Rosas v. United States Small Business Administration

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
________________________
No. 91-1822
(Summary Calendar)
________________________
Joe Rosas and Henry Perez,
Individually and d/b/a Cleburne
Joint Venture No. One
and Beatrice Rosas,
Plaintiffs-Appellants,
versus
The United States Small Business
Administration, Meadowbrook
National Bank, Mel B. Wilde, and
Ray Collins, Substitute Trustee,
Defendants-Appellees.
___________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
___________________________________________________
(May 21, 1992)
Before JONES, DUHÉ, and WIENER, Circuit Judges.
Per Curiam:
Plaintiffs-Appellants, Joe Rosas and Henry Perez, individually
and doing business as Cleburne Joint Venture No. One, and Beatrice
Rosas (collectively "Appellants" or "the Joint Venture"), appeal
summary judgments in favor of the United States Small Business
Administration (the SBA), its substitute trustee Ray Collins
(Collins), Meadowbrook National Bank (Meadowbrook), and its
president Mel B. Wilde (Wilde). Finding no reversible error, we
affirm.
I.
FACTS AND PROCEEDINGS
In August of 1987, the Appellants obtained a $280,000 loan,
amortized over 20 years, from a third party bank, Independence
Mortgage (Independence), for permanent financing of a convenience
market to be constructed by the Joint Venture. The SBA provided an
85 percent guaranty for the loan. Another third party bank, the
First National Bank of Cleburne (First Bank) agreed to provide
interim funding and was given a first lien on the property. In
less than a year, the Joint Venture became delinquent on the First
Bank loan because, according to Rosas and Perez, the $280,000 ran
out before construction was completed.
The Joint Venture then obtained a commitment from Independence
to increase the amount of the permanent mortgage loan by $30,000,
but First Bank refused to advance the additional funds. Even
without the additional funds, in July of 1988, Rosas and Perez
decided to open the market, despite incomplete construction and
lack of capital with which to purchase inventory.
The next month, Rosas negotiated1 with Mel Wilde, president of
Meadowbrook National Bank, about providing the needed financing.
In early September, Meadowbrook issued a 60-day commitment to the
Joint Venture in which it agreed to fund a $400,000 loan amortized
over 20 years if the SBA agreed to an 80 percent guaranty. The
1
There seems to be some disagreement with respect to whether
it was Rosas or Wilde who suggested that Meadowbrook consider
extending a loan to the Joint Venture. The discrepancy is not,
however, material to the summary judgment.
2
resulting SBA loan package, however, called for an amortization of
15 years instead of 20, and a guaranty of 85 percent instead of
80.2
Later in September, First Bank as the initial interim lender
posted the market property for foreclosure, and demanded turnover
of all equipment and inventory securing its loan.
In December, at the closing of the $400,000 loan, the
Appellants signed an SBA Authorization and Loan Agreement (the
Authorization), previously approved by the SBA, which reflected the
15 year amortization and 85 percent guaranty. The Authorization
specified the proportions of the $400,000 that were to be used for
the purchase of land, equipment, and inventory, and for
construction. The Appellants claim to have protested the 15 year
amortization, stating they were told by Wilde to sign the note as
is, and he would later modify the amortization to 20 years.
At the closing, Meadowbrook and the SBA also discovered that
several mechanics and materialmen's liens, aggregating $55,801.70,
for debts incurred by the Joint Venture in the initial construction
still stood against the market property. The Appellants contend
that the lien creditors had not performed their contracts in
accordance with specifications, and thus were not entitled to be
paid. Nevertheless, the title insurance company would not issue a
title policy unless the liens were released, so Meadowbrook
negotiated lien payoffs with most of the creditors, and agreed to
2
Although Meadowbrook argues on appeal that the SBA would
only approve a 15 year payout, the guaranty application, made by
Wilde on behalf of Meadowbrook, requested only a 15 year payout.
3
add $25,000 to the loan package to accomplish the lien payoff.
Wilde claims that Rosas and Perez disputed only one of the liens,
for which Meadowbrook escrowed the payoff pending a resolution.
Once all of the settlement charges were paid, including lien
creditors and First Bank, there remained virtually no money for
completion of the market or purchase of inventory. Therefore, the
Appellants closed the market and began searching for additional
funding. After an aborted attempt to secure funding through
another bank, the Appellants returned to Meadowbrook. It agreed to
fund an additional $80,000 loan, again guaranteed by the SBA. This
time Meadowbrook retained $25,000 of the $80,000 to pay off an
interim loan,3 and used another $24,206.36 to service the $400,000
debt. Apparently, the Appellants received the remaining $30,000
for operating capital.
