*Pursuant to Local Rule 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Local Rule 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 96-40401

_____________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

11,950 ACRES OF LAND, ETC., ET AL.,

Defendants,

FIRST HEIGHTS BANK,

Defendant-Cross Defendant

Cross Claimant-Appellee,

versus

PACIFIC UNION COMPANY,

Defendant-Cross Claimant

Cross Defendant-Appellant.

_________________________________________________________________

Appeal from the United States District Court for the

Southern District of Texas

(B-93-CV-256)

_________________________________________________________________

March 18, 1997

Before JOLLY, JONES, and WIENER, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:*

This appeal arises from a condemnation action by the United

States. It involves a disputed claim to the condemned land, which

is 11,950 acres located where the Rio Grande meets the Gulf of
-2-

Mexico. The background of this case presents a morass of

historical or procedural facts involving more than one failed

savings and loan institution, the FDIC, the EPA, politics,

injunctions, and various lawsuits. To be sure, the case is no

stranger to this court. See In re FDIC, 58 F.3d 1055 (5th Cir.

1995); Sierra Club, Lone Star Chap. v. FDIC, 992 F.2d 545 (5th Cir.

1993). Most of this complexity, however, does not matter any more.

In the final analysis, this case turns on contract interpretation.

Pacific Union Company, the appellant, contracted with First Heights

Bank to purchase this land, but the FDIC had to approve the sale.

The FDIC approved the sale but subsequently withdrew its approval.

First Heights Bank then refused to complete the sale. We hold that

FDIC approval was a condition of this sale, that when the FDIC

withdrew its approval the condition failed, and that First Heights

Bank was relieved from performance under the contract. The

judgment of the magistrate judge in favor of First Heights Bank

will therefore be affirmed. 

I

A

In the late 1980's, Champion Savings Association acquired

title to an 11,950-acre tract of land, known as Playa del Rio,

located at the southernmost tip of Texas. After acquiring title,

Champion Savings Association became insolvent and was dissolved.

The Federal Savings and Loan Insurance Corporation (“FSLIC”) was

appointed receiver. In 1988, as part of a purchase and acquisition
 

2The sale contract also includes other provisions, concerning

personal property, that are not relevant to the current appeal.

 

3In 1989, Congress enacted the Financial Institutions Reform,

Recovery, and Enforcement Act (“FIRREA”), which abolished the

Federal Home Loan Bank Board and the FSLIC. FIRREA also

established the FSLIC Resolution Fund and appointed the FDIC as

manager of the fund. Under FIRREA, the FDIC is now responsible for

-3-

agreement, FSLIC transferred Playa del Rio to Heights of Texas,

FSB, a predecessor to First Heights Bank, FSB (collectively “First

Heights”).

In 1992, First Heights and Pacific Union Company (“Pacific

Union”) entered into an “Unimproved Property Earnest Money

Contract.” This sale contract included a provision for the sale of

Playa del Rio to Pacific Union for $5,884,500.2 Under Article IX

of the sale contract, execution of the sale was “conditioned upon

and subject to various approval processes.” First, Article IX

required First Heights to submit the sale contract to its “internal

approval process.” Following the internal approval process, the

sale contract was to be “submitted for approval by the regulatory

authorities having jurisdiction over Seller which approval is

required prior to sale of the Subject Property.” 

The regulatory authority referred to in Article IX is the

Federal Deposit Insurance Corporation (“FDIC”). Its authority

results from an Assistance Agreement between First Heights and

FSLIC that was entered into simultaneously with the purchase and

acquisition agreement by which FSLIC transferred Champion Savings

Association’s interest in Playa del Rio to First Heights.3 The
approving First Heights’ asset sales requests. See 12 U.S.C. §

1821a(a); see also Sierra Club, Lone Star Chapter v. FDIC, 992 F.2d

545, 547 n.2 (5th Cir. 1993). Hereafter, all of these agencies

will be referred to as the FDIC.

 

4The Assistance Agreement was designed to prevent First

Heights from suffering a loss on the sale of assets that Champion

Savings Association had carried on its books at an inflated value.

 

5The book value of Playa del Rio is reportedly $7.4 million.

Thus, the proposed sale to Pacific Union for approximately $5.9

million would result in a capital loss of $1.5 million for First

Heights. This loss would be made up by the FDIC under the terms of

the Assistance Agreement.

