IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 95-50403
CADLE COMPANY,
Plaintiff-Appellant,
versus
1007 JOINT VENTURE; JAMES P. HALBERT;
WILLIAM N. RUSH; LOWELL J. HARO;
GREGORY M. KRONBERG; JAMES P. McMICHAEL;
WILLIAM H. SAYRE; ANTHONY B. SEIDENBERG,
Estate of DAVID H. CHENEY; DAVID G. HOPKINS,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Texas
April 22, 1996
Before POLITZ, Chief Judge, and HIGGINBOTHAM and SMITH, Circuit
Judges.
HIGGINBOTHAM, Circuit Judge:
This appeal arises out of a suit on a promissory note executed
by 1007 Joint Venture. The question is whether suit was barred by
limitations. The note changed hands several times before The Cadle
Company acquired it. Cadle Company then sued Joint Venture to
collect a deficiency due on the note. Joint Venture moved for
summary judgment, arguing that Cadle Company's suit was time-barred
under Texas law. Cadle Company responded that as an assignee of
the Federal Deposit Insurance Corporation, it enjoyed the longer
federal statute of limitations applicable to suits by the FDIC.
The district court granted summary judgment for Joint Venture,
determining that Cadle Company's suit was time-barred under Texas
law and concluding that the federal period of limitations did not
apply. We affirm.
I.
On August 1, 1983, the Round Rock Industrial Development
Corporation agreed to loan $850,000 to 1007 Joint Venture to
finance Joint Venture's purchase of an office building located in
Round Rock, Texas. On August 11, 1983, Joint Venture executed a
promissory note in favor of Round Rock Industrial in the original
principal amount of $850,000. Round Rock Industrial immediately
endorsed the note to Texas American Bank, Fort Worth.
On July 20, 1989, Texas American/Fort Worth was declared
insolvent. The Federal Deposit Insurance Corporation was appointed
receiver for Texas American/Fort Worth. On that same day, the FDIC
as receiver for Texas American/Forth Worth transferred the Joint
Venture note to Texas American Bridge Bank, N.A. (later known as
Team Bank). The note was not in default when Texas American was
declared insolvent, nor when the FDIC transferred it to Team Bank.
In August 1991, Team Bank sent Joint Venture a formal notice
of default and a notice of intention to accelerate. In October
1991, Team Bank foreclosed on the property securing the note,
leaving a deficiency. In November 1992, Team Bank merged with Bank
One and formed Bank One, Texas, N.A.
2
In November 1993, The Cadle Company acquired the note from
Bank One/Texas. In September 1994, Cadle Company sued Joint
Venture in federal district court, asserting diversity jurisdiction
and seeking a judgment for the amount due on the note.
Joint Venture moved for summary judgment, arguing that Cadle
Company's claim for a deficiency was time-barred under Section
51.003 of the Texas Property Code, which provides that a suit to
collect a deficiency resulting from a real-estate foreclosure must
be brought within two years after the foreclosure.1 Joint Venture
contended further that, because the note was not in default when
the FDIC transferred it (to Team Bank), Cadle Company was not
entitled to the six-year statute of limitations governing FDIC
actions under the Financial Institutions Reform, Recovery, and
Enforcement Act. See 12 U.S.C. § 1821(d)(14). The district court
agreed and granted summary judgment for Joint Venture.
II.
Cadle Company ably argues that FIRREA's six-year statute of
limitations does not apply to its suit against Joint Venture. We
disagree.
FIRREA provides, in relevant part, that "the applicable
statute of limitations with regard to any action brought by the
1
"If the price at which real property is sold at a foreclosure
sale under section 51.002 is less than the unpaid balance of the
indebtedness secured by the real property, resulting in a
deficiency, any action brought to recover the deficiency must be
brought within two years of the foreclosure sale and is governed by
this section." Tex. Prop. Code § 51.003.
3
[FDIC] as conservator or receiver shall be — (I) in the case of any
contract claim, the longer of — (I) the 6-year period beginning on
the date the claim accrues; or (II) the period applicable under
state law . . . ." 12 U.S.C. § 1821(d)(14)(A). Under FIRREA, "the
date on which the statute of limitation begins to run on any claim
described in [§ 1821(d)(14)(A)] shall be the later of — (I) the
date of the appointment of the [FDIC] as conservator or receiver;
or (ii) the date on which the cause of action accrues." 12 U.S.C.
§ 1821(d)(14)(B). FIRREA thus establishes a six-year limitations
period for a suit by the FDIC to collect on a note, regardless of
the otherwise applicable state statute of limitations.
Cadle Company relies chiefly on Federal Deposit Ins. Corp. v.
Bledsoe, 989 F.2d 805 (5th Cir. 1993), in arguing that because it
is an assignee of the FDIC,2 it is entitled to the longer period of
limitations that FIRREA extends to actions brought by the FDIC. In
Bledsoe, we held that an assignee of the FSLIC enjoys the six-year
limitations period that 28 U.S.C. § 2415(a) extends generally to
suits brought by federal agencies.3 We explained: "As [FIRREA] is
silent as to the rights of assignees [of the FDIC or the FSLIC], we
turn to the common law to fill the gap. Fortunately, while the
statute is quiet, the common law speaks in a loud and consistent
2
Cadle claims to be an assignee of Bank One/Texas, which is an
assignee of the FDIC.
