#### Joseph E. BOHM, Constance M. Bohm, Bert W. Cartwright, Rose A. Cartwright, Dale M. Cunningham, June M. Cunningham, Edward M. Dagger, Horace Davis, III, Vincent J. DiStefano, Joanne M. DiStefano, Joseph E. Dureiko, Arlene M. Dureiko, David Ehrenreich, Reginald B. Furtick, Ronald S. Gup, Bruce Hofman, Paul Kincaid, Nancy Kincaid, Craig Love, Julie Love, Robert P. Marcell, Kathryn R. Marcell, Michael J. Michael, Larry Nance, Nanci Tolbert Nance, Harvey R. Pickford, Mary E. Pickford, James Raven, Jr., Fred W. Schmidt, Yvonne M. Schmidt, John Van Orsdol, Christine Van Orsdol, James C. Wagner and Rosemarie Wagner, Plaintiffs, v. FORUM RESORTS, INC., Ronald G. Williams, Robert A. Parma, Mark B. Alegnani, Shank, Irwin, Conant, Lipsky & Casterline, Federal Deposit Insurance Corporation,1 Pannell, Kerr, Forster, Subrata Ghosh, Edward Kruger and National Capital Corporation, Defendants.

Civ. A. No. 88-CV-72707-DT.

United States District Court, E.D. Michigan, S.D.

Jan. 25, 1991.

*706Stephen P. Ormond, Tucker & Rolf, Southfield, Mich., for plaintiffs.

Linda McAlpine, Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, Mich., for defendant FDIC.

1

. On January 10, 1990, the court ordered that the FDIC be substituted for defendant First City National Bank and Trust.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT/COUN-TERPLAINTIFF FDIC’s MOTION FOR SUMMARY JUDGMENT

FRIEDMAN, District Judge.

This matter is presently before the court on the motion of defendant Federal Deposit Insurance Corporation (FDIC) for summary judgment, filed November 28, 1990. Plaintiffs have filed a response, and the FDIC has filed a reply. Pursuant to Local Rule 17(i)(2) of the United States District Court for the Eastern District of Michigan, the court shall decide this motion without an oral hearing. Accordingly, the January 31, 1991, hearing date for this motion is can-celled.

I. *Background.*

Plaintiffs allege in their second amended complaint that in 1986 they purchased limited partnership interests in Redbud Bay Associates, Ltd., which was created to acquire and manage the Redbud Bay Marina in Oologah, Oklahoma. Plaintiffs lost their money when Redbud went bankrupt in 1987. Plaintiffs assert securities fraud, RICO, and state law claims against various individuals and corporate entities who allegedly were involved in the preparation and distribution of the offering documents and in the offer and sale of the limited partnership interests.

Plaintiffs allege that First City National Bank and Trust (First City Bank or FCB), for whom the FDIC has been substituted as a party defendant, aided and abetted the securities law violations by financing the investment of certain plaintiffs in Redbud Associates. First City allegedly agreed to finance the purchase of Redbud units under terms which First City knew would jeopardize the syndication and which violated the investors’ “borrower’s letters.” *Id.,*para. 31. It is also alleged that First City made loans to “unsuspecting investors” after the termination date of the offering, in violation of its contract with plaintiffs. *Id.,*para. 115. For relief, plaintiffs seek cancellation of the notes now held by the FDIC,2 damages, costs, interest and attorneys’ fees.

In its counter-complaint, the FDIC alleges that certain plaintiffs/counter-defendants 3 have defaulted on their notes. The FDIC seeks an order to compel counter-defendants to pay their indebtedness under these notes. The FDIC also seeks costs and attorneys’ fees.

II. *Summary Judgment Standard*

Under Fed.R.Civ.P. 56(c), summary judgment is appropriate if

> the pleadings, depositions, answers to interrogatories, and admissions on file, to*707gether with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The burden is on the party opposing summary judgment to “set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). “[T]he mere existence of *some*alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no *genuine*dispute as to any *material*fact.” *Anderson v. Liberty Lobby, Inc.,*477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in original). Viewing the evidence “in the light most favorable to the opposing party,” *Adickes v. S.H. Kress & Co.,*398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970), summary judgment should be entered only if the evidence is so one-sided that a reasonable fact-finder could not find for the opposing party. *See, e.g., Anderson v. Liberty Lobby, Inc.,*477 U.S. 242, 248-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986); *Street v. J.C. Bradford & Co.,*886 F.2d 1472, 1478-80 (6th Cir.1989).

