DocketNumber： 92-1344
Filed Date： 10/7/1992
Status： Precedential
Modified Date： 9/21/2015
October 7,1992
_________________________
No. 92-1344
FEDERAL DEPOSIT INSURANCE CORPORATION,
Plaintiff, Appellee,
v.
PRITAM SINGH, ET AL.,
Defendants, Appellants.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, U.S. District Judge]
___________________
_________________________
Before
Selya and Stahl, Circuit Judges,
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and Skinner,* District Judge.
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Elizabeth G. Stouder, with whom John S. Whitman, Richardson
____________________ _______________ __________
& Troubh, Allen J. Hrycay, and Reef, Jordan, Hrycay & Sears were
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on brief, for appellants.
Thomas A. Cox, with whom Mary Ann E. Rousseau and Friedman &
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Babcock were on brief, for appellee.
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_________________________
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*Of the District of Massachusetts, sitting by designation.
SELYA, Circuit Judge. In this case, the district court
SELYA, Circuit Judge.
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granted summary judgment on a guaranty in favor of the Federal
Deposit Insurance Corporation (FDIC).1 The guarantors appeal.
We affirm the judgment below because, as a matter of law, the
guaranty was free of ambiguity and the plaintiff was entitled to
summary enforcement. See, e.g., Garside v. Osco Drug, Inc., 895
___ ____ _______ _______________
F.2d 46, 48-49 (1st Cir. 1990) (appellate court may affirm a
grant of summary judgment on any independently sufficient ground
reflected in the record).
I. BACKGROUND
I. BACKGROUND
On December 23, 1985, Bandon Associates, a general
partnership, executed and delivered a promissory note (the 1985
Note) in the principal amount of $1,050,000 to Patriot Bank, N.A.
As collateral, Bandon gave the bank a mortgage on property it
held in Maine. Both the 1985 Note and the mortgage deed were
signed on Bandon's behalf by the four appellants as Bandon's sole
general partners. The quartet also executed and delivered, on
the same date, an unconditional guaranty of Bandon's obligations
(the Guaranty). By the terms of that document, the signers
"jointly and severally . . . unconditionally guarantee[d]" all
liabilities of Bandon Associates to Patriot Bank "now existing or
hereafter arising, regardless of how they arise or by what
____________________
1By statute, cases in which the FDIC is a party are
ordinarily deemed to "arise under" the laws of the United States.
See 12 U.S.C. 1819(b)(2)(A) (Supp. II 1990). Hence, the
___
district court possessed federal question jurisdiction pursuant
to 28 U.S.C. 1331 (1988). In turn, we have appellate
jurisdiction under 28 U.S.C. 1291 (1988).
2
agreement or instruments they may be evidenced . . . ." The
Guaranty did not refer specifically to the 1985 Note.
On April 6, 1987, Bandon entered into a written
agreement (the Agreement) with Patriot Bank to revise the terms
of the 1985 loan. The arrangement involved substituting a new
note (the 1987 Note) for the old note. The 1987 Note was in the
same face amount, but provided for a fixed interest rate, an
amortization schedule, and a prepayment penalty. It was signed
by the four appellants on Bandon's behalf and "individually." It
also contained an assurance that the Bank would "look solely to
its [c]ollateral for satisfaction of the [o]bligations of
Borrower or under any documents or undertaking given as security
herefor and not to the personal assets of any partner, General or
Limited." At the same time, Bandon and Patriot jointly executed
an emendatory instrument (the Amendment) which tied the security
instruments into the 1987 Note, reaffirmed them, and stated that:
"The Mortgage, the Assignment, the Guaranty, and the Financing
Statement . . . shall remain in full force and effect and all the
terms thereof are hereby ratified and confirmed, by the parties
hereto." Although Bandon and its principals were represented by
counsel, the bank's lawyers were the chief architects of the
documents.
