USCA1 Opinion
December 9, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-1524
No. 92-1524
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK,
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK,
Plaintiff, Appellee,
Plaintiff, Appellee,
v.
v.
HOWARD COMMUNICATIONS CORPORATION, ET AL.,
HOWARD COMMUNICATIONS CORPORATION, ET AL.,
Defendants, Appellees.
Defendants, Appellees.
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ROBERT T. HOWARD, ET AL.,
ROBERT T. HOWARD, ET AL.,
Defendants, Appellants.
Defendants, Appellants.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Frank H. Freedman, U.S. District Judge]
[Hon. Frank H. Freedman, U.S. District Judge]
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Before
Before
Breyer, Chief Judge,
Breyer, Chief Judge,
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Cyr and Boudin, Circuit Judges.
Cyr and Boudin, Circuit Judges.
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John F. Henning, Jr. for appellants.
John F. Henning, Jr. for appellants.
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Sabin Willett with whom Patricia J. Hill and Bingham, Dana &
Sabin Willett with whom Patricia J. Hill and Bingham, Dana &
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Gould were on brief for appellee.
Gould were on brief for appellee.
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CYR, Circuit Judge. Between 1988 and 1990, appellants
CYR, Circuit Judge.
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Robert Howard and Scott Robb held FCC licenses to operate several
radio stations through two closely-held companies, Howard Communica-
tions Corporation and Citicom Radio of Pittsfield [hereinafter collec-
tively, the "Companies"].1 In 1990, the Companies defaulted on a
$2.65 million loan, personally guaranteed by Howard and Robb. Rhode
Island Hospital Trust National Bank ["Hospital Trust"], the lender,
sued for repayment and for the appointment of a receiver to take
control of the Companies' assets, including their FCC licenses. In
apparent contravention of the ensuing receivership order, appellants
took various dilatory actions designed to impede FCC approval of the
license transfers to the court-appointed receiver. Robb and Howard
appeal the district court finding of civil contempt, and the summary
judgment entered against them on their loan guaranty. We affirm.
I
I
BACKGROUND
BACKGROUND
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Viewing the pleadings, affidavits, and other competent
submissions in the light most favorable to appellants, see Milton v.
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Van Dorn Co., 961 F.2d 965, 969 (1st Cir. 1992), without crediting
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"conclusory allegations, improbable inferences, and unsupported
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1Howard Communications, a Delaware corporation, held FCC licenses to
operate radio stations WGAM-AM and WRSI-FM in Greenfield, Massachu-
setts. Citicom, a Massachusetts corporation, held FCC licenses to
operate radio stations WBEC-AM/FM in Pittsfield, Massachusetts.
speculation," Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8
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(1st Cir. 1990), the following facts emerge.2
In 1988, appellants Howard and Robb, acting on the advice of
their "financial consultant," Gregory L. Howard, approached Hospital
Trust's Broadcast Lending Division in an effort to refinance a $1.1
million bank loan then held by Old Stone Bank. After extensive
negotiations, Hospital Trust officials agreed to lend the Companies
$2.65 million to refinance the loan and to pursue a program of expan-
sion. A Loan Agreement and Revolving Credit and Term Note (hereinaf-
ter, collectively, the "loan agreement") were duly executed by Robert
Howard, as president of the Companies, on October 28, 1988. Concur-
rently, appellants, as co-owners of the Companies, executed a Guaranty
Agreement under which they personally guaranteed the Companies' loan
agreement obligations. Until September 30, 1989, appellants were
answerable under their guaranty whenever the Companies failed to make
any payment in full, as it came due. After that date, appellants were
liable on the occurrence of an event of default, as defined under
5.08 of the loan agreement. Howard and Robb reluctantly signed the
guaranty at the insistence of Hospital Trust, in order to permit the
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2Other so-called "facts," presented by appellants for the first time
on appeal, were not before the district court and will not be consid-
ered on appeal. See Fed. R. App. Proc. 10(a).
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4
loan transaction to go forward. In all significant respects, the
guaranty was valid and enforceable on its face.3
No loan payments were made after January 30, 1990. On April
17, 1990, the Companies admitted their inability to make loan payments
in a timely manner, and on June 26, 1990, the Companies admitted an
event of default under 5.08 of the loan agreement, thereby trigger-
ing appellants' liability on their guaranty. On October 17, Hospital
Trust brought an action against the Companies under their loan agree-
ment, and against appellants on the guaranty.
