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USCA1 Opinion

February 16, 1993


UNITED STATES COURT OF APPEALS
For The First Circuit
____________________
No. 92-1805
RESOLUTION TRUST CORPORATION, ETC.,
Plaintiffs, Appellees,
v.
DANIEL M. DRISCOLL, JR.,
INDIVIDUALLY AND AS HE IS TRUSTEE OF
QUINAQUISSET REALTY TRUST, ET AL.,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Higginbotham, Senior Circuit Judge,*
____________________
and Boudin, Circuit Judge.
_____________
____________________
J. Daniel Lindley with whom Peter

Antell and Antell &

Associa

_________________
were on brief for appellants.

_____________

James H. Wexler with whom Bennett H. Klein


________________
_________________
and Strong were on brief for appellees.
___ ______

_________________

and Kotin, Crabtr


_____________

____________________
February 16, 1993
____________________
____________________
*of the Third Circuit, sitting by designation.

BOUDIN, Circuit Judge.


_____________
complex
court.
that

commercial

matter

This appeal is one branch


still

pending

in the

of a

district

The case derives from a set of entangled transactions


have been

failure.
claims

further complicated

Perceiving reasons
against

separate
followed.

one

party,

for

by an
a

prompt resolution

the district

final judgment as to

intervening bank

court

entered

of
a

those claims, and this appeal

We affirm.
I.

In the mid-1980's, the Fox Run

Realty Trust ("Fox Run")

set

out

to

develop

residential

complex

Massachusetts, known as "Willowbend."


Quinaquisset

Realty Trust

in

Mashpee,

In December 1986, the

("Quinaquisset") conveyed

to Fox

Run 152 acres of land adjoining the Fox Run holding, allowing
the

project

to

be

expanded.

In

exchange,

Quinaquisset

received a large payment and the promise of a number of house


lots

and

of

subdivision
were secured

condominiums

approval.

by a first mortgage

million to

secured by

permits

for

them

after

Fox Run's obligations to Quinaquisset

same time, Sentry Federal


Run $13

or

on the 152 acres.

At the

Savings Bank ("Sentry") loaned Fox

finance Willowbend,

taking back

a mortgage on Willowbend, subordinated

a note

as to the

152 acres.
In

October 1987,

Fox Run

conveyed to

Quinaquisset 20

house lots and the rights to 22 or 23 condominium permits (we

-2-2-

are given different numbers in the briefs).


mortgage

on

the 152

acres was

repurchased the permit rights for

discharged.

The Quinaquisset
Fox

Run then

cash and an unsecured $1.1

million

note

to

Quinaquisset.

Then,

Quinaquisset borrowed $950,000 from


note and
note
point,

depositing with it

in

April

1989,

Sentry, giving Sentry

as collateral the

earlier $1.1

reflecting Fox

Run's debt

to Quinaquisset.

At this

Fox Run was

indebted to

Quinaquisset and

both were

indebted to Sentry.
In September 1989 Fox Run fell
to Sentry, and Sentry
April

1990, Sentry

Run entered

agreed to convey

or

wholly

owned subsidiary of Sentry, and


under

Evergreen Holding

the

note

guaranteed

Fox Run's debt

Willowbend,

however, was

against

Company

two

to Sentry.
not

into a

In

settlement

title in Willowbend

Sentry

claim

to

began to foreclose on Willowbend.


and Fox

agreement; Fox Run

into default on payments

("Evergreen"),

Sentry agreed not to


individuals

who

had

Sentry's mortgage on

discharged; rather

took the property subject to Sentry's

to

Evergreen

power to sell pursuant

to the mortgage.
In the meantime, it
August 1989

to make

appears that Fox Run had

payments

to Quinaquisset

million note

payable to Quinaquisset

collateral.

In November

payments on

ceased in

on the

$1.1

but held by

Sentry as

1989, Quinaquisset fell

behind in

its own $950,000 note

-3-3-

to Sentry.