Soon thereafter, Patriot Bank merged with Bank of New
England (BNE). On January 6, 1991, the Comptroller of the
Currency determined that BNE was insolvent and appointed the FDIC
as receiver. The New Bank of New England (NBNE) was created,
3
chartered, and duly designated as a bridge bank. The lender's
rights material to the Patriot/Bandon transactions were assigned,
in relatively rapid succession, from Patriot to BNE and,
eventually, to NBNE.
Meanwhile, Bandon was unable to meet its payment
obligations under the 1987 Note. On February 13, 1991, NBNE
commenced a civil action to foreclose the mortgage in the United
States District Court for the District of Maine. It
simultaneously brought an action against the appellants, as
individuals, alleging that each of them was liable under the
Guaranty for Bandon's default. While the cases were pending, the
FDIC dissolved NBNE and, as receiver, became the substitute
plaintiff in both actions.2
In time, the district court granted the FDIC's
dispositive motion in the guaranty action, invoking the D'Oench,
________
Duhme doctrine, see D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447,
_____ ___ ____________________ ____
460 (1942), and the statute that largely codifies the doctrine.3
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2The district court thereafter granted the FDIC's motion for
summary judgment in the foreclosure action. Bandon has not
appealed from that order. We need not dwell upon it.
3The statute provides in pertinent part:
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 as receiver of
any insured depository institution, shall be
valid against the [FDIC] unless such
agreement
(1) is in writing,
4
This doctrine defines the limited conditions under which
agreements may validly diminish or defeat the FDIC's interest in
an asset it acquires.
II. A THUMBNAIL SKETCH
II. A THUMBNAIL SKETCH
Appellants theorize that the non-recourse provision in
the 1987 Note conflicts with both the Guaranty and the
reaffirmation of the Guaranty; and that, under applicable law,
the conflict should be resolved in favor of the 1987 Note. In
their view, the judgment below should be reversed or,
alternatively, vacated and the case remanded for trial regarding
the effect of the non-recourse provision.4
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(2) was executed by the depository
institution and any person claiming
an adverse interest thereunder,
including the obligor,
contemporaneously with the
acquisition of the asset by the
depository institution,
(3) was approved by the board of
directors of the depository
institution or its loan committee,
which approval shall be reflected
in the minutes of said board or
committee, and
(4) has been, continuously, from
the time of its execution, an
official record of the depository
institution.
12 U.S.C. 1823(e) (Supp. II 1990). We set forth the current
version, including the 1989 amendments, see Pub. L. No. 101-73,
___
103 Stat. 183, 256 (1989), as those amendments were comparatively
minor and do not impact upon the case before us.
4Appellants' alternative argument seemingly reflects the
possibility that, if the instruments are not in direct conflict,
they are at least ambiguous.
5
The yardstick by which we must measure the cogency of
appellants' contentions is not in doubt. "Summary judgment is
appropriate when the record reflects 'no genuine issue as to any
material fact and . . . the moving party is entitled to judgment
as a matter of law.'" Rivera-Muriente v. Agosto-Alicea, 959 F.2d
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349, 351 (1st Cir. 1992) (quoting Fed. R. Civ. P. 56(c)). When,
as here, the district court has cranked up the machinery of Rule
56, and disposed of a case on that basis, appellate review is
plenary. See Allen v. Adage, Inc., ___ F.2d ___, ___ (1st Cir.
___ _____ ___________
1992) [No. 91-2206, slip op. at 8]; Garside, 895 F.2d at 48.
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Although a dispute over the meaning of a contract is
often a dispute about a material fact, summary judgment is not
necessarily foreclosed in such a situation. See Allen, ___ F.2d
___ _____
at ___ [slip op. at 6]. In some circumstances, "[t]he words of a
contract may be so clear themselves that reasonable people could
not differ over their meaning." Boston Five Cents Sav. Bank v.
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Secretary of Dep't of HUD, 768 F.2d 5, 8 (1st Cir. 1985). This
_________________________
is such an instance: here, long-standing principles of
Massachusetts contract law compel us to conclude that the non-
recourse provision in the 1987 Note neither trumps the plain
language of the Guaranty nor creates an ambiguity in the contract
documents.
