USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
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No. 95-1641
FEDERAL DEPOSIT INSURANCE CORPORATION, AS
RECEIVER OF NEW BANK OF NEW ENGLAND, N.A.,
Plaintiff, Appellee,
v.
DONALD L. LEBLANC AND LEBLANC ASSOCIATES, INC.,
Defendants, Appellants.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Bownes, Senior Circuit Judge,
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and Boudin, Circuit Judge.
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Robert B. Fredericks for appellants.
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Lawrence H. Richmond, with whom Ann S. DuRoss and Colleen B.
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Bombardier were on brief for appellee.
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June 6, 1996
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BOWNES, Senior Circuit Judge. This appeal concerns
BOWNES, Senior Circuit Judge.
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federal banking law and the scope of the federal estoppel
doctrine established by the Supreme Court's decision in
D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942), and 12
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U.S.C. 1823(e). Defendant-appellant Donald L. LeBlanc
seeks review of the district court's order granting the
FDIC's motion for summary judgment. The district court held
that the defenses and counterclaims LeBlanc raised in
response to the FDIC's affirmative suit to recover the
deficiency owed on a mortgage note he and his company,
LeBlanc Associates, (collectively "LeBlanc") executed on
January 5, 1989, were barred by both Massachusetts law and
the D'Oench doctrine. We affirm this decision, but on
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slightly different grounds than those articulated by the
district court. Title 28 U.S.C. 1291 provides
jurisdiction.
I.
I.
BACKGROUND
BACKGROUND
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For the purpose of reviewing the district court's
grant of summary judgment, we summarize the facts in the
light most favorable to the nonmoving party. Levy v. FDIC, 7
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F.3d 1054, 1056 (1st Cir. 1993). In 1987, appellant acquired
the 54-acre parcel at issue in this case. The parcel, which
is located in Falmouth, Massachusetts, and abuts a 900-acre,
partially-completed, residential community called Falmouth
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Woods, is accessible by only one road, Falmouth Woods Road.
Though appellant purchased the parcel without first obtaining
a right of way over Falmouth Woods Road, his intent was
ultimately to acquire such an easement and to develop his
parcel into a six-lot, multifamily subdivision called
Prospect Hills. At the time LeBlanc purchased the property,
both the Falmouth Woods development and Falmouth Woods Road,
which fronts the LeBlanc parcel's western boundary, were
owned by the Falmouth Woods Development Corporation ("FWDC"),
a Massachusetts corporation.
On January 5, 1989, to finance development of the
Prospect Hills parcel, LeBlanc obtained a $750,000.00 loan
from the Bank of New England South, N.A., which later merged
into Bank of New England, N.A. ("BNE"). The loan, which both
parties agree was not conditioned upon LeBlanc's acquiring an
easement across Falmouth Woods Road, was secured by a
personal guaranty note executed by LeBlanc and a mortgage on
the 54-acre parcel. Payment on the note was to be monthly,
beginning in February of 1989, with the provision that the
principal balance, plus accrued and unpaid interest, were to
be paid by January 4, 1992.
LeBlanc obtained approval and a permit for the
Prospect Hills subdivision from the Falmouth Planning Board
and, in the Fall of 1989, began meeting with FWDC to discuss
securing access rights over Falmouth Woods Road. During
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negotiations, FWDC verbally agreed to grant LeBlanc an
easement for utilities and right of way across Falmouth Woods
Road. A written agreement regarding the easement, however,
was never prepared. Before the sale of the easement could be
recorded, FWDC began experiencing financial difficulties and
filed for Chapter 11 bankruptcy in March of 1990.
