Duhme doctrine in California

1998The principal issue on defendant’s appeal is whether the trial court properly determined that as a matter of law plaintiff was entitled to a deficiency judgment against Shlens in that Shlens’s state law defenses were barred under the federal common law doctrine known as the D’Oench, Duhme doctrine (D’Oench, Duhme & Co. v. F.D.I.C. (1942) 315 U.S. 447 [ 62 S.Ct. 676 , 86 L.Ed. 956 ]), or under the doctrine’s “partial codification” (Weber v. New West Federal Savings & Loan Assn. (1992) 10 Cal.App.4th 97, 99 [ 12 Cal.Rptr.2d 468 ]) in the federal statutes at 12 United States Code section 1823 (e)

1998The principal issue on defendant’s appeal is whether the trial court properly determined that as a matter of law plaintiff was entitled to a deficiency judgment against Shlens in that Shlens’s state law defenses were barred under the federal common law doctrine known as the D’Oench, Duhme doctrine (D’Oench, Duhme & Co. v. F.D.I.C. (1942) 315 U.S. 447 [ 62 S.Ct. 676 , 86 L.Ed. 956 ]), or under the doctrine’s “partial codification” (Weber v. New West Federal Savings & Loan Assn. (1992) 10 Cal.App.4th 97, 99 [ 12 Cal.Rptr.2d 468 ]) in the federal statutes at 12 United States Code section 1823 (e)

1997Corp. (5th Cir. 1989) 868 F.2d 776, 785 ) and relying upon judicial interpretations of the statute when applying the common law.” (234 Cal.App.3d at pp. 1543-1544, fn. 6.) The Walsh court concluded the case fell within the provisions of the D’Oench, Duhme doctrine because plaintiffs were, inter alia, attempting to enforce an oral agreement which would reduce the value of assets formerly held by State Savings. ( 234 Cal.App.3d at p. 1545 .) More recently, in Bartram v. Federal Deposit Ins.

1993Corp. (1989) 868 F.2d 776, 783-785 ; Webb v. Superior Court (1990) 225 Cal.App.3d 990 [ 275 Cal.Rptr. 581 ].) Courts hold the D’Oench, Duhme defense applies, moreover, even where the party asserting an oral agreement was innocent of any wrongdoing.

1998It follows that the need for a *323 body of federal common law under the rubric of D’Oench has now ‘disappeared’ and that the district court erred in holding that Murphy’s claims are barred under D’Oench.” ( 61 F.3d at p. 40 .) The Murphy case, and the other case cited by Shlens which addressed the D’Oench, Duhme doctrine after O’Melveny (see DiVall Insured Income v. Boatmen’s First Nat.

1998“In 1950, eight years after the Supreme Court decided D’Oench, the Congress enacted the Federal Deposit Insurance Act, 12 U.S.C. § 1811 et seq., which ‘bars anyone from asserting against the FDIC any agreement not properly recorded in the records of the bank that would diminish the value of an asset held by the FDIC.’ [Citation.] That provision, as modified in 1989 by [FIRREA], currently provides that: ‘No agreement which tends to diminish or defeat the interest of the [FDIC] in any asset acquired by it under this section or section 1821 of this title, either as security for a loan or by purch

1998Bank (8th Cir. 1995) 69 F.3d 1398 ), do not discuss a point which is critical to the instant case, wherein Shlens maintains that the statutory codification of the D’Oench, Duhme doctrine, section 1823(e), cannot be relied upon by the RTC herein because the statute cannot be applied retroactively to the instant loan documents, executed in 1988, prior to the enactment of FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989) in August 1989.

1998Bank (8th Cir. 1995) 69 F.3d 1398 ), do not discuss a point which is critical to the instant case, wherein Shlens maintains that the statutory codification of the D’Oench, Duhme doctrine, section 1823(e), cannot be relied upon by the RTC herein because the statute cannot be applied retroactively to the instant loan documents, executed in 1988, prior to the enactment of FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989) in August 1989.

1998Also for the first time on appeal, Shlens challenges the standing of RTC Mortgage Trust to invoke the protections of federal law, and in his reply brief he argues for the first time that pursuant to O’Melveny & Myers v. FDIC (1994) 512 U.S. 79 [114 S.Ct. *315 2048, 129 L.Ed.2d 67 ], there is no general federal common law, so there is serious doubt whether the D’Oench, Duhme doctrine survives independently of section 1823(e).

1998Also for the first time on appeal, Shlens challenges the standing of RTC Mortgage Trust to invoke the protections of federal law, and in his reply brief he argues for the first time that pursuant to O’Melveny & Myers v. FDIC (1994) 512 U.S. 79 [114 S.Ct. *315 2048, 129 L.Ed.2d 67 ], there is no general federal common law, so there is serious doubt whether the D’Oench, Duhme doctrine survives independently of section 1823(e).

