Hanson v. F.D.I.C.
| Decision Date | 13 January 1994 |
| Docket Number | No. 92-3566,92-3566 |
| Citation | 13 F.3d 1247 |
| Parties | Steven D. HANSON, Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for the New Bank of New England, N.A., Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
James P. Larkin, Bloomington, MN, argued (Thomas J. Seymour, on the brief), for appellant.
S. Alyssa Roberts, Washington, DC, argued, for appellee.
Before BOWMAN, MAGILL, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
Steven D. Hanson (Hanson) appeals the district court's grant of summary judgment dismissing his claim seeking the imposition of a constructive trust on property to which the Federal Deposit Insurance Corporation (FDIC) holds legal title. We reverse the D'Oench, Duhme bar and remand this case to the district court for further proceedings consistent with this decision.
Hanson claims the Bank of New England, N.A., (BNE) obtained legal title to his property through unlawful means. He consequently sought the imposition of a constructive trust on the property in his favor to prevent the FDIC, now the legal owner, from being unjustly enriched.
In July of 1985, Hanson Industries, Inc., (Hanson Industries) and Hanson, the president and majority stockholder of Hanson Industries, entered into corporate and individual loan agreements with BNE. Hanson Industries' loan agreement included a term loan amount, a revolving demand note, and a security agreement. The loan payments on the corporate loan were made through automatic withdrawals by BNE on an account maintained by Hanson Industries at BNE. Hanson also individually entered into several loan agreements with BNE that were secured in part by a second mortgage on a building owned by Hanson and leased by him to Hanson Industries. This building and its property (collectively, the property) are the subject of Hanson's claim.
BNE, in April 1986, claimed that Hanson Industries defaulted on its loan. However, Hanson alleges that all payments were current on the loan and had been paid through the automatic withdrawal system; Hanson contends that BNE, after claiming that Hanson Industries defaulted on its loan, reversed the automatic payments to create an appearance of default. Because of the cross-default provisions in the loan agreements, BNE demanded full payment on all loans owed by Hanson and Hanson Industries to it. Hanson further alleges that BNE converted funds deposited by account debtors into the Hanson Industries checking account, effectively closing the checking account and causing the dishonor of numerous checks. BNE purportedly also sent letters to trade debtors, customers, potential customers, and employees of Hanson Industries demanding payment to BNE of all monies due Hanson Industries.
In August 1986, BNE filed an action in Minnesota state court to collect on the defaulted loans (the collection action). Hanson responded by filing counterclaims asserting causes of action sounding in tort and contract. BNE ultimately received legal title to the property in a Minnesota state court title proceeding which had been consolidated with the collection proceeding. 1
The United States Comptroller of the Currency in January 1991 declared BNE insolvent and appointed the FDIC as its receiver. The FDIC removed the consolidated state court actions to federal court. The FDIC then established New Bank of New England (NBNE) as a bridge bank, and the FDIC, as receiver, sold most of BNE's assets to NBNE. The assets sold to NBNE included Hanson's property. This claim seeking the imposition of a constructive trust on the property was filed by Hanson in November of 1991. 2
The constructive-trust complaint alleged that BNE breached the express and implied terms of the corporate loan, personal loan, and mortgage loan; defamed Hanson; interfered with Hanson's business relations; interfered with Hanson's contractual relations; and in the process of obtaining legal title, abused process through ex parte contact with the state court. Essentially, Hanson contends that because NBNE and the FDIC had knowledge of Hanson's claims against BNE, any funds obtained by the FDIC through disposition of the property would unjustly enrich the FDIC.
When the FDIC 3 filed its motion for summary judgment on Hanson's claim for a constructive trust, it made three arguments in favor of summary judgment: (1) the constructive trust claim was an impermissible collateral attack on the prior state court property title proceeding, (2) federal statutory law 4 insulates the FDIC from any claims Hanson may have against BNE, and (3) Hanson cannot establish the elements of a constructive trust because he cannot establish that a fiduciary relationship existed between him and the bank. In its memorandum in support of summary judgment, the FDIC conceded for purposes of summary judgment that the wrongdoings alleged by Hanson were true.
