Court Opinion

ID: 196900
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:16:47+00
Date Added: 2024-06-11T17:26:44.735185
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UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT

                                         

No. 95-1853

            FEDERAL DEPOSIT INSURANCE CORPORATION,
           AS RECEIVER FOR NEW MAINE NATIONAL BANK,

                    Plaintiff, Appellant,

                              v.

                 ROLAND HOUDE AND ORA HOUDE,

                    Defendants, Appellees.

                                         

No. 95-1854

            FEDERAL DEPOSIT INSURANCE CORPORATION,
           AS RECEIVER FOR NEW MAINE NATIONAL BANK,

                     Plaintiff, Appellee,

                              v.

                 ROLAND HOUDE AND ORA HOUDE,

                   Defendants, Appellants.

                                         

        APPEALS FROM THE UNITED STATES DISTRICT COURT

                  FOR THE DISTRICT OF MAINE

           [Hon. Gene Carter, U.S. District Judge]
                                                             

                                         

                            Before

                    Boudin, Circuit Judge,
                                                     

               Campbell, Senior Circuit Judge,
                                                         

                  and Lynch, Circuit Judge.
                                                      
                                         

Jaclyn  C.  Taner, Counsel,  with  whom  Ann S.  DuRoss, Assistant
                                                                   
General  Counsel,  Colleen  B.  Bombardier,  Senior  Counsel,  Federal
                                                  
Deposit Insurance  Corporation, Andrew Sparks,  Paul E. Peck,  John B.
                                                                              
Emory and Drummond & Drummond were on briefs for plaintiff.
                                     
Jeffrey Bennett with whom  Melinda J. Caterine,  Clare S. Benedict
                                                                              
and Bennett and Associates, P.A. were on briefs for defendants. 
                                        

                                         

                        July 24, 1996
                                         

CAMPBELL,  Senior   Circuit  Judge.    The   Federal  Deposit
                                              

Insurance Corporation ("FDIC") appeals from an order, entered

in  the  United States  District  Court for  the  District of

Maine, dismissing its complaint to  collect the amount due on

a $275,000  promissory note  executed in  1986 by  defendants

Roland and Ora  Houde and made payable to  the Maine National

Bank, and to foreclose on  the mortgage securing the  Houdes'

indebtedness.   The  Houdes  cross-appeal  from the  district

court's denial of four pretrial motions.  For the reasons set

forth below, we affirm the district court's order.

                              I.
                                          I.

          In  November 1986,  Roland and  Ora  Houde borrowed

$275,000  from the Maine  National Bank ("MNB"),  a federally

insured national  banking association, to finance  a business

venture.   They executed a  note and allonge made  payable to

MNB (collectively the "Note" or "Houde Note"), and secured by

a mortgage on property located  in Maine.  After MNB declared

insolvency in January  1991, ownership of the Note  passed to

the FDIC as receiver, the FDIC says.  The FDIC also says that

it  transferred the  Houde  Note  briefly  to the  New  Maine

National Bank  ("NMNB"), a  bridge bank set  up by  the FDIC.

After  the dissolution  of NMNB  in  July 1991,  many of  its

assets  were  purchased  by  Fleet  Bank  and  the  rest,  as

recounted  by  the FDIC,  passed  to  the  FDIC as  the  duly

                             -3-

appointed receiver for NMNB.   The FDIC asserts that the Note

was  among  the remaining  assets  transferred  to it.    All

parties agree, in any case, that the original Note was in the

possession of the FDIC at trial.  

          The FDIC  says  that  it  hired  Recoll  Management

Corporation ("Recoll") to manage  the receivership assets  of

NMNB.  The FDIC maintains that Recoll took over management of

the Note  as well  as other obligations  owed by  the Houdes.

These other obligations  included loans from MNB  to Turcotte

Concrete,  a  corporation  of  which  Mr.  Houde  was  a  50%

shareholder,  that were guaranteed  by the Houdes.   Turcotte

Concrete filed  for bankruptcy  in 1991, and  as part  of the

bankruptcy  proceeding,   Recoll,  on  behalf  of  the  FDIC,

negotiated  an  agreement  in June  1993  resolving  Turcotte

Concrete's  debt  (the  "Conditional  Amendment  to  Guaranty

Agreements   and    Promissory   Notes,"    or   "Conditional

Agreement").    According  to  the  FDIC,  Recoll  separately

negotiated  with the  Houdes  concerning their  personal debt

evidenced by the Note.  The Houdes, however, contend that the

Conditional   Agreement    resolving   Turcotte    Concrete's

obligations,  by  its  own  terms,  released  their  personal

obligations on the Note.   On this theory, they have  made no

payments on the Note since June 1993.

