First National Bank v. Russell (In re Russell)

First National Bank appeals the Bankruptcy Appellate Panel’s (“BAP”) decision to reinstate the civil rights action of Dennis and Barbara Russell. The BAP reversed the bankruptcy court’s determination that res ju-dicata and collateral estoppel barred the couple’s civil rights claim against First National. In re Russell (Russell v. First National Bank), 166 B.R. 901, 906 (9th Cir. BAP 1994). We have jurisdiction pursuant to 28 U.S.C. § 158 (d), and we reverse.

I. FACTS

In 1986, First National Bank provided Dennis Russell’s concrete contracting company, Den-Ed Russell, Inc. (“Den-Ed”), a line of credit. The line of credit was renewed many times and eventually increased to $1 million. In 1991, the revolving line of credit was revised and included a $300,000 term loan and a $700,000 promissory note. In addition to the corporate loans made to Den-Ed, First National made personal loans to Dennis and Barbara Russell and the Dennis L. Russell and Barbara J. Russell Trust (“Trust”). Over the years, First National requested and received various guaranties for the loans, including cross-default provisions. The cross-default provisions stated that in the event of a default on any of the…