Landcastle Acquisition Corp. v. Renasant Bank

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[PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 20-13735

____________________

LANDCASTLE ACQUISITION CORP.,

Plaintiff-Appellee,

versus

RENASANT BANK,

Defendant-Appellant.

____________________

Appeal from the United States District Court

for the Northern District of Georgia

D.C. Docket No. 2:17-cv-00275-RWS

____________________

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2 Opinion of the Court 20-13735

Before WILLIAM PRYOR, Chief Judge, GRANT, and HULL, Circuit

Judges.

HULL, Circuit Judge:

This case arises out of the insolvency of the Crescent Bank

and Trust Company (“Crescent”) and the conduct of its customer-

lawyer Nathan Hardwick, a manager of his law firm, Morris

Hardwick Schneider, LLC (“Hardwick law firm”). In 2009,

Crescent, a Georgia bank, made Hardwick a loan for $631,276.71.

Hardwick, as his law firm’s manager, signed a security agreement

that pledged, as collateral, his law firm’s certificate of time deposit

(“CD”) for $631,276.71. So far, all looked hunky-dory, or facially

valid in legal speak.

For five years, Hardwick’s loan remained current. When

Crescent failed, the Federal Deposit Insurance Corporation

(“FDIC”), as receiver, took over and sold Hardwick’s loan and CD

collateral to Renasant Bank. Hardwick then made loan payments

to Renasant, and Renasant held the CD collateral.

When Hardwick defaulted in 2014, the security agreement

permitted Renasant to liquidate the CD collateral to pay the loan

balance, which Renasant did. Renasant notified the Hardwick law

firm of the loan default and CD liquidation but received no

response—much less any objection—from the law firm.

Eventually, Hardwick’s and his law firm’s financial troubles

caught up with them. The law firm filed for bankruptcy, and

Hardwick was convicted of wire and financial fraud. See United

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States v. Maurya, 25 F.4th 829, 835 (11th Cir. 2022). The bankrupt

law firm had countless creditors, including plaintiff Landcastle

Acquisition Corporation (“Landcastle”), which was assigned the

law firm’s potential claims against others. 1

In 2017, Landcastle sued Renasant (as successor to the FDIC

and Crescent), claiming Renasant was liable for $631,276.71, the

CD amount. Landcastle’s lawsuit seeks to invalidate the Hardwick

law firm’s security agreement.

That security agreement is unconditional and facially valid.

But Landcastle alleges that Hardwick, the law firm’s agent and

manager, lacked authority to pledge its CD as collateral. In its

attempt to invalidate the security agreement, Landcastle

introduces and relies on the law firm’s corporate records and

testimony. Landcastle’s evidence thus comes from outside the

failed bank’s records.

This case requires us to apply federal law developed from a

combination of federal common law and a statute, known

collectively as the “D’Oench doctrine.” See D’Oench, Duhme &

Co. v. Fed. Deposit Ins. Corp., 315 U.S. 447, 62 S. Ct. 676 (1942); 12

U.S.C. § 1823(e). That estoppel doctrine applies when the FDIC

takes over a failed bank and sells it to a solvent bank. See D’Oench,

315 U.S. at 460, 62 S. Ct. at 681. Just as the parol evidence rule bars

extrinsic evidence to contradict a written contract, the D’Oench

1 In 2016, the bankruptcy court approved Landcastle’s $300,000 bulk purchase

of any claims that the Hardwick law firm potentially had against others.

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doctrine bars the use of evidence outside the failed bank’s records

to challenge the validity of a facially valid note, guaranty, or

collateral pledge acquired by the FDIC from a failed bank and sold

to a solvent bank, like Renasant. To be clear, D’Oench does not

bar such challenges; rather, it limits what evidence can be used to

mount those challenges.

Courts have developed this robust federal common law

because the FDIC must be able to rely upon the failed bank’s

official records when it quickly estimates and sells a failed bank’s

assets—loans and collaterals—to a successor bank that takes over

the failed bank’s deposit liabilities. The FDIC’s immediate sale

enables the purchaser-successor bank, like Renasant, to open the

failed bank the next morning with deposits (the failed bank’s

liabilities) available to customers without interruption. See

Langley v. Fed. Deposit Ins. Corp., 484 U.S. 86, 91–92, 108 S. Ct.

396, 401 (1987); Fed. Sav. & Loan Ins. Corp. v. Gordy, 928 F.2d

1558, 1564 (11th Cir. 1991). Practically too, D’Oench affords the

FDIC a super-charged, holder-in-due-course protection.

There’s more relevant D’Oench law and more to

Hardwick’s tale but that gets us to the certified question:

Does D’Oench bar a claim (or defense) that the agent

[Hardwick] who signed the agreement [the CD

security agreement] with the bank [Crescent]

purportedly lacked authority to do so?

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Applying the Supreme Court’s and our Circuit’s D’Oench

precedent, we hold that Landcastle’s lack-of-authority claims are

barred because they rely on evidence that was outside Crescent’s

records when the FDIC took over that failed bank and sold the

Hardwick loan and CD collateral to Renasant.

Indeed, none of Landcastle’s evidence was in Crescent’s

records. Undisputedly too, Crescent had no knowledge that

Hardwick lacked authority to pledge his own law firm’s CD.

Although D’Oench bars Landcastle’s non-bank-records

evidence, Landcastle tries to escape D’Oench’s estoppel doctrine

altogether. Landcastle makes a novel argument that seeks to slip

in and use its non-bank-records evidence through another avenue.

To do that, Landcastle isolates the 2009 transaction and then

tries to use the same non-bank-records evidence to claim the

security agreement was “void,” a legal nullity, and non-existent.

From that, Landcastle argues Crescent itself never had any interest

in the CD security agreement, the FDIC took over nothing from

Crescent, the FDIC sold nothing to Renasant, and D’Oench

protection was never triggered.

But to allow Landcastle to do indirectly—introduce

non-bank-records evidence—what it cannot do directly in an FDIC

case would eviscerate D’Oench equitable protection of the FDIC.

That would mean every facially valid and unqualified note,

mortgage, or collateral pledge assumed and sold by the FDIC as

receiver would be subject to after-the-fact litigation based on

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non-bank-records evidence alleging a former customer’s manager

lacked authority. That use of evidence outside the bank’s records

is precisely what D’Oench is designed to avoid.

The Supreme Court teaches us that even if a note is

“voidable,” a failed bank can “transfer to the FDIC voidable title,

which is enough to constitute ‘title or interest’ in the note” for

purposes of the D’Oench doctrine. See Langley, 484 U.S. at 93–94,

108 S. Ct. at 402. Therefore, agent Hardwick’s lack of authority,

even if proven by non-bank-records evidence, 2 would render the

security agreement, at most, voidable by the principal, but not

void. So Crescent had and transferred at least a voidable interest

to the FDIC, which is adequate for D’Oench purposes.

Simply put, D’Oench bars Landcastle’s attempt to use

non-bank-records evidence to challenge the facially valid and

unconditional security agreement acquired by the FDIC as receiver

from the failed bank Crescent and sold by the FDIC to Renasant.

We divide our opinion into these six parts:

(1) we discuss the loan documents in Crescent’s records

when the FDIC took over;

2 The district court found fact issues existed as to whether Hardwick had

apparent authority to pledge the CD given that all three managers,

shareholders, and directors commingled their personal finances with those of

their law firm. Further, the law firm’s CD was held as collateral for over five

years and liquidated without objection by the law firm—yet another fact

evincing Hardwick’s apparent authority.

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(2) we examine the procedural history and Landcastle’s

evidence that all comes from outside the failed bank’s records;

(3) we review Supreme Court and our precedent developing

the D’Oench estoppel doctrine as federal common law;

(4) we apply those D’Oench principles and explain that

Landcastle’s lack-of-authority claims are barred because they are

based on only evidence outside Crescent’s records;

(5) we outline why we reject Landcastle’s attempt to escape

the D’Oench estoppel doctrine altogether; and

(6) lastly, we respond to the dissent.

I. CRESCENT’S LOAN AND CD RECORDS

The FDIC, created by Congress, works to insure deposits at

banks and savings institutions. See 12 U.S.C. § 1811(a). When

Crescent failed in 2010, the FDIC took over as receiver and,

overnight, sold Crescent’s assets and liabilities—including the

Hardwick loan and CD collateral—to Renasant.

Prior to Crescent’s failure, Hardwick induced Crescent in

2009 to make him a loan for $631,276.71: (1) by procuring a CD for

$631,276.71 in the name of “Morris Hardwick Schneider, LLC”;

and (2) by signing, on the same day, an agreement granting

Crescent a security interest in the CD as collateral for his loan.

Crescent also had his law firm’s corporate resolution as to that CD.

When the FDIC took over as receiver, Crescent’s bank

records included Hardwick’s note and these documents: (1) a

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Hypothecation Agreement (the “security agreement”) granting

Crescent a security interest in the CD; (2) an Assignment of the CD;

and (3) the Hardwick law firm’s Corporate Resolution as to the

CD. We review each in turn.

A. Security Agreement as to the CD

The parties to the security agreement are: (1) Crescent, the

“Lender”; (2) Nathan Hardwick, the “Borrower”; and (3) the

Hardwick law firm, the “Pledgor.” The first page of the agreement

states, “[I]n consideration of loans granted by Lender [Crescent] to

Borrower [Hardwick], the [Pledgor Hardwick law firm] . . . hereby

assigns the Lender all its right, title and interest to, and grants

Lender a security interest in,” the CD collateral, described as CD

#55529696. Hardwick signed for the Pledgor Hardwick law firm

as “MANAGING MEM[BER].”

The security agreement provides that in the event of default,

Crescent may dispose of the CD collateral as a secured party.

Undisputedly, the plain terms of the agreement permitted

Renasant to liquidate the CD to pay off Hardwick’s loan balance.

B. Assignment of CD

The CD was also assigned to Crescent as security for the

payment of Hardwick’s loan. The Assignment states, “Assignment

of deposit or share account: For value received, I [the Hardwick

law firm] assign and transfer to you [Crescent], and I give you a

security interest in the following account(s): CRESCENT BANK

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CD# 55529696.” Hardwick signed the Assignment as the

“MANAGING MEM[BER]” of the Hardwick law firm.

C. Law Firm’s Corporate Resolution as to the CD

Crescent’s records contain a third document, entitled

“Resolution of Corporation, Partnership & LLCs.” The corporate

resolution was signed by: (1) Hardwick, as both “MANAGING

MEMBER” and “DESIGNATED REPRESENTATIVE” of the

Hardwick law firm; and (2) Robert Driskell, the Hardwick law

firm’s Chief Financial Officer, as an “AUTHORIZED SIGNER.”

The corporate resolution was addressed to Crescent.

The second page of the corporate resolution states,

“RESOLUTION APPLIES TO (check all that apply).” That second

page has this box: “■ SPECIFIC ACCOUNTS ACCOUNT

NUMBER(S): 55529696.” That box was checked. That number is

the CD number.

Below that checked box, the corporate resolution lists

Hardwick and Driskell as the “Authorized Parties.” The corporate

resolution concludes with the proclamation: “IT IS FURTHER

RESOLVED AS FOLLOWS, the Entity [the Hardwick law firm]

certifies to the Financial Institution [Crescent] that: Unless

specifically designated, each of the Authorized Parties [Hardwick

and Driskell] whose signature appears above may sign without the

other(s).”

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II. PROCEDURAL HISTORY

In 2017, Landcastle filed this lawsuit against Renasant to

recover the funds from the liquidated CD, alleging conversion and

breach of contract. Landcastle asserted that Hardwick lacked

authority to pledge the Hardwick law firm’s CD as collateral for his

personal loan.

A. Summary Judgment Evidence

Following discovery, both parties moved for summary

judgment. Landcastle introduced documents about the Hardwick

law firm’s structure. None of these documents were in Crescent’s

records. Yet we must review them because Landcastle bases its

claims on them.

Landcastle’s documents revealed that the lawyers in the

firm’s name—Arthur Morris, Hardwick, and Randolph

Schneider—were not even “members” of the LLC law firm. In

actuality, the law firm was owned by a corporation called

MHSLAW, P.C. The designated “sole member” of the firm was

MHSLAW, P.C.

Landcastle emphasizes that (1) although Hardwick was a

manager, he was not a “member”; (2) only MHSLAW, P.C. was a

“member”; and (3) only MHSLAW, P.C. had authority to pledge

the CD.

Of course, nothing about MHSLAW, P.C. was in Crescent’s

records. Instead, the CD was in the name of the Hardwick law

firm. Plus, Landcastle’s documents show Hardwick (1) owned

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50% of MHSLAW, P.C.’s stock, (2) was “President” and a

“director” of MHSLAW, P.C., and (3) was a “Manager” of the

firm. 3 Hardwick ran the show, so to speak.

Now comes the twist that Landcastle tries to use, derived

from a deep dive into MHSLAW, P.C.’s corporate structure.