BNE, which had loaned FWDC $28 million prior to
extending LeBlanc the loan to develop Prospect Hills and, as
a result, held a mortgage in the Falmouth Woods property,
sought and obtained relief from the automatic stay placed on
FWDC's estate as a result of the bankruptcy filing. BNE
operated the Falmouth Woods property as a mortgagee in
possession, briefly continuing service at the Falmouth Woods
golf course, and tried to sell Falmouth Woods subdivision
lots. It eventually foreclosed its mortgage and purchased
the property at the subsequent foreclosure sale. Because
FWDC's mortgage did not include the fee interest in Falmouth
Woods Road, the foreclosure sale purchase left BNE with title
to Falmouth Woods and an easement over Falmouth Woods Road.
The fee interest in the road remained with the bankruptcy
trustee assigned to manage FWDC's assets.
The Falmouth Woods property changed hands several
times after BNE's foreclosure-sale purchase, thwarting
LeBlanc's efforts to obtain an easement over Falmouth Woods
Road. In September 1990, BNE transferred the Falmouth Woods
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property to its wholly-owned subsidiary, Falmouth Land
Company ("FLC"). In January 1991, the Comptroller of the
Currency of the United States of America ("COC") declared BNE
insolvent and appointed the FDIC receiver of BNE. The COC
also chartered the New Bank of New England, N.A. ("NBNE"),
pursuant to 12 U.S.C. 1821(n), as a bridge bank to acquire
the assets formerly held by BNE. Thus, NBNE held title to
the FWDC property, as well as LeBlanc's $750,000.00 note and
guaranty from January to July of 1991.
On July 13, 1991, the COC dissolved NBNE and
appointed the FDIC as receiver of the bank, pursuant to 12
U.S.C. 1821(n)(12). The FDIC then acquired Falmouth Woods
and assumed the note and the mortgage on the LeBlanc parcel.
On August 13, 1991, the FDIC took title to the fee interest
in Falmouth Woods Road in the name of FLC, the NBNE
subsidiary. NBNE had purchased the fee interest in Falmouth
Woods Road from the FWDC's bankruptcy trustee in May 1991.
LeBlanc pursued his easement request with each of
Falmouth Woods's owners because the Prospect Hills parcel,
initially appraised at $1,980,000.00, was virtually worthless
without access to Falmouth Woods Road. Negotiations with
BNE, FLC, and Oak Tree Capitol ("Oak Tree"), a company which
functioned as asset manager for both FLC and BNE, were
unsuccessful. Attempts to obtain a right of way from NBNE
and the FDIC were also unsuccessful, primarily because both
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entities engaged in actions which blocked LeBlanc's
acquisition efforts. NBNE contested LeBlanc's efforts to
resolve his road access problems through direct negotiations
with the FWDC bankruptcy trustee and was ultimately
successful in outbidding LeBlanc for the fee interest in
Falmouth Woods Road. According to LeBlanc, NBNE officials
also misrepresented the fact that they were marketing the
Falmouth Woods property without reservation of rights or
notice of claims. LeBlanc further asserts that NBNE
attempted to accelerate payment on his note by declining to
honor a loan commitment made to another LeBlanc development
entity, DDM Development Corporation ("DDM"), and making an
easement across Falmouth Woods Road contingent upon increased
collateralization of the note or a reduction in principal.
LeBlanc imputes a similar bad intent to the FDIC, which
failed to convey him an easement during work-out negotiations
on the note.
Payments on LeBlanc's $750,000.00 note were current
and regular until the Fall of 1991. Then, in a November 13,
1991, letter, LeBlanc informed the FDIC, which held title to
Falmouth Woods and Falmouth Woods Road at that time, that its
refusal to convey the requested easement entitled him to
discontinue payments on the $750,000.00 note and that he
would not resume payments until the easement matter was
resolved. On November 21, 1991, the FDIC made a demand for
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full payment of the outstanding note balance. When LeBlanc
failed to make the requested payment, the FDIC, on August 7,
1992, foreclosed and sold the Prospect Hills property for
$235,000.00 at auction. Appellant's son, Mark LeBlanc, as
Trustee of the McAuliffe Nominee Trust, purchased the
property. The deficiency due on LeBlanc's note, the subject
of the instant appeal, has not yet been paid.
