
USCA1 Opinion

	




          April 7, 1993         [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1740                                FLEET BANK OF MAINE,                                   Plaintiff, Appellee,                                          v.                         HARVEY E. PRAWER and GILBERT PRAWER,                   Defendants, Counterclaim Plaintiffs, Appellants,                                         and                        FEDERAL DEPOSIT INSURANCE CORPORATION,                          Counterclaim Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                       [Hon. Gene Carter, U.S. District Judge]                                          ___________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                     Campbell and Bownes, Senior Circuit Judges.                                          _____________________                                 ____________________            Joseph J. Hahn  with whom Bernstein, Shur,  Sawyer & Nelson was on            ______________            _________________________________        brief for appellants.            Alexandra L. Treadway with  whom P. Benjamin Zuckerman and Verrill            _____________________            _____________________     _______        & Dana were on brief for appellees.        ______                                          ____________________                                 ____________________                      CAMPBELL, Senior Circuit Judge.  Maine Savings Bank                                ____________________            brought this action against  appellants, Harvey E. Prawer and            Gilbert  Prawer,  to  collect  money owed  to  it  under  two            promissory  notes the  appellants had  personally guaranteed.            The bank alleged that Limehouse Corporation ("Limehouse"), of            which Harvey Prawer was the president, defaulted on the notes            when   it  stopped   making   monthly   interest   payments.1            Appellants argued  below, as  the basis of  their affirmative            defenses  and  their  counterclaims  against  the bank,  that            Limehouse  stopped  making  payments  because  the  bank  had            reneged  on an agreement  to provide even  more financing for            their real estate project.   The United States District Court            for the District  of Maine granted  summary judgment for  the            bank's successors in interest,  appellees Fleet Bank of Maine            and the FDIC, and we affirm.                                           I.                                          I.                      The district court found  the following facts to be            undisputed.  In 1987 appellants Harvey and Gilbert Prawer, on            behalf of  Limehouse, of  which Harvey Prawer  was president,            began negotiations  with Maine Savings Bank  ("the Bank") for            the financing of the purchase and development of 122 acres of                                            ____________________            1.   Limehouse  Corporation is  not a  party to  this action.            The bank sued  only Harvey  E. Prawer and  Gilbert Prawer  in            their  individual capacities, as guarantors of one promissory            note and co-makers of the other.            land in Scarborough, Maine.   Appellants planned to subdivide            the property and market it as a planned residential community            known as "Coulthard Farms."  At the time of the negotiations,            the total cost of the project was estimated to be $2,500,000,            consisting of $1,000,000 for the  purchase of the real estate            and $1,500,000 for the  construction of the infrastructure               roads, sewers,  water supply  and other structures  needed to            transform the land into a residential community.                      On October  1, 1987,  the Bank issued  a commitment            letter ("First  Commitment Letter"),  in which it  offered to            lend $1,000,000  to Limehouse  for purchase of  the Coulthard            Farms  property,  for  a  term   of  "36  months,  on  demand            thereafter," at  an adjustable  rate, initially 10.50%.   The            Letter  specified  that interest  payments  were  to be  made            monthly.   By  signing  the Letter,  Harvey Prawer  agreed on            behalf  of Limehouse to borrow  the money "in accordance with            the  []  terms  and  conditions"  of  the  Letter,  including            granting  the Bank a mortgage on the property.  One paragraph            of the four-page letter  of terms and conditions  said, "This            loan  shall be repaid from the sale of the mortgaged property            or its refinancing into a residential subdivision development            loan."                      On October 15, 1987, Harvey Prawer, as president of            Limehouse, executed  a promissory note ("First  Note") in the            amount  of $1,000,000 to the  Bank.  Both  Harvey and Gilbert                                         -3-            Prawer, acting in  their individual  capacities, executed  an            unconditional guaranty  of the  First Note.   The First  Note            obligated Limehouse to make  monthly payments of the interest            due and to repay the principal sum on demand after October 1,            1990.2   A default  provision defined "default"  as including            failure to  pay  any  installment  of the  interest  due  and            authorized the holder of  the Note, in addition to  the right            to  demand payment after October 1, 1990, to declare the Note            immediately  due  and  payable in  full  in  the  event of  a            default.3     The  provisions   of  the  First   Note,  while                                            ____________________            2.   