          In July  1994, the  FDIC sued  the Houdes in  Maine

state  court to collect  the amount  due on  the Note  and to

                             -4-

foreclose  on the  mortgage securing  the  debt.   The Houdes

removed the  action to the  United States District  Court for

the  District of  Maine  and  then moved  to  dismiss or  for

summary   judgment  on   the   ground  that   their  personal

indebtedness  on  the   Note  had  been  discharged   by  the

Conditional Agreement.  The district court denied the motions

in  September 1994, concluding that there were genuine issues

of  fact as  to the  meaning  and intent  of the  Conditional

Agreement.  In  early 1995, the Houdes moved  for judgment on

the  pleadings as well  as for summary  judgment, reiterating

their claim  that  the  Conditional  Agreement  unambiguously

released them  from the  Note.  In  the Houdes'  Statement of

Undisputed Material  Facts submitted in connection with their

summary  judgment motion,  the Houdes  acknowledged that  the

FDIC had been appointed as receiver for MNB.  The Houdes also

moved to dismiss, or for a  default judgment based on a claim

that  the servicing  agreement between  the  FDIC and  Recoll

violated the Maine  champerty statute.  See 17-A   M.R.S.A.  
                                                       

516(1).  The FDIC cross-moved  for summary judgment.   In May

1995, the district court denied these motions.  

          A jury  trial was  scheduled for  early June  1995.

Shortly  before trial,  the  FDIC filed  a  motion in  limine

seeking  to preclude the  Houdes from questioning  the FDIC's

standing to  recover on  the Note.   The Houdes  opposed this

motion.    The  district  court  denied  the  motion  without

                             -5-

addressing the merits  of the standing issue.   At trial, the

parties stipulated that  (1) the FDIC possessed  the original

Note,  (2) the  Houdes'  signatures  on  the  documents  were

authentic, and  (3) the  Houdes had made  no payments  on the

Note  since June  1993.   The  FDIC offered  in evidence  the

original  Note which  was payable  to  MNB and  had not  been

indorsed to any other entity.   The FDIC called as  a witness

James Golden, the FDIC account officer, who had only been the

custodian of the Houde file for the two weeks prior to trial.

Golden  testified to the series of events occurring after the

failure of MNB up until the time  of trial:  (1) the FDIC was

appointed receiver  of MNB,  (2) the Note  passed to  NMNB, a

bridge bank set up  by the FDIC, (3) the FDIC dissolved NMNB,

(4) the Note passed to the FDIC as receiver for NMNB.  Golden

testified that  the Note was  not among the NMNB  assets that
                                             

Fleet Bank purchased  from the FDIC.  The FDIC  did not offer

or have with it any public or business records evidencing the

transfers to which Golden testified.

          The  Houdes objected  to Golden's testimony  and to

the  introduction of  the  Note  in  evidence,  arguing  that

Golden's testimony  was inadmissible  hearsay, as  he had  no

personal knowledge of the transactions to which he testified.

In addition, they argued that Golden's testimony was  not the

best evidence of  the transactions in question.  The district

court  sustained the  Houdes'  objection and  struck Golden's

                             -6-

testimony.   The FDIC  then requested a  short continuance to

allow   it   to  obtain   documentation  of   the  underlying

transactions to which Golden had testified.  The court denied

a continuance, granting judgment as  a matter of law in favor

of the  Houdes.  The  court stated  that there was  "no basis

whatsoever on which  a jury could conclude that the plaintiff

is entitled  to enforce this note."1  In response to the FDIC

counsel's   indication  that  he  would  file  a  motion  for

reconsideration of the directed verdict later that afternoon,

the   court  indicated  that  it  would  not  reconsider  its

                    
                                

1.   The district court ruled from the bench:

          There is  a complete gap in  the evidence
          between  the  time  the  bank  [sic]  was
          lawfully  in  the   possession  of  Maine
          National  Bank  and  the   title  to  the
          document was in Maine National Bank,  and
          the time that it  ultimately came to rest
          in the possession of  this plaintiff, and
          there is  no formal  proof, first  of all
          that Maine  National Bank ever  went into
          receivership, if  so, what  happened with
          respect  to  any  of the  assets  of that
          institution   as   a  result   of   that,
          specifically what  happened with  respect
          to  this note and mortgage.  And there is
          no proof or evidence sufficient to permit
          a jury to reach a verdict in favor of the
          plaintiff with  respect to  what happened
          to that  note, and what has been referred
          to as its  many transitions in  ownership
          among,  apparently  New   Maine  National
          Bank, Fleet Management Corporation, Fleet
          Bank and  RECOLL Management  Corporation,
          and ultimately its transfer back into the
          possession of FDIC.  It is not even clear
          that the note ever left the possession of
          the FDIC in  the first place, but  all of
          that is completely in doubt.

                             -7-

decision.  The  court issued a final judgment  dismissing the

FDIC's action on June 8, 1995.

