### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 16

- 60166 Summary Calendar

C& C INVESTMENT PROPERTIES, L.L.C.; GLEN L. COLLINS,

Plaintiffs

- Appellants

v. TRUSTMARK NATIONAL BANK,

Defendant

- Third Party Plaintiff

- Appellee

v.
CHARLOTTE D. COLLINS
Third Party Defendant

- Appellant

Appeal from the United States District Court for the Southe rn District of Mississippi

Before K ING , DENNIS , and C OSTA, Circuit Judges

. GREGG COSTA, Circuit Judge: At the height of the s avings & loan c risis, we considered a number of cases involving the D’Oench
, Duhme doctrine. See, e.g. , Resolution Trust Corp. v. Murray , 935 F.2d 89 (5th Cir. 1991); F ed. Sav. & Loan Ins. Corp. v. Cribbs, 918 F.2d 557 (5th Cir. 1990) ; Fed. Sav. & Loan Ins. Corp. v. Murray , 853 F.2d
1251 (5th Cir. 1988)

. That doctrine , which originated in the federal common United States Court of Appeals Fifth Circuit 

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2 law and is now codified at 12 U.S.C. § 1823(e), prevents borrowers from relying on oral agreements they allegedly had with a failed bank to de fend against collection efforts of a federal receiver like the Federal Deposit Insurance Corporation (FDIC). D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 459

– 60 (1942). The failure of a Mississippi bank in the aftermath of the 2008 f inan cial

c risis 1 requi res us to again consider the doctrine.
I. In 2004, Glen and Charlotte Collins formed C&C Investment Properties, LLC to buy, rent, and flip real estate

. Between 2006 and 2009, C&C bought several foreclosed properti es from Heritage Banking Group

. C&C financed
the se purchases through promissory notes payable to Heritage, which were secured by d eeds of t rust encumbering the properties and guaranteed personal ly by the Collins es

. According to the Collins es , t he purchases were subject to the following side agreement: C&C would pay Heritage amounts equal to what Heritage paid for the properties at foreclosure and Heritage would later refinance the prope rties to account for their renovation value. C&C stopped making payments on the loans because Heritage

pu rportedly did not live up to the side agreement

. As a result, it defaulted on the notes and guaranties. In response, Heritage foreclos ed on the properties. Aggrieved, Glen Collins and C&C sued Heritage for breach of contract and fraudulent inducement. While the suit was pending, Heritage was declared insolvent and the
F DIC was appointed as receiver. That same day, t he FDIC entered into a Purchase and Assumption Agreement with Trustmark National Bank , under

1 More than four hundred FDIC

- insured banks failed from 2008

– 2012. Only ten had failed in the five years prior to 2008. See FDIC : Failed Bank List , F EDERAL D EPOSIT I NSURANCE C ORPORATION , https://www.fdic.gov/bank/individual/failed/banklist.html (last updated Sept. 15, 2016)

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3 which it transferred to Trustmark various Her itage assets and liabilities, including the C&C notes and guaranties

. Upon being substituted for Heritage as a defendant, the FDIC moved to dismiss the case

. Before the c ourt could rule on the motion, however, Mr. Collins and C&C sought and obtained lea ve to amend, adding Trustmark as a defendant. The FDIC thereafter renewed its motion, which was granted. Once added as a party, Trustmark pleaded section 1823(e) as a defense and filed counterclaims against C&C and the Collins es (hereafter referred to jointly as the “borrowers”) for the amount still ow ing on the notes

. Trustmark also sought reimbursement for its costs and expenses related to collection and enforcement of the loans

. Trustmark filed a motion for summary judgment , arguing that because
t he claims against it and the defenses to its counterclaims are based on an unwritten side agreement between C&C and Heritage , section 1823(e) bars them . The borrowers objected, assert ing that Trustmark either affirmatively or by being dilatory waived this defense

. They further argued that, even if
there was no waiver , there is a material fact dis pute about whether the side agreement exists in a writ ten form sufficient to overcome section 1823(e) . The district court granted Trustmark’s motion

