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February 13, 1996


The opinion of the court was delivered by: FRIEDMAN

 Country Club Associates Limited Partnership was formed to construct a residential community with a Robert Trent Jones golf course, a tennis facility and a clubhouse, to be called Virginia Oaks. *fn1" To finance the project it entered into a $ 57 million Loan Agreement with Home Federal Savings and Loan Association ("HFSL"). After construction on Virginia Oaks had begun and Country Club had drawn down more than $ 23 million under the loan, the Office of Thrift Supervision ("OTS") declared HFSL insolvent. The OTS appointed the Resolution Trust Corporation ("RTC") as Receiver for HFSL, chartered a new institution called HomeFed to purchase the assets and assume some of the liabilities of HFSL, and then appointed the RTC as Conservator of the newly-formed HomeFed. *fn2" After the RTC took over the management of HFSL and HomeFed and redistributed the two institutions' financial obligations, the RTC refused any further advances of Country Club Loan funds, and work on Virginia Oaks ceased.


 There is no dispute about many of the facts underlying this lawsuit. In May 1989, Country Club executed a loan Agreement in the amount of $ 57 million with HFSL. Defendants' Statement of Material Facts ("Defs.' Statem.") P 1; Plaintiffs' Statement of Material Facts ("Pls.' Statem.") PP 1, 3. The purpose of the loan was to finance the acquisition and development of an upscale residential community in Virginia to be called Virginia Oaks. Defs.' Statem. P 2; Pls.' Statem. PP 2, 3. For its part, Country Club executed two promissory notes, one in the amount of $ 44 million and the other in the amount of $ 13 million, each of which it secured by a deed of trust. Defs.' Statem. P 3; Pls.' Statem. P 3. R-B and SBC, the sole general partners of Country Club Associates Limited Partnership, contributed $ 6 million of equity to the Country Club Partnership. Pls.' Statem. P 4. The $ 57 million loan was at least partially guaranteed by Bressler & Reiner, Inc., which plaintiffs assert is a limited partner of Country Club and the corporate parent of one of Country Club's general partners. Defs.' Statem. P 4.

 After obtaining the Loan, Country Club acquired real estate and began to develop Virginia Oaks. It requested and received from HFSL extensions of the maturity date of the Loan until June 1, 1993. Defs.' Statem. PP 6, 7; Pls.' Statem PP 5, 6. By the end of June 1992, HFSL had advanced $ 23 million to Country Club under the Loan Agreement. Defs.' Statem. P 8; Pls.' Statem. P 5.

 On July 6, 1992, the Office of Thrift Supervision declared HFSL insolvent and placed it into receivership with the RTC as Receiver. Defs.' Statem. P 9; Pls.' Statem. P 7. On the same date, OTS chartered HomeFed, placed HomeFed into conservatorship and appointed the RTC as Conservator. Defs.' Statem. P 10; Pls.' Statem. P 7. The RTC as Receiver of HFSL and the RTC as Conservator of HomeFed entered into a Purchase and Assumption Agreement on July 6, 1992, which transferred certain HFSL assets, including some "loans," from HFSL to HomeFed. Defs.' Statem. P 11; Pls.' Statem. P 8. The Assumption Agreement also obligated the RTC as Conservator of HomeFed to assume certain of HFSL's existing liabilities. Defs.' Statem. P 13; Pls.' Statem. P 8.

 Within 45 days of the institution of the HFSL receivership, Country Club submitted two requisitions for funds under the loan Agreement. The RTC declined to provide the funds. County Club followed up each draw request with a letter from its attorneys indicating that it viewed the RTC's failure to honor the draw requests as a material breach of the Loan Agreement. Declaration of Burton Reiner ("Reiner Decl."), Exs. 14, 18. Without funds, all construction on the Virginia Oaks project soon ceased. Defs.' Statem. PP. 14, 15, 22; Pls.' Statem. P 9. Country Club was not in default at the time the RTC declined to make funds available under the loan Agreement. Pls.' Statem. P 6; Defs.' Reply Mem. in Support of Summ. J. at 5. *fn3"

 Country Club sued the RTC as Receiver of HFSL and as Conservator of HomeFed. Country Club moved for partial summary judgment on liability, claiming that the RTC is liable either for breach of contract or for statutory repudiation based on its refusal to honor the Country Club loan. The RTC cross-moved for summary judgment, arguing principally that it had no continuing obligation to disburse loan fluids to Country Club and, even if such an obligation existed, it fell on the RTC as Receiver of HFSL rather than on the RTC as Conservator of HomeFed. The practical result of such an allocation of liability would be that any judgment obtained by Country Club would be against an entity with empty pockets. The Court finds that there is no genuine dispute that the RTC improperly terminated the Loan Agreement without providing Country Club with notice and an opportunity to cure a possible budget imbalance. It concludes that Country Club is entitled to judgment as a matter of law on the liability issue and that the RTC as Conservator of HomeFed is accountable for that breach of contract.