                             II.
                                         II.

          The  FDIC contends that the district court erred in

finding that the evidence of the FDIC's ownership of the Note

was so inadequate  that the FDIC's claim to  enforce the Note

against its  makers, the  Houdes, fails as  a matter  of law.

Alternatively, the FDIC argues that the district court abused

its discretion in refusing to grant a brief continuance so as

to enable  the FDIC to  procure records that  would establish

its requisite  interest in the  Note.  The Houdes  reply that

the  FDIC  never  presented competent  proof  of  the various

transactions  through  which  it  allegedly  acquired  lawful

ownership  and possession  of  the  Note, Golden's  testimony

having,  in their  view, been  rightly  stricken as  hearsay.

They argue that  without such competent evidence,  the FDIC's

case failed as a matter of law. 

          The  district court  dismissed the case  because it

concluded  that the  FDIC had  failed to  meet its  burden of

presenting  sufficient  evidence to  establish,  prima facie,

that it was  a party entitled to  enforce the Note.   Without

proper  proof of ownership, the Note  would not be admissible

as a basis for  the FDIC's claim.   The question, of  course,

would not be whether the FDIC's right to enforce the Note was

                             -8-

conclusively established  but whether  enough of  a case  was

made out  to go to the jury.   See Fed. R. Civ. P. 50(a) ("If
                                              

. . . there is no legally sufficient  evidentiary basis for a

reasonable  jury to  find for  [a] party  on [an]  issue, the

court  may determine  the  issue against  that party  and may

grant  a motion for judgment as  a matter of law against that

party.").  

1. The FDIC's Burden of Proof
            1. The FDIC's Burden of Proof

          The FDIC argues  that possession of the Note  was a

sufficient basis for it to  be entitled to a presumption that

it could enforce  the Note.  The FDIC  points to federal law,

set  forth  in  FIRREA,2 providing  expressly  that  the FDIC

succeeds by  operation of  law to a  failed bank's  right and

title  in  all its  assets,  see 12  U.S.C.    1821(d)(2)(A),
                                            

infra.   FIRREA, however,  does not spell  out what  the FDIC
                 

needs to prove in order to  show its entitlement to sue on  a

transferred  asset  like the  Note.   The  Supreme  Court has

recently held  that matters  left unaddressed  in FIRREA  are

controlled by  state law. O'Melveny  & Myers v. FDIC,  114 S.
                                                                

Ct. 2048, 2054 (1994).  We  look, therefore, to Maine law  to

supplement FIRREA in  determining what the FDIC,  as receiver

of NMNB, needed to show for  it to be found a party  entitled

                    
                                

2.  FIRREA is  the Financial  Institutions Reform,  Recovery,
and  Enforcement Act  of  1989, 103  Stat.  183, codified  in
various sections of 12 and 18 U.S.C.

                             -9-

to enforce the Note.  See, e.g.,  RTC v. Maplewood  Invs., 31
                                                                     

F.3d 1276, 1293-94 (4th Cir.  1994) (holding that question of

whether  RTC is a  holder in due course  is governed by state

law); see  also FDIC v.  Grupo Girod Corp.,  869 F.2d 15,  17
                                                      

(1st  Cir. 1989)  (applying  Puerto  Rico  law  to  determine

whether the FDIC was a holder in due course);  FDIC v. Bandon
                                                                         

Assocs., 780 F. Supp. 60,  63 (D. Me. 1991).  But see FDIC v.
                                                                      

World Univ.  Inc., 978 F.2d  10, 13-14 (1st Cir.  1992) (pre-
                             

O'Melveny case).
                     

          The  applicable Maine law,  set forth in  the Maine

Uniform Commercial Code, Negotiable Instruments, 11  M.R.S.A.

3-1101  et  seq.,3  provides  that  a  note  qualifying  as a
                            

                    
                                

3.  The  Maine Uniform Commercial  Code was amended  in 1993,
after the execution  of the Note but before  the execution of
the Conditional Agreement  and before the institution  of the
lawsuit  in  question.   The  earlier  version  of the  Maine
Uniform Commercial Code, Negotiable Instruments, was codified
at 11 M.R.S.A.   3-101, et seq. (repealed in 1993).
                                           
          Both  parties  have  taken  the  position  in  this
litigation  that the  Note is  a  negotiable instrument  (the
Houdes in  their appellate  brief, and  the  FDIC in  motions
submitted  to  the  district court),  and  neither  party has
argued  that  the Note  is not  a negotiable  instrument even
though, with its variable interest rate, the Note is arguably
not a negotiable instrument under the pre-1993 version of the
Maine  Uniform Commercial Code.   See e.g., FSLIC v. Griffin,
                                                                        
