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In this dispute over a replacement
promissory note, the parties presented Judge van Gestel
with “an array of ten separate motions, accompanied by a
full cardboard carton of supposedly supporting or
opposing materials.” Id. at *1. The note
provided that interest on the note would be calculated
using the rate established by the Malden Trust Company
for commercial loans; if such a rate ceased to exist,
then interest was to be calculated using the rate
established by Bank of Boston or its successors.
Republic Credit Corp. ultimately purchased the note, and
maintained in answers to interrogatories and other
filings that it had been accurately calculating the
interest due. However, Republic subsequently
acknowledged that it had been erroneously calculating
interest according to the Wall Street Journal prime rate
rather than the Malden Trust or Bank of Boston rates as
required.
Bateman moved to dismiss, contending that
this motion charged Republic committed fraud in its
interest calculations. The Court denied the motion. “A
fraud on the Court occurs where it can be demonstrated,
clearly and convincingly, that a party has sentiently
set in motion some unconscionable scheme calculated to
interfere with the judicial system’s ability impartially
to adjudicate a matter by improperly influencing the
trier or unfairly hampering the presentation of the
opposing party’s |
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claim or defense.” Id. at *3.
There was no showing that “this was a consciously
erroneous act done to manipulate and, presumably,
increase the amount of interest due. Rather, it appears
to have been a response to the somewhat chaotic
situation presented to Republic, having taken over the
note years after the Malden Trust failure and the
handling of the note by the FDIC in the interim.” Id.
The Court also denied Bateman’s motion to
continue Republic’s summary judgment motions with
respect to liability and damages.
On the merits of Republic’s motions for
summary judgment, the Court held that the undisputed
facts established Bateman’s liability on the note.
Bateman, a sophisticated lawyer, was himself the drafter
of the original note and its replacement; as such, he
“was in control of his own fate in insuring that the
replacement note mirrored his obligations under the
original note, or if the obligations were changed in any
way he agreed thereto.” Id. at *8. The Court held
there was an issue of fact on damages, but suggested
that where the amount in dispute was likely to be quite
small, “there can, and there should, be an effort made
by counsel, in the best interests of their duties to
their clients and their duty to the legal system of
which they are a part, to bring this matter to a close
short of trial.” Id. at *9.
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