MHSLAW P.C.’s bylaws—also evidence outside the failed bank’s

records—state that a “director” cannot guarantee a debt over

$10,000 “without the affirmative vote of the majority of the votes

entitled to be cast by the shareholders.” And the law firm’s

operating agreement provides that a “Manager” cannot guarantee

a debt over $10,000 “without the affirmative vote of the Members

holding a majority interest.”

3Hardwick’s broad authority as President of MHSLAW, P.C. is demonstrated

by how MHSLAW, P.C.’s bylaws describe his President’s role:

The President shall be the chief executive officer of the

Company and shall have general and active management of

the operation of the Company. He shall be responsible for the

administration of the Company, including general supervision

of the policies of the Company and general and active

management of the financial affairs of the Company, and shall

execute bonds, mortgages, or other contracts in the name and

on behalf of the company.

Similarly, the law firm’s operating agreement designated Hardwick as a

“Manager” and provided Hardwick with “complete power and authority to

act on behalf of the Company, enter into contracts on behalf of the Company

and otherwise bind the Company in any other manner.”

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Because Hardwick owned only 50% of MHSLAW, P.C. and

not a majority interest, Landcastle contended (1) Hardwick needed

the vote of another shareholder of MHSLAW, P.C., and (2) thus

Hardwick lacked authority to unilaterally pledge his law firm’s CD.

Landcastle also filed declarations from Morris and Schneider—who

each owned 25% of MHSLAW, P.C.’s stock—stating that they “did

not vote to authorize either MHSLAW, P.C. or Morris Hardwick

Schneider, LLC to pledge the CD as collateral.”

B. District Court’s Order and Certification

In 2020, the district court denied both parties’ summary

judgment motions. The district court determined that “it is

beyond dispute that Crescent Bank did not know that Hardwick

lacked authority to pledge the CD.”

In denying Renasant’s motion, the district court identified as

a threshold issue whether D’Oench bars Landcastle’s claims, based

on non-bank records, that Hardwick lacked authority to execute

Crescent’s security agreement. The court likened Hardwick’s lack

of authority to a “forgery” that resembles “fraud in the factum.”

The court concluded that “fraud in the factum” rendered the CD

security agreement “void” and thus D’Oench did not apply.

In denying Landcastle’s motion, the district court found that

the corporate documents of MHSLAW, P.C. and the Hardwick law

firm revealed that Hardwick did not have actual authority to

pledge the CD because (1) the “sole member” of the law firm was

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MHSLAW, P.C., and (2) Hardwick, despite owning 50% of its

stock, needed the vote of another shareholder to pledge the CD.

Nonetheless, the district court ruled that genuine fact issues

existed as to whether Hardwick had apparent authority to pledge

the CD. The court observed, inter alia, that all three managers of

the LLC (who were also shareholders and directors of the LLC’s

sole member MHSLAW, P.C.) failed to follow corporate

formalities and routinely commingled their personal finances with

those of the company. 4

In its same order, the district court certified two questions of

law for immediate appeal pursuant to 28 U.S.C. § 1292(b). This

Court granted Renasant’s petition for an interlocutory appeal as to

only the threshold question: “Does D’Oench bar a claim (or

4 The dissent incorrectly claims that there is no evidence that Morris and

Schneider—the other two managers, shareholders, and directors—knew

about Hardwick’s purchase of the law firm’s CD or his pledge. Dissenting Op.

at 3. But the record creates fact issues about what Morris and Schneider knew.

For example, Morris testified he knew of Hardwick’s financial troubles, and he

“was [Hardwick’s] daddy for ten years” because Morris knew the law firm

“[couldn’t] afford to have a major partner file for bankruptcy”; so Morris used

personal funds and “weekly [bonus] payments” from the law firm given the

“constant pressure on [Hardwick] from creditors for immediate funding.”

Even the district court found that “Renasant’s evidence—in particular, the

managers’ use of [firm] funds to pay off Hardwick’s personal debts” raised fact

issues about how Morris and Schneider conducted firm business. In short,

Morris and Schneider were self-acknowledged enablers of Hardwick’s use of

firm funds for his personal debts.

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defense) that the agent who signed the agreement with the bank

purportedly lacked authority to do so?”

C. Standard of Review

“We review de novo a question of law certified by the

district court pursuant to § 1292(b).” Sec’y, U.S. Dep’t of Lab. v.

Preston, 873 F.3d 877, 880 n.2 (11th Cir. 2017) (quotation marks

omitted). While we “may not reach beyond the certified order, we

may address any issue fairly included within the certified order.”

Barrientos v. CoreCivic, Inc., 951 F.3d 1269, 1275 (11th Cir. 2020)

(quotation marks omitted).

III. SUPREME COURT AND OUR D’OENCH PRECEDENT

In this appeal, the certified question assumes that Hardwick

“purportedly” lacked authority to unilaterally pledge the CD. We

proceed on that basis. In addition, Renasant stands in the shoes of

the FDIC, and Landcastle in those of the Hardwick law firm.

Given D’Oench is not a doctrine we apply every day, we set

forth the Supreme Court’s D’Oench and Langley decisions and

then five Eleventh Circuit decisions holding D’Oench barred a

broad array of claims against the FDIC when based on evidence

outside the failed bank’s official records.

A. D’Oench Doctrine

In 1942, the Supreme Court decided D’Oench, Duhme &

Co. v. Federal Deposit Insurance Corp., creating what is known as

the D’Oench doctrine. 315 U.S. 447, 62 S. Ct. 676. In D’Oench, the

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FDIC conducted a purchase-and-assumption transaction of an

insolvent bank and acquired a loan where the collateral was a

demand note by the D’Oench company. Id. at 454, 62 S. Ct. at 678.

When the FDIC sued to collect on the demand-note collateral, the

D’Oench company asserted the defense of failure of consideration

because the failed bank had agreed the note would not have to be

paid. Id. at 456, 62 S. Ct. at 679. The undisclosed agreement was

evidenced by written “receipts,” stating: “This note is given with

the understanding it will not be called upon for payment.” Id. at

454, 62 S. Ct. at 678.

Yet the Supreme Court barred the D’Oench company’s

defense to the note as a matter of law. The Court concluded that

the enforceability of the note was determined by federal common

law rather than state law because of the federal policy to protect

the FDIC. See id. at 457–61, 62 S. Ct. at 679–81. More specifically,

the Supreme Court held that “secret agreements” could not be a

defense to suit by the FDIC because such agreements would

contravene “a federal policy” that “protect[s] [the FDIC] and the

public funds which it administers against misrepresentations as to

the securities or other assets in the portfolios of the banks which

[the FDIC] insures or to which it makes loans.” Id. at 457–58, 62 S.

Ct. at 679–80 (emphases added). The written receipts reflecting the

insolvent bank’s agreement—that the note would not be paid—

were not in the bank’s official records when the FDIC assumed the

bank’s assets and liabilities, and thus were not enforceable against

the FDIC. Id. at 461, 62 S. Ct. at 681.

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B. Langley and 12 U.S.C. § 1823(e)

Eight years after D’Oench, Congress passed The Federal

Deposit Insurance Act of 1950, which broadened D’Oench’s

protection of the FDIC. See 12 U.S.C. § 1823(e). Section 1823(e)

imposes various requirements on “any agreement which tends to

diminish or defeat the interest” of the FDIC in any asset acquired

from an insolvent bank. Id. An agreement—that “tends to

diminish or defeat” the FDIC’s interest in an asset—is only valid

against the FDIC if it, inter alia, is in writing, is continuously an

official record of the failed bank, is executed by the bank itself, and

satisfies other approval and filing requirements in § 1823(e). Id.

Thirty-seven years later, the Supreme Court in Langley v.

Federal Deposit Insurance Corp. concluded that the D’Oench

doctrine also protected the FDIC from claims raising “undisclosed

conditions” and “fraud” as to “a facially unqualified note” the FDIC

acquired from an insolvent bank. 484 U.S. at 92–93, 108 S. Ct. at

401–02 (emphasis added). In Langley, the FDIC sought to collect

on the acquired note. Id. at 88–90, 108 S. Ct. at 400. The borrowers

alleged their note was “entirely void” and no contract was formed

because the failed bank itself procured their note through

fraudulent misrepresentations about the land being purchased with

the note’s proceeds. Id. at 88–89, 108 S. Ct. at 400 (emphasis

added).

Although the failed bank committed fraud, the Supreme

Court concluded that the borrowers could not use evidence

outside the bank’s official records to assert a fraudulent-

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inducement defense to the FDIC’s enforcement of “a seemingly

unqualified note.” Id. at 92–93, 108 S. Ct. at 402. The Court

discussed how, when a bank fails, the FDIC must decide whether

to (1) liquidate the bank’s assets (its loans) and much later pay the

bank’s customers their deposits; or (2) provide public-funds

financing for a solvent ongoing bank to purchase the failed bank’s

assets (its loans) and assume its liabilities (its deposits), thus

avoiding an interruption in banking services. See id. at 91, 108 S.

Ct. at 401. The FDIC’s evaluations “must be made with great

speed, usually overnight” so that the successor bank opens the next

morning with deposits accessible to customers without

interruption and with assigned loans roughly equal to the assumed

deposit liabilities. See id., 108 S. Ct. at 401 (quotation marks

omitted).

The Supreme Court concluded that the FDIC would not “be

able to make reliable evaluations if bank records contained

seemingly unqualified notes that are in fact subject to undisclosed

conditions.” Id. at 92, 108 S. Ct. at 401. The Court clarified that

“[a] condition to payment of a note . . . is part of the ‘agreement’ to

which the writing, approval, and filing requirements of 12 U.S.C.

§ 1823(e) attach.” Id. at 96, 108 S. Ct. at 403.

In Langley, the borrowers’ “fallback position” was that a

bank’s misrepresentation should fall outside the scope of D’Oench

and § 1823(e) “when the misrepresentation was fraudulent and the

FDIC had knowledge of the asserted defense at the time it acquired

the note.” Id. at 93, 108 S. Ct. at 402. In rejecting that claim, the

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Supreme Court distinguished between “fraud in the factum” and

“fraud in the inducement.” See id. at 93–94, 108 S. Ct. at 402.

The Court observed that fraud in the factum (1) is “the sort

of fraud that procures a party’s signature to an instrument without

knowledge of its true nature or contents”; (2) which “would take

the instrument out of § 1823(e), because it would render the

instrument entirely void”; and (3) would leave the FDIC with “no

right, title or interest that could be diminished or defeated.” Id.,

108 S. Ct. at 402 (cleaned up).

On the other hand, the Court explained that “fraud in the

inducement . . . renders the note voidable but not void,” and “[t]he

bank therefore had and could transfer to the FDIC voidable title,

which is enough to constitute title or interest in the note.” Id. at

94, 108 S. Ct. at 402 (emphases added and quotation marks

omitted). The Court reasoned that (1) “[t]his conclusion is not only

textually compelled, but produces the only result in accord with

the purposes of the statute,” and (2) “[i]f voidable title were not an

‘interest’ under § 1823(e), the FDIC would be subject not only to

undisclosed fraud defenses but also to a wide range of other

undisclosed defenses that make a contract voidable.” Id., 108 Ct.

at 402 (emphasis added).

The Court held that “neither fraud in the inducement nor

knowledge by the FDIC is relevant to the section’s application.” Id.

at 93, 108 S. Ct. at 402. The Court pointed out that “a voidable

interest is transferable whether or not the transferee knows of the

misrepresentation or fraud that produces the voidability.” Id. at 94,

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108 S. Ct. at 403. The Court stressed that “the equities [that] the

statute regards as predominant” are those protecting the FDIC.

See id. at 94–95, 108 S. Ct. at 403 (emphasis added).

Langley teaches three federal common-law lessons under

D’Oench: (1) even if the failed bank itself made material

misrepresentations and fraudulently induced the borrower to enter

into a promissory note, the bank’s admitted fraud against a

borrower renders the borrower’s note only “voidable but not

void”; (2) the failed bank’s transfer of a voidable note to the FDIC

is enough to grant the FDIC title or interest in the note; and (3) a

borrower cannot use documents outside the failed bank’s official

records to challenge a facially valid and unqualified note acquired

by the FDIC from a failed bank. See id. at 93–94, 108 S. Ct. at 402–

03.

We now review our Circuit and other precedent faithfully

applying these D’Oench principles as federal common law.

Repeatedly, our Court has emphasized that the FDIC cannot make

a reliable evaluation, nor can a successor-purchaser bank, if a failed

bank has facially valid and unconditional loan assets that are sold

and then much later a party can challenge them based on

documents outside the failed bank’s records.