935 F.2d 691, 697 n.3 (5th Cir. 1991), cert. denied, 502 U.S.
                                                               
1092  (1992); New  Conn. Bank  & Trust  Co., N.A.  v. Stadium
                                                                         
Management Corp., 132  B.R. 205, 208-09 (D. Mass.  1991).  In
                            
the  absence of  an applicable  statute,  the FDIC's  initial
burden would be  subject to Maine common law.   In discerning
the common law  requirements for the FDIC to show  that it is
entitled to enforce the variable interest rate Note, we would
be  inclined  to  look  to  the  statutory  requirements  for
enforcing  negotiable instruments by analogy.  As the parties
have not argued  otherwise and as it  is hard to see  how the
outcome of this case would change in any event, we proceed on

                             -10-

negotiable  instrument can  be  enforced  by "holder[s]"  and

"nonholder[s]  in possession of the instrument who [have] the

rights of [] holder[s]." See 11 M.R.S.A.   3-1301.4  The FDIC
                                        

is plainly  not a "holder"  under Maine law because  the Note

was   not  indorsed  to  the  FDIC   and  therefore  was  not

"negotiated."5  See 11 M.R.S.A.   3-1201 ("[I]f an instrument
                               

                    
                                

the assertion that the Note is a  negotiable instrument under
Maine law.

4.  The  version  of  the Maine  Uniform  Commercial  Code in
effect  before  1993 also  provided that  holders as  well as
transferees  with the  rights  of  holders  could  enforce  a
negotiable  instrument.  See  11 M.R.S.A.    3-201, Comment 8
                                        
(repealed 1993).

5.  The federal holder in due course doctrine, which provides
a buffer for the FDIC against certain defenses, does not give
the FDIC the  status of a "holder" in  the instant situation.
This Circuit has held that  the federal doctrine is generally
not applicable to the FDIC in its receivership capacity.  See
                                                                         
Capitol Bank  & Trust Co.  v. 604 Columbus Ave.  Realty Trust
                                                                         
(In  re  604 Columbus  Ave.  Realty  Trust),  968 F.2d  1332,
                                                      
1352-53  (1st Cir. 1992) (stating  that the federal holder in
due course  doctrine does not  apply to the FDIC  as receiver
except in the case of a purchase and assumption transaction);
see also FDIC  v. Laguarta,  939 F.2d 1231,  1239 n. 19  (5th
                                      
Cir. 1991) (same).   But see Campbell Leasing,  Inc. v. FDIC,
                                                                        
901 F.2d 1244, 1249 (5th   Cir. 1990) (stating that the  FDIC
may enjoy federal holder in due  course status whether acting
in its corporate or receivership capacity); Firstsouth,  F.A.
                                                                         
v.  Aqua Constr.,  Inc., 858  F.2d 441,  443 (8th  Cir. 1988)
                                   
(providing FSLIC-Receiver with  federal holder in  due course
status).  
          We  note  that  the  continuing  viability  of  the
federal  holder in  due course doctrine  is questionable.   A
circuit split has arisen as  to whether the doctrine is still
valid after O'Melveny & Myers, supra.  Compare DiVall Insured
                                                                         
Income Fund Ltd. Partnership v. Boatmen's First Nat'l Bank of
                                                                         
Kansas City, 69 F.3d 1398, 1402 (8th Cir. 1995) and Murphy v.
                                                                      
FDIC, 61 F.3d 34, 38 (D.C. Cir. 1995) (holding that O'Melveny
                                                                         
& Myers leaves no room  for common law D'Oench doctrine) with
                                                                         
MotorCity of  Jacksonville v.  Southeast Bank  N.A., 83  F.3d
                                                               
1317,  1327-28 (11th  Cir. 1996).    This court  has not  yet

                             -11-

is  payable to  an  identified  person, negotiation  requires

transfer  of possession of the instrument and its indorsement

by the holder.");6  see also Calaska Partners Ltd. v. Corson,
                                                                        

672 A.2d  1099, 1104 (Me.  1996) (holding that holder  in due

course status is not conferred when financial instruments are

transferred in bulk to the FDIC).  

          Not  being a  holder, the  FDIC had  to show,  as a

prerequisite to enforcing  the Note against the  Houdes, that

it was a transferee in possession entitled to the rights of a

holder.  See 11 M.R.S.A.   3-1203.  Comment 2 following    3-
                        

1203 provides:

          If the transferee is not a holder because
          the  transferor  did   not  indorse,  the
          transferee  is   nevertheless  a   person
          entitled to enforce  the instrument . . .
          if  the transferor  was a  holder at  the
          time  of  transfer. . . .    Because  the
          transferee is  not a holder, there  is no
          presumption . . . that the transferee, by
          producing the instrument,  is entitled to
          payment.  The  instrument, by its  terms,
          is not payable to the transferee  and the
          transferee must account for possession of
          the unindorsed instrument  by proving the
          transaction through which  the transferee
          acquired  it.  Proof of a transfer to the
                                                               

                    
                                

expressed an opinion as to the effect of O'Melveny & Myers on
                                                                      
the doctrine.  
          In any  event, the present case does  not present a
situation for  which the doctrine  was created.   The federal
holder in due course doctrine is designed to protect the FDIC
from  claims unascertainable  from the  books  of the  failed
institution, a purpose unrelated to the present.

