* District Judge of the District of Maryland, sitting by

designation.

1 United States Court of Appeals,

Fifth Circuit.

No. 93-2367.

HARTFORD CASUALTY INSURANCE COMPANY, Hartford Fire Insurance

Company, Hartford Accident and Indemnity Company, Hartford

Insurance Company of the Midwest, Hartford Underwriters Insurance

Company, and Twin City Fire Insurance Company, Petitioners,

v.

The FEDERAL DEPOSIT INSURANCE CORPORATION, in its Corporate

Capacity and in its Capacity As Receiver for Texas Investment Bank,

N.A. of Houston, Texas, Respondent.

June 1, 1994.

Petition for Review of an Order of the Federal Deposit Insurance

Corporation.

Before HIGGINBOTHAM and WIENER, Circuit Judges, KAUFMAN, District

Judge. *

KAUFMAN, District Judge.

Plaintiffs ("Hartford") are six corporate entities, each

affiliated with the ITT Hartford Insurance Group of Companies. In

February 1984, Hartford Accident & Indemnity Co., one of those six

entities, furnished a performance bond for Morchem Resources, Inc.

("Morchem") to secure a project undertaken by Morchem for Peoples

Gas System, Inc. ("Peoples"), the obligee under the bond. Morchem

contracted with Peoples to remove and to dispose of sludge from

three low pressure gas holding vessels located in North Miami

Beach, Florida. As collateral, Morchem gave Hartford a $492,000 CD

issued by Texas Investment Bank, N.A. of Houston, Texas ("TIB") in

Morchem's name. On November 15, 1985, Morchem's parent company,1 "In its capacity as receiver, the FDIC is obligated to

marshall the assets of the failed bank for the benefit of the

bank's creditors and shareholders. In its corporate capacity,

2 Finultra, issued a promissory not e to TIB, pledging the same

$492,000 CD as collateral for payment of the note. During oral

argument in this case, when asked by this Court about why that

November 1985 act took place, none of counsel for the parties was

able to provide any explanation.

On January 7, 1987, Hartford Accident & Indemnity Co. and

Morchem agreed to substitute six CDs in place of the single

$492,000 CD. Each of the six CDs was for $82,000, thus totaling

492,000, and each was issued separately to a di fferent Hartford

subsidiary. Counsel for plaintiffs explained during oral argument

before us that Hartford desired the substitution because Hartford

became uneasy after Hartf ord was notified that Morchem was in

default on the performance bond. The insurance provided by the

Federal Deposit Insurance Company ("FDIC") for a single deposit is

limited to the amount of $100,000. Hartford apparently sought to

have provided to it total FDIC insurance coverage by causing the

substitution of the six CDs for one single CD and by havi ng each

$82,000 CD considered separately.

On May 21, 1987, the Comptroller of the Currency declared TIB

insolvent and the FDIC on that date took over TIB in the FDIC's

capacity as receiver ("FDIC-R"). On or about May 22, 1987, River

Oaks Bank notified Plaintiffs that it was in receipt of the insured

deposits of TIB and welcomed Plaintiffs as new bank customers. On

June 24, 1987, the FDIC, in its corporate capacity ("FDIC-C"), 1the FDIC is obligated to insure the failed bank's deposits."

FDIC v. Hatmaker, 756 F.2d 34, 36 n. 2 (6th Cir.1985).

2 Although not alluded to by either party in their filings

before this Court, several documents filed in the district court

reveal that on or about September 25, 1984, the bond issued by

Hartford became the subject of one or more claims in Hartford's

bond claim department. Subsequently, Hartford and Morchem became

defendants in three lawsuits concerning the performance of

Morchem's contract with Peoples Gas Systems Inc. On September 9,

1991, after years of protracted litigation, Hartford entered into

a settlement agreement with Peoples Gas System, Inc. and others,

pursuant to which Hartford was released from all actions asserted

against it and all obligations under the performance bond issued

by it for Morchem. Hartford claimed in the court below that it

suffered financial losses in connection with the bond in excess

of $415,000. Interrogatories answered by Hartford and filed in

the court below state that Hartford paid out two claims under the

bond, totalling $139,000.

3 informed Hartford of its determination that the six CDs issued in

Hartford's name were the property of Morchem and also that those

CDs had to be aggregated for deposit insurance pu rposes.