II.
II.
PROCEDURAL HISTORY
PROCEDURAL HISTORY
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On June 19, 1992, the FDIC filed an action in the
District Court for the District of Massachusetts, seeking the
deficiency balance on LeBlanc's note. On August 21, 1992,
LeBlanc filed an answer and three count counterclaim,
alleging that the FDIC's refusal to grant LeBlanc an easement
across Falmouth Woods Road violated state law. Count I of
the counterclaim alleged that the FDIC's actions breached the
implied covenant of good faith and fair dealing implicit in
all contracts made under Massachusetts law. See Mass. Gen.
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L. ch. 106 1-203 (1990). Count II alleged a breach of
contract under Mass. Gen. L. ch. 106 9-106, which governs
secured transactions. Count III raised claims in tort for
intentional infliction of emotional distress.
On February 17, 1993, before a magistrate judge,
the FDIC moved for judgment on the pleadings, pursuant to
Fed. R. Civ. P. 12(c), and argued that the federal estoppel
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doctrine established by the Supreme Court's decision in
D'Oench, Duhme & Co. v. FDIC, 315 U.S. at 447, and 12 U.S.C.
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1823(e) barred LeBlanc from asserting his defenses and
three counterclaims. LeBlanc contended that neither section
1823(e) nor the common law D'Oench doctrine it codifies
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preempted his counterclaims. He maintained that, under
Massachusetts common law and the Uniform Commercial Code
("UCC"), the duties allegedly breached by the FDIC arose out
of the performance and administration of the note and not out
of an unauthorized side agreement.
In a May 13, 1993, order, the magistrate judge
allowed, in part, and denied, in part, the FDIC's Rule 12(c)
motion. The court found that the principal allegations
raised by LeBlanc's counterclaims rested on an "implied" and,
under the D'Oench doctrine, unenforceable "agreement that the
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FDIC affirmatively assist LeBlanc . . . in [his] attempt to
acquire a right of way over the road." It, therefore,
dismissed those allegations in counts I and III of
appellant's counterclaim which relied on that agreement,
holding that all other allegations, taken as true, were
legally sufficient to survive Rule 12(c).
The magistrate judge ruled that count II of
appellant's counterclaim, which was based on Mass. Gen. L.
ch. 106 9-507 and focused on the FDIC's conduct at the
August 1991 foreclosure auction, survived the Rule 12(c)
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motion because, unlike counts I and III, it was based
exclusively on state law. She did not, however, attempt to
resolve that claim because she found the information
available to her insufficient to decide the commercial
reasonableness of the FDIC's foreclosure actions. Finally,
the magistrate judge rejected the FDIC's claim that a federal
common law rule barring LeBlanc's claims should be fashioned.
She found that LeBlanc's counterclaim was procedurally
deficient because he failed to seek leave to name the FDIC as
a counterclaim-defendant in its corporate capacity.
On August 13, 1993, the district court issued an
order accepting the Report and Recommendation of the
magistrate judge, with two modifications. It dismissed
LeBlanc's counterclaims against the FDIC in its corporate
capacity and reserved the issue of which party bears the
burden of proof on matters of "commercial reasonableness" for
later determination. The FDIC filed a motion for summary
judgment against LeBlanc on July 22, 1994.
On October 27, 1994, the district court issued an
order allowing summary judgment for the FDIC on its
affirmative claim for the deficiency due on the note and
post-judgment interest. The district court agreed with the
magistrate judge's determination that the federal estoppel
doctrine barred much of LeBlanc's answer and concluded that
"LeBlanc has presented no defense that would excuse his
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default." The court also granted the FDIC's summary judgment
motion with respect to appellant's three-count counterclaim.
It reaffirmed the magistrate judge's conclusion that
appellant's counterclaims were barred to the extent that they
were based on a side agreement or affirmative duty and,
consequently, only considered the state law issues which
survived the magistrate judge's order.