III. *Motion of Defendant/Counterplain-tiff FDIC for Summary Judgment*

Defendant/counter-plaintiff FDIC seeks summary judgment as to both (1) plaintiffs’ claims and (2) FDIC’s counterclaims on the notes. The FDIC’s arguments apply equally to both (1) and (2).

The FDIC first argues that plaintiffs may not escape liability on their notes because plaintiffs’ defenses to repayment of the notes may not be asserted against the FDIC. The FDIC relies primarily on *D’Oench, Duhme & Co., Inc. v. FDIC,*315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), and its progeny; 12 U.S.C. § 1823(e); and the “holder in due course” doctrine.

In *D’Oench, Duhme,*defendant gave a bank a note with the understanding that the bank would not call the note for payment.4 The FDIC later obtained the note and sued to collect on it. Defendant argued that the note was unenforceable because it “was given without any consideration whatever and with the understanding that no suit would be brought thereon ...” 315 U.S. at 456, 62 S.Ct. at 679. The district court adopted the FDIC’s position that this side agreement “constituted a misrepresentation which would deceive the creditors of the bank, the state banking authorities and [the FDIC] ...” and held that defendant “was an innocent holder of the note in good faith and for value and that [defendant] was estopped to assert want of consideration as a defense.” *Id.*

In affirming, the Supreme Court noted that “an accommodation maker is not allowed that defense ... where his act contravenes a general policy to protect the institution of banking from such secret agreements.” 315 U.S. at 458, 62 S.Ct. at 679-80. The Court went on to say:

> The test is whether the note was designed to deceive the creditors or the *708public authority, or would tend to have that effect. It would be sufficient in this type of case that the maker lent himself to a scheme or arrangement whereby the banking authority on which [FDIC] relied in insuring the bank was or was likely to be misled.

315 U.S. at 460, 62 S.Ct. at 681.

The holding of *D’Oench, Duhme*was codified in 12 U.S.C. § 1823(e),5 which states:

> (e) Agreements against interests of Corporation

> 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—

> (1) 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.

Plaintiffs argue that *D’Oench, Duhme*and § 1823(e) do not apply to bar their defenses to the notes now held by the FDIC. A reading of *D’Oench, Duhme,*alone, suggests that the rule prevents an obligee from asserting defenses to a note or other obligation when the defense is based on a “secret agreement” or other misconduct in which the obligee participated.6 Plaintiffs hasten to point out that in the present case there is no such “side agreement” in which they participated. The “side agreements” alleged by plaintiffs were of an entirely different sort, namely, between First City and certain of the defendants.

The *D’Oench, Duhme*rule, however, as codified in § 1823(e), has been greatly expanded to bar defenses other than the one asserted by the defendant in *D’Oench, Duhme.**7***In *Langley v. FDIC,*484 U.S. 86, 108 S.Ct. 396, 98 L.Ed.2d 340 (1987), the FDIC brought an action on a promissory note. Defendants argued that the note was unenforceable because it had been procured by certain misrepresentations about the property8 they had purchased with the *709borrowed money. The district court rejected this argument because the alleged misrepresentations did not meet the writing requirements of § 1823(e), and entered summary judgment for the FDIC. The Fifth Circuit affirmed.

In affirming the Fifth Circuit, the Supreme Court reviewed the purposes of § 1823(e):

> One purpose of § 1823(e) is to allow federal and state bank examiners to rely on a bank’s records in evaluating the worth of the bank’s assets. Such evaluations are necessary when a bank is examined for fiscal soundness by state or federal authorities ... and when the FDIC is deciding whether to liquidate a failed bank ... or to provide financing for purchase of its assets (and assumption of its liabilities) by another bank ... The last kind of evaluation, in particular, must be made “with great speed, usually overnight, in order to preserve the going concern value of the failed bank and avoid an interruption in banking services.” ... Neither the FDIC nor state banking authorities would be able to make reliable evaluations if bank records contained seemingly unqualified notes that are in fact subject to undisclosed conditions.

> A second purpose of § 1823(e) is implicit in its requirement that the “agreement” not merely be on file in the bank’s records at the time of an examination, but also have been executed and become a bank record “contemporaneously” with the making of the note and have been approved by officially recorded action of the bank’s board or loan committee. These latter requirements ensure mature consideration of unusual loan transactions by senior bank officials, and prevent fraudulent insertion of new terms, with the collusion of bank employees, when a bank appears headed for failure. Neither purpose can be adequately fulfilled if an element of a loan agreement so fundamental as a condition upon the obligation to repay is excluded from the meaning of “agreement.”