III. ANALYSIS
III. ANALYSIS
We begin by reviewing applicable state law. We then
apply that law, explain how federal law is supportive of the
result that we reach, and address appellants' remaining counter-
6
arguments.
A.
A.
__
The instruments at issue here state that they are to be
governed by, and construed in accordance with, the law of
Massachusetts. Under Massachusetts law, when several writings
evidence a single contract or comprise constituent parts of a
single transaction, they will be read together. See Chelsea
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Indus., Inc. v. Florence, 260 N.E.2d 732, 735 (Mass. 1970); see
____________ ________ ___
also Ucello v. Cosentino, 235 N.E.2d 44, 47 (Mass. 1968) (holding
____ ______ _________
that the parties' intent "must be gathered from a fair
construction of the contract as a whole and not by special
emphasis upon any one part"); Chase Commercial Corp. v. Owen, 588
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N.E.2d 705, 707 (Mass. App. Ct. 1992) (construing a guaranty and
contemporaneous loan and security agreements as part of one
transaction and reading them together despite the fact that the
guaranty did not incorporate the other documents by reference).
"The question of whether a contract term is ambiguous
is one of law for the judge." Allen, ___ F.2d at ___ [slip op.
_____
at 6]; accord Boston Five Cents Sav. Bank, 768 F.2d at 8;
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Jefferson Ins. Co. v. Holyoke, 503 N.E.2d 474, 476 n.4 (Mass.
__________________ _______
App. Ct.), rev. denied, 506 N.E.2d 146 (Mass. 1987). A contract
____ ______
is not ambiguous simply because litigants disagree about its
proper interpretation. See Papago Tribal Util. Auth. v. FERC,
___ __________________________ ____
723 F.2d 950, 955 (D.C. Cir. 1983), cert. denied, 467 U.S. 1241
_____ ______
(1984). Rather, a contract, or a set of documents which in the
ensemble comprise a contract, is considered ambiguous only when
7
the language "is reasonably prone to different interpretations."
Fowler v. Boise Cascade Corp., 948 F.2d 49, 54 (1st Cir. 1991).
______ ___________________
Stated another way, contract language which "is susceptible to
differing, but nonetheless plausible, constructions . . . is
ambiguous." Allen, ___ F.2d at ___ [slip op. at 12]; see also
_____ ___ ____
Fashion House, Inc. v. K Mart Corp., 892 F.2d 1076, 1083 (1st
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Cir. 1989).
B.
B.
__
Notwithstanding appellants' unremitting effort to
overshadow the Guaranty by a single-minded focus on the 1987
Note's non-recourse provision, we discern no ambiguity here. The
non-recourse provision unequivocally refers to the "Obligations
of Borrower," namely, Bandon, and to the "personal assets of any
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partner." (Emphasis supplied.) The status of guarantor is
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obviously not implicated either by the word "Borrower" or by the
allusion to "any partner." Any mention of, or reference to, the
appellants qua guarantors is conspicuously lacking.
___
On the other hand, the language of the Guaranty is
plain as a pikestaff. The signatories "unconditionally
guarantee[d]" all liabilities "now existing or hereafter
arising." Nothing in the document package indicates that the
parties later intended to nullify the Guaranty or to restrict its
sweep. Indeed, the parties took pains in the 1987 Amendment to
reaffirm the Guaranty, thus leaving it in full flower. We
believe that, by executing the Guaranty in addition to the
partnership obligation, and by thereafter reaffirming it in
8
conjunction with the loan rewrite, the appellants incurred
liability in two separate and distinct capacities. Cf., e.g.,
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Fred T. Ley & Co. v. Sagalyn, 19 N.E. 2d 687, 689 (Mass. 1939)
__________________ _______
(upholding personal liability of trustees who also signed
guaranty of trust obligations as individuals).
