National Enterprises, Inc. v. Joseph-Burnham Partnership

MEMORANDUM **

This controversy relates to the interpretation of a release provision in a settlement agreement. The controversy stems from the purchase of a package of loans from failed savings and loans institutions at Auction VIII. David Wick, president of Morehouse Acquisitions (Morehouse), filed false certifications of eligibility on behalf of Morehouse in order to participate in the auction. The certifications were false because Morehouse is a subsidiary of National Enterprises, Inc. (National), which was excluded from participating in auctions.

After Morehouse purchased this loan package, it transferred the assets to National. National then attempted to collect on one of the loans by filing suit against the loan debtor. The debtor then alleged that Morehouse had fraudulently purchased the loan package. The debtor filed a cross-complaint against the Federal Deposit Insurance Corporation (FDIC) as the receiver of the loans.

The parties voluntarily submitted the case to the district court for settlement proceedings. The FDIC, National and Morehouse signed a settlement agreement on September 10, 1998. 1 In this agreement, the FDIC released National and Morehouse from further…