9 F.3d 312 (3rd Cir. 1993), 93-1195, Resolution Trust Corp. v. Daddona

Docket Nº:93-1195.
Citation:9 F.3d 312
Party Name:RESOLUTION TRUST CORPORATION in its capacity as receiver for Bell Federal Savings Bank v. John L. DADDONA, Sr., Judy Daddona and Daniel Culnen, Appellants.
Case Date:November 16, 1993
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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9 F.3d 312 (3rd Cir. 1993)

RESOLUTION TRUST CORPORATION in its capacity as receiver for

Bell Federal Savings Bank


John L. DADDONA, Sr., Judy Daddona and Daniel Culnen, Appellants.

No. 93-1195.

United States Court of Appeals, Third Circuit

November 16, 1993

Aug. 26, 1993.

Page 313

[Copyrighted Material Omitted]

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James M. Barker, Asst. Gen. Counsel, Michael P. Condon, Sr. Counsel, Sheila Kraft Budoff, Counsel, Resolution Trust Corp., Washington, DC, James S. Crockett, Jr., Panos S. Midis, Mays & Valentine, Richmond, VA, Michael R. Lastowski, Saul, Ewing, Remick & Saul, Philadelphia, PA for appellee.

Mitchell R. Leiderman, Media, PA, for appellants.

Before: BECKER, NYGAARD, and ALITO, Circuit Judges.


BECKER, Circuit Judge.

This is an appeal by several real estate developers who are in default of their loan obligations to a failed savings and loan and who were unsuccessful in the district court in asserting a lender liability claim (based on the alleged failure of the thrift to supply additional financing) as a defense to the claim for the balance due brought by the thrift's successor in interest, the Resolution Trust Corporation ("RTC"). RTC prevailed on the basis that the alleged agreement to supply additional funds was not in writing as is necessary to meet the requirements of the common law D'Oench, Duhme doctrine and the statutory mandate of 12 U.S.C. Sec. 1823(e). See D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942).

We hold that an agreement is only "in writing" if its basic structure is apparent on the face of the writing. Because no terms of Bell's alleged agreement to lend CUL-DADD Development Corp., Inc. ("CUL-DADD") additional funds are written, we will affirm the district court's grant of summary judgment for the RTC. In so doing we reject defendants' constitutional claims that D'Oench, Duhme and Sec. 1823(e) constitute takings of property without just compensation and deprivations of property without due process.


A. Background Facts

RTC is the receiver for Bell Federal Savings Bank, which is the successor to Bell Savings Bank ("Bell Savings") which, on June 29, 1989, agreed to lend CUL-DADD Development Corp., Inc. $2,230,000. CUL-DADD secured the loan by executing and delivering two mortgages on CUL-DADD Industrial Park to Bell Savings. 1 Defendants John L. Daddona, Judy Daddona and Daniel Culnen are sureties on this loan, and RTC brought this action to collect on their guarantees.

Defendants assert that when Bell agreed to provide the June 29 loan for the acquisition of property, Bell also agreed to provide CUL-DADD with at least an additional $9,000,000 for improvement and development of CUL-DADD Industrial Park in Weisenburg Township, Pennsylvania and for 75 acres in the Borough of Kutztown, Pennsylvania. Bell, it is alleged, was to provide this financing within 90 to 120 days of the June 29 loan at an interest rate of prime plus two points for a minimum of one year.

Defendants contend that from June until December 1989, CUL-DADD repeatedly requested that Bell close the loans for development of the site but that Bell refused to do so, and in December made it clear that it was never going to close on the loans. Defendants

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claim that, in the interim, CUL-DADD expended funds in reliance on Bell's promise of additional loans.

B. Procedural History

On December 18, 1990, Bell Savings filed two separate actions in the Court of Common Pleas of Delaware County, Pennsylvania, to recover from defendants on the $2,230,000 initial loan. One action was filed against John Daddona, Sr. and Judy Daddona, and the other action was filed against Daniel Culnen. The court entered two confessed judgments and then opened the judgments to allow the sureties to file counterclaims. Subsequently, the RTC succeeded to the rights of Bell Savings, see supra n. 1, and removed the two actions to the District Court for the Eastern District of Pennsylvania. Defendants then filed counterclaims, asserting that they were entitled to $1,000,000 plus costs and punitive damages due to Bell's default on the alleged agreement to provide additional loans.

The RTC moved to dismiss the counterclaims under the D'Oench, Duhme doctrine, see D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), and its codified counterpart, see 12 U.S.C. Sec. 1823(e), which require that claims against the RTC be based on written agreements. Defendants responded that their claim arose from a written agreement composed of an integration of a series of writings. They cited a variety of writings which we will discuss in detail below. Moreover, they asserted that Sec. 1823(e) and the D'Oench, Duhme doctrine violated their rights under the Fifth Amendment's prohibition on taking of property without just compensation and its mandate of procedural and substantive due process.

At the same time it filed its action against defendants in the Court of Common Pleas, Bell also filed an action against CUL-DADD to collect on the same $2,230,000 loan. As in the actions against the sureties, the court entered a confessed judgment and then allowed CUL-DADD to bring a counterclaim. On November 9, after RTC removed the action to federal court, the district court granted summary judgment against CUL-DADD finding that:

Viewed in a light most favorable to CUL-DADD, the semantic differences in the documents suggest that the parties contemplated and considered additional financing. Nevertheless, this falls far short of the certain and categorical requirements imposed by the D'Oench, Duhme doctrine and Sec. 1823(e). See [Langley v. Federal Deposit Ins. Corp., 484 U.S. 86, 95, 108 S.Ct. 396, 403, 98 L.Ed.2d 340 (1987)]. A careful review of the documents reveals that the only monetary figure that parties reduced to writing is the $2,230,000.00 commitment. Neither the $9,000,000.00 figure nor any other additional terms are represented in CUL-DADD's exhibits.

CUL-DADD appealed, and we dismissed the appeal for lack of jurisdiction under Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982) (per curiam). See Bell Savings Bank v. CUL-DADD, 6 F.3d 778 (1993).

On December 11, 1992, the district court combined the two separate actions against the sureties and converted RTC's motions to dismiss into one motion for summary judgment. On January 28, 1993, the district court granted RTC's motion for summary judgment, adopting its holding from the action against CUL-DADD that no written agreement for additional loans had been formed. The court also rejected defendants' constitutional claims. This appeal followed.

We exercise plenary review over motions for summary judgment to determine whether the moving party has demonstrated the absence of a genuine issue of material fact. See Colburn v. Upper Darby Township, 946 F.2d 1017, 1020 (3d Cir.1991). We consider inferences in the light most favorable to the non-moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976). Defendants contend that there is a genuine issue of material fact as to whether Bell Savings entered into a written agreement with CUL-DADD for loans beyond the $2,230,000--a written agreement sufficient to meet the requirements of D'Oench, Duhme and Sec. 1823(e).

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A. Background of D'Oench, Duhme and Sec. 1823(e)

In D'Oench, Duhme, the Supreme Court developed a federal common law rule designed to protect federal institutions from misrepresentations in bank records. See 315 U.S. at 459, 62 S.Ct. at 680. The Court held that the Federal Deposit Insurance Corporation ("FDIC") could collect on notes it had acquired from a bank even though the debtor who had executed the notes had a written side agreement with the bank that he would not have to pay on the notes. See id. at 454, 461-62, 62 S.Ct. at 678, 681. The Court explained that it would have been difficult for the FDIC to discover the side agreement when it acquired the note from the bank because no copy was in the bank records. Because the side agreement was deceptive, the Court allowed the...

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