Stiles v. Resolution Trust Corp.

• Decision Date: 22 April 1992
• Docket Number: No. 05-91-00894-CV,05-91-00894-CV
• Citation: 831 S.W.2d 24
• Parties: Dudley W. STILES, Appellant, v. RESOLUTION TRUST CORPORATION, as Receiver of Hallmark Savings & Loan Association, F.A., Appellee.
• Court: Texas Court of Appeals

Page 24

831 S.W.2d 24

Dudley W. STILES, Appellant, v. RESOLUTION TRUST CORPORATION, as Receiver of Hallmark Savings & Loan Association, F.A., Appellee.

No. 05-91-00894-CV.

Court of Appeals of Texas Dallas.

April 22, 1992.

Rehearing Denied June 3, 1992.

Stephen A. Coke, Richard W. Winn, Dallas, for appellant.

Keith B. Cummiskey, William N. Radford, Dallas, for appellee.

Before STEWART, BURNETT and CHAPMAN, JJ.

OPINION

STEWART, Justice.

Dudley W. Stiles appeals from a summary judgment in favor of the Resolution Trust Corporation (RTC), as receiver of Hallmark Savings and Loan Association, in its suit to recover the balance due on a promissory note. Stiles asserts eleven points of error on appeal, contending that the trial court erred in granting summary judgment. We affirm the trial court's judgment.

In May 1988, Stiles executed a $500,000 revolving-line-of-credit note (the note) payable to Hallmark Savings Association (Old Hallmark). The note matured on May 2, 1989. On July 26, 1989, the Federal Home Loan Bank Board declared Old Hallmark insolvent and appointed the Federal Savings and Loan Insurance Corporation (FSLIC) as its receiver. FSLIC and Hallmark Savings and Loan Association, F.A. (New Hallmark) entered an acquisition agreement pursuant to which New Hallmark acquired the note. On September 28, 1989, New Hallmark notified Stiles in writing that the note was in default and demanded immediate payment of all principal and interest due.

On October 24, 1989, New Hallmark filed this suit to collect the amount allegedly due on the note. Stiles' original answer asserted the defenses of release, accord and satisfaction, payment, and estoppel. ¹ On May 16, 1990, RTC was appointed receiver for New Hallmark. On September 17, 1990, RTC filed its plea in intervention, stating that it had been appointed receiver of New Hallmark and that, as receiver, it was responsible for pursuing the claims originally asserted by New Hallmark in this suit. A few days later, RTC filed its motion for summary judgment, alleging that Stiles executed the note, that it was owner and holder of the note, that the note was in default, that demand had been made for all amounts due, and that an amount remained due. Stiles' response alleged that issues remained as to: (1) whether he had a fair opportunity to conduct discovery of the books and records of Old Hallmark; (2) whether the indebtedness was written off Old Hallmark's books and records; (3) whether Old Hallmark's board of directors or loan committee approved removal of the indebtedness, which approval is reflected in the minutes of the board or committee; (4) whether Old Hallmark has an official record of the release of the indebtedness set forth in the motion; (5) whether he had been released from the cause of action; (6) whether RTC's cause of action is barred by accord and satisfaction; (7) whether RTC's predecessor in interest waived its rights under the note; (8) whether RTC is estopped to recover under the note; and (9) whether he paid the indebtedness.

On November 28, 1990, Stiles filed his first request for production of documents. RTC produced, among other things, a June 22, 1989 memorandum in which Wayne Ikerd, a bank employee, stated, "This loan was written off in the Deerfield Settlement Agreement." On February 20, 1991, Stiles filed motions for continuance and to compel. He complained that RTC refused to produce internal accounting records, which Stiles asserted might show that the note had been written off in Old Hallmark's books, and refused voluntarily to produce Ikerd for deposition.

On March 20, 1991, the trial court rendered summary judgment for RTC on the note. It denied Stiles' motions to compel and for continuance on April 23, 1991. Stiles then perfected this appeal.

Stiles asserts eleven points of error, generally complaining that: (1) the trial court erred in granting RTC's motion for summary judgment on grounds not alleged in the motion; (2) RTC was not entitled to assert holder-in-due-course status on the note; (3) D'Oench ² and section 1823(e) of Title 12 of the United States Code ³ are inapplicable because the note was extinguished and satisfied before RTC acquired the alleged asset; (4) the trial court erred in granting RTC's motion for summary judgment and in denying his motions for continuance and to compel because (a) he did not have a fair opportunity to conduct discovery of the books and records of Old Hallmark and to present affidavit facts essential to justify his opposition to RTC's motion and (b) Ikerd's affidavit was the controverted testimony of an interested witness which was not credible and free from contradictions and inconsistencies; and (5) the trial court erred in granting summary judgment because he raised fact issues as to whether the note was paid, satisfied, and extinguished.

