United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 20, 2012 Decided January 25, 2013
No. 11-7121
A. HUDA FAROUKI,
APPELLEE
v.
PETRA INTERNATIONAL BANKING CORPORATION, ET AL.,
APPELLANTS
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-02137)
John R. Fornaciari argued the cause for appellants. With
him on the briefs was Robert M. Disch.
Grayson D. Stratton argued the cause for appellee. With
him on the brief were Robert J. Mathias and David Clarke, Jr.
Before: ROGERS and KAVANAUGH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge KAVANAUGH.
KAVANAUGH, Circuit Judge: In 1986, A. Huda Farouki
personally guaranteed a loan made by Petra International
Banking Corporation to American Export Group International
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Services, or AEGIS. But all was not well with AEGIS, which
filed for bankruptcy in 1987. Although AEGIS’s bankruptcy
triggered Petra’s right to sue Farouki under the terms of the
Guaranty Agreement, Petra did not do so. Indeed, Petra
continued administering loans to AEGIS for the next decade.
In late 2008, Farouki sued Petra in the United States
District Court for the District of Columbia, seeking a
declaratory judgment that he did not have any obligations
under the Guaranty Agreement. Petra counter-sued in early
2009, seeking to enforce the Guaranty Agreement. The
District Court dismissed Petra’s claim, concluding that it was
time-barred under the relevant D.C. statute of limitations, and
granted Farouki summary judgment. Petra now appeals.
We agree with the District Court that Petra’s claim is
time-barred. Much of the briefing is devoted to whether the
Guaranty Agreement is under seal. If so, under D.C. law a
12-year statute of limitations would apply. If not, a three-year
statute of limitations typically used in contract disputes would
apply. See D.C. Code § 12-301(6)-(7). But we need not
decide that question because Petra’s claim is time-barred even
assuming that the 12-year statute of limitations applies. The
limitations period began in 1987, when AEGIS declared
bankruptcy and Farouki was obligated to pay Petra under the
Guaranty Agreement, and the limitations period expired in
1999. But Petra did not sue Farouki to enforce the Guaranty
Agreement until 2009, which was far too late.
To try to surmount the 12-year limitations bar, Petra
argues that its efforts, through 1997, to collect on the original
loan, tolls the limitations period until after it filed its
counterclaim in 2009. But under United States v. Rollinson,
the due date of a loan may be postponed through “a binding
agreement supported by consideration” between the principal
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debtor and creditor. 866 F.2d 1463, 1470 (D.C. Cir. 1989)
(quoting FDIC v. Petersen, 770 F.2d 141, 143 (10th Cir.
1985)). Rollinson simply does not speak to any effect that
ongoing collection efforts might have on the statute of
limitations. Collection efforts through 1997 are irrelevant to
the limitations question under Rollinson and, indeed, under the
terms of the Guaranty Agreement itself: As the District Court
correctly concluded, the Guaranty Agreement did not require
exhaustion of collection efforts as a pre-condition to accrual of
a cause of action.
Petra separately contends that the District Court entered
summary judgment sua sponte in favor of Farouki improperly
because it afforded Petra neither notice nor opportunity to
respond, as required by Federal Rule of Civil Procedure
56(f)(3). We have previously held that erroneous entries of
summary judgment may be harmless under Rule 56 where “a
nonmoving party could not have produced any evidence
sufficient to create a substantial question of fact material to the
governing issues of the case.” Colbert v. Potter, 471 F.3d
158, 168 (D.C. Cir. 2006) (internal quotation marks and
citation omitted). We cannot conclude that was the case here.
The question, under Rollinson, was whether the parties
modified their contract such that a new accrual date fell within
12 years of Petra filing its counterclaim. At the time the
District Court made its decision, it did not know whether Petra
could have met the standard announced in Colbert. And while
nothing in the record or a proffer on appeal indicates that the
modification, if it occurred, occurred at a time where the
accrual date would fall within the limitations period, notice and
opportunity to respond might have produced evidence of
consequence bearing on the factual issue at hand. Petra
should have the opportunity to produce such evidence.
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***
We vacate the District Court’s grant of summary judgment
and remand for further proceedings.
So ordered.