United States District Court, District of Columbia
MEMORANDUM OPINION, GRANTING PLAINTIFF &
COUNTER-DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE
Presidential Bank, FSB and Defendants Kevin Green and six
LLCs he owns (“Defendants”) have been involved in
a lending dispute now spanning over a decade. Between 2006
and 2010, Presidential Bank made several loans to Defendants
secured by D.C. real property owned by Defendants. After
Defendants repeatedly defaulted on those loans, the parties
entered into, inter alia, a loan modification
agreement in 2014 and then a forbearance agreement in 2015.
The forbearance agreement contained several financial
conditions in exchange for Presidential Bank forbearing on
collection of the debt, including a lockbox provision
requiring that rental revenue from the collateral properties
be deposited in an account under Presidential Bank's
control, to be disbursed by the bank according to a specific
order of priorities. The agreement also contained a
confession of judgment clause.
Defendants defaulted on the forbearance agreement,
Presidential Bank accelerated the debt and sued Defendants in
Maryland state court, relying on the confession of judgment
clause. Presidential Bank also sued Defendants for conversion
in D.C. Superior Court, alleging that they had failed to
comply with the lockbox agreement and had retained rental
proceeds for themselves. Defendants aggressively contested
the D.C. Superior Court suit, first removing it to this Court
and then raising no less than twelve affirmative defenses and
bringing nine counterclaims. The Court dismissed all but
three of the counterclaims, and, after Presidential Bank
fully and finally prevailed in the Maryland state court case,
granted Presidential Bank summary judgment on all but one of
Defendants' affirmative defenses.
Bank now moves for summary judgment on Defendants' three
remaining counterclaims, for retaliation in violation of the
Equal Credit Opportunity Act (“ECOA”), 15 U.S.C.
§§ 1691-1691f, breach of contract, and tortious
interference with contract. Presidential Bank argues that two
of the claims are barred by res judicata and that all three
claims separately fail as a matter of law. While appearing to
concede much of Presidential Bank's arguments, Defendants
oppose the motion, contending that it is unclear whether they
were truly in default when the bank sued to enforce the
forbearance agreement. The Court finds that argument
meritless and is satisfied that Presidential Bank has shown
its entitlement to summary judgment. The Court therefore
grants the motion for summary judgment in its entirety.
Court has already set out the underlying facts of this case
in detail in its prior opinions. See Presidential Bank,
FSB v. 1733 27th Street SE LLC (“Presidential
Bank II”), 318 F.Supp.3d 61, 67-69 (D.D.C. 2018);
Presidential Bank, FSB v. 1733 27th Street SE LLC
(“Presidential Bank I”), 271 F.Supp.3d
163, 165-66 (D.D.C. 2017). It assumes familiarity with those
prior opinions and only summarizes the facts most relevant to
the present motion.
The Initial Loans and 2015 Forbearance Agreement
2006 and 2010, Presidential Bank entered into seven loan
agreements with the six LLCs controlled by Green named as
defendants in this case. See Presidential Bank II,
318 F.Supp.3d at 67; Compl. ¶ 5, ECF No. 1-1; Countercl.
¶¶ 15-22, ECF No. 12. Each agreement was secured by
a deed of trust, with real estate property controlled by the
LLCs serving as collateral on each of the loans. See
Presidential Bank II, 318 F.Supp.3d at 67; Compl. ¶
5; Countercl. ¶¶ 15-22. Defendants defaulted on the
loans in 2014 and the parties engaged in a “global loan
modification agreement” on October 17, 2014.
See Compl. ¶¶ 6-9; Countercl. ¶¶
28-29. One condition of the loan modification agreement was
that Defendants deposit all rental income from the collateral
properties in separate accounts at Presidential Bank, to
serve as additional collateral for the loans. See
Compl. ¶ 9; Countercl. ¶ 29. Defendants were
allowed to withdraw from those accounts only “those
usual and customary funds necessary to carry out [their]
day-to-day business operations.” Global Loan
Modification Agreement 5, Pl.'s Mem. Supp. Mot. Summ. J.
Ex. 2, ECF No. 66-2. The agreement required Defendants to
bring all loans current by January 15, 2015. Id.
Defendants defaulted on the loan modification agreement as
well. See Green Dep. 78:13-79:5, Mar. 30, 2018,
Defs.' Opp'n Mot. Summ. J. Ex. 2, ECF No. 66-1.
Rather than foreclosing on the properties, Presidential Bank
agreed to enter into a forbearance agreement with Defendants.