The district court granted the FDIC's motion for summary judgment based solely on the FDIC's second argument. The court found that the FDIC is protected against claims related to the wrongful actions of a failed financial institution unless the alleged actions fall within the federal statute's limited exceptions. 5 Title 12 U.S.C. Sec. 1823(e), 6 the relevant statute, codifies the D'Oench, Duhme doctrine, which protects the FDIC from claims based upon secret agreements between the failed financial institution and the claimant. See D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942). Hanson appeals the district court's judgment arguing that his claim for a constructive trust is not based upon a secret agreement, and thus, the district court misapplied the statute.
On appeal, the FDIC has significantly revised its arguments. The FDIC now argues that Hanson's claims are barred because Hanson failed to bear his burden of production when he did not produce a written agreement satisfying the terms of Sec. 1823(e), and it again argues that Hanson cannot establish the elements of a constructive trust under Minnesota law. The FDIC abandoned its collateral-attack argument on appeal 7 and no longer contends that federal statutory law insulates the FDIC from any claims Hanson may have against BNE, the argument upon which the district court based its grant of summary judgment.
We review this grant of summary judgment de novo. See Rafos v. Outboard Marine Corp., 1 F.3d 707, 708 (8th Cir.1993). And, we examine the record to determine whether it shows there is no genuine issue as to any material fact and whether the moving party is entitled to judgment as a matter of law. Id.
The D'Oench, Duhme doctrine and its statutory progeny, 8 the basis upon which the district court granted summary judgment, are intended to "allow federal and state bank examiners to rely on a bank's records in evaluating the worth of the bank's assets." Langley v. Federal Deposit Ins. Corp., 484 U.S. 86, 91, 108 S.Ct. 396, 401, 98 L.Ed.2d 340 (1987). The doctrine requires that any agreement upon which a claim is based be memorialized in the bank's records and also be approved by "officially recorded action" on the part of the bank's board or loan committee. Id. at 92, 108 S.Ct. at 401. These requirements are intended to ensure against the fraudulent insertion of new terms in agreements when a bank appears destined to fail. Id.
The FDIC argued to the district court that the statute "insulates the FDIC, in its corporate capacity, from any claims that relate to actions allegedly taken by the former Bank." Def.Mem. of Law at 10. The heart of the FDIC's argument to the district court was that pursuant to the statute, the FDIC is not a successor in interest to the former bank, and hence the FDIC was immune from liability. In a supplementary memorandum in support of its motion for summary judgment, the FDIC refined its argument to state that it was not liable for the wrongful actions of a failed institution unless the alleged wrongful actions fell within the limited exceptions enumerated in the statute.
The district court adopted the FDIC's approach, finding that the statute protects the FDIC against claims "relat[ed] to the alleged wrongful actions taken by failed financial institutions ... unless the alleged actions fall within the limited exception set forth in [the statute]." Federal Deposit Ins. Corp. v. Hanson, 799 F.Supp. 954, 959 (D.Minn.1992). This finding by the district court untenably extends the reach of the statute.
The statute protects the FDIC from claims based upon agreements which decrease the FDIC's interest in an asset. See 12 U.S.C. Sec. 1823(e); Langley, 484 U.S. at 90, 108 S.Ct. at 400. Unless that agreement is (1) in writing, (2) between the bank and the claimant and executed contemporaneously with the acquisition of the asset, (3) approved and recorded by the appropriate bank committee, and (4) from its inception is an official bank record, the claim based upon the agreement is barred. 12 U.S.C. Sec. 1823(e). When determining whether the statute bars a claim, a court must first determine whether the wrongdoings underlying the claim are based upon an agreement. 9 See Langley, 484 U.S. at 95, 108 S.Ct. at 403.
Hanson's claim seeks the imposition of a constructive trust, an equitable remedial measure which a court may impose under specific conditions determined by state law. See Wright v. Wright, 311 N.W.2d 484, 485 (Minn.1981). The alleged wrongdoings which form the basis of Hanson's claim are both contract and tort claims. 10 But, only if the claim is based upon an agreement must it meet the underlying requirements of the statute. See Garrett v. Commonwealth Mortgage Corp. of Am., 938 F.2d 591, 595 (5th Cir.1991). The district court never considered whether the underlying claim was based upon an agreement; instead, it simply found that it did not meet the "limited exception" 11 in the statute.
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