. II.
We r eview a summary judgment ruling de novo. Davis v. Fort Bend Cty. , 765 F.3d 480, 484 (5th Cir. 2014). We interpret all facts and draw all reasonable inferences in favor of the nonmovant. Ion v. Chevron USA, Inc. , 731 F.3d 379, 389 (5th Cir. 2013). Summa ry judgment is appropriate only when the record reveals “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” F ED

. R. C IV

. P . 56(a). D’Oench, Duhme bars part ies from “ rely [ ing ] on an oral agreement Case: 16-60166 Document: 00513701614 Page: 3 Date Filed: 10/03/2016No. 16

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4 between [ a failed bank and its customer ] as the basis for defense s or claim s against the FDIC. ” Lemaire v. FDIC , 20 F.3d 654, 657 (5th Cir. 1994). Enacted in 1950 , not long after the Supreme Court decided D’Oench , Duhme , section
182 3(e) codifies that common law ruling. Bowen v. FDIC , 915 F.2d 1013, 1015 n.3 (5th Cir. 1990 )

. The statute provides that any “ agreement which tends to diminish or defeat the interest of the [ FDIC ] in any asset acquired by it under this section ” shall not “ be valid against the [ FDIC ] unless such agreement ” is : (1) in writing; (2) contemporaneously executed by the depository institution and the person claiming an adverse interest ; (3) approved by the board of directors of the depository institution and refle c ted in the minutes of the board ; and (4) continuously, from the time of its execution, an official record of the depository institution

. 12 U.S.C. § 1823(e)( 1). W e have extend ed the se protections to private parties , like Trustmark , that purchase the assets of
insolvent bank s from the FDIC. Porras v. Petroplex Sav. Ass’n , 903 F.2d 379, 381 (5th Cir. 1990). The re are two reasons for the D’Oench, Duhme rule. First, it “allow[s] federal and state bank examiners to rely on a bank’s records in evalua ting the worth of the bank’s assets.” Langley v. FDIC, 484 U.S. 86, 91 (1987)

. S econd,
i t “ensure[s] mature consideration of unusual loan transactions by senior bank officials, and prevent[s] fraudulent insertion of new terms, with the collusion of bank employees, when a bank appears headed for failure.” Id . at 92.
T he borrowers do not dispute the se general principles of section 1823(e) or their applicability to this case

. Instead, they attem pt to avoid the defense
in three ways. The first two involve waiver , as the borrowers contend that Trustmark substantively waived the defense in its agreement for the purchas e of the Heritage assets and also procedurally waived the defense by asserting it too late in this lawsuit

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5 An affirmative w aiver occurs when a party voluntarily or intentionally surrenders a known right. Salzstein v. Bekins Van Lines Inc. , 993 F.2d 1187 , 1191 (5th Cir. 1993). The borrowers maintain that Trustmark, through Section 2.1(n) of its Purchase and Assumption Agreement with the FDIC, did just that. Section 2.1(n) states : The Assuming Institution expressly assumes at Book Value (subject to adjustment pursuant to Article VI I I) and agrees to pay, perform, and discharge, all of the following liabilities of the Failed Bank as of the Bank Closing Date, except as otherwise provided in this Agreement (such liabilities referred to as “Liabilities Assumed”);

. . . (n) a ll asset

- related offensive litigation liabilities and all asset

- related defensive litigation liabilities, but only to the extent such liabilities relate to assets subject to a Shared

- Loss Agreement, and provided that all other defensive litigation and any class actions with respect to credit card business are retained by the Receiver.

