SRSB-IV, Ltd. v. Continental Savings Ass'n

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 92-2317

SRSB-IV, LTD, ET AL.,
Plaintiffs, Counter-Defendants,
versus

CONTINENTAL SAVINGS ASSOCIATION, ET AL.,

Defendants, Counter Plaintiffs,
3rd Party Plaintiffs,
versus

GERALD BROWN and BURTON STERMAN,

Defendants In Intervention,
Appellant,
versus

FEDERAL DEPOSIT INSURANCE CORPORATION,

Intervenor/Receiver,
Appellee.

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Appeal from the United States District court for the
Southern District of Texas
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Before HIGGINBOTHAM, SMITH and DeMOSS, Circuit Judges.

PER CURIAM:

The Federal Deposit Insurance Corporation ("FDIC"), receiver

of Mainland Savings Association, as appellee in the above

referenced case, has moved the Court to remand the case to the U.S.

District Court, in order to permit it to create a better record on

appeal regarding the issue as to whether the actions taken by the

original creditor in foreclosing on 1,000 shares of stock of a

closely held corporation, put up as collateral for the original
indebtedness herein were conducted in a commercially reasonable

fashion. Such motion recognizes, inferentially at least, that the

Trial Judge's determination that the burden of proof was on the

guarantors ("appellants" herein) to prove that the foreclosure

process was not commercially reasonable, was erroneous in light of

the holding of the Supreme Court of Texas in Greathouse v. Charter

National Bank-Southwest, 35 Tex. Sup. Ct. J. 1017 (July 1992) which

was handed down some five months after the Trial Court's ruling in

the present case. The appellants, hoping that they had found a

bird's nest on the ground, opposed the motion to remand and call on

us to reverse the Trial Court's Judgment and render judgment in

their favor relying on a recent decision of another panel of this

Court in Federal Deposit Insurance Corporation v. Payne, 973 F.2d

403 (Sept. 1992). We believe, however, that Payne is factually

distinguishable from the present case. In Payne, the FDIC neither

specially pleaded the commercial reasonableness of the disposition

of the diamond ring, nor generally pleaded that all requirements

for the effective disposition of collateral had been met; and there

was no notice of any kind to the debtor regarding the sale of the

diamond ring. Whereas, in the instant case, there were pleadings on

both sides of the issue and evidence of some actual notice to the

debtor, but the dispute was as to the "reasonableness or not" of

such notice.

Accordingly, we REVERSE the final judgment entered by the

Trial Court in this cause under date of March 2, 1992, (including

all interlocutory and preliminary judgments on liability and/or

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damages upon which the final judgment rests) and REMAND this case

to the Trial Court for a new trial in accordance with the pleading

and proof requirements established by the Supreme Court of Texas in

Greathouse.

All other motions of either party are DENIED as moot.

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