In February 1991, following several unsuccessful workout
attempts, Hospital Trust moved for the appointment of a receiver to
liquidate the Companies' assets in satisfaction of the unpaid loan
balance. At the hearing held on the motion for the appointment of a
receiver in July 1991, Robb orally represented to the district court
that $2 million had been "segregated to [appellants'] account" for the
purpose of settling the loan dispute. The court granted appellants'
request to defer the appointment of a receiver, but no funds were
forthcoming. On August 5, Howard filed an affidavit in support of a
further request for deferral of the appointment of a receiver, repre-
senting to the court that the funds would be available on or before
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3Appellants now state that they understood that the guaranty would not
be enforced, that it was "for appearances only." They state that this
understanding was reinforced by Hospital Trust's failure through
accident or design to specify the "minimum net worth" appellants
would be required to maintain in order to protect the bank's ability
to collect on their guaranty. Appellants say they believed that the
omission of the "minimum net worth" term rendered the guaranty "void
on its face." See infra pp. 8-9.
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5
August 15. Again the court acceded, but no funds were forthcoming.
On August 23, the court appointed Robert Maccini, a media consultant,
as receiver, effective August 26, and directed him to obtain control
of the Companies' properties, including their FCC licenses. Appel-
lants were enjoined to cooperate in the delivery of the Companies'
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properties and to refrain from "disturb[ing] or imped[ing] the receiv-
er in the performance of his duties in any way."
The procedural plot deepened on August 26, when Howard and
Robb moved to stay enforcement of the receivership order pending FCC
approval of the receiver's succession to the radio station license
rights. The motion was denied. Although Howard and Robb could have
appealed the receivership order, see 28 U.S.C. 1292(a)(2) (confer-
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ring appellate jurisdiction of interlocutory appeals from receivership
orders), no appeal was taken. Instead, on August 28, chapter 11
petitions were filed in behalf of the Companies, which resulted in an
automatic stay of the district court receivership proceedings against
the Companies. See 11 U.S.C. 362(a)(1). In accordance with FCC
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regulations, see 47 C.F.R. 21-11(d), Howard and Robb thereupon submit-
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ted a Transfer of Control Application to the FCC requesting authoriza-
tion to transfer the radio station licenses to the Companies, qua
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debtors-in-possession.
As the district court proceedings against Howard and Robb
were unaffected by the Companies' initiation of chapter 11 proceed-
ings, see, e.g., In re Supermercado Gamboa, Inc., 68 B.R. 230, 232
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(Bankr. D.P.R. 1986), on October 9, Hospital Trust moved for partial
6
summary judgment against appellants on their loan guaranty.4 Summary
judgment was granted on April 1, 1992.
The intervening dismissal of the Companies' chapter 11
proceedings on January 9, 1992, lifted the automatic stay of the
receivership proceedings. See 11 U.S.C. 362(c)(1) & (2)(B). The
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receiver accordingly moved to take control of the Companies' assets
and, on or about January 17, 1992, in order to assume control of the
FCC licenses from the former debtors-in-possession, forwarded license
transfer applications to Howard and Robb for execution. Howard signed
the transfer applications on January 22 and returned them to the
receiver on January 28. In the meantime, however, on January 20, Robb
had filed a separate set of license transfer applications, seeking
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authorization to retransfer the FCC licenses from the Companies, qua
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debtors-in-possession, to the Companies, qua former debtors-in-posses-
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sion. Moreover, Robb notified the receiver that the receiver's
license transfer applications should not be filed until appellants'
applications had "cleared" the FCC. The receiver's transfer applica-
tions were not filed with the FCC until February 4. On February 9, in
response to the filing of the receiver's license transfer applications
with the FCC, appellants filed a so-called "Transferor's Statement of
Circumstances," signed by Robb and supported by Howard's affidavit.
The statement and affidavit opposed the receiver's license transfer
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4Under their guaranty, Howard and Robb waived any right to require
that Hospital Trust proceed against the Companies in the first in-
stance.
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applications and alleged a litany of illegal and abusive activities on
the part of the receiver. The district court later found these
accusations false, misleading, and violative of the receivership
order.