The First Note provided, in part:                           For Value Received, On  Demand after                      October 1, 1990, the undersigned promises                      to pay  to  the order  of  Maine  Savings                      Bank,  a  Maine banking  corporation, the                      sum     of     One    Million     Dollars                      ($1,000,000.00),  or  so much  thereof as                      may be advanced,  together with  interest                      upon the principal sum thereof  from time                      to time advanced, . . . ;  which interest                      at  said rates shall  be paid  monthly in                      arrears   on  the   first  day   of  each                      succeeding month hereafter, with  a final                      payment of interest when the indebtedness                      evidenced hereby is paid in full.            3.   The default provision of the First Note provided:                           In case of default in the payment of                      any installment of  interest due  hereon,                      including  default in the  payment of any                      applicable late charge, and  such default                      is  continued  for a  period  of  one (1)                      month, or in case  of default in any term                      or condition of  a Mortgage and  Security                      Agreement of even date, given as security                      herefor, the holder hereof at  its option                      may declare  due and payable at  once the                                         -4-            considerably more detailed,  were consistent  with the  terms            outlined  in  the  First  Commitment  Letter;  but  the  Note            contained  no reference  to repayment  from the  sale of  the            mortgaged property or its refinancing.                      On the  same date,  the Bank and  Limehouse entered            into a  Mortgage and Security Agreement  whereby the property            to be purchased  by Limehouse for the Coulthard Farms project            was mortgaged to  the Bank.   One provision  of the  Mortgage            stated  that, "Upon request  of Grantor  [Limehouse], Grantee            [the  Bank] may, at its  sole option, from  time to time make            further  advances  to Grantor,  provided,  however, that  the            total   principal  secured   hereby  and   remaining  unpaid,            including  any such advances shall not at any time exceed the            sum   of   Two   Million  Five   Hundred   Thousand   Dollars            ($2,500,000.00)."                      On  September 7, 1988, the  Bank issued a letter of            intent to  the Maine Department  of Environmental Protection,            vouching   for  the  financial  condition  of  Limehouse  and            appellants and stating that the Bank  intended to finance the            development of the Coulthard Farms project.                      On  December  21,  1988, the  Bank  issued  another            commitment  letter ("Second Commitment Letter") to Limehouse,                                            ____________________                      unpaid principal  balance hereof, accrued                      interest and late charges, as applicable.                      The foregoing rights shall be in addition                      to the demand right of the holder  hereof                      after October 1, 1990.                                         -5-            offering to lend  an additional  $200,000 for a  term of  "12            months with interest  only to be repaid from  the refinancing            of the debt into a residential subdivision development loan."            Appellants accepted  the terms  and conditions of  the Second            Commitment  Letter   by  signing   it  in  their   individual            capacities.                      On  April 12,  1989,  Harvey  Prawer, as  Limehouse            president, executed a promissory  note ("Second Note") in the            amount of $200,000 "or so much thereof as may be advanced" to            the  Bank.    Both  Harvey  and   Gilbert,  acting  in  their            individual capacities, executed the Second Note as co-makers.            Only $100,000 in funds was advanced by the Bank to Limehouse.            The  Second Note  contained provisions  for monthly  interest            payments and default substantially  identical to those of the            First Note.   Like the  First Note, the  Second Note's  terms            were consistent with those  outlined in the Second Commitment            Letter, except there was no mention of  repaying the interest            from the refinancing of the debt.                      Sometime  in  1990  Limehouse  stopped  making  the            monthly  interest payments  due  under the  First and  Second            Notes.  The Bank  notified Limehouse that it was  in default,            but Limehouse did not cure the  default.  On August 30, 1990,            the  Bank filed  an action  in Maine  Superior Court  against            Harvey Prawer and Gilbert Prawer, as guarantors of  the First            Note and co-makers of the Second Note, seeking payment of the                                         -6-            principal  and  unpaid interest  on both  Notes.   (Under the            First Note  the Bank  alleged it  was owed, as  of August  9,            1990,  $1,000,000  in  principal  and  approximately  $32,900            interest; under  the  Second  Note,  $100,000  in  principal,            $3,100  in interest.)   On  September 26,  1990, the  Prawers            answered the complaint, raised affirmative defenses, and made            counterclaims against the Bank.                        Subsequently,  Maine  Savings  Bank  failed.    The            Federal Deposit Insurance  Corporation ("FDIC"), the receiver            of Maine  Savings Bank,  was substituted as  the counterclaim            defendant, and  Fleet Bank of Maine  ("Fleet"), the purchaser            of  the Bank's assets, was substituted as the plaintiff.  The            case  was removed by the  FDIC to the  United States District            Court for the District of Maine.                      