Accordingly, the FDIC concluded that $392,000 of the $492,000

represented by the CDs was uninsured and that only $100,000 was

insured. The FDIC-C paid that insured portion of the CDs, ie.,

$100,000, to Rive r Oaks Bank, the institution which had acquired

the deposits of TIB from the FDIC-R. On July 24, 1987, the FDIC-R

retrieved the $100,000 from River Oaks Bank, and on July 29, 1987,

offset the entire $492,000 represented by the six CDs against the

debt Finultra owed TIB. 2

On June 24, 1991, Plaintiffs filed suit in the district court

against the FDIC as defendant in bo th its receivership and

corporate cap acities, seeking to recover $492,000 in deposit

insurance for the six CDs or in the amount of the value of the CDs.

On May 11, 1993, the district court severed all of plaintiffs'4

claims against the FDIC in its corporate capacity and transferred

them to this Court. The district court reasoned that 12 U.S.C. §

1821(f)(4), one of the sections of Financial Institutions Reform,

Rec overy, and Enforcement Act of 1989 ("FIRREA"), which places

claims for deposit insurance within the exclusive jurisdiction of

the federal Courts of Appeals, applied retroactively to plaintiffs'

claims, ie., claims arising out of a receivership which commenced

before August 9, 1989, the effective date of FIRREA. Accordingly,

the district court denied the FDIC-C's motion for summary judgment

because that court held that it lacked jurisdiction as to the

insurance claim, but retained jurisdiction over non-insurance

claims alleged against the FDIC- R. During oral argument before

this Court, counsel for both side s confirmed that all claims

against the FDIC-R had been settled.

In this appeal, the issues arise whether this Court has

jurisdiction over Hartford's appeal, whether Hartford's claim

against the FDIC was timely filed, whether the FDIC-C acted

arbitrarily and capriciously in determining that the CDs belonged

to Hartford, and whether, under various equitable principles, the

FDIC's offset of the six CDs against the debt owed to TIB by

Finultra was wrongful.

I. SUBJECT MATTER JURISDICTION

In Nimon v. Resolution Trust Corp., 975 F.2d 240, 244 (5th

Cir.1992), this Court determined that 12 U.S.C. § 1821(f)(4) places

claims involving deposit insurance within the exclusive

jurisdiction of the federal Courts of Appeals. That FIRREA3 That section provides as follows:

Whenever a civil action is filed in a court ... and

that court finds that there is a want of jurisdiction,

the court shall, if it is in the interest of justice,

transfer such action or appeal to any other such court

in which the action or appeal could have been brought

at the time it was filed or noticed, and the action or

appeal shall proceed as if it had been filed in or

noticed for the court to which it is transferred on the

date upon which it was actually filed in or noticed for

the court from which it is transferred.

5 provision provides:

Final determination made by the Corporation shall be

reviewable in accordance with the chapter 7 of Title 5 by the

United States Court of Appeals for the District of Columbia or

the court of appeals for the F ederal judicial circuit where

the principal place of business of the depository institution

is located.

In the court below, Hartford argued that § 1821(f)(4), which

was enacted on August 9, 1989, did not apply retroactively to

receiverships created before that date, and thus, does not apply to

the FDIC's 1987 receivership of TIB. Rejecting that argument, the

district court transferred all of Hartford's claims against the

FDIC-C to this Court pursuant to 28 U.S.C. § 1631. 3 Hartford has,

in its reply brief in this appeal, dropped its opposition to

retroactive application of § 1821(f)(4) to this case. However, in

order to clarify the basis for our subject matter jurisdiction, we

address the question of whether 12 U.S.C. § 1821(f)(4) applies

retroactively to this case and conclude that it does.

We have recently applied 12 U.S.C. § 1821(f)(4) to an

insurance cover age dispute, relating to the Federal Savings and

Loan Insurance Corporation, based on "depos its made prior to

enactment of [FIRREA]," although we did so without elaborating upon4 Prior to the Supreme Court's ruling in Landgraf, there were

two seemingly different presumptions concerning statutory

retroactivity. Compare Bowen v. Georgetown University Hospital,

488 U.S. 204, 208, 109 S.Ct. 468, 471-72, 102 L.Ed.2d 493 (1988)

("[C]ongressional enactments ... will not be construed to have

retroactive effect unless their language requires this result.")

with Bradley v. School Board, 416 U.S. 696, 711, 94 S.Ct. 2006,

2016, 40 L.Ed.2d 476 (1974) ("[A] court is to apply the law in

effect at the time it renders its decision, unless doing so would

result in manifest injustice or there is statutory direction or

legislative history to the contrary."). The opinion in Landgraf

was issued after oral argument was heard in the instant case.

