Opinion ID: 194612
Heading Depth: 3
Heading Rank: 1

Heading: Retroactivity of FIRREA

Text: In general, district courts apply the law in effect when they render their decisions, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary. Bradley v. Richmond Sch. Bd., 416 U.S. 696, 711 (1974).5 Since the FDIC brought this 5 In Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 836 (1990), the Supreme Court noted a tension between Bradley and Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988), which stated a presumption against retroactivity. However, the Court declined to reconcile the cases. Kaiser Aluminum & Chem. Corp., 494 U.S. at 854. -5- action on March 3, 1991, almost two years after the application of 1823(e) to the FDIC as receiver, 1823(e) presumptively applies to this case. Thus, we examine the two exceptions to the general rule. First, the statute itself and the legislative history offer little guidance as to Congress' intent with respect to retroactivity. Under Bradley, this lack of guidance supports retroactive application. Bradley, 416 U.S. at 715-16 (stating that when legislative history is inconclusive, courts should apply the statute retroactively). Second, to determine whether a manifest injustice will result from the retroactive application of a statute, we must balance the disappointment of private expectations caused by retroactive application against the public interest in enforcement of the statute. Demars v. First Serv. Bank for Sav., 907 F.2d 1237, 1240 (1st Cir. 1990). In the present case, appellants' disappointed expectations are small. Appellants had notice that their agreement had to meet certain criteria to be valid against the FDIC. The D'Oench doctrine was well The Seventh and Eight circuits have expressly addressed the issue of retroactivity with respect to the substantive provisions of FIRREA. Both of these circuits applied FIRREA retroactively. See FDIC v. Wright, 942 F.2d 1089, 1095-97 (7th Cir. 1991); FDIC v. Kasal, 913 F.2d 487, 493 (8th Cir. 1990), cert. denied, 111 S. Ct. 1072 (1991). In light of the muddled state of the law in this area, we apply Bradley which is well-established precedent in this circuit. We find no prejudice in this application because Bradley permits retroactive application only where no manifest injustice will result. See FDIC v. Wright, 942 F.2d at 1095 n.6. -6- established when appellants were negotiating with the Bank. Although D'Oench, Duhme & Co. did not explicitly require a writing executed by the Bank, it did require that any agreement be clearly documented in the Bank's records to be valid against the FDIC. In addition, even if D'Oench, Duhme & Co. did not provide appellants with sufficient notice of the statute's requirements, appellants' failure to meet these requirements did not result from reasonable reliance on the D'Oench doctrine. See Van Dorn Plastic Machinery Co. v. NLRB, 939 F.2d 402, 404 (6th Cir. 1991) (manifest injustice requires parties' reasonable reliance on preexisting law). Appellants did all they could to advance settlement of the debt. In fact, they sent the necessary documents, with their signatures, to the Bank for execution. The Bank, however, refused to sign the papers. Appellants, therefore, could have done nothing more to satisfy either the D'Oench or the statutory requirements. Finally, there is no evidence that appellants made any attempt to perform under this agreement during the two years between the time that appellants allegedly entered this agreement and the time the FDIC filed suit. As such, we cannot conclude that appellants reasonably expected this agreement to shield them from liability on their notes. On the other hand, 1823(e) promotes important public policies. Congress amended 1823(e), through FIRREA, to aid the FDIC in its immediate responsibilities of dealing with -7- mounting bank failures in this country. FDIC v. Wright, 942 F.2d 1089, 1096 (7th Cir. 1991). The FDIC cannot protect public funds held in failed banks unless it can rely on the bank's records. FDIC v. McCullough, 911 F.2d 593, 600 (11th Cir. 1990), cert. denied, 111 S. Ct. 2235 (1991). Accordingly, we find no manifest injustice, and we apply 1823(e), as amended by FIRREA, to the present case.