484 U.S. at 91-92, 108 S.Ct. at 401 (citations omitted). The Court also stated:

> Certainly, one who signs a facially unqualified note subject to an unwritten and unrecorded condition upon its repayment has lent himself to a scheme or arrangement that is likely to mislead the banking authorities, whether the condition consists of performance of a coun-terpromise (as in *D’Oench, Duhme)*or of the truthfulness of a warranted fact.

484 U.S. at 93, 108 S.Ct. at 402.

The defendants in *Langley*argued that the requirements of § 1823(e) should not apply where the bank’s misrepresentations were fraudulent and the FDIC knew of this defense when it acquired the note.9 The Court rejected this argument and held that “neither fraud in the inducement nor knowledge by the FDIC is relevant to the section’s application.” *Id.*

> The short of the matter is that Congress opted for the certainty of the requirements set forth in § 1823(e). An agreement that meets them prevails even if the FDIC did not know of it; and an agreement that does not meet them fails even if the FDIC knew.

> A condition to payment of a note, including the truth of an express warranty, is part of the “agreement” to which the writing, approval, and filing requirements of 12 U.S.C. § 1823(e) attach. Because the representations alleged by petitioners constitute such a condition and did not meet the requirements of the *710statute, they cannot be asserted as defenses here.

484 U.S. at 95-96, 108 S.Ct. at 403. *See also FDIC v. McCullough,*911 F.2d 593, 600 n. 5 (11th Cir.1990) (“it is irrelevant whether the FSLIC or FDIC has knowledge of the unrecorded agreement or scheme at the time it acquires the note”); *Kilpatrick v. Riddle,*907 F.2d 1523, 1528 (5th Cir.1990) (FDIC’s knowledge of defunct bank’s fraud irrelevant to application of § 1823(e)); *FDIC v. Kratz,*898 F.2d 669, 671 (8th Cir.1990) (same).

Similar considerations arose in *FDIC v. Investors Associates X., Ltd.,*775 F.2d 152 (6th Cir.1985). In *Investors Associates,*defendant Milton Turner signed two blank notes and gave them to a bank CEO, C.H. Butcher, in connection with a bank refinancing scheme.10 Butcher assured Turner that the notes would be filled in collectively for $750,000 and that Turner would not incur any personal liability on the notes. Butcher also showed Turner “letters ostensibly indicating that ... the FDIC approved of the refinancing plan.” 775 F.2d at 154. Butcher later made the notes payable to two banks for a total of $890,000; neither note contained any limitation on Turner’s liability. The FDIC obtained both notes and sought to recover on them. Turner argued that the notes were unenforceable because (1) he had acted in good faith, and (2) the FDIC “was aware of the circumstances surrounding the execution of the two notes." 775 F.2d at 155. The district court rejected both arguments and entered summary judgment for the FDIC.

In affirming, the Sixth Circuit agreed that Butcher’s oral assurances constituted agreements “likely to mislead the banking authorities” within *D’Oench, Duhme. Id.*The court found Turner’s good faith and the FDIC’s knowledge to be irrelevant. 775 F.2d at 155-56. Additionally, the court stated:

> [T]he Court [in *D’Oench,*Duhme] was less concerned with the particular defense presented by that case, failure of consideration, than with the fact that the maker’s defense originated out of the secret agreement transaction. Accordingly, we conclude that *D’Oench*estops the maker of a note from asserting any defense arising out of the fraudulent scheme, including representations made by another participant in the scheme.... Applying the foregoing principle to this case, since Turner’s non-liability agreement, fraud in the inducement, and state and federal security law defenses are all premised upon Butcher’s misrepresentations in perpetrating the fraudulent scheme, Turner is estopped from asserting them.

775 F.2d at 156.

In *FDIC v. Dixon,*681 F.Supp. 408 (E.D.Mich.1988), defendant Dixon acquired a ten percent interest in a limited partnership, “SWDR5.” Dixon made a cash contribution to SWDR5 and executed an assumption agreement binding herself to the Penn Square Bank for ten percent of a loan to SWDR5. The partnership used the loan to purchase a drilling rig. The partnership failed and the FDIC eventually obtained both the note and the assumption agreement. In defending against the FDIC’s collection action, Dixon argued *inter alia*that the note was unenforceable because “the SWDR5 promoters’ misrepresentations fraudulently induced her to bind herself to the SWDR5 limited partnership’s loan obligation.” 681 F.Supp. at 410.

In granting the FDIC summary judgment, the district court first rejected Dixon’s argument that “the misrepresentations allegedly made to her by the SWDR5 promoters do not constitute ‘agreements’ within the meaning of section 1823(e).” 681 F.Supp. at 411. The court stated:

> This argument was thoroughly considered and expressly rejected by the Fifth Circuit in *Chatham Ventures, Inc. v. FDIC,*651 F.2d 355, 360-61 (5th Cir.1981), ce*rt. denied,*456 U.S. 972, 102 S.Ct. 2234, 72 L.Ed.2d 845 (1982). Applying section 1823(e) despite improper actions taken by a party other than the failed bank, the *Chatham Ventures**711court noted that the language of the statute “makes no express exception for agreements initiated by a third party and the obligors.” *Id.*...

