer and Gilbert Prawer in
their individual capacities, as guarantors of one promissory
note and co-makers of the other.

land in Scarborough, Maine.

Appellants planned to subdivide

the property and market it as a planned residential community


known as "Coulthard Farms."

At the time of the negotiations,

the total cost of the project was estimated to be $2,500,000,


consisting of $1,000,000 for the
and $1,500,000 for the
roads, sewers,

purchase of the real estate

construction of the infrastructure

water supply

and other structures

needed to

transform the land into a residential community.


On October
letter ("First

to Limehouse

property,

for

thereafter," at
Letter

behalf
the

By

of

that interest

signing

granting

terms

and

"36

payments

the Letter,

the Coulthard

months,

on

were

to be

Harvey Prawer

demand
The
made

agreed on

the money "in accordance with

conditions"

of

the

Letter,

the Bank a mortgage on the property.

of the four-page letter

offered to

rate, initially 10.50%.

of Limehouse to borrow

[]

loan

term

a commitment

in which it

for purchase of

an adjustable

specified

monthly.

the Bank issued

Commitment Letter"),

lend $1,000,000
Farms

1, 1987,

of terms and conditions

including

One paragraph
said, "This

shall be repaid from the sale of the mortgaged property

or its refinancing into a residential subdivision development


loan."
On October 15, 1987, Harvey Prawer, as president of
Limehouse, executed
amount

a promissory note ("First

of $1,000,000 to the

Bank.

-3-

Both

Note") in the

Harvey and Gilbert

Prawer, acting in

their individual

unconditional guaranty

of the

obligated Limehouse to make

capacities, executed

First Note.

The First

an
Note

monthly payments of the interest

due and to repay the principal sum on demand after October 1,


1990.2

A default

failure to

pay

provision defined "default"

any

installment

authorized the holder of


to

of the

as including

interest

the Note, in addition to

due

the right

demand payment after October 1, 1990, to declare the Note

immediately
default.3

due
The

and

payable in

provisions

of

full
the

in

the

First

event of
Note,

____________________
2.

The First Note provided, in part:


For Value Received, On Demand after
October 1, 1990, the undersigned promises
to pay to the order of Maine Savings
Bank, a Maine banking corporation, the
sum
of
One
Million
Dollars
($1,000,000.00), or so much thereof as
may be advanced, together with interest
upon the principal sum thereof from time
to time advanced, . . . ; which interest
at said rates shall be paid monthly in
arrears
on the
first day
of each
succeeding month hereafter, with a final
payment of interest when the indebtedness
evidenced hereby is paid in full.

3.

and

The default provision of the First Note provided:


In case of default in the payment of
any installment of interest due hereon,
including default in the payment of any

while

applicable late charge, and such default


is continued for a period of one (1)
month, or in case of default in any term
or condition of a Mortgage and Security
Agreement of even date, given as security
herefor, the holder hereof at its option
may declare due and payable at once the
-4-

considerably more detailed,


outlined

in

contained

the

First

no reference

were consistent

Commitment

with the

Letter;

to repayment

but

from the

terms

the

sale of

Note
the

mortgaged property or its refinancing.


On the
into a

the Bank and

Mortgage and Security Agreement

to be purchased
was mortgaged to
stated
[the

same date,

the Bank.

Bank] may, at its

total

advances
principal

whereby the property

by Limehouse for the Coulthard Farms project

that, "Upon request

further

Limehouse entered

One provision
of Grantor

secured

provided,

hereby

and

Mortgage

[Limehouse], Grantee

sole option, from

to Grantor,

of the

time to time make


however, that
remaining

the

unpaid,

including

any such advances shall not at any time exceed the

sum

Two

of

($2,500,000.00)."

Million

Five

Hundred

Thousand

Dollars

On

September 7, 1988, the

intent to

the Maine Department

vouching

for

the

financial

Bank issued a letter of

of Environmental Protection,
condition

appellants and stating that the Bank

of

Limehouse

and

intended to finance the

development of the Coulthard Farms project.


