                                                                              F I L E D
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                               OCT 6 1997
                                   TENTH CIRCUIT
                                                                          PATRICK FISHER
                                                                                   Clerk

 GARRETT R. QUINTANA, SR.,

          Plaintiff-Counter-Defendant-
          Appellant,

               v.                                         No. 96-2165
                                                (D.C. No. CIV-92-714 BB/WWD)
 FIRST NATIONAL BANK OF                                    (D. N.M.)
 SANTA FE,

          Defendant-Counter-Claimant-
          Appellee.


                             ORDER AND JUDGMENT *


Before BRISCOE, McWILLIAMS, and LUCERO, Circuit Judges.


      Plaintiff Garrett R. Quintana, Sr., (Quintana Sr.) filed this action against

defendant First National Bank of Santa Fe (First National), claiming First

National violated the anti-tying provisions of the Bank Holding Company Act

(BHCA), 12 U.S.C. § 1972, by requiring, as a condition of loaning him

approximately $1.7 million in September 1989, that Quintana Sr. pay off a



      *
          This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
defaulted $211,500 loan First National had made earlier to Quintana Sr.’s son,

Garrett Quintana, Jr. (Quintana Jr.). Following a bench trial, the district court

found in favor of First National. Quintana Sr. appeals and we affirm.

                                          I.

      Quintana Sr. is a real estate developer and investor who has been involved

in a number of projects in Santa Fe, New Mexico. He generally financed his real

estate activities through loans from financial institutions, including First National.

Quintana Jr. was also involved in the real estate development business, and was

an officer, director, and employee of Bonanza Realty, Inc., a real estate agency

wholly owned by Quintana Sr.

      In 1984, Quintana Sr. entered into an agreement to purchase the Sears

Building in downtown Santa Fe. In light of outstanding loans on other projects,

he decided he should not personally obtain the financing and he turned the project

over to Quintana Jr., who had recently graduated from college. With the

assistance of his father, Quintana Jr. sought financing for the project from First

National. Quintana Jr. submitted a financial statement to First National in August

1984 reflecting a personal net worth of over $2.2 million, based primarily on real

estate holdings at 1533 and 1599 St. Francis Drive and 1975 Cerrillos Road. First

National agreed to loan Quintana Jr. $450,000 to finance the purchase of the

building; in return, First National asked for mortgages and collateral assignments


                                          -2-
of rents and leases on the St. Francis and Cerrillos properties. Notably, the St.

Francis and Cerrillos properties were actually owned by Quintana Sr. and were

not conveyed to Quintana Jr. until September 4, 1984, the date on which Quintana

Jr. executed the mortgages and collateral assignments in favor of First National.

The following day, Quintana Jr. conveyed the St. Francis and Cerrillos properties

back to Quintana Sr. without the knowledge of First National. A portion of the

loan proceeds ($180,000) was used to pay a real estate commission to Grubesic

Realty, which then split the commission with Quintana's wholly-owned real estate

agency, Bonanza Realty.

      In 1985, First National offered to sell Quintana Jr. a piece of property

known as Calle Lorca. Quintana Jr. and Quintana Sr. participated in negotiations

for the purchase and financing of the property. Ultimately, First National loaned

Quintana Jr. $211,500 to finance acquisition of the Calle Lorca property. In

1986, disputes arose regarding an easement at Calle Lorca, as well as a

commitment First National had allegedly made to loan additional sums to

Quintana Jr. to develop the property. Both Quintana Sr. and Quintana Jr.

threatened to sue First National.

      Quintana Sr. located a piece of property with the potential of being

developed into a trailer park in 1985. Quintana Jr. and C.L. Brown, a friend of

Quintana Sr., formed the Vista Verde partnership and obtained a $355,000 loan


                                         -3-
from First National to purchase the property. Quintana Jr. borrowed money from

Quintana Sr. to use as his capital contribution to the project. Although Quintana

Sr. was not a partner or a party to the loan, he participated in negotiations with

First National for the loan and later contended First National had made a

commitment to fund the development and acquisition of the proposed Vista Verde

Mobile Home Park. As he had with the Calle Lorca loan, Quintana Sr. threatened

to sue First National over its perceived failure to provide additional financing.

By 1987, Quintana Jr. and Brown had ceased making interest payments on the

loan. The parties eventually resolved the situation by Brown personally executing

a new promissory note to First National, First National assigning the original

Vista Verde note to Brown, and Quintana Sr. personally guaranteeing payment of

the original Vista Verde note.

      In 1989, Quintana Jr. presented First National with another financial

statement reflecting that he owned the St. Francis and Cerrillos properties. More

specifically, the financial statement reflected that Quintana Jr. owned the asset

values, income, and associated expenses on these properties. However, at the

same time, Quintana Sr. was claiming the income, depreciation, and associated

expenses for these properties on his federal tax returns.