The Appellants also maintained an operating account at
Meadowbrook into which they deposited all receipts of the market.
The Appellants contend that in June of 1989, Meadowbrook began to
dishonor some checks drawn against the operating account despite
the presence of sufficient funds to pay the checks. Meadowbrook
agrees that on at least one occasion it did refuse to honor a check
even though there were sufficient funds, justifying its action on
the ground that the Appellants were attempting to purchase
equipment in violation of the limitations set forth by the SBA's
Authorization and Loan Agreement for the $80,000.
3
It is not clear from the record whether this $25,000 is the
same $25,000 added to the original $400,000 to cover the payoff
of the creditors.
4
Late in 1989, the Appellants again approached Meadowbrook for
additional funding. The Appellants were at least six months
delinquent on both the $400,000 note and the $80,000 note.
Meadowbrook refused the additional funding. In January of 1990
Meadowbrook requested that the SBA purchase its guaranties, which
it agreed to do. Thereafter, the SBA initiated foreclosure.
The Appellants brought suit in Texas state court against the
SBA and Ray Collins, the substitute trustee, for promissory
estoppel and to enjoin the SBA's foreclosure action. They also
brought actions against Meadowbrook and Wilde for breach of
contract, negligent misrepresentation, breach of duty of good faith
and fair dealing, duress, and breach of depository agreement. The
SBA removed the action to federal district court. After initially
denying motions to dismiss and motions for summary judgment filed
by the SBA and Collins, the court granted summary judgment to
Meadowbrook, Wilde the SBA, and Collins.
In its memorandum order, the district court rejected the
Appellants' contention that the statements made by Wilde at the
December closing of the $400,000 loan were negligent
misrepresentations. Instead, the court found them to be
inadmissible under the parol evidence rule. The court also
rejected the Appellants' claim for breach of duty of good faith and
fair dealing, finding that Texas does not recognize such a duty
from lender to borrower. And the court rejected the duress claim
because it found that the Appellants' assertions were conclusory
5
and unsupported by fact or authority. The court did not address
the breach of depository agreement claim.
The Appellants timely appealed the district court's final
judgment.
II.
STANDARD OF REVIEW
This court reviews the grant of summary judgment motion de
novo, using the same criteria used by the district court in the
first instance.4 We "review the evidence and inferences to be
drawn therefrom in the light most favorable to the non-moving
party."5 Summary judgment is proper "if the pleadings,
depositions, answers to interrogatories, and admission on file
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law."6 Fed.R.Civ.P. 56(e) requires
that when a proper motion for summary judgment is made, the non-
moving party must set forth specific facts showing that there is a
genuine issue for trial.7 The mere existence of an alleged factual
dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment. A dispute about a material
4
Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.
1988).
5
Baton Rouge Bldg. & Constr. Trades Council v. Jacobs
Constructors, Inc., 804 F.2d 879, 881 (5th Cir. 1986)(per
curiam)(citing Southmark Properties v. Charles House Corp., 742
F.2d 862, 873 (5th Cir. 1984)).
6
Fed.R.Civ.P. 56(c).
7
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
6
fact is genuine "if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party."8 "Material facts"
are "facts that might affect the outcome of the suit under the
governing law."9
III.
ANALYSIS
A. Negligent Misrepresentation
The district court rejected the Appellants' contentions that
Wilde's statement at the closing, indicating that he would convert
the loan from a 15 to a 20 year payout if the Appellants would sign
the note, was a negligent misrepresentation. The court concluded
that the statement was inadmissible under the parol evidence rule.
We agree.
Even assuming the Appellants' allegations are true, Wilde's
alleged representations fall squarely within the ambit of the parol
evidence rule making such representations inadmissible evidence.
As a basic rule of Texas contract construction, if a contract is
clear and unambiguous on its face, courts will not consider oral
representations by the parties in interpreting the contract.10
Parol agreements, negotiations and representations are inadmissible
8
Id. at 248.
9
Id.
10
R & P Enterprises v. La Guarta, Gavrel & Kirk, Inc., 596
S.W.2d 517, 519 (Tex. 1980).