In an effort to stem this inexorable tide, appellants
invite us to infer a construction that would render an express
clause in the documents nugatory. Such an invitation flies in
the teeth of Massachusetts law, which directs courts to give
reasonable effect to each provision of an agreement wherever
feasible. See J.A. Sullivan Corp. v. Commonwealth, 494 N.E. 2d
___ ____________________ ____________
374, 378 (Mass. 1986); McMahon v. Monarch Life Ins. Co., 186
_______ _______________________
N.E.2d 827, 830 (Mass. 1962). "It is a canon of construction
that every word and phrase of an instrument is if possible to be
given meaning, and none is to be rejected as surplusage if any
other course is rationally possible." Tupper v. Hancock, 64
______ _______
N.E.2d 441, 443 (Mass. 1946) (citation omitted). Because
appellants' reading of the documents would render the Guaranty
and the reaffirmation of it surplusage and would do so in the
utter absence of any manifest necessity for so drastic an
outcome5 we cannot accept it.
Moreover, Massachusetts law embraces the maxim
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5There are, of course, sound business reasons why a borrower
might want to free prospective partners from personal liability
even though existing partners remain liable as guarantors. To
cite but one example, doing so would obviously enhance the
partnership's ability to attract new partners to the venture, and
thus, to secure an infusion of fresh capital.
9
"expressio unius est exclusio alterius." Chatham
________________________________________________ _______
Pharmaceuticals, Inc. v. Angier Chem. Co., 196 N.E.2d 852, 854-55
_____________________ ________________
(Mass. 1964). That maxim applies as forcibly to exceptions to an
obligation as to enumerations of the objects embraced by a
contract. See id. Here, the Amendment lists a number of
___ ___
particular alterations in the security instruments without once
mentioning a nullification or diminution of the liabilities
assumed under the Guaranty. In these circumstances, the parties'
failure to provide expressly for modification of the Guaranty
leaves us no choice but to give effect to the Guaranty's
provisions. Courts should not attempt to "accomplish by judicial
fiat what [a party] neglected to achieve contractually." RCI
___
Northeast Servs. Div. v. Boston Edison Co., 822 F.2d 199, 204
_____________________ __________________
(1st Cir. 1987).
To recapitulate, the non-recourse provision limits the
liabilities incurred under the 1987 Note by the appellants acting
as partners of Bandon Associates; it does not limit the separate
and distinct liabilities incurred by the appellants in their
capacities as guarantors. Taken as a whole, there is no
ambiguity; the documents are susceptible only to one plausible
construction. Hence, appellants' suggestion that they intended
the non-recourse provision to qualify the Guaranty is irrelevant.
See, e.g., Fairfield 274-278 Clarendon Trust v. Dwek, ___ F.2d
___ ____ __________________________________ ____
___, ___ (1st Cir. 1992) [No. 91-1729, slip op. at 6-7] (refusing
to subrogate an unambiguous contract provision to the supposed
contemplation of the parties; applying Massachusetts law);
10
Appalachian Power Co. v. FPC, 529 F.2d 342, 348 (D.C. Cir.)
_______________________ ___
(stating that a party may not "reach outside . . . unambiguous
contracts for an argument seeking to impart uncertainty"), cert.
_____
denied, 429 U.S. 816 (1976); Blakeley v. Pilgrim Packing Co., 340
______ ________ ___________________
N.E.2d 511, 514 (Mass. App. Ct. 1976) (similar).
C.
C.
__
The continued enforceability of the Guaranty, according
to its tenor, is not only dictated by state law and by the
incidence of clear and unambiguous language; it is also suggested
by the spirit, if not the letter, of the D'Oench, Duhme
_______________
doctrine.6 As we have said, appellants' basic thesis is that
the non-recourse provision of the 1987 Note implies an intent to
defenestrate the Guaranty. We think that nullification by
implication transgresses the principles animating the D'Oench,
________
Duhme doctrine, both in its common law and statutory variants.
