USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 93-1418
RESOLUTION TRUST CORPORATION,
IN ITS CAPACITY AS RECEIVER FOR
HOME FEDERAL SAVINGS BANK OF WORCESTER,
Plaintiff, Appellee,
v.
MICHAEL F. CARR,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. A. David Mazzone, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Rosenn,* Senior Circuit Judge,
____________________
and Cyr, Circuit Judge.
_____________

____________________

Mark S. Furman with whom Edward R. Wiest and Tarlow, Breed, Ha

_______________
_______________
_________________
Murphy & Rodgers, P.C. were on brief for appellant.
______________________
Thomas Paul Gorman with whom Sherin & Lodgen was on brief
___________________
________________
appellee.
____________________
December 22, 1993
_____________________
______________________
*Of the Third Circuit, sitting by designation.

ROSENN,
genesis

in the

England and

Senior Circuit Judge.

_____________________
real

estate recession

many other parts

This
which

appeal has

its

first struck

New

of the country several

years ago.

The malaise apparently not only adversely affected the appellant,

Michael

F. Carr,

Federal

Savings

a real
Bank

substantial sum of
ocean
failed.

lot Carr
The

estate
(the

money.

mortgaged

developer, but

Bank)

from

whom

The Bank foreclosed

to

it.

Ultimately,

Resolution Trust Corporation

also the
he

Home

borrowed

on an unimproved
the Bank

also

(RTC/Receiver) became

its Receiver.
The RTC
brought

succeeded the Bank

by the Bank,

organized under the

Superior Court of
recover a

with

Massachusetts against Carr.

first

complaint

a promissory note

mortgage

on

While this litigation was

in

the

Massachusetts, alleging
securing the note.

state

court

wrongful

in the Worcester
The

Bank sued to

executed by

Bank in 1988
property

an action

savings association

laws of the United States,

a loan from the

Massachusetts.
a

a federally chartered

deficiency on

evidence of

as plaintiff in

Carr as

for $243,000, secured

located

in

Marshfield,

in process, Carr filed

for

foreclosure

Middlesex
on

the

County,

property

The court consolidated the actions.

The RTC/Receiver removed the cases to the United States

District

Court for the District of

Massachusetts and then moved

-22

for summary judgment.

The district court granted

the motion by

order

dated March

court.

We affirm.

29,

1993.1

Carr

timely

appealed to

this

I.
Carr obtained
his property at
August

1,

extension.

loan from the

Bank on

45 Old Beach Road, Marshfield, Massachusetts, on

16, 1988.

September

a first mortgage

Shortly before

1989,

Carr

the maturity

requested

of the

of the

Bank

note on
one

year

The Bank's Executive Committee approved the extension

subject to a number of

conditions, including the payment by Carr

of a one percent extension fee in the amount of $2,430.

The

Bank notified Carr

of the proposed

by letter dated

September 13, 1989.

its conditions
provided

that the commitment to extend

16, 1989, and

or

before

the

commitment be accepted and

returned no later than September

22,

1989, together with Carr's

check for $2,430.

his signature in

20, 1989, and

The letter

also

be executed on
that

affixed

date."

The letter

"shall expire on October

that a modification agreement must

such

extension and

acceptance of the

tendered the required check.

required

Accordingly, Carr

letter on September

The check, however,

____________________
1The district court had subject matter jurisdiction under 12
U.S.C.
1441a(11) while we have jurisdiction pursuant to 28
U.S.C.
1291.
-33

was

returned for insufficient

funds.

Thereafter,

Carr neither

paidtheextension feenorexecutedthe requiredmodificationagreement.

The minutes
extension

of the

mention of

of the

loan

a date for

and

Executive Committee approving

fixing the

the payment of

extension

fee made

the extension fee

the

no

or any

details pertaining to the implementation of the extension.

In

response

to

the

RTC's

interrogatories,

Carr

testified that he advised the Bank's counsel in late September or

early October 1989

that he had

$1,500,000 which he expected to

and that counsel

another loan

for

refinance at the end of October,

agreed that payment of the

be deferred until the refinancing of his other

testified that sometime after October
Engstrom, Jr., a

with the Bank

extension fee could

loan.