7
in Texas and cannot be used to alter the express terms of a written
contract.11
In an attempt to escape the parol evidence rule, the
Appellants maintain that they are not attempting to contradict the
terms of the $400,000 note, but are simply attempting to prove that
Wilde's representations induced them to execute a note containing
terms to which they did not agree. Such an assertion cannot save
the Appellants. Texas courts bind parties to the express terms of
the promissory notes they execute. As the Texas supreme court held
in a case involving a loan agreement,
A party to a written agreement (promissory note) is charged as
a matter of law with knowledge of its provisions and as a
matter of law cannot claim fraud when he is bound to the
provisions unless he can demonstrate he was tricked into its
execution.12
Therefore to fall within this exception to the parol evidence rule,
a party must prove that he was fraudulently induced to enter a
contract. Absent a showing by the Appellants that Wilde
fraudulently induced them to execute the $400,000 note, evidence of
representations and negotiations prior to execution of the note is
inadmissible.
In Simpson v. MBank Dallas, N.A.,13 a guarantor attempted to
avoid liability on a note by claiming that the bank represented
prior to execution that his signature was a "mere technicality" and
11
Texas Export Development Corp. v. Schleder, 519 S.W.2d
134, 137 (Tex. Civ. App. - Dallas 1974).
12
Town North National Bank v. Broaddus, 569 S.W.2d 489, 492
(Tex. 1978)(quoting Texas Export, 519 S.W.2d at 139).
13
724 S.W.2d 102 (Tex. Civ. App. - Dallas 1987).
8
that MBank would not attempt to enforce its guaranty. The court
upheld the trial court's grant of summary judgment for MBank,
stating:
The law is well settled that in order for [the guarantor] to
prove fraud in the inducement sufficiently to allow an
exception to the parol evidence rule to come into play, he
must show some type of trickery, artifice or device employed
by MBank in addition to showing that MBank represented to him
that he would not be liable on the guaranty.14
The Appellants have presented no evidence that the Meadowbrook or
Wilde employed any trickery, artifice or device other than Wilde's
alleged representation that he would restructure the loan from 15
to 20 years. In fact, the Appellants' evidence reflects that Wilde
and the Bank never engaged in a course of conduct calculated to
deceive the Appellants into believing that any alleged oral
agreement would also be honored on the note.
Parties to a promissory note are charged as a matter of law
with knowledge of its provisions, and as a matter of law cannot
claim fraud unless they demonstrate that they were tricked into its
execution.15 The Appellants executed the note with full knowledge
of the facts that they claim constituted fraud. They knew at the
time they signed the note that it required a 15 year payout and
that they were responsible for payment under that note. They
14
Id. at 108 (emphasis added). See also Town North, 569
S.W.2d at 492; Clark v. Dedina, 658 S.W.2d 293, 296 (Tex. App. -
Houston (1st Dist.) 1983). As the district court noted in the
present case, "[c]learly an action for negligent
misrepresentation could not, by definition, include evidence of
artifice or trickery necessary to meet the requirements of this
exception" to the parol evidence rule.
15
Town North, 569 S.W.2d at 492.
9
cannot now be heard to complain that Wilde deceived them into
signing the note based on a promise to vary its terms in the
future.
If fraud could be predicated on a party's allegation of any
oral promise to vary the express terms of the note, then any
collateral parol agreement might be asserted to contradict, vary or
even abrogate any written contract. The result would destroy the
parol evidence rule altogether resulting in uncertainty and
confusion in the law of contracts in general and negotiable
instruments in particular.16
There is no genuine fact issue here, and it is clear that the
Appellees should prevail on the law. The Appellants signed the
loan documents at closing, agreeing to a 15 year payout under the
note, and cannot now avoid their contractual obligation based on an
alleged parol representation.
B. Duress
The district court concluded that the Appellants failed to
present any evidence of duress. The Appellants contend, however,
that their affidavits submitted in opposition to the summary
judgment motions illustrate the "extreme precarious financial
position" in which they found themselves at the time of the
December closing. Rosas stated that "[a]t the December Closing,
Wilde threatened that unless the Joint Venture accepted the terms
which had been negotiated, [First Bank] would foreclose on [its]
16
Id.
10
first lien." The Appellants also assert that the fact that the
disbursements planned for the $400,000 loan did not comply with the
SBA authorization is further evidence of duress. We fail to see,
however, how these statements can be deemed evidence of duress.
