Law School Case Brief
McCallum Highlands v. Wash. Capital Dus - 66 F.3d 89 (5th Cir. 1995)
To avoid summary judgment on an economic duress claim, the plaintiff must demonstrate a genuine issue of material fact as to each of the following elements of economic duress required by Texas law: (1) a threat to do something that the threatening party has no legal right to do; (2) some illegal exaction or fraudulent deception; (3) the restraint is imminent and such as to destroy a person's free will without adequate means of protection; and (4) the claimant's financial distress was caused by the party accused of duress. Elements one and two are very similar: the plaintiff must establish that the defendant threatened to do something he had no legal right to do, and that threat involved an illegal exaction or a fraudulent deception.
Plaintiff partnership filed suit against defendant mortgage company to avoid certain amended portions of a loan agreement. Plaintiff alleged that defendant's actions amounted to economic duress, resulting in its bankruptcy, or alternatively, that there was no consideration for the modification of the loan commitment so that it was void, and defendant was therefore in breach of the original agreement. The district court ruled in favor of the defendant. Plaintiff appealed.
Is summary judgment properly granted in the economic duress claim of plaintiff partnership?
The court held that there was no showing that defendant engaged in any deceptive or fraudulent behavior, noting that defendant's advising plaintiff of its belief that there could be loopholes in the loan commitment was not sufficient to constitute economic duress. The district court also correctly held that plaintiff failed to show an imminent threat that destroyed his free will and against which he had no present means of protection.
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