Murdock-SC Associates v. Beverly Hills Federal Savings & Loan Ass'n

ORDER

In April, 1984 the plaintiff, Murdock-SC Associates (“Murdock”), a California partnership, sold an office building for approximately $36,000,000 to Beverly Hills Savings and Loan Association (“Old BHS”), a California-chartered, federally insured savings and loan association. As part of the purchase price for the building Old BHS delivered to Murdock an unsecured, subordinated promissory note (the “promissory note” or the “note”) for the sum of approximately $3,600,000, plus interest. The promissory note provided in part:

(The Note, at 1-2.) The note further provides that in the event of any receivership, insolvency, or bankruptcy proceedings of Old BHS the Senior Liabilities shall be preferred in payment over the note and such Senior Liabilities shall first be paid and satisfied in full before any payment of any kind shall be made on either the principal or interest on the note. Id. Finally, the note states that it is not secured by the assets of Old BHS and is not eligible as collateral for any loan of Old BHS. Id.

On April 23, 1985 the Federal Home Loan Bank Board (“FHLBB”) found that Old BHS was insolvent. Consequently, pursuant to its authority under 12 U.S.C. § 1729…