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American International Enterprises Inc. v. Federal Deposit Insurance Corp.

filed: August 31, 1993.

AMERICAN INTERNATIONAL ENTERPRISES, INC.; CHEKER KARAM, PLAINTIFFS-APPELLANTS,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, AS AGENCY OF THE UNITED STATES OF AMERICA, AS SUCCESSOR IN INTEREST TO FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Southern District of California. D.C. No. CV-90-1062-GT. Gordon Thompson, Jr., District Judge, Presiding.

Before: Cynthia Holcomb Hall, Charles Wiggins, and Stephen S. Trott, Circuit Judges. Opinion by Judge Trott.

Author: Trott

TROTT, Circuit Judge:

Plaintiffs American International Enterprises, Inc., and individual Cheker Karam appeal the dismissal of their complaint against the Federal Deposit Insurance Corporation arising out of an alleged commission agreement between the parties in a real estate sale. We have jurisdiction pursuant to 28 U.S.C. § 1291 (1988), and we affirm.

I

The appellants in this case are American International Enterprises ("AIE"), a California corporation, and Cheker Karam, a real estate broker employed by AIE. Both AIE and Karam are real estate brokers licensed in California. Also, both AIE and Karam are trustees of the "Roque De La Fuente Alexander Revocable Trust No. 1" ("the trust").*fn1

The appellee is the Federal Deposit Insurance Corporation ("FDIC"), the successor in interest to the Federal Savings and Loan Insurance Corporation ("FSLIC").*fn2 As part of its role as receiver, FSLIC owned parcels of real estate located in many parts of the country. To sell these parcels of property, the FSLIC solicited help from real estate agents to locate buyers.

In this particular instance, FSLIC solicited an offer from AIE for property located in San Diego County, California, in April, 1988. AIE submitted its offer on the property on behalf of the trust, but FSLIC selected another offer. When the deal with the successful offeror fell through, FSLIC again solicited an offer from AIE. In a letter dated July 25, 1988, AIE offered to buy the property on behalf of the trust for $4,150,000 plus a 6% commission. At that time, the trust needed to invest funds on hand to avoid federal tax penalties through the completion of a "Starker Exchange" under 26 U.S.C. § 1031.*fn3

The July 25 offer letter included a line upon which the FSLIC representative was requested to sign to accept the offer. The FSLIC representative did not sign the offer letter and, instead, arranged a meeting with AIE for August 3, 1988, to prepare the contract of sale. At this meeting, FSLIC produced a contract of sale which did not include a provision for payment of a 6% commission to AIE. In fact, the contract included a provision which required AIE to indemnify FSLIC from all liabilities arising from claims for brokerage commissions based on arrangements or agreements made by AIE. The contract also included an integration clause which stated the contract embodied the parties' complete agreement and superseded all prior negotiations, agreements, and understandings. The contract called for a purchase price of $4,600,000, and was signed for AIE by Cheker Karam "as Trustee."

In its complaint, AIE alleges that through its actions between July 25, 1988, and August 3, 1988, FSLIC accepted the terms of AIE's July 25 offer letter including the 6% commission. Moreover, AIE claims that at the August 3 meeting, FSLIC refused to insert a provision in the contract for sale concerning the 6% commission AIE had requested in its offer letter, and that Karam signed the contract only upon FSLIC's oral promise to pay the 6% commission and because time was running out for the trust to complete the Starker Exchange.

After completing the sale, AIE sent a letter on September 14, 1988, to FSLIC complaining about the failure of FSLIC to pay AIE the 6% commission. In this letter, AIE explained why it had signed the sales contract that did not provide for the payment of a commission:

As a fiduciary, [AIE] had the obligation to complete the purchase of the property in the interest of the trust and beneficiary. As a broker, its best interests were not to enter into the agreement to purchase until the 6% commission was provided for. Recognizing this conflict of interest, A.I.E. felt it was compelled to complete the purchase on behalf of the trust.

Nearly two years later, on August 3, 1990, AIE filed a complaint against FDIC, as successor in interest to FSLIC, seeking 6% of the final contract price of $4,600,000, or $276,000. FDIC answered the complaint on February 4, 1991. AIE filed its First Amended Complaint on April 1, 1991. The amended complaint sought recovery of damages on six counts: quantum meruit, intentional interference with contract, breach of contract, commercial misrepresentation or fraud, damages, and estoppel.*fn4

In response, FDIC moved to dismiss the case pursuant to Fed. R. Civ. P. 12(b)(6) on April 15, 1991. At the date set for arguing FDIC's motion to dismiss, July 22, 1991, the district court asked for further briefing on the proper choice of law. After briefing, the court granted FDIC's motion to dismiss the complaint on September 3, 1991. The court concluded:

1. The California Statute of Frauds provides the applicable rule of decision in this matter with regard to the motion to ...


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