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DILL v. FSLIC

January 25, 1988

David Dill Plaintiff
v.
Federal Savings and Loan Insurance Corporation, as Receiver for FirstSouth, F.A., et al, Defendants



The opinion of the court was delivered by: WOODS

 HENRY WOODS, U. S. District Judge.

 Pending now is the motion of the plaintiff, David Dill, to dismiss the counterclaim filed against him by the defendant, Federal Savings and Loan Insurance Corporation, as Receiver for FirstSouth, F.A. (FSLIC). Also pending is the FSLIC's motion for summary judgment against Dill based on the same counterclaim. For the reasons that follow, Dill's motion to dismiss is denied and summary judgment is granted in favor of the FSLIC on its counterclaim.

 I. Background

 The plaintiff, David Dill brought this action in state court alleging that the separate defendants conspired to wrongfully convert insurance commissions due him for his work in developing FirstSouth's deferred compensation plan. In furtherance of and intertwined with this alleged scheme to defraud, Dill claims that Howard Weichern, Chairman of the Board and Chief Executive Officer of FirstSouth, induced him to sign a promissory note in favor of FirstSouth by representing that the note would be repaid from the commissions due, and that FirstSouth would not hold him personally liable on the note. FirstSouth denied any such agreement and counterclaimed against Dill to recover on the note, which on its face represents an unconditional obligation of Dill to pay the full amount at maturity.

 Dill moved to dismiss the counterclaim arguing that it was untimely filed under the Arkansas Rules of Civil Procedure. Before the state court ruled, however, the FSLIC intervened as Receiver for FirstSouth and removed the case to this court invoking jurisdiction, inter alia, under 12 U.S.C. ยง 1730(k)(1)(B). The FSLIC now moves for summary judgment on its counterclaim, arguing that Dill cannot assert against the FSLIC defenses to a facially valid note which are based upon agreements outside the insured institution's records.

 II. Dill's Motion to Dismiss

 Dill advances two arguments in support of his motion to dismiss the FSLIC's counterclaim. First, he asserts that the FSLIC's counterclaim filed by the attorneys for FirstSouth prior to removal is compulsory and that under Arkansas Rule of Civil Procedure 13(a) a compulsory counterclaim is waived if not set forth in the answer. Additionally, Dill contends that the FSLIC's counterclaim is not an amended or supplemental pleading within the meaning of Arkansas Rule of Civil Procedure 15 and, therefore, it is absolutely barred.

 The court agrees with Dill that the FSLIC's counterclaim is compulsory under Ark. R. Civ. P. 13(a) because both the complaint and counterclaim arise from the same transaction. Dill claimed that the defendants acted in a conspiracy to deprive him of insurance commissions. And Dill further claimed that the note on which the FSLIC based its counterclaim represented an advance of, and was to be repaid with said commissions. But, the court cannot agree that the FSLIC's counterclaim is not an amended or supplemental pleading under Ark. R. Civ. P. 15.

 Ark. R. Civ. P. 13(e) states that " when a pleader fails to assert a counterclaim, he should be entitled to assert such counterclaim by amended or supplemental pleading subject to the requirements and conditions of Rule 15." Under Rule 15 the court is vested with broad discretion and should strike an amendment only if it determines prejudice would result by allowing the amendment. Kay v. Economy Fire & Casualty Co., 284 Ark. 11, 678 S.W. 2d 365 (1984); Milne v. Milne, 266 Ark. 900, 587 S.W. 2d 229 (1979). Here, the FSLIC's counterclaim was filed at a preliminary stage of the action, before a trial date was set and prior to removal. Accordingly, the court finds that Dill will not be prejudiced and that his motion to dismiss the FSLIC's counterclaim should be, and is hereby ordered denied.

 III. The FSLIC's Motion for Summary Judgment

 In its Local Rule 29 statement of undisputed facts the FSLIC asserts that Dill borrowed $ 30,000 from FirstSouth for which he gave a promissory note in return. The FSLIC further iterates that the note has since matured and that the entire amount has become due and payable, but that Dill has failed to make payment as required despite numerous demands therefor. Additionally the FSLIC states, relying on statements in Dill's deposition of September 4, 1986 at page 198 and Dill's first amended complaint at paragraph 8(i), that Dill has admitted the authenticity of the note and his signature thereon.

 Based on these facts, and a body of common law emanating from the Supreme Court's decision in D'Oench, Duhme & Co. v. Federal Deposit Insurance Corporation, 315 U.S. 447, 86 L. Ed. 956, 62 S. Ct. 676 (1942), in which defenses against the FDIC based upon "secret agreements" have been barred, the FSLIC argues that it is entitled to summary judgment as a matter of law. Dill disputes only the FSLIC's assertion that he has not performed his obligations under the note and its contention that the D'Oench doctrine is applicable to the facts of this case. As to the performance of his obligations, he contends that there was a novation and release, that he was fraudulently induced to sign the note and that FirstSouth agreed to look to a third party for payment. With regard to the D'Oench doctrine, he argues that its estoppel rule cannot be applied to an FSLIC case, and even if it is applied it does not bar his defenses because he did not intend to defraud FirstSouth, its examiners or the FSLIC. *fn1"

 In D'Oench the court held that the maker of a note held by an FDIC insured institution was estopped to defend against the FDIC on the ground that the note was an accommodation, given without consideration, and with the understanding that it would not be collected, in order to enable the bank to carry it as a real asset and thereby deceive the bank examiners. 315 U.S. at 459, 461. The court's decision was grounded in a public policy to protect the FDIC and the public funds which it administers against misrepresentations of the assets of insured banks. Id. The test for ...


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