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Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 

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"' UNITED sTATEs couRT oF APPEALS F 1 ~E n ...... ,, 

U ii•&••• urt of"Ap.-- FOR THE TENTH CIRCUIT n Tenth lrou\t 

RESOLUTION TRUST CORPORATION, 

as Receiver for Sun County 

Savings Bank of New Mexico, 

F.S.B., a federally chartered 

savings bank, 

Plaintiff-Appellee, 

v. 

LIBERTY HOMES, INC., a New Mexico 

corporation, et al.; MANUEL A. 

FERRAN, Ph.D. Court appointed 

Independent Receiver for Continental 

Mortgage Exchange Inc., a New 

Mexico Corporation; GUARANTEED 

EQUITIES, INC., a New Mexico 

corporation; THE CITY OF 

ALBUQUERQUE, a municipal 

corporation; GRACE ANDRADE; 

FRED ANDRADE; CARL BRUCE 

SANCHEZ; STATE OF NEW MEXICO 

TAXATION AND REVENUE DEPARTMENT, 

Defendants, 

and 

SAMUEL ANDRADE, 

Defendant-Appellant. 

AUG 2 3 1991 

) ROBERT L. HOECKER 

) Clerk 

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) No. 90-2255 

) (D.C. No. CV 89-423-JC) 

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ORDER AND JUDGMENT* 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 1 
Before LOGAN, MOORE, and BALDOCK, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The case is therefore ordered 

Defendant-appellant Samuel Andrade (Andrade) appeals the 

district court's grant of summary judgment and decree of 

foreclosure to plaintiff-appellee Resolution Trust Corporation 

(RTC) in its capacity as receiver for Sun Country Savings Bank of 

New Mexico (Sun Country). 1 Specifically, Andrade appeals (1) the 

district court's order of February 12, 1990, granting RTC's motion 

for summary judgment as to Andrade's defenses and counterclaims; 

and (2) the district court's order of October 11, 1990, 

incorporating by reference the state court's grant of summary 

judgment to Sun Country regarding liability on the promissory 

notes, and the district court's grant of RTC's motion for summary 

judgment as to damages. We affirm in part and reverse in part. 

This action was originally initiated by Sun Country on 

December 2, 1985, in two separate state actions (subsequently 

consolidated) as complaints for foreclosure of mortgages and 

1 As noted by RTC in its brief, the notice of appeal names only 

Andrade personally as the party taking the appeal, and therefore, 

we will not discuss the district court's conclusions as they 

relate to Liberty Homes or any other defendant named in the 

original action. See Fed. R. App. P. 3(c); Torres v. Oakland 

Scavenger Co., 487 U.S. 312, 314, 317 (1988). 

2 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 2 
collection of promissory notes against Andrade and the additional 

defendants. Andrade filed a timely answer asserting defenses of 

estoppal, latches, fraud, duress, and lack of consideration. On 

September 17, 1987, Andrade moved to amend his answer to include 

counterclaims of breach of contract, breach of covenant of good 

faith and fair dealing, fraud, misrepresentation, economic duress 

and compulsion, and intentional interference with business 

relations. On April 3, 1989, the state court entered partial 

summary judgment in favor of Sun Country on the issue of the 

defendants' liability on the notes. The court denied Sun 

Country's motion for summary judgment on the issue of damages and 

on defendants' counterclaims. 

On April 7, 1989, the Federal Savings and Loan Insurance 

Corporation (FSLIC), as conservator for Sun Country, removed the 

action to the United States District Court for the District of New 

Mexico. On February 12, 1990, the district court granted 

plaintiff's motion for summary judgment as to defendants' defenses 

and counterclaims. On May 1, 1990, the court entered an order 

striking Andrade's jury demand. On August 30, 1990, RTC was named 

as receiver for Sun Country and was substituted as plaintiff in 

the action. On September 14, 1990, the court heard arguments on 

RTC's motion for summary judgment as to damages and on October 11, 

1990, granted summary judgment and entered decrees of foreclosure 

against Andrade and the other defendants. 

We review a grant of summary judgment de novo applying the 

same standard applied by the district court, Fed. R. Civ. P. 

56(c). Abercrombie v. City of Catoosa, 896 F.2d 1228, 1230 (10th 

3 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 3 
Cir. 1990). Sunnnary judgment should be granted only if "there is 

no genuine issue as to any material fact and . the moving 

party is entitled to a judgment as a matter of law." Fed. R. Civ. 

