United States District Court, D. Montana, Billings Division
R. MICHAEL PRICE, Plaintiff,
US BANK, N.A., Defendant.
OPINION AND ORDER
P. WATTERS UNITED STATES DISTRICT JUDGE
the Court is Plaintiff R. Michael's Price's motion to
excuse or suspend performance (Doc. 18) and Defendant U.S.
Bank's motion to dismiss for failure to state a claim
(Doc. 20). For the foregoing reasons, the Court DENIES both
Facts alleged in amended complaint
August 4, 2009, Price signed a Term Loan Agreement and
Promissory Note ("Term Note") with U.S. Bank. (Doc.
3-1 at 12). The Term Note was secured by an Arizona Deed of
Trust, Security Agreement, and Assignment of Rents for
property located in Mohave County, Arizona ("Primary
Collateral"). (Doc. 3 at ¶ 10).
April 4, 2010, U.S. Bank filed a complaint against Price in
federal court, alleging Price had defaulted on the Term Note.
(Doc. 3 at ¶ 10). On July 26, 2010, Price filed a
complaint against U.S. Bank in state court, alleging U.S.
Bank had wrongfully instituted foreclosure proceedings
against the Primary Collateral. (Doc. 3 at ¶ 11). U.S.
Bank removed the state court action to federal court and the
cases were consolidated. (Doc. 3 at ¶¶ 12-14).
Price and U.S. Bank entered into a settlement agreement
("Agreement") prior to trial. (Doc. 3 at ¶
15). Pursuant to the Agreement, Price and U.S. Bank executed
a Letter Loan Agreement, a new promissory note
("Replacement Note"), an amendment to the Arizona
Deed of Trust, and a Colorado Deed of Trust to secure the
Replacement Note with additional property located in Douglas
County, Colorado ("Secondary Collateral"). (Doc. 3
at ¶ 15).
Colorado Deed of Trust provided that if the Secondary
Collateral was sold, the cash proceeds would be held as
"Cash Collateral" and deposited in a securities
account as security for the Replacement Note. (Doc. 3-1 at
28). The Colorado Deed of Trust further provided:
Upon sale and conversion to Cash Collateral, [US Bank] will,
within a reasonable time, release that amount of the Cash
Collateral that exceeds the amount required to maintain a
loan-to-value ratio (expressed as a percentage) not in excess
of 70% based on the then current principal balance of the
Note and on the then current market value of all Collateral
for the Note as determined in accordance with the Loan
Agreement, including the Primary Collateral. . . thereafter,
on January 1, 2012 and on January 1 of each succeeding year
until the Note is paid in full, the Bank will recalculate the
value to maintain a loan-to-value ratio (expressed as a
percentage) not in excess of 70% based on the then current
balance of the Note and will release that amount of Cash
Collateral that exceeds such recalculated value.
3-1 at 28). Section 7 of the Letter Loan Agreement provided:
Solely for the purposes of determining the amount of such
Cash Collateral, the Primary Collateral will initially be
valued according to the Lender's current appraisal of $1,
390, 000 ... until [a developed parcel] of the Primary
Collateral is sold or leased or an undeveloped parcel of the
Primary Collateral is sold ...
(Doc. 3-1 at 3-4).
2012, the Secondary Collateral was sold and converted to Cash
Collateral equivalent to $850, 000. (Doc. 3 at ¶ 22).
Also in 2012, U.S. Bank reappraised the Primary Collateral
and valued it at $630, 000. (Doc. 3 at ¶ 30). In January
2015, the principal balance of the Replacement Note was $1,
430, 000. (Doc. 3 at ¶ 23). In February 2015, the value
of the Cash Collateral was $933, 567.75. (Doc. 3 at ¶
25). In 2015, 2016, and 2017, Price requested U.S. Bank
release the Cash Collateral in excess of the 70%
loan-to-value ratio. (Doc. 3 at ¶¶ 27-29). Price
maintained there was Cash Collateral in excess of the 70%
loan-to-value ratio based on the combined value of the Cash
Collateral and the value of the Primary Collateral set out in
Article 7 of the Letter Loan Agreement. (Doc. 3 at
refused to release any Cash Collateral. (Doc. 3 at ¶
29). U.S. Bank maintained there was no Cash Collateral in
excess of the 70% loan-to-value ratio based on the combined
value of the Cash Collateral and U.S. Bank's 2012
reappraisal of the Primary Collateral. (Doc. 3 at
filed suit against U.S. Bank, alleging breach of contract and
fraud, among other claims. (Doc. 1 ¶¶ 38-84). Price
subsequently filed a motion to excuse his performance under
the contract. (Doc. 13). U.S. Bank filed a motion to dismiss
the complaint for failure to state a claim. (Doc. 20). The
parties agree Montana law governs the interpretation of the
contracts at issue.
Motion to ...