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Federal Deposit Insurance Corp. v. Harry Brown & Co., LLC

United States District Court, M.D. Alabama, Northern Division

December 22, 2014

THE FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff,
v.
HARRY BROWN & CO., LLC; STEWARDSHIP INVESTMENTS, LLC; HARRY I. BROWN, JR.; and JOHN M. BROWN, as personal representative of the ESTATE OF HARRY I. BROWN, SR., Defendants. HARRY BROWN & CO., LLC; STEWARDSHIP INVESTMENTS, LLC; HARRY I. BROWN, JR.; and JOHN M. BROWN, as personal representative of the ESTATE OF HARRY I. BROWN, SR., Counterclaimants,
v.
THE FEDERAL DEPOSIT INSURANCE CORPORATION, Counterclaim-Defendant.

MEMORANDUM OPINION AND ORDER

W. HAROLD ALBRITTON, Senior District Judge

I. INTRODUCTION

This cause is before the court on a Motion for Judgment on the Pleadings filed by John M. Brown, as Personal Representative of the Estate of Harry I. Brown, Sr. (Doc. #63), and a Motion to Seal Exhibit A to Appendix 2 to the Motion for Summary Judgment filed by the Federal Deposit Insurance Corporation (Doc. #68).

The case began as a suit by Frontier Bank against Harry I. Brown, Jr.; Harry Brown & Company, LLC; and Stewardship Investments, LLC. The Federal Deposit Insurance Corporationn ("FDIC") became the Receiver for Frontier Bank, and removed the state case to federal court.

The Defendants in the removed case submitted counterclaims to FDIC administratively. FDIC then filed an Amended Complaint, adding John M. Brown as personal representative of the Estate of Harry I. Brown, Sr. The claims in the Amended Complaint, in relevant part, are two breach of contract claims (Counts I and II), an ultra vires claim (Count IV), lack of consideration (Count V), and conspiracy to breach fiduciary duty and to commit fraud (Count VI).

The Defendants Answered the Amended Complaint and counterclaimed. FDIC answered the counterclaims, and asserted affirmative defenses to the counterclaims.

The court granted and denied in part a previous Motion for Judgment on the Pleadings or Summary Judgment filed by FDIC.

The instant Motion for Judgment on the Pleadings is due to be GRANTED in part and DENIED in part, and the Motion to Seal is due to be GRANTED.[1]

II. STANDARD FOR MOTION FOR JUDGMENT ON THE PLEADINGS

Judgment on the pleadings is appropriate where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law. Mergens v. Dreyfoos, 166 F.3d 1114, 1116-17 (11th Cir.1999). The court must accept the facts alleged in the complaint as true and view them in the light most favorable to the nonmoving party. Id. at 1117.

III. FACTS

The facts as alleged are as follows:

This case arises out of the non-payment of promissory notes and guaranties owed to Frontier Bank. Harry Brown, Sr. ("Brown, Sr.") and Harry Brown, Jr. ("Brown, Jr.") were Directors of Frontier Bank. Two loans were made by Frontier Bank to Harry Brown & Co. which were guaranteed by Brown, Jr. and by Brown, Sr. in a limited amount ("the Guaranty").

The Amended Complaint alleges that in the Spring of 2011, Brown, Jr.; Steve Townson, the CEO and a Director of Frontier Bank ("Townson"); and Brown, Sr. realized that the loans to Harry Brown & Co. exceeded the value of the real estate ...


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