Resolution Trust Corp. v. BVS Development, Inc.

Junior lienholders, GT Water Products, Inc. (“GT Water”), Theodore Aronson (“Ar-onson”), and Wolfgang and Charlotte Wagner (‘Wagner”) appeal summary judgment and order of foreclosure in favor of senior lienholder, the Resolution Trust Corporation as receiver for Concord-Liberty Savings and Loan Association (“RTC-Concord”).

The appellants were the owners of land that was being acquired for development by a thinly capitalized company whose ultimate failure brought about this litigation. The owners each sold their land for a cash payment and notes secured by a deed of trust. Concord provided construction financing and demanded subordination of existing notes and trust deeds to its trust deed. When the venture failed, the interests of the junior lienholders were substantially wiped out.

The three principal issues on appeal are whether: (1) removal of the case to federal court pursuant to the RTC’s removal power under 12 U.S.C. § 1441a was lawful after the litigation had gone to judgment and was on appeal in the state court; (2) the D’Oench doctrine as codified in 12 U.S.C. § 1823 (e), which invalidates agreements not found in a financial institution’s written records when the RTC…