On
commitment

December

21,

1988, the

Bank

issued

another

letter ("Second Commitment Letter") to Limehouse,

____________________
unpaid principal balance hereof, accrued
interest and late charges, as applicable.
The foregoing rights shall be in addition
to the demand right of the holder hereof
after October 1, 1990.
-5-

offering to lend

an additional

months with interest

$200,000 for a

only to be repaid from

term of

"12

the refinancing

of the debt into a residential subdivision development loan."


Appellants accepted

the terms

Commitment

by

Letter

signing

and conditions of
it

in

the Second

their

individual

Prawer, as

Limehouse

capacities.
On

April 12,

1989,

president, executed a promissory

Harvey

note ("Second Note") in the

amount of $200,000 "or so much thereof as may be advanced" to


the

Bank.

Both

Harvey

and

Gilbert,

acting

in

their

individual capacities, executed the Second Note as co-makers.


Only $100,000 in funds was advanced by the Bank to Limehouse.
The

Second Note

contained provisions

payments and default substantially


First Note.

Like the

for monthly

identical to those of the

First Note, the

were consistent with those

interest

Second Note's

terms

outlined in the Second Commitment

Letter, except there was no mention of

repaying the interest

from the refinancing of the debt.


Sometime
monthly
Notes.

in

1990

interest payments
The Bank

Limehouse
due

Bank filed

under the

an action

default.

in Maine

making

First and

notified Limehouse that it was

but Limehouse did not cure the


the

stopped

the

Second

in default,

On August 30, 1990,

Superior Court

Harvey Prawer and Gilbert Prawer, as guarantors of

against
the First

Note and co-makers of the Second Note, seeking payment of the

-6-

principal

and

unpaid interest

on both

Notes.

(Under the

First Note
1990,

the Bank

$1,000,000

interest; under
$3,100

alleged it

in
the

was owed, as

principal
Second

in interest.)

On

and

Note,

of August

approximately
$100,000

September 26,

in

9,

$32,900

principal,

1990, the

Prawers

answered the complaint, raised affirmative defenses, and made


counterclaims against the Bank.
Subsequently,

Maine

Federal Deposit Insurance


of Maine

Savings Bank,

defendant, and
of
case

Savings

Bank

failed.

The

Corporation ("FDIC"), the receiver


was substituted as

Fleet Bank of Maine

the counterclaim

("Fleet"), the purchaser

the Bank's assets, was substituted as the plaintiff.


was removed by the

FDIC to the

The

United States District

Court for the District of Maine.


In September 1991,
for summary judgment.

plaintiff Fleet filed a

motion

Counterclaim defendant FDIC filed its

motion for summary judgment in

February 1992.

The

district

court granted both motions on April 3, 1992, finding that the


Prawers' affirmative defenses and counterclaims turned on the
same question:

whether the two Commitment

the Bank conditioned

repayment of the Notes

ultimate refinancing of
that the

the debt.

Letters issued by
upon the Bank's

The district court

D'Oench, Duhme doctrine prevented


______________

held

the Prawers from

using the Commitment Letters to defend against the efforts by


Fleet and

the FDIC

to collect

-7-

on the facially

unqualified

Notes.

See
___

D'Oench, Duhme & Co.


______________________

v. FDIC,
____

315 U.S.

447

(1942).

The Prawers appeal from the district court's order.4


II.
II.
We review

judgment de novo,
__ ____

the district
looking at

favorable to appellants.

court's

grant of

the record in

summary

the light

most

August v. Offices Unlimited, Inc.,


______
_______________________

981 F.2d 576, 580 (1st Cir. 1992).

The district court

based

summary judgment on the D'Oench, Duhme doctrine, but "we need


______________
not

limit

ourselves

utilized below.
on

to

the

exact

grounds

for

decision

We are free, on appeal, to affirm a judgment

any independently

sufficient

Canon U.S.A., Inc., 978 F.2d


___________________

ground."