      By June 1, 1989, Quintana Jr. had failed to pay his Calle Lorca note to First

National, creating a default under the provisions of the Sears loan agreement


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(which characterized a failure to pay any other debt or obligation to First National

as a default of the Sears loan agreement), placing at risk all of the real property

pledged to secure the Sears loan agreement (i.e., the St. Francis and Cerrillos

properties). Quintana Sr. approached First National and offered to pay Quintana

Jr.’s defaulted Calle Lorca loan and resolve all of the disputes if First National

would agree to finance the acquisition and planning costs for 320 acres of

undeveloped land northwest of Santa Fe called Vista del Monte. First National

accepted the offer and ultimately loaned him $1,762,000. In addition to

acquisition funds for the land, the loan provided funds for engineering, an interest

reserve, and $211,500 to pay off Quintana Jr.’s defaulted Calle Lorca loan. First

National subsequently extended the Vista del Monte loan on three separate

occasions at the request of Quintana Sr. On May 13, 1992, more than seven

months after the Vista del Monte loan was due, First National issued a notice of

sale and a notice of default and election to sell the real property securing the loan.

Quintana Sr. subsequently sold the land and paid the loan in full.

      Quintana Sr. filed this action on July 9, 1992, alleging the Vista del Monte

loan agreement violated the anti-tying provisions of the BHCA. The district court

initially granted summary judgment in favor of First National on the grounds that

the evidence presented was insufficient to raise a factual dispute concerning

whether First National’s practices were unusual or anticompetitive (as required by


                                          -5-
the BHCA). Quintana Sr. appealed and we reversed and remanded for further

proceedings. Quintana v. First Nat’l Bank, 64 F.3d 670, 1995 WL 490276 (10th

Cir. 1995) (table). In so doing, we concluded (1) there were factual disputes

concerning whether Quintana Sr. and Quintana Jr. were “related” customers for

lending purposes, and (2) the district court improperly disregarded two expert

opinions proffered by Quintana Sr. On remand, the district court conducted a

bench trial on the BHCA claim and found in favor of First National, concluding

the Vista del Monte loan agreement did not violate the anti-tying provisions of the

BHCA.

                                        II.

      The purpose of the BHCA, as originally enacted in 1956, “was the

regulation of the power of bank holding companies to prevent a small number of

powerful banks from dominating commerce and to ensure a separation of

economic power between banking and commerce.” Baggett v. First Nat’l Bank,

117 F.3d 1342, 1345 (11th Cir. 1997). “In 1970, Congress amended the Act to

reach the anti-competitive practices of even smaller banks, which notwithstanding

their comparative size, were able to exert economic power over businesses

because of their control over credit.” Id. Specifically, Congress amended the Act




                                        -6-
by adding 12 U.S.C. § 1972(1), which prohibited certain tying arrangements. 1 In

pertinent part, that section provides:

            A bank shall not in any manner extend credit, lease or sell
      property of any kind, or furnish any service, or fix or vary the
      consideration for any of the foregoing, on the condition or
      requirement
            ...
            (C) that the customer provide some additional credit, property, or
      service to such bank, other than those related to and usually provided in
      connection with a loan, discount, deposit, or trust service.

12 U.S.C. § 1972(1)(C) (1994).

      To demonstrate a violation of § 1972(1)(C), a plaintiff must prove the

condition placed on the loan is (1) an unusual banking practice, (2) an

anticompetitive tying arrangement, and (3) a practice that benefits the bank.

Parsons Steel, Inc. v. First Alabama Bank, 679 F.2d 242, 245-46 (11th Cir. 1982);

accord Palermo v. First Nat’l Bank & Trust Co., 894 F.2d 363, 368 (10th Cir.

1990). In Palermo, we held it is not an unusual banking practice for a lender to

“evaluate its entire existing relationship” with a customer, including the

“customer’s related loans,” when deciding whether to renew existing credit or

extend new credit. Id. at 369-70. Nor is it an unusual practice, we held, for a

bank to require a customer to guarantee affiliated debt before extending further



      1
          In conjunction with § 1972, Congress enacted § 1975 of the BHCA, creating a
private right of action in favor of individuals harmed by violations of the anti-tying
provisions of the BHCA. Baggett, 117 F.3d at 1345-46.

                                           -7-
credit. However, we held, this exemption does not extend to a situation where the

lender conditions the extension of credit to a customer “on the requirement that

the customer participate in the bank’s bad loans to an unrelated customer.” Id. at

369.

