The Wall Guy, Inc. et al v. Federal Deposit Insurance Corporation (FDIC) et al
Filing
81
MEMORANDUM OPINION AND ORDER granting the FDIC-Receiver's 71 EMERGENCY MOTION to Enforce the Parties' Pledge Agreement; denying Plaintiffs' 76 MOTION to Enforce the Parties' Pledge Agreement; further directing the FDIC-Receive r to provide substitute collateral in the form of a letter of credit for $524,023 and directing Plaintiffs, within seven (7) days of receipt of the letter of credit, to release their judgment liens on the properties listed in the Pledge Agreemen t; further denying as moot the FDIC-Receiver's 72 MOTION to Expedite Briefing and Argument on Its Emergency Motion to Enforce the Part[ies'] Pledge Agreement. Signed by Judge Robert C. Chambers on 11/17/2022. (cc: counsel of record; any unrepresented parties) (jsa)
Case 3:20-cv-00304 Document 81 Filed 11/17/22 Page 1 of 4 PageID #: 3809
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
THE WALL GUY, INC.,
JEFFREY FRYE, and
JR CONTRACTORS,
Plaintiffs,
v.
CIVIL ACTION NO. 3:20-0304
(consolidated with 3:20-0305)
FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) as Receiver for
The First State Bank,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending before the Court is the FDIC-Receiver’s Emergency Motion to Enforce the
Parties’ Pledge Agreement (ECF No. 71), the FDIC-Receiver’s Motion to Expedite Briefing and
Argument on Its Emergency Motion to Enforce the Part[ies’] Pledge Agreement (ECF No. 72),
and Plaintiffs’ Motion to Enforce the Parties’ Pledge Agreement. ECF No. 76. For the reasons
stated below, the Court GRANTS the FDIC-Receiver’s motion to enforce, DENIES Plaintiffs’
motion, and DENIES AS MOOT the motion to expedite the briefing on the motions.
This action arises out the failure of The First State Bank (First State). Prior to the
bank’s failure, Plaintiffs had obtained a $1,500,000 verdict against The First State Bank in the
Circuit Court of Cabell County. However, the circuit court granted First State’s request for a
remittitur and reduced the verdict to $524,023. Plaintiffs appealed to the West Virginia Supreme
Court, and First State filed a cross appeal. The parties also entered into a “Pledge Agreement”
Case 3:20-cv-00304 Document 81 Filed 11/17/22 Page 2 of 4 PageID #: 3810
securing the award with specific real estate listed as collateral. While the case was on appeal, First
State failed, and the FDIC was appointed as Receiver. The FDIC-Receiver then removed the
actions to this Court for further proceedings. 1
The issue before the Court in the current motions involves paragraphs 6 and 7 of
the Pledge Agreement. These paragraphs provide:
6. In the event the Bank’s post-trial motions are granted by
the Court and the verdict is subject to a remittitur (and a new trial is
not permitted by the Court or is not opted for by Frye) Frye and the
Bank will negotiate, without delay and in good faith, for a new
pledge agreement to be entered into by the parties in an amount
commiserate with any new judgment amount in Frye’s favor.
7. In the event the Bank secures a third-party purchaser for
any of the properties given as security herein, Frye will immediately
release that piece of security and the Bank will provide substitute
collateral of equal or greater value.
Pledge Agreement, at ¶¶6, 7, ECF No. 71-1, at 3. In its motion, the FDIC-Receiver seeks to enforce
its rights under these paragraphs to clear recent cloud-of-title issues on the existing collateral.
When First State failed, the FDIC-Receiver transferred most of First State’s assets
to MVB Bank (MVB). According to the FDIC-Receiver, this transfer included three of the four
properties listed as collateral in the Pledge Agreement. Subsequently, MVB sold two of the
pledged properties. One of those purchasers has demanded that the cloud of title created by a lien
Plaintiffs placed on the property be cleared. To remove the cloud of title on all four properties, the
FDIC-Receiver offered to replace the collateral listed in the Pledge Agreement with a letter of
1
As this Court previously has explained, the procedural history of this case is complex. For
purposes of the current motions, the Court only highlights the relevant facts. The Court has set
forth a more complete description of the relevant history in its Memorandum Opinion and Order
entered on March 5, 2021. ECF No. 34.