3
Section 2415(a) provides that "every action for money damages
brought by the United States of an officer or agency thereof which
is founded upon any contract express or implied in law of fact,
shall be barred unless the complaint is filed within six years
after the right of action accrues." 28 U.S.C. § 2415(a).
4
voice: An assignee stands in the shoes of his assignor." Id. at
810. We concluded that the assignee in Bledsoe "stood in the shoes
of the FSLIC, the assignor, and thus received the FSLIC's six year
period of limitations." Id.; see also Davidson v. Federal Deposit
Ins. Corp., 44 F.3d 246 (5th Cir. 1995) (holding that transfer of
note in default to FDIC triggered six-year statute of limitations
under 28 U.S.C. § 2415(a)).
Joint Venture contends that this case differs from Bledsoe and
Davidson in that these notes were in default when transferred to
the FSLIC and the FDIC, respectively. According to Joint Venture,
FIRREA's longer period of limitations attached to the defaulted
notes in Bledsoe and in Davidson only because the fact of default
meant that a claim had accrued before the FSLIC and the FDIC
transferred the notes; the existence of a claim, in turn, activated
FIRREA's limitations period while the notes were in the hands of
the FSLIC and the FDIC. On this view, FIRREA's six-year period
comes into play only if a claim accrues on a note either before the
FDIC acquires it, or while the FDIC has it.4 Joint Venture thus
argues that because the note in this case was not in default until
after the FDIC transferred it to Bank One/Texas, Bledsoe is not
controlling.
4
Cadle Company points to two Texas cases that held that an
assignee received FDIC's six years even though the notes at issue
were not in default when the FDIC took over as receiver. EKA
Liquidators v. Phillips, 883 S.W.2d 178 (Tex. 1994); The Cadle
Company v. Weaver, 883 S.W.2d 179 (Tex. 1994). But in those cases,
the notes went into default while the FDIC still had them. Joint
Venture argues not that the note must have already been in default
when the FDIC acquired it, but that default must have occurred some
time before the FDIC transferred it away.
5
Cadle Company responds that in Bledsoe, "[n]o distinction or
limitation was made depending upon whether the note in question was
in default when transferred by the FDIC." Cadle Company points out
that FIRREA itself "makes no distinction between a note that is in
default and a note that is not in default when the FDIC obtains
possession of the note." It is true that neither Bledsoe nor
FIRREA draws an express distinction based on the timing of default.
Since the note in Bledsoe was in default when the FDIC acquired it,
it is silent on the issue before us, and our task today is to
address that silence.
Bledsoe, to be sure, teaches that "[a]n assignee stands in the
shoes of his assignor," 989 F.2d at 810. Cadle Company concedes
here, as it must, that it did not acquire all of the rights and
powers of the FDIC. Thus, our decision today requires that we ask
an additional question: did the transfer of the note carry with it
the longer limitations period.
We agree with Joint Venture that an assignee of the FDIC can
invoke FIRREA's six-year period of limitations only if the note at
issue was in default either before the FDIC acquired it or while
the FDIC owned it. FIRREA's six-year period of limitations has no
significance independent of a claim to which it applies; it
attaches only to an accrued claim, not to a performing note.
Indeed, the text of FIRREA favors this view; it refers to "the
applicable statute of limitations with regard to any action brought
by the [FDIC]." 12 U.S.C. § 1821(d)(14)(A). This limitations
period begins to run on the later of "the date of the appointment
6
of the [FDIC] as conservator or receiver" or "the date on which the
cause of action accrues." 12 U.S.C. § 1821(d)(14)(B). The six-
year period is not triggered by the FDIC's appointment as receiver;
rather, it becomes relevant only upon the accrual of a cause of
action, at which time it identifies the starting date for the six-
year period. Until a note is in default, there is no claim and
hence no need to ask whether FIRREA's federal limitations rule
supplants an otherwise applicable state statute of limitations.
We expanded the reach of federal law in Bledsoe in part on
federal policy concerns that are here less salient. In Bledsoe, we
emphasized the need to facilitate "Congress' policy of protecting
failed institutions' assets." 989 F.2d at 811. We quoted Fall v.
Keasler, 1991 WL 340182, at *4 (N.D. Cal. Dec. 18, 1991), which
explained as follows:
To hold that assignees are relegated to the state statutes of
limitations would serve only to shrink the private market for
the assets of failed banks. It would require the FDIC to hold
onto and prosecute all notes for which the state statute of
limitations has expired because such obligations would be
worthless to anyone else. This runs contrary to the policy of
allowing the FDIC to rid the federal system of failed bank
assets.
Bledsoe, 989 F.2d at 811. These market concerns, to be sure, are
sharpest when a note held by the FDIC is in default, since such a
note has no value to a prospective transferee whose claim on it
would be time-barred under state law. This reasoning loses force
with a note performing when the FDIC transfers it; because such a
note is not in default, it has value to a prospective transferee
and no limitation period is running. A market thus exists for such
a note without an extension of FIRREA's limitations period to an
7
assignee of the FDIC. Though Cadle Company may be correct that a
performing note will tend to have a slightly higher value if it
carries with it FIRREA's longer limitations period, such a "more
money" argument does not by itself mandate that we read FIRREA as
displacing an otherwise applicable state statute of limitations.
See Davidson, 44 F.3d at 252 (finding that FDIC could not prevail
on the ground that there was a federal interest in "simply not
depleting the deposit insurance fund").
AFFIRMED.
8