       The initial question on appeal is whether the district court erred in finding

Quintana Sr. and Quintana Jr. are related customers. If the court’s finding on this

matter is correct, then the condition challenged by Quintana Sr. (i.e., that he pay

off his son’s Calle Lorca loan in return for receiving the Vista del Monte loan)

was a typical banking practice not prohibited by the BHCA. We review the

district court’s factual findings for clear error. See Curry v. United States, 97

F.3d 412, 414 (10th Cir. 1996). A finding of fact is clearly erroneous if it is

without factual support in the record, or if the appellate court, after reviewing all

the evidence, is left with the definite and firm conviction that a mistake has been

made. Heim v. Utah, 8 F.3d 1541, 1543 (10th Cir. 1993).

       In paragraphs 8 through 27 of its findings of fact, the district court outlined

the financial affairs, assets, liabilities, and borrowing of Quintana Sr. and

Quintana Jr. Considered together, those findings clearly indicate Quintana Sr.

and his son repeatedly manipulated their joint assets in order to obtain funding

from First National for various real estate projects. More specifically, the

findings suggest Quintana Sr. and Quintana Jr. used one another as conduits for


                                          -8-
obtaining financing they otherwise would have been unable to achieve on their

own. In addition, the findings indicate Quintana Sr. had substantial influence, if

not complete control, over his son’s real estate projects. In particular, he was

routinely involved in the development and financing of his son’s real estate

projects, as well as with his son’s post-loan dealings with First National. Based

upon these collective factual findings, which are amply supported by the record

on appeal, we conclude the court did not commit clear error in finding Quintana

Sr. and Quintana Jr. were affiliated or related borrowers.

      In addition to challenging the sufficiency of the evidence underlying the

district court’s factual findings, Quintana Sr. also contends the district court erred

by ignoring applicable federal regulations governing the banking industry.

Specifically, he argues the court failed to follow 12 C.F.R. § 32.5, which sets

forth guidelines a bank must use in determining whether loans or extensions of

credit to one borrower will be attributed to another person for lending limit

purposes.

      Because the record on appeal fails to demonstrate that this issue was

presented to and decided by the district court, we decline to decide it on appeal.

See Wilson v. Union Pac. R.R. Co., 56 F.3d 1226, 1233 (10th Cir. 1995).

Although Quintana Sr. cites to trial testimony in which a witness discusses the

regulation, he cites to no portion of the record in which his counsel argued to the


                                          -9-
district court (either at trial or by written motion) that it must consider the

regulation in determining whether Quintana Sr. and his son were related

borrowers. Likewise, the record contains no indication that the court considered

the issue at all.

       Even assuming the issue was properly raised below, it has no merit. The

portions of the regulation quoted and relied upon by Quintana Sr. are from the

most recent version of the regulation. Notably, that version became effective in

March 1995, approximately six years after the loan at issue was made. Although

a similar regulation was in place at the time of the loan, it was less detailed than

the newer version cited by Quintana Sr. Both versions of the regulation indicate

loans to one person will be attributed to another person when the proceeds of the

loan are used for the “direct benefit” of the other person; however, the older

version of the regulation, unlike the newer version, did not define the term “direct

benefit.” Kenneth J. Rojc, National Bank Lending Limits--A New Framework, 40

Bus. Law. 903, 919-20 (May 1985). Thus, it is arguable that the older version

would apply to a wider variety of circumstances and could arguably encompass

the facts in this case. See id. at 920 (suggesting the Comptroller would interpret

the term “direct benefit” in a flexible manner). Similarly, although both versions

of the regulations mandate attribution where the persons involved are deemed to

be involved in a “common enterprise,” the older version of the regulation is far


                                          -10-
less detailed in defining the term “common enterprise.” Id. at 920-21. For these

reasons, it is conceivable Quintana Sr. and Quintana Jr. would have been

considered affiliated or related borrowers under the older version of the

regulation. Finally, even if the new regulation were applicable, it is possible that

Quintana Sr. and his son would fall within the catch-all provision of the “common

enterprise” definition. See 12 C.F.R. § 32.5(c)(4) (noting a common enterprise

will be deemed to exist “[w]hen the OCC determines, based upon an evaluation of

the facts and circumstances of particular transactions, that a common enterprise

exists”). Accordingly, the court’s conclusion that Quintana Sr. and Quintana Jr.

are related borrowers is not inconsistent with the provisions of § 32.5. 2

      Because we conclude the district court did not err in finding Quintana Sr.

and Quintana Jr. were related borrowers for purposes of the BHCA, we find it

unnecessary to address the remaining issues raised on appeal.

                                           III.

      The judgment of the district court is AFFIRMED.

                                                  Entered for the Court

                                                  Mary Beck Briscoe
                                                  Circuit Judge




      2
         We reach no decision with respect to whether the district court was required to
consider § 32.5 in determining whether Quintana Sr. and his son were related borrowers.

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