D’Oench, Duhme Bars “Tax-Credit-Only” Repayment Defenses and Defeats Post-Default “Manufactured Default” Claims Against FDIC-Asset Assignees

1. Introduction

In BY Equities, L.L.C. v. Carver Theater Productions, L.L.C.; Eugene Oppman (5th Cir. Feb. 26, 2026) (per curiam) (unpublished), the Fifth Circuit affirmed summary judgment for an assignee of a failed bank’s loan, enforcing a matured promissory note and a personal guaranty. The dispute arose from a tax-credit “bridge” financing used to renovate the historic Carver Theater in New Orleans. After the borrower defaulted and the originating bank (First NBC Bank (FNBC)) failed, the FDIC (as receiver) transferred the note through subsequent assignments to BY Equities, L.L.C., which sued to collect.

The borrower Carver Theater Productions, L.L.C. and guarantor Eugene Oppman conceded nonpayment but asserted two defenses: (1) FNBC executives allegedly represented the loan would be repaid only from state tax-credit proceeds (a “tax-credit-only” repayment limitation); and (2) BY Equities supposedly “manufactured” a default through conduct surrounding the assignment and a broader tax-credit structure “unwind.” The central legal question was whether those defenses could survive D’Oench, Duhme and 12 U.S.C. § 1823(e)(1)—and, separately, whether Louisiana law recognized a viable “manufactured default” defense on this record.

2. Summary of the Opinion

The Fifth Circuit affirmed. It held that the “tax-credit-only” defense was barred by the D'Oench, Duhme doctrine and 12 U.S.C. § 1823(e)(1) because it depended on alleged oral assurances and internal bank credit memoranda that did not satisfy the statute’s strict, documentary requirements. The court also held that the “manufactured default” theory failed because the default occurred years before BY Equities purchased the note, the assignment was lawful under Louisiana law, and defendants offered no competent evidence that BY Equities breached any duty owed under the note. Finally, the court affirmed denial of Rule 60(b)(2) relief, concluding defendants lacked diligence and the “new” FDIC-produced memorandum would not have changed the result.

3. Analysis

3.1. Precedents Cited

D’Oench, Duhme & Co. v. FDIC

The opinion’s foundation is D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942), which allows the FDIC (and successors) to enforce facially valid notes notwithstanding undisclosed side understandings that would alter repayment. The Fifth Circuit treated defendants’ “tax-credit-only” assertion as the paradigmatic D’Oench problem: an alleged unwritten arrangement contradicting an unconditional promise to pay.

Campbell Leasing, Inc. v. FDIC

Citing Campbell Leasing, Inc. v. FDIC, 901 F.2d 1244 (5th Cir. 1990), the court emphasized D’Oench’s estoppel effect in the Fifth Circuit: borrowers and guarantors cannot use oral statements (or their evidentiary equivalents) to diminish an FDIC-controlled asset. This precedent supported the categorical rejection of reliance on Oppman’s affidavit and deemed admissions about what FNBC officers said.

Beighley v. FDIC

With Beighley v. FDIC, 868 F.2d 776 (5th Cir. 1989), the court reinforced that § 1823(e)’s requirements are “certain” and “categorical,” leaving no equitable leeway for informal expectations in FDIC receivership contexts. This case anchored the court’s refusal to entertain a fraud-based defense that did not satisfy § 1823(e)(1)(A)-(D).

FDIC v. Va. Crossings P'ship

The court relied on FDIC v. Va. Crossings P'ship, 909 F.2d 306 (8th Cir. 1990), to illustrate the “contemporaneous execution” requirement: memoranda predating the loan transaction do not qualify as § 1823(e) agreements. That authority supported rejecting the 2012 credit memorandum as too remote to modify a 2015 refinancing note.

Little v. Liquid Air Corp.; C&C Inv. Props., L.L.C. v. Trustmark Nat'l Bank

The court cited Little v. Liquid Air Corp., 37 F.3d 1069 (5th Cir. 1994), and C&C Inv. Props., L.L.C. v. Trustmark Nat'l Bank, 838 F.3d 655 (5th Cir. 2016), for the summary-judgment rule that speculation cannot create a genuine dispute of material fact. These cases were deployed to reject defendants’ theory that redacted “pen marks” on internal memoranda implied Oppman’s signature or assent.