-4-

Assistance Agreement obligated the FDIC to indemnify First Heights

for capital losses it incurred on the sale of certain “covered

assets,” provided First Heights first obtained FDIC approval of the

sale of those assets.4 Playa del Rio was a covered asset under the

Assistance Agreement and, thus, was subject to its provisions

requiring FDIC approval.5

On August 4, 1992, the internal approval process was

completed. Two days later, First Heights, pursuant to Article IX

of the sale contract, notified Pacific Union of the approval and

reminded Pacific Union that FDIC approval was still required. On

September 1, First Heights submitted the required approval form to

the FDIC, seeking approval of the sale contract. On September 4,

the FDIC granted its approval, and First Heights communicated this

approval to Pacific Union in writing on September 10. With the

approval processes required by the sale contract apparently

completed, the parties prepared, over the next several months, to

close the transaction.
-5-
-6-

B 

On January 3, 1993, the Sierra Club, the Frontera Audubon

Society, and Norman L. Richard (collectively, the “Sierra Club”)

filed suit against the FDIC in the United States District Court for

the Southern District of Texas, seeking to require the FDIC to

withdraw its approval of the sale of Playa del Rio to Pacific

Union. The complaint further sought to enjoin the FDIC’s approval

until the environmental impact of the sale was evaluated under the

National Environmental Policy Act (“NEPA”). In late January, the

district court judge granted the Sierra Club relief and ordered

that the FDIC 

withdraw approval and withhold future approval for

Height[s]’ sale to development interests of the Playa

property and shall take no further action facilitating

the sale of the Playa del Rio property, pending

consideration by the FDIC Board of Directors of the

issues surrounding the FDIC’s approval or rescission of

the Playa del Rio sale request.

This order, notably, enjoined only the FDIC’s approval. It did not

enjoin the sale of Playa del Rio to Pacific Union under the sale

contract.

The FDIC appealed the order of the district court to this

court. At the same time, the FDIC, in a letter dated February 5,

1993, notified First Heights of the preliminary injunction order

and reported that it was in the process of appealing the order.

The letter also informed First Heights of the FDIC’s obligation to

comply with the order by withdrawing its approval of the sale

contract. The letter stated, in relevant part:
 

6The court held that the district court had jurisdiction to

enjoin the FDIC from approving the sale of Playa del Rio to Pacific

Union, that the Sierra Club had not yet demonstrated that it was

entitled to injunctive relief, and that the district court had not

complied with Federal Rule of Civil Procedure 52. Sierra Club,

Lone Star Chapter v. FDIC, 992 F.2d 545, 552 (5th Cir. 1993). This

suit was dismissed by the lower court on December 12, 1994, because

it was rendered moot by the condemnation action underlying this

appeal.

-7-

Notwithstanding the FDIC’s appeal of the order,

until such time as it has been vacated or modified the

FDIC must comply with it. Accordingly, in compliance

with such order the FDIC formally withdraws its approval

of Asset Sale request #14-92-0059-01-MCA, pending further

order by the District Court or the Court of Appeals.

In view of the FDIC’s withdrawal of the previous

approval, Heights is advised that if it should consummate

the sale of the Playa del Rio to Pacific Union the FDIC

will be unable to approve or to provide the capital loss

coverage the Manager agreed to accept by approval of the

Asset Sale Request unless and until the court order is

vacated or modified.

C

On June 8, 1993, this court vacated the injunction and

remanded the action for further proceedings.6 Sierra Club, Lone

Star Chapter v. FDIC, 992 F.2d 545, 552 (5th Cir. 1993). Nine days

later, First Heights requested, under the terms of the sale

contract, that within five days Pacific Union either waive its

remaining title objections, and thereby place its $250,000 earnest

money at risk, or else terminate the sale contract. Pacific Union

declined to terminate the sale contract and on June 22 was deemed

to have waived all remaining title objections. 

In late July 1993, First Heights resubmitted an asset sale

request for Playa del Rio to the FDIC for approval. On August 24,
 

7First Heights appeared in the action as title owner, and

Pacific Union appeared, claiming rights under the sale contract.

 

8This is the same declaration sought in the declaratory

judgment action jointly filed by First Heights and the FDIC.

-8-

1993, the FDIC denied this second approval request. The following

day, First Heights notified Pacific Union that the sale contract

was being terminated because it had been “disapproved by the

regulatory authorities having jurisdiction over Seller.” That same

day, First Heights and the FDIC jointly filed a declaratory

judgment action against Pacific Union in the United States District

Court for the Southern District of Texas, seeking a declaration

that the sale contract had no force and effect. On September 1,

1993, the scheduled closing date, Pacific Union appeared for

closing and tendered the full purchase price for Playa del Rio,

which was rejected.

