United States District Court, E.D. Arkansas, Western Division
SIMMONS BANK, TRUSTEE OF THE HEARTLAND BANK LIQUIDATING TRUST U/I/D MARCH 8, 2018 PLAINTIFF
FIRST CAPITAL VICTORIA LLC; FIRST CAPITAL JOURDANTON LLC; FIRST CAPITAL HOBBS LLC; FIRST CAPITAL REAL ESTATE INVESTMENTS LLC; FIRST CAPITAL RETAIL LLC; FIRST CAPITAL REAL ESTATE ADVISORS LP; and SUNEET SINGAL DEFENDANTS
MARSHALL JR. UNITED STATES DISTRICT JUDGE.
First Capital entities assumed approximately $15 million of
non-performing debt to Heartland Bank. The debt was rooted in
Texas real estate developments. Two other First Capital
entities, plus Suneet Singal personally, guaranteed
repayment. The First Capital entities are a nest of limited
liability companies; Singal was in charge. Heartland Bank was
troubled - by these loans and others. Simmons Bank is in this
case because Heartland eventually failed, and Simmons is the
trustee of the Heartland Bank Liquidating Trust.
First Capital entities and Singal admit all the debt-related
facts: the amounts owed on the notes, the defaults, and the
guarantors' lack of payment. They defend against
Simmons's claims for breach of the notes and the
guaranties by saying there's more to the story. The First
Capital entities got no money from the deal. They took over a
failing real estate venture as an accommodation to Heartland
because the bank was under pressure from state regulators.
Heartland promised the First Capital entities more loans, as
needed, which it never made. These promises came from Walter
Quinn, the owner of Heartland Bank's holding company and
moving force at the bank. Singal testified about all these
surrounding circumstances on deposition. He and the First
Capital entities say these circumstances create a promissory
estoppel, make Heartland's hands unclean, and bar any
relief to Simmons now. But, for three reasons, Simmons is
entitled to summary judgment on its breach claims.
the effort to contradict the terms of the parties'
undisputed transactional documents runs aground on the parol
evidence rule, ARK. CODE ANN. § 4-2-202. The final
writings control. Each loan document, and each guaranty,
contains a merger clause, stating that it is the parties'
entire understanding and supersedes any prior understanding,
written or oral. And in the loan documents, the parties
specifically agreed that Heartland had not committed to
provide any other financing. Singal's contradictory
testimony can't undo the parties' writings.
Ultracuts Ltd. v. Wal-Mart Stores, Inc., 343 Ark.
224, 232, 33 S.W.3d 128, 134 (2000).
as Simmons argues, the core of promissory estoppel is
reliance. Wilcox v. Wooley, 2015 Ark.App. 56 at 10,
454 S.W.3d 792, 798; Restatement (Second) of Contracts §
90 (1981). To carry the day, the reliance must be reasonable.
Mickens v. Correctional Medical Services, Inc., 395
F.Supp.2d 748, 752-53 (E.D. Ark. 2005); RESTATEMENT (Second)
of Contracts § 90 cmt. b (1981). This is usually a fact
question. Van Dyke v. Glover, 326 Ark. 736, 744-45,
934 S.W.2d 204, 209 (1996). But, in the face of the
agreements' clear contrary words, no factfinder could
conclude that it was reasonable for the First Capital
entities or Singal to rely on assurances from Quinn that more
financing was around the bend.
Simmons is not seeking any equitable relief. It seeks a
judgment at law that the debt remains unpaid. An unclean
hands defense may be asserted against a party who asks a
court to do equity. Poff v. Brown, 374 Ark. 453,
456, 288 S.W.3d 620, 623 (2008). The maxim is he who comes
into equity must come with clean hands. 2 POMEROY'S
EQUITY JURISPRUDENCE § 397 (5th ed. 1941). Because
Simmons seeks only legal relief, this equitable defense is
are some loose ends. First Capital Retail, LLC, is in
bankruptcy, and the claims against it are stayed.
Nq27. All those claims will be dismissed without
prejudice. Simmons also requests dismissal without prejudice
of counts III and IV of the live complaint. The First Capital
entities and Singal object, asking for either a
with-prejudice dismissal or fees and costs. The Court
overrules their objection. These counts have always been at
the margin. There's no showing that the First Capital
entities or Singal incurred any additional fees or costs
related only to them. Last, the motion to withdraw by local
counsel for the defendants, Na 110, is granted. And
the Court waives the requirement that defendants get
replacement local counsel, given that the case is mostly
No 89, 105 ...