$ 1 million to Tax Investments. Harris executed a $ 1 million Personal Guaranty of the loan. On the same day, FSB and Sun Savings entered into a Loan Participation Agreement in which FSB sold ninety-five percent participation in the $ 1 million loan to Sun Savings.
On July 18, 1986, the Federal Savings and Loan Insurance Corporation ("FSLIC") was appointed receiver for Sun Savings pursuant to 12 U.S.C. § 1729(c)(2). In 1989, the FDIC, as manager of the FSLIC Resolution Fund, replaced the FSLIC as receiver for Sun Savings.
Plaintiffs have not made any payments on the loan since August 1, 1986. Plaintiffs say that its failure to pay on the loan was due to the FDIC's refusal to fund the perfection of unredeemed tax certificates after the two year redemption period had expired. Plaintiffs assert that Sun Savings was aware that plaintiffs sought funding for both steps of a two-step process: First, Tax Investments would purchase liens and obtain tax certificates on properties with unpaid real estate taxes. Second, after a two year redemption period expires, Tax Investments would obtain a deed to the real property by perfecting any tax certificates which had not been redeemed by the property owners. According to plaintiffs, Sun Savings had assured plaintiffs at the time of the initial loan that Sun Savings would loan additional funds to them so that Tax Investments could accomplish the second step -- perfecting unredeemed tax certificates upon expiration of the two-year redemption period.
Specifically, plaintiffs assert that a loan commitment letter "reflects our understanding that Sun Savings would also fund the perfection of tax certificates" and that Harris wrote a letter to Sun Savings "expressing our understanding about what would happen on certificates which were not redeemed." (Harris Aff., paras. 6-7.) The FSLIC, as receiver for Sun Savings, refused to fund a new loan to perfect the tax certificates. (Id. at para. 10.)
The FDIC, as receiver for Sun Savings, has moved for summary judgment on (1) the complaint filed by plaintiffs and (2) FDIC's counterclaim against plaintiffs.
Under Rule 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In ruling on a motion for summary judgment the evidence of the non-movant must be believed, and all justifiable inferences must be drawn in the non-movant's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986).
I. SUMMARY JUDGMENT ON THE COMPLAINT
The FDIC contends that there is no agreement in the loan documents that Sun Savings would loan additional funds to plaintiffs so that Tax Investments could perfect unredeemed tax certificates. Even if an agreement to so fund exists, the FDIC contends that D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S. Ct. 676, 86 L. Ed. 956 (1942), and 12 U.S.C. § 1823(e) bar the enforcement of any unrecorded agreement of Sun Savings against the FDIC. Plaintiffs argue that a letter written by Harris to Sun Savings reflects the parties' agreement about future loans, that D'Oench is inapplicable here, and, in any event, Paragraph 11 of the loan commitment letter allows the additional funding requested by plaintiffs.
In D'Oench, the Supreme Court held as a matter of federal common law that an agreement that "was designed to deceive the creditors or the public authority or would tend to have that effect" was not enforceable against the FDIC if the result would be to impair the value of its asset. 62 S. Ct. at 681. In 1950, Congress codified in 12 U.S.C. § 1823(e) the principle established in D'Oench.1 See Federal Deposit Ins. Corp. v. Venture Contractors, Inc., 825 F.2d 143, 148 (7th Cir. 1987). The purpose behind § 1823(e)
is to enable the FDIC, in deciding to proceed with respect to a troubled bank, to make a quick and certain inventory of the bank's assets. It can do that only if it can disregard secret oral agreements that may impair the value of those assets..