> [T]he narrow definition of an “agreement” urged by Dixon represents a substantial threat to the FDIC’s evaluation process because Dixon’s defense arises from discourse between individuals with no direct ties to the failed bank ... or to the FDIC. In short, the rule proposed by Defendant Dixon would virtually eviscerate the protection that the *Langley*Court characterized as indispensable to the FDIC....

> In light of logical considerations posited by *Langley,*and based on the express holding of *Chatham Ventures,*the Court finds that the misrepresentations allegedly made to Dixon by the SWDR5 promoters fall within the definition of an “agreement” in the context of section 1823(e).

681 F.Supp. at 411-12.

The court believes that the *D’Oench, Duhme*rule and § 1823(e) bar the defenses counter-defendants raise to enforcement of their notes. In a nutshell, counter-defendants argue that these notes are unenforceable because First City ob-tamed them as a knowing participant in a fraud conspiracy, and because First City breached its contractual obligation to return plaintiffs’ investment money if a certain sum was not raised by the offer termination date. The cases cited above, taken together, stand for the proposition that such defenses may not be asserted against the FDIC unless the asserted “agreements” meet the writing requirements of § 1823(e). *See also Kilpatrick v. Riddle,*907 F.2d 1523, 1527-28 (5th Cir.1990) (“it is now clear that borrowers who execute facially unqualified obligations may not prevent a federal receiver’s collection efforts by claiming that they were induced to execute the obligations by fraud”). Plaintiffs do not contest the FDIC’s representation that these writing requirements have not been met in this case.11 Accordingly, the court shall grant summary judgment for the FDIC, both on plaintiffs’ complaint12 and on the FDIC’s counter-complaint. As the court noted in *Dixon, supra,*plaintiffs’/ counter-defendants’ “recourse, if any, is against the individuals and entities who allegedly defrauded” them, not against the FDIC. 681 F.Supp. at 414 n. 6. *Accord Kilpatrick,*907 F.2d at 1524, 1529.

V. *Conclusion*

For the reasons stated above,

*712IT IS ORDERED that the defendant FDIC’s motion for summary judgment is granted both as to plaintiffs’ claims and as to the FDIC's counter-complaint.

SO ORDERED.

2

. Plaintiffs’ notes originally were held by First City. The FDIC obtained the notes when the bank went into receivership.

3

. Paragraph 4 of the FDIC’s counter-complaint alleges that the following plaintiffs/counter-defendants are in default on their notes: Edward Dagger, Horace Davis III, Reginald Furtick, Ronald Gup, Bruce Hofman, Paul and Nancy Kincaid, Craig and Julie Love, Michael J. Michael, and John and Christine Van Orsdal.

4

. The circumstances of this side agreement are described as follows:

> Respondent [FDIC] instituted this suit ... on a demand note for $5000, executed by petitioner in 1933 and payable to the Belle-ville Bank & Trust Co_ Respondent insured that bank January 1, 1934; and it acquired the note in 1938 as part of the collateral securing a loan of over $1,000,000 to the bank, made in connection with the assumption of the latter’s deposit liabilities by another bank. Since 1935 the note had been among the charged off assets of the bank. The note was executed by petitioner in renewal of notes which it had executed in 1926. Petitioner, who was engaged in the securities business at St. Louis, Missouri, had sold the bank certain bonds which later defaulted. The original notes were executed to enable the bank to carry the notes and not show any past due bonds. Proceeds of the bonds were to be credited on the notes. The receipts for the notes contained the statement, "This note is given with the understanding it will not be called for payment. All interest payments to be repaid.” Respondent had no knowledge of the existence of the receipts until after demand for payment on the renewal note was made in 1938.... Petitioner’s president, who signed the original notes, knew that they were executed so that the past due bonds would not appear among the assets of the bank, and that the purpose of the interest payments was "to keep the notes alive.”

315 U.S. at 453-54, 62 S.Ct. at 678.

5

. *See Kilpatrick v. Riddle,*907 F.2d 1523, 1524 n. 1 (5th Cir.1990) (noting that the *D’Oench, Duhme*doctrine "was later codified at 12 U.S.C. § 1823(e)’’); *FDIC v. Wood,*758 F.2d 156, 159 (6th Cir.1985) ("This holding [of *D’Oench, Duhme*] is generally considered to have been codified in 12 U.S.C. § 1823(e)").