C. FSLIC v. Two Rivers Associates, Inc.

In 1989, this Court faced a situation where the failed bank’s

official records did provide some support for the borrower’s

defense. Nonetheless, this Court concluded that the D’Oench

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doctrine still protected both the FDIC and the Federal Savings and

Loan Insurance Corporation (“FSLIC”) from claims relying on

official bank records, unless those bank records contained an

“explicit acceptance” of a specific legal obligation by the failed

bank. Fed. Sav. & Loan Ins. Corp. v. Two Rivers Assocs., Inc., 880

F.2d 1267, 1276 (11th Cir. 1989) (“Two Rivers”). 5

In Two Rivers, after a bank failed, the FSLIC as receiver

instituted foreclosure proceedings against a borrower that had

defaulted on its mortgage. Id. at 1270. A subordinate creditor

opposed the foreclosure and filed affidavits from officials at the

insolvent bank stating that the bank had agreed to fund the

borrower’s entire project. Id. at 1273. The creditor argued, inter

alia, that D’Oench should not apply because the bank’s agreement

to fund the entire project was not “secret” but reflected in the failed

bank’s own records. Id. at 1275.

The FSLIC contended that under federal common law the

creditor was “estopped from asserting his defenses and

counterclaims” based on documents and an agreement not in the

failed bank’s records. Id. at 1273. In holding D’Oench barred the

creditor’s claim against the FSLIC, this Court found the failed

bank’s records contained evidence of an “obligation to provide an

5As to the FSLIC, this Court agreed with other circuits that D’Oench “should

protect the FSLIC to the same extent it protects the FDIC.” Two Rivers, 880

F.2d at 1274–75. On August 9, 1989, the FSLIC was abolished, and the FDIC

became its statutory successor. See Gordy, 928 F.2d at 1559 n.1.

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additional” loan. Id. at 1275–76 (emphasis omitted). This Court,

however, still applied D’Oench to bar the creditor’s claim because

the bank’s records contained no “explicit acceptance of the

obligation to fund the entire project.” Id. at 1276.

In so ruling, this Court observed that the D’Oench doctrine

“allow[s] the FDIC to rely on bank records . . . when taking over a

failed bank.” Id. at 1275. Adhering to Langley, our Court

emphasized that “neither the FDIC nor the state banking

authorities would be able to make a reliable evaluation if bank

records contained seemingly unqualified notes that are in fact

subject to undisclosed conditions.” Id. at 1276 (alterations adopted)

(quoting Langley, 484 U.S. at 91–92, 108 S. Ct. at 401).

Our Court also stressed: While the creditor’s arguments and

affidavits “might be appropriate in a suit against [the insolvent

bank]” had the bank not failed, they were “not sufficient in this case

to survive summary judgment against the FSLIC.” Id. In other

words, while under state law a creditor’s claim may be viable

against a failed bank, under federal common law, the creditor “[i]s

estopped” from asserting claims based on documents not in the

failed bank’s records. See id. at 1277.

D. FDIC v. McCullough

Extending the federal common-law D’Oench doctrine

further, this Court has held D’Oench barred borrowers’ claims that

a note and mortgage were entirely “void” based on “failure to

perform a condition precedent, failure of consideration, and

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fraudulent inducement.” Fed. Deposit Ins. Corp. v. McCullough,

911 F.2d 593, 600–02 (11th Cir. 1990) (emphasis added).

McCullough is particularly instructive here. In that case,

Charles Little borrowed over $1 million from Twin City FSB, a

local bank, secured by a mortgage on various properties. Id. at 595.

The borrowers assumed Little’s debt held by Twin City. Id. at 595–

96. When Twin City failed, the FSLIC, as receiver, sued the

borrowers to recover the debt. Id. at 596. In defense, the

borrowers contended that (in consideration of their assuming

Little’s debt) the failed Twin City had promised to convey to them

title to certain properties and oil leases. Id.

The borrowers argued: (1) “the note and mortgage should

be considered void because Little and [the failed] Twin City had

fraudulently induced them to assume Little’s prior indebtedness”;

(2) “the transaction should be declared void due to a failure of

consideration”; and (3) “the mortgage being sued upon was legally

insufficient because the notarization was not conducted in

accordance with Alabama law.” Id. (emphases added).

In affirming the grant of summary judgment for the FSLIC,

this Court addressed the scope of D’Oench. Id. at 599. Even

though D’Oench involved a secret agreement, we observed that

“the policy considerations leading to the development of federal

common law in D’Oench have resulted in extension of the

D’Oench estoppel doctrine well beyond” its initial factual setting.

Id. at 600. Borrowers’ claims and defenses based “upon unrecorded

promises or schemes”—even if creating claims of fraudulent

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inducement or failure of consideration—“are now also generally

precluded by D’Oench and its progeny.” Id. Our Court again

underscored that “[s]uch defenses if allowed against the FSLIC or

the FDIC would, like the defense at issue in D’Oench, contravene

the primary federal policy that the FSLIC and the FDIC must be

able to rely upon financial institutions’ records in order to best

protect the public funds they administer.” Id. (emphasis added).

Our Court concluded, to put the FSLIC on notice of the

failed bank’s obligation to transfer the mortgaged or other

property, there must be “explicit documentation evidencing [the

failed bank’s] obligation to transfer specific properties to the

McCulloughs.” Id. at 601. While there were two documents in the

bank’s records with references to transfers of additional property,

those documents were legally insufficient under D’Oench to give

notice to the FSLIC that the failed bank “had made a fixed

commitment” to transfer property. Id.

This Court also rejected the McCulloughs’ argument that

the mortgage securing the note was legally insufficient. Id. at 602–

03. “Although facially appearing to be a valid, legal mortgage, the

parties agree[d] that the mortgage was not witnessed or

acknowledged in proper fashion” under Alabama law. Id. at 602.

The borrowers argued that under state law this flaw rendered the

bank’s mortgage “voidable” and “insufficient to pass legal title” to

the property described in the mortgage. Id. (emphases added).

In holding D’Oench barred that claim, this Court compared

D’Oench’s protection of the FDIC and FSLIC as analogous to state

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law protection of “a holder in due course.” Id. Our reasoning was:

“Although the error in acknowledgement might render the

mortgage voidable were this suit between two private parties

litigating under state law, we conclude that the FSLIC’s federal

common law defenses bar the McCulloughs’ claim of improper

notarization. On its face, the mortgage appears valid.” Id.

(emphasis added).

Our Court also concluded that the FSLIC, if accorded

holder-in-due-course status under Alabama law, “could not be said

to have had notice of the irregularity of which the McCulloughs

now complain.” Id. at 604. In any event, the irregularity in the

mortgage is not cognizable against a holder in due course. Id. So

long as the disputed note or loan in the bank’s records appears

facially valid, the FDIC as receiver is allowed to rely on it with the

protection of the D’Oench doctrine. See id. at 602.

E. Twin Construction, Inc. v. Boca Raton, Inc.

Once more this Court faced a scenario where a document in

the failed bank’s official records supported a party’s claim against

the FDIC. Nevertheless, this Court held that a document in the

failed bank’s records is not enough to bring a party’s claim outside

of D’Oench protection unless the document was executed by the

failed bank. See Twin Constr., Inc. v. Boca Raton, Inc., 925 F.2d

378, 382–84 (11th Cir. 1991). We discuss Twin Construction as it

(1) rejected arguments that D’Oench bars only borrowers’ claims;

(2) concluded that D’Oench applies to collateral pledge agreements

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securing a loan; and (3) emphasized that D’Oench requires courts

“to look beyond contract law.” See id.

A shopping center owner obtained a loan from Old Vernon

bank and pledged the property as collateral in a mortgage. Id. at

379–80. Twin Construction built the shopping center. Id. at 380.

A document in the bank’s official records, entitled “Contractor’s

Consent,” stated that the bank would reserve sufficient funds in the

owner’s loan to pay and satisfy the owner’s agreement with Twin

Construction (the “bank document”). Id. Twin Construction

signed Old Vernon’s bank document. Id.

When Old Vernon did not pay, Twin Construction sued the

bank: (1) to foreclose its mechanic’s lien for $1.5 million and to

elevate that lien above Old Vernon’s mortgage; (2) for breach of

the bank’s written contract to reserve funds to pay Twin

Construction; and (3) for fraud. Id. In a separate action, Old

Vernon sued the shopping center owner for defaulting on its loan

and mortgage. Id. Old Vernon alleged its mortgage had priority

over Twin Construction’s lien. Id. Twin Construction joined that

lawsuit, making similar allegations as those in its own suit. Id.

Thereafter, the bank failed. Id.

Ultimately, the FSLIC, as receiver, took over, consolidated

the cases, and contended D’Oench barred Twin Construction’s

claims against Old Vernon (now the FSLIC). Id. Twin

Construction responded that D’Oench did not apply to its claims

based on an official bank record and barred only (1) claims asserted

by the borrower (the shopping center owner), and (2) unwritten

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agreements between the borrower and the failed bank. Id. at 381.

Because the bank document in the failed bank’s own records

represented Old Vernon would reserve loan funds to pay Twin

Construction, Twin Construction contended there was no secret

agreement. Id. at 383.

This Court held D’Oench barred Twin Construction’s

claims. Id. at 384–85. In doing so, our Court outlined the evolution

of the federal “D’Oench common law” and how it protects the

FDIC, the FSLIC, and their successors “from claims of state and

common law fraud, violation of state or federal securities laws, and

the affirmative defenses of waiver, estoppel, unjust enrichment,

failure of consideration and usury.” Id. at 382 (emphasis added).

We rejected Twin Construction’s argument that D’Oench

applies only to claims asserted by a borrower. Id. We pointed out

that “D’Oench and section 1823(e) have affected monetary

obligations including a mortgage, a letter of credit or personal

guaranty or collateral pledge agreement securing a loan, rental

payments under a lease, and a refund provision in an insurance

contract.” Id. (emphasis added). D’Oench applies to any asset of

the failed bank acquired by the FDIC or FSLIC because “[f]ederal

regulatory authorities need to make reliable evaluations of the

assets of a financial institution.” Id.

As to whether D’Oench barred Twin Construction’s claims

against the FSLIC based on a document in the failed bank’s records,

this Court made clear that D’Oench requires courts “to look

beyond normal contract law.” Id. at 383 (emphasis added). Since

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Old Vernon’s bank document was signed by only Twin

Construction and not by the bank, it “does not establish that the

non-signatory [bank] is required to perform any obligations

contained in the document. Instead, it would be necessary to

resort to an assessment of the non-signatory’s words or acts in

order to determine whether that party is so bound.” Id. at 384.

This Court also stressed that “[b]ank examiners must

reliably evaluate the worth of a bank’s assets ‘with great speed,

usually overnight, in order to preserve the going concern value of

the failed bank and avoid an interruption in banking services.’” Id.

(quoting Langley, 484 U.S. at 92, 108 S. Ct. at 401). “That a

document is written and in the bank’s records is not enough to

bring the case outside D’Oench and section 1823(e).” Id. at 383. In

order to impose any legal obligation of the bank on the FSLIC, the

document must be “executed,” i.e., signed, by the bank, as well as

in the bank’s records. Id. at 384; see 12 U.S.C. § 1823(e)(2).

F. FSLIC v. Gordy

In a similar vein, this Court in Federal Savings & Loan

Insurance Corp. v. Gordy held that D’Oench protected the FSLIC

from a guarantor’s fraud claim that the failed bank had falsely

misrepresented its financial statements. 928 F.2d at 1559–60, 1566.

In Gordy, two individuals (guarantors of a letter of credit)

negotiated a plan to acquire and develop a hotel. Id. at 1560.

During the negotiations, the bank provided them with “a written

statement of [the bank’s] financial condition,” portraying “a sound

financial condition,” even though the bank was insolvent. Id.

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After the bank failed, the FSLIC sought payment from the

guarantors. Id. The guarantors argued D’Oench was inapplicable

because the bank’s own misrepresentations constituted fraud in the

factum. Id. at 1561.

The Gordy Court held that D’Oench applied to bar the

guarantor’s fraud claim. Id. at 1564. The bank’s financial statement

in Gordy was a “condition of payment” that was not

“memorialized in writing or otherwise made explicit such that the

FSLIC or the FDIC would have knowledge of the bank’s

obligations during an evaluation of the bank’s records.” Id.

(quotation marks omitted). So D’Oench applied to protect the

FSLIC from the guarantor’s fraudulent misrepresentation claim.

Id.

D’Oench applied “even in the absence of bad faith,

recklessness or negligence” on the part of the guarantors seeking

to invalidate their guaranty. Id. at 1566; see Baumann v. Savers

Fed. Sav. & Loan Ass’n, 934 F.2d 1506, 1515 (11th Cir. 1991) (“[T]he

D’Oench doctrine applies even where the customer is completely

innocent of any bad faith, recklessness, or negligence.”).

Similar to the Supreme Court’s Langley, this Court

explained the material difference between fraud in the factum and

fraud in the inducement. Gordy, 928 F.2d at 1565. The Gordy

Court held that the false financial statement was not fraud in the

factum, but was “fraud in the inducement,” and D’Oench applied.

Id. at 1566. This Court described fraud in the factum “as ‘the sort

of fraud that procures a party’s signature to an instrument without

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knowledge of its true nature or contents,’” rendering the

agreement entirely void. Id. at 1565 (quoting Langley, 484 U.S. at

93, 108 S. Ct. at 402). Conversely, fraud in the inducement “does

not go to the very essence of the agreement but rather merely

induces the party to enter the agreement,” rendering the

agreement “voidable and thus capable of transfer.” 6 Id.

