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United States Court of Appeals,
Fifth Circuit.
No. 91-1977.
Roy E. THIGPEN, III, Plaintiff,
v.
Marc A. SPARKS, et al., Defendants.
Marc A. SPARKS, Defendant-Counter Plaintiff-Appellant,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, In its capacity as receiver for BancTexas
Dallas, N.A., Counter Defendant-Appellee.
Feb. 16, 1993.
Appeal from the United States District Court for the Northern District of Texas.
Before GOLDBERG, JONES, and DeMOSS, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The issue in this case is whether an individual's breach of warranty claims, which arose when
a now-failed bank sold him a wholly-owned Texas trust company, are barred against FDIC by the
D'Oench doctrine,1 12 U.S.C. § 1823(e) or § 1821(d)(9)(A). We hold that they were not so barred
and thus reverse and remand the district court's summary judgment.
BACKGROUND
Appellant Marc A. Sparks purchased a Texas trust company called The Dallas Empire
Company (DEC) from BancTexas, Dallas, planning to sell it afterward. Both Sparks and Roy
Thigpen, III, the prospect ive purchaser, required that DEC have a "continuous, uninterrupted
corporate charter" as a condition to purchase. By letter dated May 8, 1986, the Chairman of the
1D'Oench Duhme & Co., Inc. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942). The
Supreme Court that in D'Oench held a bank customer was estopped from asserting an alleged
unrecorded agreement as a defense to an action maintained by the Federal Deposit Insurance
Corporation to collect on a note held by an insolvent bank. The alleged agreement between the
customer and the bank was intended to protect the customer from collection on the note while
deceiving federal banking authorities as to the existence of this asset. See Warren Dennis, The
Rise and Expansion of the D'Oench doctrine (American Law Institute, 1992) (available on
Westlaw).

Board and CEO of the bank represented to Sparks, among other things, that DEC "has had a
continuous and uninterrupted status of good standing through this present date." One week later,
Sparks bought DEC for $45,000. The May 15 bill of sale warranted that DEC was in good corporate
standing at that time.
Before the sale to Thigpen, for which Sparks was to receive $150,000, Sparks learned that
DEC's charter had been forfeited briefly for non-payment of corporate franchise taxes in 1985.
Despite the charter's reinstatement, Thigpen refused to purchase DEC and sued Sparks, BancTexas
and another individual in state court for violation of the Texas Deceptive Trade Practices Act
(DTPA). Counter-claims and cross-claims were filed. By autumn, 1987, the state court had granted
summary judgment in favor of the bank on Thigpen's and Sparks's DTPA claims and dismissed
Thigpen's original petition with prejudice. Only Sparks's breach of warranty claims against the bank
remain. BancTexas was declared insolvent in January 1990, and FDIC was appointed its receiver.
Substituted as a party defendant for the bank in state court, FDIC removed the case to federal court
and some months later filed a motion for summary judgment on Sparks's claims.
The district court held that Sparks's claims against FDIC are barred by the relatively new
FIRREA2 provision that states in pertinent part:
"[A]ny agreement which does not meet the requirements set forth in § 13(e) [12 U.S.C. §
1823(e) ] shall not form the basis of, or substantially comprise, a claim against the receiver
or the Corporation."
12 U.S.C. § 1821(d)(9)(A), effective in September, 1989. The requirements incorporated in that
provision from 12 U.S.C. § 1823(e) include that the agreement be in writing, executed by both parties
contemporaneously with the "acquisition of the asset" by the institution, and be continuously
maintained among the institution's business records. FDIC offered an affidavit of Linda Bratton, one
of its employees, to attest that no documents in BancTexas's files reflected whether the sale of DEC
to Sparks, or the May 8 letter, had been approved by the bank's board of directors. The bank found
2Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub.L.
No. 101-73 103 Stat. 183 ((codified at 12 U.S.C. § 1811 et seq. (1991)). FIRREA significantly
overhauled financial institution regulation by the federal government. See generally 1989
U.S.Code Cong. & Admin.News 86 ff.