In reviewing a summary-judgment record, this Court applies the following standards:

1. The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.

2. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true.

3. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in his favor.

Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). To prevail on summary judgment, the plaintiff as movant must conclusively prove its entitlement to prevail on each element of its cause of action as a matter of law. Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972). The plaintiff is under no obligation to negate affirmative defenses. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984). The mere pleading of an affirmative defense does not prevent the rendition of summary judgment for a plaintiff who has established conclusively the nonexistence of disputed fact issues in its claim for relief. Clark v. Dedina, 658 S.W.2d 293, 296 (Tex.App.--Houston [1st Dist.] 1983, writ dism'd). To show a disputed fact issue that will preclude the rendition of summary judgment for the plaintiff, the defendant must offer summary-judgment proof on each element of at least one of the affirmative defenses it has pleaded. Seale v. Nichols, 505 S.W.2d 251 (Tex.1974); Clark, 658 S.W.2d at 296.

To prove its entitlement to summary judgment for the balance due on the note, RTC was required to prove conclusively: (1) the note in question; (2) that Stiles signed the note; (3) that it was the legal owner and holder of the note; and (4) that a certain balance was due on the note. Rea v. Sunbelt Sav., 822 S.W.2d 370, 372 (Tex.App.--Dallas 1991, no writ); Clark, 658 S.W.2d at 295. To support its summary-judgment motion, RTC submitted Ikerd's affidavit with the note attached. Stiles admitted execution of the note. Ikerd's affidavits and its exhibits establish that RTC was owner and holder of the note; that $608,460.14 was due on the note as of September 15, 1990; and that interest accrued at the rate of $177.92 per day. This evidence proved RTC's entitlement to recover the unpaid balance of the note as a matter of law. Rea, 822 S.W.2d at 372. Once RTC established its entitlement to summary judgment, Stiles was required to raise an issue of fact on every element of at least one of his affirmative defenses.

Stiles argues that the trial court erred in granting RTC's motion for summary judgment because RTC failed to specify in any written pleading that it intended to rely on D'Oench, section 1823(e), or the federal-holder-in-due-course doctrine as specific grounds for summary judgment. See TEX.R.CIV.P. 166a(c). RTC states in its brief that the trial court did not apply the federal-holder-in-due-course doctrine in granting RTC's summary-judgment motion because, at the time judgment was rendered, the doctrine was inapplicable to the indebtedness in this case. See Sunbelt Sav., FSB, Dallas v. Montross, 923 F.2d 353 (5th Cir.1991). We agree. Thus, we consider only section 1823(e) and D'Oench in determining whether the trial court erred in granting RTC's motion for summary judgment.

We note that RTC, as plaintiff, does not assert D'Oench and section 1823(e) as grounds to support its motion for summary judgment to recover the balance due on the note. Instead, RTC relies on section 1823(e) and D'Oench to preclude Stiles' affirmative defenses.

The D'Oench doctrine is a common-law rule of estoppel precluding a borrower from asserting against RTC defenses based on agreements not established in the financial institution's records. Resolution Trust Corp. v. Murray, 935 F.2d 89, 93 (5th Cir.1991). The essence of the rule is that RTC is entitled to rely, to the exclusion of any extraneous matters, on the official bank records which set forth the rights and obligations of the bank and those to whom the bank lends money. Even borrowers who are innocent of any intent to mislead banking authorities are covered by the doctrine if they lend themselves to an arrangement which is likely to do so. Campbell Leasing, Inc. v. FDIC, 901 F.2d 1244, 1248 (5th Cir.1990) (citing Bell & Murphy & Assocs. v. Interfirst Bank Gateway, N.A., 894 F.2d 750, 753-54 (5th Cir.), cert. denied, 498 U.S. 895, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990)). The doctrine thus "favors the interests of depositors and creditors of a failed bank[,] who cannot protect themselves from secret agreements, over the interests of borrowers, who can." Campbell Leasing, Inc., 901 F.2d at 1248 (quoting Bell & Murphy & Assocs., 894 F.2d at 754).

Section 1823(e) codified and expanded the policy behind D'Oench. Olney Sav. & Loan Ass'n v. Trinity Banc Sav. Ass'n, 885 F.2d 266, 274 (5th Cir.1989). Section 1823(e) provides as follows:

No agreement which tends to diminish or defeat the right, title or interest of the Corporation in any asset acquired by it under this section or section 1821 of this title, either as security...