Jackson v. F.D.I.C.

• Decision Date: 19 November 1992
• Docket Number: No. 92-2194,92-2194
• Citation: 981 F.2d 730
• Parties: Randolph S. JACKSON and Martha S. Jackson, Plaintiffs-Appellants, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for MBank Houston, N.A., Defendant-Appellee. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 730

981 F.2d 730

Randolph S. JACKSON and Martha S. Jackson, Plaintiffs-Appellants, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for MBank

Houston, N.A., Defendant-Appellee.

No. 92-2194

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Nov. 19, 1992.

Larry P. Boyd, Boyd & Cogdell, Houston, TX, for plaintiff-appellants.

Gregory E. Gore, Washington, DC, for defendant-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, DAVIS, and WIENER, Circuit Judges.

PER CURIAM.

Randolph S. Jackson sued MBank Houston, N.A. (MBank) in Texas state court for breach of contract and promissory estoppel in connection with MBank's refusal to lend money to Jackson despite its allegedly having promised to do so. Before Jackson's case came to trial, MBank was declared insolvent and the FDIC was appointed as receiver. The FDIC removed the suit to federal district court, and asserted, in a subsequent motion for summary judgment, that Jackson's claims were barred by the D'Oench Duhme doctrine and applicable provisions of FIRREA. ¹ The district court granted this motion for summary judgment. Agreeing with that court, we affirm.

I. FACTS AND PROCEEDINGS

Jackson was a manager employed by the Monsanto company at its Texas City, Texas petrochemical plant when it was purchased by the Sterling Chemical Company. As a part of Sterling's purchase, it proposed to sell specified quantities of its own capital stock to named key Monsanto employees at a price of $10 per share. Jackson was one such employee and was authorized to purchase up to 833 shares of Sterling stock.

Sterling arranged with MBank to provide financing to the former Monsanto employees for their purchase of Sterling stock. MBank agreed to finance sixty percent of the stock purchase price for each qualified employee. Jackson prepared a loan application and a personal financial statement, and apparently was approved for a $5,000 loan, just over sixty percent of the purchase Jackson attended the scheduled group closing for these employee stock purchase. He took with him a cashier's check for $2,000 as his forty percent of the purchase price for the number of Sterling shares that he had decided to purchase--500 shares rather than the full 833 shares authorized. The MBank personnel at the closing tendered a $5000 check to Jackson, but refused to make a smaller loan. Jackson refused the $5,000 loan and instead used his own $2000 to purchase 200 shares of Sterling stock.

price for his maximum authorized 833 shares.

Within thirty months, the value of the Sterling stock had skyrocketed, ² so Jackson filed the subject suit against MBank in Texas state court, alleging breach of contract and promissory estoppel for the bank's failure to lend him the $3,000 for the employee stock purchase. Shortly after MBank filed its general denial, it was declared insolvent and placed under FDIC receivership. The FDIC removed the action to federal court and moved for summary judgment arguing, inter alia, that Jackson's claims were barred by the D'Oench Duhme doctrine and § 1821(d)(9)(A) of FIRREA ³ because the claims were based on unrecorded and unwritten agreements.

The magistrate judge recommended that this motion be granted. At the time that this recommendation was made, the FDIC had produced no documents relating to Jackson's claims. The FDIC later produced several related MBank documents, which were referenced in Jackson's supplemental response to the FDIC's motion for summary judgment.

The district court subsequently granted summary judgment for the FDIC, adopting the magistrate judge's recommendation without expressly addressing the MBank documents produced by the FDIC after that recommendation had been made. Jackson timely appeals.

II. STANDARD OF REVIEW

The grant of a motion for summary judgment is reviewed de novo, using the same criteria employed by the district court. ⁴ This court must "review the evidence and inferences to be drawn therefrom in the light most favorable to the nonmoving party." ⁵ "[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." ⁶

III.