Texas courts have held that there can be no duress unless (1)
there is a threat to do some act that the party threatening has no
legal right to do, (2) there is some illegal exaction or some fraud
or deception, and (3) the restraint must be so imminent as to
destroy a party's free agency without present means of protection.17
Neither the Appellants' complaint nor the affidavits allege any
action by Wilde that meets the elements set forth above. Simply
stated, the alleged acts constitute no threat to undertake an
unauthorized, deceptive, fraudulent or illegal act. Both the
"threat" not to fund the loan and the "threat" that First Bank
would foreclose on the Joint Venture alleges no illegal or
fraudulent act. Both scenarios were within the respective banks'
legal rights.
The Appellants also failed to articulate how Wilde's alleged
threats destroyed the Appellants' free agency.18 Instead of
attempting to address each of the elements of a duress cause of
action, the entirety of the Appellants' arguments on the duress
issue focuses on the Joint Venture's "extreme precarious financial
17
Tower Contracting Co. v. Burden Brothers, Inc., 482 S.W.2d
330, 335 (Tex. Civ. App. - Dallas 1972); See also Palmer Barge
Line, Inc. v. Southern Petroleum Trading Co., 776 F.2d 502, 505
(5th Cir. 1985).
18
Tower Contracting, 482 S.W.2d at 335.
11
position." The affidavits set forth no facts demonstrating that
Wilde, and not the Joint Venture's financial hardship, was
responsible for forcing the Appellants to execute the $400,000
note. The district court recognized that the Appellants' argument
"is supported by neither legal authority nor by any factual
clarification of Wilde's alleged threats." As a consequence of the
Appellants' failure to plead the elements of duress properly, there
is no issue whatsoever, either legal or factual. Therefore, the
district court was correct in rejecting the Appellants' claim of
duress.
C. Breach of Good Faith and Fair Dealing
The district court also rejected the Appellants' claim that
the Bank and Wilde breached a duty of good faith and fair dealing
because Texas courts do not recognize such a duty from lender to
borrower.19 On appeal, the Appellants characterize this claim as
one for breach of the implied promise not to interfere or hinder
the Appellants' right to perform their contract.20 The Appellants
apparently base their argument on Meadowbrook's alleged deviation
from the guidelines set forth in the SBA authorizations with
respect to disbursement of the proceeds. In effect, they argue
that Meadowbrook disbursed the loan proceeds to benefit its
19
See Victoria Bank and Trust Company v. Brady, 779 S.W.2d
893, 902 (Tex. App. - Corpus Christi 1989), aff'd in part, rev'd
in part on other grounds, 811 S.W.2d 931 (1991).
20
See Texas National Bank v. Sandia Mortgage Corp., 872 F.2d
692 (5th Cir. 1989).
12
position as mortgagee and not in accordance with the SBA's
authorizations. This argument is without merit.
SBA regulations with respect to the purpose of the loan
authorization provide helpful guidance. Section 122.5-521 reads,
"[i]f SBA approves a loan request, a loan authorization is issued.
The authorization states the terms and conditions on which SBA is
willing to make, participate in or guarantee a loan but it is not
a contract to loan money." Section 120.202-522 provides that the
SBA shall be released from obligation to purchase its share of
the guaranteed loan unless the Lender has substantially
complied with all of the provisions of these regulations, the
Guaranty Agreement and the Loan Authorization, and has not
failed to disclose material facts, and had made no material
misrepresentations to SBA with respect to the loan; or upon
the happening of any one or more of the following events:
(a) Defective Closing. Failure of the Lender to close
and disburse the loan substantially in accordance with
the terms and requirements of the loan instructions
(including the loan authorization), or to service the
loan in a prudent manner, either of which may result in
a substantial loss on the loan.23
Read together, these regulations make clear that the loan
authorization is not a contract to lend. Rather, it is an
agreement between the SBA and the lending institution defining
under what conditions the SBA will honor its guaranty. The SBA is
obligated to perform only if the Bank substantially complies with
the conditions of the agreement. When the Joint Venture defaulted
on the notes, the SBA conducted a prepurchase review of
Meadowbrook's distribution of the loan funds prior to purchasing
21
13 C.F.R. § 122.5-5.
22
13 C.F.R. § 120.202-5.
23
Emphasis added.