3, 6 (1st

Aunyx Corp.
___________

v.

Cir. 1992) (quoting


_______

Polyplastics, Inc. v. Transconex, Inc., 827 F.2d 859, 860-61


__________________
_________________
(1st Cir. 1987)),

cert. denied, 61 U.S.L.W.


____________

9, 1993) (No. 92-1205).

3620 (U.S. Mar.

We do not reach D'Oench, Duhme here


_______________

because

we

find that

appellees

were

entitled to

summary

judgment as a matter of Maine contract law.5


Appellants admit that
monthly

interest payments

Notes,

but

contend

that

due

Limehouse stopped making the


under the

its obligation

First and
to

make

Second
monthly

____________________
4.
The district court had jurisdiction over this matter
pursuant to 12 U.S.C.
1819(b)(2)(A) and 28 U.S.C.
1331.
This court has jurisdiction over this appeal pursuant to 28
U.S.C.
1291.
5.
The parties
agree that
Maine law
governs their
respective rights and obligations, outside of the question of
application of the federal D'Oench, Duhme doctrine.
______________
-8-

interest payments and


Second

repay the principal

Notes was conditioned upon

a promise by

provide financing for the development.

in the provisions of either

point

Commitment

promise.

the

Because the

"This loan shall

Letters as

the Bank to

Note, appellants

establishing

First Commitment Letter

be repaid

and

While no such promise

is to be found
to

of the First

from the sale

such

stated that,

of the

mortgaged

property or its
development

refinancing into

loan,"

appellants

obligations under the First


the

Bank's providing

property.
as,

"12

the

say

new financing

refinancing

of

development

loan,"

obligations

under the Second

into

appellants

that interpretation

repayment

for development

to

contend
Note were

of the

that

of the

loan term

be repaid

residential

upon the Bank's providing of refinancing.


insist

the

Note described the

interest only
debt

that

subdivision

Note were wholly contingent upon

Because the Second


months with

a residential

from the

subdivision
Limehouse's

likewise contingent
Appellants further

Notes is

insulated from

summary judgment disposition as it is a mixed question of law


and fact.
A major problem with

appellants' approach is that,

under Maine contract law, a court does not consider extrinsic


evidence in

interpreting a

the contract is ambiguous.

contract unless the

language of

Portland Valve, Inc.


____________________

v. Rockwood
________

Systems Corp., 460 A.2d 1383, 1387 (Me. 1983).


_____________

-9-

The
issue
of whether
contract
language is ambiguous is a question of
law for the Court. The interpretation of
an unambiguous written contract is a
question of law
for the Court; the
interpretation of ambiguous language is a
question
for
the factfinder.
The
interpretation of an unambiguous writing
must be determined from the plain meaning
of the language used and from the four
corners of the instrument without resort
to extrinsic evidence. Once an ambiguity
is found then extrinsic evidence may be
admitted and considered to
show the
intention of the parties.
Contract
language
is
ambiguous
when it
is
reasonably
susceptible
of
different
interpretations.
Id.
___

(citations omitted);

Assoc. v.
______
(1st

see also
_________

Triple-A Baseball Club


_______________________

Northeastern Baseball, Inc., 832


___________________________

Cir.

1987)

(summarizing

Maine

F.2d 214, 220-21


law

of

contract

interpretation), cert. denied, 485 U.S. 935 (1988).


____________
contract terms

the

repayment terms contained

four corners of the Notes


relevant way

are they

interpretations."

Here the
within the

are not at all ambiguous.

"reasonably susceptible

Portland Valve, 460 A.2d


_______________

In no

of different
at 1387.