He further

24, 1989, he spoke to Paul

senior loan counselor of the

Bank, advised him

of the upcoming closing on the $1,500,000 loan, and that Engstrom

orally agreed to defer payment due under the extension until that
closing.
On October 24,

1989, the Bank

informed Carr that

his

extension fee, as well as his monthly payment checks on the note,

had

been returned

for insufficient

funds.

The Bank

demanded

payment of the

total arrearage and the extension

30, but

November 16, 1989,

as of

November 17,

1989, payment not

Carr had

fee by October

not responded.

having been made, the

On

Bank made

-44

formal

demand under the defaulted promissory note.

between

Carr and

agreement.

The

ultimately

the

Bank

Bank

again ensued

commenced

purchased the

but

foreclosure

mortgaged land

Negotiations

they reached

no

proceedings

and

in April

1990 at

the

foreclosure sale for $195,000.

In his
that the

the Middlesex

Court, Carr

Bank actually had agreed to extend

note for one

but the
draft.

action in

in the preparation of

further claimed that the September

the Bank

reflected an

$325,000

and that

$350,000.

the due date of the

year, from September 1, 1989, to September 1, 1990,

terms were changed

Carr

asserted

appraisal of

Carr's appraiser

Carr therefore

the extension

1989 minutes of

the Marshfield
subsequently

sought relief

property at
valued it

because of

at

a wrongful

foreclosure in
September

1,

the face of
1990, unjust

covenant of good
the

an agreement
enrichment

to extend the
to the

faith and fair dealing, and

foreclosure sale

in a

Bank,

note to

breach of

failure to conduct

commercially reasonable manner.

also sought reconveyance of the

property.

He

In addition, he filed

a counterclaim in the consolidated actions in the Worcester Court

substantially identical to his complaint in the Middlesex Court.
The district
federal court, granted
the

consolidated

court, after the RTC removed

the RTC's motion for

matters

based

on

the

the case to

summary judgment in
undisputed

record,

-55

including

a Statement of Undisputed Facts, affidavits, and other

supporting documentation filed by the RTC.

II.
The principal issues raised on appeal by Carr are:

(1)

The Bank agreed to extend the maturity date of the $243,000 note.

(2) The gap between the appraised value of the mortgaged property
and

the

judgment

price

obtained

against him

at

for

foreclosure

the

deficiency

genuine issues of material fact whether

sale

barred

because

summary

there

were

the foreclosure sale was

conducted in good faith and in a commercially reasonable manner.

Federal
summary
issue

Rule of

judgment may

Civil Procedure

only be

entered "if

as to any material fact."

56(c) provides
there is

that

no genuine

In reviewing a summary judgment

order entered by a district court, this court has plenary powers.

See, e.g., Garside v. Osco Drug, Inc.,
___ ____ __________________________

976 F.2d 77, 78 (1st Cir.

1992); Olivera v. Nestle Puerto Rico, Inc., 922 F.2d 43, 45 (1st
____________________________________
Cir. 1990).

The court, in making its review,

record in the light most

judgment and accept

must "look at the

favorable to the party opposing summary

all reasonable inferences favorable

party arising from the record."

to such

Id. at 45 (citations omitted).

___
III.

Carr first

argues that

Committee did not refer to a

the minutes

of the

Executive

date for closing or for payment

-66

of

the extension fee and that the deadlines in the commitment letter
"were

not

Executive

conditions of

extension

summary

extension approved

Therefore,

he

commitment,

and

closing
judgment

of the
was

his

in

the

asserts that

difference between the minutes and

officers had orally agreed to

until the

loan

Committee minutes."

light of the
the

the

in

the language of

affidavit

that

the

Bank

defer payment of the extension fee

refinancing of

the $1,500,000

inappropriate.

This

argument

loan,

is

disingenuous and has no merit whatsoever.

