Recent Development by Jodie Beth Weitzer
In 1985, appellees Mitchell Company and Mitchell Equities (jointly, Mitchells), third generation subsidiaries of a bank that later failed, formed two limited partnerships to build, own, and operate certain apartment complexes. In 1986, Mitchells sold appellant Alexandria Associates, Ltd. (Alexandria) partnership interests in these limited partnerships. To finance a loan borrowed to purchase these interests, Alexandria attempted to syndicate itself. When the syndication was unsuccessful, Alexandria became suspicious that Mitchells had misrepresented the value of the properties and therefore demanded return of the purchase price. Mitchells refused. When Alexandria's loan fell into default, Mitchells foreclosed on appellant's mortgages. Alexandria thereafter filed suit, alleging that Mitchells “orally misrepresented the original purchase and value of the . . . partnership interests, orally misrepresented the nature of [[[Mitchells' duties], and orally misrepresented syndication details.” Mitchells moved for summary judgment, asserting that the alleged oral misrepresentations were “secret agreements” and that, therefore, the D'Oench, Duhme doctrine (D'Oench doctrine or the doctrine) and 12 U.S.C. § 1823(e) barred Alexandria's claim. The district court granted summary judgment, and Alexandria appealed. The Fifth Circuit reversed, holding that the D'Oench doctrine does not apply to non-banking transactions involving the sale of partnership interests in real estate ventures, particularly when the transactions involve a nonbanking sub-sub-subsidiary of a bank. Alexandria Associates v. Mitchell Co., 2 F.3d 598 (5th Cir. 1993).
About the Author
Jodie Beth Weitzer.
Citation
68 Tul. L. Rev. 1629 (1994)