Opinion ID: 2070228
Heading Depth: 1
Heading Rank: 3

Heading: Transfer of Assets to DEPCO

Text: Having reviewed the relevant documents, it is our conclusion that under the DEPCO statute, G.L.1956 chapter 116 of title 42 (the statute) and under the transfer documents by which DEPCO acquired the assets of RICCU, DEPCO took the assets of RICCU free and clear of any alleged breach of contract claim and free of any recoupment defense arising therefrom. Section 42-116-6(b) states that DEPCO is empowered:    to assume all, none, or any portion of the liabilities    of said eligible institution at such terms and in such manner as the corporation shall deem advisable, provided, however, that the corporation shall be responsible and liable only for those liabilities specifically assumed and shall bear no responsibility or liability for any other debts or liabilities of such eligible institutions. [2] See Rhode Island Depositors' Economic Protection Corp. v. DiLorenzo, 683 A.2d 370, 371 (R.I. 1996) (mem.) (citing § 42-116-6(b)); Rhode Island Depositors Economic Protection Corp. v. Phillips, 643 A.2d 215, 216 (R.I.1994) (per curiam) (same). The document sent by DEPCO to the receiver, titled Offer to Purchase Assets and Assume Certain Liabilities of RICCU (Offer), in the section titled Limitation on Liability of DEPCO, stated, DEPCO does not, and shall not, assume or in any way become liable for any debts, claims or liabilities of the Institutions, other than the Assumed Deposit Liabilities specifically assumed pursuant to Paragraphs 4 and 6 hereof. Neither DEPCO nor any of its successors or assigns shall be or become liable as a result of this Offer, the Court Order, any counterclaim or other claim of liability, whether as a successor to or assignee of any Institution, the Receiver or otherwise, for any debts or liabilities of, or claims against the Institutions, whatsoever, including (without limitation) claims against the Institutions or the Receiver for    acts or omissions of the Institutions or their Receiver or for defaults by the Institutions under any agreement    or contract  that has not been specifically assumed. This language was approved by and incorporated in a court order dated May 22, 1992. In addition, the DEPCO/Receiver Agreement (Agreement) dated June 24, 1992, stated, Except for the express provisions of paragraphs 5, 6, 8, and 9 of this Offer, DEPCO shall not assume or otherwise become liable for any claims against or liabilities of the Institutions or the Receiver to    non-deposit    creditors of the Institutions whether their claims are liquidated, unliquidated, contingent, known or unknown or otherwise, nor shall DEPCO assume or be or become liable with respect to any setoff or counterclaim or other claim or liability    whatsoever, including (without limitation) claims against the Institutions or the Receiver with respect to    damages for breach of any contract.  (Emphases added.) The DEPCO statute must be construed liberally in conformity with its purposes. Section 42-116-4(a); Rhode Island Depositors Economic Protection Corp. v. Mapleroot Development Corp., 710 A.2d 167, 170 (R.I.1998). The purpose of the DEPCO statute is to aid the prompt payment of the deposit liabilities of the financial institutions to each depositor to the extent and in the manner as the corporation determines. Section 42-116-2(e). The statute goes on to provide that [i]n carrying out its purpose, [DEPCO] seeks to: (1) Maximize the return from the sale or other disposition of the assets of the corporation   . Id. The verified claim filed in the RICCU receivership made reference to the defense of equitable setoff. Claims of setoff, however, were expressly disclaimed in the Agreement, indicating that DEPCO intended to disclaim the very recoupment defense that Bowen Court asserted in its verified claim. [3] Significantly, nowhere in either paragraphs 4 or 6 of the Offer or in 5, 6, 8 or 9 of the Agreement is liability for the note and loan documents specifically assumed. Moreover, we believe that the above disclaimers of any setoff or counterclaim or other claim or liability are broad enough to include a defense of recoupment arising out of an alleged breach of the loan agreement. The defendants argued that because DEPCO referred to rights of recoupment when assuming assets of RICCU, but did not expressly disclaim the defense of recoupment in its disclaimers, DEPCO did not intend to disavow a recoupment defense. We believe that DEPCO's disclaimers were intended to be as broad as possible and that the absence of the word recoupment in the disclaimer sections did not thereby establish DEPCO's intention to assume or become liable to defendants' recoupment defense. Accordingly, we construe § 42-116-6(b) as permitting DEPCO to assume liabilities free of all defenses including recoupment defenses, and excepting only those liabilities expressly assumed. Hence, given that the Offer and the Agreement specifically disclaim any liabilities and counterclaims, we conclude that DEPCO is immune from defendants' recoupment defense.