The

repayment terms are clear and unconditional: the maker of the


Note is obligated to
to

make

make monthly interest payments; failure

interest payments

grantor defaults,

constitutes

the grantee

is a condition to

default; if

may demand full

the principal sum and accrued interest.


the Notes' language that

the

repayment of

There is no hint in

the Bank's extension of refinancing

full repayment upon default.

Because the

Notes

are

unambiguous,

appellants

may

not

rely

on

the

-10-

Commitment

Letters

to

show that

the

differed from their plain meaning.

Id.
___

Appellants argue
incorporated

into the

terms

that the Commitment

Notes

and thus

including the Letters' references

of the

Notes

Letters were

the Letters'

terms,

to refinancing, should

considered as part and parcel of the parties' agreement.


Letters

were entirely

contended, because

incorporated

into the

the Notes "referred to"

Notes, it

be
The
is

the Mortgage and

the Mortgage "referred to" the First Commitment Letter.

This

overlooks the

None

of

the

record,

limited nature of the

documents in
suggests that

everything said
the Notes.
default
the

in the

The Notes

question,

nor

the parties

cross-references.
anything
intended

Commitment Letters as
provided that Limehouse
_________

else in

the

to incorporate
conditions of
would be

in

of the Note if it defaulted on its obligations under


___

Mortgage

and

Security

Agreement.

The

Mortgage

and

Security

Agreement

stated

that

whatever obligations

it had
__

under the

Commitment Letter.
about

the

provision

the

purported

Letters will

of monthly

Note

Nothing is anywhere
its

must

terms

perform

of the

First

Neither of these references says anything

requirement
of

Limehouse
_________

as to

interest

which

payments,

Limehouse

said that a failure by the

refinancing

assurances

constitute a defense to

in

the

the

defaulted.
Bank to meet
Commitment

the borrower's default

upon the Notes.

-11-

The
agreements for

Notes

are

purposes of

appear on their face to


as

to the

advanced.
v.

terms

for

least

partially

the parol evidence

integrated
rule.

They

express the parties' final agreement


Limehouse's

repayment of

the

funds

See Interstate Indus. Uniform Rental Serv., Inc.


___ _____________________________________________

Lepage Bakery, Inc.,


____________________

(applying

at

test for

413 A.2d

516,

integrated agreements

519-20 (Me.
and stating

1980)
that

question

of

integration

is

determined

Restatement (Second) of Contracts


by

both

parties,

the

Notes

by

the

court);

209, 210 (1981).

contain

detailed

Signed

terms

and

conditions for repayment of the interest and principal of the


loans, specifying schedules for repayment, penalties for late
payments, calculation of the interest rate, and processes for
handling defaults.
209(3)

("Where the parties reduce an

which in view of
appears to be
integrated
evidence

See Restatement (Second)


___

agreement

expression.")
Letters

agreement to a writing

its completeness and specificity reasonably

a complete

that

of Contracts

agreement, it

unless

the

writing

The

lack

it
did

is

is taken

to be

established

not

of specificity

constitute
in the

an

by

other

final

Commitment

in addition to the time delay between issuance of

the Letters and execution of the Notes (two weeks between the
First Letter and
Letter

and

Note)

First Note, four months


strongly suggests

-12-

between the Second


that

the

parties

intended

the

Notes,

not

the

Letters,

to

be

the

final

expressions of the repayment terms.


"A

binding

integrated agreement

discharges prior

agreements to the extent that it is inconsistent with


Restatement (Second)
Co., 451
___
213).

A.2d 903, 905


If the

the parties

that

(Me. 1982)

references

"refinancing" mean

the

of Contracts

in

which are

urged that

caused

an

appellants.
that the Bank

to repay
then to

prior agreements

See Astor, 451 A.2d at 905-06.