1998Thus, consistent with Twin Constr., Inc. v. Boca Raton, Inc., supra, 925 F.2d 785 , we conclude that the RTC, and its assignee RTC Mortgage Trust, are not bound by the Exculpation Language by virtue of the D’Oench, Duhme doctrine.

1997(D.Utah 1989) 728 F.Supp. 656, 671 ; Webb v. Superior Court, supra, 225 Cal.App.3d at p. 999, and cases cited therein.) Assignees of the FDIC and the FSLIC enjoy the protection of the doctrine, as do so-called “ ‘bridge banks’ ”—institutions authorized by the FDIC and FSLIC to operate failed banks and savings and loans—such as New West. ( 225 Cal.App.3d at p. 1001 ; Bell & Murphy & Assoc, v. Interfirst Bank Gateway (5th Cir. 1990) 894 F.2d 750 , 754-755, cert. den. 498 U.S. 895 [ 112 L.Ed.2d 203 , 111 S.Ct. 244 ].) A primary purpose of the D’Oench, Duhme doctrine as it stands today “is to allo

1997The court held an unsigned note containing erroneous information, apparently written by a Commonwealth Mortgage loan officer and contained in Commonwealth’s files, that led to the inadvertent expiration of plaintiffs’ period to lock-in a certain loan rate was barred “under D’Oench, Duhme[.]” (Id. at pp. 891-892.) However, in its analysis the district court, without discussion, equated the D’Oench, Duhme doctrine with the provisions of section 1823(e), detailed the provisions of that section and proceeded to apply the language of section 1823(e) to bar admission of the note: “Obviously the misr

1997(D.Utah 1989) 728 F.Supp. 656, 671 ; Webb v. Superior Court, supra, 225 Cal.App.3d at p. 999, and cases cited therein.) Assignees of the FDIC and the FSLIC enjoy the protection of the doctrine, as do so-called “ ‘bridge banks’ ”—institutions authorized by the FDIC and FSLIC to operate failed banks and savings and loans—such as New West. ( 225 Cal.App.3d at p. 1001 ; Bell & Murphy & Assoc, v. Interfirst Bank Gateway (5th Cir. 1990) 894 F.2d 750 , 754-755, cert. den. 498 U.S. 895 [ 112 L.Ed.2d 203 , 111 S.Ct. 244 ].) A primary purpose of the D’Oench, Duhme doctrine as it stands today “is to allo

1997(D.Utah 1989) 728 F.Supp. 656, 671 ; Webb v. Superior Court, supra, 225 Cal.App.3d at p. 999, and cases cited therein.) Assignees of the FDIC and the FSLIC enjoy the protection of the doctrine, as do so-called “ ‘bridge banks’ ”—institutions authorized by the FDIC and FSLIC to operate failed banks and savings and loans—such as New West. ( 225 Cal.App.3d at p. 1001 ; Bell & Murphy & Assoc, v. Interfirst Bank Gateway (5th Cir. 1990) 894 F.2d 750 , 754-755, cert. den. 498 U.S. 895 [ 112 L.Ed.2d 203 , 111 S.Ct. 244 ].) A primary purpose of the D’Oench, Duhme doctrine as it stands today “is to allo

1994(See Bell & Murphy & Assoc, v. InterFirst Bank Gateway (5th Cir. 1990) 894 F.2d 750 , 754.) The D’Oench, Duhme doctrine (now codified in 12 U.S.C. § 1823 (e)) may bar many claims and defenses which would defeat or diminish the FDIC’s rights in and to an acquired asset, and it may sometimes be extended to benefit the FDIC’s assignees (Cadle Co. II, Inc. v. Lewis (1993) 254 Kan. 158 [ 864 P.2d 718, 720-721 ]).

1994(See Bell & Murphy & Assoc, v. InterFirst Bank Gateway (5th Cir. 1990) 894 F.2d 750 , 754.) The D’Oench, Duhme doctrine (now codified in 12 U.S.C. § 1823 (e)) may bar many claims and defenses which would defeat or diminish the FDIC’s rights in and to an acquired asset, and it may sometimes be extended to benefit the FDIC’s assignees (Cadle Co. II, Inc. v. Lewis (1993) 254 Kan. 158 [ 864 P.2d 718, 720-721 ]).

1993Corp. v. Newhart (8th Cir. 1989) 892 F.2d 47 , cited in Mountain States, discussed the D’Oench, Duhme doctrine which shields the FDIC from the effect of oral agreements which diminish the value of a bank’s assets.

