FDIC v. Davis

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-40553
FEDERAL DEPOSIT INSURANCE
CORPORATION, as receiver for
Southwest Bank, Jennings, Louisiana;
SOUTHWEST BANK,
Plaintiffs - Appellees,
versus
VIRGINIA DAVIS
Defendant - Appellant.
Appeal from the United States District Court
For the Eastern District of Texas
(No. 3:00-CV-32)
June 5, 2002
Before KING, Chief Judge, and PARKER and CLEMENT, Circuit Judges.
PER CURIAM:*
Defendant-Appellant Virginia Davis appeals the district
court’s granting summary judgment for the FDIC. For the
following reasons, we AFFIRM.
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
This matter arises from Davis’s default on a loan guaranteed
by the Farmers Home Administration, now known as the Farm Service
Agency or FSA. Southwest Bank of Jennings, Louisiana (“the
bank”), acted as the lender, for which it received a 90%
guarantee from the FSA. Pursuant to the guarantee, FSA must
repurchase the guaranteed portion of the loan in the event of
Davis’s default if the bank or a holder of the note so requests.
In any event, the bank remains responsible for servicing the
loan.
The bank filed suit in state court following Davis’s
default. Davis had secured the note using farm equipment and
livestock as collateral. The state court enjoined Davis from
divesting any of it. Thereafter, FSA repurchased the guaranteed
portion of Davis’s loan, and after that, the bank was declared
insolvent. The Federal Deposit Insurance Corporation (“FDIC”)
was substituted for the bank as its receiver and removed the
action to federal court pursuant to 12 U.S.C. § 1819(b)(2)(A).
It then moved for summary judgment, which the district court
granted. The court awarded the FDIC the unpaid principal on the
note, $227,369.46, plus $75,358.64 in interest.
On appeal, Davis, now proceeding pro se, again argues that
the FDIC cannot be the holder or owner of the note because it was
repurchased by the FSA before the FDIC was substituted as the
bank’s receiver. In other cases, we have concluded that
uncertainty regarding a receiver’s status as holder or owner
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supports the debtor’s claim that it has a “legitimate fear” of
being subjected to double recovery. For example, in FDIC v.
Selaiden Builders, Inc., 973 F.2d 1249 (5th Cir. 1992), the FDIC
came into possession of a note apparently endorsed to another.
There, we held that the FDIC’s failure to offer evidence tending
to negate any third-party claim to the note in question created
an issue of fact regarding the FDIC’s rightful status. Id. at
1255. In another case, FDIC v. McCrary, 977 F.2d 192 (5th Cir.
1993), the evidence showed that the FDIC, acting as receiver, had
sold unspecified assets in an insolvent bank to a third party.
We there held that uncertainty regarding which assets the FDIC
divested itself of created a question of material fact whether
the FDIC was in fact the holder or owner of the note it was suing
on. Id. at 195.
In this case, there is no evidence that the FDIC sold any of
Southwest Bank’s assets or that another party was the endorsee to
Davis’s note. But more importantly, the FSA’s repurchasing the
guaranteed portion of the note is not an event that affects
Davis’s obligations to the bank, and now to the FDIC. As we
noted at the outset, Davis must continue paying the bank (or its
successor) whether the FSA reacquires the guaranteed portion of
Davis’s loan or not. Following repurchase, the bank retains the
note, as well as all other documentation evidencing the loan, the
note remains payable to the bank, and the bank continues to
service and collect on the loan. In this way, the FSA does not
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attain the status of a holder or owner of Davis’s note. A third-
party to a note cannot recover under it unless the same at least
has possession of it or the note has been endorsed over to him.
As neither of these conditions are met here--nor will they ever
be--Davis has not demonstrated a legitimate fear that she might
be subjected to double recovery, at least not as between the FSA
and FDIC. We therefore conclude that summary judgment for the
FDIC was proper.
AFFIRMED.
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