___ _____

the Bank

counterclaims, appellants

breached the

terms of

a binding

to provide development financing and

unspecified

amount of

financial

damage

to

In support of this contention, appellants assert


"knew" and the

would make

or conjecture

insufficient

to raise

August, 981 F.2d


______

parties "understood" that

a development

allegations,

"must be

to
that

of the debt

Letters are inconsistent,

contract when it failed

Bank

claim they mean

make Limehouse's obligation

In connection with their

so

Letters

discharged by the partially integrated agreements,

i.e., the Notes.

have

Commitment

loans contingent on refinancing


extent the

Astor v. Boulos
_____
______

(applying Restatement

the

what appellants

agreed to

213(1);

them."

at 580.

able to point

loan in

the future.

unsupported in
genuine issue
To avoid

"Mere

the record,

of material

summary judgment,

to specific, competent

the

are

fact."
they

evidence" in

support of their claims.

Id.
___

-13-

Appellants point to
of evidence to

only a few isolated

establish the existence of the

fragments

contract they

assert: (1) the sentences in the two Commitment Letters which


refer

to

letter to

"refinancing"; (2)
the Maine

the

Bank's

statement in

Department of Environmental

that it was the Bank's "intention to finance

its

Protection

the development

of this project, once all requisite approvals are in place.";


(3) the Mortgage and

Security Agreement's provision that the

Bank could, "at its sole option," advance up to $2,500,000 to


Limehouse upon its request;
officials on
changed

May

22, 1990,

and (4) oral statements


indicating

that the

by Bank
Bank

had

its plans and decided not to loan Limehouse any more

than the $1,200,000 already extended.


"For there
parties must

to be a

contract under Maine

have manifested their

the material terms

mutual assent to

of the agreement."

law, the
all of

Maine Surgical Supply


_____________________

Co. v. Intermedics Orthopedics, Inc.,


___
_____________________________
(D.

756 F. Supp. 597,

602

Me. 1991); Ouellette v. Bolduc, 440 A.2d 1042, 1045 (Me.


_________
______

1982).

"The

terms

certain, such that

of

the contract

must

they provide a basis for

existence of a breach and

be

reasonably

determining the

for giving an appropriate remedy."

Maine Surgical Supply Co., 756 F. Supp. at 602; Roy v. Danis,


_________________________
___
_____
553
rely

A.2d 663, 664 (Me. 1989).

The asserted facts appellants

upon are wholly inadequate

legally

binding contract

to show the

by the

Bank to

existence of a

provide financing

-14-

beyond the two loans


and $200,000,
which bound
Limehouse.

made.

there is
the Bank

no commitment letter
to providing development

for $1,000,000
in the

record

financing to

Nothing is offered by appellants to show the loan

amount, interest

rate, period of repayment, repayment terms,

conditions, or other material


for this financing.
into

Unlike the loans

a future

terms of the alleged agreement

Mere declarations of intention to enter

agreement

which

is,

at most,

what

the

statements in the Commitment Letters and in the letter to the


Maine Department

of Environmental

create a binding contract.


Supp. at 602.

Protection are

do not

Maine Surgical Supply Co., 756 F.


_________________________

Appellants failed to establish a genuine issue

of material fact

over the existence

of a binding

agreement

obligating the Bank to provide financing beyond the two loans


made.

III.
III.
In sum, the record is without material facts which,
viewed

in

the light

most

favorable

to appellants,

would

create a genuine issue under Maine contract law as to whether


Limehouse

could justifiably

under the

Notes because of the Bank's

claimed

obligation,

as a

refuse to

condition

-15-

pay the

amounts due

nonperformance of its
to

collection of

its

Notes,

to

need to

have provided

inquire into

Duhme doctrine, we
_____
that

appellees were

development

financing.6

the application here

rule as

a matter of

entitled to

of the

Without
D'Oench,
________

Maine contract

summary judgment

law

in their

favor.
Affirmed.
________

Costs to appellees.
__________________

____________________
6.

We have

considered all of appellants'

other arguments,

mostly variations on
them.

the same

theme, and find

-16-

no merit

in