Simultaneously with the filing of the Transferor's Statement
of Circumstances, the FCC received a so-called "Petition to Deny and
Impose Forfeiture," signed by "Denise Harris" and purportedly submit-
ted in behalf of the "HCC/CRP Creditors Committee." Although appel-
lants' names do not appear on the "petition," upon further investiga-
tion it was discovered that Denise Harris was a receptionist for
Robb's law firm. The creditors committee petition reiterated the
false allegations against the receiver, urged disallowance of the
request for transfer of the Companies' licenses to the receiver, and
recommended imposition of "the highest possible penalty" against the
receiver and Hospital Trust. If the HCC/CRP Creditors Committee was
anything other than a vehicle utilized by appellants to impede the
license transfer to the court-appointed receiver, the record does not
substantiate it. In any event, Howard and Robb now admit their
responsibility for filing the petition signed by Harris, which the
district court found to be a flagrant violation of its order enjoining
appellants to refrain from "disturb[ing] or imped[ing] the receiver
. . . ."
On April 1, the district court found Howard and Robb in
civil contempt for interposing (1) the unnecessary post-bankruptcy
license retransfer, (2) the creditors committee's petition through
8
Harris, and (3) the "Statement of Circumstances" opposing the FCC
license transfer to the receiver. Appellants were ordered to reim-
burse Hospital Trust and the receiver for the attorney fees incurred
in responding to the dilatory FCC filings by and in behalf of appel-
lants. See Chambers v. NASCO, Inc., 111 S. Ct. 2123, 2133 (1991)
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(upholding inherent power of federal district court to shift counsel
fees as sanction for contemptuous conduct which included, inter alia,
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false and frivolous FCC petitions); Hutto v. Finney, 437 U.S. 678, 689
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(1978). Howard and Robb appeal.
II
II
DISCUSSION
DISCUSSION
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1. Summary Judgment
1. Summary Judgment
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Summary judgment was appropriate on the loan guaranty only
if Hospital Trust demonstrated (1) the absence of any genuine issue of
material fact, and (2) its right to judgment as a matter of law. See
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Fed. R. Civ. P. 56(c); FDIC v. Singh, No. 92-1344, slip op. at 1 (1st
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Cir. Oct. 7, 1992). We view the evidence in the light most favorable
to the non-moving parties, see Bank One Texas, N.A. v. A.J. Warehouse,
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Inc., 968 F.2d 94, 97 (1st Cir. 1992), and review the summary judgment
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ruling de novo, see, e.g., Milton, 961 F.2d at 969.
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Appellants frivolously assert that the loan guaranty is
"void on its face," as it omitted to prescribe a "minimum net worth"
the guarantors would be required to maintain as contemplated by the
9
form.5 The appropriate inquiry is whether the omitted term is mate-
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rial, i.e., whether its omission renders the guaranty "too vague and
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uncertain to constitute an enforceable contract." Jordan-Milton
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Mach., Inc. v. F/V Teresa Marie II, No. 91-1761, slip op. at 8 (1st
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Cir. Oct. 30, 1992). The omission of a "minimum net worth" term was
utterly immaterial, as it in no manner prejudiced appellants but
simply deprived Hospital Trust of further protection under its loan
guaranty.
Appellants' claim that there was insufficient consideration
for the loan guaranty is untenable under Rhode Island law, which makes
clear that the loan made to the Companies was sufficient consideration
for their personal guaranty. See Katz v. Prete, 459 A.2d 81, 86 (R.I.
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1983) ("When a corporate officer agrees to be liable for a debt of the
corporation, it is not necessary for consideration to move to the
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5The subject net worth clause reads:
Guarantors agree to maintain an excess of total
assets over total liabilities, determined in ac-
cordance with generally acceptable accounting
principles . . . of at least ($ ).
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Courts reject the view that "a guaranty agreement printed on a
standard form is not enforceable unless all blanks of the form contain
terms." FDIC v. Neitzel, 769 F. Supp. 346, 349 (D. Kan. 1991); see
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also Cessna Finance Corp. v. Meyer, 575 P.2d 1048 (Utah 1978) (uphold-
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ing guaranty agreement containing blank term for limitation on guar-
antor's liability); North Carolina Nat'l. Bank v. Corbett, 271 N.C.
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444, 156 S.E.2d 835 (1967) (same); McCaleb v. National Bank of Com-
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merce, 752 S.W.2d 54 (Ark. App. 1988) (same).
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10
officer personally. It is enough if the corporation receives the
consideration.").6
Appellants' further contention, that their liability under
the guaranty expired on September 30, 1989, is belied by the express
language of the guaranty:
On or after September 30, 1989, the liability of
the Guarantors hereunder shall be released at all
such times that there is no Event of Default . . .