G. First Union National Bank of Florida v. Hall

Significantly, this Court has instructed that the

“common-law” D’Oench doctrine serves as a super-charged parol

evidence rule that precludes evidence of an agreement that tends

to diminish or defeat the FDIC’s interest in any asset acquired from

a failed bank. First Union Nat’l Bank of Fla. v. Hall, 123 F.3d 1374,

1379 n.9, 1380–81 (11th Cir. 1997). In Hall, First Union sued Hall

to collect on his defaulted note that it acquired through a purchase-

and-assumption agreement with the FDIC. Id. at 1376. Hall

claimed that the insolvent bank “had agreed to limit its remedies in

the event of default.” Id. Hall offered affidavits and documents to

prove that such an agreement existed, including the affidavit of

Harrison, a former bank officer. Id. at 1380. First Union argued

that D’Oench barred Hall’s claim and evidence. Id. at 1376.

6 To be complete, this Court has created an exception to D’Oench for “free

standing tort claims that are not related to a specific asset acquired by the

FDIC.” Vernon v. Fed. Deposit Ins. Corp., 981 F.2d 1230, 1233–34 (11th Cir.

1993); Vernon v. Resol. Tr. Corp., 907 F.2d 1101, 1108 (11th Cir. 1990). Here,

no party relies on this free standing tort exception, so we need not discuss it.

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This Court ruled that the “common-law” D’Oench doctrine

“flatly prohibits parol evidence.” Id. at 1380. “Allowing Hall to

present parol evidence, such as Harrison’s affidavit, would force

the FDIC and its transferees to look beyond the plain terms of the

documents. That is a burden of which the D’Oench, Duhme

doctrine seeks to relieve them.” Id. at 1381. This Court, therefore,

held that Hall’s parol evidence was barred by the “common-law”

D’Oench doctrine. Id. at 1379 n.9, 1381.

Although this concludes our outline of relevant Circuit

precedent, we review one state decision because it applies the

federal D’Oench doctrine to bar a lack-of-authority claim.

H. Federal Financial Co. v. Holden

Applying federal common law, the Georgia Supreme Court

has held that D’Oench protects the FSLIC as receiver from a

property owner’s claim that a partner lacked authority to pledge a

security interest in property. Fed. Fin. Co. v. Holden, 485 S.E.2d

481, 483 (Ga. 1997). In Holden, three brothers, who were three of

the four members of a partnership, executed a security deed

conveying to a bank title to property owned by the partnership. Id.

at 482. The three brothers lacked authority to convey the

partnership property. Id. The bank failed, the FSLIC became

receiver, and Federal Financial, as the FSLIC’s successor, became

the assignee of the security deed and the note it secured. Id.

Plaintiff Holden was not paid for his work on the property.

Id. He filed a lien and sued to set aside the failed bank’s senior

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security deed. Id. Holden claimed the bank’s security deed was

worthless because the three brothers lacked authority from the

partnership to pledge the property as security. Id. Fact issues

existed as to who owned the property, what authority the brothers

had, and what the bank knew. See id. A jury found “that the

property was partnership property, that the bank had knowledge

that the property was partnership property, and that the brothers

did not have authority from the partnership to execute the security

deed.” Id. (emphases added). The state trial court canceled the

bank’s security deed and established Holden’s lien. Id.

Based on the federal D’Oench doctrine, the Georgia

Supreme Court reversed and entered judgment as a matter of law

for Federal Financial, the FSLIC’s successor. Id. at 483. The Court

pointed out that Holden’s attack on the security deed was based on

“two unrecorded agreements” that were not in the bank’s official

records: (1) the partnership agreement, and (2) the agreement

between the brothers and the bank permitting them to pledge

partnership property. See id. Even where the failed bank knew the

property was partnership property and the brothers lacked

authority to pledge it, the Georgia Supreme Court concluded that

D’Oench still protected the FSLIC from claims based on

documents that were not in the bank’s official records. Id.

We now apply these D’Oench principles.

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32 Opinion of the Court 20-13735

IV. APPLICATION OF D’OENCH TO THIS CASE

To begin, the factual scenario here fits squarely within

D’Oench. Overnight, the FDIC as receiver took over the failed

Crescent and sold its assets (loans) and liabilities (deposits) to

Renasant. See Langley, 484 U.S. at 91, 108 S. Ct. at 401.

Undisputedly, the Hardwick note and the pledged CD collateral are

loan assets the FDIC sold to Renasant.

A. Failed Bank’s Records

Next, to apply D’Oench, we must examine what the failed

bank’s records showed.

Those records contained the security agreement that

unambiguously and unconditionally pledged the Hardwick law

firm’s CD to Crescent as security for Hardwick’s personal loan. See

McCullough, 911 F.2d at 600. Hardwick executed the agreement

as managing member of the Hardwick law firm. Crescent even

had the law firm’s corporate resolution as to the CD, which listed

Hardwick as the managing member and authorized party to sign

for the law firm. For D’Oench purposes, the agreement itself

appeared facially valid.

Then for over three years, and after the FDIC’s sale to

Renasant in 2010, Hardwick continued to pay on his loan, and

Renasant continued to hold the law firm’s CD as collateral for

Hardwick’s personal loan. When Hardwick defaulted in 2014, the

terms of the security agreement plainly permitted Renasant to

liquidate the CD to pay off Hardwick’s personal loan balance.

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B. Landcastle’s Evidence Outside the Bank’s Records

Now applying D’Oench, we conclude that Landcastle’s

claims against the FDIC and Renasant—that Hardwick lacked

authority to sign the security agreement—are barred because they

rely on evidence outside the bank’s records. D’Oench “flatly

prohibits” consideration of Landcastle’s “parol evidence.” See Hall,

123 F.3d at 1380. For purposes of summary judgment, we accept

that (1) those outside documents prohibited Hardwick, although

President and 50% owner of MHSLAW, P.C. and a manager of the

Hardwick law firm, from guaranteeing debt over $10,000 without

the vote of another shareholder; (2) the testimony states that no

such vote occurred; and (3) Hardwick lacked authority to enter

into and execute the security agreement.

However, none of the law firm’s documents, nor any of this

testimony, was in the failed bank’s own records. The D’Oench

doctrine thus protects the FDIC from a claim or defense that relies

on documents and evidence not found in the failed bank’s official

records. Resol. Tr. Corp. v. Dunmar Corp., 43 F.3d 587, 595 (11th

Cir. 1995) (en banc); see Two Rivers, 880 F.2d at 1274;

McCullough, 911 F.2d at 600; Hall, 123 F.3d at 1379.

Throughout its brief, Landcastle argues that D’Oench

applies only to oral and written “agreements” outside the bank’s

records. Landcastle mistakenly focuses narrowly on the word

“agreement” in § 1823(e). As explained above, D’Oench is a federal

common-law doctrine that extends well beyond § 1823(e) and

broadly protects the FDIC from a claim or defense based on fraud,

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34 Opinion of the Court 20-13735

undisclosed conditions, failure of consideration, and pre-conditions

to payment, when based on documents not in the bank’s records.

Landcastle’s claims fit that description, as they rely on outside law

firm documents and testimony to show that Hardwick lacked

authority to sign the security agreement with the failed bank.

C. Crescent’s Lack of Documentation

Shifting its argument, Landcastle asserts that it is not the law

firm’s governance documents but Crescent’s lack of

documentation from the law firm that makes D’Oench

inapplicable. Landcastle contends that (1) the corporate resolution

did not go far enough and expressly authorize Hardwick to pledge

the law firm’s CD as collateral; (2) the insolvent bank thus lacked

adequate documentation that Hardwick had authority; and

(3) because Hardwick was pledging his law firm’s CD for his

personal loan, the loan transaction was suspicious and should have

placed Crescent on notice that Hardwick lacked authority.

To be clear, nothing herein addresses what claims or

evidence the Hardwick law firm might have made or used against

Crescent if Crescent had not failed and had liquidated the CD.

Rather, this case is only about what claims and evidence can be

made or used against the FDIC as receiver (and Renasant).

As to the FDIC, Landcastle attempts to impose a

pre-condition—the bank’s obtaining a written authorization of

Hardwick’s authority from the law firm—on the otherwise

unconditional terms of the security agreement. Landcastle’s

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authority requirement would condition the validity and

enforceability of the security agreement on obtaining something

outside the bank’s records. Nothing in the terms of the security

agreement required a law firm or corporate resolution for its

validity. As to the FDIC, the security agreement was facially valid.

Regarding the lack of documentation, both parties debate

the legal effect of the Hardwick law firm’s corporate resolution that

was in the bank’s records. However, as the district court found:

“[I]t is beyond dispute that Crescent Bank did not know that

Hardwick lacked authority to pledge the CD.”

We need not resolve the debate over the legal effect of the

corporate resolution, if any, because nothing in the corporate

resolution limits or disclaims Hardwick’s authority to pledge the

CD. Nothing in the corporate resolution varies, contradicts, or

alters the plain terms of the security agreement.

At bottom, Landcastle’s claims—that Hardwick lacked

authority to unilaterally pledge the CD—rely on MHSLAW, P.C.’s

and the law firm’s documents and testimony outside the failed

bank’s records and are thus barred by the D’Oench doctrine.

V. LANDCASTLE’S CLAIMS ARE SUBJECT TO D’OENCH

What Landcastle is left to argue all revolves around its

attempt to escape D’Oench’s estoppel doctrine altogether.

Landcastle isolates the loan-CD transaction and argues that

Hardwick’s lack of authority rendered the security agreement

entirely “void,” a legal nullity, and non-existent back in 2009, and

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36 Opinion of the Court 20-13735

incapable of being transferred to the FDIC. From that, Landcastle

argues the FDIC obtained nothing from Crescent—no title to or

interest in the security agreement—and thus the FDIC sold nothing

to Renasant and D’Oench has no application here. Landcastle also

argues that Hardwick’s exceeding his authority constitutes fraud in

factum.

In response, Renasant and amici (the FDIC and the

American and Georgia Bankers Associations) argue persuasively

that: (1) no fraud in factum occurred; (2) agent Hardwick’s lack of

authority, at most, rendered the security agreement potentially

“voidable” by the principal law firm, but not “void”; and (3) thus

Crescent had and did transfer an interest in the security agreement.

They emphasize Langley which instructed: “Fraud in the

inducement . . . renders the note voidable but not void. The bank

therefore had and could transfer to the FDIC voidable title, which

is enough to constitute ‘title or interest’ in the note” for D’Oench

purposes. Langley, 484 U.S. at 94, 108 S. Ct. at 402 (emphases

added and citation omitted).

We address each of Landcastle’s arguments in turn.

A. Fraud in the Factum

We first reject Landcastle’s claims that Hardwick’s

exceeding his authority constitutes fraud in the factum. The

Supreme Court in Langley made clear that “fraud in the factum” is

only the narrow sort of real fraud that “procures a party’s signature

to an instrument without knowledge of its true nature or

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contents.” Id. at 93, 108 S. Ct. at 402. Similarly, this Court has

described “fraud in the factum” as “fraud which occurs within the

instrument itself, and as fraud arising when a party signs a

document without full knowledge of the character or essential

terms of the instrument.” Gordy, 928 F.2d at 1565 (quotation

marks and citation omitted). There must be fraud in the

procurement of a person’s signature itself that leaves the signer

unaware of the nature of the document he has signed. See Langley,

484 U.S. at 93, 108 S. Ct. at 402.

Landcastle does not dispute that Hardwick actually signed

the security agreement and knew what he was signing. There is no

allegation that Crescent engaged in the fraudulent procurement of

Hardwick’s signature, and accordingly there is no forgery or fraud

in the factum here. Just the opposite, Hardwick’s apparent fraud—

purportedly lacking authority to pledge the CD—induced Crescent

to make him a loan because it was fully collateralized by a CD in

precisely the same amount of $631,276.71. 7

B. Landcastle’s “Void” Claim

To avoid D’Oench altogether, Landcastle also argues that

Hardwick’s lack of authority rendered the security agreement

7 There is no fraud in the factum here, so we need not address whether a fraud-

in-the-factum claim is an exception to the D’Oench doctrine. See

McCullough, 911 F.2d at 602 n.7 (“Although it is possible that a claim of fraud

in the factum would survive [the] FSLIC’s invocation of the D’Oench doctrine,

we need not decide this issue.” (citation omitted)).

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38 Opinion of the Court 20-13735

“void,” a legal nullity, and non-existent, and incapable of transfer

to the FDIC. From that, Landcastle contends the FDIC obtained

nothing, and D’Oench categorically does not apply here.

Landcastle’s arguments fail to recognize the material

differences between “void” and “voidable” contracts. As explained

below, even if Hardwick lacked authority, the security agreement

was not a “void” contract but, at most, a “voidable” contract.

Here’s why.