The Executive Committee records reveal an approval of a

request for a
of conditions.

one year extension of the loan subject to a number

Among the conditions for the

requirements that an extension

extension were the

fee be paid and that

the loan be

kept current.
Understandably, the Executive
out

the mechanics and

language of the

Committee did not

spell

extension agreement, for

such administrative details ordinarily are left to bank officers.

In this

instance, the

payment of the
commitment."

extension fee of $2,430 "upon

Carr made no

of the commitment and

the

officers unequivocally

tendered his

check

the

acceptance of this

objection to the terms and conditions

signed his acceptance

Executive Committee

provided for

had approved

in payment

of

of it a week

the extension.

the fee.

Thus,

after

He

then

even

Carr

-77

recognized by his execution of

and not

the minutes,

His check, however,

constituted his
was returned for

never paid this fee.

with the

loan

current

updated

financial

letter

stated other

expenses and

agreement with

the Bank.

insufficient funds and

he

The commitment also required, in accordance

recommendation to

bring his

the letter of commitment that it,

the Executive

and supply

information.

Bank

Additionally,

details with

title examination.

the

Committee, that
with

additional

the

commitment

respect to closing
Carr agreed

Carr

to its

costs and

terms but

never fulfilled any of the extension requirements after accepting

them,

including

the

execution

of

the

required

modification

agreement.
Carr reaches for a straw
a contract

when he attempts to carve out

from the corporation minutes.

corporation is only

The minute book

of a

a brief record of the corporate proceedings.

5A William M. Fletcher, Fletcher Cyclopedia of the Law of Private

_________________________________________
Corporations
____________
merely an
Bank's

2190 (Perm.

internal record

officers to

grant

ed. rev.

vol. 1987).

which memorializes
an

extension of

Here,

authority to
Carr's

loan.

minutes, which

of course were

never "executed" by Carr,

U.S.C.

(e)(2) (1989),

infra,
_____

1823

agreement with him.

it is

do not

The

see 12
___

purport to

They in no way reflect any intention

the

be an

on the

-88

part of the Executive Committee to defer payment of the extension

fee until the refinancing of the $1,500,000 loan.
Similarly,
supplemental

Carr's

agreement with

reliance
a bank

on

an

officer is

alleged
misplaced.

oral

In

D'Oench, Duhme and Co. v. FDIC, 315 U.S. 447 (1942), the Supreme
_______________________________
Court first enunciated

the common law doctrine that

the FDIC is

protected

from

unrecorded

or

oral

agreements

reflected in one of its insured bank's records.

D'Oench
_______

doctrine bars

against the FDIC.

defenses as

well

not

Id. at 461.
___

The

claims

Timberland Design Inc. v. First Service Bank

_____________________________________________

which

establishes

the

1441a(b)(4), the RTC possesses the

available to the FDIC.
by the

are

as affirmative

For Sav., 932 F.2d 46, 50 (1st Cir. 1991).

________
1441a(b),

that

Pursuant to 12 U.S.C.

RTC,

12

U.S.C.

same rights and powers as are

Moreover, 12 U.S.C.

Financial Institutions Recovery,

Act of 1989 (FIRREA), which

and

1823(e), as amended

Reform, and Enforcement

codifies the D'Oench doctrine,

_______

requires all agreements to be reflected in a bank's records.

The section provides that:
[N]o agreement which tends to diminish or
defeat the interest of the [Receiver] in any
asset acquired by it under this section 1821
. . . shall be valid against the [Receiver]
unless such agreement -(1)

is in writing,

(2)
was
institution

executed
and
any
-99

by the
depository
person
claiming an

also

adverse interest thereunder, including the

obligor,
contemporaneously
with
the
acquisition of the asset by the depository
institution,
(3) was approved by the board of directors of
the depository
institution or
its loan
committee, which approval shall be reflected
in the minutes of said board or committee,
and
(4) has been, continuously, from the time of
its execution, an official record of the
depository institution.
12 U.S.C.

1823(e) (1989).

This section

compliance.

Beighley v. FDIC, 868 F.2d 776, 783 (5th Cir. 1989).