6 the retroactivity issue. P ool v. RTC, 13 F.3d 880, 880-81 (5th

Cir.1994). The Supreme Court recently clarified the circumstances

in which a new statute which itself does not explicitly state

whether it applies to pending cases should be applied

retroactively. S ee Landgraf v. USI Film Products, et al.,

--- U.S.

----, 114 S.Ct. 1483, --- L.Ed.2d ---- (1994) (deciding whether

certain provisions of the Civil Rights Act of 1991, Pub.L. No. 102-

166, 105 Stat. 1071 (1991), should be applied retroactively to

pending cases). 4 In so doing, the Supreme Court endorsed "the

traditional presumption against applying statutes affecting

substantive rights, liabilities, or duties to c o nduct arising

before their enactment." I d. at ----, 114 S.Ct. at 1504. That

presumption is based on "the unfairness of imposing new burdens on

persons after the fact." I d. at ----, 114 S.Ct. at 1506. However,

the Supreme Court stated that regardless of the general presumption

against statutory retroactivity, "in many situations, a cou r t

should "apply the law in effe c t at the time it renders its

decision.' " I d. (citing Bradley, 416 U.S. at 711, 94 S.Ct. at

2016). Such situations generally involve procedural changes to5 That section currently provides in pertinent part:

(A) In general

Except as provided in subparagraph (D), all suits of a

7 existing law, including statutes which merely alter jurisdiction.

" W e have regularly applied intervening statutes conferring or

ousting jurisdiction, wheth er or not jurisdiction lay when the

underlying conduct occurred or when the suit was filed." Id.

---

U.S. at ----, 114 S.Ct. at 1501. In such a circumstance,

"[a]pplication of a new jurisdictional rule usually "takes away no

substantive right but simply changes the tribunal that is to hear

the case.' " I d. (quoting Hallowell v. Commons, 239 U.S. 506, 508,

36 S.Ct. 202, 202, 60 L.Ed. 409 (1916)).

This Court has previously recognized that principle, holding

that amendments to statutes which affect procedural or rem edial

rights generally apply to pending cases, where such change does not

deprive a party of its " "day in court.' " NCNB Texas Nat'l Bank

v. P & R Invs. No. 6, 962 F.2d 518, 519 (5t h Cir.1992) (quoting

FDIC v. 232, Inc., 920 F.2d 815, 818-19 (11th Cir .1991)). "When

Congress adopts statutory changes while a suit is pending, the

effect of which is not to eliminate a substantive right but rather

to "change the tribunal which will hear the case,' those

changes—barring specifically expressed intent to the contrary—will

have immediate effect." Turboff v. Merrill Lynch, Pierce, Fenner

& Smith, Inc., 867 F.2d 1518, 1521 (5th Cir.1989) (quoting

Hallowell, 239 U.S. at 508, 36 S. Ct. at 202). Thus, we have

retroactively applied 12 U.S.C. § 1819(b)(2), 5 permitting the FDICcivil nature at common law or in equity to which the

Corporation, in any capacity, is a party shall be

deemed to arise under the laws of the United States.

(B) Removal

Except as provided in subparagraph (D), the Corporation

may, without bond or security, remove any such action,

suit, or proceeding from a state court to the

appropriate United States district court before the end

of the 90-day period beginning on the date the action,

suit, or proceeding is filed against the Corporation or

the Corporation is substituted as a party.

6 That section provides in pertinent part:

(14) Statute of limitations for actions brought by

conservator or receiver

(A) In general

Notwithstanding any provision of any contract, the

applicable statute of limitations with regard to any

action brought by the Corporation 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

8 to remove cases in which it is a party to federal court, to pending

cases. See, e.g., NCNB Texas Nat'l Bank, 962 F.2d at 519; In re

Meyerland Co., 960 F.2d 512, 514 n. 2 (5th Cir.1992), cert. denied,

--- U.S. ----, 113 S.Ct. 967, 122 L.E d.2d 123 (1993); W alker v.