P. 56(c). However, the nonmoving party may not rely solely on his 

pleadings, but must provide specific facts to support a conclusion 

that genuine issues exist. Abercrombie v. City of Catoosa, 896 

F.2d at 1230 (citation omitted). The Supreme Court has held that 

in order to defeat a motion for sunnnary judgment, "the nonmoving 

party (must) go beyond the pleadings and by [his) own affidavits, 

or by the 'depositions, answers to interrogatories, and admissions 

on file' designate 'specific facts showing that there is a genuine 

issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 324 

(1986)(quoting Fed. R. Civ. P. 56(e)). The record in this case is 

voluminous and Andrade's brief does not provide us with much 

guidance as to his specific contentions of error. Although "(a) 

prose litigant's pleadings are to be construed liberally and held 

to a less stringent standard than formal pleadings drafted by 

lawyers," Hall v. Bellman, 935 F.2d 1106, 1110, (10th Cir. 

1991)(citing Haines v. Kerner, 404 U.S. 519, 520-21 (1972)), we 

are not obligated to fashion appellant's arguments for him. See 

National Commodity & Barter Ass'n v. Gibbs, 886 F.2d 1240, 1244 

(10th Cir. 1989). 

Andrade appeals the New Mexico state court's grant of partial 

sunnnary judgment as to his liability on the notes, which was 

incorporated by reference into the district court's grant of 

sunnnary judgment as to damages and decree of foreclosure on 

October 11, 1990. Andrade, in his May 30, 1989, response to RTC's 

4 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 4 
motion for summary judgment, appears to confess his liability on 

the notes. R. Vol. II, Tab 42 at 11-12; see Federal Deposit Ins. 

Corp. v. Van Laanen, 769 F.2d 666, 667 (10th Cir. 1985)(defendant 

estopped from denying liability on agreement which was valid and 

enforceable on its face). 

When the district court entered its decree of foreclosure in 

this matter, it granted Andrade only one month in which to redeem. 

The record on appeal is void of any indication that a stay of 

foreclosure was applied for or granted. Therefore, if we assume 

that the foreclosure went forward, Andrade's defenses to liability 

and damages on the notes would fail as moot. Even if Andrade's 

defenses were still viable, as our further discussion will 

reflect, they would be precluded as insufficient in law by 

application of D'Oench, Duhme & Co. v. Federal Deposit Insurance 

Corp., 315 U.S. 447 (1942). 2 

In D'Oench, Duhme, a bank and its customer entered into a 

secret agreement whereby the customer provided a demand note to 

the bank which was duly documented in the bank's records. The 

bank assured the customer that it would never attempt collection 

on the note, an assurance which was not documented in the bank's 

records. When the bank failed, the Federal Deposit Insurance 

Corporation (FDIC), as receiver, began collection proceedings on 

the note only to have the customer raise the bank's assurance as a 

2 The RTC could have cited 12 u.s.c. § 1823(e), which is 

essentially a codification of D'Oench, Duhme. RTC did not, 

however, argue or brief the applicability of this statute, and we, 

therefore, consider the issue waived as it may apply to support 

RTC's argument. 

5 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 5 
defense. The Supreme Court held that "federal policy" protects 

the funds of FDIC from enforcement of agreements not documented in 

the records of the banking institution. 3 See id. at 457. The 

doctrine of D'Oench, Duhme has been codified at 12 u.s.c. 

S 1823(e). 4 

Andrade's defenses and arguments relating to his liability on 

the notes, based upon vague representations and conclusory 

allegations, not apparent in the records of the bank, fall victim 

to this protection. See Mainland Sav. Ass'n v. Riverfront 

Assocs., Ltd., 872 F.2d 955, 956 (10th Cir.)(defenses of fraud, 

3 Although D'Oench, Duhme and§ 1823(e) refer to the "FDIC," 

the RTC is deemed to have the same powers and rights as the FDIC 

in handling the affairs of a failed banking institution. 12 

U.S.C. § 144la(b)(4); Resolution Trust Corp. v. Wellington Dev. 

Group, 761 F. Supp. 731, 735 (D. Colo. 1991). 

4 12 u.s.c. § 1823(e) states: 

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 or as receiver of 

any insured depository institution, shall be valid 

against the Corporation unless such agreement--

(!) 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. 

