Uhlig v. Darby Bank & Trust Co. et al

Filing 24

ORDER granting 16 Motion for Summary Judgment. Uhlig's claims agaonst FDIC are dismissed. Uhlig's claims against Drayprop, LLC, Draypark LLC, Michael Brown, Reuben Croll, and Marley Management, Inc. remain pending. Signed by Judge B. Avant Edenfield on 1/4/2012. (loh)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
THOMAS UHLIG,
Plaintiff,
v.

4:11-cv-145

FEDERAL DEPOSIT INSURANCE
CORPORATION, as Receiver of the
business and property of DARBY BANK
& TRUST CO., DRAYPROP, LLC,
DRAYPARK, LLC, MICHAEL
BROWN, REUBEN CROLL, and
MARLEY MANAGEMENT, INC.,
Defendants.
ORDER
I. INTRODUCTION
Before the Court is Defendant Federal
Deposit Insurance Corporation’s (“FDICR”) motion for summary judgment. See
Doc. 16.
II. FACTS
On February 8, 2010, Plaintiff Thomas
Uhlig (“Uhlig”) filed this lawsuit in state
court against Defendants Darby Bank &
Trust Co. (“Darby Bank”), Drayprop, LLC,
Draypark, LLC, Michael Brown, Reuben
Croll, and Marley Management, Inc.
(collectively, “Defendants”), arising from
the purchase of two Drayton Towers units in
Savannah, Georgia. See Doc. 1-2 at 2-10.
Uhlig claims that, in purchasing the two
units, he relied upon Defendants’
representations regarding the completion of

infrastructure for the Drayton Towers
project. See id. at 4.
Uhlig claims that he relied upon a
statement within a letter written by Salita R.
Hill (“Hill”), formerly the Vice-President of
Darby, to Mr. Richard Mopper of MopperStapen Realtors in May 2005. See Doc. 171 at 13. The letter confirmed “that Darby
Bank & Trust Company will guarantee the
availability of funds up to the amount of
$1,500,000.00.” Id. The letter further stated
that “should Drayprop, L.L.C. fail to
perform in the specified time period ending
March 1, 2006, the remaining funds will be
released as necessary to the Drayton Tower
Condominium Association to complete
items as required.” Id. According to Uhlig,
this letter was incorporated into Uhlig’s
closing. See Doc. 17-1 at 7. The letter is
signed only by Hill, and was not reviewed or
approved by anyone else at Darby prior to
its issuance. See id. at 13, 15, 17.
Uhlig further alleges that Darby Bank
mishandled these funds, and that Uhlig
incurred damages as a result of Darby’s
misfeasance and the incomplete state of the
Drayton Towers infrastructure. See Doc. 12 at 5.
Uhlig avers that work remains largely
incomplete and that no funds were ever
released. See Docs. 1-2 at 4-5; 20 at 2.
On November 12, 2010, the Georgia
Department of Banking and Finance closed
Darby Bank, took possession of it, and
appointed the FDIC as Darby Bank’s
receiver. See Doc. 1 at 2. After a brief
return to state court, the case is back before
this Court with the FDIC having been

genuine ‘if the evidence is such that a
reasonable jury could return a verdict for the
nonmoving party.’” Four Parcels, 941 F. 2d
at 1437 (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)). A fact is
material only if it might affect the outcome
of the suit under governing law. See
Anderson, 477 U.S. at 248.

substituted as a party for Darby Bank. See
Docs. 12; 15.
III. ANALYSIS
The FDIC-R has moved for summary
judgment as to all of Uhlig’s claims pending
against it. See Doc. 16.
A. Summary Judgment Standard

B. D’Oench and § 1823(e)

“The court shall grant summary
judgment if the movant shows that there is
no genuine dispute as to any material fact
and the movant is entitled to judgment as a
matter of law.” F ED. R. C IV. P. 56(a). In
ruling on summary judgment, the Court
views the facts and inferences from the
record in the light most favorable to the nonmoving party. See Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986); United States v. Four Parcels of
Real Prop. in Greene & Tuscaloosa Cntys.,
941 F.2d 1428, 1437 (11th Cir. 1991).