In

May 1990,

Quinaquisset was in default,


$950,000 note in Middlesex

and Sentry brought suit

on the

Superior Court, claiming not only

against Quinaquisset's trustee, Daniel M. Driscoll, Jr.,


also against
note

("the

a number of individuals who


guarantors").

collectively

to the

For

had guaranteed the

simplicity,

trustee and

but

we will

refer

guarantors, appellants

in

this court, as "Quinaquisset."


Sentry

also

proceeded with

Willowbend mortgage,

seeking to

efforts

to

foreclose the

sell both the

property and

the associated rights to the condominium permits that Fox Run


had transferred
Quinaquisset

to Quinaquisset

threatened

to

and then reacquired.

delay

the

mortgage

sale

When
by

litigation, Sentry and Quinaquisset entered into an agreement


on

June 22, 1990.

released Sentry's
conveyed
certain
agreed

to

That agreement (in


mortgage on

Quinaquisset;

reservations
(in

the

foreclosure sale

of

second
"or to

the first paragraph)

the 20 house
and

rights

lots previously

Quinaquisset,

subject

described

the margin,

paragraph)

not

take any further

in
to

enjoin

to

the

action subsequent

thereto with reference to the validity of said foreclosure or


the

[m]ortgages relating

____________________

thereto."1

The foreclosure

sale

1This promise was qualified in the same paragraph by


this language: "provided, however, that Quinaquisset reserves
its rights, claims and remedies, if any, relating to (i)
Sentry's
dealings with [the
two individuals
who had
guaranteed Fox Run's note to Sentry], and (ii) Sentry's
dealings with Quinaquisset regarding the [m]ortgage being
released . . . ."
In the third paragraph, the parties
-4-4-

proceeded,

there

were multiple

bidders,

and

at the

sale

Evergreen acquired Willowbend.


In

September 1990,

Sentry

failed and

Trust Company ("RTC") became its receiver.


new

bank

entity,

entity; the
which

Evergreen.
district
brought

RTC

received

The RTC,
court

became
various

Resolution

The RTC created a

conservator of
Sentry

assets

the

against

in Middlesex

Quinaquisset to

new

including

as receiver for Sentry, removed

the litigation

by Sentry

the

to the

Superior Court
recover on

the

$950,000 note.
II.
On May
the

district

Evergreen,

22, 1991, Quinaquisset


court action,
now

named

as

filed a new

including
a

third

for

pleading in

the first

party

time

defendant.

Quinaquisset's amended consolidated answer,

counterclaim and

third party complaint

is one of those documents that portend

a lot of litigation.

Claims were directed against the RTC as

receiver

for

Sentry

and

conservator of

the

new

entity,

against Fox Run's trustees, and against Evergreen; there were


12

counts,

alleging

multiple

theories; and the relief

wrongs

and

numerous

legal

sought included recision of various

transactions, imposition of constructive trusts, and damages.

____________________
agreed, "with the exception of the foregoing, to reserve
without prejudice their rights, claims or remedies" in the
Middlesex Superior Court action.
-5-5-

As only the

claims against

Evergreen are

at issue

on

this appeal, we confine ourselves to the procedural steps and


rulings
Evergreen

concerning
is not

1991, pleading

it.

Describing

easy because

very little

relates directly to

allegations against others,

the

it.

claims
in the

There

against
May 22,

are specific

notably Sentry, including claims

of misrepresentation
led

to

and trickery

Quinaquisset's

reconveyance

of

the

discharge
permit

refusal to fund interest


Quinaquisset, and
to the
does

of

transactions that

its

rights to

mortgage,

Fox

claim that

conveyed to
Evergreen

trust

and

Run,

payments by Fox Run on

alleged attempts by Sentry

house lots

constructive

in the

seeks

the

Sentry's

its debt to

to cloud title

Quinaquisset.

holds

The pleading

permit rights

recision

of

the

the

in

original

transfer to Fox Run.


