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Federal Deposit Insurance Corporation v. Mustilli

2010 WL 147932 (U.S. Dist. Ct. D. N.J. 2010) (Unpublished)

NOTES; LOANS — Where a note expressly recites that any outside understandings of obligations will be ineffective unless memorialized by a writing and signed by representatives of the lender, the court will not give relief to a borrower for claims that an officer of the lender had agreed to waive the borrower’s obligations under the note.

A borrower obtained a $500,000 loan secured by a mortgage on his residence. He then defaulted on the loan. The note called for full payment of the loan, plus interest, by a specific maturity date. The note recited that any outside understandings of obligations would be ineffective unless memorialized by writing and signed by representatives of the bank. Additionally, the parties agreed that the borrower would not assert claims against the bank in an effort to avoid payment and would bear the costs of any expenses relating to collection actions in the event of default. The maturity date was extended by one year under an agreement executed by the parties. The borrower partially satisfied the debt by the maturity date. The bank filed suit, seeking full payment. The borrower answered, asserting an understanding with the president of the bank that he would not have to make good on this loan if he repaid another loan made by the bank to another party.

The United States District Court granted summary judgment in favor of the bank. It found the note explicitly required repayment of the $500,000 and the borrower had failed to repay most of that. The Court said the note also required the borrower to pay various late fees and litigation expenses, including attorneys’ fees and court costs, in the event of default. It dismissed the borrower’s assertion of any understanding to forgo the debt, as the note required any such understanding to be in writing. The borrower did not submit any writing that amended, modified or cancelled the repayment obligation under the note.

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