this affidavit, unanswered by Sparks, conclusive against him for purposes of § 1821(d)(9)(A).
Sparks moved for reconsideration on several grounds. First, he contended that because the
DEC transaction constituted a sale of an asset by the bank, it did not fall within the purview of
D'Oench, § 1823(e) or § 1821(d)(9)(A) as a matter of law. If § 1821(d)(9)(A) was necessary to
make the § 1823(e) requirements applicable to Sparks's "claim" against FDIC, he contended, then §
1821(d)(9)(A) was being improperly retroactively applied, for it became effective in September 1989,
while the DEC transaction occurred in 1986. Finally, he moved for an opportunity to conduct
discovery to counter the Bratton affidavit. Because the bank had defended Sparks's case on the
merits, he was not forewarned by FDIC's substitution that he might have to produce evidence to show
that the DEC sale had complied with 12 U.S.C. § 1823(e). The district court denied the motion for
reconsideration and this appeal followed.
DISCUSSION
Sparks undertakes a four-fold attack on appeal. He disputes that § 1821(d)(9)(A) applies
retroactively to his claims against FDIC. He contends that D'Oench and § 1823(e) do not apply to
the DEC transaction. Even if those rules did apply, he maintains that FDIC did not carry its summary
judgment burden. Finally, he asserts that if any of these avoiding doctrines are available to FDIC, the
district court abused its discretion in not allowing further discovery. FDIC takes issue with each of
these propositions.
Our analysis begins with a threshold question that the parties have not resolved. The linchpin
of Sparks's argument and conversely, the Achilles heel of FDIC's response, is an assumption that the
May 8 letter from the president of BancTexas is part of the agreement by which DEC was sold. If
it was part of that agreement--and Texas has a doctrine that a contract may consist of multiple
writings3--then D'Oench does not logically apply. The D'Oench doctrine was formulated to protect
3See Plains Machinery Co. v. City of Beaumont, 672 S.W.2d 319, 321 (Tex.App. 9th
Dist.1984, no writ) (noting "a written contract, of course, may be composed of several documents
..."); W.D. Dunavant & Co. v. Southmost Grocers, 561 S.W.2d 578, 582 (Tex.Civ.App. 13th
Dist.1978, writ ref'd n.r.e.). See also, Jones v. Kelley, 614 S.W.2d 95, 98 (Tex.1981) (noting the
general rule in Texas is that separate instruments or contracts can be considered as one
instrument.)

the integrity of bank insolvency proceedings by making secret agreements between banks and
preferred customers unenforceable. According to Sparks's theory, however, BancTexas profited by
selling DEC under the very same written agreement whose alleged warranty of continuing corporate
existence FDIC now seeks to escape. If this is correct, Sparks's case would be analogous to Federal
Deposit Insurance Corp. v. Laguarta, 939 F.2d 1231, 1237-39 (5th Cir.1991), in which we held that
a borrower could assert an affirmative defense, notwithstanding D'Oench Duhme, because the defense
arose from an express written obligation undertaken by the bank in the loan agreement with the
borrower. This court concluded that because the funding obligations on which LaGuarta premised
his claims were spelled out in the parties' loan agreement and modification agreement, the D'Oench
doctrine was inapplicable. 939 F.2d at 1239. The court cited with approval a district court decision
interpreting § 1823(e), the original provision based on D'Oench:
None of the policies that favor the invocation of this statute are present in such cases because
the terms of the agreement that tend to diminish the rights of the FDIC appear in writing on
the face of the agreement that the FDIC seeks to enforce.
Riverside Park Realty Co. v. FDIC, 465 F.Supp. 305, 313 (M.D.Tenn.1978).
In Laguarta, however, there was no question whether the borrower's loan agreement and
modification agreement were collateral to the promissory note; as the court observed, they were
integral to the loan transaction. Here, that is not necessarily the case. Indeed, FDIC has assumed that
the May 8 letter was collateral to the bill of sale for DEC. From this assumption proceed FDIC's
arguments that the May 8 letter did not separately comply with D'Oench or § 1823(e).
