Duhme & Co. v. FDIC, 315 U.S. 447 (1942), holding that a person who had agreed to execute unconditional notes to a bank on the basis of a secret side agreement that the bank would not call the notes for payment could not rely upon the secret agreement as a defense to payment of the notes to the bank, for which the FDIC had since been appointed receiver. The D'Oench, Duhme doctrine was expanded beyond this initial paradigm to bar a wide variety of both claims made and defenses raised against the FDIC as receiver. In addition, in 1989, as part of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), Congress passed its own version of the D'Oench, Duhme doctrine, which bars any claim that (1) is based upon an agreement that is either unwritten or, if written, does not meet the stringent requirements of the statute, and (2) would diminish or defeat the interest of the FDIC in an asset acquired by it as receiver of a failed depository institution. 12 U.S.C. § 1823(e). |
| For several years after the passage of FIRREA, courts continued to apply the common- |
law D'Oench, Duhme doctrine in a way that was more expansive than what Congress provided
for in § 1823(e). However, in Murphy v. FDIC, 61 F.3d 34 (D.C. Cir. 1995), the District of
Columbia Circuit Court of Appeals held, based on the Supreme Court's opinion in O'Melveny &
Myers v. FDIC, 114 S. Ct. 2048 (1994), that the D'Oench, Duhme doctrine was preempted by
the passage of § 1823(e) in 1989. Thus, according to the D.C. Circuit, D'Oench, Duhme can no
longer serve as a separate bar to claims that otherwise would not be barred by § 1823(e).
| Without addressing the preemption issue, the First Circuit recently held that neither the |
D'Oench, Duhme doctrine nor § 1823(e) bars an action against the FDIC as receiver for a failed
bank for the bank's sale of unregistered securities in violation of state law. Adams v. Zimmerman,
64 U.S.L.W. 2465 (1st Cir. Jan. 19, 1996). The court reasoned that while D'Oench, Duhme and §
1823(e) are expansive in scope, they only protect the FDIC from claims or defenses based upon
an agreement or arrangement. Since the claim in Adams was not based upon such an agreement,
neither D'Oench, Duhme nor § 1823(e) would bar the plaintiff's claims.
| Taken together, the decisions in Murphy and Adams may signal a new willingness on the |