In June 1991, Evergreen filed a motion to dismiss or for
summary judgment.
granted summary
recision,

On September 10, 1991,

the district court

judgment for Evergreen on

the count seeking

concluding

that

the

recision

count

sought

to

challenge Evergreen's title to Willowbend; this, the district


court found, was inconsistent with Quinaquisset's obligations
under

the agreement of June 22, 1990, quoted above, that had

permitted the mortgage sale

to proceed.

the

judgment

court

remaining

granted summary
counts.

for

On April

21, 1992,

Evergreen on

the

The court did not issue a written opinion

-6-6-

but

it

appears

that

the

dismissal was

premised

on

the

D'Oench, Duhme doctrine, which limits claims based on matters


______________
not reflected in

bank records.

See D'Oench, Duhme & Co. v.


___ ____________________

FDIC, 315 U.S. 447 (1942).2


____
On May 12, 1992, the district court ordered the separate
entry of

judgment

in

finding pursuant to

favor

Fed. R. Civ. P. 54(b)

just reason

for

history and

note that the

stemmed from
that

delay.

the recision

of

pass over

recision claim,

so that
to

separate judgment
the district court
a prompt

Evergreen could complete


prospective

seeking immediate

Thus, the judgment

buyer.

appellate review

the district court thought

against Evergreen is properly

counts,

procedural

Evergreen needed

claims against Evergreen should

the same time.

all

related

reason for the

claim against

Willowbend

Quinaquisset was

all

We

on

that there was no

an earlier determination by

definitive resolution
sale

of Evergreen

the
Since

of the

it suitable that

be before this court at


dismissing all

claims

before us; the balance of

the

____________________
2The district court relied
on the doctrine in a
memorandum and order of July 19, 1991, granting summary
judgment to the RTC on all counts except the recision

request; that request had been dismissed by the court in


early May 1991 based on the agreement of June 22, 1990. In
an order dated May 12, 1992, the court indicated that the
same reasoning was implicated in Evergreen's case.
-7-7-

litigation involving other


court.3

parties remains

in the

district

____________________
3Quinaquisset contests the Rule 54(b) certification but
its argument is unpersuasive. The thread of the argument is
that to enter a judgment facilitating a sale of Willowbend
could impair Quinaquisset's prospects of recovering the
permit rights. If so, Quinaquisset was free to seek a stay
of judgment from the district court or from us. Absent a
showing that would warrant a stay, the desire to facilitate a
sale of assets, in connection with a bank reorganization, is
a perfectly good ground for the Rule 54(b) determination.
See generally Curtiss-Wright Corp. v. General Electric Co.,
_____________ ___________________
___________________
446 U.S. 1, 8 (1980).
-8-8-

III.
Like
recision

the

district

court

against Evergreen

against

it.

Our reason

recover

property

is

the

we separate

from the
for doing
one

line

the

balance of

claim

for

the claims

so is

that a

claim to

of

attack

made

by

Quinaquisset that we can imagine succeeding against Evergreen


without a separate showing

of wrongful conduct by Evergreen.


____________

Putting to one side a possible D'Oench, Duhme defense, there


_______________
might

be

circumstances

wrongdoing

on

its

wrongfully taken by
that case,

which

part--became

Evergreen--without
a

holder

of

property

recision, constructive trust

or device, perhaps the property

circumstances)

any

Sentry or others from Quinaquisset.

whether by

other theory

in

be reached

even though

In

or some

could (in some

in the

hands of

an

innocent possessor.
The district court foreclosed this possibility by ruling
on September
between

10,

the parties

Evergreen's title
district
subsequent

attack

the June

22, 1990,

agreement

such a

recovery.

Treating

prevented

as derived from the

court interpreted

"Evergreen owns the


."

1991, that

on the

the

foreclosure sale, the

agreement

resulting

title

as preventing
and ruled

property free of any title defect

that
. . .