Without deciding whether D'Oench and section
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1823(e) permit claims based on terms implied in an agreement
as a matter of state law, the district court held that
appellant's allegations, even if true, did not constitute a
breach of the implied covenant of good faith and fair
dealing. Noting that Massachusetts law does not impose a
duty to enter into a contract, the court rejected appellant's
claims that it was inappropriate for the FDIC to compete with
LeBlanc or to use the fee interest in Falmouth Woods Road as
a bargaining chip in its negotiations with appellant.
The court also held that LeBlanc's claim that the
FDIC failed to handle its secured collateral, the Prospect
Hills parcel, in accordance with Mass. Gen. L. ch. 106 9-
507, could not stand because that statute does not govern
secured transactions where the security is real property.
Finally, the district court granted summary judgment on
appellant's intentional infliction of emotional distress
counterclaim. It concluded that the FDIC's actions did not
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amount to extreme and outrageous behavior within the meaning
of Massachusetts tort law, though it acknowledged that the
FDIC's actions in attempting to trade an easement in Falmouth
Woods Road "may [have] constitute[d] rather hard-nosed
business." The court entered its judgment on May 8, 1995,
and this appeal followed.
III.
III.
DISCUSSION
DISCUSSION
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We review the district court's grant of summary
judgment de novo, EEOC v. Green, 76 F.3d 19, 23 (1st Cir.
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1996), but may affirm on any independently sufficient ground.
Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991),
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cert. denied, 504 U.S. 985 (1992); see also Fed. R. Civ. P.
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56(c). We do not consider the issues presented by
appellant's intentional infliction of emotional distress and
Mass. Gen. L. ch. 106, 9-507 counterclaims. Appellant
failed to heed our oft-articulated warning that "issues
averted to in a perfunctory manner, unaccompanied by some
effort at developed argumentation, [will be] deemed waived
for purposes of appeal." Grella v. Salem Five Cent Sav.
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Bank, 42 F.3d 26, 36 (1st Cir. 1994); see also Executive
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Leasing v. Banco Popular De Puerto Rico, 48 F.3d 66, 68 (1st
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Cir.)(On appeal, "[w]e will not rely upon arguments and
allegations that are developed only in the district court
pleadings."), cert. denied, 116 S. Ct. 171 (1995).
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Nor do we consider those counterclaim I issues
which the district court held hinged on an affirmative
obligation or implied agreement that the FDIC assist
appellant in obtaining a right of way over Falmouth Woods
Road. Appellant did not object to the magistrate's decision
and, therefore, waived his right to appeal the district
court's order on this question. See Henley Drilling Co. v.
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McGee, 36 F.3d 143, 150-51 (1st Cir. 1994); see also 28
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U.S.C. 636 (b)(1)(C); Fed. R. Civ. P. 72(b). We concern
ourselves solely with LeBlanc's defense to the FDIC's
affirmative claims and those counterclaim I arguments which
the district court held survived D'Oench and section 1823(e).
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For the sake of convenience, we use "FDIC" to refer to both
the FDIC in its capacity as receiver and its predecessors in
interest.
LeBlanc's Defense to the FDIC's Affirmative Claims
LeBlanc's Defense to the FDIC's Affirmative Claims
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The district court granted summary judgment on the
FDIC's claim for the deficiency due on the $750,000.00 note
and entered judgment in favor of the FDIC in the amount of
$686,942.78, plus post-judgment interest. On appeal, LeBlanc
argues that the district court erroneously held that D'Oench
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and section 1823(e) barred his defense that the FDIC, as
receiver of NBNE, breached its obligation to perform the
terms of the loan agreement in good faith, see Mass. Gen. L.
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ch. 106 1-203, by competing with him for the fee interest
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in Falmouth Woods Road. He contends that his defense of
economic coercion concerns the value of the $750,000.00 note
and not his failed attempts to secure a right of way.