It is axiomatic that a “void” contract, as distinct from a

“voidable” one, is “a legal nullity.” 1 Williston on Contracts § 1:20

(4th ed. Oct. 2022 Update). A void contract has “no legal effect”

whatsoever. Void, Black’s Law Dictionary (11th ed. 2019).

“Whenever technical accuracy is required, void can be properly

applied only to those provisions that are of no legal effect

whatsoever—those that are an absolute nullity.” Id. “A contract

may be void because it is technically defective, contrary to public

policy, or illegal.” Void Contract, Black’s Law Dictionary (11th ed.

2019).

While voidable contracts are “a common occurrence in the

law,” 1 Williston on Contracts, supra, § 1:20, examples of wholly

void contracts “are not very numerous,” 1 Corbin on Contracts

§ 1.7 (Rev. ed. 2018). They include illegal bargains or bargains that

are contrary to express statutes or that violate public policy. 1

Williston on Contracts, supra, § 1:20; see, e.g., O.C.G.A. §§ 13-8-1

(“A contract to do an immoral or illegal thing is void.”), 13-8-2(a)

(“A contract that is against the policy of the law cannot be

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enforced.”), 13-8-3(a) (“Gambling contracts are void[.]”). Void

promises are not legally binding, have no legal effect, and therefore

are not contracts. 1 Williston on Contracts, supra, § 1:20; see

Restatement (Second) of Contracts § 7 cmt. a (Am. L. Inst. 1981)

(“A promise for breach of which the law neither gives a remedy nor

otherwise recognizes a duty of performance by the promisor is

often called a void contract.”).

In contrast, the term “voidable” contract is defined as

“[v]alid until annulled,” and “capable of being affirmed or rejected

at the option of one of the parties.” Voidable, Black’s Law

Dictionary (11th ed. 2019). Our Court has distinguished void from

voidable contracts: “A contract is void ab initio if it seriously

offends law or public policy, in contrast to a contract that is merely

voidable at the election of one party to the contract.” Griffin v.

Coca-Cola Refreshments USA, Inc., 989 F.3d 923, 934 n.6 (11th Cir.

2021) (citing Black’s definitions of void and voidable).

The treatises agree that a “voidable” contract is one where a

party may elect to reject and avoid the legal relations created by

the contract or by ratification may extinguish the power to avoid.

Restatement (Second) of Contracts, supra, § 7 (“A voidable

contract is one where one or more parties have the power . . . to

avoid the legal relations created by the contract, or by ratification

of the contract to extinguish the power of avoidance.”); 1 Williston

on Contracts, supra, § 1:20 (same, quoting Restatement (Second)

of Contracts § 7); 1 Corbin on Contracts, supra, § 1.6. It bears

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40 Opinion of the Court 20-13735

repeating that a “voidable contract is a common occurrence.” 1

Williston on Contracts, supra, § 1:20.

Further, “a voidable contract imposes on the parties the

same obligations as if it were not voidable. If a contract is voidable,

it remains intact until the party who has the power of avoidance

elects to exercise it, and a party who has the power of avoidance

may extinguish that power by ratification of the contract.” Id.

(footnote omitted); 1 Corbin on Contracts, supra, § 1.6 (“In the case

of a voidable contract, there is usually both a power to avoid and a

power to validate by ratification.”).

The concept of a voidable contract “rests primarily on the

traditional view that the transaction is valid and has its usual legal

consequences until the power of avoidance is exercised.”

Restatement (Second) of Contracts, supra, § 7 cmt. e; see also 1

Williston on Contracts, supra, § 3:6 (“When a contract is ‘voidable’

as a result of an invalidating cause, it nevertheless remains valid and

enforceable unless and until the party entitled to avoid the

obligation exercises that right.”).

Examples of voidable contracts include situations where an

invalidating cause, like duress, fraud, mental illness, or minor

status, render a facially valid contract “voidable.” Restatement

(Second) of Contracts, supra, § 7 cmt. b; 1 Williston on Contracts,

supra, § 1:20; see, e.g., O.C.G.A. §§ 13-3-20 (minor status),

13-3-24(a) (mental illness or incompetency), 13-3-25 (intoxication),

13-5-5 (fraud), 13-5-6 (duress).

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The same is true for lack of authority. Specifically, if an

agent without authority signs a written contract on behalf of a

principal, the resulting contract is “voidable” by the principal, but

it is not “void.” 2A C.J.S. Agency § 163 (Nov. 2022 Update) (“Acts

or transactions in excess of the agent’s authority ordinarily do not

bind the principal, subject to ratification by the principal, and are

generally voidable but not void.”); id. § 56 (same); 3 Am. Jur. 2d

Agency § 164 (2d ed. & Nov. 2022 Update) (explaining that an

agent’s execution of a contract “that exceeds the scope of the

agency” is “merely voidable, not void,” and that “without the

principal’s subsequent ratification, the contract must be set aside”).

Both state and federal courts applying state law have held an

agent’s lack of authority renders a contract voidable, not void. See,

e.g., Reinagel v. Deutsche Bank Nat’l Tr. Co., 735 F.3d 220, 226

(5th Cir. 2013) (stating that, under Texas law, “a contract executed

on behalf of a corporation by a person fraudulently purporting to

be a corporate officer is, like any other unauthorized contract, not

void, but merely voidable at the election of the defrauded

principal”); Fejta v. GAF Cos., 800 F.2d 1395, 1396 (5th Cir. 1986)

(stating that, under Louisiana law, “a contract entered into by an

agent, though voidable for lack of authority to act, may be ratified

by the principal”); Eaglebank v. BR Pro. Sports Grp., Inc., 649

F. App’x 209, 211 n.1 (3d Cir. 2016) (“[T]he effect of an officer

exceeding the scope of his or her authority in entering into a

contract is to make that contract voidable . . . .”); Perri v. United

States, 53 Fed. Cl. 381, 401 (2002) (stating that when an official

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42 Opinion of the Court 20-13735

makes an agreement without actual authority to bind the

government, the resulting contract is “voidable at the option of the

government” and citing Restatement (Second) of Contracts, supra,

§ 7), aff’d, 340 F.3d 1337 (Fed. Cir. 2003); Stamatakos v. Wells Fargo

Bank, Nat’l Ass’n, 2018 WL 1441233, at *7 (D. R.I. Mar. 22, 2018)

(“The law of Rhode Island is clear that, even if the signatory to an

assignment (or other contract) lacks the proper authority, the

assignment is rendered voidable rather than void.”); Sauers v. Bank

of Am., N.A., 2013 WL 12108140, at *3 (W.D. Tex. Oct. 3, 2013)

(explaining that the “lack of authority makes th[e] assignments

merely voidable, not void”); Deutsche Bank Tr. Co. v. Beesley,

2012 WL 5383555, at *5 (D. Haw. Oct. 30, 2012) (concluding

plaintiffs’ challenge to assignment of their mortgage based on

signing agents’ lack of authority was a challenge to “a voidable, not

void, contract”); Scott v. United States, 2011 WL 13308717, at *2

(M.D.N.C. June 2, 2011) (“[A]n agreement entered into by an

unauthorized agent is a voidable, not void, agreement.”); Ristic

Elec. LLC v. AH Holdings LLC Series A, 2016 WL 4161966, at *10

(Ill. App. Ct. Aug. 4, 2016) (concluding a company agent’s lack of

authority to execute a deed “would merely render it voidable” and

“the company may later ratify the contract”); see also Roberson

Advert. Serv., Inc. v. Winnfield Life Ins. Co., 453 So. 2d 662, 665

(La. Ct. App. 1984) (acknowledging that a contract entered by an

agent is voidable for lack of authority).

While we do not apply state law here, we note these state

law cases are consistent with the general void/voidable principles

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established in the treatises and legal dictionary definitions,

discussed above, which draw a demarcation more easily applied.

Applying these general principles here, we conclude that the

written and facially valid security agreement, signed by Hardwick

as agent and manager, created legal relations until it was avoided

or ratified by agent Hardwick’s principal. Hardwick’s lack of

authority, even if proven, would at most render the security

agreement voidable.8 And Langley teaches us that a failed bank has

and can transfer a voidable interest or title in an asset to the FDIC,

and that is enough to constitute an interest in the asset to trigger

D’Oench protection of the FDIC. See Langley, 484 U.S. at 94, 108

S. Ct at 402.

Tellingly, Landcastle’s brief argues only that the security

agreement was “void,” never mentions “voidable” contracts, and

never acknowledges the void-voidable dichotomy. We readily

reject Landcastle’s argument that the security agreement, like a

gambling contract or illegal bargain, was void, of no legal effect,

nonexistent, and incapable of transfer. Rather, as Renasant and the

amici agree, the security agreement was, at most, voidable and

capable of transfer to the FDIC.

8 Notably, before the FDIC took over Crescent, the Hardwick law firm took

no steps to avoid the security agreement. After the FDIC took over and sold

the security agreement, Renasant continued to hold the law firm’s CD as

collateral for five years. When Renasant notified the law firm of the loan

default and CD liquidation, it received no response, much less any objection,

from the law firm.

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44 Opinion of the Court 20-13735

C. Fraudulent Inducement Does Not Prevent Transfer of an

Interest to the FDIC, and Neither Should Hardwick’s

Lack of Authority

Landcastle’s attempt to categorically exclude lack-of-

authority claims from D’Oench is also inconsistent with the broad

equitable protection afforded the FDIC from claims based on

evidence outside the bank’s official records. As noted earlier, the

Supreme Court has held that D’Oench protects the FDIC from

even fraud-in-the-inducement claims and defenses. Id. at 93, 108 S.

Ct. at 402 (holding that a claim based on the failed bank’s fraud—

that induced the borrower to borrow money and sign a note—was

barred by D’Oench and § 1823(e)); see McCullough, 911 F.2d at

599–600 (holding that D’Oench bars fraud-in-the-inducement

claims); Twin Constr., Inc., 925 F.2d at 382 (stating the D’Oench

doctrine broadly protects the FDIC and its successors “from claims

of state and common law fraud”).

Under Langley, a failed bank’s fraud against its own bank

customer renders the customer’s note only “voidable” and does

not prevent the bank from transferring title to or an interest in that

customer’s note to the FDIC for D’Oench purposes. By analogy,

Hardwick’s lack of authority also renders the security agreement at

most “voidable” and capable of transfer to the FDIC.

Let’s remember that D’Oench is an estoppel doctrine. We

do not consider legal issues, such as lack of authority in this

D’Oench setting, in the abstract or in a vacuum, but in the context

of the factual circumstances presented in this case. Our decision as

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to a legal issue can reach only as far as the factual circumstances

frame the precise issue presented. See Edwards v. Prime, Inc., 602

F.3d 1276, 1298 (11th Cir. 2010); Chavers v. Sec’y, Fla. Dep’t of

Corr., 468 F.3d 1273, 1275 (11th Cir. 2006); Watts v. BellSouth

Telecomms., Inc., 316 F.3d 1203, 1207 (11th Cir. 2003).

Three contextual facts surround Landcastle’s lack-of-

authority claims in this D’Oench setting: (1) at a minimum,

Hardwick was an agent and manager of the Hardwick law firm;

(2) the failed bank had no knowledge that Hardwick lacked

authority to pledge the CD; and (3) Hardwick induced the bank to

make a loan by securing it with his law firm’s CD in the same

amount of $631,276.71.

Under these circumstances, we reject Landcastle’s argument

that Hardwick’s lack of authority prevented Crescent’s transfer of

an interest in the security agreement to the FDIC as receiver.

D. Equities Protect the FDIC

Landcastle’s approach—categorically excluding lack-of-

authority claims from D’Oench’s prohibition of non-bank-records

evidence—would defeat D’Oench’s equitable purposes.

Our thorough review of D’Oench precedent above

demonstrates that courts consistently have applied D’Oench as a

federal equitable doctrine that protects the FDIC as receiver from

a broad array of claims and defenses to a facially valid and

unconditional note, guaranty, or collateral pledge acquired by the

FDIC from a failed bank. See, e.g., Langley, 484 U.S. at 92–93, 108

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46 Opinion of the Court 20-13735

S. Ct. at 401–02 (protecting the FDIC from claims raising

“undisclosed conditions” and “fraud in the inducement”);

McCullough, 911 F.2d at 601–02 (protecting the FDIC from

“defenses of failure to perform a condition precedent, failure of

consideration, and fraudulent inducement”); Twin Constr., Inc.,

925 F.2d at 382 (protecting the FDIC “from claims of state and

common law fraud, violation of state or federal securities laws, and

the affirmative defenses of waiver, estoppel, unjust enrichment,

failure of consideration and usury”).

Landcastle’s lack-of-authority claims pale in comparison to

the severity of the other types of claims already held barred by

D’Oench’s prohibition of non-bank-records evidence. These

claims already barred by D’Oench nonetheless provide a close

analog, certainly a much closer analog than anything Landcastle or

the dissent proposes.

Think about this, too. Landcastle’s categorical approach

would mean every facially valid and unconditional bank

transaction assumed and sold by the FDIC as receiver can now be

subjected to exhaustive litigation by alleging that a manager or

officer of a business lacked authority to enter into the transaction.