. The Guaranty will immediately be reinstated at
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any time than [sic] an Event of Default under
___ ____ ____ _____ __ _____ __ _______ _____ _
5.08 of the Loan Agreement occurs.
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The record is clear that the Companies were in default under 5.08 of
the loan agreement on or before June 26, 1990, and that the default
remained uncured. Under the unambiguous terms of their guaranty
agreement, therefore, appellants' liability was "reinstated." "[S]o
long as the words of an agreement are plain and free from ambiguity,
they must be construed in their ordinary and usual sense." Bank One
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Texas, 968 F.2d at 98 (quoting McDonald's Corp. v. Lebow Realty Trust,
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888 F.2d 912, 913-14 (1st Cir. 1989)). See also United States v.
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Mallett, 782 F.2d 302, 303 (1st Cir. 1986) (express language of
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guaranty bars defenses).7
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6In their brief on appeal, Howard and Robb vaguely assert that Hospi-
tal Trust orally promised them additional "consideration" in the form
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of lending "expertise" or unspecified future loans. Since appellants
advert to this contention with no attempt to develop a defense to
liability on the loan or the guaranty, we decline to address it. See
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Jordan-Milton Mach., slip op. at 12.
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7In the context of a loan guaranty or other contract, ambiguity
typically means "language which 'is susceptible to differing, but
nonetheless plausible, constructions . . .'" Singh, slip op. at 7
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(quoting Allen v. Adage, Inc., No. 91-2206, slip op. at 12 (1st Cir.
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11
Finally, we perceive no error in the district court ruling
rejecting appellants' claim that their loan guaranty was fraudulently
induced by Hospital Trust. Where, as here, a claim must be estab-
lished by "clear and convincing evidence," see Halpern v. Pick, 522
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A.2d 197, 197 (R.I. 1987) (fraudulent inducement must be proved by
"clear and convincing evidence"); see also Fashion House, Inc. v. K
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Mart Corp., 892 F.2d 1076, 1092 (1st Cir. 1989) (same) (New York law),
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"evidence that 'is merely colorable or is not significantly probative'
cannot deter summary judgment," Wynne v. Tufts Univ. School of Medi-
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cine, No. 92-1437, slip op. at 7 (1st Cir. Oct. 6, 1992) (quoting
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Anderson v. Liberty Lobby, 477 U.S. 242, 249-50 (1986)). Appellants
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rely entirely on conclusory affidavits attesting to their "understan-
ding" that the guaranty agreement would not be enforced and that
additional "consideration" would be provided. Even assuming that
their conclusory "understandings" were competent evidence, see Fed. R.
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Civ. P. 56(e), notwithstanding the recognized "rule that where . . .
the contract is unambiguous, extrinsic evidence as to . . . the intent
of the parties should not be considered," Singh, slip op. at n.7, we
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are persuaded that Rhode Island law would preclude appellants' reli-
ance on Hospital Trust's alleged oral representations as a sufficient
basis for opposing summary judgment.
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1992)). Appellants' suggested interpretation contradicts the plain
language of the guaranty agreement. See id. at 11 (resisting inter-
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pretation which would render nugatory express clause in loan guaran-
ty).
12
Appellants purport, inter alia, to be sophisticated busi-
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nessmen (Robb a communications lawyer; Howard a longtime executive
with National Broadcasting Company) who retained a "financial advisor"
to assist in the negotiation of a complex commercial transaction.
They had made previous loan agreements which did not include personal
guaranties. They read and understood the terms and reluctantly signed
the guaranty, apparently well aware that it would bind them. As the
Rhode Island Supreme Court held in Katz, 459 A.2d at 85, a sophisti-
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cated businessman's asserted reliance on oral characterizations may be
held unreasonable, as a matter of law, where the characterizations
contradicted the plain language of a guaranty contract and are incon-
sistent with the circumstances surrounding its execution. See also
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Mallett, 782 F.2d at 303-04 (guarantor's asserted reliance on "condi-
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tional, tentative statement" by lender held inadequate).