FDIC, 970 F.2d 114, 120 (5th Cir.1992); F SLIC v. Griffin, 935 F.2d

691, 695-96 (5th Cir.1991), cert. denied,

--- U.S. ----, 112 S.Ct.

1163, 117 L.Ed.2d 410 (1992); T riland Holdings & Co. v. Sunbelt

Service Corp., 884 F.2d 205 (5th Cir.1989); s ee als o FDIC v.

Belli, 981 F.2d 838, 842-43 (5th Cir.1993) (applying 12 U.S.C. §

1821(d)(14), 6 extending the statute of limitations for contractual(II) the period applicable under State law

....

(B) Determination of the date on which a claim accrues

For purposes of subparagraph (A), the date on which the

statute of limitation begins to run on any claim

described in such subparagraph shall be the later of—

(i) the date of the appointment of the Corporation as

conservator or receiver; or

(ii) the date on which the cause of action accrues.

9 cla ims held by the FDIC, retroactively to pending cases, except

where so to do would revive an expired claim). Section 1821(f)(4)

changes the forum which hears deposit insurance disputes; it does

not alter any substantive rights of the parties nor does it deprive

any party of its day in court. Thus, we hold that 28 U.S.C. §

1821(f)(4) applies retroactively to govern this case and that this

Court has jurisdiction in this appeal.

II. LIMITATIONS

The FDIC argues that Hartford did not timely petition for

review of the FDIC's deposit insurance determination. In so doing,

the FDIC relies on 12 U.S.C. § 1821(f)(5), which states: "Any

request for review of a final determination by the Corporation

shall be filed with the appropriate circuit court of appeals not

later than 60 days after such determination is ordered." The FDIC

argues that the 60-day time limit began to run in this case on the

effective date of FIRREA, August 9, 1989. Because Hartford did not

file this suit until June 24 , 1991, the FDIC contends that such

filing is untimely. Further, the FDIC asserts that applying §7 In the court below, the FDIC-C argued that 12 U.S.C. §

1822(e) (1982) served as a statute of limitations barring

plaintiff's suit. That provision states:

Unclaimed Deposits

If, after the Corporation shall have given at least

three months' notice to the depositor by mailing a copy

thereof to his last-known address appearing on the

records of the closed bank, any depositor in the closed

bank shall fail to claim his insured deposit from the

Corporation within eighteen months after the

appointment of the receiver for the closed bank, or

shall fail within such period to claim or arrange to

continue the transferred deposit with the new bank or

with the other insured bank which assumes liability

therefor, all rights of the depositor against the

Corporation with respect to the insured deposit, and

against the new bank and such other insured bank with

respect to the transferred deposit, shall be barred,

and all rights of the depositor against the closed bank

and its shareholders, or the receivership estate to

which the Corporation may have become subrogated, shall

thereupon revert to the depositor. The amount of any

transferred deposits not claimed within such eighteen

months' period, shall be refunded to the Corporation.

The FDIC-C abandoned that argument before this Court. That

abandonment would appear correct. A revised, but similar

section, still governs disposition of unclaimed deposits.

12 U.S.C.A. § 1822(e) (West Supp.1994). The co-existence of

§ 1822(e) and § 1821(f)(5) under current law indicates that

§ 1822(e) was not meant to govern the within situation, ie.,

a dispute over insurance coverage where the FDIC-C is

asserting that Hartford is not the actual depositor and

where the FDIC-C did not inform Hartford that it must claim

its deposits, but rather informed Hartford that it owned no

insured deposits at all.

10 1821(f)(5) to Hartford retroactively is mandated under the

aforementioned Fifth Circuit caselaw which generally permits

procedural statutory amendments to be applied to pending cases. We

do not agree with either of those two positions. 7

The FDI C's assertion that retroactive application of §

1821(f)(5) is in accord with this Court's prior caselaw fails to8 In Belli, we stated that we would not revive a stale claim

even where a statute of limitations had been extended. The

situation presented by this case is the flip side of that

principle, ie., we will not "kill" a viable claim where the

applicable statute of limitations is shortened. Contrary to the

government's assertion, there is a difference between applying an

extended statute of limitations where no substantive rights are

affected and applying a shortened statute of limitations where so

to do wipes out a substantive right.