In September 1991,  plaintiff Fleet filed a  motion            for summary judgment.   Counterclaim defendant FDIC filed its            motion for summary judgment in  February 1992.  The  district            court granted both motions on April 3, 1992, finding that the            Prawers' affirmative defenses and counterclaims turned on the            same question:  whether the two Commitment  Letters issued by            the Bank conditioned  repayment of the Notes  upon the Bank's            ultimate refinancing of  the debt.   The district court  held            that the  D'Oench, Duhme doctrine prevented  the Prawers from                      ______________            using the Commitment Letters to defend against the efforts by            Fleet and  the FDIC  to collect  on the facially  unqualified                                         -7-            Notes.   See  D'Oench,  Duhme &  Co.  v. FDIC,  315 U.S.  447                     ___  ______________________     ____            (1942).  The Prawers appeal from the district court's order.4                                         II.                                         II.                      We review  the district  court's  grant of  summary            judgment de novo,  looking at  the record in  the light  most                     __ ____            favorable to appellants.   August v. Offices Unlimited, Inc.,                                       ______    _______________________            981 F.2d 576, 580 (1st Cir. 1992).  The district court  based            summary judgment on the D'Oench, Duhme doctrine, but "we need                                    ______________            not  limit  ourselves  to  the  exact  grounds  for  decision            utilized below.  We are free, on appeal, to affirm a judgment            on  any independently  sufficient  ground."   Aunyx Corp.  v.                                                          ___________            Canon  U.S.A., Inc., 978 F.2d  3, 6 (1st  Cir. 1992) (quoting            ___________________                                   _______            Polyplastics, Inc. v. Transconex,  Inc., 827 F.2d 859, 860-61            __________________    _________________            (1st Cir. 1987)),  cert. denied, 61 U.S.L.W.  3620 (U.S. Mar.                               ____________            9, 1993) (No. 92-1205).  We do not reach D'Oench,  Duhme here                                                     _______________            because  we  find that  appellees  were  entitled to  summary            judgment as a matter of Maine contract law.5                      Appellants admit that  Limehouse stopped making the            monthly  interest payments  due  under the  First and  Second            Notes,  but  contend  that  its obligation  to  make  monthly                                            ____________________            4.   The  district court  had jurisdiction  over this  matter            pursuant to 12 U.S.C.    1819(b)(2)(A) and 28 U.S.C.    1331.            This court has jurisdiction  over this appeal pursuant to  28            U.S.C.   1291.            5.   The  parties   agree  that   Maine  law   governs  their            respective rights and obligations, outside of the question of            application of the federal D'Oench, Duhme doctrine.                                       ______________                                         -8-            interest payments and  repay the principal  of the First  and            Second  Notes was conditioned upon  a promise by  the Bank to            provide financing for the development.  While no such promise            is to be found  in the provisions of either  Note, appellants            point  to  the  Commitment  Letters as  establishing  such  a            promise.   Because the  First Commitment Letter  stated that,            "This loan shall  be repaid  from the sale  of the  mortgaged            property or its  refinancing into  a residential  subdivision            development   loan,"  appellants   say  that   the  repayment            obligations under the First  Note were wholly contingent upon            the  Bank's providing  new financing  for development  of the            property.   Because the Second  Note described the  loan term            as,  "12  months with  interest only  to  be repaid  from the            refinancing  of  the  debt  into  a  residential  subdivision            development  loan,"  appellants   contend  that   Limehouse's            obligations  under the Second  Note were  likewise contingent            upon the Bank's providing of refinancing.  Appellants further            insist  that interpretation  of the  Notes is  insulated from            summary judgment disposition as it is a mixed question of law            and fact.                      A major problem with  appellants' approach is that,            under Maine contract law, a court does not consider extrinsic            evidence in  interpreting a  contract unless the  language of            the contract is ambiguous.  Portland Valve, Inc.  v. Rockwood                                        ____________________     ________            Systems Corp., 460 A.2d 1383, 1387 (Me. 1983).              _____________                                         -9-                           The   issue   of  whether   contract                      language  is ambiguous  is a  question of                      law for the Court.  The interpretation of                      an  unambiguous  written  contract  is  a                      question  of  law   for  the  Court;  the                      interpretation of ambiguous language is a                      question   for   the  factfinder.     The                      interpretation of  an unambiguous writing                      must be determined from the plain meaning                      of  the language used  and from  the four                      corners of the instrument  without resort                      to extrinsic evidence.  