![]() ![]() The FDIC thereafter filed a notice of substitution as a party and in November 1988 filed the instant motion to dismiss, contending the remaining claims asserted by RBC are barred by the D'Oench, Duhme doctrine. On JRepublicBank was declared insolvent and the FDIC appointed as its receiver. In April 1988 the court granted RepublicBank's motion for summary judgment with respect to certain claims, specifying that other grounds for recovery against RepublicBank remain for trial. Pengo's financial condition subsequently deteriorated further. RepublicBank did not apply RBC's $10 million payment towards Pengo's purchase of a letter of credit, but instead used the money to repay RepublicBank's smaller correspondent banks and take them out of the Pengo loan. Instead, RepublicBank called on RBC to fund its entire $10 million obligation, which RBC did. RBC alleges that in late 1982 RepublicBank requested and RBC agreed that RBC would advance $3-4 million to enable Pengo to purchase a letter of credit. On JRepublicBank placed Pengo on its insolvent loan internal watch list. On Jthe three banks declined Pengo's request for an additional $6 million loan. RepublicBank and the two other signatory banks waived this default. Pengo's debt-to-net worth ratio dropped below the level required in the original bank credit agreement, putting Pengo in default on the loans. Due to a decline in oil prices, Pengo experienced financial difficulties in the spring of 1982. RepublicBank funded the $5.8 million repayment by selling participations in the Pengo loan to *1094 RepublicBank's various smaller correspondent banks. According to the participation, RepublicBank could, at its option, request RBC to advance up to $10 million.īetween March 25 and ApRBC advanced $5.8 million on the Pengo note shortly thereafter, RepublicBank repaid RBC the sum advanced. ![]() Pursuant to this certificate, RepublicBank assigned to RBC an "undivided participating interest" of $10 million in the $40 million Pengo note. RepublicBank thus entered into a participation agreement with RBC evidenced by a one-page participation certificate. RepublicBank could not finance the entire $40 million loan itself because banking regulations restricted the bank to loans no higher than $30 million. Shortly thereafter, Pengo and the three banks amended the bank credit agreement so that each bank agreed to lend Pengo up to $40 million. RepublicBank was named as the agent bank. Under the bank credit agreement, each bank committed to lend Pengo up to $30 million. The initial loan arose from a Decembank credit agreement between RepublicBank, First National Bank of Chicago, and Continental Illinois National Bank. The lawsuit arises from RBC's purchase of a $10 million participation interest in a loan made by RepublicBank and others to Pengo Industries, Inc. ("RepublicBank") in 1984, alleging claims for fraud, breach of fiduciary duty, and breach of contract. Plaintiff The Royal Bank of Canada ("RBC") filed this action against a predecessor of First RepublicBank Fort Worth, N.A. The instant motion to dismiss presents questions concerning the application of the D'Oench, Duhme doctrine, and asks the court to decide whether the Federal Deposit Insurance Corporation ("FDIC") can be liable for punitive damages and attorney's fees. as Receiver for First RepublicBank Fort Worth, N.A. William Frank Carroll, John Mitchell Nevins, and Alyson Couch Dover of Baker, Mills & Glast, P.C., Dallas, Tex., for defendant Federal Deposit Ins. Lilly of Choate & Lilly, P.C., Dallas, Tex., for plaintiff The Royal Bank of Canada. 1091(1990) The ROYAL BANK OF CANADA, Plaintiff,įEDERAL DEPOSIT INSURANCE CORPORATION as Receiver for First RepublicBank Fort Worth, N.A., Defendant.
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