6.  The term "negotiation"  is similarly defined in  the pre-
1993 statute, 11 M.R.S.A.   3-202 (repealed in 1993).

                             -12-

          transferee by a holder  is proof that the
                                                               
          transferee has acquired  the rights of  a
                                                               
          holder.  At that point  the transferee is
                             
          entitled to the presumption . . . .

(emphasis added).7  Thus,  in order minimally to be  entitled

to the presumption under Maine  law that it could enforce the

Note, the  FDIC  was  required  (1)  to  prove  a  sufficient

transfer from a holder (here MNB, to which the Note was  made

payable by the Houdes) to the FDIC in its present capacity as

receiver of NMNB, and (2) to produce the Note at trial.  

2. The Evidence At Trial
            2. The Evidence At Trial

          The FDIC  brought this  action in  its capacity  as

receiver for  NMNB.  The NMNB was allegedly a bridge bank set

up pursuant to 12 U.S.C.    1821(n) by the FDIC following the

failure of MNB.  The FDIC produced the Note at trial, and the

parties stipulated  that the  signatures  were authentic  and

                    
                                

7.  The  result would  not be  different  under the  pre-1993
version of the Maine Uniform Commercial Code which provided:

          [T]he transferee  without indorsement  of
          an order  instrument is not  a holder and
          so is  not aided by the  presumption that
          he  is   entitled  to   recover  on   the
          instrument  . .  . .   The  terms of  the
          obligation do not run to him, and he must
          account   for  his   possession  of   the
          unindorsed   paper    by   proving    the
          transaction through which he acquired it.
          Proof of a transfer to him by a holder is
                                                               
          proof  that he has acquired the rights of
                                                               
          a holder and  that he is entitled  to the
                                                               
          presumption.
                                 

11 M.R.S.A.   3-201, Comment 8 (repealed in 1993).

                             -13-

that  the instrument  the FDIC  possessed  was the  original.

What remained,  therefore, was  for the  FDIC to  establish a

proper  transfer of  the Note  to  it in  its suing  capacity

(receiver of NMNB) from the Note's holder, MNB.  

          The first step in this transfer could rather easily

have  been established  given the  provisions of  FIRREA.   A

transfer of  all the holder's  (MNB's) rights in the  Note to

the FDIC as receiver for  MNB could be demonstrated simply by

showing that the  FDIC became the  receiver of MNB.   Once  a

receivership of a  failed bank takes place,   the transfer of

the failed bank's  assets to the FDIC occurs  by operation of

law  --  the  FDIC  as  receiver  of  a  failed   institution

succeeding under federal law to:

          (i)  all  rights,   titles,  powers,  and
          privileges  of  the   insured  depository
          institution, . . . 

          (ii)  title to  the  books, records,  and
          assets  of  any previous  conservator  or
          other    legal    custodian    of    such
          institution.

12 U.S.C.   1821(d)(2)(A).  

          The most  serious problem  in the  instant case  is

what additional  proof is  needed to  prove that  enforceable

title  to  the  Note  was  transmitted to  the  FDIC  in  its

subsequent and  present capacity  as receiver  of the  bridge
                                                                         

bank,  NMNB.   Under the  Maine  negotiable instruments  law,
                       

there has to be "[p]roof of a transfer to the transferee by a

holder"  of the Note, establishing "proof that the transferee

                             -14-

[i.e., the FDIC as receiver  of NMNB] has acquired the rights

of a holder [MNB]."   11 M.R.S.A.   3-1203, Comment 2, supra.
                                                                        

As  stated above, if  the FDIC were suing  in the capacity of

receiver  of  MNB, nothing  more  would  be required  than  a

showing  of such receivership,  coupled with a  production of

the Note, for the FDIC  to become entitled to the presumption

that  it was  entitled to payment.  But the FDIC  is suing as

receiver of a different entity,  NMNB.  There is no automatic

transfer provided by federal law of the assets of the FDIC as

receiver of  a failed bank to a bridge  bank, nor is there an

automatic transfer from  a bridge bank back to  the FDIC upon

the termination of the bridge bank.  See 12 U.S.C.   1821(n).
                                                    

          A key  question, therefore,  is whether the  record

below  properly  established  the   formation  of  NMNB,  the

transfer  of the  Note to  NMNB, the demise  of NMNB  and the

appointment of the FDIC as  its receiver, and the transfer of

the Note  from NMNB to  the FDIC as receiver  of that entity.