_____
That doctrine is designed to "help the FDIC accurately and
speedily determine an insolvent bank's value." Bateman v. FDIC,
_______ ____
___ F.2d ___, ___ (1st Cir. 1992) [No. 91-1832, slip op. at 12];
accord Commerce Federal Sav. Bank v. FDIC, 872 F.2d 1240, 1245
______ __________________________ ____
(6th Cir. 1989). The doctrine requires that agreements which
would diminish or defeat the FDIC's interest in any asset
acquired by it must fulfill certain requirements. See supra note
___ _____
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6While we agree with our concurring brother that appellants
failed to demonstrate either board or loan committee approval of
any modification of guarantor liability, we believe that the case
is satisfactorily resolved on the grounds previously discussed,
and it is, therefore, unnecessary for us to consider the further
potential ground for affirming summary judgment upon which Judge
Skinner rests his separate opinion.
11
3. By making the value of bank assets readily apparent, these
requirements aid the FDIC in fulfilling its mission. "[I]t is
important that FDIC officials, examining the insolvent bank's
documents, feel they can rely, for valuation purposes, upon the
bank's documents as meaning what they say." Bateman ___ F.2d at
_______
___ [slip op. at 12].
Guaranty obligations are assets of the FDIC within the
meaning of 12 U.S.C. 1823(e). See FDIC v. Virginia Crossings
___ ____ __________________
Partnership, 909 F.2d 306, 312 (8th Cir. 1990); FDIC v. P.L.M.
___________ ____ ______
Int'l, Inc., 834 F.2d 248, 253 (1st Cir. 1987). To allow the
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non-recourse provision inserted in the 1987 Note to nullify the
Guaranty by implication, when the non-recourse language appears
in a document separate from the asset in question and when its
plain words on the surface suggest a far more limited aim, would
undercut the principle that FDIC officials should be able to
assess the value of an insolvent bank's assets from the "official
record[s] of the depository institution." 12 U.S.C.
1823(e)(4).
Appellants' proffer of extrinsic evidence to
demonstrate the parties' ostensible intentions falls victim to
many of the same considerations. Such evidence, not visible to
FDIC officials on the face of the documents to which they must
refer in determining the value of assets they have acquired,
should not, under the D'Oench, Duhme rationale, be permitted to
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contribute covertly to the diminution of these assets. See FDIC
___ ____
v. Merchants Nat. Bank, 725 F.2d 634, 637 (11th Cir.) (noting
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12
that the district court "correctly applied Sec. 1823(e) to
exclude as irrelevant any evidence not found in the records of
the bank and not meeting the statute's strict requirements"),
cert. denied, 469 U.S. 829 (1984); FDIC v. Cardinal Oil Well
_____ ______ ____ __________________
Servicing Co., 837 F.2d 1369, 1372 (5th Cir. 1988) (refusing to
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considerexternalevidencethat didnotmeet 1823(e)'s requirements).7
D.
D.
__
Appellants advance three additional asseverations.
None of them suffices to carry the day.
First, using prior U.C.C. 3-119 as a springboard, and
noting that Massachusetts has adopted the Uniform Commercial
Code, see Mass. Gen. Laws. Ann. ch. 106 (West 1990), appellants
___
urge that, since a direct contradiction exists between the 1987
Note and the Guaranty, the former, being a negotiable instrument,
should be given effect.8 The fly in the ointment is huge:
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7Reliance upon extrinsic evidence is also inappropriate in
light of the longstanding common law rule that where, as here,
the contract is unambiguous, extrinsic evidence as to the meaning
of terms and the intent of the parties should not be considered.
