North Arkansas Medical Center v. Barrett, s. 90-2340
| Decision Date | 17 April 1992 |
| Docket Number | Nos. 90-2340,90-2583,s. 90-2340 |
| Citation | 962 F.2d 780 |
| Parties | NORTH ARKANSAS MEDICAL CENTER, f/k/a Boone County Hospital, Appellant, v. Arther W. BARRETT, Sr., Estate of Elsie M. Barrett, Arther Barrett, Jr., Cathy Barrett, Royce Barrett, Edith Barrett, Donald C. Crutchfield, Bobby L. Pinson, Guaranty Savings & Loan Association, FDIC as manager of the FSLIC Resolution Fund, as Receiver for Guaranty Savings & Loan Association, Office of Thrift Supervision, and Bowman & Company, Appellees. NORTH ARKANSAS MEDICAL CENTER, f/k/a Boone County Hospital, Appellee, v. Arther W. BARRETT, Sr., Estate of Elsie M. Barrett, Arther Barrett, Jr., Cathy Barrett, Royce Barrett, Edith Barrett, Donald C. Crutchfield, Bobby L. Pinson, Guaranty Savings & Loan Association, Office of Thrift Supervision, and Bowman & Company. FDIC as manager of the FSLIC Resolution Fund, as Receiver for Guaranty Savings & Loan Association, Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Robert D. McGillicuddy, Washington, D.C., argued (Dorothy L. Nichols, Ann S. Duross, Joan E. Smiley, Robert D. McGillicuddy, Washington, D.C., and Garland Garrett and Jess Askew, III, Little Rock, Ark., on brief), for appellee F.D.I.C.
Mark W. Nichols, Little Rock, Ark., argued, for appellee Bowman & Co., Inc.
Before JOHN R. GIBSON, Circuit Judge, HEANEY, Senior Circuit Judge, and BEAM, Circuit Judge.
North Arkansas Medical Center appeals from the judgment of the district court 1 dismissing its complaint against the FDIC as receiver for the failed thrift, Guaranty Savings & Loan Association, holding that an agreement to pledge securities as collateral for jumbo certificates of deposit and other accounts did not satisfy the requirements of 12 U.S.C.A. § 1823(e) (West 1989). North Ark. Medical Ctr. v. Arther W. Barrett, Sr., No. Civ. 89-3067, 1990 WL 364778 . On appeal, the Medical Center argues that the district court erred (1) in permitting the FDIC to act as successor receiver for a pre-1989 savings and loan receivership; (2) in applying the Financial Institutions Reform and Recovery Act (FIRREA), Pub.L. No. 101-73, retrospectively to render section 1823(e) applicable to this case; (3) in holding that a security agreement must satisfy the requirements of section 1823(e) to be enforceable against the receiver; and (4) in applying FIRREA sections 212(a), (i)(1) and (2) to negate all security interests in a failed thrift's assets. The Medical Center also appeals from the district court's order entering partial summary judgment in favor of Bowman & Co., which the Medical Center claimed breached a duty to perfect the Medical Center's security interest, and from its order dismissing the remaining individual defendants for lack of a federal question. The FDIC cross appeals from the district court's holding that the common law D'Oench, Duhme 2 doctrine would not bar the Medical Center's claims. We affirm the judgment of the district court.
As a foreword, we observe that our task in deciding this appeal was made more difficult because the appellant's brief did not include a statement of facts. See Fed.R.App.P. 28(a)(3) (effective until Dec. 31, 1991) (appellant's brief shall contain statement of facts). Therefore, this court was required to glean the facts from pleadings and cryptic exhibits, totalling 83 pages in all. This exercise certainly gave weight to the FDIC's argument that it should not be charged with knowledge of the legal significance of every scrap of paper in a bank's files; we were able to experience first-hand the difficulty the FDIC complains of.
From January 1983 to December 5, 1985, the date Guaranty was placed in receivership, the Medical Center made deposits with Guaranty that eventually added up to about a million dollars, most of which was placed in jumbo certificates of deposit. The deposits exceeded the amount of deposit insurance. The Medical Center and Guaranty arranged for Guaranty to put up collateral to secure the amount of the Medical Center's deposits that exceeded FSLIC insurance coverage. Originally, Guaranty entered a "Collateral Custodial Agreement" with Worthen Bank & Trust Company, naming the Medical Center as a third party beneficiary. Under the Worthen agreement, Guaranty pledged a certain security to the Medical Center as collateral for its deposits, with Worthen acting as custodian. In June or early July 1985 Guaranty sold the security without telling the Medical Center. Belatedly, Guaranty obtained the Medical Center's permission to release the collateral. Guaranty provided the Medical Center with a signed letter designating substitute collateral:
This is to inform you that U.S. Treasury Bills are being purchased today as substitute collateral. These Treasury Bills will serve as your collateral until August 22, 1985. A confirmation letter from the securities dealer who will hold these Treasury Bills in safekeeping for your account will be sent to you by July 16, 1985.