T his language, the borrow ers assert , makes clear that Trustmark assumed liability on th e subject loans free of any section 1823(e) defense

. We disagree. Our sole case dealing with affirmative waivers in this context suggests
the borrowers have not made a sufficient showing. In Tex. Refrigeration Supply, Inc. v. FDIC , 953 F.2d 975 (5th Cir. 1992), we remarked that the borrowers’ “most appealing argument ” was that a purchaser of failed bank
assets “ waived any D’Oench, Duhme defens es to [the] claims [against it] ” through its “ Pu rchase and Assumption Agreement ” with the FDIC. 953 F.2d
at 983

– 84. T h at a greement stated , in pertinent part, that the purchaser assumed certain “ liabilities as shall be certified by the Receiver

. . . whether or
not they [we] re reflected on the book s of the Failed Bank as of Bank Closing .”
Id. (emphasis added) (internal quotation marks omitted)

. The borro wers argued that purchasing the assets irrespective of whether they were recorded on the books of the failed bank waive d the D ’O ench, Duhme rule that only Case: 16-60166 Document: 00513701614 Page: 5 Date Filed: 10/03/2016No. 16

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6 recorded agreements are enforceable. We found no waiver without having to interpret this provision , however, relying instead on the provision stating that the lender only assumed liability for claims certified as valid by the FDIC, which had no t been done for the claims being asserted

. Id. Unlike the agreement in Texas Refrigeration , Trustmark ’s agreement
with the FDIC makes no mention of liabilities not reflected on the books of the failed bank. It merely addresses which Heritage asset

- related litigation liabilities , assumed by the FDIC , were transferred to Trustmark. N ot h ing about it expressly or impliedly indicate s a voluntary or intentional surrender by Trustmark of the section 1823(e) defense it inherited from the FDIC

. We al so reject t he borrowers’ assert ion that Trustmark waived this defense by raising it in a dilatory manner

. Even when a party has failed to
assert a n affirmative defense in its answer, we may allow it to assert the defense “ if it is raised at a pragmaticall y sufficient time and [ the plaintiff ] was not prejudiced in its ability to respond.” Arismendez v. Nightingale Home Health Care, Inc. , 493 F.3d 602, 610 (5th Cir. 2007 ) (alteration in original) (internal quotations omitted); see also Rogers v. McDorman , 521 F.3d 381, 386

– 87 (5th Cir. 2008) (finding no unfair surprise when , despite the defense not being pleaded, plaintiffs had notice in light of it being alluded to in the answer and a pretrial brief , as well as during a pretrial hearing); Standard Waste Sy s. Ltd. v. Mid

- Continent Cas. Co. , 612 F.3d 394, 398

– 99 (5th Cir. 2010) (finding
the failure to plead an affirmative defense did not result in unfair surprise wh en defendant expressly mentioned it in denial letters, a joint status report, and the expert wi tness designation list)

. Unlike the defendants in the cases just cited, Trustmark raised its section 1823(e) defense in its answer so there is no basis for the borrowers to argue unfair surp rise. Indeed, they don’t do so. I nstead , they argu e Trustmark Case: 16-60166 Document: 00513701614 Page: 6 Date Filed: 10/03/2016No. 16

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7 was required to include the defense in a Rule 12 motion to dismiss , like the FDIC did

. Trustmark’s failure to do so, ac cording to the borrowers , caused an

unnecessary continuation of the litigation that should preclude it from asserting the def ense at the summary judgment stage. This argument rev eals a basic misunderstanding of the rules of civil procedure. Rule 12(b)( 6) provides a means by which a defendant may seek to dismiss a claim at the pleading stage; it does not require that a defense be asserted through that procedure. F ED

. R. C IV

. P. 12(b) (“Every defense to a claim for relief must be asserted in the responsi ve pleading if one is required. But a party may assert the following defenses by motion . . . (6) failure to state a claim upon which relief can be granted.” (emphasis added)); F ED

. R. C IV

. P. 12(h)(1) (o mitting a Rule 12(b)(6) defense from the defenses t hat may be subject to waiver by failure to assert at the Rule 12 stage). Rule 12 expressly provides that a defendant not pursuing a Rule 12(b)(6) defense at the pleading stage may raise it later in the litigation, including at trial. F ED

