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Keywords

partnership

Related Cases

Murphy v. F.D.I.C., 208 F.3d 959, 13 Fla. L. Weekly Fed. C 570

Facts

In June 1989, Bruce G. Murphy was solicited to invest in the Orchid Island Golf and Beach Club Project by a letter from a general partner in Orchid Island Associates Limited Partnership. Murphy invested $515,672.37 in August 1989, after which Southeast Bank provided approximately $50 million in loans for the project. Following Orchid's default and Southeast's insolvency, Murphy filed suit against the FDIC, alleging that Southeast had acted fraudulently and in concert with Orchid, leading to his financial loss.

In June 1989, Murphy received a letter from Robert H. Haines, III, a general partner in Orchid Island Associates Limited Partnership (“Orchid”), soliciting Murphy's investment in Orchid's development of the Orchid Island Golf and Beach Club Project (the “Project”) located in Indian County, Florida. The letter projected a 6.1 multiple return on investments. Soon thereafter, on August 18, 1989, Murphy invested $515,672.37 in a limited partnership interest in Orchid. Southeast Bank provided several loans for the Project from the fall of 1988 until the beginning of 1991. These loans totaled approximately $50 million. Orchid eventually defaulted on its loans and Southeast foreclosed on the property. Southeast itself was declared insolvent on September 19, 1991 and placed in FDIC receivership.

Issue

Whether Murphy's claims against the FDIC were barred by the D'Oench, Duhme doctrine.

Rule

The D'Oench, Duhme doctrine bars claims against the FDIC based on agreements that are not documented in the bank's records, protecting the FDIC from misrepresentations regarding the assets of failed banks.

Analysis

The court applied the D'Oench, Duhme doctrine to Murphy's claims, determining that there was no written agreement establishing a joint venture between Southeast and Orchid. The court emphasized that the doctrine is intended to protect the FDIC and the public funds it administers from undisclosed agreements that could misrepresent a bank's financial condition.

Conclusion

The court affirmed the district court's dismissal of Murphy's complaint, concluding that his claims were barred by the D'Oench, Duhme doctrine.

Who won?

FDIC prevailed because the court found that Murphy's claims were barred by the D'Oench, Duhme doctrine, which protects the FDIC from claims based on unrecorded agreements.

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