________________

Carr's claim that the officers

agreed

not

to

require payment

of

requires categorical

of the Bank had

the

extension

orally

upon Carr's

acceptance of the extension commitment, but to defer it until the

refinancing of
assertion

his large loan,

that the

proscribe.

D'Oench
_______

doctrine and

12

U.S.C.

of an

1823(e)

See Langley v. FDIC, 484 U.S. 86, 95 (1987).

___ _______________
Inasmuch as

entered

constitutes the very kind

into any

commitment,

the record

agreement,

which in any way

fails to

except the

establish that
unfulfilled

Carr

extension

complied with federal statutory or

common law, his claims are barred.

IV.

The

second

Bank's conduct

arrow in

in connection

Carr's

quiver is

with the foreclosure

aimed

at the

sale of

the

gap between

the

-1010

Marshfield

property.

appraised value

Carr

claims

of this property

that

the

and the price obtained

at the

foreclosure sale raises serious questions of material fact as

whether

the

sale

was

commercially reasonable
asserts

conducted
manner.

that the district court

judgment.

The district court

not, complained that there

the foreclosure."

that a

Carr's sole

commercial

genuine issue
reasonableness

good

Under such

faith

and

in

should not have granted summary

found that "Carr cannot,

complaint on appeal is

and has

in

that the

He therefore argues in a general

of material
and

circumstances, Carr

were procedural or notice defects

price obtained was inadequate.

way

in

to

good

fact exists
faith

as

employed

to "the
in

the

foreclosure sale."
Carr neither alleges nor has

he proven that he did not

receive

adequate

notice

of

the

insufficient public notice of the

or that

the Bank acted

the price prior to

that the

real estate

or

that

collusively, or did anything

sale was

In short,

conducted

approximately

was

press

to depress

he does not claim

in violation

of

any

Rather, he relies entirely on the affidavit of a

appraiser whom he commissioned, who

market value

there

forthcoming sale in the

or at the sale.

foreclosure

applicable law.

sale

of the

property at $350,000

placed the fair

on January

four months before the sale.

11, 1990,

Carr's counsel sent

-1111

the appraisal to the Bank.

of

September 6,

$325,000
appraisal

for the

1989,

Carr also points to the

which reflected

property.

conducted

for

an

However, on
the

Bank

few

Bank minutes

appraisal value
March
days

of

29, 1990,

an

before

the

foreclosure showed a value of $195,000.

The threshold question is what law governs this issue -

- state

or federal

1823(e) bars the

depend on
from

981

Neither

the D'Oench
_______

assertion of a claim

an agreement; they

alleged oral

record.

law.

doctrine nor

or defense that

protect federal banks and

agreements

that

are not

part

Texas Refrigeration Supply Inc. v. FDIC,

________________________________________

(5th Cir. 1992).

This

does not

second issue

the RTC

of the

loan

953 F.2d 975,

only pertains

to the

propriety of the foreclosure sale in the state court.

We

believe that state

law governs this

the Bank foreclosed

the property under state

The

was

not

See
___

id. at
___

property

proceedings.

foreclosure claim).

involved

has

the

burden

any

982 (applying

court proceedings.
federal

state law

The district court relied on

does Carr, and so do we.

Carr

in

Under
of proving

issue because

to wrongful

state law, as

Massachusetts

commercial

bankruptcy

state

unreasonableness,

Chartrand v. Newton Trust Co., 296 Mass. 317, 320, 5 N.E.2d

_____________________________
423

(1936), which is a question of

v. Fraker, 395 N.W.2d 885,

_________

421,

fact, John Deere Leasing Co.

______________________

887 (Iowa 1986).

-1212

law

Absent evidence

of

bad faith
the

or improper conduct,

collateral at

a mortgagee is permitted

a foreclosure

sale as

Cambridge Sav. Bank v. Cronin, 289

_____________________________

"cheaply" as

to buy

it can,

Mass. 379, 383, 194 N.E. 289,

290 (1936), and "[m]ere inadequacy of price will not invalidate a

sale unless it
reasonable

is so gross as
__ _____

diligence," Chartrand, 296 Mass.