See Id. 79:6-14; Forbearance Agreement 1, Pl.'s
Mem. Supp. Ex. 3, ECF No. 66-3. The forbearance agreement
included a number of conditions in exchange for Presidential
Bank delaying collecting on the debt until April 1, 2017.
See Forbearance Agreement 5-10. Amongst others, the
forbearance agreement included an “Account and Lockbox
Agreement” (the “lockbox agreement”), which
provided not only that Defendants would continue to deposit
rental income in separate accounts controlled by Presidential
Bank, but also that Defendants would not be able to withdraw
such funds from the accounts for any reason. See Id.
at 5-6. Instead, the bank itself would disburse money from
the accounts according to an order of priority agreed to by
the parties, with the important caveat that the bank was
entitled to use the entire balance of each account to pay for
the loans or to protect its interests in the collateral
properties if Defendants defaulted under the forbearance
agreement. See Id. at 6. The forbearance agreement
also included a confession of judgment clause, which provided
for Defendants' confession of judgment in the event of
default as to “the amount of the unpaid principal
balance . . . together with any accrued and unpaid interest,
late charges and attorneys' fees and costs incurred by
the lender, together with all other costs and expenses
incurred or accrued and unpaid under th[e] agreement.”
Id. at 9. Finally, the forbearance agreement
required that Defendants bring each loan current by December
31, 2015. Id. at 7.
Defendants' Default Under the Forbearance Agreement and
the Maryland Litigation
never brought the loans current. See Green Dep.
89:9-90:1. By May 2016, the loans were approaching 90 days
behind payment. See Id. 98:19-99:1. On May 1, 2016,
Green filed a complaint about Presidential Bank with the
Department of the Treasury's Office of the Comptroller of
the Currency (“OCC”). See Id. 116:5-7.
OCC sent a letter to Green acknowledging the complaint on May
11, 2016, see Id. 116:18-117:6, and the Bank first
became aware of the complaint at some point later in the
month, see Giraldi Aff. ¶ 2, Pl.'s Mem.
Supp. Ex. 6, ECF No. 66-6; Green Dep. 117:14-16. At the end
of the month, Green began contacting tenants of the
collateral properties to ask them to no longer pay rent in
the accounts identified in the lockbox agreement, and instead
to begin making rental payments in accounts he controlled.
See Green Dep. 34:6-35:9; 100:6-16.
same month, Presidential Bank began preparing to foreclose on
the collateral properties. The bank engaged the services of a
law firm on May 4, 2016 “in connection with the
bank's rights and remedies related to Kevin Green and his
affiliated entities.” Miles & Stockbridge P.C.
Engagement Letter, Pl.'s Mem. Supp. Ex. 7, ECF No. 66-7;
see also Giraldi Aff. ¶ 3. On June 16, 2016,
the bank filed a complaint for entry of judgment by
confession in the Circuit Court of Montgomery County,
Maryland. See Green v. Presidential Bank, FSB, No.
2092, Sept. Term, 2016, 2018 WL 904445, at *1-2 (Md. Ct.
Spec. App. Feb. 14, 2019) (unreported). The circuit court
entered confessed judgment in Presidential Bank's favor,
in the amount of $3, 314, 295.63, on June 27, 2016. See
Id. at *2. On September 19, 2016, Defendants moved to
vacate the judgment, “arguing primarily that judgments
by confession are disfavored in Maryland, and [that] the
circuit court lacked personal jurisdiction over them.”
Id. The circuit court denied Defendants' motion
on November 10, 2016, see id., and the Maryland
Court of Special Appeals affirmed in an unpublished opinion
on February 14, 2018, see Id. at *5.
parallel with the Maryland state action, Presidential Bank
began the instant action in D.C. Superior Court on July 18,
2016. See Compl. Alleging that Defendants had
“absconded with th[e] funds” they were supposed
to deposit in Presidential Bank accounts pursuant to the
lockbox agreement, id. ¶ 22, Presidential Bank
brought claims for conversion and for the appointment of a
receiver, id. ¶¶ 37-65. Defendants removed
the case to this Court, see Defs.' Notice of
Removal, ECF No. 1, and filed an answer and counterclaim on
February 3, 2017, see Countercl. Defendants asserted
twelve affirmative defenses and brought nine claims in their
counterclaim, including that Presidential Bank had retaliated
against them for contacting the OCC by initiating
foreclosure, in violation of the ECOA; had ...