On this point, we discern no error in the district
court's analysis. Without deciding whether breach of implied
covenant of good faith and fair dealing claims are generally
precluded by D'Oench, we hold that the particular defense
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advanced in this case is barred. Appellant's defense rests
on an unwritten or implied agreement regarding a right of way
over Falmouth Woods Road and not the terms of the $750,000.00
note.
The common law D'Oench doctrine "prevents
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plaintiffs from asserting as either a claim or defense
against the FDIC oral agreements or 'arrangements.'" Adams
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v. Zimmerman, 73 F.3d 1164, 1168 (1st Cir. 1996)(quoting
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Timberland Design, Inc. v. First Serv. Bank for Sav., 932
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F.2d 46, 48-50 (1st Cir. 1991)). Its statutory codification,
section 1823(e), "bars anyone from asserting against the FDIC
any 'agreement' that is not in writing and is not properly
recorded in the records of the bank." Id.; see also 12
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U.S.C. 1823(e). Section 1823(e), as amended by the
Financial Institutions Reform, Recovery, and Enforcement Act
(FIRREA), provides:
No agreement which tends to diminish or
defeat the interest of the Corporation in
any asset acquired by it under this
section or section 1821 of this title,
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either as security for a loan or by
purchase or as receiver of any insured
depository institution, shall be valid
against the Corporation unless such
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. 1823(e). Though there is some disagreement as to
whether D'Oench and section 1823(e) should be read as
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coextensive, see Adams, 73 F.3d at 1168-69 n.2, all courts
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agree that they serve the same purpose: to "prohibi[t] all
secret agreements that tend to make the FDIC susceptible to
fraudulent arrangements." Timberland Design, Inc. v. First
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Serv. Bank for Sav., 932 F.2d 46, 48 (1st Cir. 1991).
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The scope of agreements precluded by D'Oench and
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section 1823(e) is expansive. See Adams, 73 F.3d at 1169.
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It includes promises to perform, as well as fraudulent
misrepresentations or warranties, whether the FDIC had
knowledge of the fraud or misrepresentation at the time it
acquired the asset or not. Langley v. FDIC, 484 U.S. 86, 91-
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94 (1987). Additionally, it embraces both affirmative claims
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and defenses and extends to arguments asserted in terms of
contract or tort. Timberland, 932 F.2d at 49-50.
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LeBlanc's main attack is based on the FDIC's
failure to actively assist him in obtaining a Falmouth Woods
Road easement upon taking control of BNE's assets. The
problem with this is that nothing in the terms of the
$750,000.00 note can be read to create such a duty on the
part of the FDIC. LeBlanc, in fact, admits that the
$750,000.00 note was contingent neither upon his obtaining
nor the FDIC or its predecessors providing an easement.
Accordingly, this attempt to shift the risk LeBlanc knowingly
assumed when he purchased the land-locked Prospect Hills
property to the FDIC, and consequently, to unsuspecting
creditors and depositors, must fail. See Timberland, 932
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F.2d at 48. Permitting appellant to proceed on the basis of
an unrecorded agreement would undermine the accuracy of
NBNE's records and further complicate the FDIC's task of
valuing NBNE's assets. Compare Desmond v. FDIC, 798 F. Supp.
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829, 839 (D. Mass. 1992); see also Langley, 484 U.S. at 92.
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LeBlanc's Counterclaim for Breach of an Implied Covenant of
LeBlanc's Counterclaim for Breach of an Implied Covenant of
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Good Faith and Fair Dealing
Good Faith and Fair Dealing
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LeBlanc avers that the FDIC, as receiver of NBNE,
breached its obligation to perform the terms of the
$750,000.00 loan agreement in good faith in three regards.
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He contends that the FDIC deprived him of the fruits of his
bargain, see Anthony's Pier Four, Inc. v. HBC Assoc., 411
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Mass. 451, 471 (1991), by withholding funds due him on the
DDM construction project and by making an easement across
Falmouth Woods Road contingent upon provision of additional
collateral or a reduction in note principal and utilizing
artificially low appraisals of the Prospect Hills
development. He also alleges that the FDIC's failure to
extend him an easement across Falmouth Woods Road during
work-out negotiations constitutes a breach ofthe agreement.