Once an ambiguity                      is found then  extrinsic evidence may  be                      admitted  and  considered  to   show  the                      intention  of  the  parties.     Contract                      language   is   ambiguous   when  it   is                      reasonably   susceptible   of   different                      interpretations.            Id.  (citations omitted);  see  also  Triple-A Baseball  Club            ___                        _________  _______________________            Assoc. v.  Northeastern Baseball, Inc., 832  F.2d 214, 220-21            ______     ___________________________            (1st  Cir.   1987)   (summarizing  Maine   law  of   contract            interpretation), cert. denied, 485 U.S. 935 (1988).  Here the                             ____________            contract terms     the  repayment terms contained  within the            four corners of the Notes    are not at all ambiguous.  In no            relevant way  are they  "reasonably susceptible  of different            interpretations."   Portland  Valve, 460 A.2d  at 1387.   The                                _______________            repayment terms are clear and unconditional: the maker of the            Note is obligated to  make monthly interest payments; failure            to  make  interest payments  constitutes  a  default; if  the            grantor defaults,  the grantee  may demand full  repayment of            the principal sum and accrued interest.   There is no hint in            the Notes' language that  the Bank's extension of refinancing            is a condition to  full repayment upon default.   Because the            Notes  are  unambiguous,  appellants  may  not  rely  on  the                                         -10-            Commitment  Letters  to  show that  the  terms  of the  Notes            differed from their plain meaning.  Id.                                                 ___                      Appellants argue  that the Commitment  Letters were            incorporated  into the  Notes  and thus  the Letters'  terms,            including the Letters' references  to refinancing, should  be            considered as part and parcel of the parties' agreement.  The            Letters  were entirely  incorporated  into the  Notes, it  is            contended, because  the Notes "referred to"  the Mortgage and            the Mortgage "referred to" the First Commitment Letter.  This            overlooks the  limited nature of the  cross-references.  None            of  the  documents in  question,  nor  anything  else in  the            record,  suggests that  the parties  intended  to incorporate            everything said  in the  Commitment Letters as  conditions of            the Notes.   The Notes  provided that Limehouse  would be  in                                                  _________            default  of the Note if it defaulted on its obligations under                                                    ___            the  Mortgage  and  Security  Agreement.   The  Mortgage  and            Security   Agreement  stated  that   Limehouse  must  perform                                                 _________            whatever obligations  it had  under the  terms  of the  First                                  __            Commitment Letter.  Neither of these references says anything            about  the  requirement  of monthly  interest  payments,  the            provision  of  the  Note  as to  which  Limehouse  defaulted.            Nothing is anywhere  said that a failure by the  Bank to meet            its  purported  refinancing  assurances  in   the  Commitment            Letters will  constitute a defense to  the borrower's default            upon the Notes.                                           -11-                      The  Notes  are   at  least  partially   integrated            agreements for  purposes of  the parol evidence  rule.   They            appear on their face to  express the parties' final agreement            as  to the  terms  for  Limehouse's  repayment of  the  funds            advanced.   See Interstate Indus. Uniform  Rental Serv., Inc.                        ___ _____________________________________________            v.  Lepage Bakery,  Inc.,  413 A.2d  516,  519-20 (Me.  1980)                ____________________            (applying  test for  integrated agreements  and stating  that            question  of  integration   is  determined  by  the   court);            Restatement (Second) of Contracts    209, 210 (1981).  Signed            by  both  parties,  the  Notes  contain  detailed  terms  and            conditions for repayment of the interest and principal of the            loans, specifying schedules for repayment, penalties for late            payments, calculation of the interest rate, and processes for            handling defaults.   See Restatement (Second)  of Contracts                                   ___            209(3)  ("Where the parties reduce an  agreement to a writing            which in view of  its completeness and specificity reasonably            appears to be  a complete  agreement, it  is taken  to be  an            integrated  agreement  unless  it  is  established  by  other            evidence  that  the  writing   did  not  constitute  a  final            expression.")   The  lack  of specificity  in the  Commitment            Letters     in addition to the time delay between issuance of            the Letters and execution of the Notes (two weeks between the            First Letter and  First Note, four months  between the Second            Letter  and  Note)      strongly suggests  that  the  parties                                         -12-            intended  the  Notes,  not  the  Letters,  to  be  the  final            expressions of the repayment terms.                        "A  binding  integrated agreement  discharges prior            agreements to the extent that it is inconsistent with  them."            