. R. C IV

. P. 12(h )(2 ) (C) (stating that “failure to state a claim upon which relief can be granted . . . may be raised . . . at trial” ). And it is common that affirmative defenses sometimes raised in Rule 12(b)(6) motions, take a limitations defense as but one example,

may also be raised via a summary judgment motion. See e.g. , FDIC v. Dawson , 4 F.3d 1303, 1306 (5th Cir. 1993). One obvious reason a defendant may wait is that a Rule 12(b)(6) motion typically cannot rely on evidence outside the complaint. See Brand Coupon Network , LLC v. Catalina Mkt g

. Corp

. , 748 F.3d 631, 635 (5th Cir. 2014 ). But even when there is no apparent reason for doing so, the rules allow a defendant to assert an affirmative defense that may have been suitable for Rule 12(b)(6) disposition at the summary judgment stage. As for the efficiency concerns the borrowers raise, a plaintiff desiring early resolution of an affirmative defense may seek to strike it under Federal Case: 16-60166 Document: 00513701614 Page: 7 Date Filed: 10/03/2016No. 16

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8 Rule of Civil Procedure 12(f). See 5C C HARLES A LAN W RIGHT & A RTHUR R.
M ILLER , F EDERAL P RACTICE & P ROCEDURE § 1381 (3d. ed. 2004 ) (explaining that the “insufficient defense” language in Rule 12(f) had been read to allow a challenge to the legal sufficiency of an affirmative defense). Or the parties can agree to file an early summar y judgment motion without the need for full discovery. But there is nothing that barred Trustmark from pursuing the section 1823(e) defense , asserted in its answer , at the summary judgment stage after discovery concluded

. Apart from their unsuccessful waiver arguments, t he borrowers argue that a material fact dispute exists that should have precluded summ ary judgment: whether the side agreement is in a written form sufficient to

overcome section 1823(e)

. They point to the testim ony of a Heritage divis ion president who , when asked whether something in writing described the

arrangeme nt between C&C and Heritage, replied, “there may have been

— well, I would have

. . . gotten

— and I can ’t remember whether it was an e

- mail or something from Tim Leitaker saying it was okay for me to do that.” The executive was then asked whether there was something in writing other than the email, to which he replied , “I don’t remember the exact communication, but, yeah . . . I guess I’m positive that it was communicated in wri ting. If not, it still had to be signed off on every time I turned a loan in for it.” Even viewing the executive’s testimony about the purported side agreement in favor of the borrowers , there is no evidence from which a jury might conclude that all of the conditions necessary to overcome section 1823(e) are present. At most, the statements are evidence of communications describing the purported side agreement. We have doubts whether such writing s would meet even the first requirement: that the “ agreement ” itself be in writing

— not other communications referring to it. 12 U.S.C. § 1823(e)(1)(A). Case: 16-60166 Document: 00513701614 Page: 8 Date Filed: 10/03/2016No. 16

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9 That the agreement be in writing, however, is only one re quirement of section 1823(e)

. The written agreement must also meet the th re e other non

- secrecy requirements . 12 U.S.C. § 1823 (e) (1)(B)

– (D)

. T he bank executive does not
state that the communication was signed by Heritage and the borrowers , approved by Heritage’s Board of Directors, or continuously kept as an official Heritage record. Nor do the b orrowers point to any other evidence supporting these additional statutory requirements. See Resolution Trust Corp. v. McCrory , 951 F.2d 68, 72 (5th Cir. 1992) (holding that a copy of a n agreement executed by an insolvent bank found in the draft documents of the bank’s attorney did not satisfy section 1823(e)’s requirements because it was not an official record of the failed bank ); Twin Const r ., Inc. v. Boca Raton, Inc. , 925 F.2d 378, 383

– 84 (11th Cir. 1991) (holding that a written form, despite outlining the obligations of both parties and existing in the insolvent bank’s records, did not meet section 1823(e)’s requirements because it had not been executed by the failed bank ); FDIC v. Gardner , 606 F. Supp. 1484, 1488 (S.D. Miss. 1985) (finding that a writt en agreement executed by a failed bank president could not be enforced against the FDIC because it was not specifically approved by the board )

. * * * The judgment of the district court is AFFIRMED. Case: 16-60166 Document: 00513701614 Page: 9 Date Filed: 10/03/2016