ANALYSIS

Jackson argues that the instant case does not fall within the ambit of D'Oench Duhme because he is asserting an affirmative claim against MBank and the FDIC, rather than a defense to a claim against him. He further asserts that D'Oench Duhme is inapplicable because his claim does not tend to diminish or defeat the FDIC's interest in any particular asset. Jackson claims alternatively that even if D'Oench Duhme does apply to the present situation he has produced sufficient documentation

                of the loan agreement to defeat summary judgment.   We now analyze each of Jackson's arguments in turn
                

A. Affirmative Claims

Jackson's initial claim--that D'Oench Duhme does not bar his claim because it is an affirmative claim--is based on a single sentence in one opinion of the Tenth Circuit. In Grubb v. FDIC, ⁷ that court stated: "By its very terms, however, the D'Oench rule only prevents parties from raising defenses against the FDIC." ⁸ When viewed in context of the full opinion, however, that statement is recognizable as but one of several alternative bases relied on by the Tenth Circuit for its decision. Further, that statement has been criticized repeatedly by district courts within the Tenth Circuit. ⁹

Of greater significance to the instant case is Jackson's failure to cite the several opposite rulings of the Fifth Circuit--rulings that constitute binding precedent here. We have never refused to apply D'Oench Duhme merely because a party had asserted an affirmative claim rather than a defense against the insolvent institution or the FDIC. ¹⁰ To the contrary, we have consistently applied D'Oench Duhme to claims for affirmative relief. ¹¹ Even if we were of a mind to do so, we could not abandon well established precedent in order to follow this questionable alternative ground for the holding in Grubb. Instead, we reaffirm that D'Oench Duhme and FIRREA may bar an affirmative claim against the FDIC, just as it may bar a defense to a claim by the FDIC.

Although Jackson failed to discuss the relevant cases from this circuit in his argument that D'Oench Duhme should only prevent parties from raising defenses to the FDIC, he nevertheless attempts to rebut the FDIC's reliance on Fifth Circuit precedent anticipatorily. Jackson tries to distinguish his situation from previous decisions in this circuit that apply D'Oench Duhme to affirmative claims. He notes that in all cases cited by the FDIC, the party asserting the affirmative claim had some pre-existing borrowing relationship with the bank. In the instant case, however, there apparently was no relationship between Jackson and MBank other than the loan at issue.

We find this to be a distinction without a difference, and clearly one insufficient to

                prevent the application of D'Oench Duhme to Jackson's claim.   Even though in prior cases, ongoing lending relationships may have existed, the existence or nonexistence of such relationships was not dispositive.   In neither Bell & Murphy & Assoc., Inc. v. Interfirst Bank Gateway, N.A., 12 nor Beighley v. FDIC 13, is there evidence that the plaintiffs were in default on their loans at the times they filed their respective affirmative claims.   Although the FDIC eventually asserted a counterclaim against Beighley to enforce his promissory note, no existing loan played any part in the litigation between Bell & Murphy and the FDIC.
                

B. No Specific Asset Involved

Jackson next argues that his affirmative claims against MBank and the FDIC do not involve a specific asset and thus could not diminish or defeat the FDIC's interest in any such asset, thereby preventing application of D'Oench Duhme. Again, our decisions in Bell & Murphy ¹⁴ and Beighley ¹⁵ are instructive on this argument. ¹⁶

In Bell & Murphy, the plaintiff entered into an agreement with a bank under which it was to make various loans to the plaintiff. This agreement was embodied in a letter, but was never reflected in the bank's official records. The loans were never made to the plaintiff who sued alleging that it had been induced by the bank to enter the agreement through fraudulent misrepresentations, and that the bank had breached its obligations under that agreement. The plaintiff in Bell & Murphy argued that its affirmative claim against the bank was not barred by D'Oench Duhme because the agreement in question did not diminish or defeat the FDIC's interest in any specific asset acquired from the bank. Although the agreement clearly could affect the total worth of the bank, it would not diminish the value to the bank of the plaintiff's admitted debts from other transactions. In response, this court stated: "We find this inventive argument to be meritless in light of our recent holding in Beighley that the D'Oench Duhme rule bars affirmative claims based upon unrecorded agreements to extend future loans." ¹⁷

Moreover, Jackson's attempted reliance on Olney Savings & Loan Ass'n v. Trinity Banc Savings Ass'n ¹⁸ is misplaced. In Olney, we refused to apply D'Oench Duhme because the FSLIC has acquired no "right, title, or interest" that could be diminished or defeated by Olney's claims. ¹⁹ Prior to the FSLIC take over of Trinity Bank, Olney had sued Trinity successfully for recision of a loan agreement and for damages. The FSLIC placed Trinity in conservatorship after Trinity had already posted a supersedeas bond to stay execution of the damage award to Olney pending appeal. When the FSLIC took over Trinity, the loan agreement had already been declared void; consequently there was no interest for the FSLIC to acquire with regard to the...