13
its 85 percent guaranty. The SBA apparently concluded that the
distribution complied with the SBA's loan authorizations because it
honored its guaranty. We find it incongruous that Meadowbrook
could have both managed the loans in an inequitable manner and
comported with the SBA authorizations. The SBA's determination as
to whether the Bank's actions comport with its guidelines is
dispositive of the issue.24
D. Breach of Depository Agreement
Although the Appellants claimed before the district court that
Meadowbrook breached its depository agreement and wrongfully
dishonored checks when there were sufficient funds in the operating
account, the district court made no mention of this claim in its
memorandum order. Instead, in its judgment, the court declared,
"for the reasons stated in the memorandum order of this date, it is
ordered that plaintiffs take nothing on their claims against
defendants in this case." Although the court's opinion does not
discuss the cause of action for breach of the depository agreement,
this in no way renders invalid the court's dismissal of that claim.
A court is not required, after disposing of all the issues in a
judgment, to explain its determination on each and every issue in
an attached memorandum.25
24
See also Klehm v. Grecian Chalet, Ltd., 164 Ill. App. 3d
610, 518 N.E.2d 187 (1987).
25
Murdaugh Volkswagen, Inc. v. First National Bank, 741 F.2d
41, 44 (4th Cir. 1984).
14
Clearly, the district court dismissed the Appellants' claim
because they failed to present the requisite testimony and
documentary evidence to raise a fact issue in response to the
motions for summary judgment filed by Meadowbrook and Wilde. The
Appellants' affidavits fail to meet the requirements for
specificity to raise a fact issue and thereby defeat summary
judgment under the standard set forth by Anderson v. Liberty Lobby,
Inc. There, the Supreme Court held that, "when a properly
supported motion for summary judgment is made, the adverse party
must set forth specific facts showing that there is a genuine issue
for trial."26
Rosas and Perez submitted the following affidavit testimony in
response to the motions for summary judgment:
Rosas:
Meadowbrook did deposit some loan funds in the operating
account which the Joint Venture maintained, but often refused
to honor checks, even though the Joint Venture account balance
wa much greater than the face amount of the check. Attached
hereto as Exhibit "K" are true and correct copies of return
check notices sent to the Joint Venture by Meadowbrook, which
show that Meadowbrook dishonored checks despite there being
sufficient funds in the Joint Venture Account.
Perez:
Meadowbrook did deposit funds in the operating account which
the Joint Venture maintained, but often refused to honor
checks, even though the Joint Venture account balance was much
greater than the fact amount of the check.
26
477 U.S. at 250. See also Miller v. Soliz, 648 S.W.2d
734, 737 (Tex. Civ. App. - Corpus Christi 1983); Westland Oil
Development Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 907 (Tex.
1982).
15
To bolster this testimony, the Appellants attached two
document pages listing four checks totaling $350. The documents,
however, are vague and are not self-explanatory.27
In Wilde's affidavit in support of his motion for summary
judgment, he averred that
There were several occasions in which Meadowbrook denied
payment on Cleburne Joint Venture checks written on a
Operating Account at Meadowbrook due to Cleburne Joint Venture
maintaining insufficient funds in the account. Only once did
Meadowbrook refuse payment on a check despite sufficient funds
existing in the account. This occurred when Cleburne Joint
Venture attempted to purchase approximately $600.00 of
equipment not authorized by the SBA in the Authorization and
Loan Agreement.
There is no genuine issue with respect to the fact that checks were
dishonored even though there were sufficient funds in the account
to cover them. The Appellants presented no evidence, however, to
counter Wilde's statement that the checks were for unauthorized
purchases. In fact, the Appellants have never explained what the
checks were for.
Moreover, the Appellants have never asserted the specific
damages they might have suffered. Tex. Bus. & Comm. Code § 4.402
provides in pertinent part, "A payor bank is liable to its customer
for damages proximately caused by the wrongful dishonor of an
item....Whether any consequential damages are proximately caused by
the wrongful dishonor is a question of fact to be determined in
27
They show that on two different dates, the balance in the
account was $11,334.69 and $19,028.07. The legend indicates that
the balance in the account was insufficient to pay the items
listed. The documents also purport to show that three of the
four checks were returned, and one was paid. But this was done
by hand-lining through the word "paid" so that only the word
"returned" remained.
16
each case."28 An element of a cause of action under this section
is that the customer suffer damages. The Appellants made the
conclusory statement in their response to the summary judgment
motions that "damages for loss of credit, loss of time, loss of
money, loss of use of money and mental anguish" were genuine issues
of material fact. But the Appellants have done nothing to place
those "facts" in issue. Such unsupported statements are wholly
insufficient to defeat summary judgment.