See, e.g., Fairfield, Etc. Trust, ___ F.2d at ___ [slip op. at
___ ____ ______________________
6]; Cardinal Oil, 837 F.2d at 1371; Papago Tribal, 723 F.2d at
_____________ _____________
955; Massachusetts Mun. Wholesale Elec. Co. v. Town of Danvers,
_______________________________________ ________________
577 N.E.2d 283, 289 (Mass. 1991); Blakeley, 340 N.E. 2d at 514.
________
8The language that appellants most cherish is contained in
comment 3:
If there is outright contradiction between [a
separate writing and a negotiable
instrument], as where the note is for $1,000
but the accompanying mortgage recites that it
is for $2,000, the note may be held to stand
on its own feet and not to be affected by the
contradiction.
U.C.C. 3-119 comment 3 (1964). While the corresponding section
13
appellants' exhortation is completely dependent upon the
existence of an "outright contradiction" between the 1987 Note
and the Guaranty and we see none. To the exact contrary, there
is a perfectly natural reading which reconciles the documents and
renders them internally consistent. Thus, the law of
Massachusetts demands that we harmonize the clauses rather than
strain to create an imaginary conflict between the non-recourse
provision and the reaffirmation of the Guaranty. See Truck
___ _____
Drivers, Local 42 v. International Bhd. of Teamsters, 482 F.
__________________ _________________________________
Supp. 266, 271 (D. Mass. 1979) (preferring to read contract
clauses as if they are not in conflict if such an interpretation
is reasonably possible); McMahon, 186 N.E.2d at 830 ("[A]
_______
contract is to be construed to give a reasonable effect to each
of its provisions if possible.").
Next, appellants claim that the loan documents should
be construed against the FDIC because the lender drafted them.
But, this argument is a mere heuristic. Documents should be
construed against the drafter only when the questioned language,
together with the circumstances surrounding its use, creates some
cognizable uncertainty as to intended meaning. See Merrimack
___ _________
Valley Nat'l Bank v. Baird, 363 N.E.2d 688, 690 (Mass. 1977);
_________________ _____
Aldrich v. Bay State Constr. Co., 72 N.E. 53, 54 (Mass. 1904);
_______ ______________________
see also Shea v. Bay State Gas Co., 418 N.E.2d 597, 602 (Mass.
___ ____ ____ __________________
____________________
of revised Article 3 (adopted after the documents at issue here
were drafted) does not retain this comment, see U.C.C. 3-117
___
(1990), the prior version still persists in the Commonwealth.
See Mass. Gen. Laws Ann. ch. 106, 3-119.
___
14
1981) (stating that the rule of construction against the drafter
"must give way to the primary and inflexible rule that . . .
contracts . . . are to be construed so as to ascertain . . . the
true intention of the parties") (citation omitted). In the
absence of ambiguity, non-drafters gain no special advantage.
Appellants' last argument completely contradicts their
original premise. Having unsuccessfully maintained that the 1987
Note and the Guaranty are irreconcilably inconsistent with one
____________
another, they shift gears in their reply brief, maintaining, for
the first time, that the two documents are unnecessarily
duplicative (in other words, consistent with one another). To
__________
this end, they cite Seronick v. Levy, 527 N.E.2d 746, 749 (Mass.
________ ____
App. Ct.), rev. denied, 530 N.E.2d 797 (Mass. 1988), for the
____ ______
broadcast proposition that, where the makers of a note also sign
as guarantors, the guaranty is surplusage and, hence,
unenforceable. Because appellants signed both the 1987 Note and
the Guaranty, they argue, the Guaranty is excess baggage and the
FDIC cannot proceed against them under it.