There is an argument that D'Oench precludes these
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claims, at least to the extent that they rely upon any
specifics in the negotiations between the borrower and the
bank, even if the specifics are not formally agreements. See
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Langley, 484 U.S. at 91-94. But even if we assume that
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D'Oench does not bar LeBlanc's breach of an implied covenant
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of good faith and fair dealing counterclaims -- and, as we
indicated in the previous section, we are certainly not
deciding that question here -- appellant has not convinced us
that there is any general obligation under state law that
required the bank (in the absence of an agreement) to take
the affirmative steps appellant now claims should have been
taken.
We detect no bad faith in the FDIC's decision to
withhold DDM project funds or to make an easement across
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Falmouth Woods Road contingent upon additional collateral or
a reduction in principal. Though the FDIC's dealings with
LeBlanc were arguably "hard-nosed," there is no evidence that
the FDIC's actions deprived LeBlanc of the benefits of the
loan agreement. See Anthony's Pier, 411 Mass. at 471.
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LeBlanc neither disputes that he received the proceeds of the
$750,000.00 loan nor suggests that the FDIC took adverse
actions on the note before his November 1992 default.
LeBlanc's arguments are complaints about the terms
on which the FDIC proposed to execute or continue agreements
with him. But having engaged in rigorous bargaining of his
own, LeBlanc cannot now contend that it was unfair for the
FDIC to bargain for more security on the $750,000.00 note.
The FDIC had no duty at all under the loan agreement to
extend appellant an easement, let alone to provide him one on
terms which were more favorable to him. Nothing prevents a
party to a bargain from engaging in hard-nosed dealings, see
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Schwanbeck v. Federal-Mogul Corp., 31 Mass. App. Ct. 390, 450
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(1991), rev'd on other grounds, 412 Mass. 703, 706 (1992), or
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even from attempting to capture opportunities foregone at the
formation of one contract -- i.e., the loan agreement -- by
negotiating another -- i.e., the easement. See Burton,
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Breach of Contract and the Common Law Duty to Perform in Good
_____________________________________________________________
Faith, 94 Harv. L. Rev. 369, 372-73 (1980). As the district
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court astutely observed, "the FDIC owned something that
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LeBlanc wanted, and it was permissible for the FDIC to use
that 'something' as a bargaining chip in order to obtain what
it wanted, namely more security on the $750,000.00 note."
Finally, we reject LeBlanc's claim that the FDIC
breached its obligation to perform in good faith during work-
out negotiations with appellant. Massachusetts law implies a
duty of good faith and fair dealing in every existing
contract. See Anthony's Pier, 411 Mass. at 472; Fortune v.
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Nat'l Cash Register Co., 373 Mass. 96 (1977); Schwanbeck, 31
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Mass. App. Ct. at 397 n.6. At the time the work-out
negotiations occurred, however, there was no contract between
the FDIC and LeBlanc. LeBlanc's November 1992 default ended
the contractual relationship he theretofore enjoyed with the
FDIC. We, therefore, hold that LeBlanc's claim fails to the
extent that it relies on the loan agreement. That claim also
fails to the extent that it rests on an obligation to
negotiate new contracts in good faith. We are not convinced
that the loan agreement contained any such contractual
obligation, see Schwanbeck v. Federal-Mogul Corp., 412 Mass.
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703, 706 (1992), and do not find, for that matter, any
evidence that the FDIC entered into work-out negotiations
with an ulterior purpose or bad motives.
IV.
IV.
CONCLUSION
CONCLUSION
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For the foregoing reasons, we affirm the district
court's grant of summary judgment. The judgment sum of the
district court is affirmed. There will be added to that sum,
$686,942.78, such post-judgment interest as is due.
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