As here, a manager or officer often does have considerable

authority to handle the affairs of the business but may allegedly

exceed that authority in a particular transaction.

Yet under Landcastle’s proposed categorical rule, when

deciding whether to sell or liquidate a failed bank, the FDIC would

no longer be able to rely on the bank’s official records but would

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have to look beyond the plain terms of each and every note,

guaranty, or security agreement and investigate whether each

party in each transaction in fact possessed the precise authority to

execute a particular agreement that their signature and title imply.

That is precisely the burden of which the D’Oench doctrine

relieves the FDIC when it must quickly sell a failed bank in order

to provide customers’ access to their deposits without interruption

and protect the federal funds it administers. The FDIC’s ability to

rely on the official failed bank records is the purpose of D’Oench’s

federal estoppel doctrine.

Here, in taking over and selling Crescent’s assets to

Renasant, the FDIC was entitled to rely on Crescent’s official

records, which contained the unqualified and facially valid security

agreement pledging a CD for $631,276.71 as collateral for a

$631,276.71 loan. Barring under D’Oench Landcastle’s lack-of-

authority claims—based on non-bank-records evidence—properly

allocates the risk to the principal (MHSLAW, P.C. and the law firm)

who hired Hardwick—as its President, director, and manager—

rather than to the FDIC as receiver of a failed bank. 9 Severing

Hardwick’s lack of authority from his fraudulent inducement of the

9 Indeed, the law firm failed to give Crescent its corporate governance

documents that limited Hardwick’s authority as President and Director of

MHSLAW, P.C., or as Manager of his law firm. By doing so, the law firm lent

itself to an arrangement—the purchase of a CD for $631,276.71 and a loan for

$631,276.71 collateralized by the CD—that would tend to mislead the bank

examiners and the FDIC.

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48 Opinion of the Court 20-13735

bank would favor the interests of borrowers over the interests of

depositors by shifting, in the context of FDIC receivership, the risk

of internal corporate-governance problems from the business

entity (here a law firm) to the FDIC.

As the Supreme Court emphasized in Langley, the equities

that the D’Oench doctrine regards as predominant are those

protecting the FDIC. 484 U.S. at 94–95, 108 S. Ct. at 403. We need

go no further than rejecting Landcastle’s attempt to exclude its

lack-of-authority claims—which are based on non-bank records—

from D’Oench’s estoppel doctrine.

VI. RESPONSE TO THE DISSENT

The bulk of the dissent is not about D’Oench cases but is a

discussion of different agency and contract principles. Dissenting

Op. at 14–36. The dissent insists we create a “radical” new rule that

an agent without authority binds its principal in contract. Id. at 1,

10, 36–38. The dissent uses various forms of the word “bind” 55

times. But that is not what we rule, say, or intend to do here.

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A. Agreement on Basic D’Oench Principles

Before addressing the core dispute, let’s list D’Oench

principles the dissent does not dispute:

(1) the D’Oench doctrine protects the FDIC from claims or

defenses based on evidence outside the failed bank’s records,

Dissenting Op. at 1, 11;

(2) the D’Oench doctrine applies when the claim or defense

based on outside evidence “tend[s] to diminish or defeat” the

FDIC’s interest in an asset of the failed bank, id. at 11;

(3) the D’Oench doctrine protects only interests the failed

bank already had at the time of the takeover; it does not create new

interests, id. at 12; and

(4) a “voidable” contract is enough to constitute an interest

that is transferable to the FDIC, and the D’Oench shield would bar

claims that seek to defeat a “voidable” contract, id. at 13–14.

What the dissent does hotly dispute is that the security agreement

was voidable. Our core dispute is over whether for D’Oench

purposes the security agreement was (1) automatically void, a

nullity, and non-existent at execution, or (2) merely voidable by the

law firm at its option and transferable.

Deciding this case does not require the dissent’s lengthy

debate about agency and contract principles. See id. at 14–36.

Rather, this case can be narrowly decided using the void-voidable

dichotomy for D’Oench-transfer purposes. As discussed in Section

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50 Opinion of the Court 20-13735

V.B., the general definitions of void and voidable found in treatises

and legal dictionaries draw a clear demarcation easily applied to

this case. The security agreement was not an illegal contract; it did

not contravene a statute or violate public policy. Under Langley,

it was a facially valid, unqualified agreement, held by Crescent and

transferable to the FDIC.

The dissent tries to expand the issues and make this case

about whether the law firm was bound by that contract. The bulk

of the dissent is under this heading: “An Agent Without Authority

Cannot Bind a Principal in Contract.” Id. at 14–36. The dissent

argues that no binding contract was formed because Hardwick

lacked authority, and Crescent had nothing to transfer.

Here, though, we need not, and do not, decide what

evidence would have been allowed if Crescent had not failed and

the law firm challenged the enforceability of the agreement. What

D’Oench precludes is not the challenge itself, but the law firm’s

(now Landcastle’s) use of documents outside the failed bank’s

official records to mount that challenge.

It is undisputed that Landcastle’s lack-of-authority claims are

based on non-bank records. Accordingly, our holding, as already

stated, is:

Applying the Supreme Court’s and our Circuit’s

D’Oench precedent, we hold that Landcastle’s lack-

of-authority claims are barred because they rely on

evidence that was outside Crescent’s records when

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the FDIC took over that failed bank and sold the

Hardwick loan and CD collateral to Renasant.

Majority Op. at 5, 33.

It’s hard to know what to respond to and what to ignore

because the dissent strays so far afield from the narrow D’Oench

path that decides this case. Yet the dissent cannot go wholly

unanswered because it asserts that the majority (1) relies on a

“radical . . . interpretation of agency law” that allows the FDIC to

“steal assets from third parties when it takes over a failed

bank,” (2) “creates serious Takings Clause concerns,” (3) adopts a

“new rule” that “greatly disrupts commercial relationships” in

Georgia, and (4) fails to get the message of the Supreme Court and

three sister Circuits that “the Deposit Corporation cannot acquire

an interest that is void before the Deposit Corporation purports to

acquire it.” Dissenting Op. at 1–2, 40, 42, 47.

Oh my goodness. “[L]ike most apocalyptic warnings,” the

dissent “proves a false alarm.” Epic Sys. Corp. v. Lewis, 584 U.S.

—, 138 S. Ct. 1612, 1630 (2018). 10 Nonetheless, given the dissent’s

accusations, we must respond and do so in seven parts.

10 As to the Takings Clause, the dissent accuses the majority of “licens[ing]

governmental theft” and “creat[ing] serious constitutional problems without

any discussion.” Dissenting Op. at 47. We do not discuss the Takings Clause

because Landcastle never mentioned it in the district court or in its appellate

briefs. That’s why the dissent resorts to suggesting that “Landcastle should be

free on remand” to raise a Takings Clause claim. Id. at 43.

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52 Opinion of the Court 20-13735

First, we address three D’Oench decisions that the dissent

cites to charge we failed to get the message of our sister circuits.

Dissenting Op. at 14, 46–47. Those cases support our ruling, not

the dissent.

Second, we refute the dissent’s groundless accusation that

we “greatly disrupt[] commercial relations” in Georgia. Id. at 40.

Third, we reply to the dissent’s baseless charge that we

invent a new rule and rely on “a radical” interpretation of agency

law that allows the FDIC to “steal assets from third parties.” Id. at

1. We explain how contracts are formed by agents, and how if an

agent exceeds his authority, the principal (here, the law firm)

always has the option to reject or affirm that contract, which

renders the contract voidable, not void. No radical ideas here.

Fourth, we respond to the dissent’s no contract or void

contract arguments. Id. at 14–36. None of the dissent’s authorities,

including the three cited Eleventh Circuit cases, involve failed

banks, D’Oench issues, or whether a contract is void or voidable

for D’Oench transfer purposes. Rather, the cases involve whether

a principal was bound by an agent’s unauthorized act. The dissent

also relies on conflicting state law, which we view as unnecessary

and unwise to unravel.

Fifth, we address the dissent’s cites to Federal Arbitration

Act (“FAA”) cases that are not on point.

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Sixth, we discuss how the security agreement was ratifiable

and thus voidable and why the dissent’s void-contract claim is

incorrect.

Seventh, we explain why the Restatement comments the

dissent cites do not support its argument that the security

agreement was void.

B. Dissent’s Claim that Three Other Circuits “Got the

Message” that the “Majority Misunderstands”

The dissent alleges “[t]he majority misunderstands the

D’Oench doctrine, even though . . . at least three of our sister

circuits got the message: the Deposit Corporation cannot acquire

an interest that is void before the Deposit Corporation purports to

acquire it.” Id. at 47 (citing Fed. Deposit Ins. Corp. v. Bracero &

Rivera, Inc., 895 F.2d 824, 830 (1st Cir. 1990); Grubb v. Fed. Deposit

Ins. Corp., 868 F.2d 1151, 1158 (10th Cir. 1989); Andrew D. Taylor

Tr. v. Sec. Tr. Fed. Sav. & Loan Ass’n, 844 F.2d 337, 342–43 (6th

Cir. 1988) (“Taylor Trust”)); see id. at 14 (citing same). The dissent

claims these cases show the security agreement here was void and

not transferable. These cases support our ruling, not the dissent.

The dissent summarily dismisses the fact that these cases

concerned bank assets that were already voided by a court

judgment, paid, or fully extinguished before the FDIC took over as

receiver. That total cancellation of the asset before the takeover is

what precluded the FDIC from acquiring an interest in the

contract. In stark contrast, here there was no change to,

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54 Opinion of the Court 20-13735

cancellation of, or diminishment of the security agreement before

the FDIC took over.

In Grubb, for instance, the Tenth Circuit held that the FDIC

could not “claim the protection of D’Oench” because, before the

bank in that case failed, i.e., before the FDIC took over as receiver,

the district court had entered a judgment for the plaintiff and

explicitly “voided” the asset at issue. 868 F.2d at 1158–59. Here, if

the Hardwick law firm had sued Crescent while the bank was still

solvent, and a court had entered judgment voiding the 2009

security agreement before the FDIC took over as receiver in 2010,

then Crescent would not have had a transferrable interest in the

security agreement when it failed. The Hardwick law firm did not

challenge the 2009 security agreement before the FDIC took over

or during the next seven years. For over five years Renasant Bank

held the law firm’s CD as collateral and liquidated it in 2014—all

without objection by the law firm. The law firm’s actions belie the

dissent’s claims of no transferable interest. It was only in 2017 that

Landcastle (who bought potential claims in the law firm’s

bankruptcy) challenged the 2009 security agreement.

The dissent’s next case—Bracero & Rivera—also supports

our holding. The First Circuit held that D’Oench did not apply to

a canceled mortgage note in the bank’s records before the FDIC

took over. 895 F.2d at 829–30. The First Circuit concluded that the

D’Oench doctrine did not apply because (1) “the note was

discharged by the payment and cancellation of the underlying debt

before [the] FDIC ever obtained it,” and (2) bank documents

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evidencing that discharge and cancellation “were in the hands of

[the] FDIC at all relevant times.” Id. The note was paid and not

an asset protected by D’Oench or § 1823(e). Id. at 830.

Just the opposite is true here. The security agreement was

never challenged—much less canceled—before the FDIC took

over, and Landcastle’s challenge came seven years later. That the

dissent resorts to Grubb and Bracero & Rivera to discredit the

majority reveals how baseless the dissent’s accusations are.

Likewise, Taylor Trust does not help the dissent because the

Sixth Circuit held the agent trustee acted with authority. Taylor

was the trustee of his minor son’s savings account. Taylor Tr., 844

F.2d at 339. However, Taylor, as president of Security Trust,

executed collateral agreements pledging, inter alia, his minor son’s

savings-account trust. Id. Taylor executed the pledge agreements

to secure advances made by Security Trust to two Hawaiian real

estate ventures under lines of credit. Id. at 340. After Taylor was

discharged as president and both Hawaiian real estate ventures

defaulted, Security Trust claimed the pledged accounts. Id. The

minor’s savings-account trust then sued Security Trust to have the

pledge agreements declared invalid, arguing that Taylor lacked

authority to pledge the minor’s trust. Id. at 340, 343. While the

action was pending, Security Trust was declared insolvent, and the

FSLIC took over as receiver. Id. at 340.

The Sixth Circuit summarized the trust’s argument that

because Taylor lacked authority to pledge his son’s trust, the

pledge agreements were void ab initio, taking them out of the

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56 Opinion of the Court 20-13735

D’Oench doctrine. Id. at 342–43. The Sixth Circuit did not decide

that issue because it concluded that Taylor had the authority to

revoke the minor’s trust. Id. at 344. Thus, the Sixth Circuit

concluded D’Oench applied, and the FSLIC prevailed. Id. 11

C. Dissent Misstates Georgia Law

As discussed later, the dissent largely cites state cases and

federal diversity cases—applying applicable state law—to support

its proposition that the security agreement was void because no

contract is ever formed when an agent lacks authority. As part of

that argument, the dissent alleges: “Georgia law dictates that lack

of authority prevents contract formation,” and therefore “the

majority’s new rule greatly disrupts commercial relationships.”