6 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 6 
gross negligence, reckless conduct, breach of an agreement to 

fund, and breach of the implied covenant of contractual fair 

dealing cannot survive D'Oench, Duhme doctrine), cert. denied, 110 

s. Ct. 235 (1989); Resolution Trust Corp. v. Colorado 126 

Partnership, 746 F. Supp. 35, 36-37 (D. Colo. 1990)(D'Oench, Duhme 

and § 1823(e) bar defenses of fraud, waiver, !aches, and 

estoppal). 

It would appear that the only issue left for this court's 

consideration is the fate of Andrade's counterclaims and whether, 

as RTC argues, they, too, succumb to the sharp edge of D'Oench, 

Duhme. Andrade's first counterclaim focuses on whether Sun 

Country breached the terms of the loan agreements or failed to 

fulfill its obligations under the agreements in good faith. 

Andrade alleges that Sun Country's refusal to release certain lots 

for sale caused him considerable financial loss. Andrade further 

disputes the parties' agreement as to what amount Andrade was to 

pay to secure the release of the lots. Andrade also asserts that 

Sun Country failed to properly credit him with payments on the 

notes. "Bank examiners cannot be misled by documents that 

evidence the true obligations of the parties." Baumann v. Savers 

Fed. Sav. & Loan Ass'n, 934 F.2d 1506, 1517 (11th Cir. 1991). 

"[T]he protections provided to the deposit insurance fund by the 

D'Oench doctrine would not be furthered by allowing financial 

institutions to breach valid agreements or to carry them out in 

bad faith." Id.; see also Resolution Trust Corp. v. Wellington 

Dev. Group, 761 F. Supp. at 738 (counterclaim which can be 

resolved on basis of documents and correspondence in bank's file 

7 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 7 
not precluded by D'Oench, Duhme). 

because the terms of the agreement can 

We therefore conclude that 

be ascertained from the 

bank's records, Andrade's counterclaim of breach of contract 

escapes D'Oench, Duhme and, because Andrade's contention raises 

issues of material fact, it escapes summary judgment as well. 

However, Andrade's further allegations that Sun Country 

breached its contract in regard to an undocumented 

one-million-dollar line of credit and an undocumented promise to 

extend a future loan in the amount of $170,000.00, do not fare as 

well. These claims are not based on any written agreements 

readily available in the bank's records and are defeated by 

D'Oench, Duhme. See Bowen v. Federal Deposit Ins. Corp., 915 F.2d 

1013, 1015-16 (5th Cir. 1990)(claim of oral promise to loan money 

subject to D'Oench, Duhme bar). 

Andrade's counterclaim alleging that Sun Country engaged in 

fraud and misrepresentation, to the best of our ability to 

decipher Andrade's somewhat muddled contentions, appears to be 

based on vague and unspecific oral representations of the bank and 

unfulfilled expectations of Andrade. Consequently, because we are 

not obligated to create arguments for a litigant, see National 

Commodity & Barter Ass'n v. Gibbs, 886 F.2d at 1244, we agree with 

RTC, and conclude this claim is also precluded by D'Oench, Duhme. 

Andrade's next counterclaim alleges that he entered into a 

letter agreement modifying the terms and conditions of the loans 

under economic duress and compulsion. "'Duress does not exist 

merely where consent to an agreement is secured because of hard 

bargaining positions or the presence of financial circumstances.'" 

8 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 8 
Resolution Trust Corp. v. Ruggiero, 756 F. Supp. 1092, 1095 (N.D. 

Ill. 1991)(quoting Higgins v. Brunswick Corp., 395 N.E.2d 81, 85 

(Ill. App. 1979)). Although this "agreement" is documented in the 

bank's records and is, therefore, safe from the axe of D'Oench, 

Duhme, Andrade presents no facts which would prompt a conclusion 

that Sun Country did anything other than attempt to fashion a 

work-out agreement with Andrade which would enable him to cure his 

defaults while still protecting the interests of the bank. 

Consequently, we conclude that Andrade raises no issues of fact 

regarding this claim which would sway a trier of fact in his 

favor, and therefore, summary judgment was appropriate. 

Andrade's fourth counterclaim, an allegation of intentional 

interference with contractual relations, is recognized by New 

Mexico law as set forth in Restatement (Second) of Torts§ 766(B) 

(1979). 5 See Schmitz v. Smentowski, 785 P.2d 726, 736 (N.M. 