 D

The United States instituted this condemnation proceeding

against Playa del Rio on December 8, 1993. Both First Heights and

Pacific Union appeared, claiming title to Playa del Rio and

therefore the right to the condemnation award.7 First Heights

asserted a cross-claim against Pacific Union, seeking a declaration

that the parties’ sale contract had terminated and that Pacific

Union had no rights under the contract.8 Pacific Union answered,

denying that First Heights was entitled to the relief sought.

Pacific Union subsequently filed a cross-claim against First
 

9The parties consented to a trial before a magistrate judge

and to appeal the judgment of the magistrate judge to this court.

See 28 U.S.C. § 636(c). 

 

10The magistrate judge initially dismissed with prejudice

Pacific Union’s cross-claims against First Heights and dismissed

with prejudice Pacific Union as a party to the proceeding. Pacific

Union timely requested amendment of the judgment, and the

magistrate judge subsequently altered the judgment to dismiss

Pacific Union’s “damage claims” without prejudice. Pacific Union

does not appeal with respect to those claims.

-9-

Heights and moved to compel joinder of the FDIC. First Heights

then moved for summary judgment.

On November 28, 1995, a magistrate judge9 granted First

Heights’ motion for summary judgment and held that Pacific Union’s

motion to join the FDIC was moot. In sum, the magistrate judge

concluded that the injunction voided the initial FDIC approval and

that the subsequent ruling of this court did not revive the

necessary approval. Two months later, the magistrate judge entered

final judgment under Federal Rule of Civil Procedure 54(b) for

First Heights on its claim of title to Playa del Rio.10 Pacific

Union timely appealed.

II

A

We review the magistrate judge’s grant of summary judgment de

novo, using the same standard employed by the court below. See

Garcia v. Elf Atochem N. Am., 28 F.3d 446, 449 (5th Cir. 1994).

Summary judgment is warranted only if “the pleadings, depositions,

answers to interrogatories, and admissions on file, together with
-10-

the affidavits, if any, show that there is no genuine issue of

material fact and that the moving party is entitled to judgment as

a mater of law.” Fed. R. Civ. P. 56(c). We review the facts in

the light most favorable to the nonmoving party and affirm the

grant of summary judgment only “[i]f the record taken as a whole

could not lead a rational jury to find for the nonmoving party.”

Garcia, 28 F.3d at 449. Our review is not limited to the reasons

given by the lower court; instead, we may affirm the grant of

summary judgment on any appropriate ground supported by the record.

See, e.g., Davis v. Liberty Mut. Ins. Co., 525 F.2d 1204, 1207 (5th

Cir. 1976). Bearing this familiar standard in mind, we turn now to

the issues presented by this appeal.

B

Notwithstanding the legal, administrative and political

machinations that color this case, the resolution of the simple

question on appeal--who has the right to ownership of Playa del

Rio--requires only an interpretation of the language found in

Article IX of the sale contract. The dispute concerns the meaning

of the provision that the sale contract be “submitted for approval

to the [FDIC] which approval is required prior to sale of the

Subject Property.” First Heights contends that the contract term

required FDIC approval at the time of closing--a fact that did not

occur. Pacific Union, however, contends that once the initial FDIC

approval was obtained, the approval conditions were satisfied and

the sale contract was binding; consequently, the later revocation
 

11Section 7.2 of the sale contract expressly provided that the

“[c]ontract shall be construed under and in accordance with the

laws of the State of Texas and all obligations of the parties are

performable in Cameron County, Texas.” A federal court follows the

choice of law rules of the forum in which it sits; thus, Texas

choice of law rules apply to this appeal. See Klaxon v. Stentor

Elec. Mfg. Co., 61 S.Ct. 1020, 1021 (1941). Under Texas law, “[a]n

express agreement of the parties that the contract is to be

governed by the laws of a particular state will be given effect if

the contract bears a reasonable relation to the chosen state and no

countervailing public policy of the forum demands otherwise.”

DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 678 (Tex. 1990)

(quoting First Commerce Realty Investors v. K-F Land Co., 617

S.W.2d 806, 808-09 (Tex. Ct. App. 1981)). Clearly, there is a

“reasonable relation” between the contract and Texas, and there is

no “countervailing public policy” weighing against the use of Texas

-11-

and denial of approval is irrelevant because the condition of FDIC

approval had been satisfied. Thus, the question before the court

is whether Article IX required approval as a one-time event, after

which the contract condition was conclusively satisfied and no

longer relevant, or whether FDIC approval was required upon

closing.