The facts of this case fail to support such an
overgeneralized argument. Because the Guaranty operates to hold
appellants individually responsible for Bandon's liabilities to
the mortgage lender while the 1987 Note blocks recourse to the
personal assets of partners other than the appellants, the
Guaranty is hardly surplusage. Moreover, the Guaranty is
15
significantly broader than the 1987 Note in certain respects.9
We offer two examples. (1) The Guaranty does not refer to the
repayment of any specific liability in any specific time period,
but rather was clearly meant to secure any liability running from
___
Bandon to the bank. Stated another way, the obligation
undertaken under the Guaranty is not bounded by the term of the
1987 Note or any specific note, for that matter. (2) The
Guaranty, unlike the 1987 Note, also obligates the guarantors to
deliver additional collateral, presumably from personal assets,
"at such time or times as the [lender] may deem itself to be
insecure." These dissimilarities adequately evince that the
Guaranty is not surplusage by any stretch of the most active
imagination. Cf. Ligran, Inc. v. Medlawtel, Inc., 432 A.2d 502,
___ ____________ _______________
505-06 (N.J. 1981) (holding that although a guaranty is often
surplusage when a maker also signs as guarantor, in certain
limited and unusual situations, a maker may enlarge the scope, if
not the duration, of liability by signing as a guarantor).10
____________________
9In other respects, however, the Guaranty is slightly
narrower than the 1987 Note. For example, the Guaranty, unlike
the 1987 Note, specifically contemplates possible revocation by
one or more of the guarantors.
10To be sure, certain states have laws that prohibit or
limit deficiency judgments after foreclosure. To enforce the
policies behind these statutes, courts have frowned on post-
foreclosure deficiency judgments against guarantors who were also
makers. See, e.g., Westinghouse Credit Corp. v. Barton, 789 F.
___ ____ _________________________ ______
Supp. 1043, 1046 (C.D.Cal. 1992) (non-recourse nature of loan to
partnership did not separate guarantor from his normal status as
partner and principal obligor so as to make him a true guarantor
outside the protection of California anti-deficiency law); First
_____
Interstate Bank v. Larson, 475 N.W.2d 538, 542-44 (N.D. 1991)
_______________ ______
(distinction between obligors' joint liability as partners and
their joint and several liability as individual guarantors must
16
IV. CONCLUSION
IV. CONCLUSION
We need go no further. Where, as here, a "transaction
is commercial, the principals practiced and represented by
counsel, and the contract itself reasonably clear, it is far
wiser for a court to honor the parties' words than to imply other
and further promises out of thin air." Mathewson Corp. v. Allied
_______________ ______
Marine Indus., Inc., 827 F.2d 850, 856 (1st Cir. 1987) (applying
____________________
Massachusetts law). On that basis, we are fully satisfied that
we should not venture to rewrite the lender/borrower/guarantor
agreements that underlie this controversy. We are equally
satisfied that, as written, the agreements are clear and
unambiguous. Construed according to their tenor, they warrant
summary judgment in the FDIC's favor.
Affirmed.
Affirmed.
________
Concurrence Follows
____________________
give way to the force of North Dakota's anti-deficiency law).
Massachusetts, however, has no such policy. See Mass. Gen. Laws
___
Ann. ch. 244, 17B (West 1988). Accordingly, we are particularly
reluctant to strip a bona fide guaranty of its intended effect.
17
SKINNER, District Judge, concurring.
I concur in the court's judgment, but write separately
because I am unable to accept the court's conclusion that there
is in fact no conflict between the 1987 Note and the Guarantee.
In my view this issue should not be resolved without an
evidentiary hearing. The result adopted by the court can be
reached by a different route, however.
Congress opted for certainty when it enacted the
categorical recording scheme embodied in 1823(e). Langley v.
__________
FDIC, 484 U.S. 86, 95 (1987). The scope of a court's inquiry
____
into the enforceability of an agreement is limited, and the
court's conclusion depends entirely on the agreement's compliance
or noncompliance with the statute. See id. at 94-95. The
___ __
statute provides that any agreement that "tends to diminish or
defeat the interest of the [FDIC] in any asset acquired" as
receiver is invalid against the FDIC, unless the agreement:
(1) is in writing, (2) was executed by the depository
institution and any person claiming an adverse interest
thereunder, including the obligor, contemporaneously
with the acquisition of the asset by the depository
institution, (3) was approved by the board of directors
of the depository institution or its loan committee,
which approval shall be reflected in the minutes of
said board or committee, and (4) has been,
continuously, from the time of its execution, an
official record of the depository institution.
