UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: DELAWARE PRIME
CONTRACTORS, INCORPORATED, a/k/a
Prime Contractors, Incorporated,
Debtor.

DELAWARE PRIME CONTRACTORS,
INCORPORATED, a/k/a Prime
Contractors, Incorporated,
Plaintiff-Appellant,

and

ROLAND E. KINSER; JEAN A. KINSER,                  No. 96-1663
Plaintiffs,

v.

NATIONSBANK OF VIRGINIA, N.A.,
formerly known as Sovran Bank
NA, a National Banking
Association,
Defendant-Appellee,

v.

UNITED STATES TRUSTEE,
Party in Interest.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Alexander Williams, Jr., District Judge.
(CA-96-183-AW, BK-91-4-0826-PM, AP-95-1-AO34-PM)

Argued: July 8, 1997

Decided: October 6, 1997
Before NIEMEYER, MICHAEL, and MOTZ,
Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Mark Peyser Friedlander, Jr., FRIEDLANDER &
FRIEDLANDER, P.C., Arlington, Virginia, for Appellant. Philip C.
Baxa, MAYS & VALENTINE, Richmond, Virginia, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

When NationsBank of Virginia, N.A., began foreclosure proceed-
ings against a townhouse development in Prince George's County,
Maryland, known as Woods End, the developer of the project, Dela-
ware Prime Contractors, filed for Chapter 11 bankruptcy, staying the
foreclosure. Delaware Prime then instituted this adversary proceeding
against NationsBank, alleging that NationsBank breached duties of
good faith and fair dealing in the administration of the loans that
NationsBank had made to Delaware Prime for the project. The bank-
ruptcy court granted NationsBank's motion for summary judgment
and the district court affirmed. This appeal followed, and we now
affirm.

In March 1988, Delaware Prime Contractors and NationsBank
entered into three separate loan agreements, totaling nearly $5 mil-
lion, for land acquisition, development, and construction of Woods

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End. The loan agreements provided, inter alia, that Delaware Prime
would segregate the proceeds of each loan and use them only for the
loan's specified purpose and would not allow any mechanics liens to
be filed against the project.

By early 1990, Delaware Prime began to experience serious cash
flow problems due in large part to a civil engineering error with
regard to the grading of the site, and by May 1990, Delaware Prime
was in default on its loans. It had improperly drawn funds under the
construction loan to cover the development cost overruns; it had mis-
reported its progress on the project and had reported a need for funds
to complete the project that exceeded the remaining available funds
on the initial loans; and it permitted unpaid subcontractors and materi-
almen to record mechanics liens against the property.

Although NationsBank could have instituted foreclosure proceed-
ings at that time, it elected to lend an additional but final advance of
$400,000 to Delaware Prime. In exchange, Delaware Prime agreed to
allocate the sales proceeds of each townhouse, paying a portion to
reduce loan principal and the remaining portion to NationsBank to be
held in escrow to pay project expenses. Delaware Prime also pledged
two adjacent properties as additional collateral. The terms for this
additional advance were memorialized in a written modification to the
deed of trust. The modification also provided that "[e]xcept as
expressly provided herein, all other terms, obligations, conditions, and
covenants of the Deed of Trust and Modifications shall remain in full
force and effect."

Despite the additional loan amount, sales of townhouses continued
to be slow in the summer and fall of 1990, and Delaware Prime had
insufficient funds to pay its subcontractors and materialmen who
again began to file mechanics liens against the property. By Novem-
ber 1990, Delaware Prime ceased work on the project, and in January
1991 NationsBank instituted foreclosure. Delaware Prime then
obtained a stay by filing for bankruptcy.

In this adversary proceeding, Delaware Prime alleged that Nations-
Bank breached its duty of good faith and fair dealing in the adminis-
tration of the loans during and after June 1990. Specifically, it con-
tended that NationsBank manipulated valuations to justify its demand

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for extra collateral for the June 1990 modification and that Nations-
Bank exacerbated the cash flow crisis by an intentionally slow release
of escrow funds. Delaware Prime argued further that the June 1990
agreement constituted a novation of the prior contract that absolved
it of its prior defaults. Finally, Delaware Prime claimed that, based on
oral contract modifications, NationsBank obtained a right of first
refusal on end-loan applications by townhouse purchasers and mis-
used that right by rejecting the applications, most of which were sub-
mitted by African-Americans.

Following NationsBank's motion for summary judgment, the bank-
ruptcy court allowed Delaware Prime discovery, but it denied Dela-
ware Prime's request to see NationsBank's loan valuation manuals.
After a full hearing, the court granted NationsBank's motion for sum-
mary judgment, finding that Delaware Prime had failed to produce
any material evidence to support its allegations and noting, addition-
ally, that Delaware Prime was barred from asserting its claim because
it had failed to list the claim as an asset in the bankruptcy estate. Even
after Delaware Prime amended its bankruptcy schedules to reflect the
existence of the claim, the Bankruptcy Court denied reconsideration,
and the district court affirmed. On appeal, Delaware Prime challenges
the district court's ruling on the merits, its refusal to allow discovery
of the loan valuation manuals, and its refusal to reconsider its rulings.

We have carefully reviewed the record in this case and have con-
sidered the arguments of counsel. For the reasons cogently stated by
the district court in its opinion, we affirm. See Prime Contractors,
Inc. v. NationsBank of Virginia, N.A. (In re Delaware Prime Contrac-
tors, Inc.), Civil No. AW-96-183 (D. Md. April 9, 1996).

AFFIRMED

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