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Acequia, Inc. v. Prudential Ins. Co. of Am.

District court properly interpreted conflicting contractual language in bankruptcy plan and subsequently approved settlement agreement concerning repayment of loan through sale of farm land securing loan, and properly determined apportionment of proceeds to principal and interest on loan; summary judgment on entire case proper where motion raised dispositive issue but did not explicitly request relief on remaining claims.

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The full case caption appears at the end of this opinion.

Cudahy, Circuit Judge. Acequia, Inc., an Idahofamily farming operation, obtained a $4 millionloan from Prudential in 1977. The security forthe loan was Acequia’s 7,600 acres of farmproperty. The note was to mature on March 15,1992. In 1981, Acequia defaulted on the loan.Prudential began foreclosure proceedings, butAcequia filed for bankruptcy protection. For thenext two years, Acequia worked on areorganization plan; Prudential approved thisBankruptcy Plan (the Plan) and the bankruptcycourt confirmed it in 1984. But the two companiescontinued feuding, and in 1987, Acequia suedPrudential in Idaho state court because of adispute regarding the terms of the promissorynote required by the Plan. This dispute ended ina 1989 Settlement Agreement, under whichPrudential and Acequia agreed to extend thedeadline for Acequia to repay Prudential. TheSettlement Agreement called for the parties toexecute an amended and restated promissory note,which they did. Prudential maintains that as partof the Settlement Agreement, it agreed totransform the loan into a non-recourse loansecured only by the land. Under the SettlementAgreement parcels of land could be sold byAcequia, but only at minimum prices and underother prescribed conditions. It is unclear fromthe record exactly what recourse Prudentialoriginally had against Acequia, but there is nodispute that under the new Settlement Agreement,Prudential does not have in personam recourseagainst Acequia for the unpaid portion of theloan.

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