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FEDERAL DEPOSIT INSURANCE CORPORATION v. MORTON A. BENDER </h1> <p class="docCourt"> </p> <p> September 23, 1997 </p> <p class="case-parties"> <b>FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR MADISON NATIONAL BANK, APPELLEE<br><br>v.<br><br>MORTON A. BENDER, ET AL., APPELLANTS</b><br><br> </p> <div class="caseCopy"> <div class="facLeaderBoard"> <script type="text/javascript"><!-- google_ad_client = "ca-pub-1233285632737842"; /* FACLeaderBoard */ google_ad_slot = "8524463142"; google_ad_width = 728; google_ad_height = 90; //--> </script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </div class="facLeaderBoard"> <div class="numbered-paragraph"><p><br> Appeals from the United States District Court for the District of Columbia (No. 93cv00864)</p></div> <div class="numbered-paragraph"><p> Before: Wald, Williams and Ginsburg, Circuit Judges.</p></div> <div class="numbered-paragraph"><p> Wald, Circuit Judge</p></div> <div class="numbered-paragraph"><p> FOR PUBLICATION</p></div> <div class="numbered-paragraph"><p> FOR THE DISTRICT OF COLUMBIA CIRCUIT</p></div> <div class="numbered-paragraph"><p> Argued September 2, 1997</p></div> <div class="numbered-paragraph"><p> Consolidated with No. 96-5137</p></div> <div class="numbered-paragraph"><p> Opinion for the Court filed by Circuit Judge Wald.</p></div> <div class="numbered-paragraph"><p> On October 27, 1994, the district court granted summary judgment to the Federal Deposit Insurance Corporation ("FDIC") in its action against Van Dorn Retail Management, Inc. ("Van Dorn Retail") to recover the amounts due on several promissory notes, including attorneys' fees of 15 percent of the outstanding balance as provided in the notes. See FDIC v. Bender, Civ. No. 93-0864 (D.D.C. Oct. 27, 1994). Similarly, on February 28, 1996, the district court granted summary judgment to the FDIC in its action against Morton Bender ("Bender") as guarantor of the loan to Van Dorn Retail, holding that Bender's opposition to the motion for summary judgment was untimely. See FDIC v. Bender, Civ. No. 93-0864 (D.D.C. Feb. 28, 1996). In this consolidated appeal, Van Dorn Retail now challenges the district court's refusal to reconsider its award of 15 percent attorneys' fees to the FDIC, and Bender challenges the district court's treatment of the FDIC's motion for summary judgment as conceded. We hold that the district court erred with respect to Van Dorn Retail, but not with respect to Bender, in granting summary judgment on the fee issue to the FDIC, but because these results run the risk of creating inconsistent obligations between Van Dorn Retail and Bender as guarantor, we remand both cases to the district court for renewed consideration.</p></div> <div class="facAdFloatLeft"> <script type="text/javascript"><!-- google_ad_client = "ca-pub-1233285632737842"; /* FACContentLeftSkyscraperWide */ google_ad_slot = "1266897617"; google_ad_width = 160; google_ad_height = 600; //--> </script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"></script> </div class="facLeaderBoard"> <div class="numbered-paragraph"><p> I. Background</p></div> <div class="numbered-paragraph"><p> On December 1, 1986, Morton Bender, on behalf of MAB Development, Inc., executed and delivered to Madison National Bank ("Madison") a promissory note in which MAB Development, Inc., promised to pay a principal amount of $1,700,000 plus interest. On or about December 4, 1986, this note was replaced with six separate notes from Morton Bender, Scott Bender, Kenneth Bender, Jeffrey Bender, Lisa Bender, and Jay Bender. Each maker promised to make quarterly payments until December 4, 1991, when the balance payable under the note would become due. On December 31, 1986, Morton Bender executed a personal guaranty of each of the six notes.</p></div> <div class="numbered-paragraph"><p> In addition, on December 1, 1989, Morton Bender executed and delivered to Madison a promissory note, of which he was sole maker, in which he promised to pay a principal amount of $2,000,000 plus interest by December 1, 1990. This additional note provided that should it go into default, Bender would be liable for attorneys' fees in the amount of 15 percent of the outstanding balance of principal and interest. On April 5, 1990, N Street Follies, a limited partnership of which Morton Bender was general partner, executed and delivered to Madison a promissory note in which it agreed to pay a principal amount of $2,500,000 plus interest by April 5, 1991. Morton Bender also executed a personal guaranty of this note, which, similar to the note on which Bender was sole maker, provided for attorneys' fees of 15 percent upon default.</p></div> <div class="numbered-paragraph"><p> Finally, on January 21, 1991, Morton Bender, acting as secretary of Van Dorn Retail, executed and delivered to Madison a promissory note in which Van Dorn Retail agreed to pay a principal amount of $2,500,000 plus interest on demand. This note, too, provided for attorneys' fees of 15 percent upon default.</p></div> <div class="numbered-paragraph"><p> On May 10, 1991, Madison was declared insolvent, and the FDIC was appointed as receiver pursuant to 12 U.S.C. Section(s) 1819. As such, it succeeded to all of Madison's rights under the promissory notes. When each of these promissory notes and guaranties went into default, the FDIC brought suit in district court on April 26, 1993, seeking judgment against the Benders and N Street Follies (collectively, the "Bender Defendants") and Van Dorn Retail for the amount due, costs, and, where applicable, the full 15 percent in attorneys' fees.</p></div> <div class="numbered-paragraph"> <p> The FDIC moved for summary judgment on all of the notes on February 4, 1994. The Bender Defendants and Van Dorn Retail, who were represented by the same counsel, jointly opposed the motion, arguing, among other things, that the 15 percent attorneys' fees requested in the FDIC's motion were "not only unreasonable, but clearly unconscionable" because, though based on the contractual rates provided for in the notes, they bore no relationship to the reasonable fees actually incurred. The district court granted the FDIC's motion on October 27, 1994, ruling that because the defendants "have not produced any evidence other than the mere ...</p> </div> </div> </div> <div id="caseToolTip" class="caseToolTip" style="display: none;"> <div class="toolTipHead"> </div> <div class="toolTipContent"> <p> Our website includes the first part of the main text of the court's opinion. To read the entire case, you must purchase the decision for download. 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