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#2141

THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS

In Re:

TIFFANY GARDENS PARTNERS, L.P.,

DEBTOR(S)

NO. 93-40413-11

CHAPTER 11

TIFFANY GARDENS PARTNERS, L.P.,

PLAINTIFF(S),

v.

RESOLUTION TRUST CORPORATION as receiver for PIONEER

SAVINGS AND LOAN ASSOCIATION,

DEFENDANT(S).

RESOLUTION TRUST CORPORATION as receiver for PIONEER

FEDERAL SAVINGS AND LOAN ASSOCIATION,

INTERVENOR-DEFENDANT.

ADV. NO. 93-7056

ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT

This proceeding is before the Court on the debtor's motion for relief from the order the Court entered on March 21, 1995, granting summary judgment in favor of the Resolution Trust Corporation (RTC). The debtor is represented by counsel Donald E. Bucher of Moore, Bucher & Morrison of Kansas City, Missouri. The RTC's interest has been transferred to Ontra, Inc., which has intervened to object to the debtor's motion. Ontra is represented by James A. Polsinelli, James E. Bird, and Christopher C. Wren of Polsinelli, White, Vardeman & Shalton, P.C., of Kansas City, Missouri. The Court has reviewed the relevant pleadings and is now ready to rule.

The debtor filed this adversary proceeding to ask the Court to subordinate the claim of the Resolution Trust Corporation (RTC) to the claims of the debtor's other creditors. In the March 21 order, the Court ruled that the debtor's grounds for seeking subordination were barred by the D'Oench, Duhme doctrine (see D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942)) and 12 U.S.C.A. §§1441(b)(4)(A) and 1823(e), and because federal law made the RTC a holder in due course. The debtor now claims that the transfer of the RTC's interest to Ontra eliminated the D'Oench, Duhme doctrine's effect on this dispute, and that recent decisions by the Supreme Court and a federal District Court in Kansas eliminate any federal common law doctrine on holder in due course status.

The debtor's first argument seems to be premised on the novel theory that successor banks which obtain the RTC's interest in an asset are protected by D'Oench, Duhme, but non-bank assignees (like Ontra "apparently" is) are not. Thus, from a case holding that the RTC's successor was protected, the debtor quotes language about "successor banks" and concludes only banks are protected. The Court believes such language arose from the particular facts of a typical case where the RTC transferred assets to a bank, and not from any intent to limit the protection to a particular type of successor or assignee of the RTC. The rationale of such cases, that the RTC will have trouble finding buyers for its assets if the buyers are not protected by D'Oench, Duhme, applies equally to all buyers, not just banks. The debtor has provided no explanation why the pool of potential buyers should be divided into protected banks and unprotected others. The Court is not convinced.

The debtor's second argument is perhaps more shortsighted than its first. The debtor relies on that part of Judge Van Bebber's decision in RTC v. A.W. Associates, 869 F.Supp. 1503, 1509-10 (D.Kan. 1994), in which he suggests that O'Melveny & Myers v. FDIC, ___ U.S. ___, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994), probably precludes federal common law from giving the RTC holder in due course status not available to it under state law. The debtor overlooks, however, the fact that Judge Van Bebber went on to hold that the D'Oench, Duhme doctrine barred claims similar to those made here based on essentially the same facts as those before this Court. Id. at 1510-12. In fact, Ontra argues that even if the Court granted the debtor's motion, Judge Van Bebber's decision would collaterally estop the debtor from asserting the claims it has made in this proceeding because some of its principals were also principals of the party making the claims involved there. The Court declines to decide that issue, and simply notes that while Judge Van Bebber's ruling may cast doubt on one ground of this Court's order, at the same time, it provides additional support for the main ground of the order, the application of the D'Oench, Duhme doctrine.

Since the debtor's arguments fail on their merits, the Court need not consider whether the debtor's motion satisfies the procedural requirements for relief under Federal Rule of Civil Procedure 60(b), made applicable here by Federal Rule of Bankruptcy Procedure 9024. The motion is hereby denied.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of May, 1995.











__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

 

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