 A. The Breach of Contract Claim

 When the RTC takes over an institution, either as Receiver or Conservator, it assumes the preexisting obligations of the failed institution and thus is susceptible to claims that it breached those obligations. 12 U.S.C. ยง 1821(d)(2)(H); see Homeland Stores, Inc. v. Resolution Trust Corp., 17 F.3d 1269, 1274-75 (10th Cir.), cert. denied, 513 U.S. 928, 130 L. Ed. 2d 279, 115 S. Ct. 317 (1994). The parties do not dispute that the RTC assumed the contractual obligations contained in the Country Club Loan Agreement, but the RTC disputes whether those obligations continued and in what capacity it took over any continuing obligations related to the Loan. See infra section II.D.

 The elements of a breach of contract claim under Virginia law are (1) a legal obligation of a defendant to a plaintiff; (2) a violation or breach of that duty; and (3) consequential injury or damage to the plaintiff. Westminster Investing Corp. v. Lamps Unlimited, Inc., 237 Va. 543, 379 S.E.2d 316 (Va. 1989). *fn4" It is undisputed that there was a valid loan Agreement providing for funds to be disbursed to Country Club to finance the Virginia Oaks Project, that plaintiffs made draw requests under that Agreement on July 15, 1992 and on August 27, 1992, and that they followed up with letters from their attorneys on August 3, 1992, and September 14, 1992, stating that the RTC's failure to honor the draw requests constituted a material breach of the Agreement and that, in the absence of Loan funds, construction on Virginia Oaks would come to a standstill. Reiner Decl., Exs. 13, 14, 17, 18. It also is undisputed that the RTC refused to honor Country Club's requests, but the record is devoid of any contemporaneous explanation from the RTC for its refusal.

 Since the failure by a party to a contract to do what it is contractually bound to do is a breach of contract, see, e.g., Harrison Higgins, Inc. v. AT&T Communications, Inc., 697 F. Supp. 220 (E.D.Va. 1988), and the RTC failed to honor Country Club's loan draw requests, plaintiffs claim that they are entitled to summary judgment on their breach of contract claim. On the other hand, the RTC argues that it is entitled to judgment as a matter of law because its obligation to advance funds under the Loan Agreement ceased after plaintiffs concealed from HFSL relevant facts concerning the state of the Virginia Oaks budget.

 Under Rule 56, Fed. R. Civ. P., summary judgment shall be granted if there is no genuine issue of material fact in dispute and the moving party is entitled to judgment as a matter of law. Rule 56(c), Fed. R. Civ. P. "In cases in which the dispositive issue involves the construction of a contract, summary judgment may be appropriate if the provisions of the contract are unambiguous." Davis v. Chevy Chase Financial Ltd., 215 U.S. App. D.C. 117, 667 F.2d 160, 169 (D.C. Cir. 1981); see America First Inv. Corp. v. Goland, 288 U.S. App. D.C. 298, 925 F.2d 1518, 1520 (D.C. Cir. 1991). Furthermore, it is settled that whether a contract term is ambiguous is a question to be determined by the court. Carey Canada, Inc. v. California Union Ins. Co., 708 F. Supp. 1, 4 (D.D.C. 1989). In this case, the Court finds that the pivotal provisions of the loan Agreement between HFSL and Country Club are not ambiguous. *fn5"

The Lender shall not be obligated to make any advance of loan proceeds . . . unless . . . the Lender shall be satisfied, based upon the advice of the Consulting Engineer or Progress Inspector, that the Project (or any phase of the Project) can be completed with the balance of the loan proceeds then held by the lender and available for advance pursuant to the terms of this Agreement. . . .

 Reiner Decl., Ex. 1 P 2.4(c).

 The RTC asserts that at the time plaintiffs submitted their requests for funds on July 15, 1992 and August 27, 1992, plaintiffs were concealing a loan imbalance of the type described in paragraph 2.4(c) of the Loan Agreement. As proof, the RTC relies on an April 7, 1992 letter from James F. Cain, Senior Asset Manager at an HFSL subsidiary, to one of Country Club's limited partners and a June 1992 Virginia Oaks Priority Action List prepared by Country Club representatives that was uncovered by the RTC during discovery. The April 7, 1992 HFSL letter from Mr. Cain concerns a budget revision for the Virginia Oaks project. It states:

[HFSL] is advancing the funds requested in your last advance based upon your representations concerning the Project and your commitment to our engineer that there are adequate fluids available in the loan to complete the Project. . . .

 Declaration of Mark Morgan, Ex. F. *fn6" The June 1992 Priority Action List states:

[The] HomeFed budget is $ 44 million. Realistic budget is $ 64-69 million as currently planned, resulting in need to generate approx. $ 7.95 to $ 13 million from sales proceeds.
* * * *
The loan is not in balance. [Country Club] must fund costs (as incurred) until the loan is back in balance before HomeFed has any further obligation to fund, if there are ...

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