ADAMS v. MADISON REALTY & DEVELOPMENT, INC.

No. 90-5918.

937 F.2d 845 (1991)

John M. ADAMS, Jr., Jacqueline Adams, Dennis R. Absher, Robert J. Absher, Harvey L. Alpern, Barbara Alpern, Pamela M. Anthony, Charles M. Aronson, Joy Aronson, Art Baer, Raymond L. Bille, Karla M. Bille, Milton M. Birnbaum, Davis Black, James E. Blum, Dorothy Blum, John M. Bollinger, Beverly Bollinger, M. Fred Brannock, John E. Brittain, III, Carol A. Brittain, Herbert Bronsten, Miriam Bronsten, John Burkey, Cynthia A. Burkey, Esequiel Campos, Elva M. Campos, Richard Caster, Nancy Caster, David Cee Cates, Lyn Cates, David H. Cauble, Darlos Cauble, Milton J. Chasin, John A. Collins, Lee Collins, Carole J. Conti, Christopher Crowe, Linda Crowe, Peter C. Cullen, David L. Cunningham, Berneice P. Cunningham, Donald W. Daymon, Lucille Daymon, Rene Del Re, Daycel B. Del Re, Joseph M. DeMarco, Louis Demorales, Kathe G. Demorales, E. Michael De Santis, William A. Dial, Joy A. Dial, Larry W. Drehs, Cynthia A. Drehs, David A. Drummond, Sylvia Drummond, Alain F. Du Puis, Yary Du Puis, William D. Edwards, John R. Elerding, S. Linda Andrieux Elerding, Gerd H. Ernst, Theodora Ernst, John J. Fitch, Sandra F. Fitch, Thomas M. Fontana, Susan Lewis Fontana, Richard E. Foringer, Warren H. Fox, Roberta H. Fox, William Francis, Leo Frischman, Suzanne Furst, Howard Furst, Edward F. Gill, Sylvelyn D. Gill, Marcel Goldfarb, Ruth Goldfarb, Lisa Goldman, Howard Goldman, Irvin Goodman, Dorothy Goodman, Richard H. Grey, Sallie V. Grey, Richard R. Grey, Catherine L. Grey, Karl G. Grothues, Mechtild Grothues, W. Halliday Randall, Charles T. Harris, Carolyn L. Harris, John R. Hartman, Barbara Hartman, John T. Hedgepeth, Jr., Mary W. Hedgepeth, Hanns Hederer, Angelika Hederer, Orville G. Hiepler, Florence L. Hiepler, William C. Holmes, Bonnie Holmes, Richard Huetter, Maria Luise Huetter, Carol A. Imle, John F. Imle, Jr., Charles W. Jackman, Yvonne I. Jackman, Rand L. Jackson, Martha Jackson, Donald D. Jeffries, Virginia J. Cypiers, Carlos Jimenez, M. Ricarmen Jimenez, Indersit Amar, James L. Keating, Kathy K. Keating, Roger L. Keech, George T. Keen, Jr., Sally J. Keen, D. Frederick Knudson, Christine Knudsen, Edyth C. Koch, Martin L. Kove, Vivienne Kove, Richard J. Kuhn, Arlene Kuhn, Jean B. La Fond, Lulie E. La Fond, Nicol R. Laly, David E. Lang, Grace Lang, Mitchell C. Latter, Elias Lazarides, Catherine Lazarides, Chun B. Lee, John W. Leggat, III, Nancy Jane Leggat, Victor Lobl, Harry A. Louie, Delores C. Louie, Alexander C. MacDonald, Dorothe MacDonald, John Erick Mack, Jr., Dagmar Mack, James E. Martin, John Masius, Donald S. Mayes, Josephine E. Mayes, Joseph McDaniel, Mary McDaniel, David E. Miller, Toni R. Miller, Lee Miller, Michael J. Moss, Romain Oliver Nelsen, Richard A. Neumeyer, Leonard M. Okun, Ted L. Olsen, Elise E. Olsen, Dhiru G. Patel, Jyoti D. Patel, Ramesh R. Patel, Ronald J. Patterson, Cynthia Patton, Leonard Pearlman, Cindy Pearlman, Ronald Pearlman, Laurie Pearlman, Thomas Powell, Anthony E. Romero, Andrew Rudd, Virginia A. Rudd, James K. Ruxin, Howard Sadowsky, Judith Sadowsky, Vikram Shah, Jyoti Shah, Frederick C. Shaller, Kimberly W. Shaller, Howard Shapiro, Joan A. Shapiro, Steven M. Shaw, Marcella J. Shaw, Bernard Shearer, Beverly Shearer, George M. Sheram, Arthur Michael Solender, Elsie Solender, Stephen Lawrence Solender, Benjamin S. Song, Jennifer Song, Joseph Stall, Phyllis L. Stall, Terence T. Stay, Jack Strauss, Jeff Strong, Michael R. Sullivan, Elyse E. Sullivan, John E. Swan, Linda G. Swan, Stephen R. Targan, Janne Targan, Harold A. Thompson, Jay Thompson, Shirleta Richards-Thompson, Steven Tisherman, Arleen Tisherman, Kalyanasundaram Venkataraman, Lorna G. Ventataraman, Troy Verrett, Charlene Verrett, Donald Volz, Kay A. Volz, William H. Walsh, Yui L. Wang, Ronald E. Williams, Kathryn M. Williams, Wanda Wilson, Joseph I. Wilson, Harbajan Singh Kyalsa Yogiji, BVW Investments, v. MADISON REALTY & DEVELOPMENT, INC., a Corporation, Consolidated Mortgage Company, a Corporation, American Funding Limited, a Partnership, First American Services, Inc., a Corporation, John Peter Galanis, Chandra Galanis, Jay Botchman, Tri-County Savings and Loan Association, a State Chartered and Loan Association, Community Federal Savings and Loan Association, a Federal Savings and Loan Association, First Northern Cooperative Bank, a State Chartered Mutual