_________

423 (emphasis added).

percent

to indicate bad faith

of

the

Carr alleges

property's fair

or lack of

at 320, 5 N.E.2d at

that the Bank paid

market

value

only 56

($350,000), but

produced no other evidence of bad faith or improper conduct.

To

warrant

would have to

summary

be shown that no

judgment for

RTC,

therefore, it

reasonable factfinder, crediting

Carr's appraisal of $350,000, could find the $195,000 sales price

"grossly" inadequate.
find ample
percent

Mass.

suggestion that a price

of fair

dispositive

In canvassing Massachusetts case

market

motion.

400, 402

value

deficiency of as much

can support

the

law, we

as 39

granting of

See Sher v. South Shore Nat'l Bank, 360

___ _________________________________

(1971) (disparity

between price of

$35,500 and

alleged fair market value of $52,500, i.e. a 67 percent sale, was

____
"not

so gross"

Mortgage Co.

as

to

v. Tebaldi,

withstand a
304 Mass.

motion
554, 558

to dismiss);

Atlas
_____

(1939) (disparity

________________________
between

price

$18,000, i.e.
____
directed

of

$13,000

72 percent

and

alleged

sale, not

verdict for mortgagee);

fair

market

"so great"

value of

as to defeat

DesLauries v. Shea,
__________________

300 Mass.

-1313

30, 34-35

(1938) (disparity

between price of

$16,815 and

fair

market value of $25,500, i.e. 65 percent sale, permitted directed

____
verdict for

Bank); Cambridge Sav. Bank, 289

____________________

N.E. at 291 (disparity between

Thus,

inadequacy"
differential,
judgment.

warrants directed

whatever the hypothetical boundaries

under

Massachusetts

standing

alone,

383, 194

price of $20,000 and alleged fair

market value of $51,000, i.e. 39 percent sale,

____
verdict).

Mass. at

law,

could

not

Carr's
ward

of "gross

56

percent

off

summary

As

to Carr's

contention of

record shows no evidence of

points to none.

extension

of one

year.

conditions

which

were

faith, the

it on the part of the Bank

Payment

On August 22, 1989,

negotiations

of good

Carr knew for many months before

foreclosure was imminent.

1, 1989.

lack

and Carr

the sale that

of his note was due September

he wrote to the Bank requesting an

The

Bank obliged

acceptable

to

subject to
Carr.

certain

Thereafter,

between the parties ensued for several months which

were inconclusive, and

the conditions of the

proposed extension

were

by

did

never

fulfilled

foreclosure until
until

the sale

either pay

Carr.

November 30,
on April 5,

the note,

The

Bank

1989, and

1990.

it was

Carr had

refinance elsewhere,

not

commence

not concluded

all this

or especially

time to

as an

-1414

experienced

businessman and

real

estate developer,

buyer who would pay the price he aspired to achieve.

produce

On the
estate

on

matter,

other hand,

hand which

a bank

with

indefinitely until

the Bank

required

had non-performing

disposition.

non-performing assets

it canvasses

search

of potential purchasers

market

value, lest

they

As
may

an amorphous
who will pay

too succumb

to

real

pragmatic

not hold

public market

them

in

a theoretical fair

claims of

creditors.

Here, the Bank gave Carr every reasonable opportunity to meet his
obligation or produce a buyer.
It
potential

is common

price to

particularly in a

He did neither of these.

knowledge

be realized

in the
from the

recessionary period,

real

world that

the

sale of

real estate,

usually is

considerably

lower when sold "under the hammer" than the price obtainable when

it is sold by an owner not under distress and who is able to sell

at

his convenience

price.
faith.

Carr has

and to
not met

wait until
his burden

a purchaser
of proof

Under Massachusetts law, inadequacy

"without more,

would not show

113, 115 (1949).

-1515

of showing

bad

of the selling price

bad faith or lack

West Roxbury Co-op Bank v. Bowser, 324

_________________________________

reaches his

of diligence."