11 recognize that in the cases cited above, we approved retr oactive

application of procedural statutory changes where those changes did

not deprive a litigant of its day in court, but rather changed the

forum in which the claim was to be heard or extended a statute of

limitations. In such instances, the substantive rights of the

parties were not affected. 8 In contrast, retroactive application

of § 1821(f)(5) in this case would extinguish claims which were

valid before the statute's effective date and deprive Hartford of

a forum, even though it a cted properly under law existing at the

time its claims arose. "[T]he mere fact that a new rule is

procedural does not mean that it applies to every pending case."

Landgraf, --- U.S. at ----, 114 S.Ct. at 1502 n. 29.

The FDIC recognizes that applying the 60- d ay limitations

period from the date of the final determination is patently unfair

because there is simply no way Hartford could have foreseen, on

June 24, 1987, that a 60-day limitation would someday come into

effect. Thus, the FDIC proposes that we begin running the

limitations period from the date of FIRREA's enactment. While such

a n approach may not be unconstitutional, s ee Fust v. Arnar-Stone9 " "[A] newly-created statute of limitation or one which

shortens existing periods of limitation will not violate the

constitutional prohibition against divesting a vested right

provided it allows a reasonable time for those affected by the

act to assert their rights.' " Id. at 1100 (quoting Lott v.

Haley, 370 So.2d 521, 524 (La.1979)).

12 Laboratories, Inc., 736 F.2d 1098 (5th Cir.1984), 9 it would be

manifestly unjust, and therefore in cont ravention of B radley v.

School Board, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974),

because it would "infringe upon or deprive a person of a right that

had matured," and would impose "unanticipated obligations

... upon

a party without notice or an opportunity to be heard." I d. at 720,

94 S.Ct. at 2021. See also Landgraf, --- U.S. at ----, 114 S.Ct.

at 1497 ("Ele mentary considerations of fairness dictate that

individuals should have an opportunity to know what the law is and

to conform their conduct accordingly; settled expectations should

not be lightly disrupted."). In this case, the FDIC's proposed

limitations period would deprive Hartford of a forum without giving

Hartford adequate notice to protect its otherwise valid rights. In

hindsight, it may appear that Hartford should have moved quickly

upon enactment of FIRREA and the inclusion in it of the 60-day

limitations period. However, such hindsight fails to take into

account the situation which reigned in retroactivity law prior to

the Supreme Court's ruling in Landgraf. Further, given this

Court's approval of retroactively applying procedural, as opposed

to substantive, statutory changes, an d the substantive aspect of

the statutory change in this case, Hartford could reasonably have

believed that the 60-day limitations period did not apply to it.10 That letter stated, "In examining the bank records it has

been determined that the [six] certificates belong to Morchem

Resources" After listing the six CD numbers and each CD's value

at $82,000, the FDIC stated:

In February 1987, the six (6) referenced documents were

transferred into the name of six different Hartford

companies. However, the six certificates continue to

secure a loan in the name of Finultra, A.G. which is

associated with Morchem Resources, Inc. Therefore,

determination has been made to aggregate these deposits

and an uninsured excess deposit exists for $392,000.

Should there be any questions, please contact the

undersigned.

(Emphasis added.)

13 Finally, we note that the date of the "final determination" in this

case is in dispute. The FDIC states that its final determination

was made in the June 24, 19 87, letter to Hartford. 1 0 However,

Hartford correctly notes that final determinations may occur after

the FDIC's initial determination and after several written

exchanges between the FDIC and the alleged depositor concerning

ownership of the deposit. See Kershaw, 987 F.2d at 1208; Nimon,

975 F.2d at 244. In this case, the FDIC never responded to

Hartford's inquiries and requests for further information, despite

the FDIC's direction to Hartford to submit any questions to the

FDIC. The FDIC seemingly desires to convert a determination into

a "final" determination simply by ignoring the inquiries of alleged

depositors. Hartford concedes that prior to its institution of the

within case, there has been a "de facto" final determination by the

FDIC, and we agree. Nonetheless, even if the 60-day limitation

period had been in effect in 1987, it is not clear, under the facts

of this case, whether the limitations period would have begun11 That section provides in pertinent part:

[E]very civil action commenced against the United

States shall be barred unless the complaint is filed

within six years after the right of action first

accrues.

