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Federal Deposit Insurance Corp. v. Crabtree

United States District Court, M.D. Tennessee, Nashville Division

December 23, 2014

FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of Tennessee Commerce Bank, Plaintiff,
v.
WILLIAM HARRISON CRABTREE, JR., Defendant.

REPORT AND RECOMMENDATION

E. CLIFTON KNOWLES, Magistrate Judge.

This matter is before the Court upon a "Motion to Strike and Dismiss Certain Purported Counterclaims and Defenses of the Defendant, " filed by Plaintiff, Federal Deposit Insurance Corporation, in its capacity as Receiver of Tennessee Commerce Bank ("FDIC-R"). Docket No. 8. Plaintiff has filed a supporting Memorandum of Law. Docket No. 9. Defendant has filed a Response in Opposition to the Motion and a Memorandum of Law. Docket Nos. 11, 12. Plaintiff has filed a Reply to Defendant's Response. Docket No. 13.

The factual background underlying this case appears to be relatively simple.

On March 29, 2006, Defendant executed and delivered to Citizen's Corporation ("Citizens") a Promissory Note in the amount of $166, 021.76, with a maturity date of March 29, 2013. On January 4, 2007, Citizens executed and delivered to Tennessee Commerce Bank ("TCB"), a Tennessee banking corporation, an Assignment assigning the subject Note to TCB. Defendant later executed an Amended and Restated Pledge and Security Agreement, which amended and restated certain collateral pledged upon the Note. On January 27, 2012, FDIC-R was appointed Receiver of TCB.

Plaintiff avers that, by virtue of its appointment as Receiver of TCB, it is the current holder and owner of the subject Note and has all rights and powers to seek enforcement and collection of the Note pursuant to 21 U.S.C. ยง 1821(d)(2). Plaintiff avers that the Note is in default and seeks to recover the principal amount, accrued in unpaid interest, other fees, additional interest and late charges accruing after January 31, 2014, and fees and expenses of collections, including attorneys fees.

In response to the Complaint, Defendant filed an "Answer to Complaint and Counterclaim." Docket No. 6. In general terms, Defendant denied many of the allegations of the Complaint. In his Answer, Defendant stated he "reasonably relied on promises and representatives made by authorized representative [ sic ] of Citizens Corporation which were dishonored or false and as such has made payments in respect to said Note." He further averred that he did not "receive or retain one penny of the proceeds of the Note or the transactions evidenced thereby, nor did he receive any other material benefit therefrom." Docket No. 6, p. 3. After answering the allegations of the Complaint, Defendant set forth a number of "affirmative or special defenses and counterclaims...." Id. It appears that the "affirmative or special defenses" are set forth in paragraphs 27-34 of the "Answer to Complaint and Counterclaim." Docket No. 6, p. 3-4. Those "affirmative or special defenses" are:

27. The Complaint fails to state a claim upon which relief can be granted.

28. Plaintiff's claims are barred by waiver and estoppel.

29. Plaintiff's claims are barred by the doctrine of accord and satisfaction.

30. Plaintiff's claims are barred by the doctrine of failure of consideration.

31. Plaintiff's claims are barred or reduced by application of the rights of setoff or recoupment.

32. To the extent Plaintiff has suffered any damages, Plaintiff has failed to mitigate its damages.

33. Defendant states that he has breached no duty to Plaintiff by action or failure to act.

34. Plaintiff is not entitled to attorney's fees or cost under the provisions of the Note, Security Agreement, or otherwise. Docket No. 6, p. 3-4.

Although it is not entirely clear, it appears that Defendant's "Counterclaim" is set forth in paragraphs 36-45 of the "Answer to Complaint and Counterclaim." Id., p. 4-6. Essentially, Defendant's Counterclaim avers that there was an understanding and agreement between him and Citizens that he would not have any personal liability on the Note. Defendant avers that TCB had "actual and/or constructive knowledge of all material agreements between [Defendant] and Citizens." Id. Defendant also avers that TCB "knew or should have known that the Note was not for commercial purposes and only and internal dealing between [Defendant] and Citizens." Id. Defendant additionally avers that he "was caused to enter into the transaction with Citizens by representation [ sic ] and promises which appear now to have been materially false, misleading, or fraudulent, on which Defendant reasonably relied." Id., p. 4. Defendant argues that, as a result, the Note or other instruments are void or voidable and that he is entitled to "rescind the transaction." Id.

Defendant further avers that he "steps into the shoes of TCB and/or Citizens as to any defense he may have against Citizens and/or its officers and/or directors." Id. He describes the Agreement between himself and Citizens, and states that he received no funds from Citizens as represented by the Note. Id. He avers that Citizens and its officers and directors breached a fiduciary duty of care to him in dealings related to the employee stock incentive plan. Id. He additionally avers that "Citizens and its officers and directors engaged in improper and fraudulent conduct, " and that Citizens and its officers and directors acted under ...


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