Carnegie Techs., L.L.C. v. Triller, Inc.; Terral River Serv., Inc. v. SCF Marine Inc.; FTC v. Nat'l Bus. Consultants, Inc.

For the governing summary-judgment framework, the court cited Carnegie Techs., L.L.C. v. Triller, Inc., 39 F.4th 288 (5th Cir. 2022), and, through it, Terral River Serv., Inc. v. SCF Marine Inc., 20 F.4th 1015 (5th Cir. 2021), plus FTC v. Nat'l Bus. Consultants, Inc., 376 F.3d 317 (5th Cir. 2004). These authorities supported the proposition that a party bearing the burden on an affirmative defense must produce competent evidence sufficient to raise a triable issue.

Hesling v. CSX Transp., Inc.; Edwards v. City of Hou.; Gov't Fin. Servs. One Ltd. P'ship v. Peyton Place, Inc.; N.H. Ins. v. Martech USA, Inc.

To affirm denial of post-judgment relief, the court applied the Fifth Circuit’s strict approach to newly discovered evidence: Hesling v. CSX Transp., Inc., 396 F.3d 632 (5th Cir. 2005), relying on Edwards v. City of Hou., 78 F.3d 983 (5th Cir. 1996) (en banc), and the Rule 60(b)(2) standard articulated in Gov't Fin. Servs. One Ltd. P'ship v. Peyton Place, Inc., 62 F.3d 767 (5th Cir. 1995) (quoting N.H. Ins. v. Martech USA, Inc., 993 F.2d 1195 (5th Cir. 1993)). These cases framed two decisive failures: lack of diligence (FOIA request delayed until late) and lack of materiality (the memo still did not satisfy § 1823(e)).

Dimuzio v. Resol. Tr. Corp.; Resol. Tr. Corp. v. Midwest Fed. Sav. Bank; FDIC v. Manatt

In a footnote, the court acknowledged an inter-circuit disagreement about how strictly to interpret § 1823(e)’s “contemporaneous” requirement, citing: Dimuzio v. Resol. Tr. Corp., 68 F.3d 777 (3d Cir. 1995); Resol. Tr. Corp. v. Midwest Fed. Sav. Bank, 36 F.3d 785 (9th Cir. 1993); and FDIC v. Manatt, 922 F.2d 486 (8th Cir. 1991). Importantly, the court did not need to choose a side because defendants’ memoranda failed for other § 1823(e) reasons (not executed by the obligor; inconsistent with the asserted repayment limitation).

Lamar Contractors, Inc. v. Kacco, Inc.

To dispose of the “manufactured default” defense under Louisiana law, the court relied on Lamar Contractors, Inc. v. Kacco, Inc., 2015-1430 (La. 5/3/16), 189 So. 3d 394, interpreting Louisiana Civil Code article 2003 to require proof that the obligee failed to perform duties owed under the contract before the obligor can claim the obligee contributed to nonperformance. Because BY Equities’ only material duty under the note was to accept payment—and defendants did not allege refusal—the doctrine did not apply.

3.2. Legal Reasoning

(a) The “tax-credit-only” theory is the kind of side agreement D’Oench/§ 1823(e) excludes

The Fifth Circuit treated defendants’ fraud-in-the-inducement defense as an attempt to rewrite an “unconditional” repayment obligation. Even if FNBC executives said the bridge loan would be satisfied exclusively from tax credits, such statements would “tend to diminish or defeat” the asset and thus are unenforceable against the FDIC and its successors unless they meet § 1823(e)(1)’s four prerequisites:

  1. in writing;
  2. executed contemporaneously by bank and obligor;
  3. approved by the bank’s board/loan committee as reflected in minutes; and
  4. continuously maintained as an official record.

Oppman’s affidavit and Ryan’s deemed admissions failed immediately because they evidenced, at most, oral assurances. The internal credit memoranda also failed because (i) they were not shown to be executed by Oppman or otherwise to constitute a borrower-bank “agreement,” (ii) the 2012 memo was not contemporaneous with the 2015 loan, and (iii) both memoranda expressly preserved collateral liquidation and guarantor support as secondary repayment sources—undercutting the asserted “tax-credits-only” limitation.

