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. § 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).
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.
The RTC argues that it had no legal obligation to continue to disburse funds to Country Club under the Loan Agreement. Its defense against plaintiffs' breach of contract claim rests on a provision of the Loan Agreement that provides in relevant part as follows:
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. . . .