Savings Bank, Empire of America Federal Savings Bank, a Federally Chartered Savings Bank, Empire of America Federal Savings Bank, Deland, Florida, a Federally Chartered Savings Bank, Barclays/American Business Credit, Inc., a Corporation, Public Loan Company, Inc., a Corporation; Morris Cofman, MXC Holdings, Ltd., a Corporation; Arthur Mason, Leff & Mason, a Partnership, Friedman & Shaftan, P.C., a Professional Corporation; Federal Savings and Loan Insurance Corporation, as Receiver for Tri-County Savings and Loan Association, Resolution Trust Corporation, as Receiver for Empire of America Federal Savings Bank and Resolution Trust Corporation as Conservator of Empire Federal Savings Bank of America. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION as Receiver for Tri-County Savings and Loan Association, Counterclaim Plaintiff, v. Pamela ANTHONY, Charles Aronson, Joy Aronson, David Black, John Bollinger, Beverly Bollinger, John Brittain, III, Carroll Ann Brittain, Eseqiel Campos, Elva Campos, Richard Caster, Nancy Caster, David Cates, Lyn Cates, John Collins, Lee Collins, Christopher Crowe, Linda Crowe, Robert S. Deleo, Margaret Deleo, Joseph DeMarco, William Dial, Joy Dial, Thomas Fontana, Susan Lewis Fontana, Howard Furst, Edward Gill, Sylevlyn Gill, Irvin Goodman, Richard H. Grey, Sallie Grey, Richard R. Grey, II, Catherine L. Grey, John Hartman, Barbara Hartman, Hanns Hederer, Angelika Hederer, John Hedgepeth, Jr., Mary Hedgepeth, Orville Hiepler, Florence Hiepler, William Holmes, Bonnie Holmes, Richard Huetter, Mary Luise Huetter, Donald Jeffries, Virginia Jeffries, Carlos Jimenez, Maricarmen Jimenez, Inderjit Kaur, George Keen, Jr., Sally Ken, Frederick Knudson, Christine Knudsen, Martin Kove, Vivienne Kove, Richard Kuhn, Arlene Kuhn, Mitchell Latter, John Leggat, III, Nancy and Leggat, Victor Lobl, Harry Louie, Delores Louie, John Erick Mack, Jr., Dagmar Maria Mack, Alexander MacDonald, Dorothe MacDonald, Joseph McDaniel, Mary McDaniel, James Martin, David Miller, Toni Miller, Michael Moss, Leonard Okun, Ted Okun, Ted Olsen, Elise Olsen, Cynthia Patton, Thomas Powell, Howard Sadowsky, Judith Sadowsky, Vikramkumar Shah, Jjyoti Shah, Frederick Shaller, Kimberly Shaller, Howard Shapiro, George Sheram, Joseph Stall, Phyllis Stall, Jeff Strong, William Edwards, John Swan, Linda Swan, Stephen Targan, Janne Targan, Kalyanasundaram Venkataraman, Lorna Venkataraman, Harbhajan Singh Kkhalsa Yogiji, Counterclaim Defendants, Dennis R. and Roberta J. Absher, John M. and Jacqueline Adams, Milton M. Birnbaum, David H. and Darlos Cauble, Carole J. Conti, Peter C. Cullen, David L. and B.P. Cunningham, Donald W. and Lucille Daymon, Louis and Kathe G. Demorales, Larry W. and Cynthia A. Drehs, John R. and S. Linda Elerding, John J. and Sandra K. Fitch, Warren H. and Roberta H. Fox, Leo L. and Chana F. Frischman, Edward F. and Sylvelyn Gill, Lisa and Howard Goldman, Karl G. and Mechtild Grothues, Charles W. and Yvonne Jackman, James L. and Kathy K. Keating, Edyth C. Koch, Elias and Catherine Lazarides, John Masius, Romain Oliver Nelsen, Dhiru G. and Jyoti D. Pate, Ramesh R. Patel, Leonard and Cindy Pearlman, Ronald and Laurie Pearlman, Anthony E. Romero, Andrew and Virginia A. Rudd, James K. Ruxin, Howard and Joan A. Shapiro, Terence T. Stay, Jack Strauss, Michael R. and Elyse E. Sullivan, Donald and Kay A. Volz, William H. Walsh, Ronald E. and Kathryn Williams, Joseph L. and Wanda Wilson, Charles T. and Carolyn L. Harris, Lee Miller, Arthur M. and Elsie Solender, Stephen L. Solender, and Steve and Arleen Tisherman, Appellants.

United States Court of Appeals, Third Circuit.

Decided June 27, 1991.


Attorney(s) appearing for the Case

Marcus E. Crahan, Jr. (argued), Crahan, Javelera, Ven Halen & Aull, Los Angeles, Cal., for appellants.

Richard E. Moot (argued), Damon & Morey, Buffalo, N.Y., for appellee.

Before HUTCHINSON, COWEN and SEITZ, Circuit Judges.


OPINION OF THE COURT

COWEN, Circuit Judge.

This appeal raises the question whether investors who sign unconditional promissory notes can raise fraud in the inducement as a defense to enforcement of those notes by the Resolution Trust Corporation (the "RTC"), where the RTC acquired the notes by taking over a bank that purchased them on the secondary market. The district court granted summary judgment in favor of...

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