The opinion of the court was delivered by: ARNOLD
MORRIS S. ARNOLD, UNITED STATES DISTRICT JUDGE.
In January, 1986, plaintiff C. J. Giroir, Jr., obtained from defendant MBank Dallas an irrevocable letter of credit
in the amount of $ 13, 209,000. In conjunction with the letter of credit, plaintiff Giroir executed a promissory note to MBank for $ 13,209,000. As collateral, he pledged 133,000 shares of Worthen Bank stock and some promissory notes payable to him by the Balder Corporation.
Stock, Inc., a corporation of which plaintiff Giroir is the sole stockholder, pledged a certificate of deposit worth $ 1,864,000
and 109,000 shares of Worthen Bank stock as additional collateral.
On the same day that the letter of credit was issued, FirstSouth, a savings and loan association, "assume[d] and agree[d] to pay and perform" plaintiff Giroir's obligations to MBank under the letter of credit and the promissory note.
As security for FirstSouth's assumption of these obligations, FirstSouth pledged all of its current and future assets, including three Treasury notes worth $ 6,000,000 and two Federal National Mortgage Association securities worth $ 6,400,000. FirstSouth's liability under the assumption agreement, however, was limited to $ 8,500,000 or the fair market value of the collateral it had pledged,
whichever was greater. The assumption agreement states that plaintiff Giroir was to "remain obligated and liable" on the letter of credit and the promissory note. Under the terms of the assumption agreement, to which plaintiff Giroir, FirstSouth, and MBank were all parties, MBank had the right to "sell, exchange, release, substitute, or otherwise deal with all or any part of the property now or hereafter securing" the obligations.
$ TIn early December, 1986, the Federal Home Loan Bank Board declared FirstSouth insolvent. The Federal Savings and Loan Insurance Corporation (FSLIC) was appointed as receiver for FirstSouth at that time.
In January, 1985, FirstSouth had issued a commitment letter
to plaintiff Giroir stating that FirstSouth would lend plaintiff $ 3,894,872 in four installments over four years.
When FSLIC took over as a receiver for FirstSouth, it repudiated the commitment letter to plaintiff Giroir and refused to lend him the money that he had been expecting for December, 1986. As a result, plaintiff Giroir was unable to make payments on his promissory notes to the former stockholders of the First National Bank of Fayetteville. The former stockholders then drew on the letter of credit from MBank and were paid $ 13,184,554 by MBank in January, 1987.
In July, 1987, FSLIC, allegedly acting in its corporate capacity only, bought plaintiff Giroir's promissory note from MBank. MBank then transferred to FSLIC the security interests in the Worthen Bank stock, the Balder Corporation promissory notes, and the certificate of deposit. FSLIC then agreed to the dismissal of its lawsuit against MBank.
In early August, 1987, FSLIC notified plaintiff Giroir of its intention to foreclose on the collateral. On August 18, 1987, plaintiff Giroir applied ex parte to this court for a temporary restraining order to enjoin the transfer from MBank to FSLIC of any of plaintiff Giroir's collateral. The order was issued, and although the collateral had already been transferred to FSLIC, the foreclosure action was apparently postponed. Two days later, this court held a full hearing and vacated the temporary restraining order and denied a preliminary injunction.
In September, 1987, plaintiff Giroir filed an amended complaint, alleging that because FSLIC had the power to buy his promissory note from MBank only in its capacity as receiver for FirstSouth, the purchase of that promissory note was a discharge by FirstSouth of his indebtedness to MBank. As a consequence, plaintiff Giroir alleges, instead of transferring his collateral to FSLIC, MBank should have returned the collateral to him.
Plaintiff Giroir sues MBank for breach of contract, conversion, and breach of fiduciary duty and asks for compensatory damages of $ 9,000,000 and punitive damages of $ 20,000,000.
FSLIC moved to intervene as a defendant. The court has granted that motion.
Before the amended complaint was filed, MBank had moved to dismiss. The only contention contained in that motion that is still in issue
is that venue is improper because of the choice-of-forum clauses in the letter of credit application and agreement and the security agreements. After the amended complaint was filed, MBank again moved to dismiss, contending in addition that the amended complaint failed to state a claim, especially one for punitive damages, and asking, in the event the case is not dismissed, that the court transfer it to the federal district court in Dallas.
The motions to dismiss will be denied, and the case will be transferred to the federal district court for the Northern ...