Twiford Enterprises, Inc. v. Rolling Hills Bank and Trust
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 20-8048 (10th Circuit, Jul 09,2021) Not Published
- Tag(s):
-
- Ruling:
- In order to succeed on a claim of economic duress under Iowa law, a borrower must (1) prove that the duress resulted from the lender's wrongful and oppressive conduct and not by the borrower's needs, (2) not have obtained a benefit, and (3) show that no other alternative existed, which could include an earlier action against the lender for breach of contract. Here, the lender extended loan maturity dates and extended $850,000 additional financing to the borrower. As a result, the borrower could not disavow the releases contained in the forbearance agreements and could not succeed on its suit.
- Procedural context:
- The debtor, a family owned business, sued a lender, arguing that the lender misled the debtor into twice refinancing the debtor's real estate loans, and then manufactured a default.
The debtor filed a chapter 11 petition and commenced an adversary proceeding against the lender. At the lender's request, the district court withdrew the reference.
The district court converted the lender's motion to dismiss into a summary judgment motion, which the district court granted.
The debtor appealed.
- Facts:
- Twiford Enterprises, Inc. (TEI), a family owned business, obtained cattle loans from Rolling Hills Bank & Trust, an Iowa corporation. The notes for the original loans selected Iowa law as the governing law. Rolling Hills expressed its interest in refinancing TEI's mortgage loans.
In 2015, Rolling Hills refinanced TEI's real estate loans that had been held by another lender. The real estate loans contained Iowa choice of law provisions.
After making the real estate loans, Rolling Hills quit advancing funds to TEI. TEI fell behind on its repayment obligations and Rolling Hills declared a default.
In May 2016, TEI and Rolling Hills executed several loan modification agreements. The loan modification agreements included broad waivers of "all claims, defenses, setoffs, or counterclaims" relating to the debt owed by TEI to Rolling Hills.
In June 2016, TEI and Rolling Hills executed two forbearance agreements. TEI obtained an additional $850,000 in financing and extensions of the maturity dates. The forbearance agreements included broad releases: "Borrower and Guarantors... hereby absolutely, unconditionally and irrevocably release[], remise[] and forever discharge [Rolling Hills] of and from all demands, actions, causes of action, suits..., claims, counterclaims, defenses, rights of set-off, demands and liabilities... known or unknown...." The forbearance agreements also selected Iowa law as the governing law.
- Judge(s):
- MATHESON, BACHARACH, and CARSON
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