Wilhite v. Schendle
| Decision Date | 28 August 1996 |
| Docket Number | No. 95-30621,95-30621 |
| Citation | 92 F.3d 372 |
| Parties | Sidney R. WILHITE, Plaintiff-Appellant, v. H.I. SCHENDLE; Federal Deposit Insurance Corporation, Defendants-Appellees, and James W. Beaver; James M. Rasbery, Defendants. |
| Court | U.S. Court of Appeals — Fifth Circuit |
John C. Laird, Johnny E. Dollar, Dollar, Laird & Scott, Monroe, LA, for plaintiff-appellant.
David Baer Klotz, Mary L. Coon Blackley, Bodenheimer, Jones, Klotz & Simmons Shreveport, LA, for H.I. Schendle, defendant-appellee.
James Scott Watson, Kathleen V. Gunning, Federal Deposit Insurance Corporation, Washington, DC, Richard Franklin Zimmerman, Jr., J. Michael Robinson, Jr., Kantrow, Spaht, Weaver & Blitzer, Baton Rouge, LA, for F.D.I.C.
Appeal from the United States District Court for the Western District of Louisiana.
Before WISDOM, EMILIO M. GARZA and PARKER, Circuit Judges.
The plaintiff-appellant, Sidney Wilhite, appeals the dismissal of his suit against defendant-appellee, H.I. Schendle, for contribution to a Settlement Agreement made with the Resolution Trust Corporation ("RTC"), the statutory predecessor to defendant-appellee, the Federal Deposit Insurance Corporation ("FDIC"). Wilhite also appeals the dismissal of his cause of action against the FDIC for the return of a portion of his settlement payment. For the reasons that follow, we AFFIRM the dismissal of the case against both defendants.
Sidney Wilhite and H.I. Schendle are both former directors of the Deposit Trust Savings Bank of Monroe, Louisiana ("the Bank"). In 1990, the United States Office of Thrift Supervision closed the Bank and appointed the RTC as receiver. The RTC investigated the cause of the Bank's failure, and eventually made a demand for compensation from the Bank's former officers and directors.
Following a period of negotiations, the RTC reached a settlement agreement with seven of the former directors and officers of the Bank, including Schendle and Wilhite ("the Settlement Agreement"). The Settlement Agreement provided for a payment by the officers and directors of $750,000 to the RTC in exchange for their discharge from any claims arising from the Bank's trading practices. Throughout the negotiation process, Schendle denied liability, and stated that he would refuse to pay any settlement amount. Nonetheless, Schendle, Wilhite, and the other five directors and officers signed the Settlement Agreement with the RTC.
Wilhite paid the entire $750,000 to the RTC. He then made arrangements with three of the six remaining directors to receive compensation for their portions of the settlement amount. After failing to reach agreements with the last three directors, Wilhite filed this suit on June 3, 1993. He later dismissed one of those defendants to maintain federal diversity jurisdiction, and obtained a default judgment against a second defendant, leaving Schendle as the only remaining defendant. After an unsuccessful attempt to obtain summary judgment against Schendle, Wilhite amended his complaint and added the RTC as defendant to the suit, seeking the return of three-sevenths of the Settlement proceeds.
The district court heard testimony on the case, and issued a memorandum ruling denying recovery to Wilhite and dismissing his suit with prejudice. Wilhite filed a timely notice of appeal.
Wilhite contends that Schendle should be required to contribute under any of several theories of Louisiana Law, including: applying of the laws of solidary liability to the Settlement Agreement; subrogation; "unjust enrichment;" and "payment of a thing not due." Alternatively, Wilhite maintains that the FDIC should be required to reimburse him under the theory of "payment of a thing not due." We address each theory of law in turn, reviewing the district court's conclusions of law de novo, and its factual findings for clear error. 1
Wilhite's first theory of recovery against Schendle is that the Settlement Agreement alternatively created either a "solidary" obligation or a "joint and indivisible" obligation among the Bank's former director's and officers. Under Louisiana law, either of these types of obligations is enforced under the rules governing solidary liability, and would give Wilhite a right of contribution against Schendle. 2
In its ruling, the district court found that the Settlement Agreement created neither of these types of obligations, but instead created a "joint and divisible" obligation with no right of contribution. We agree.