The FDIC-R contends that Uhlig’s
claims are precluded by 12 U.S.C. §§
1823(e) and 1821(d)(9)(A) because they are
not based upon a fully executed, properly
documented agreement that constitutes an
official record of Darby Bank. See Doc. 17
at 6. Uhlig bases his claims against Darby
entirely upon the Hill letter. See Doc. 17-1
at 7.
In D ’Oench, Duhme & Co. v. FDIC, the
Supreme Court held that a securities dealer,
who executed a demand note with a bank
that was subsequently acquired by the FDIC,
could not keep the FDIC from enforcing the
agreement. 315 U.S. 447, 459, 461-62
(1942). The Court held that a secret,
unrecorded agreement could not operate as a
defense against the FDIC’s lawsuit. See id.

“The moving party bears ‘the initial
responsibility of informing the . . . court of
the basis for its motion, and identifying
those portions of the pleadings, depositions,
answers to interrogatories, and admissions
on file, together with the affidavits, if any,
which it believes demonstrate the absence of
a genuine issue of material fact.’” Four
Parcels, 941 F.2d at 1437 (quoting Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986))
(internal quotation marks removed).

Current application of the D ’Oench
doctrine “depends upon whether the
purported agreement relied upon by the
private party was ever memorialized in
writing or otherwise made explicit such that
. . . the FDIC would have knowledge of the
bank's obligations during an evaluation of
the bank's records.” FDIC v. McCullough,
911 F.2d 593, 600 (11th Cir. 1990).

The nonmoving party then “may not rest
upon the mere allegations or denials of the
[nonmoving] party’s pleadings, but . . . must
set forth specific facts showing that there is
a genuine issue for trial.” Gonzalez v. Lee
Cnty. Hous. Auth., 161 F.3d 1290, 1294
(11th Cir. 1998). “A factual dispute is

D ’Oench applies when the FDIC acts as
a receiver. See Murphy v. FDIC, 208 F.3d
959, 963 (11th Cir. 2000).
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D ’Oench ’s statutory complement is
codified at 12 U.S.C. § 1823. This section
provides:

12 U.S.C. § 1821(d)(9) states that “any
agreement which does not meet the
requirements set forth in section 1823(e) of
this title shall not form the basis of, or
substantially comprise, a claim against the
receiver or the [FDIC].”

No agreement which tends to
diminish or defeat the interest of [the
FDIC] in any asset acquired by it . . .
as receiver of any insured depository
institution, shall be valid against the
[FDIC] unless such agreement—(A)
is in writing, (B) 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, (C) 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 (D) has been,
continuously, from the time of its
execution, an official record of the
depository institution.

“[C]ourts have found the aims of section
1823(e) and D ’Oench identical and thus
have construed defenses premised upon
section 1823(e) and D ’Oench in tandem.”
Twin Const., 925 F.2d at 382 .
Applying D ’Oench and § 1823(e) in
tandem, the Court determines that Uhlig
cannot bring his claims against the FDIC-R.
In order for a writing to be enforceable
against the FDIC-R, the writing must be
executed (signed) by both the depository
institution and the interested party. See 12
U.S.C. § 1823(e)(1)(B). Uhlig did not sign
the writing upon which he bases his claims.
The undisputed evidence in the record
indicates that the letter was neither approved
by Darby Bank’s board of directors nor
recorded in any minutes. See Doc. 17-1 at
15, 17; see also 12 U.S.C. § 1823(e)(1)(C)(D) (requiring board approval and minute
recordation). Finally, there is no evidence
even suggesting that the letter was an
official record.
See 12 U.S.C. §
1823 (e)( 1 )(D) (mandating official
recordation). There is simply no evidence in
the record indicating that the FDIC-R would
have knowledge of the Hill letter during an
evaluation of Darby Bank’s records as
D ’Oench requires.

12 U.S.C. § 1823(e)(1). In the context of
section 1823(e)(1)(B), “executed” means
“signed.” See Twin Const., Inc. v. Boca
Raton, Inc., 925 F.2d 378, 384 (11th Cir.
1991).
The burden of establishing that an
agreement satisfies § 1823(e)(1)’s
requirements lays with the party claiming
the adverse interest. See, e.g., FDIC v.
Oldenburg, 34 F.3d 1529, 1551 (10th Cir.
1994); Hanson v. FDIC, 13 F.3d 1247,
1253 (8th Cir. 1994); see also FDIC v. Gulf
Life Ins. Co., 737 F.2d 1513, 1516 (11th Cir.
1984).