The FDIC relied  on the testimony of its  witness, Golden, to

show  this.   Golden testified,  among  other things,  to the

FDIC's  receivership  of  MNB,  the  creation  of  NMNB,  the

subsequent  dissolution of NMNB,  and the Note's  transfer to

the  FDIC as  NMNB's receiver.   The  court, however,  struck

Golden's testimony.   We agree  with the  court that  Golden,

having taken over the Houde  file only two weeks before trial

and not claiming  direct personal knowledge of  these events,

                             -15-

could not testify to them over objection.  See Fed. R.  Evid.
                                                          

602 ("A witness  may not testify to a  matter unless evidence

is  introduced sufficient  to  support  a  finding  that  the

witness has personal knowledge of the matter.")  Although, as

custodian of  the Houde file,  his testimony might  well have

been sufficient to authenticate  business records, admissible

under an exception to the  hearsay rule, that may have proved

the  underlying transactions, see  Fed. R. Evid.  803(6), the
                                             

FDIC did not have any of the underlying documents with  it at

trial.   Nor was  the FDIC prepared  to offer  public records

such  as  might establish  the  appointment  of the  FDIC  as

receiver of  MNB and  NMNB respectively.   See Fed.  R. Evid.
                                                          

803(8),  901(b)(7)   (indicating  that  public   records  are

admissible as an exception to the hearsay rule  and generally

self-authenticating).  Thus, the  FDIC was without admissible

evidence of  its ownership  of the Note.   The  FDIC conceded

that  it was  unprepared at  the time to  present alternative

evidence  after Golden's  testimony  was struck,  although it

said it could obtain the relevant evidence if the court would

grant a  brief continuance.   Without such a  foundation, the

court  declined  to  permit  the  Note  to  be  received into

evidence.  Without  the Note in evidence, the  FDIC felt that

it could not proceed.8

                    
                                

8.  After a lengthy  discussion in which the  court indicated
that there was  insufficient evidence of foundation  to allow
the Note  into evidence  and that  even if  the FDIC  were to

                             -16-

          Attempting  to  justify   the  lack  of  admissible

foundation evidence,  the FDIC  now argues  that because  the

Note was  never indorsed  and  never made  payable to  anyone

other  than MNB,  it plainly  could not have  been sold  to a

third party by  the FDIC or the  bridge bank.  But  while the

absence  of  an  indorsement  on  the  Note  strengthens  the

argument that no one acquired a title superior to that of the

FDIC,  it  does not  by  itself  meet  the FDIC's  burden  to

"account  for  possession  of  the unindorsed  instrument  by

proving the transaction through which the transferee acquired

it."  11 M.R.S.A.   3-1203, Comment 2, supra.  
                                                        

          We  note that  the Houdes,  in  their Statement  of

Undisputed  Material Facts submitted to the district court in

conjunction  with  their  earlier  summary  judgment  motion,

conceded  that the FDIC was  appointed receiver for MNB, that

the  FDIC created NMNB,  that the  FDIC appointed  itself the

                    
                                

provide  additional documentation  and witnesses  to  lay the
proper foundation,  it would be  in violation of  the court's
Final  Pretrial  Order,   the  court  declined  to   grant  a
continuance.  The following colloquy then took place:

[FDIC's Counsel]:   Then,  your  Honor,  we  have no  further
                    witnesses.

THE COURT:          I take  it  the Plaintiff  rest [sic]  at
                    this time?

[FDIC's Counsel]:   Yeah.

THE COURT:          Does the defendant rest?

[Houdes' Counsel]:  Defendant rest [sic] on the complaint and
                    moves for directed verdict.  

                             -17-

receiver  of NMNB, and  that "[i]t was  through these various

transactions  that the FDIC acquired the Note  . . . at issue

in this action."  The Houdes' subsequent facile recanting  of

this admission might arguably be the sort of "fast and loose"

play which  leads a court  to impose judicial estoppel.   See
                                                                         

Patriot Cinemas, Inc.  v. General Cinema Corp., 834 F.2d 208,
                                                          

212 (1st Cir. 1987).  However, the FDIC made no effort during

the trial to offer the Houdes' Statement in evidence in order

to establish  its own ownership of the  Note, nor did it make

an estoppel argument.9  In a case such as this with well over

a hundred docket entries, the  district court can scarcely be

expected to recall, sua sponte, a fact listed in one document

submitted by the Houdes to the court.  Moreover, although the

FDIC mentions the  Houdes' admission in its  appellate brief,

it does not  make a "judicial  estoppel" argument, or  indeed

any  other  coordinated  argument, as  to  why  the admission

should, at  this late date,  be binding on  the Houdes.   See
                                                                         

United States v. Caraballo-Cruz,  52 F.3d 390, 393  (1st Cir.
                                           

1995)  (stating that  "issues adverted  to  in a  perfunctory

                    
                                

9.  The FDIC did indicate to  the court, several hours  after
the court directed the verdict  for the Houdes, that it would
file  a motion  for reconsideration  of  the verdict  because
"there  were judicial  binding  admissions" submitted  by the
Houdes.    The district  judge  indicated that  he  would not
reconsider the  decision because  the FDIC  should have  been
prepared  to argue  that point at  trial.   The FDIC  did not
submit  a motion  for reconsideration.    Moreover, the  FDIC
makes no argument on appeal that the district court's refusal
to reconsider was an abuse of discretion.  