Mass. 489, 493, 87 N.E.2d

The

district court

also rejected

Carr's

claim of

fiduciary duty owed to him, finding that "[t]he relationship here

is clearly creditor and borrower."
Carr also turns to two
Bankruptcy Code

We agree.

cases decided under the Federal

(Code), 11 U.S.C.

548 (1988), to

support his

contention that the sale was commercially unreasonable and in bad

faith.

He

argues

that

under the

Code

the foreclosure

sale

constituted a fraudulent transfer because the price obtained fell

below the fair market value.

He

cites In re General Industries,

_________________________

Inc., 79 B.R. 124, 134 (Bankr. D. Mass. 1987), and In re Ruebeck,

____
_____________
55 B.R. 163,

171 (Bankr. D. Mass.

1985).

These cases

arise in

the context of federal bankruptcy proceedings where the debtor is

in bankruptcy and the official
aside

creditors committee sought to set

the foreclosure sales contending that they were fraudulent

transfers under

548(a) of the Code because the

for less than reasonably equivalent

the statute.
foreclosure
proposed
the

sales were made

value within the meaning

of

The bankruptcy courts held that legal notice of the

sale without

other substantial

advertising of

the

sale in the general press was insufficient to withstand

fraudulent conveyance

strictures

of

the

Code.

General

_______
Industries,
__________
addition,

79

B.R. at

the courts

134;

Ruebeck,
_______

55

B.R. at

held that

sales

at 53

168.

In

percent and

57.7

percent of fair market value were not reasonably equivalent value

-1616

within the meaning of

548.

General Industries, 79 B.R. at 134;

__________________

Ruebeck, 55 B.R. at 171.

_______
Carr, however, is

not a debtor

within the meaning

of

the Code and the cases he cites are therefore inapplicable in the
context of this case.
evidence

of this

Moreover, under the facts and conflicting

case, we

cannot say

that Carr

has proven

fraudulent transfer of property merely because the price obtained

at a fairly
accordance

conducted, non-collusive public foreclosure

with

applicable

expectations of the value

state

fixed by his

law

did

not

appraiser.

sale in

meet

his

We need

not

decide whether advertising

of a foreclosure sale

in the general

press is essential for a good faith sale in Massachusetts because

notice of the sale is not an issue before us.

We also believe it

significant that the decisions of the Bankruptcy Court in General

_______
Industries
__________

and

Ruebeck
_______

were

ignored

the

by

legislature when

it amended

statute in 1989.

The statute now provides that

the

Massachusetts

State's fraudulent

conveyance

[F]air consideration is given for property or

obligation -(c) When property is received pursuant to a
regularly conducted, noncollusive foreclosure
sale or execution of a power of sale for the
acquisition or disposition of such property
upon default under a mortgage, deed or trust
or security agreement.
Mass. Gen. Laws Ann. ch. 109A,

3 (West 1992).
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Thus, the

Massachusetts legislature did

not adopt the

principles set forth in General Industries or in Ruebeck.

We see

__________________
no error in the application

_______

of Massachusetts law by the district

court and in entering judgment in the RTC's favor.

V.
In summary,

we

hold

that the

minutes

of

bank's

executive committee, which merely record the authorization of the

Board

to

the

bank's

conditions, do not
borrower.

officers

to extend

loan

constitute a contract between a

Furthermore,

alleged oral

assurances

chartered bank officers

to defer compliance with

attached

extension of a

to a proposed

federal common

law under

statute, 12 U.S.C.
mere inadequacy
non-collusive
state law

bank loan

D'Oench, Duhme,
______________

1823(e).

of the sale

and by

Finally, under

on

certain

bank and the

of federally

the conditions

are barred by

Congressional

Massachusetts law,

price of real estate

received at a

foreclosure sale conducted in full compliance with

does not constitute a

breach of the covenant

of good

faith and fair dealing and is not an indication that the sale was
commercially unreasonable.
The judgment of the district court is
Affirmed.
_________

Costs taxed in favor of appellee.

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