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Opton, Inc. v. F.D.I.C.

September 15, 1994


Appeal from the Superior Court of the District of Columbia; (Hon. Ellen Segal Huvelle, Trial Judge)

Before Wagner,* Chief Judge, and Ferren** and Schwelb, Associate Judges.

The opinion of the court was delivered by: Ferren

FERREN, Associate Judge: The National Bank of Washington (NBW) lent money to Opton, Inc. in exchange for a promissory note from Opton and personal guaranties from Stephen and Mallary Tytel and from appellant Howard Tytel. Opton defaulted on its obligations under the note, and NBW sued Opton and the Tytels for the amount due. After filing the complaint, NBW was declared insolvent and the Federal Deposit Insurance Corporation (FDIC) was appointed the bank's receiver. The trial court substituted FDIC for NBW as the "real party in interest." The court then entered a default judgment against Opton and granted FDIC's motion for summary judgment against all three Tytels. Only Howard Tytel filed a notice of appeal. We affirm summary judgment in FDIC's favor since each of appellant's proffered defenses fails as a matter of law. Specifically, (1) D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 86 L. Ed. 956, 62 S. Ct. 676 (1942) and 12 U.S.C.A. § 1823 (e) (1989) bar appellant's defense that he never delivered an unconditional guaranty to the bank; (2) appellant cannot escape liability on his guaranty by asserting that Stephen Tytel, Opton's president, lacked mental capacity and corporate authority to execute the underlying note; and (3) the language of appellant's unconditional guaranty precludes appellant from defending against FDIC on the ground that appellant had received no consideration for his guaranty or that NBW had impaired its collateral and thereby discharged appellant's obligation.


Opton was a District of Columbia corporation that operated retail stores selling various "gadgets." In 1987, Opton obtained a loan from NBW. The following year, on October 7, 1988, Opton's owner and president, Stephen Tytel, and his wife Mallary Tytel, executed a written, unconditional guaranty in which they personally guaranteed the payment of all sums Opton owed NBW "now and hereafter existing." On October 19, 1988, appellant Howard Tytel, Stephen Tytel's brother and Opton's corporate secretary, executed an identical guaranty -- the document at issue in this case -- in which appellant also personally guaranteed the payment of all sums Opton owed NBW "now and hereafter existing." Appellant's guaranty has never been terminated and has continued in full force and effect since its execution.

On June 6, 1989, NBW lent Opton $250,000 in exchange for a Commitment Letter and a Master Promissory Note, dated October 10, 1989 (collectively the "Note"). Opton subsequently defaulted on the Note by failing to make the required payments. In a letter dated May 15, 1990, NBW demanded from Opton $249,240, the total amount then due on the Note. NBW also sent notices, dated May 15, 1990, to appellant and to Stephen and Mallary Tytel, indicating that if the amount due on the Note was not paid by May 18, 1990, "NBW exercise all of its rights and remedies under the Guaranties against ." Notwithstanding NBW's demand letter, Opton failed to pay the Note in full, and the guarantors, appellant and Stephen and Mallary Tytel, failed to make payments under the terms of their guaranties.

On July 17, 1990, NBW sued Opton and the Tytels, seeking from all defendants, jointly and severally, $225,571.06 consisting of the unpaid principal balance of $193,222.10, interest through July 9, 1990, totaling $2,508.56, late charges of $418.09, and attorneys' fees aggregating $29,422.31.

On August 10, 1990, the Office of the Comptroller of the Currency declared NBW insolvent, closed the bank, and appointed appellee FDIC as the bank's receiver. Claiming it was the "real party in interest," FDIC moved to be substituted as the plaintiff in lieu of NBW. The trial court granted this unopposed motion.

Opton did not file an answer to the NBW/FDIC complaint, and, as a result, the trial court entered a default judgment against Opton for $225,571.06, the full amount due. Stephen and Mallary Tytel filed an answer alleging two defenses: lack of consideration and lack of corporate authority. Appellant answered with the following defenses: (1) he never delivered the executed guaranty to NBW; (2) he could not be held liable as guarantor because the underlying Note was invalid, given the facts that Opton's president, Stephen Tytel, lacked mental capacity and corporate authority to execute the Note; (3) appellant received no consideration for his guaranty.

FDIC moved for summary judgment against the Tytels. Appellant opposed the motion, arguing that there were genuine issues of material fact as to the defenses alleged in his answer (enumerated above) and, in addition, as to whether NBW or FDIC had impaired the loan collateral and thereby discharged appellant's obligation. Stephen and Mallary Tytel did not oppose FDIC's summary judgment motion.