1990). Andrade alleges that Sun Country intentionally interfered 

with his business relationship with Ben Ruiz. It is undisputed 

that 

5 

Andrade and Ruiz were engaged in a business deal to build an 

Restatement (Second) of Torts§ 766(B) (1979) states: 

One who intentionally and improperly interferes with 

another's prospective contractual relation ... is 

subject to liability to the other for the pecuniary harm 

resulting from loss of the benefits of the relation, 

whether the interference consists of 

(a) inducing or otherwise causing a 

not to enter into or continue 

relation or 

third person 

a prospective 

(b) preventing the other from acquiring or 

continuing the prospective relation. 

9 

Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 9 
apartment complex on land in which Andrade owned a twenty-five 

percent interest. Andrade claims that Sun Country promised Ruiz 

full funding for the project provided he eliminate Andrade from 

the deal. Also, according to Andrade, Sun Country revealed his 

very shaky financial position to Ruiz thereby .enabling Ruiz to 

purchase Andrade's twenty-five percent interest at a fraction of 

its value. Although, this claim appears to be based upon an 

agreement between the bank and Ruiz, obviously not documented in 

the bank's records, it is not the kind of agreement, against the 

interests of RTC, which D'Oench, Duhme purports to protect. See 

D'Oench, Duhme & Co. v. FDIC, 315 U.S. at 457. 

RTC, in its brief in support of its motion for summary 

judgment on this issue, relies on Quintana v. First Interstate 

Bank of Albuquerque, 737 P.2d 896, 898 (N.M. Ct. App.), cert. 

denied, 737 P.2d 893 (N.M. 1987), in which the New Mexico 

appellate court stated: I 

The mere refusal to deal with a party cannot support a 

claim for tortious interference with contractual 

relations •... As long as the Bank merely refused to 

enter into business relations ... and left [the 

business venture] to make its own decision on what to do 

about the Bank's refusal, plaintiffs have no cause of 

action. 

We agree that a bank has a right to decide whether or not to do 

business with certain persons or entities. Sun Country's actions 

involving Andrade's business relationship, however, may have 

extended beyond a refusal to "do business with" Andrade, and 

actually interfered with the relationship between Andrade and Ben 

Ruiz "with an improper motive or by improper means." Id. 

(citation omitted). We conclude that this claim raises disputed 

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Appellate Case: 90-2255 Document: 010110133296 Date Filed: 08/23/1991 Page: 10 
J 

issues of material fact which preclude a summary judgment 

disposition. 

Lastly, Andrade argues that he should have been allowed to 

assert his counterclaims against plaintiff in a jury trial and 

that the court erred in granting plaintiff's motion to strike his 

jury demand. The district court, relying on Rozelle v. 

Connecticut General Life Insurance Co., 471 F.2d 29 (10th Cir. 

1972), cert. denied 411 U.S. 921 (1973), granted plaintiff's 

motion to strike Andrade's jury demand. In Rozelle, this court 

held that foreclosure proceedings in federal court are equitable 

in nature and can be tried in federal court without a jury. Id. 

at 31. We will disturb a district court's decision regarding the 

grant of a jury trial only for an abuse of discretion. Federal 

Deposit Ins. Corp. v. Palermo, 815 F.2d 1329, 1334 (10th Cir. 

1987). Due to the district court's determination that summary 

judgment was appropriate as to all issues in this case, albeit 

erroneous in part, its denial of Andrade's jury demand was not an 

abuse of discretion. However, as the issues on remand do not 

relate to foreclosure, the order of the district court striking 

Andrade's jury demand is vacated. The district court is 

instructed to reconsider his jury demand in light of this order 

and judgment. 

In summary, we hold that Andrade's claims and defenses as to 

liability on the notes are moot and further precluded by 

application of the D'Oench, Duhme doctrine. Except for Andrade's 

allegations of breach of contract relating to the bank's failure 

to fulfill its obligations under the terms of the notes, and his 

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• 

claim of intentional interference with his business and 

contractual relations, the remainder of Andrade's counterclaims 

fall victim to the protection afforded receivers of failed 

financial institutions. The judgment of the United States 

District Court for the District of New Mexico is AFFIRMED in part, 

REVERSED in part, and REMANDED for further proceedings in 

conformity with this order and judgment. 

Entered for the Court 

John P. Moore 

Circuit Judge 

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