We conclude that appellants' contentions are without basis
in law and that summary judgment was properly granted on their loan
guaranty.8
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8Whatever remaining summary judgment claims may lurk in appellants'
confusing presentations on appeal are deemed waived. See United
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States v. Zannino, 895 F.2d 1 (1st Cir.), cert. denied, 494 U.S. 1082
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(1990) (claims raised in conclusory fashion, unsupported by developed
argumentation, are deemed waived); Jordan-Milton Mach., slip op. at 12
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(same). Although appellants ostensibly appear pro se, and under
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normal circumstances "courts should hold pro se documents to a less
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stringent standard," see Wightman v. Bureau of Alcohol, Tobacco &
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Firearms, 755 F.2d 979, 983 (1st Cir. 1985), we see no justification
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for indulgence in these circumstances. Robb is an attorney and
partner in the law firm of Robb and Henning. Moreover, at oral
argument he was represented by a law partner, whose assistance presum-
ably was as accessible in the earlier stages of the appeal. Howard,
in turn, is a sophisticated businessman and successful consultant.
13
2. The Contempt Order
2. The Contempt Order
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Next, appellants challenge the district court's finding of
civil contempt for "impeding the transfer of the FCC licenses to the
Receiver." Ordinarily, a civil contempt order is treated as a non-
appealable interlocutory order. See 11 Charles A. Wright & Arthur R.
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Miller, Federal Practice & Procedure 2960 at 592 (1973). In the
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present case, however, we need not resolve the difficult jurisdic-
tional issue raised by appellants, since the contempt finding and
sanctions were abundantly warranted. See Norton v. Mathews, 427 U.S.
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524, 528-33 (1976) (where merits can be easily resolved in favor of
the party challenging jurisdiction, resolution of complex jurisdic-
tional inquiry may be avoided); see also DCPB, Inc. v. City of Leba-
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non, 957 F.2d 913, 919-20 (1st Cir. 1992) (citing Cruz v. Savage, 896
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F.2d 626, 635 (1st Cir. 1989)).9
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There is no basis for assuming that either appellant was unable to
obtain adequate representation on appeal, as both were represented by
counsel below.
9We are unpersuaded by Hospital Trust's contention that appellants'
payment of the sanction mooted their challenge. Although uncondition-
al payment of a civil contempt fine precludes appellate review of the
underlying contempt decree, see Cordero v. DeJesus-Mendez, 867 F.2d 1,
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21 (1st Cir. 1989) ("[s]ince the contempt order has been complied
with, no case or controversy remains, and the appeal must be dis-
missed."); In re Cordova Gonzalez, 726 F.2d 16, 21 (1st Cir.), cert.
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denied, 466 U.S. 951 (1984), the record reveals that appellants did
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not satisfy the contempt sanction unconditionally. Their check for
the amount of the contempt sanction was forwarded to Hospital Trust on
June 5, 1992, subject to the direction that the proceeds be "[placed]
in escrow pending appeal if such action is appropriate." See App.
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Exh. 21 (letter from Scott Robb to Sabin Willett). Although the
instruction seems to leave it to the bank's discretion whether to
escrow the funds, we think its intent is sufficiently clear: to
14
As supportably determined by the district court, see Project
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B.A.S.I.C. v. Kemp, 947 F.2d 11 (1st Cir. 1991) ("clear error" review
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appropriate on mixed question of law and fact in contempt proceedings;
ultimate finding of contempt reviewed for abuse of discretion),
appellants displayed a clear pattern of resistance, overt as well as
surreptitious, to the enforcement of the receivership order. The
contumacious conduct included their dilatory FCC applications to
transfer the station licenses to the Companies following dismissal of
the chapter 11 proceedings, rather than directly to the receiver;
their notification to the receiver that his FCC applications for
approval of the license transfers to himself should not be filed until
their own dilatory transfer applications had been processed; and the
misleading FCC filings (including the "creditors committee" filing
signed by Robb's receptionist), designed to impede enforcement of the
receivership order, notwithstanding the fact that appellants were
explicitly enjoined to cooperate and to "refrain from . . . imped[ing]
the receiver in the performance of his duties in any way." Cf.
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Chambers, 111 S. Ct. at 2139 (upholding contempt sanctions for course
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of conduct which included, inter alia, filing frivolous FCC opposition
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in order to circumvent judgment ordering transfer of license; "as long
as a party receives an appropriate hearing . . . the party may be
sanctioned for abuses of process occurring beyond the courtroom, such
as disobeying the court's orders"). Appellants do not cite (and
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escrow the funds pending resolution of any appeal of the contempt
order.
15
neither we nor the district court have discovered) any authority which
would support the claim that their actions were "compelled" by FCC
regulations. Id. We discern no abuse of discretion in the district
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court's contempt finding or its imposition of sanctions.
Affirmed; double costs to appellee.
Affirmed; double costs to appellee.
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16