Pacific Union advances two primary arguments on appeal: First,

the plain language of the contract suggests that the requisite

approval was a process that once completed had no further bearing

on the execution of the contract; and second, in the alternative,

the contract provision was ambiguous and, thus, a fact question

existed concerning the parties’ intent. These two arguments can be

addressed by a single analysis.

C

We look to Texas law for guidance in interpreting this

contract.11 A contract is ambiguous if its meaning is unclear or
law to interpret the contract. 

-12-

its terms are susceptible to more than a single interpretation.

See Exxon Corp. v. West Tex. Gathering Co., 868 S.W.2d 299, 302

(Tex. 1993). A determination of ambiguity is a question of law

that is based upon an “examin[ation of] the contract as a whole in

light of the circumstances present when the contract was entered.”

Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., No. 94-1206,

1996 WL 596806, at *2 (Tex. Oct. 18, 1996). An ambiguous contract

is one that can be given two or more reasonable interpretations.

Id. Ambiguity does not arise, however, merely because the parties

to a contract suggest differing interpretations. Forbau v. Aetna

Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994). Instead, ambiguity

arises only if both interpretations are reasonable. National Union

Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995).

When interpreting contract language, the “court’s primary concern

is to give effect to the written expression of the parties’

intent.” Forbau, 876 S.W.2d at 133. 

Thus, in order to determine the appropriateness of the

magistrate judge’s grant of summary judgment, we must decide

whether the approval condition has more than one reasonable

interpretation, a finding that would preclude summary judgment. We

turn now to the sale contract. 
 

12Article IX appears in the contract as follows:

IX. REQUIRED APPROVALS

This Contract is conditioned upon and subject to

various approval processes. Seller operates pursuant to

an internal approval process which requires approval by

certain authorized committees and its Senior Asset

Management Committee. Thereafter, this Contract shall be

submitted for approval by the regulatory authorities

having jurisdiction over Seller which approval is

required prior to sale of the Subject Property. Seller’s

execution of this Contract is contingent upon such

approvals. Execution of this Contract by Seller is not

binding upon Seller pending completion of the approval

process. Seller shall promptly notify Buyer, in writing,

after approval of this Contract by Seller’s Senior Asset

Management Committee and the appropriate regulatory

authorities. Buyer may not, and agrees it will not rely

upon any oral discussions, representations, agreements or

the like, unless contained in a letter addressed to Buyer

executed by Seller stating: (I) the status of the

approval process, or (ii) that certain approvals have

been received. Buyer waives all rights against Seller,

its officers, employees, representatives, attorneys,

agents, independent contractors and affiliates relating

to any representations relating to this matter and agrees

not to sue or otherwise hold such parties liable for any

reliance by Buyer on such representations.

Seller will recommend regulatory approval of this

Contract and will submit all reasonably necessary

documentation in support thereof through appropriate

channels. Seller cannot and does not make any

representations regarding the ultimate approval or

disapproval of this Contract. In the event of

disapproval of this Contract, Seller shall notify Buyer

and this Contract shall terminate, Buyer shall be

returned the Earnest Money and all parties shall be

released from any liability hereunder. If regulatory

approval or disapproval is not obtained within one

hundred twenty (120) days after the Effective Dated, then

either party may terminate this Contract by written

notice served upon the other party between the expiration

of such one hundred twenty (120) day period and the date

-13-

D

Article IX of the sale contract is entitled “Required

Approvals.”12 The first sentence of the Article reads as follows:
upon which regulatory approval is obtained, in which

event the Earnest Money shall be refunded to Buyer and

both parties shall be released from any liability

hereunder. Seller has disclosed to Buyer and Buyer

acknowledges that the approval process of the regulatory

authorities is confidential, that Buyer may not be

involved in the process and that direct documentation of

the process and any acceptance or rejection is not

possible. Buyer covenants to take no action to influence

or interfere with the regulatory approval process.

-14-

“This Contract is conditioned upon and subject to various approval

processes.” The Article further states that the “Seller’s

execution of this Contract is contingent upon such approvals.”

Article IX also makes clear that, “[i]n the event of disapproval of

this Contract, Seller shall notify Buyer and this Contract shall

terminate.” Among the approvals required was that of the FDIC. 