6

. As the Sixth Circuit stated in *FDIC v. Wood,*758 F.2d 156, 159 (6th Cir.1985), “The Supreme Court held in *D’Oench, Duhme*that a secret agreement designed to deceive creditors or the public authority or tending to have that effect would not be a defense against the FDIC on its collection of a note.”

7

. In *FDIC v. McCullough,*911 F.2d 593, 600 (11th Cir.1990), the court stated:

> [T]he policy considerations leading to the development of federal common law in *D'Oench*have resulted in extension of the *D’Oench*estoppel doctrine well beyond that precise factual setting. Borrower defenses premised upon other purported, unwritten statements leading to claims of fraudulent inducement or failure of consideration are now also generally precluded by *D’Oench*and its progeny.... Such defenses if allowed against the FSLIC or the FDIC would, like the defense at issue in *D’Oench,*contravene the primary federal policy that the FSLIC and the FDIC must be able to rely upon financial institutions' records in order to best protect the public funds they administer.... The evil to be prevented in any of these situations is precisely the same: the private party seeks to rely upon unrecorded promises or schemes that purport to impose obligations other than those appearing in the bank’s records upon the financial institution.

*See also Kilpatrick v. Riddle,*907 F.2d 1523, 1527 (5th Cir.1990) ("Since the initial statement of the doctrine in *D’Oench, Duhme,*the Court has expanded its preclusive effect well beyond the context of an oral ‘secret agreement’ between the bank and the borrower.’’).

8

.Defendants executed the note in consideration for a loan from Planters Trust & Savings Bank to purchase land. Defendants asserted that Planters told them the land “consisted of 1,628.4 *709acres, when in fact it consisted of only 1,522, that the property included 400 mineral acres, when in fact it contained only 75, and that there were no outstanding mineral leases on the property, when in fact there were." 484 U.S. at 89, 108 S.Ct. at 400.

9

. The FDIC was appointed receiver for Planters in May 1984. The previous month the FDIC had "conducted an examination of Planters during which it learned of the substance of the lawsuits with the Langleys, including the allegations of Planters’ misrepresentations.” 484 U.S. at 89, 108 S.Ct. at 400. In October 1984, the FDIC was substituted as plaintiff in Planters’ action on the note. Thus, the FDIC knew of the lawsuit and the notemakers’ defenses before it acquired the note.

10

. Turner signed the notes in consideration for a 20% interest in a limited partnership created to raise new capital for the bank. 775 F.2d at 154.

11

. This representation is supported by the affidavit of Victor Safara an FDIC employee, attached to the FDIC’s summary judgment motion as Exhibit 3. In addition, any suggestion that the bank may have made any such representations to plaintiffs/counter-defendants is expressly refuted by the "Borrowers Letter” which each plaintiff/counter-defendant signed as part of the loan documents (and which is a bank record). One paragraph of this letter states:

> *Investment Knowledge*

> I acknowledge and fully understand that the Bank is acting solely as a lender and not as an investment advisor. The Bank has made no attempt to analyze or evaluate my intended investment in the Partnership. *The Bank has made no representations to me, expressed or implied, to induce me to request this loan.*The Bank has given no opinion or advice as to whether it is wise or prudent for me to invest funds in the Partnership. *The bank has made no representations concerning the Partnership, its General Partner(s) or their financial strength, prospects or*integrity.... I agree to hold the Bank harmless and do hereby release the Bank from any and all claims that I may have relating to or arising out of my investment.

Exhibit 17 to FDIC’s summary judgment motion (emphasis added).

12

. The *D’Oench, Duhme*doctrine bars affirmative claims as well as defenses based on unrecorded agreements. *See, e.g., Kilpatrick v. Riddle,*907 F.2d 1523, 1528 (5th Cir.1990) ("It is further clear that if the plaintiffs’ defenses are barred by the *D'Oench, Duhme*doctrine, then their defenses framed as causes of action must also be barred, because any other result would nullify the doctrine”); *Bell & Murphy & Associates v. Interfirst Bank Gateway,*894 F.2d 750, 753 (5th Cir.1990) (same). *See abo*12 U.S.C. § 1821(d)(9)(A) ("any agreement which does not meet the requirements set forth in section 1823(e) of this title shall not form the basis of, or substantially comprise, a claim against the receiver or the Corporation”). Accordingly, since the FDIC is entitled to summary judgment on its counter-complaint, it follows that it is also entitled to summary judgment on plaintiffs’ claim based on the alleged fraud and other wrongdoing of the bank and third parties.