(b) Rule 60(b)(2) is not a second chance to hunt for § 1823(e) paperwork

The court’s denial of Rule 60(b)(2) relief rested on two independent grounds: (1) defendants did not act with due diligence (they waited until late in the case to pursue FOIA materials despite knowing the dispute turned on FDIC-record documentation); and (2) the later-produced 2015 memorandum would not have changed the result because it still was not shown to be an executed agreement satisfying § 1823(e) and still referenced secondary repayment sources inconsistent with defendants’ theory.

(c) A post-default assignee cannot “manufacture” a default that already occurred

The “manufactured default” defense collapsed on chronology: the note matured and was unpaid in 2016, while BY Equities acquired it in 2019. The Fifth Circuit further rejected attempts to label the assignment improper, noting Louisiana law permits free assignment of creditor rights (La. Civ. Code Ann. art. 2642) and defendants identified no evidence of refused tender or other misconduct that could negate liability on a negotiable, unconditional promise to pay.

(d) Louisiana Civil Code article 2003 did not supply a defense on these facts

Invoking the note’s negotiable-instrument character (La. Rev. Stat. Ann. § 10:3-104(a)) and Lamar Contractors, Inc. v. Kacco, Inc., the court reasoned that defendants could not show the obligee’s nonperformance because BY Equities’ performance obligation was essentially to accept payment, not to restructure collateral, facilitate tax-credit unwinds, or refrain from purchasing a distressed instrument.

3.3. Impact

  • Tax-credit bridge financings: Parties cannot rely on internal bank underwriting narratives (“primary repayment source: tax credits”) to negate unconditional repayment language unless the limitation is formally documented to satisfy § 1823(e).
  • FDIC-receiver/secondary-market certainty: The decision reinforces that purchasers of FDIC-origin assets inherit strong protection against unwritten borrower defenses—supporting liquidity and pricing stability in the market for failed-bank loan portfolios.
  • Guarantor exposure: Personal guaranties remain enforceable despite alleged oral assurances of “non-recourse” repayment sources, unless the limitation is properly memorialized in bank records meeting statutory formalities.
  • Litigation strategy: The opinion underscores that Rule 60(b)(2) is not a mechanism to cure delayed investigation (including late FOIA efforts) where the legal standard was clear from the outset.

4. Complex Concepts Simplified

  • D’Oench, Duhme doctrine: A rule preventing borrowers/guarantors from using secret or informal side deals to defeat the FDIC (or its successors) when the FDIC takes over a failed bank’s assets.
  • 12 U.S.C. § 1823(e)(1): Congress’s codification requiring that any agreement limiting a loan’s enforceability must be formally documented (written, signed, approved, and kept in bank records) to be asserted against the FDIC or successors.
  • Negotiable instrument: A legally transferable written promise to pay money that is “unconditional” on its face (here, the note could not be informally converted into “pay only if tax credits arrive”).
  • Rule 60(b)(2) newly discovered evidence: Post-judgment relief is available only if the party was diligent and the new evidence would likely change the outcome—not simply because additional documents were later obtained.
  • “Manufactured default”: A borrower’s claim that the creditor caused the default; here it failed because the default predated the assignee’s involvement and because no contractual duty of the creditor was shown to have been breached.

5. Conclusion

The Fifth Circuit’s decision delivers a clear practical rule for FDIC-related loan enforcement: alleged “repayment-source-only” understandings—particularly oral assurances that a bridge loan will be satisfied exclusively by tax-credit proceeds—are not viable defenses against the FDIC or its assignees unless they satisfy the strict documentary conditions of 12 U.S.C. § 1823(e)(1). It also narrows “manufactured default” arguments in this setting, holding that an assignee cannot be blamed for a default that indisputably occurred before assignment and that Louisiana law requires proof of the obligee’s contractual nonperformance—absent here. For borrowers, guarantors, and tax-credit deal participants, the lesson is formal: if repayment is intended to be limited to a particular source (or nonrecourse), that limitation must be properly written, executed, approved, and preserved in the bank’s official records, or it will not survive FDIC receivership and subsequent assignments.