1993(See D’Oench, Duhme & Co. v. F.D.I.C. (1942) 315 U.S. 447 [ 86 L.Ed. 956 , 62 S.Ct. 676 ].) Recognizing the need for the FDIC to be able to sell nonperforming loans, and relying on section 3-201(1) of the Uniform Commercial Code, the Newhart court determined that the FDIC transferred its protected status to subsequent purchasers of notes from failed banks. ( 892 F.2d at p. 50 .) 4 Despite the paucity of case law on the issue, we agree with the courts holding that the FDIC’s assignee is entitled to the benefit of the federal statute of limitations in enforcing notes from failed banks. 5 This de

1993In Campbell Leasing Inc. v. FDIC (1990) 901 F.2d 1244, 1248-1249 , the court said: “The D’Oench, Duhme doctrine is ‘a common law rule of estoppel precluding a borrower from asserting against the FDIC defenses based upon secret or unrecorded “side agreement” that alter [] the terms of facially unqualified obligations.’ Bell & Murphy & Assoc. v. Interfirst Bank Gateway, N.A., 894 F.2d at 750, 753.) [][]... [][] We conclude that the FDIC enjoys holder in due course status as a matter of federal common law whether it is *890 acting in its corporate or its receivership capacity.

1993In Campbell Leasing Inc. v. FDIC (1990) 901 F.2d 1244, 1248-1249 , the court said: “The D’Oench, Duhme doctrine is ‘a common law rule of estoppel precluding a borrower from asserting against the FDIC defenses based upon secret or unrecorded “side agreement” that alter [] the terms of facially unqualified obligations.’ Bell & Murphy & Assoc. v. Interfirst Bank Gateway, N.A., 894 F.2d at 750, 753.) [][]... [][] We conclude that the FDIC enjoys holder in due course status as a matter of federal common law whether it is *890 acting in its corporate or its receivership capacity.

1992Corp. v. Lattimore Land Corp. (5th Cir. 1981) 656 F.2d 139, 141-142 .) D’Oench also bars claims based on misrepresentations.

1990Bank (N.D.Tex. 1990) 733 F.Supp. 1099, 1103 .) “It prevents those who give notes to federally insured institutions from raising defenses based on side agreements made with officers of failed institutions regarding the enforceability of promissory notes.

1990Corp. v. Musacchio (N.D.Cal. 1988) 695 F.Supp. 1044, 1051 , and cases cited there.) In addition, the “policy supporting protection of the FSLIC and FDIC in collateral agreement situations applies equally to all situations in which the maker’s defense is based on representations or conduct outside of the note itself.” (Federal Sav. and Loan Ins.

1990The Doctrine Prevails Over State Law Doctrines Webb contends that the D’Oench, Duhme doctrine does not preempt California’s equitable doctrines of setoff (Hauger v. Gates (1954) 42 Cal.2d 752 [ 269 P.2d 609 ]) and successor liability (Ray v. Alad Corp. (1977) 19 Cal.3d 22 [ 136 Cal.Rptr. 574 , 560 P.2d 3 ]).

1990The Doctrine Prevails Over State Law Doctrines Webb contends that the D’Oench, Duhme doctrine does not preempt California’s equitable doctrines of setoff (Hauger v. Gates (1954) 42 Cal.2d 752 [ 269 P.2d 609 ]) and successor liability (Ray v. Alad Corp. (1977) 19 Cal.3d 22 [ 136 Cal.Rptr. 574 , 560 P.2d 3 ]).

1990The court held that by failing to raise the D’Oench, Duhme defense in its answer and giving plaintiff “some time to investigate the facts and law related to the defense,” the savings and loan waived the defense. ( 215 Cal.App.3d at p. 273 .) California Concrete does not require a finding of waiver here.

1990Corp. v. Hsi (E.D.La. 1986) 657 F.Supp. 1333, 1338 .) This argument provides no aid to Webb in his effort to have the trial court’s ruling reversed. e. Conclusion We therefore find that Webb is estopped by the D’Oench, Duhme doctrine from asserting the oral agreement which was allegedly made with State and Vaughn. 7 3.

1990Corp. v. Locke (W.D.Tex. 1989) 718 F.Supp. 573, 582 , and cases cited there.) “Numerous courts” have held that for purposes of applying the D’Oench, Duhme rule, “no distinction should be drawn between the FDIC and the FSLIC.” (Federal Sav. and Loan Ins.

1990The Doctrine Prevails Over State Law Doctrines Webb contends that the D’Oench, Duhme doctrine does not preempt California’s equitable doctrines of setoff (Hauger v. Gates (1954) 42 Cal.2d 752 [ 269 P.2d 609 ]) and successor liability (Ray v. Alad Corp. (1977) 19 Cal.3d 22 [ 136 Cal.Rptr. 574 , 560 P.2d 3 ]).

1990The Doctrine Prevails Over State Law Doctrines Webb contends that the D’Oench, Duhme doctrine does not preempt California’s equitable doctrines of setoff (Hauger v. Gates (1954) 42 Cal.2d 752 [ 269 P.2d 609 ]) and successor liability (Ray v. Alad Corp. (1977) 19 Cal.3d 22 [ 136 Cal.Rptr. 574 , 560 P.2d 3 ]).