                             -18-

manner,   unaccompanied   by   some   effort   at   developed

argumentation,  are  deemed   waived")  (internal  quotations

omitted).  Given the FDIC's failure to raise  the matter in a

timely fashion  before the  district court  and to  argue the

matter on appeal, we regard it as having been waived.

          The FDIC  also argues  that this  court should  now

take judicial  notice of  the failure of  MNB and  the taking

over of its assets by the FDIC.  This point was also not made

at trial below, the district  court never being asked to take

judicial  notice  of  these  facts.   It  is  true  that  the

appointment of  the FDIC  as receiver  of MNB  was previously

announced  and  relied  upon  as  a matter  of  fact  in  two

published opinions of this court issued prior to the district

court proceeding  under review, as  well as in  several prior

opinions  of the District of Maine, including opinions issued

by the  very  judge who  presided over  the present  trial.10

                    
                                

10.  See, e.g., United States v. Fleet Bank of Maine, 24 F.3d
                                                                
320,  322  (1st  Cir.  1994)  (reviewing a  decision  of  the
district court judge who decided the present case,  the Court
of Appeals stated:  "In January 1991, the Maine National Bank
. . . was  declared   insolvent  and   the  Federal   Deposit
Insurance  Corporation . . . was  appointed its  receiver.");
Bateman v. FDIC, 970 F.2d 924, 926 (1st Cir. 1992) (reviewing
                           
a  decision of  the  district  court  judge who  decided  the
present case, Court of  Appeals stated:  "[I]n January  1991,
the federal Comptroller  of the Currency declared  the [Maine
National]   Bank  insolvent   and  appointed   the  FDIC   as
receiver."); Mill  Invs. v. Brooks  Woolen Co., 797  F. Supp.
                                                          
49,  50 (D. Me. 1992) (acknowledgement of same district court
judge  that FDIC was appointed  receiver of MNB); Cardente v.
                                                                      
Fleet Bank of  Maine, 796 F. Supp. 603, 606 n.1 (D. Me. 1992)
                                
(same).

                             -19-

Nonetheless, the  FDIC's judicial  notice argument  fails for

several reasons.   First,  even assuming  a court  could take

judicial notice of the failure  of the MNB, no party in  this

case  requested the  court to  take such  action.   While the

district court might well have taken judicial notice of these

well-known facts  sua sponte,  it was not  required to  do so

unless  requested.  See  Fed. R.  Evid. 201(c),(d).   Second,
                                   

even assuming  the district court,  or this court  on appeal,

did  take judicial  notice of  the  failure of  the MNB,  the

appointment of the FDIC as its receiver, and perhaps even the

creation of  the bridge bank,  these facts would  not relieve

the FDIC from its  burden of showing  a transfer of the  Note

from  the  bridge bank  to  the  FDIC  as receiver  for  that

institution.  These are not matters for judicial notice.

          We  conclude,  therefore,  with  some regret,  that

there was  no error in  the district court's ruling  that, on

the record as it stood, the FDIC had failed to meet its legal

burden.  We  hold that the record justified  the dismissal of

the  case as  matter of  law  on the  narrow but  dispositive

ground declared by the district court.

3. The Denial of the FDIC's Requested Continuance
            3. The Denial of the FDIC's Requested Continuance

          The  FDIC argues  that even  assuming  the FDIC  as

receiver  of NMNB  failed  to  make out  a  prima facie  case

showing the transactions by which  it acquired the Note,  the

                             -20-

court's  refusal to grant the FDIC a continuance during which

it could  procure the  necessary records  and other  evidence

constituted an  abuse of discretion.  We  review the district

court's refusal to grant a continuance solely for an abuse of

discretion. See  United States v.  Neal, 36  F.3d 1190,  1205
                                                   

(1st Cir. 1994).