12 U.S.C.A. 1823(e).
In this case, the district court concluded correctly that the
1985 Guaranty was an "asset" of the FDIC within the meaning of
1823(e). FDIC v. Virginia Crossings Partnership, 909 F.2d 306,
_______________________________________
312 (8th Cir. 1990); FDIC v. P.L.M. Int'l, 834 F.2d 248, 253 (1st
____________________
Cir. 1987). Therefore, in order to defeat or impair the
18
Guaranty, the appellants had the burden of demonstrating that the
1987 Agreement and purported release complied with each of the
four requirements of 1823(e). FDIC v. Rivera-Arroyo, 907 F.2d
_____________________
1233, 1236 (1st Cir. 1990); P.L.M. 834 F.2d at 253.
_____
The statute, among other things, requires both that the
board or loan committee approve the agreement and that such
approval be reflected in the minutes of the board or committee
meeting. 12 U.S.C. 1823(e)(3). Absent evidence of such
approval, the agreement is unenforceable against the FDIC.
P.L.M., 834 F.2d at 253; FDIC v. Eagle Prop., 664 F. Supp. 1027,
_____ __________________
1051 (W.D. Tex. 1985) (holding subordination certificate
unenforceable in spite of general board authorization because
minutes do not specifically approve the certificate); FDIC v.
_______
Gardner, 606 F. Supp. 1484, 1488 (S.D. Miss. 1985) (side
_______
agreement not referenced or affirmatively and directly
acknowledged is unenforceable).
The record is devoid of evidence supporting appellants'
contention that the board or loan committee approved a release or
modification of the guarantors' liability. At oral argument,
appellants conceded that they could point to no document and no
affidavit to demonstrate the requisite approval. But the record
is not silent on this issue. Indeed, far from reflecting a
purported release, both the Loan Committee Minutes and the Loan
Approval Sheet indicate precisely the opposite understanding:
they refer to the four appellants, by name, as "guarantors" of
the new Note. Moreover, the record demonstrates that the
continuing personal guaranties of the appellants were significant
factors in approving the loan. A risk analysis report, attached
19
to the loan approval sheet, twice mentions the "strength" of the
appellants' personal guaranties as mitigating risk factors. It
is clear that no release of personal liability was authorized.
There is no genuine issue of material fact and the FDIC is
entitled to judgment as a matter of law. I therefore join in
affirming the judgment of the district court.
20
The Boston Five Cents Savings Bank v. Secretary of the ... , 768 F.2d 5 ( 1985 )
Rci Northeast Services Division v. Boston Edison Company , 822 F.2d 199 ( 1987 )
Federal Deposit Insurance Corporation v. P.L.M. ... , 834 F.2d 248 ( 1987 )
Mathewson Corporation v. Allied Marine Industries, Inc., ... , 827 F.2d 850 ( 1987 )
Fashion House, Inc. v. K Mart Corporation, Fashion House, ... , 892 F.2d 1076 ( 1989 )
mark-a-fowler-and-famah-fowler-v-boise-cascade-corporation-and-third , 948 F.2d 49 ( 1991 )
Papago Tribal Utility Authority v. Federal Energy ... , 723 F.2d 950 ( 1983 )
Commerce Federal Savings Bank v. Federal Deposit Insurance ... , 872 F.2d 1240 ( 1989 )
Federal Deposit Insurance Corp., in Its Corporate Capacity ... , 837 F.2d 1369 ( 1988 )
federal-deposit-insurance-corporation-in-its-corporate-capacity-v , 909 F.2d 306 ( 1990 )
D'Oench, Duhme & Co. v. Federal Deposit Insurance , 62 S. Ct. 676 ( 1942 )
Langley v. Federal Deposit Insurance , 108 S. Ct. 396 ( 1987 )
Federal Deposit Insurance v. Eagle Properties, Ltd. , 664 F. Supp. 1027 ( 1985 )
Federal Deposit Ins. Corp. v. Gardner , 606 F. Supp. 1484 ( 1985 )