E. The SBA and Collins
In the district court the Appellants asserted claims of breach
of contract and promissory estoppel against the SBA and Collins
based on the SBA's alleged promises to the Appellants to purchase
and service the promissory notes from Meadowbrook. Before the SBA
responded to the Appellants' discovery requests, the district court
granted summary judgment in favor of the SBA and Collins,
concluding that as a matter of law the Appellants could not invoke
estoppel against the government, and that any agreement, even had
it existed, could not be enforced against the government. On
appeal, the Appellants contend that the district court erred in
ruling on the summary judgment motion before discovery was
complete. We disagree.
It is "the established law of this Circuit that a plaintiff's
entitlement to discovery prior to a ruling on a summary judgment
motion may be cut off when, within the trial court's discretion,
28
Tex. Bus. & Comm. Code Ann. § 4.402 (Vernon 1968).
17
the record indicates that further discovery will not likely produce
facts necessary to defeat the motion."29 As the issues to be
decided by the district court were purely legal in nature, the
court did not abuse its discretion in deciding the summary judgment
motion prior to completion of discovery.
Although the Supreme Court has not completely foreclosed the
possibility that an estoppel claim might lie against the
government, it has noted that its use is severely restricted.30 In
fact, recently in OPM v. Richmond31 the Court noted that it has
reversed every circuit court finding of estoppel against the
government that it has reviewed.32 Particularly, the Court declared
that "claims for estoppel cannot be entertained where public money
is at stake."33
The Appellants argue that their estoppel claim is not a claim
for payment of money from the public treasury, but instead seeks to
enforce the SBA's alleged promise to service the promissory notes.
The Appellants fail to recognize, however, that public monies are
indeed at stake. They borrowed a half a million dollars secured by
29
Fisher v. Metropolitan Life Ins. Co., 895 F.2d 1073, 1978
(5th Cir. 1990).
30
See Heckler v. Community Health Services, Inc., 467 U.S.
51, 60 (1984). See also Schweiker v. Hansen, 450 U.S. 785, 789
(1981)(Government will not be estopped in civil litigation
without a showing that government agents engaged in affirmative
misconduct.)
31
110 S. Ct. 2465 (1990).
32
Id. at 2470.
33
Id. at 2473.
18
the guaranty of the SBA. When the loan went into default, the SBA
honored its guaranty with payments from the federal treasury.
Estopping the government by enforcing a promise to service the
notes would bar further proper and legitimate attempts to recover
that money. Therefore, estoppel will not lie against the
government.
The Appellants' claim of breach of contract against the SBA
also must fail. It is a familiar tenet of government contracts
that the government cannot be bound by the unauthorized acts of its
agents.34 In U.S. v. R & D One Stop Records, Inc.35 we held that the
representation of certain SBA officials that no individual recourse
would be taken against the guarantors was outside the authority of
the SBA agents, and the government was entitled to summary judgment
as a matter of law. The same is true in this case. Any
representation made by an SBA official that the SBA would purchase
and service the promissory notes clearly exceeded the official's
scope of authority. As we expressed in
R & D One Stop,
The possible misrepresentations by SBA representatives are of
no help to guarantors in their defense of fraud or mutual
mistake. Even assuming such misrepresentations were made, the
United States is not bound by actions of its agents exceeding
their scope of authority.36
34
Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384
(1947).
35
661 F.2d 433 (5th Cir. 1981).
36
Id. at 434.
19
Furthermore, it was incumbent upon the Appellants to ascertain
whether the officials with whom they dealt acted within the scope
of their authority.37 Not having done so, they cannot now be heard
to complain that the officials exceeded that scope.
IV.
CONCLUSION
The Appellants were victims of a faltering economy and an
unfortunate set of difficulties in the construction of their
market, not the least of which were their apparent lack of
experience and judgment. They were not, however, victims of
Meadowbrook, Wilde, or the SBA. The Appellants were unable to
demonstrate to the district court that there were any genuine
issues of material fact sufficient to overcome the Defendants'
motions for summary judgment, or that the actions taken by Wilde
and Meadowbrook constituted negligent misrepresentation, placed the
Appellants under duress, breached any duty, or breached the
depository agreement. In addition, the Appellants failed to show
that they could prevail on any claim against the SBA and Collins.
Therefore, the district court committed no reversible error in
granting summary judgment in favor of the Defendants. For the
foregoing reasons, we AFFIRM.
37
Merrill, 332 U.S. at 384. See also U.S. v. Lowell, 557
F.2d 70, 72 (6th Cir. 1977).
20
21