          Counsel for  the FDIC  first asked  for a  two-hour

break  and  then asked,  at  10:30  a.m.,  that the  case  be

continued until the next  day.  The district  judge indicated

that he  was not willing  to recess the case  because "[t]his

case should have been prepared  weeks ago."  In addition, the

judge noted  that even if  he did allow the  continuance, any

documents  or  testimony  the  FDIC  produced  would  not  be

admissible,  over objection,  because  it  would violate  the

court's Final Pretrial Order, which required a designation of

all  exhibits  and   witnesses  and  a  description   of  the

witnesses' testimony.  The judge stated:

          I am not going to continue this case, . .
          .  to do so means opening the entire case
          up,  probably  discharging this  jury  so
          that new procedures,  pretrial procedures
          about these documents can be carried  out
          in accordance with the prior order of the
          court.  It would  make a complete mockery
          of the systematic pretrial preparation of
          cases  and the  elaborate procedure  that
          the  Court has in place to see that these
          cases are properly tried.

          When reviewing a district court's decision  to deny

a  continuance, broad  discretion must  be  granted and  only

                             -21-

"unreasonable and  arbitrary insistence  upon expeditiousness

in  the  face  of  a  justifiable  request  for  delay"  will

necessitate reversal.  United States v. Rodriguez Cortes, 949
                                                                    

F.2d  532,  545 (1st  Cir.  1991)  (citing United  States  v.
                                                                     

Torres, 793 F.2d 436, 440  (1st Cir.), cert. denied, 479 U.S.
                                                               

889  (1986)); see  also   Morris  v. Slappy,  461 U.S.  1, 11
                                                       

(1983).   In determining  whether a  denial of  a continuance

constitutes an abuse  of discretion, the court  must consider

the particular facts  and circumstances  of each  case.   See
                                                                         

Torres,  793 F.2d  at 440.    The court  should consider  the
                  

reasons  in  support  of  the request,  the  amount  of  time

requested,  whether  the   movant  has  contributed   to  his

predicament, the inconvenience to  the court, the  witnesses,

the jury  and  the  opposing  party, and  the  likelihood  of

injustice or unfair prejudice attributable to the denial of a

continuance.   See United  States v. Saccoccia,  58 F.3d 754,
                                                          

770 (1st Cir. 1995), cert. denied, 116 S.Ct. 1322 (1996).
                                             

          The FDIC  argues that the  district court's refusal

to grant a continuance led to injustice and unfair prejudice.

It  contends that  the time  needed to  gather the  necessary

evidence would not have greatly inconvenienced the court, the

jury or the Houdes, and that some of the documents would have

been self-authenticating records  admissible in court.   This

may  be so, but it overlooks a  number of factors pointing in

the other direction, among them  the presence of the jury and

                             -22-

the court's  reasonable expectation  that the  FDIC would  be

prepared  for  trial.     The  FDIC  contends   that  it  was

"surprised"  that it  had to  put  forth admissible  evidence

concerning its  ownership of  the Note.   However, we  see no

reason for the  FDIC to have been surprised.   The Houdes had

challenged the ability of the FDIC to enforce the  Note as an

affirmative defense in their answer and had later objected to

the FDIC's motion, which  the court denied, to preclude  them

from challenging  the FDIC's  standing to  enforce the  Note.

The  FDIC was  plainly on  notice  that it  was dealing  with

adversaries  who refused  to take  a  relaxed "common  sense"

approach  on  these   technical  but  nonetheless   requisite

preliminaries.   Indeed, the  FDIC showed that  it understood

its  burden by  calling  Golden and  questioning  him on  the

matters  it  did.    Unfortunately,  it  seems  not  to  have

recognized   the  hearsay   problem   inherent  in   Golden's

testimony, nor to have taken the trouble to have  with it the

necessary supporting documents. 

          The court was  entitled to expect the FDIC  to have

special competence  in actions such  as this.  This  suit had

been commenced ten months earlier and, as said, the FDIC knew

the Houdes would challenge its  standing to enforce the Note.

It was the FDIC's failure to have prepared its case for trial

that led to the request for a continuance.  While the court's

action was strict,  and we can imagine some  judges who would

                             -23-

have assessed the  situation more charitably to the  FDIC, we

cannot say  that it abused  its discretion in not  giving the

FDIC additional time to remedy its lack of preparation.  See,
                                                                        

e.g.,  Rodriguez  Cortes,  949  F.2d  at  545  (holding  that
                                    

district court did not abuse its discretion in denying motion

for continuance in  order to obtain  witness to testify  that

time  indicated on hotel registration card was incorrect when

defendant had  been in  possession of the  time card  for six

months and had  ample time to  obtain a witness).   Given the

costs  of trials, especially  before juries, and  the adverse

effects  of delay  in  one case  on  other litigants  seeking

trials, judges must  be allowed a considerable  discretion in

these matters.  We find no abuse here.

                             III.
                                         III.

          Because we find  that the  district court  properly

directed a  verdict in favor  of the Houdes and  acted within

its   discretion  in  denying   the  FDIC's  request   for  a

continuance, we  need  not reach  the  issues raised  in  the

Houdes' cross-appeal.

Affirmed.
            Affirmed.
                     

                             -24-