Uhlig bore the burden of proving that the
Hill letter satisfied § 1823(e)(1). Uhlig has
not carried this burden. Hence, the Hill

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Letter is not enforceable against the FDICR.

interrogatory answer that identifies the letter
as the sole source of Uhlig’s grievance. See
Doc 17-1 at 7 (“Please identify with
specificity each and every representation
made by this defendant to Plaintiff upon
which you relied as alleged in Count I of
your Complaint. Response: The
representations were made in this case by
Defendant in its letter to Mopper Stapen of
May 20, 2005, which was incorporated into
Plaintiff's closing and representations made
by Mssrs. Brown and Mopper ‘parrotting’
the letter of May 20, 2005.”).

Uhlig contends that § 1823(e)(1) will not
bar his claims after he voluntarily amends
his complaint to comply with the parameters
of an insurance policy maintained by Darby
Bank . See Doc. 20 at 3-4. He claims that
enforcing the letter against Darby Bank and
the FDIC-R will not “diminish or defeat” the
FDIC-R’s interest in Darby Bank because
the insurance company will pick up the tab.
See Doc. 16-2 at 13-14; see also 12 U.S.C. §
1823(e)(1).

Uhlig then indicates that the record is
unclear as to whether the Hill letter and the
loan agreement satisfy the requirements of §
1823(e)(1). See Doc. 20 at 4. According to
Uhlig, § 1823(e)(1)’s applicability in this
case involves questions of fact that are not
appropriate for summary judgment. See id.

Congress’s use of the word “tends”
demonstrates the needlessness of an exact
determination of whether the FDIC-R’s
interest in a particular asset is diminished or
defeated in each case. Enforcement of a
promise to make $1,500,000 available
would certainly “ tend[] to diminish or defeat
the interest” of the FDIC-R, regardless of
whether the FDIC-R would see an actual
diminution in value of its assets in this case.
Because a tendency to defeat or diminish is
all that is required for application of the
statute, a precise computation of the FDICR’s net loss or gain in a particular case is
unnecessary. See, e.g., Talmo v. FDIC, 782
F. Supp. 1538, 1540 (S.D. Fla. 1991)
(looking at type of agreement and
considering its tendency to diminish rights
generally, not its actual diminution of the
FDIC’s interest in that particular case).
Thus, Uhlig’s argument is unpersuasive.

Uhlig’s argument ignores the principle
that the burden of satisfying § 1823(e)(1)’s
requirements belongs to him. See, e.g.,
Oldenburg, 34 F.3d at1551; Hanson, 13
F.3d at 1253. Uhlig has not presented
evidence sufficient to fall within §
1823(e)(1)’s exception. Uhlig’s failure to
meet his burden is fatal to his claims against
the FDIC-R.
Therefore, D ’Oench and § 1823 operate
to bar Uhlig’s claims against the FDIC in its
capacity as receiver. Uhlig’ s claims against
the FDIC-R are DISMISSED.
C. Equitable Relief and Punitive
Damages

Uhlig also argues that his claims are
based on both the Hill letter and a loan
agreement between himself and Darby
Bank. See Doc. 20 at 4-5. This argument,
however,
conflicts
with
Uhlig’s

The FDIC-R also requests that the Court
dismiss any claims for equitable relief or
punitive damages that are pending against
the FDIC-R. 12 U.S.C. § 1821(j) provides
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that “no court may take any action, except at
the request of the Board of Directors by
regulation or order, to restrain or affect the
exercise of powers or functions of the
Corporation as a conservator or a receiver.”
12 U.S.C. § 1825(b)(3) provides that the
FDIC-R, “shall not be liable for any
amounts in the nature of penalties.”
Upon reviewing the complaint, the Court
determines that Uhlig seeks neither punitive
damages nor equitable relief against the
FDIC-R. Accordingly, the Court need not
pursue the FDIC-R’s request further.
IV. CONCLUSION
The FDIC-R’s Motion for Summary
Judgment is GRANTED. Uhlig’s claims
against FDIC-R are DISMISSED. Uhlig’s
claims against Drayprop, LLC, Draypark
LLC, Michael Brown, Reuben Croll, and
Marley Management, Inc. remain pending.
This 4th day of January 2012.

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4:i"

/t14V
R AVANT EDFNFIELO, JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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