Chicken Condos

Many long time Readers know that I was an attorney in Colorado in the 1970s. Later I worked in the Special Assets Department of a very large bank headquartered in Denver. Subsequent to that job, I managed a similar department for another bank. It was my legal background that brought me to the banks which job involved the management and collection of problem commercial loans and sale of troubled assets.

The Special Assets Department where I worked in had four attorneys, two non-lawyers, and two secretaries. My boss was a senior vp who reported to two executive vps. The principal character in this story was a non-lawyer who I will call Harold. Harold haled from the Midwest. He fancied himself as being very smart. I think he thought himself to be smarter than the attorneys in the office-maybe even the smartest guy in the bank with 900 + employees.  He may have been. I am not sure. Maybe not.  But I know he thought he was smarter than most people because he had that "I am the smartest guy in the room" attitude. He always had a smart remark, a quick rebuke, or a knowing stare. He stood maybe 5'10" tall and always wore the bank uniform - a blue blazer and gray slacks. We didn't really have uniforms, but every lender on the commercial floor wore that same outfit at least once a week. Harold wore his nearly every day. He had awful breath. I can still smell it. He was a young guy, maybe thirty five years old when the incident occurred.  He had a college education from the big university in his home state. Harold was no rube. Like I said, Harold was smart. Very smart. 

The story takes place in Denver in the late 1970s. One of the loans the bank made was to a borrower who owned and operated an egg production facility near the Denver airport. I think of the place as huge chicken condos where thousand of chickens were hatched, grown, and processed. I accompanied Harold to inspect the chicken condos which on that date had no chickens - nor any sign of life. And that is why Harold and the bank got sued by the borrower.

As I recall the borrower alleged that bank over-reached its rights as a secured creditor by engineering an event of default as the pretext for the bank taking possession of the chicken condos and other collateral (including chickens) which the bank then sold. Harold obtained a court order allowing him to enter upon the property and seize the collateral before any judgement on the merits was entered. He then sold the collateral and applied to to the loan. 

The borrower hired some smart lawyers (they always manage to do that) and filed suit in Denver District Court naming the bank and Harold as defendants. The borrower alleged the initial court order was obtained based on incorrect information that Harold supplied and upon which the court relied and that the subsequent taking and liquidation of collateral were improper from the first instance. A jury trial was held months after the chicken condos were seized. I recall that the trial lasted about a week. Can you imagine how much that cost the bank to defend? Bank lawyers don't work cheap. They churn out hundreds or thousands of billable hours to do research, take depositions, prepare for trial, and then sometimes try the case. They work in groups and carry lots of banker boxes filled with papers. Every minute that they talk to each other or someone involved in the case becomes billable time. And the big bank pays for each and every billable minute like clockwork.

At the end of the trial the jury reached its verdict. The jury found in favor of the borrower and against the bank and Harold. The bank lost its remaining claim to any remaining collateral (deed of trust on the land and chicken condos) and had a monetary judgement entered against it in the amount of one million dollars. The judgment required the bank to pay the amount in ten days or post a bond in the event of appeal. The bank elected to pay the judgment and limit the loss to the $1,000,000 and loss of loan secured by the former deed of trust now rendered void. My only connection to this matter was accompanying Harold to see the condos before the chicken.... hit the bank's bottom line.