As we view it, the threshold question is whether that letter was part of the parties' agreement
of sale of DEC or whether it was subsumed by the parole evidence rule or a similar principle and did
not become part of the parties' final agreement. Before FDIC entered this case, BancTexas and
Sparks had begun to brief this question on summary judgment, but neither the state nor the federal
court ever ruled on it. On remand, the court must answer this question. If the May 8 letter was not,
under Texas law, part of the documents comprising the DEC sale contract, then Sparks cannot prevail
because he has no right to rely on that letter's representations. If the May 8 letter was part of the
contract, then FDIC prevails only if the DEC sale to Sparks had to be documented pursuant to 12

U.S.C. § 1823(e) or § 1821(d)(9)(A).
Sparks argues here as he did to the trial court that § 1823(e) does not apply at all to the DEC
sale or, if it does, it only applies by an impermissibly retroactive application of § 1821(d)(9)(A). We
are inclined to agree that § 1823(e) does not apply to a claim arising from a bank's sale of an asset
in a nonbanking transaction. Section 1823(e) provides in full as follows:
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, either as security for a loan or
by purchase o r 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 appro ved 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. (Emphasis added).
This case would represent a unique application of § 1823(e) because the gist of the dispute is neither
a loan transaction, actual or contemplated, between a borrower and lender nor a conventional banking
transaction of any kind, but rather the bank's sale of an asset to Sparks, an individual who on the
record before us had no other connection with the bank than by his purchase of DEC. That the May
15, 1986 sale of DEC, even considered with the bank's assumption of a warranty obligation, could
be viewed as an agreement "which tends to diminish or defeat the interest of the [FDIC] in any asset
acquired by it" (emphasis added) is contrary to the language of the statute: the sale occurred three
years before FDIC acquired anything from BancTexas, and FDIC acquired nothing from the DEC
sale. Further, § 1823(e)(2), which requires that, to be enforced, such an "agreement" must have been
executed "contemporaneously with the acquisition of the asset " by the bank does not comfortably,
to say the least, fit the sale of an asset. It requires no stretch of the meaning of the words "asset" or

"acquired" to reach this conclusion.4
If § 1823(e) does not on its face apply to Sparks's transaction with DEC, FDIC contends and
the district court held that § 1821(d)(9)(A) nevertheless applies because the complained-of warranty
was an "agreement" that forms the basis of Sparks's "claim" against FDIC. To repeat, Section
1821(d)(9)(A) states:
"[A]ny agreement which does not meet the requirements set forth in § 13(e) [12 U.S.C. §
1823(e) ] shall not form the basis of, or substantially comprise, a claim against the receiver
or the Corporation."
Several issues of statutory interpretation are presented by this contention. First, is § 1821(d)(9)(A)
different from § 1823(e)? Second, to what extent does § 1821(d)(9)(A) incorporate § 1823(e)?
Third, if § 1821(d)(9)(A) has a materially different application than § 1823(e) to some types of
transactions in which a bank engaged before it failed, is it retroactively applicable to those
transactions? Because we read § 1821(d)(9)(A) as having intended only a modest addition to the
scope of § 1823(e), as a result of which § 1821(d)(9)(A) does not apply to Sparks's deal with DEC,
the question of retroactivity becomes not only less important to the statute's interpretation but
irrelevant in this case.5
Juxtaposing §§ 1821(d)(9)(A) and 1823(e), one possible difference is that the former
provision bars assertion of cert ain agreements as affirmative "claims" against FDIC (and related
entities), i.e. as claims for recovery of money or property from the coffers of the insolvent institution,
while the older provision bars use of such agreements "against" FDIC. Consistent with its origin in
4It may be true that the terms "asset" and "acquired" require somewhat broad definitions to
render § 1823(e) efficacious for its intended purposes i.e. to prevent last-minute favoritism by
failing banks and to permit FDIC promptly to value a bank's assets, see Langley v. FDIC, 484
U.S. 86, 108 S.Ct. 396, 98 L.Ed.2d 340 (1987) but those policies are not served here in any
event, and even a broad reading of these two terms will not stretch to a bank's sale of an asset in a
non-banking transaction.