Dissenting Op. at 40. That is not Georgia law, nor what we do

here.

In claiming an agent’s lack of authority always prevents

contract formation, the dissent cites four Georgia cases and

O.C.G.A. § 10-6-51. Id. at 40–41. See Hagan v. Asa G. Candler,

Inc., 5 S.E.2d 739 (Ga. 1939); Lynn v. Lowndes Cnty. Health Servs.,

LLC, 840 S.E.2d 623 (Ga. Ct. App. 2020); Berger v. Ga. Power Co.,

11In a parenthetical, the dissent notes that Taylor Trust “stat[ed], though in

dicta, that an agent’s lack of authority . . . renders the contract void ab initio,

rather than merely voidable.” Dissenting Op. at 36 (quotation marks omitted).

That was not even dicta. The Sixth Circuit was merely reciting the party’s

argument, not opining itself. Taylor Tr., 844 F.2d at 342–43. Taylor Trust did

not explore the differences between void and voidable agreements. There was

no reason to do so because it concluded Taylor had authority to act.

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49 S.E.2d 668 (Ga. Ct. App. 1948); Buena Vista Loan & Sav. Bank

v. Stockdale, 192 S.E. 246 (Ga. Ct. App. 1937).

Those Georgia cases relied on by the dissent have nothing

to do with the contract-formation issue here. The Berger and

Buena Vista cases involved (1) the endorsements of checks and not

formation of a contract between two parties, (2) the effect of a third

party’s unauthorized signature endorsement on a check under a

former Georgia statute, and (3) whether the third party’s

endorsements were forged or genuine. See Berger, 49 S.E.2d at

669; Buena Vista, 192 S.E. at 247. Plus, neither case involved an

agent, much less one who exceeded his authority.

Contrary to the dissent, Georgia law recognizes that an

agent routinely forms a contract on a principal’s behalf, and if an

agent acted without authority, the principal may either repudiate

or ratify that contract. See, e.g., O.C.G.A. § 10-6-51 (“The principal

shall be bound by all the acts of his agent within the scope of his

authority; if the agent shall exceed his authority, the principal may

not ratify in part and repudiate in part; he shall adopt either the

whole or none.” (emphasis added)).

Further, Lynn and Hagan, the dissent’s agency law cases, do

not support the dissent’s no-contract-formed or void-contract

argument. The Georgia court in Lynn explained that, under

Georgia law, where the principal is fully informed of the agent’s

unauthorized act and does not repudiate it within a reasonable

time, ratification is presumed and takes effect as if originally

authorized. 843 S.E.2d at 631. The Lynn court did not mention

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the terms “void” or “void contract.” And the Lynn court ultimately

concluded that the principal, a mentally disabled, 50-year-old man

with Down Syndrome who could not read, write, or speak, was

incapable of forming an agency relationship with his mother. See

id. at 628–31. Here though, Hardwick was an admitted agent of his

law firm and for years the law firm’s CD was held and then

liquidated without objection of the law firm. Lynn is wholly

inconsistent with the dissent’s interpretation of Georgia law.

Hagan also does not help the dissent because the alleged

principal there was non-existent. 5 S.E.2d at 740. The issue was

whether “an agent who executes a contract on behalf of a

non-existent principal is himself liable on the contract.” Id.

Instead, as discussed before, the more informative case as to

void contracts is our Griffin decision applying Georgia law. In

Griffin, this Court expressly addressed whether assignments of

certain benefits were void or “merely voidable,” where the

assignors’ benefit plans contained an anti-assignment provision.

Griffin, 989 F.3d at 934 (11th Cir. 2021). We observed that whereas

void contracts are “[o]f no legal effect” and “void,” voidable

contracts are “[v]alid until annulled.” Id. at 934 & n.6 (quoting

Black’s 2019 definitions of void and voidable).

We held the assignments were “merely voidable” because

they were not illegal, did not contravene public policy, and had

nothing to do with gambling—the three “void” contracts under

Georgia law. Id. at 934 (citing O.C.G.A. §§ 13-8-1, 13-8-2, 13-8-3).

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Griffin is instructive. First, Griffin observed that, unlike void

contracts, voidable contracts are valid until annulled. Id. at 934 &

n.6. Second, Griffin demonstrates that the security agreement here

was not a void contract under Georgia law because it was not

illegal, did not contravene public policy, and had nothing to do

with gambling. See id. at 934.

Tellingly too, the Georgia Supreme Court held in Holden

that D’Oench protects the FSLIC as receiver from a property

owner’s claim based on non-bank records that a partner lacked

authority to pledge a security interest in the partnership’s property.

485 S.E.2d at 483 (applying federal common law). The Georgia

Supreme Court reasoned that invalidating the agreement in

Holden would strip away the D’Oench doctrine’s protection of

bank depositors, bank authorities, and guarantors. Id. This

reasoning is equally applicable to the case at bar: Invaliding the

security agreement defeats D’Oench’s equitable purposes and

protects Landcastle and the Hardwick law firm at the expense of

bank depositors, bank authorities, and guarantors. Therefore, the

dissent’s allegation that we “greatly disrupt[] commercial

relationships” in Georgia is wholly unfounded. Dissenting Op. at

40. 12

12Speaking of commercial relationships, banks fail, the FDIC sells them

overnight to successor banks like Renasant, who open them the next day

without interruption. For years, Hardwick made his loan payments to

Renasant but then defaulted, and Renasant liquidated the CD collateral.

Landcastle now, many years later, wants to use parol evidence—outside the

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D. How Contracts Are Formed by Agents

Next, we respond to the dissent’s charge that we invent a

new, radical agency rule. This accusation also is baseless.

To set things straight, general agency principles recognize

that there can be (1) “agents” who have some actual authority from

a principal but may act outside of it or outside of their apparent

authority; (2) other actors who appear to third parties to be

“agents” but who lack any actual authority and therefore are not

“agents” for the principal at all; and (3) persons, either agents or

actors purporting to be agents, whose acts can be ratified by the

principal such that “the act is given effect as if done by an agent

acting with actual authority.” Restatement (Third) of Agency,

§§ 3.01, 3.03, 4.01(1), 4.03 (Am. L. Inst. 2006).

According to the certified question, Hardwick was the law

firm’s “agent.” He was not merely an actor appearing or

purporting to be an agent. No one disputes that Hardwick was an

agent of both the law firm (as a manager) and MHSLAW, P.C. (as

President and a director). Therefore, we look first to those agency

principles applicable to “agents.”

It is a “basic principle that when an agent enters into a

contract on behalf of a disclosed principal, the principal and the

third party are parties to the contract. A principal is disclosed when

failed bank’s records—to set aside the 2009 security agreement. That’s what

would be disruptive.

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the third party has notice that an agent is acting for a principal and

has notice of the principal’s identity.” Id. § 6.01 cmt. a.

A valid contract requires “a bargain in which there is a

manifestation of mutual assent to the exchange and a

consideration.” Restatement (Second) of Contracts, supra, § 17(1)

(emphases added); 1 Williston on Contracts, supra, § 3:2 (same).

Mutual assent and consideration are required elements for contract

formation. In the agency context, however, it is the agent who

manifests the assent to the exchange with the third party, not the

principal. Restatement (Third) of Agency, supra, § 6.01 cmt. b (“An

agent enters into a contract on behalf of the agent’s principal by

manifesting assent to an exchange that constitutes valid

consideration.”). The principal does not manifest the assent to the

exchange because that is the agent’s job. See id. A contract is

formed upon the agent’s manifestation of assent to the exchange

on the principal’s behalf.

Whether the contract so formed by the agent later subjects

the principal to liability (i.e., binds the principal) or later is voidable

by the principal is a separate legal matter. As discussed earlier, if it

turns out the agent was acting outside the scope of his authority

when he manifested assent to the exchange with the third party,

the resulting contract is voidable by the principal, not entirely

“void.”

At the risk of beating a dead horse, an agent who lacks

authority merely forms a contract that is voidable at the option of

the principal. A voidable contract is not the same as a binding

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contract. Whether a voidable contract ultimately will be binding

is a decision for the wronged party in the transaction. Upon notice

of the contract, the principal has the power to either ratify and be

bound by it or disaffirm and avoid it. And the contract becomes

either enforceable or unenforceable against the principal upon the

principal’s exercise of this power.

For D’Oench purposes, the fact that the principal retains this

power to ratify or disaffirm means the contract formed by the agent

is merely “voidable,” and not void at inception. That distinction

matters because D’Oench recognizes voidable interests are

transferrable from the failed bank to the FDIC.

E. Dissent’s No Contract or Void Contract Arguments

In an attempt to escape D’Oench altogether, the dissent

claims the security agreement is no contract or a void contract.13

Dissenting Op. at 14–36.

13 Specifically, the dissent argues: (1) that because “an agent cannot bind a

principal in contract when he lacks the authority to do so,” the “resulting

purported contract is void”; (2) “for present purposes, there is no meaningful

difference between saying that the agent formed no contract” or “formed a

void contract”; and (3) “[n]o contract is formed between the principal and the

third party because a principal is not subject to liability when an agent acts

without authority.” Dissenting Op. at 16–19, 25 (emphases added) (quotation

marks omitted). The dissent frames the issue as whether there is a binding

contract or whether the principal is bound and subject to liability. Once again,

that’s a very different issue than whether the bank had an interest in the

security agreement, even if voidable, that was transferable to the FDIC.

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First, the dissent states that “when an agent purports to

‘enter[] into [a] contract on [its] principal’s behalf . . . without

actual or apparent authority,’ the ‘principal is not a party to [that]

contract.’” Id. at 16 (alterations in original) (emphasis omitted)

(quoting Restatement (Third) of Agency, supra, § 6.05 cmt. b).

That quoted comment b to § 6.05, however, addresses only

the circumstances under which the principal “is subject to liability”

when the agent makes a contract with a third party that is

unauthorized in part. Restatement (Third) of Agency, supra,

§ 6.05(1) & cmt. b (emphasis added). Comment b speaks to the

principal’s liability under the contract the agent makes, not to

whether a contract was formed in the first place or the effect of an

agent’s lack of authority on the formation of a contract. See id.

Next, the dissent cites three Eleventh Circuit cases for its no

contract or void contract argument. Dissenting Op. at 17–19, 31–

32 (citing GDG Acquisitions LLC v. Gov’t of Belize, 849 F.3d 1299

(11th Cir. 2017) (“GDG”); In re JLJ Inc., 988 F.2d 1112 (11th Cir.

1993) (“JLJ”); Gymco Constr. Co. v. Architectural Glass &

Windows, Inc., 884 F.2d 1362 (11th Cir. 1989) (“Gymco”)). By

taking these cases wholly out of context, the dissent makes it

appear they apply here, but they do not. We therefore must discuss

these cases in detail. As we shall see, none of these precedents

involve application of the D’Oench doctrine, none discuss the void-

voidable dichotomy, all are materially and easily distinguishable,

and one actually supports our position.

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Gymco v. Architectural Glass

The dissent relies heavily on our 1989 Gymco decision,

applying Georgia law, but, unlike the Georgia Supreme Court’s

1997 Holden decision, Gymco did not involve a failed bank, the

FDIC, or D’Oench. In any event, Gymco is about whether the

principal was bound by its agent’s oral contract when the other

party to the contract knew the agent lacked authority.

In Gymco, a written contract between Gymco Construction

(“Gymco”) and Architectural Glass & Windows (“AGW”) required

AGW to install a glass façade for Gymco. 884 F.2d at 1363. Gymco

knew that AGW’s President signed the written contract, submitted

all the pay orders, and negotiated the conditions. Id. at 1366. Yet

Gymco claimed that Young, a sales representative for AGW, orally

agreed to substitute stainless steel, and Gymco sued AGW when it

refused to provide a stainless steel façade. Id. at 1364–65.

On appeal, this Court held that AGW was not liable for

damages to Gymco because (1) Young lacked actual authority to

enter a new oral contract for steel; and (2) it was unreasonable for

Gymco to assume Young had authority because it was AGW’s

President who had demonstrated his complete authority over the

contract terms. Id. at 1366. We explained: “The evidence of the

parties [sic] dealings makes clear that Gymco knew that Young

only had limited authority.” Id. at 1367. We stressed that

substituting stainless steel for glass would be enforcing a new oral

contract with “a materially different obligation,” and because

“Young lacked the authority to enter into a new contract obligating

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AGW to install the stainless steel,” we held that “there was no oral

contract between Gymco and AGW.” Id. at 1365–67.

We also rejected Gymco’s argument that Young could

orally agree to modify the written contract given that the contract

required modifications to be in writing. Id. at 1367. We also

pointed out that AGW had “repudiated” Young’s oral agreement

to provide steel in lieu of glass as soon as it learned of it and

terminated Young immediately. Id. at 1364, 1366.