Restatement (Second)  of Contracts   213(1);  Astor v. Boulos                                                          _____    ______            Co., 451  A.2d 903, 905  (Me. 1982)  (applying Restatement               ___            213).    If the  references  in  the  Commitment  Letters  to            "refinancing" mean  what appellants  claim they mean     that            the parties  agreed to  make Limehouse's obligation  to repay            the  loans contingent on refinancing  of the debt     then to            that  extent the  Letters are inconsistent,  prior agreements            which are  discharged by the partially integrated agreements,            i.e., the Notes.  See Astor, 451 A.2d at 905-06.                              ___ _____                      In connection with their  counterclaims, appellants            have  urged that  the Bank  breached the  terms of  a binding            contract when it failed  to provide development financing and            so  caused  an  unspecified  amount of  financial  damage  to            appellants.  In support of this contention, appellants assert            that the Bank  "knew" and the  parties "understood" that  the            Bank  would make  a development  loan in  the future.   "Mere            allegations,  or conjecture  unsupported in  the record,  are            insufficient  to raise  a  genuine issue  of material  fact."            August, 981 F.2d  at 580.   To avoid  summary judgment,  they            ______            "must be  able to point  to specific, competent  evidence" in            support of their claims.  Id.                                      ___                                         -13-                      Appellants point to  only a few isolated  fragments            of evidence to  establish the existence of the  contract they            assert: (1) the sentences in the two Commitment Letters which            refer  to  "refinancing"; (2)  the  Bank's  statement in  its            letter to  the Maine  Department of Environmental  Protection            that it was the Bank's "intention to finance  the development            of this project, once all requisite approvals are in place.";            (3) the Mortgage and  Security Agreement's provision that the            Bank could, "at its sole option," advance up to $2,500,000 to            Limehouse upon its request;  and (4) oral statements  by Bank            officials on  May  22, 1990,  indicating  that the  Bank  had            changed  its plans and decided not to loan Limehouse any more            than the $1,200,000 already extended.                      "For there  to be a  contract under Maine  law, the            parties must  have manifested their  mutual assent to  all of            the material terms  of the agreement."  Maine Surgical Supply                                                    _____________________            Co. v. Intermedics Orthopedics, Inc.,  756 F. Supp. 597,  602            ___    _____________________________            (D.  Me. 1991); Ouellette v. Bolduc, 440 A.2d 1042, 1045 (Me.                            _________    ______            1982).    "The  terms  of  the contract  must  be  reasonably            certain, such that  they provide a basis for  determining the            existence of a breach and  for giving an appropriate remedy."            Maine Surgical Supply Co., 756 F. Supp. at 602; Roy v. Danis,            _________________________                       ___    _____            553  A.2d 663, 664 (Me. 1989).  The asserted facts appellants            rely  upon are wholly inadequate  to show the  existence of a            legally  binding contract  by the  Bank to  provide financing                                         -14-            beyond the two loans  made.  Unlike the loans  for $1,000,000            and $200,000,  there is  no commitment letter  in the  record            which bound  the Bank  to providing development  financing to            Limehouse.  Nothing is offered by appellants to show the loan            amount, interest  rate, period of repayment, repayment terms,            conditions, or other material  terms of the alleged agreement            for this financing.   Mere declarations of intention to enter            into  a future  agreement     which  is,  at most,  what  the            statements in the Commitment Letters and in the letter to the            Maine Department  of Environmental  Protection are     do not            create a binding contract.  Maine Surgical Supply Co., 756 F.                                        _________________________            Supp. at 602.  Appellants failed to establish a genuine issue            of material fact  over the existence  of a binding  agreement            obligating the Bank to provide financing beyond the two loans            made.                                         III.                                         III.                      In sum, the record is without material facts which,            viewed  in  the light  most  favorable  to appellants,  would            create a genuine issue under Maine contract law as to whether            Limehouse  could justifiably  refuse to  pay the  amounts due            under the  Notes because of the Bank's  nonperformance of its            claimed  obligation,  as a  condition  to  collection of  its                                         -15-            Notes,  to  have provided  development  financing.6   Without            need to  inquire into  the application here  of the  D'Oench,                                                                 ________            Duhme doctrine, we  rule as  a matter of  Maine contract  law            _____            that  appellees were  entitled to  summary judgment  in their            favor.                       Affirmed.  Costs to appellees.                      ________   __________________                                                           ____________________            6.   We have  considered all of appellants'  other arguments,            mostly variations on  the same  theme, and find  no merit  in            them.                                           -16-