12 Section 16.004(c) states:

A person must bring suit against his partner for a

settlement of partnership accounts, and must bring an

action on an open or stated account, or on a mutual and

current account concerning the trade of merchandise

between merchants or their agents or factors, not later

than four years after the day that the cause of action

accrues. For purposes of this subsection, the cause of

action accrues on the day that the dealings in which

the parties were interested together cease.

Section 16.051 states:

Every action for which there is no express limitations

period, except an action for the recovery of real

property, must be brought not later than four years

after the day the cause of action accrues.

14 running on June 24, 1987, the date of the letter from the FDIC to

Hartford or on a later date. In any event, for the reasons set

forth supra, we decline to apply the 60-day limitations period

retroactively to govern Hartford's claims.

At the time of the alleged final determination in this case,

there was no federal statute or regulation specifically governing

the limitations period for insurance coverage disputes. As to

general limitations provisions, Hartford's within filing was timely

under either the general federal six year statute of limitations

contained in 28 U.S.C . § 2401, 1 1 or Texas' four year statute of

limitations contained in Tex.Civ.Prac. & Rem.Code §§ 16.00 4(c),

16.05 1. 12 The FDIC does not dispute the applicability of one or

both of those limitations periods. Because Hartford filed timely15

under each and all of those provisions, and because we conclude

that § 1821(f)(5) does not bar Hartford's claims, we need not

determine which of the federal or state limitations periods applies

in pre-FIRREA insurance coverage disp ute cases such as this one.

Rather, we simply hold that Hartford's challenge to the FDIC's

insurance determination is not time-barred.

III. INSURANCE COVERAGE DISPUTE

We review insurance coverage determinations by the FDIC-C

under the Administrative Procedure Act ("APA") and must affirm them

unless they are " "found to be arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with the law.' "

Kershaw v. RTC, 987 F.2d 1206, 1208 (5th Cir.1993) (quoting Nimon,

975 F.2d at 244). Hartford, as the appellant, bears the burden of

proving that the FDIC's determination was arbitrary and capricious.

Mississippi Hospital Ass'n v. Heckler, 701 F.2d 511, 516 (5th

Cir.1983). In performing our duties of review under the APA, we

accord deference to an administrative agency's interpreta tion of

its own regulations. Kershaw, 987 F.2d 1206.

At the time the FDIC-C made the determination at issue in

this case, the relevant pre-FIRREA statute defined "insured

deposit" as "the net amount due to any depositor ... for deposits

in an insured bank" up to $100,000. 12 U.S.C. § 1813(m)(1) (1982).

That statute further provides: "[I]n determining the amount due to

any depositor there shall be added together all deposits in the

bank main tained in the same capacity and the same right for his13 We review insurance coverage determinations under the law

in effect at the time the FDIC was appointed receiver. See

Kershaw, 987 F.2d at 1209 n. 1 (citing Spawn v. Western BankWestheimer, 925 F.2d 885, 887 n. 1 (5th Cir.1991)). Accordingly,

we apply the pre-FIRREA statutes and regulations in this part of

the opinion.

14 Because the FDIC-C's June 24, 1987, determination letter

contained only a conclusory two-paragraph finding, we take the

FDIC-C's explanations for certain of its actions from the briefs

the FDIC has filed in this case. In Abrams v. FDIC, the Second

Circuit decided that a "cursory two-page letter" from the FDIC to

an alleged depositor concluding that deposit accounts would not

be insured was "wholly inadequate, and provides very little, if

16 benefit either in his own name or in the names of others." 13 Id.

Under the regulations issued by the FDIC "[f]or the purpose of

clarifying and defining the insurance coverage under" the statute,

id., the FDIC determines the actual owner of a deposit account by

examining the deposit account records.

The deposit a ccount records of the insured bank shall be

conclusive as to the existence of any relationship pursuant to

which the funds in the acc ount are deposited and on which a

claim for insuran ce coverage is founded. Examples would be

trustee, agent, custodian or executor. No claim for insurance

based on such a relationship will be recognized in the absence

of such disclosure.

Funds owned by a principal and deposited in one or more deposit accounts in the name or names of agents or nominees

shall be added to any individual deposit accoun ts of the

principal and insured up to $100,000 in the aggregate.