Quinaquisset asserts that the district court misconstrued

the agreement, ignoring the reservation of rights provisos.

-9-9-

Subject
in
"or

to the rights reservations, Quinaquisset agreed

the June 22 document not to obstruct the foreclosure sale


to

take

any

further action

to

the

validity

reference
[m]ortgages
"[t]he

of

subsequent
said

foreclosures

relating thereto . . . ."

clear meaning

of

Quinaquisset agrees not

with

or

. .

is that

action to challenge

impair the foreclosure purchaser's title in Willowbend."


reservations

of

rights, it

argues,

Quinaquisset's damage claims, and


a

future

action

affecting

the

Evergreen argues that

the [agreement]

to take any

thereto

were

meant to

or
The

retain

not its right to institute

title

to

Willowbend

or

the

attendant permit rights.


We think this interpretation not quite so clear as

does

Evergreen, the agreement being something less than a model of


clarity.

There

"challenge or
Willowbend."
by

the

is, after

impair

district

foreclosures or
with the
one

express promise

the foreclosure

purchaser's title

court,

with

is

better

than

in

reference

to

the

the [m]ortgages relating

purpose to protect the

promise is

any

alternative

the general language used ("any further

read in

validity

of

said

thereto") together

foreclosure-sale buyer that

would expect in such circumstances.

action"

not to

But we agree that Evergreen's reading, endorsed

reading, considering
action

all, no

this way,

If the "any further


then

it is

easy to

-10-10-

construe

the

even

more

general

language

of

the

rights

reservations to relate to other claims such as damages.


We might

be more hesitant

to reach this

conclusion if

Quinaquisset had offered to us and the district court another


reasonable reading of the "any
it

pointed to evidence produced or

court

to show that the

some other meaning.


and

further action" clause, or if

no

such

promised in the district

parties intended the

clause to have

But no other reading has

evidence

has

been

been tendered

proffered.

Instead,

Quinaquisset emphasizes the rights reservations which, as


have noted, are quite
take back

general, ought not readily be

in the proviso

read to

what Quinaquisset appears

promised immediately before, and

we

to have

can easily be understood to

refer to other remedies such as damages.


Given

the

district

court's

interpretation

which

we

sustain it becomes fruitless for Quinaquisset to argue, as it


does

at

length, that

recover

the permits

claims,

whether by

it might

otherwise

from Evergreen.
recision or

have a

claim to

Assuming it

had such

constructive trust,

it has

surrendered them
decide

by

the agreement.

Quinaquisset's alternative,

doubtful argument that


at all
October

This court

judgment is

was

their acquisition

"illegal");

the

Quinaquisset's claim

claim

not

and facially

Evergreen never acquired the

(allegedly because
1987

last ditch

need

permits

by Fox
cut

Run in

off by

the

to

recover property

from

not

address property

that

-11-11-

Evergreen.

The judgment

does

Evergreen never received in the foreclosure.


IV.
Turning now to
we sustain their
district court.

the remaining claims

dismissal on
See Doe v.
___ ___

against Evergreen,

a ground not

adopted by

the

Anrig, 728 F.2d 30, 32 (1st Cir.


_____

1984) (court "free to affirm . . . on any ground supported by


the record").
having
Duhme
_____

Both parties

dismissed those

treat

claims in

the district
reliance on

doctrine, and we believe this is

so.

court

as

the D'Oench,
________

But there is no

district

court opinion applying D'Oench, Duhme to Evergreen.


______________

Although

the

applied

to

district court
the

RTC,

Evergreen's status under


is

in

the

sustaining

foreground
the

did

Quinaquisset

of

this

dismissal--the

a party

permits or the
in

a literal

to

case
failure

to

We

as

distinguish

think that there

another
to

basis

state

for
claim

our affirmance on that basis.

