## Facts

- The National Bank of Washington (NBW) made two 1986 loans: one to Keystone Financial Corporation and one to P.S. Investment Co., Inc.
- NBW later agreed to restructure the loans if Mohamed Anwar M. Hadid provided personal guarantees.
- The restructuring terms were set out in two written Renewal and Extension Agreements.
- The Keystone restructuring agreement stated that the loan was secured by a pledge of common stock in McDowell Enterprises, Inc.
- After default, NBW sued to enforce the promissory notes and Hadid’s guarantees.
- Hadid asserted a separate oral agreement: NBW would either give him control over the McDowell stock or his guarantees would be “null and void.”
- A jury returned a verdict for Hadid, accepting his account of the oral condition.
- The district court granted NBW’s motion for judgment notwithstanding the verdict (JNOV), holding the written agreements were fully integrated and the parol evidence rule barred the asserted oral condition; the court entered judgment against Hadid for $1,854,875.03 plus $272,035.26 in attorneys’ fees (15% of the debt under the notes).
- After NBW was declared insolvent, the Federal Deposit Insurance Corporation (FDIC) was substituted as plaintiff as successor to NBW’s judgment.
- Hadid appealed the JNOV on liability and the amount of the attorneys’ fee award; the FDIC argued affirmance and also invoked federal protections against unrecorded side agreements as an additional basis to affirm.

## Issues

1. Whether parol evidence of an alleged oral condition (that the guarantees would be void unless Hadid obtained control of pledged stock) was admissible given the written renewal and extension agreements.
2. Whether the district court properly decided the integration/parol-evidence questions as matters of law and entered JNOV notwithstanding the jury’s verdict.
3. Whether, under District of Columbia law governing the notes’ fee provisions, a contractual attorneys’ fee term stated as 15% of the unpaid balance permits recovery beyond reasonable fees actually incurred.

## Decision

- The court affirmed the district court’s judgment holding Hadid liable on the notes and guarantees.
- The court held the written renewal and extension agreements were integrated writings governing the restructuring and Hadid’s obligations as guarantor.
- The court held the alleged oral agreement would negate or materially vary the unconditional written guarantees and therefore was barred by the parol evidence rule.
- The court rejected Hadid’s argument that the parol-evidence determination should have been left to the jury; on the record presented, the district court could decide the issue and grant JNOV.
- The court reversed the attorneys’ fee award to the extent it automatically applied the 15% figure and remanded for recalculation limited to reasonable attorneys’ fees actually incurred.
- The court noted the FDIC’s federal-law argument against enforcement of undisclosed oral agreements, but it did not rely on that ground because ordinary contract/parol-evidence analysis resolved liability.

## Legal Principles

- When parties reduce their agreement to an integrated writing, prior or contemporaneous oral terms may not be used to contradict or negate the writing’s express obligations.
- An alleged oral condition that would render written guarantees “null and void” conflicts with an unconditional written guaranty and is inadmissible under the parol evidence rule when the writing is integrated.
- The court may decide, as a matter of law, whether a writing is integrated and whether offered parol evidence contradicts the writing; a jury verdict based on barred parol evidence cannot stand.
- Under District of Columbia law, a percentage-based attorneys’ fee clause in a note is treated as an indemnity provision: the creditor may recover only reasonable attorneys’ fees actually incurred, not a windfall based solely on the stated percentage.

## Conclusion

The Fourth Circuit held Hadid’s guarantees were governed by integrated written renewal and extension agreements, so parol evidence of an oral condition that would void those guarantees was inadmissible and could not support the jury’s verdict; it affirmed liability but reversed and remanded the attorneys’ fee award because District of Columbia law limits recovery to reasonable fees actually incurred rather than an automatic 15% of the debt.


Federal Deposit Insurance Corp. v. Hadid, 947 F.2d 1153 (1991)