12 C.F.R. § 330.1(b); 330.2(b) (1987).

In this case, the FDIC-C determined that Morchem was the

actual owner of the funds despite the fact that each of the six CDs

bears the name of a different Hartford company. The FDIC

considered those Hartford companies as holding the funds

represented by the CDs in some form of custodial or agency

capacity. 14 The FDIC relied primarily on the original Collateralany, basis upon which to conduct a meaningful review [of] the

agency's determination." 938 F.2d 22, 25 (2nd Cir.1991). The

Second Circuit remanded the case back to the FDIC for a fully

written explanation of its actions. This case also unfortunately

presents the problem of a "perfunctory analysis" by the FDIC.

Id. However, because any remand would likely only result in the

same explanation that the FDIC has proffered in the district

court and in this court, we will accept the FDIC's explanations

as presented in its brief.

15 The FDIC's determination is in accord with the general

common law principles governing ownership of collateral.

Ordinarily the general property or title in the

thing pledged remains in the pledgor, subject to a lien

in favor of the pledgee for the amount of the debt or

obligation for which the pledge is given. This rule

applies notwithstanding an apparent transfer of legal

title to the pledgee. This general property or title

in the pledgor continues until there has been a sale or

foreclosure under the contract of pledge.

Ordinarily, a pledgee of personal property does

not acquire the legal title thereto.... As a general

rule, sometimes affirmed by statute, the pledgee has

merely a special property or interest in the thing

pledged during the continuance of the pledge, which

17 Agreement, in which the single CD was pledged to secure the

performance bond provided by Hartford. That agreement states that

M orchem is the "Depositor," that Hartford, the "Surety," is only

entitled to the collateral to the extent there is a loss on the

bond, and that Hartford may foreclose on the bond to realize the

value of the security. The FDIC determined further that no change

in Morchem's status as the actual depositor occurred when the

single CD was replaced with six CDs. That substitution agreement

confirmed that the CDs were to be "held by the named Companies as

security for the performance of the undertakings in the

...

Collateral Agreement" and "shall be d eemed the collateral

substituted for the" single $492,000 CD. 15 Under a standard suretyvests in the pledgee the right to the property as far

as is necessary to secure payment of the debt. In any

event, the pledgee acquires only such interest as to

allow him security for his debt or obligation.

72 C.J.S. Pledges § 21 (footnotes omitted). See also

Congress Talcott Corp. v. Gruber, 993 F.2d 315, 319-20 (3rd

Cir.1993); Major Appliance Co. v. Gibson Refrigerator Sales

Corp., 254 F.2d 497, 502 (5th Cir.1958).

16 Even if Hartford desired to emphasize, in this appeal, the

payment of such claims, the latter would appear to relate to

issues involving the FDIC-R which are not before this Court and

have been settled in the district court, see infra, and not to

any issues concerning insurance coverage and the FDIC-C. The

record in this case is hardly a model of clarity. Accordingly,

there may be contentions which Hartford could make in this appeal

respecting insurance which would aid it. But Hartford had ample

opportunities to proffer facts to, and to make legal contentions

before, this Court. Thus, Hartford has been afforded its full

day in court, regardless of whether or not there was any lack of

appropriate procedure at the administrative level before the

FDIC-R.

17 Hartford claims that on the same day the Collateral

Agreement was signed, Morchem assigned the single $492,000 CD to

Hartford, making Hartford the owner of the CD. Hartford states

that the assignment document was in the bank records, while the

FDIC asserts the document was not in the records and that

therefore the doctrine enunciated in D'Oench Duhme & Co. v. FDIC,

315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), precludes this

Court from considering the assignment. Hartford responds that

the D'Oench, Duhme doctrine is limited to agreements to which the

18 agreement such as this one, a surety such as Hartford gains rights

to foreclose upon pledged collateral only if the obligor defaults

on the bond and the surety correspondingly suffers a loss. In such

a situation, the surety could have a claim to the FDIC's insurance

coverage of the CDs through its rights with respect to those CDs as

collateral. However, while the record does indicate that Hartford

has paid claims under the bond, Hartford, in this appeal, has not

relied on suc h loss. 1 6 Rather, in this appeal, Hartford has

emphasized that it owns the CDs because its name is on them. 17bank is a party, unlike the assignment at issue in this case, to

which the vice president of the bank was merely a witness. We

find it unnecessary to resolve the factual dispute, concerning

whether the assignment document was in the bank records, or to

reach the D'Oench, Duhme coverage issue, because we conclude that

all parts of the record in this case, including the assignment

document, support the FDIC's determination that the CDs were

posted as collateral.