Evergreen is admittedly a
not

the doctrine

seeks

the doctrine.

against Evergreen--and we rest

apparently

discuss

separate corporation and


Fox

Run's

Fox Run-Sentry agreement.


sense "charge" Evergreen

acquisition of

was
the

The complaint may


with wrongs

such as

fraud, misappropriation, and unfair competition; but no facts


are

ever alleged

acts

described.

that connect
The

complaint

Evergreen with
does

the wrongful

nakedly assert

that

-12-12-

Evergreen is the "alter ego" of Sentry, the implication being


that it

is thereby

responsible for Sentry's

conduct.

Yet

Quinaquisset

alleges no

facts that,

if proved,

would even

arguably permit a court to impose liability on Evergreen

for

the

See
___

acts of

generally
_________

its parent

under

an alter

ego

theory.

United Electrical, Radio and Machine Workers of


__________________________________________________

America v.
_______

163 Pleasant Street Corporation, 960


________________________________

F.2d 1080,

1092 (1st Cir. 1992).


Similarly,

the

sentence

that Fox

"assumed

by

acquired.

complaint
Run's

Sentry

Nothing

or

asserts

in

obligations to
Evergreen"

one

conclusory

Quinaquisset

when

else in the complaint

were

Willowbend

was

identifies any act

or document reflecting such an assumption by Evergreen of Fox


Run's debt

to Quinaquisset or remotely

basis for this claim.


assumed

Factual allegations in a complaint are

to be true when a court

dismiss,

but

this

suggests the factual

tolerance

is passing upon a motion to


does

not

extend

to

conclusions, Kadar Corp. v. Milbury, 549 F.2d 230, 235


_______________________
Cir.

1977), or to "bald

assertions."

Chongris
________

legal
(1st

v. Board of
________

Appeals of the Town of Andover, 811 F.2d 36, 37 (1st


_______________________________

Cir.),

cert. denied 483 U.S. 1021 (1987).


____ ______
It

is, of

litigation
normally

course, true

a party

may not

that at

the start

of complex

have all

the facts,

so courts

hesitate to dismiss under Fed.

at the outset.

R. Civ. P. 12(b)(6)

At the start, a reasonable

basis for belief

-13-13-

and an outline of what one might reasonably hope to prove may


suffice to permit discovery and ward off premature motions to
dismiss.

But Quinaquisset's complaint

deficient;

this

litigation

years;

and yet

even

explain

what

exactly

wrongful.
relating
Fox

has persisted

now Quinaquisset
it

is

against Evergreen is

that

is

for almost

two

still unable

to

Evergreen

did that

The only claims at issue on this appeal are


to Evergreen.

No amount of

is

those

embellished attack on

Run, Sentry or the RTC can replace what Quinaquisset has

still not supplied: a single, coherent, specific

description

of what Evergreen has done that is wrongful.


Our appraisal of Quinaquisset's claims against Evergreen
is without prejudice to whatever claims it may assert against
others.

Part of its predicament

for unexplained

may be of its

reasons, it released

own making:

a mortgage on

part of

Willowbend, reconveyed valuable permit rights to Fox Run, and


took back an unsecured note on which Fox Run later defaulted.
On

the other hand,

this misstep, if

such it was,

does not

preclude

the

possibility

surrounding events
participants.
claim is

that

out

a claim was created

Whether this

of

the

welter

of

against other active

is so, and if so

whether such a

nevertheless barred by D'Oench, Duhme, are matters


_______________

on which we have no occasion to pass at this time.


We conclude that, apart from seeking to recover property
from Evergreen, Quinaquisset has failed to state a claim upon

-14-14-

which

relief can be granted.

The property recovery claim is

barred by the agreement for reasons already stated.

Thus the

balance of the claims fail under Fed. R. Civ. P. 12(b)(6) and


on this ground

we affirm the

those

claims.

It will

Duhme
_____

when

the rest

district court's dismissal

be time enough
of

this

to consider D'Oench,
________

litigation, now

nine-tenths

submerged like the proverbial iceberg, reaches this court.


Affirmed.
________

of

-15-15-