We think that Article IX, and specifically the language we

have quoted and underscored above, could hardly make clearer the

significance and importance to First Heights of FDIC approval of

the sale of Playa del Rio. The reason underlying the importance of

approval to First Heights is, in its essence, undisputed: The FDIC

had agreed that, so long as it approved the sale of Playa del Rio,

it would reimburse First Heights for the difference between the

book value of the property and the sale price. It is undisputed

that Pacific Union knew of the Assistance Agreement and that FDIC

approval was a “deal point” with First Heights, that is, without

FDIC approval, there was no deal. Based on the record before us,

the FDIC had no obligation to any of the parties to continue its

approval once given. The FDIC has been consistent in its position
-15-

that it had the right to withdraw its approval, and that, upon

withdrawal of approval, it had no further obligation to indemnify

First Heights for its loss. There is no provision in the contract

to the contrary, and the FDIC’s position is not disputed by the

parties. Clearly, when the FDIC withdrew its approval and

subsequently refused to approve the new request, First Heights was

exposed to the very loss that the condition of approval was

designed, and was understood by the parties, specifically to

prevent. 

On the other hand, Pacific Union’s interpretation that the

condition was satisfied by the first approval and that the

subsequent withdrawal and refusal were of no contractual relevance,

totally vitiates the purpose of the condition. Pacific Union’s

position would require First Heights to consummate the sale without

FDIC approval, which would relieve the FDIC of its indemnification

obligations. In turn, this interpretation would strip First

Heights of the benefit of indemnification and loss protection,

which it sought expressly to preserve. Furthermore, to interpret

Article IX as Pacific Union urges, would require First Heights to

complete the sale of Playa del Rio for $1.5 million dollars less

than the contract itself anticipated, a point fully understood by

the parties. 

We thus conclude that Pacific Union’s interpretation is

unreasonable and that, because the interpretation advanced by First

Heights is the only reasonable interpretation of the approval
 

13Our interpretation of Article IX renders unnecessary any

discussion of whether FDIC approval, withdrawn by the letter to

First Heights, was revived by the order of this court vacating and

remanding the Sierra Club injunction. We conclude that the

condition of approval required FDIC approval upon closing, and the

formal disapproval clearly establishes that the condition was not

met at closing.

-16-

provision, the contract is not ambiguous. Summary judgment was

therefore appropriate.13

E

Pacific Union asserts that, even if the provision is

interpreted to require valid FDIC approval at the time of closing,

First Heights has waived this condition precedent and is now

estopped from relying upon the withdrawal and subsequent denial of

FDIC approval to avoid the contract obligation to convey Playa del

Rio to Pacific Union. 

Waiver results from the express relinquishment of a right or

from intentional conduct inconsistent with the exercise of that

right. See First Interstate Bank of Ariz. v. Interfund Corp., 924

F.2d 588, 594-95 (5th Cir. 1991); Sun Exploration & Prod. Co. v.

Benton, 728 S.W.2d 35, 37 (Tex. 1987). Quasi-estoppel precludes a

party from asserting, to the disadvantage of another, a right

inconsistent with a position previously taken. Missouri Pac. R.R.

Co. v. Harbison-Fischer Mfg. Co., 26 F.3d 531, 537 (5th Cir. 1994);

Steubner Realty 19, Ltd. v. Cravens Road 88, Ltd., 817 S.W.2d 160,

164 (Tex. Ct. App. 1991). 
-17-

Pacific Union’s waiver and estoppel argument is without merit,

because the parties entered into a series of letter agreements,

after the withdrawal of approval, delaying the date of closing and

specifically providing:

By execution of this letter, neither party hereto waives

any of its claims, causes of action, rights or remedies

with regard to the Contract and each of such claims,

causes of action, rights or remedies are reserved

including, without limitation, those pursuant to Article

IX of the Contract. In addition, neither party makes any

representations or warranties, express or implied, beyond

those set forth in the Contract.

Through these agreements, First Heights expressly preserved its

rights under Article IX and cannot therefore be said to have waived

those rights. Furthermore, there is no evidence that First Heights

ever took a position other than the position that FDIC approval was

necessary to the closing of the contract.

III

For the foregoing reasons, we find that the sale contract was

not ambiguous and only reasonably can be interpreted to require

FDIC approval at the time of closing. To interpret the condition

in any other way would nullify the purpose of the inclusion of the

condition, which was to protect First Heights from bearing the

burden of closing the sale without assurance of reimbursement from

the FDIC. Further, we find that Pacific Union failed to raise a

fact issue with respect to its defenses of waiver and quasiestoppel. Our holding renders moot Pacific Union’s appeal from the
 

14Our holding also makes it unnecessary for us to consider the

argument advanced by First Heights that the contract obligations

should be discharged by operation of the principle of “frustration

of purpose.”

-18-

magistrate judge’s refusal to compel joinder of the FDIC as a party

to this action.14

The judgment of the magistrate judge is 

A F F I R M E D.