19 The FDIC-C, before making the determination of owner ship,

apparently did not discover that there were in fact defaults by

M orchem; however, such failure by the FDIC-C does not add up to

arbitrary or capricious conduct on its part, given that nothing in

the bank records indicate s that such loss had occurred. At the

time of the agency's determination of ownership, there was no

regulation defining "deposit account records." In Abdulla Fouad &

Sons v. FDIC, 898 F.2d 482, 486 (5th Cir.1990), we rejected

appellant's claim that the FDIC should have examined records other

t han those contained in the deposit account records to determ ine

depositor status. We explained that the FDIC was not required to

undertake such examinations because the FDIC was empowered and

expected by Congress " "to make available to the public its insured

savings as speedily as possible.' " I d. at 485 (quoting Scott,

Some Answers to A ccount Insurance Problems, T he Business Lawyer

493, 504 (Jan.1968)). Because the FDIC "must literally make

determinations of deposit insurance coverage overnight," the FDIC

is not called upon to use its limited resources to investigate

possible ownership rights outside of those indicated in the deposit

account records themselves. I d. Thus, the FDIC did not need to go

beyond the bank file concerning the CDs to determine who had18 Hartford's interpretation of deposit records would unduly

limit the FDIC to the most superficial evaluation in this type of

case. For instance, the computer records on which Hartford would

have the FDIC rely are printouts of the names of accountholders,

which list only "short names" and have no space to disclose trust

or surety arrangements. Similarly, the CDs themselves state that

interest is to be awarded to the Hartford companies, while the

other documents, as well as actual practice, reveal that Morchem

received all interest on the CDs.

19 Hartford concedes that its equitable claims all arise out

of the FDIC's admittedly wrongful offset and that the equitable

claims do not involve the insurance coverage dispute. However,

Hartford claims that it does not know which "hat" the FDIC was

wearing when it made the wrongful offset. But before the

district court, Hartford in its own proposed pre-trial order,

stated that "[o]n July 24, 1987, FDIC-R retrieved the $100,000

20 ownership interests in the CDs.

Nor in this case did the FDIC look at too many records before

making its determination as to ownership. Hartford claims that the

only records relating to the "deposit account" are the CDs

themselve s and TIB's computer listing of open customer accounts.

But, even if some of those documents related to matters other than

"deposit accounts ," they clearly related to ownership of the CDs

since they pertain to the question of who had a right with respect

to those CDs and under what circumstances. 18 Thus, the FDIC did not

act arbitrarily or capriciously in determining that Morchem owned

the CDs and that the CDs should be aggregated.

IV. OFFSET CLAIMS

Hartford argues that the FDIC's offset of the six CDs against

the debt owed TIB by Finultra was wrongful and asks this Court to

impose a constructive trust or to grant some similar type of

equitable relief. However, Hartford's equitable claims are based

on actions taken by the FDIC-R, not the FDIC-C. 19 Since the FDIC-from River Oaks Bank, and on July 28, 1987, setoff the entire

$492,000 represented by the six CDs against debt owed by

Finultra, A.G." (Emphasis added.) From the inception of this

case, the parties have proceeded under the understanding that the

FDIC was being sued in both capacities, that the FDIC-C was

responsible for the insurance coverage, and that the FDIC-R was

responsible for other matters including offset. Hartford points

to no evidence that the FDIC-C had a hand in the offset. Rather,

exhibit documents from the FDIC's file concerning the offset are

from the FDIC's liquidation office, revealing that the FDIC was

acting in its receivership capacity, because only the FDIC-R has

the statutory authority to "place the insured depository

institution in liquidation." 12 U.S.C. § 1821(d)(2)(E).

21 R has been dismissed in this case pursuant to a settlement

agreement in the district cou rt, and because this appeal relates

only to Hartford's insurance claims, the offset claims are not

open. Under the dual capacities doctrine, the FDIC-C may not be

held liable for acts committed by the FDIC-R, ie., the FDIC acting

in one capacity is not subject to defenses or claims based on its

acts in other capacities. See Texas American Bancshares, Inc. v.

Clarke, 954 F.2d 329, 335 (5th Cir.1992).

For the reasons set forth in this opinion, Hartford's petition

for review is DENIED.