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Peach Blossom Development Co. v. The Federal Deposit Insurance Corpo.

United States District Court, M.D. Georgia, Macon Division

December 17, 2014

PEACH BLOSSOM DEVELOPMENT CO., INC., Plaintiff,
v.
THE FEDERAL DEPOSIT INSURANCE CORPORATION as Receiver of PIEDMONT COMMUNITY BANK, and THE FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of MOUNTAIN HERITAGE BANK, Defendants.

ORDER

HUGH LAWSON, Senior District Judge.

This case is before the Court on Defendants' Motion for Judgment on the Pleadings, or, in the Alternative, for Summary Judgment. (Doc. 48). After reviewing the pleadings, briefs, affidavits, and other evidentiary materials presented, and determining that there is no genuine dispute of the material facts, the Court finds that Defendants are entitled to judgment as a matter of law and grants Defendants' motion.

I. BACKGROUND

Plaintiff Peach Blossom Development Co., Inc. ("Peach Blossom") is a development company based in Warner Robins, Georgia. (Doc. 1). On or about September 15, 2007, Peach Blossom borrowed $669, 415.75 from Piedmont Community Bank ("PCB") to purchase real property located at 1131 Houston Lake Road in Warner Robins. (Doc. 1-1, ¶¶ 5, 7). On March 6, 2008, Peach Blossom and PCB signed an Acquisition and Development loan, whereby PCB agreed to loan Peach Blossom $3, 517, 050.00 to pay off the purchase loan and to fund the development of the property. (Doc. 1-1, ¶ 9; DSOMF, ¶ 2).[1]

In the spring of 2009, PCB ceased funding the project. (Doc. 1-1, ¶ 14; DSOMF, ¶ 2). Peach Blossom alleges that in March 2009, PCB notified Peach Blossom for the first time of Mountain Heritage Bank's ("MHB") involvement as a participant in the loan. (Doc. 1-1, ¶ 15). PCB then informed Peach Blossom that MHB was no longer willing to continue funding the project and that without a participating partner PCB, likewise, was restricted by its own policies from loaning Peach Blossom the total sum. (Doc. 1-1, ¶¶ 15, 16). PCB requested that Peach Blossom devise a stabilization budget to allow the project to continue and to provide PCB time to identify a new funding partner. (Doc. 1-1, ¶ 17).

Then, on March 3, 2010, PCB presented Peach Blossom with a loan renewal, which Peach Blossom signed, reducing PCB's loan obligation from $3, 517, 000.00 to $1, 349, 000.00. (Doc. 1-1, ¶ 22; DSOMF, ¶ 2). In the fall of 2010, Peach Blossom defaulted on the loan, and PCB initiated foreclosure proceedings against Peach Blossom, ultimately selling the property held as collateral. (Doc. 1-1, ¶ 23; DSOMF, ¶ 2).

On March 25, 2011, Peach Blossom filed suit against PCB in the Superior Court of Houston County, Georgia. (Doc. 1-1; DSOMF, ¶ 1). Peach Blossom pled causes of action for breach of contract/promissory estoppel, breach of the duty of good faith and fair dealing, fraud, violations of the Georgia RICO Act, and wrongful foreclosure. (Doc. 1-1; DSOMF, ¶ 2).

Soon thereafter, the Georgia Department of Banking and Finance closed both MHB and PCB and appointed the Federal Deposit Insurance Corporation ("FDIC") as receiver ("FDIC-R PCB" and "FDIC-R MHB"). (Doc. 1, ¶¶ 2, 3; DSOMF, ¶¶ 3, 4). MHB was closed on June 24, 2011. (DSOMF, ¶ 3). PCB was closed on October 14, 2011. (DSOMF, ¶ 4). Effective October 14, 2011, State Bank and Trust Company ("State Bank") and FDIC-R PCB entered into a Purchase and Assumption Agreement pursuant to which FDIC-R PCB transferred and assigned to State Bank certain real property, including that formerly owned by Peach Blossom. (DSOMF, ¶ 5). State Bank also assumed all "asset-related defensive litigation liabilities" related to that asset. (DSOMF, ¶ 5). Accordingly, on January 13, 2012, State Bank was substituted as defendant for PCB in the state court action. (DSOMF, ¶ 7).