5Section 1821(d)(9)(A) was enacted as part of FIRREA, a complex statute whereby, among
other things, the FSLIC was absorbed into the FDIC, and receiverships maintained by FSLIC was
absorbed into the FDIC, and receiverships maintained by FSLIC were transferred to FDIC. See
North Arkansas Medical Center v. Barrett, 962 F.2d 780 (8th Cir.1992). These changes
expanded the coverage of § 1823(e). The pre-FIRREA version of § 1823(e) protected only FDIC
in its corporate capacity, but FIRREA extended that protection to FDIC in its receivership
capacity, see, e.g., Texas Refrigeration Supply, Inc. v. FDIC, 953 F.2d 975, 979 (5th Cir.1992);
to the RTC, 12 U.S.C. § 1441a(b)(4); and to bridge banks, 12 U.S.C. § 1821(n)(4)(I)(i-iv).

the D'Oench case, § 1823(e) has generally been applied against obligors who have sought to invoke
"agreements" that do not conform with the statute as defenses to their duty to repay loans. Section
1823(e) has only recently been used to bar affirmative claims. The earliest of this court's cases that
arguably so held is Beighley v. FDIC, 868 F.2d 776, 783-84 (5th Cir.1989), decided just as Congress
completed work on FIRREA. See also, Bell & Murphy & Assoc., Inc. v. Interfirst, 894 F.2d 750 (5th
Cir.1990). Consequently, before the enactment of § 1821(d)(9)(A), it was not a foregone conclusion
that § 1823(e) barred the assertion of an affirmative claim against FDIC predicated on an agreement
covered by the provision. It could be argued, that § 1821(d)(9)(A), if it has any meaning independent
of § 1823(e),6 extends the defensive character of § 1823(e) to bar certain affirmative claims against
FDIC.7
The next question is, to what "agreements" does § 1821(d)(9)(A) apply the rigorous
"recording"8 requirements of § 1823(e)? Put otherwise, is the type of agreement covered by §
1821(d)(9)(A) different from that defined by § 1823(e)? The logical result of FDIC's argument
suggests that § 1821(d)(9)(A) is far broader than § 1823(e). FDIC contends, and the district court
agreed, that the bank's alleged warranty of DEC's continuous uninterrupted corporate status was an
"agreement" that, under § 1821(d)(9)(A), was unenforceable because of its noncompliance with the
§ 1823(e) criteria. We have already concluded that the transaction was not covered by § 1823(e)
because it did not embody or was not made in connection with the bank's "acquisition" of an "asset."
Ergo, FDIC's and the district court's notion of an agreement under § 1821(d)(9)(A) are unconstrained
by the portions of § 1823(e) that refer to the "acquisition" of an "asset" by the institution and by
FDIC.
6The legislative history suggests that § 1821(d)(9)(A) was not intended to plan new
substantive ground by enhancing FDIC's avoiding powers. See FIRREA House Rep., 1986
U.S.C.A.N. at 128. Like much legislative history, however, the references are obscure and
ambiguous.
7We have parsed the remainder of FIRREA unsuccessfully trying to find a consistent definition
of "claim."