In order to have a solidary obligation under Louisiana law, the agreement must demonstrate an express, written intent for the parties to have such an obligation. 3 Although the words "in solido" or "solidary" are not necessarily required, there may be no doubt as to the parties' intention on this matter. 4 Applying this strict standard, the Louisiana Supreme Court has determined that while the phrase "we promise to pay" is insufficient to create a solidary obligation, a reference to "our promise to pay" is sufficient to create one. 5
Wilhite contends that the language of the Settlement Agreement in this case is more akin to the latter phrase, because the Agreement refers to the Bank's directors and officers as a group, and also refers to only one "payment" and one "release." We disagree. The portions of the Settlement Agreement cited by Wilhite do not amount to an express stipulation of solidary liability. In order to create solidary liability, Louisiana law requires more than a solidary "tenor" to an agreement. 6 Furthermore, paragraph two of the Settlement Agreement specifically provides that:
"The former officers and directors agree to pay, and hereby pay, and the RTC agrees to receive and hereby acknowledges receipt and sufficiency of the sum of $750,000.00 cash (the "Settlement Proceeds").
If one substitutes the word "we" for "the former officers and directors," it is clear that this language is analogous to the phrase "we promise to pay," and creates a joint obligation among the parties. 7
Under Louisiana law, such a joint obligation may be either "divisible," or "indivisible," depending on the nature of the object of performance and the intention of the parties. The obligation is "divisible" if the object of performance is susceptible of division. 8 It is "indivisible" if the object of performance is incapable of division or if the parties intend to make an otherwise divisible performance indivisible. 9 In this case, the directors' and officers' obligation under the Settlement Agreement was a financial payment to one entity. We agree with the district court that by nature, such a monetary payment is susceptible of division. Wilhite maintains, however, that the Settlement Agreement demonstrates an intent to make the financial obligation "indivisible" among the directors and officers.
We look to the Settlement Agreement as a whole to determine the intent of the parties on this issue. 10 As previously discussed, paragraph two demonstrates an intent to avoid a solidary obligation. Wilhite argues, however, that other provisions in the Settlement Agreement show the intent to make the joint obligation "indivisible." He first relies on the language of paragraphs three and four, which read as follows:
According to Wilhite, this language makes it clear that only one performance (the "Settlement Proceeds") is expected by the RTC, and in return only one performance (a general "release" of liability) is given by the RTC. Wilhite maintains that the obligation must therefore be "indivisible". In effect, he argues that one performance by law cannot be made up of divisible parts. This argument is weak and somewhat circular. Although the "Settlement Proceeds" is a singular mass, the agreement to pay in paragraph two provides that sum will be paid by the plural "officers and directors." Thus, language regarding a "singular" performance still offers no insight into whether the parties responsible for that performance intended it to be divisible. Further, the nature of the return obligation on behalf of the RTC is on its face capable of division. The singular "release" of liability given to the seven directors is clearly capable of division into seven individual releases of liability. Thus, these provisions do not support Wilhite's argument.
Wilhite also argues that paragraph six of the Settlement Agreement evidences the necessary intent. That provision reads as follows:
Wilhite insists that this clause leads to the conclusion that the parties intended to make the obligation "indivisible." He contends that this clause creates the right to seek indemnification or contribution from the other former directors and officers signing the Settlement Agreement. We disagree. The language, "nothing in this Agreement shall be interpreted as a bar to any rights ... to indemnification or contribution as a consequence of their respective payments to the RTC ..." does not indicate that it is creating new rights within the Agreement. Instead, the passive language leads us to conclude that the paragraph merely preserves rights that may exist outside of the Settlement Agreement. This conclusion is bolstered by the additional language, "nor...
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Humphrey v. O'Connor
...paragraph in an RTC settlement agreement in an opinion not yet rendered when the trial court ruled in this case. In Wilhite v. Schendle, 92 F.3d 372 (5th Cir.1996), a former bank director sought contribution against a nonpaying director for a portion of the amount paid to the RTC under a se......
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Woodfield v. Bowman
...an obligor who pays a debt he owes with others and who has recourse against those others as a result of the payment. Wilhite v. Schendle, 92 F.3d 372, 376 (5th Cir. 1996) (citations omitted) (construing Louisiana law). 12. 712 So.2d 885 (La. App. 1997), writ denied, 716 So.2d 892 (La. 1998)......