State Bank filed a motion for summary judgment in the state court case on July 10, 2012. (DSOMF, ¶ 8). Peach Blossom responded to that motion on August 24, 2012. (DSOMF, ¶ 8). A hearing was held on October 1, 2012. (DSOMF, ¶ 9). The Superior Court of Houston County granted State Bank's motion for summary judgment on October 4, 2012, finding that Peach Blossom could not recover on any of its claims and denying Peach Blossom's motion to add MHB as a defendant because there was no contractual privity between Peach Blossom and MHB. (Doc. 19-6; DSOMF, ¶ 9). Peach Blossom filed a notice of appeal that it later withdrew. (DSOMF, ¶ 10).

Meanwhile, Peach Blossom submitted a Proof of Claim to FDIC-R PCB on January 11, 2012. (Doc. 1-1; DSOMF, ¶ 6). The Proof of Claim incorporated by reference the allegations set forth in Peach Blossom's complaint filed in the state court action. (Doc. 1-1; DSOMF, ¶ 6). Peach Blossom made no additional allegations. (DSOMF ¶ 6). FDIC-R PCB denied Peach Blossom's claim by Notice of Disallowance of Claim dated August 3, 2012. (Doc. 1-2). FDIC-R PCB determined that Peach Blossom failed to prove its claims against PCB to the satisfaction of the receiver and advised Peach Blossom of its right to seek judicial review within 60 days of notice of the disallowance. (Doc. 1-2).

Peach Blossom then filed the present lawsuit on October 2, 2012, again alleging that PCB extended $3, 517, 000.00 in an acquisition and development loan[2] to Peach Blossom that PCB was unable to finance without the participation of MHB. (DSOMF, ¶ 11). Peach Blossom claims that as a result of the "financial meltdown", PCB requested that Peach Blossom "slow down" development of the project and present a stabilization budget, which Peach Blossom agreed to do, only drawing down $1 million of the loan. (Doc. 1, ¶¶ 15-18; DSOMF, ¶ 11). Peach Blossom alleges that PCB is liable for refusing to allow Peach Blossom to draw the full amount of the loan and to complete the development project and that MHB is liable for failing to fund its participation interest, leaving PCB unable to finance the loan. (Doc. 1, ¶ 19; DSOMF, ¶ 11). Peach Blossom raises causes of action for recoupment, gross negligence, fraud, and the FDIC's disallowance of its claim. (DSOMF, ¶ 12).

Despite knowing that both PCB and MHB were in receivership, Peach Blossom named the FDIC as a party to this action only in relation to PCB. (Doc. 1, ¶¶ 2, 3). Peach Blossom named MHB as a defendant and served the bank through its successor-in-interest First American Bank and Trust Company. The FDIC filed a Notice of Appointment and Substitution on April 4, 2013, thereby becoming a party to the suit as the receiver for MHB. (Doc. 22). On May 28, 2013, FDIC-R MHB sent Peach Blossom a notice that the FDIC-R MHB discovered that Peach Blossom might have a claim against MHB. (Doc. 26-2, p. 6; DSOMF ¶ 13). This notice indicates that MHB was closed June 24, 2011. The notice further explains that the receiver published notice of the bank's closure in one or more newspapers and that the deadline to file any claims against the bank was September 28, 2011. Acknowledging that the claims bar date had already passed, the notice also points out that the FDIC-R may consider claims filed after the claims bar date if: "(1) the claimant did not receive notice of the appointment of the Receiver in time to file a claim, and (2) the claim is filed in time to permit payment of the claim (the late-filed claim exception'). 12 U.S.C. 1821(d)(5)(C)(ii)." (Doc. 26-2, p. 7). The letter then specifically provides,

Because the Claims Bar Date has passed in this case, you must prove to the Receiver's satisfaction that you did not receive notice of the appointment of the Receiver in time to file a claim before the Claims Bar Date. Therefore, along with your Proof of Claim form and supporting documentation, you must prove that you lacked knowledge of the appointment of the Receiver. For example, evidence that you were on active military duty stationed overseas at the time of the appointment of the Receiver.... Submitting your claim no later than the ...

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