On August 22, 1985, your collateral will be Federal Home Loan Mortgage Corporation pass-through certificates. A new collateral pledge will be issued to you as soon as possible after August 22, 1985.
Guaranty then entered an agreement with Bowman & Co., Inc., for Bowman to hold the securities Guaranty had pledged to its depositors. The Medical Center alleges that Guaranty purchased and sold in turn various securities pledged to the Medical Center. The Medical Center deposited $250,000 in new money in CDs at Guaranty on November 26, 1985. A Guaranty "housing location report" dated December 2, 1985, listed various securities and included a notation identifying a particular Federal Home Loan Mortgage Corporation Certificate (No. 256792A) in the amount of $1,014,618.36 as "BCHP," its code for "Boone County Hospital Pledge." (The Medical Center was formerly known as Boone County Hospital.) Bowman had custody of the FHLMC certificate, known as the "November certificate."
Guaranty was placed in FSLIC receivership on December 6, 1985. On that date the Medical Center had $968,146.62 in deposits at Guaranty. The Medical Center has to date received more than $630,000.00 of its deposit from the receiver in the form of $100,000.00 in deposit insurance, $192,500.00 in a settlement with FSLIC of the Medical Center's claim for additional deposit insurance, and $341,344.98 in distributions in respect of its position as an unsecured creditor.
The Medical Center brought this suit in state court against Guaranty and some of its officers and directors, the FSLIC, the FDIC, the Office of Thrift Supervision, the FSLIC Resolution Fund, and Bowman & Co. The Medical Center sought a declaration that it had a perfected security interest in the November FHLMC Certificate. Alternatively, it claimed that Guaranty and Bowman had breached contractual duties to keep the Medical Center's deposits fully secured. The Medical Center made various other claims against Guaranty, Bowman and the other defendants, all arising out of the same facts.
Upon the enactment of FIRREA, the FSLIC was abolished. The FDIC was substituted for the FSLIC in this case as successor receiver for Guaranty, and it removed the case to federal court.
On a motion to dismiss by the federal defendants and cross motions for summary judgment by the Medical Center and Bowman, the district court ruled that the FDIC was entitled to judgment because the Medical Center's claim against it was barred by 12 U.S.C.A. § 1823(e), 3 which was made applicable to this case by FIRREA, enacted August 9, 1989. Order of May 4, 1990, slip op. at 17. The district court held:
[I]nsofar as plaintiff's claims against the federal defendants are concerned, plaintiff cannot affirmatively assert the alleged security agreement and perfection of plaintiff's security interest, unless all of the requirements of § 1823(e) are satisfied. They are obviously not.
The documents upon which plaintiff relies were not executed by both plaintiff and Guaranty contemporaneously with Guaranty's acquisition of the asset to which the documents pertain and there is little indication that the writings evidencing a security agreement were independently approved by the board of directors or the loan committee.
Therefore, plaintiff's alleged security interest in the FHLMC certificates, perfected or not, may not be asserted against the federal defendants.
However, since the Medical Center also asserted a claim against Bowman & Co. for failure to perfect the Medical Center's security interest, the district court went on to consider whether the Medical Center had a perfected security interest in the November FHLMC certificate at the time Guaranty went into receivership. Slip op. at 18. The district court determined that at the time Guaranty went into receivership, the Medical Center had a temporarily perfected security interest in the November FHLMC certificate under Ark.Code Ann. § 4-8-313(1)(i) (Michie 1987) (UCC § 8-313(1)(i)). 4 The district court found that the July 15, 1985, letter from Guaranty to the Medical Center was a security agreement; that the Medical Center's purchase of $250,000 in CD's on November 26, 1985, was new value; and that the security agreement adequately described the FHLMC certificate under state law. Slip op. at 24-28. The court held that these facts gave the Medical Center a temporarily perfected security interest for twenty-one days under Ark.Code Ann. § 4-8-321(2) (Michie 1987), and found that the twenty-one days had not expired when the FSLIC took over Guaranty. Slip op. at 24-28. Based on this finding of temporary perfection, the court entered partial summary judgment for Bowman on the Medical Center's claim that Bowman failed to perfect the security interest. Id. at 28.
The district court never addressed the question of whether the Medical Center had a security interest in the FHLMC certificate greater than...
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