-2-
Case 3:20-cv-00304 Document 81 Filed 11/17/22 Page 3 of 4 PageID #: 3811
credit in the amount of the remittitur, which would secure Plaintiffs’ judgment if it withstands the
underlying Rule 59 motions currently on review by this Court. Plaintiffs, however, refused to
release the liens unless the FDIC-Receiver substitutes the collateral in the current Pledge
Agreement with at least $2,300,000 in collateral, together with other extraneous demands. The
FDIC-Receiver denied Plaintiffs’ requests and now seeks the Court intervention to enforce
paragraphs 6 and 7 of the Agreement.
In response and in their motion, Plaintiffs argue the FDIC-Receiver breached the
Pledge Agreement by selling the property. Plaintiffs also assert they had at least $2,300,000 worth
of claims that First State had agreed needed to be collateralized. Plaintiffs also claim that First
State agreed to keep the Pledge Agreement in place pending appeal so this Court should continue
to maintain the status quo. If the FDIC-Receiver wants to clear the title to the properties, Plaintiffs
contend the FDIC-Receiver should immediately pay them the full value of the Pledge Agreement.
Additionally, it should not be reduced to the amount of the remittitur because Plaintiffs accepted
the remittitur under protest.
Upon review, the Court disagrees with Plaintiffs. It is a basic tenant of contract law
that, “[w]hen a written contract is clear and unambiguous[,] its meaning and legal effect must be
determined solely from its contents and it will be given full force and effect according to its plain
terms and provisions. Extrinsic evidence of the parties to such contract, or of other persons, as to
its meaning and effect will not be considered.” Syl. Pt. 3, Kanawha Banking & Trust Co. v. Gilbert,
46 S.E.2d 225 (W. Va. 1947). Here, under the clear and unambiguous language of the Pledge
Agreement, First State (and now its successors) had the right to “secure[] a third-party purchaser”
for the properties used to securitize the judgment. Thereupon, Plaintiffs “will immediately release
-3-
Case 3:20-cv-00304 Document 81 Filed 11/17/22 Page 4 of 4 PageID #: 3812
that piece of security and the Bank will provide substitute collateral of equal or greater value.” Id.
at ¶7. In the event of a remittitur, as is in this case, paragraph 6 requires Plaintiffs and the FDICReceiver to “negotiate, without delay and in good faith, for a new pledge agreement” in the amount
of the “new judgment.” As the FDIC-Receiver unmistakably had the authority under paragraph 7
to sell the property, it did not breach the Agreement by doing so. Additionally, once Plaintiffs
opted to accept the remittitur instead of a new trial, paragraph 6 requires a new pledge agreement
be negotiated in the amount of the remittitur of $524,023.
Finding the dispute raised in the current motions is controlled by the plain language
of the Pledge Agreement in favor of the FDIC-Receiver, the Court GRANTS the FDIC-Receiver’s
Emergency Motion to Enforce the Parties’ Pledge Agreement (ECF No. 71) and DENIES
Plaintiffs’ Motion to Enforce the Parties’ Pledge Agreement. ECF No. 76. The Court further
ORDERS the FDIC-Receiver to provide substitute collateral in the form of a letter of credit for
$524,023 and ORDERS Plaintiffs, within seven (7) days of receipt of the letter of credit, to release
their judgment liens on the properties listed in the Pledge Agreement. Additionally, the Court
DENIES AS MOOT the FDIC-Receiver’s Motion to Expedite Briefing and Argument on Its
Emergency Motion to Enforce the Part[ies’] Pledge Agreement. ECF No. 72.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record
and any unrepresented parties.
ENTER:
November 17, 2022
ROBERT C. CHAMBERS
UNITED STATES DISTRICT JUDGE
-4-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?