July 6, 1995 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 95-1025
SUNSHINE DEVELOPMENT, INC.,
Appellant,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION,
Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Paul J. Barbadoro, U.S. District Judge]
Before
Boudin and Lynch, Circuit Judges,
and Schwarzer,* Senior District Judge.
William E. Aivalikles, with whom Law Office of William
Aivalikles was on brief for appellant.
Daniel H. Kurtenbach, Counsel, with whom Ann S. Duross,
Assistant General Counsel, and Richard J. Osterman, Jr., Senior
Counsel, Federal Deposit Insurance Corporation, were on brief for
appellee.
* Of the District of Northern California, sitting by
designation.
SCHWARZER, District Judge. Sunshine Development, Inc.
SCHWARZER, District Judge
("Sunshine") appeals from a judgment of the United States
District Court for the District of New Hampshire which affirmed a
judgment of the United States Bankruptcy Court for the District
of New Hampshire. We have jurisdiction of the appeal under 28
U.S.C. 1291. We affirm largely for the reasons stated in the
thoughtful opinion by the district court and add the following.
This appeal grows out of two actions consolidated
below. The first was filed by First Service Bank for Savings
("Bank") against Sunshine in the New Hampshire state court to
collect loans made by the Bank to Sunshine and to obtain an
attachment on property pledged by Sunshine as security for the
loans. The second was filed by Sunshine in the district court
against the Bank for breach of contract, breach of fiduciary
duties, negligence, interference with contractual relations,
conversion, and violation of the Racketeer Influenced and Corrupt
Organizations Act (18 U.S.C. 1961 et seq.). When the Federal
Deposit Insurance Corporation ("FDIC") was appointed liquidating
agent for the Bank, it was substituted in both actions and
removed the state court action to the district court. The
district court had jurisdiction over the removed action under 12
U.S.C. 1819(b)(1) and (b)(2)(A) and 28 U.S.C. 1331 and
1345. It had jurisdiction over Sunshine's action under 18 U.S.C.
1964 and 28 U.S.C. 1331 and 1332. When Sunshine filed for
protection under chapter 11 of the bankruptcy code, the district
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court referred both actions to the bankruptcy court where they
were consolidated.
With the consent of the parties, a jury trial was held
in the bankruptcy court in both actions. In the Bank s action
against Sunshine to collect the amounts due under the loans, the
jury ruled for Sunshine and awarded nothing. In Sunshine s
action against the Bank, the jury awarded $2,000,000. On the
FDIC s motion, the bankruptcy court, in a 21 page opinion, held
that the jury's verdict in both cases was "manifestly against the
clear weight of the evidence." (R. 11, 21, 30). It vacated the
jury's verdict, dismissed Sunshine's complaint, entered judgment
for FDIC in the amount of $2,727,856.12, and conditionally
granted a new trial. (Id.)
Sunshine appealed to the district court under 28 U.S.C.
158(a). In a sixteen page opinion, the district court affirmed
the judgment of the bankruptcy court (R. 32, 47). The court
acknowledged that its review of the bankruptcy court's order was
plenary and that the reversal of the jury's verdict could not be
sustained "unless the evidence points so strongly and
overwhelmingly in favor of the moving party that no reasonable
jury could have returned a verdict adverse to that party."
Keisling v. Ser-Jobs For Progress, Inc., 19 F.3d 755, 759-60 (1st
Cir. 1994) (R. 34). Examining the evidence "in the light most
favorable to the non-moving party," (Id.), it reached the same
conclusions as the bankruptcy court.
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For the reasons stated by the District Court, our
review too is plenary and we can sustain the judgment only if
there is no evidence on the basis of which a reasonable jury
could have found for Sunshine. We agree with the district
court's analysis that the burden of establishing payment was on
Sunshine and that it could not support a jury verdict merely by
pointing to deficiencies in the Bank s records (R. 36-37). At
oral argument, counsel was unable to point to any facts on the
basis of which a jury could have found that an additional credit
in the amount of $1,016,000, or any other amount, was due as
claimed by Sunshine. As the court below cogently pointed out, to
accept Sunshine s claim would require the jury to find both that
the Bank's records were incorrect in showing the $1,016,000 as
overfunding of another loan yet correct as reflecting a repayment
by Sunshine of $1,016,000 (R. 38-39). No evidence was offered to
support such a strained inference.
With respect to Sunshine's claim against the Bank for
breach of its duty of good faith and fair dealing, the
uncontradicted evidence established that one of its loans had an
overdue balance of over $500,000 and that the notes' cross-
default clauses triggered defaults in all outstanding loans,
justifying the attachment on the property put up as security and
the acceleration of the notes (R. 42-43). And it further
established that the Bank, in obtaining the attachment, had
deemed itself to be insecure because a current appraisal showed
the wholesale value of the security for the loans to be
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substantially below the amount of Sunshine's outstanding debt and
an FDIC examination report classified all of the loans as
"substandard," "doubtful," or "loss." (R. 44).
To refute this evidence reflecting that the Bank acted
in a commercially reasonable manner, Sunshine argued that the
appraiser s report showed the retail value of the Bank s security
to be greater than the amount due on the loans, but it presented
no evidence that the Bank s reliance on wholesale rather than
retail value was unreasonable. It also pointed to a report
prepared by a former Bank official months after the attachment
was obtained indicating optimism that the Bank will be able to
work out of these loans. But after-the-fact evidence does not
establish the lack of good faith of the decisions at the time of
the attachment and acceleration. Sunshine s evidence is not
sufficient to permit a reasonable jury to conclude that the Bank
acted unreasonably in deeming itself to be insecure and obtaining
the attachment, and on appeal, counsel have pointed to no
evidence that would support their claim.
The judgment is AFFIRMED.
AFFIRMED
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