8See Langley v. FDIC, supra, analogizing § 1823(e) to a recording statute. 484 U.S. at 95,
108 S.Ct. at 403.

FDIC urges that the Supreme Court's opinion in Langley compels its broad reading of an
"agreement," but this is incorrect. Langley held that an agreement under § 1823(e) could include an
oral understanding between borrower and lender that, if enforced, would have constituted a defense
to the borrower's loan repayment obligation. The facts of the case precisely include an "asset" of the
institution, i.e. the loan, "acquired" by FDIC when the bank failed. Langley did not define or deal
with the nature of "assets" to which § 1823(e) agreements refer. While Langley broadly defines an
"agreement" made under § 1823(e), it does not say that any "agreement" must be unhinged from the
rest of the statutory language which contemplates that the "agreement" bear upon an "asset"
"acquired by" the institution and later by FDIC. The question is not whether Langley's definition of
an "agreement" applies to § 1821(d)(9)(A)--we assume it does--but instead is whether the modifiers
expressly used in § 1823(e), referencing an agreement in connection with an "asset" "acquired" by
the institution, are also expressed in § 1821(d)(9)(A). To state the question that way is to answer
it. Those modifiers are clearly expressed: among the specific provisions of § 1823(e) adopted by §
1821(d)(9)(A) is the requirement that an enforceable agreement must have been "executed by the
depository institution and any person claiming an adverse interest thereunder, contemporaneously
with the acquisition of the asset by the depository institution." § 1823(e)(2) (emphasis added).
Again, laying aside the questions of the intended scope of "acquisition" and "asset," there is still no
doubt that these terms describe essential features of the transaction to which § 1823(e), and now §
1821(d)(9)(A), applies. These modifiers bind § 1823(e) to its origins in the D'Oench doctrine as a
device to protect the federal regulators from side agreements that would have impeded the collection
of obligations owed to the Bank. Such obligations are the bank's "assets" acquired in the course of
its banking activities.
Moreover, if § 1821(d)(9)(A) were to apply to claims arising from any agreement entered into
by a depository institution, absurd consequences would result. A claimant who furnished office
supplies to the failed bank could not assert a claim unless his contract was (1) in writing, (2) executed
by him and the bank contemporaneously with the sale of office supplies, (3) approved and recorded
in the bank's board of directors' minutes and (4) continuously maintained as a bank record. Such

requirements would render unenforceable the claims of nearly all bank trade creditors. Take another
example: if an employee claimed to have been wrongfully denied reimbursement for travel expenses,
the "agreement" would, under FDIC's reasoning, be unenforceable unless it had jumped through the
§ 1823(e) hoops. These results transform § 1821(d)(9)(A) from a provision protecting the failed
bank's loan portfolio from D'Oench-like secret agreements into a meat-axe for avoiding debts
incurred in the ordinary course of business. Far-reaching as some of FIRREA's provisions were, we
doubt that this extravagant extension of § 1823(e) would have occurred, as it did, unremarked in the
legislative history.
Because § 1821(d)(9)(A) applies to the same type agreements tied to "acquisitions" of
"assets" as does § 1823(e), it cannot apply in this instance to the alleged breach of a warranty by the
bank when it sold DEC to Sparks.
We note finally that this interpretation of § 1823(e) and § 1821(d)(9)(A) is not necessarily
inconsistent with the Eighth Circuit's recent decision in North Arkansas Medical Center, supra,
because, despite its broad dicta, that case revolved around loan-related transactions entered into by
the bank in its unique capacity as a lending institution. As Justice Scalia noted in Langley the purpose
of § 1823(e) relates to banks in that capacity; to the evaluation of "bank assets" and "mature
considerat ion of unusual loan transactions." 484 U.S. at 92, 108 S.Ct. at 401. This factor also
distinguishes similar cases cited by FDIC.
CONCLUSION
Sparks may or may not be able to persuade the district court that a warranty of "continuous,
uninterrupted corporate existence" was an essential contractual feature of his purchase of DEC from
BancTexas. If he fulfills this task, he may proceed with his claims against FDIC unhindered by
D'Oench, § 1823(e) or § 1823(d)(9)(A), because these regulatory superpower rules do not apply to
a bank's sale of an asset in a nonbanking-related transaction. FDIC's avoidance powers are awesome,
but neither infinite nor unrestrained by the statutory language.
For the foregoing reasons, the judgment of the district court is REVERSED and
REMANDED for further proceedings.