On October 20, 1992, the trial court granted summary judgment against all three Tytels, and, on April 9, 1993, the court entered judgment, "jointly and severally against Howard Tytel, Mallary Tytel and Stephen Tytel in the amount of [$280,639.21]." Appellant alone filed a notice of appeal.


Super. Ct. Civ. R. 56 (c) (1993) requires the trial court to grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." "The moving party has the burden of demonstrating clearly the absence of any genuine issue of material fact and entitlement to a judgment as a matter of law." Holland v. Hannan, 456 A.2d 807, 815 (D.C. 1983). To survive a summary judgment motion, "the opposing party need only show that there is sufficient evidence supporting the claimed factual dispute to require a jury or Judge to resolve the parties' differing versions of the truth at trial." Nader v. Toledano, 408 A.2d 31, 42 (D.C. 1979) (quoting International Underwriters, Inc. v. Boyle, 365 A.2d 779, 782 (D.C. 1976), cert. denied, 444 U.S. 1078 (1980)). This means the court must deny summary judgment if the offered evidence and related inferences would permit the factfinder, applying the appropriate burden of proof, to find for the nonmoving party. See id. Furthermore, "our standard of review of a trial court order granting motion for summary judgment is the same as that applied by the trial court when it considers the motion in the first instance." Government Employees Ins. Co. V. Group Hospitalization Medical Servs., Inc., 602 A.2d 1083, 1086 (D.C. 1992). With these principles in mind, we turn to appellant's contentions.

A. Non-Delivery Defense

Appellant contends that the trial court erred in granting summary judgment as to his defense that he never delivered an executed guaranty to NBW. More specifically, although appellant admitted in his answer that he had signed the unconditional guaranty on October 19, 1988, appellant argues that, despite this admission, his affidavit and several NBW documents -- submitted to the trial court with appellant's opposition to FDIC's motion for summary judgment -- established a genuine issue of material fact as to whether appellant had delivered the guaranty to the bank. According to the affidavit, appellant signed the guaranty and gave it to his brother but never authorized his brother to deliver the executed guaranty to NBW.

FDIC contends that summary judgment was appropriate because D'Oench, Duhme & Co., 315 U.S. at 447, and D'Oench's statutory counterpart, 12 U.S.C.A. § 1823 (e), barred the non-delivery defense. FDIC argues, more specifically, that the D'Oench rule entitled FDIC "to rely, to the exclusion of any extraneous matters, on the official bank records that set forth the rights and obligations of the bank and those to whom the bank lends money." According to FDIC, appellant's unqualified guaranty was in NBW's records; thus, appellant's non-delivery defense was ineffectual as a matter of law, based as it was, solely on an alleged oral agreement between appellant and his brother, not reflected in the guaranty itself, conditioning delivery on appellant's later authorization.

The trial court concluded that appellant's non-delivery defense failed for a different reason: FDIC was a holder in due course of appellant's guaranty. We do not address the trial court's reasoning because we agree with appellee's contention that D'Oench and 12 U.S.C.A. § 1823 (e) preclude the non-de livery defense. See Max Holtzman, Inc. v. K & T Co., 375 A.2d 510, 513 n.6 (D.C. 1977) ("An appellate court may sustain a correct judgment on a ground different from that adopted by the trial court."). *fn1

In D'Oench, FDIC sued the maker of a note which FDIC had received as collateral for an FDIC loan to the original obligee bank. The maker alleged in defense that it had given the note to the obligee bank without consideration and, further, with the understanding that the bank would never sue on the note. FDIC argued that the maker could not assert those defenses because, if they were to be honored, the very existence of the facially unconditional note in the bank's records would amount to a misrepresentation likely to deceive the bank's creditors, state banking authorities, and FDIC itself. The Supreme Court agreed with FDIC, holding that the maker was estopped from defending against FDIC on the grounds alleged. The Court concluded:

Public policy requires that a person who, for the accommodation of the bank executes an instrument which is in form a binding obligation, should be estopped from thereafter asserting that simultaneously the parties agreed that the instrument should not be enforced.

D'Oench, 315 U.S. at 459. The Court added that, in executing the note, the maker effectively had given the bank permission "to treat the note as genuine for purposes of examination at the hands of the public authorities as well as for its general banking activities." Id. at 460.

In 1950, reflecting D'Oench, Congress enacted 12 U.S.C.A. ยง 1823 (e), which ...

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