So that’s the case. Now let’s look at how the dissent uses

Gymco wholly out of its context. The dissent cites Gymco for this

purported principle: “that because an agent ‘lacked authority to

enter into a . . . contract’ between his principal and a third party,

‘there was no [such] contract.’” Dissenting Op. at 17 (alterations in

original). The first quote leaves out the word “oral,” and the latter

quote changes “there was no oral contract” to “there was no [such]

contract.” Gymco involved an oral contract that the third party

knew the agent lacked authority to enter and that the principal

promptly repudiated. These facts alone are sufficient reasons to

discard it.

Gymco is further materially distinguishable because there is

no analysis of contract-formation principles, much less contract

formation by an agent where: (1) the agent executed a facially valid

written contract, with plain and clear terms; (2) the agent who

signed for the principal was its President, manager, and director;

and (3) the other party (Crescent) undisputedly had no knowledge

of any limits on the officer’s authority. Significantly, too, Gymco

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66 Opinion of the Court 20-13735

was about whether AGW was bound by Young’s oral acts when

Gymco knew he lacked authority. To repeat ad nauseam, whether

the principal law firm was bound by agent Hardwick’s acts is not

the narrow issue here.

Gymco never used the word “void.” Gymco did not

suggest, much less hold, that Young’s oral agreement was a void

contract, as the dissent implies. Id. Gymco is but one example of

how the dissent’s cites do not support the proposition offered.

Holden, not Gymco, is relevant here.

In re JLJ Inc.

The dissent argues JLJ is relevant because it shows an agent

lacking authority “cannot bind a principal in contract” and “the

resulting purported contract is void.” Id. at 18–19. Of course, the

inquiry in JLJ was whether the contract was binding on the

principal. JLJ did not address the void-voidable dichotomy or even

mention the term voidable. Also, JLJ did not involve a failed bank,

the FDIC, or D’Oench. Here’s what happened.

In a bankruptcy adversary proceeding, Karen Rush and her

estranged husband’s company RBC both claimed they owned the

debtor’s note. 988 F.2d at 1115. Her husband had Karen’s power

of attorney and assigned the note to RBC. Id. The issue was

whether the assignment contract was valid against Karen. Id. at

1116. The bankruptcy court awarded the note to RBC, but the

district court reversed and entered judgment for Karen, finding she

had impliedly revoked the power of attorney. Id. at 1114–15.

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This Court vacated the district court’s judgment and

remanded for the bankruptcy court to make factual findings

regarding whether Karen had orally revoked the power of attorney

before her husband assigned the note. Id. at 1117. Applying federal

procedural rules, our Court held that the district court “exceeded

the proper scope of review” and invaded “the province of the

bankruptcy court as the trier of fact” when it “independently found

that Karen’s and Edward’s estrangement impliedly revoked the

power of attorney.” Id.

We reasoned that “[i]f Karen orally revoked the power of

attorney when she fled [her husband] Edward’s threats of violence,

then the assignment Edward executed one week later would be

void.” Id. at 1116.

We conclude JLJ is not instructive here. First, the validity of

the assignment in JLJ involved substantive Alabama law. See id. at

1116–17. 14 Second, and in any event, the JLJ Court did not address

14 We know that the JLJ Court applied substantive Alabama law because both

our Court and the bankruptcy court cited Alabama law. See JLJ, 988 F.2d at

1116–17; In re JLJ, Inc., 115 B.R. 324, 333 (Bankr. N.D. Ala. 1990) (applying

Alabama law to determine whether Karen revoked the power of attorney). It

is well settled that “[t]he interpretation of private contracts is ordinarily a

question of state law” and “[t]he substantive law of the forum state [Alabama

here] governs issues of state law that arise in bankruptcy proceedings.” In re

Chira, 567 F.3d 1307, 1311 (11th Cir. 2009) (quotation marks omitted); see In

re Northington, 876 F.3d 1302, 1310 (11th Cir. 2017) (“Even in the uniquely

‘federal’ bankruptcy context, ‘[p]roperty interests are created and defined by

state law.’” (alteration in original) (quoting Butner v. United States, 440 U.S.

48, 55, 99 S. Ct. 914, 918 (1979))). The dissent acknowledges JLJ expressly

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the issue presented in this case: whether an agreement entered by

an agent without authority is void or merely voidable.

Third, our Court, albeit in an unpublished opinion, recently

singled out Alabama court decisions for using the word “void”

imprecisely, including when the court means a contract is voidable.

See United States v. Ruan, 796 F. App’x 672, 675–76 (11th Cir.

2020). Our Court observed that “Alabama ‘judges and text-book

writers have frequently used the words voidable and void

indiscriminately’” when referring to contracts. Ruan, 796 F. App’x

at 675 (quoting Ex parte Banks, 64 So. 74, 75 (Ala. 1913)).

Fourth, many have lamented that courts imprecisely use

“void” where “voidable” is meant. For example, Black’s Law

Dictionary has explained that “[t]he distinction between void and

voidable is often of great practical importance,” and although the

“strict meaning of void” is “[o]f no legal effect,” “the word [void] is

often used and construed as bearing the more liberal meaning of

‘voidable.’” Void, Black’s Law Dictionary (11th ed. 2019); see also

Void Contract, Black’s Law Dictionary (11th ed. 2019) (again

acknowledging that “the word ‘void’ has been used, even by judges

and the framers of statutes, where ‘voidable’ is meant”).

relied on Alabama law “to determine under what circumstances the power of

attorney could be revoked,” but the dissent attempts to separate from

Alabama law JLJ’s statement the contract would be void if the agent’s power

of attorney was revoked. Dissenting Op. at 19. However, the entire question

as to the validity of the assignment in JLJ involved substantive Alabama law,

meaning that JLJ is not instructive here.

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This is not a new phenomenon. See Ham v. Blankenship,

194 F.2d 430, 432 (5th Cir. 1952) (observing a “lack of preciseness”

in the use of the word void, which causes confusion generally);

Haggart v. Wilczinski, 143 F. 22, 27 (5th Cir. 1906) (“The word

‘void’ is so often used in the sense of ‘voidable’ . . . .”). Recently,

our Court pointed out the imprecise use of void where voidable is

meant. See Griffin, 989 F.3d at 934 & n.7 (11th Cir. 2021).

For these reasons, JLJ is not helpful guidance here.

GDG v. Government of Belize

The dissent’s final case from this Circuit is GDG. The

dissent argues GDG shows an agent’s unauthorized contract is

“void” until ratified. Dissenting Op. at 31. GDG hurts, not helps,

the dissent. GDG supports our conclusion that a contract entered

by an agent without authority is not “void” ab initio.

GDG involved a contract dispute between the government

of Belize and a company leasing equipment. 849 F.3d at 1302. A

Belizean minister executed a lease waiving sovereign immunity.

Id. at 1302–03. When GDG sued Belize for rent, Belize argued its

minister lacked authority to waive immunity. Id. at 1302.

Applying agency ratification principles, this Court concluded Belize

ratified its minister’s actions by performing, making payments, and

retaining equipment. Id. at 1302, 1312.

Importantly, we rejected Belize’s argument that the lease

was “void ab initio” and could not be ratified. Id. at 1310. We

stated Belize “misapprehend[ed] the nature of ratification,” which

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“starts with the assumption that the agent did not have actual

authority at the time he acted.” Id. Therefore, it was “of no

moment” that the minister lacked authority when he entered the

agreement. Id.

GDG is entirely consistent with our reasoning here.

Specifically, GDG reasoned that even if an agent enters a contract

without authority, that contract is not void ab initio because the

principal can ratify the contract.

Contrary to the dissent’s claims, our Court did not

“recognize[] that a contract entered by an agent who lacked

authority initially ha[s] no legal effect on the principal, but the

principal [is] empowered to ratify it later.” Dissenting Op. at 32.

Quite the opposite. We rejected Belize’s argument that the lease

was “void ab initio” and could not “be enforced against [it] under a

ratification theory.” 849 F.3d at 1310 (quotation marks omitted).

Nothing in GDG’s reasoning suggested, much less held, that the

lease was “initially” void and somehow rendered not void by

Belize’s ratification.

Other Federal and State Court Cases Cited by the Dissent

In Section V.B, we cited many state law decisions holding

that a contract signed by an agent without authority makes that

contract merely voidable at the election of the principal, but not

void. However, we recognize that the dissent cites other state

court cases, a Fifth Circuit case applying Mississippi law, and a First

Circuit case applying Puerto Rico law for the inverse proposition

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that a contract signed by an agent without authority is void.

Dissenting Op. at 20–21.

Candidly, both we and the dissent are citing conflicting, but

non-binding, state court and federal cases applying state law. And

we appreciate the dissent’s frankness in observing that agency law

in this area is not a model of clarity, not always precise, and easily

gives rise to confusion. Id. at 15, 27, 30, 32.

Given this landscape and that D’Oench is a federal estoppel

doctrine, it is unnecessary and unwise to take on the difficult, if not

impossible, task of reconciling this divergent state agency law.

Instead, in deciding this case, we rely on: (1) Langley’s

holding that D’Oench bars evidence outside the bank’s records

because even fraud in the inducement renders a contract merely

voidable, not void, and transferable to the FDIC; (2) our own

well-developed circuit precedent squarely applying the D’Oench

parol-evidence-like bar to a broad array of claims and defenses to a

facially valid and unconditional note or collateral pledge acquired

by the FDIC from a failed bank; and (3) the general definitions of

“void” and “voidable” found in treatises and legal dictionaries, as

discussed earlier, which demonstrate that the security agreement

was a voidable contract. To repeat, Landcastle’s lack-of-authority

claims based on non-bank records pale in comparison to the

severity of other types of claims this Court has held subject to

D’Oench’s prohibition on non-bank-records evidence. Our

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72 Opinion of the Court 20-13735

D’Oench precedent on those claims provides a much closer analog

than anything the dissent proposes. 15

F. Federal Arbitration Act Cases

Although the parties’ briefs do not discuss any arbitration

cases, the dissent tries to employ FAA cases as “informative.”

Dissenting Op. at 21. The cases are not on point or instructive.

The dissent’s reliance on Buckeye Check Cashing, Inc. v.

Cardegna is misplaced because the Court declined to address

whether an arbitration agreement is valid when the signor lacked

authority to commit the principal. 546 U.S. 440, 444 n.1, 126 S. Ct.

1204, 1208 (2006) (“Our opinion today . . . does not speak

to . . . whether the signor lacked authority to commit the alleged

principal . . . .”); see also Rintin Corp., S.A. v. Domar, Ltd., 476 F.3d

1254, 1259 (11th Cir. 2007) (recognizing that the Supreme Court in

Buckeye Check Cashing, Inc. “deemed irrelevant” the distinction

between void and voidable contracts). Our decision in Chastain v.

Robinson-Humphrey Co., also relied upon by the dissent, provides

no guidance here, as the parties in that case agreed the appellee

never signed the arbitration clauses at issue—a situation akin to

fraud in the factum that would render a contract void. 957 F.2d

15We already know from D’Oench itself and our McCullough precedent that

the D’Oench estoppel doctrine bars even a failure of consideration claim if

based on non-bank records. See D’Oench, 315 U.S. at 456, 460–61, 62 S. Ct. at

679, 681; McCullough, 911 F.2d at 601–02.

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851, 853, 855 (11th Cir. 1992), abrogated on other grounds by First

Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920 (1995).

We need not wade into the quagmire of FAA law to

recognize a fundamental difference between this case and the FAA

cases cited by the dissent. For D’Oench purposes, we must

determine whether the FDIC had an interest (including a voidable

interest) that could be diminished or defeated. See Langley, 484

U.S. at 92–93, 108 S. Ct. at 401–02. In the arbitration context,

however, courts look at whether an arbitration agreement is

binding on the principal. See, e.g., Nat’l Fed’n of the Blind v.

Container Store, Inc., 904 F.3d 70, 79–80 (1st Cir. 2018) (“A party

seeking to compel arbitration must demonstrate that . . . the other

party is bound by th[e arbitration] clause . . . .” (emphasis added

and quotation marks omitted)). The dissent’s FAA cases, therefore,

have no bearing on whether an agent lacking authority enters a

void or voidable contract for purposes of D’Oench transfers.

G. That the Security Agreement Was Ratifiable Shows It

Was Voidable, Not Void

The dissent concedes, as it must, that a principal can ratify

an agent’s unauthorized act and the security agreement was

ratifiable by the law firm. Dissenting Op. at 15, 29–30. Even so,

the dissent argues that “capacity for ratification does not

undermine the [dissent’s] conclusion that contracts purportedly

formed by agents who lack authority are void.” Id. at 29. We

disagree.

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74 Opinion of the Court 20-13735

Fundamental principles of agency and contract law establish

that only a voidable contract is capable of ratification. Restatement

(Second) of Contracts, supra, § 7 cmt. e (“[T]he term voidable

contract is appropriate if ratification by one of the parties would

terminate his power of avoidance and make the contract

enforceable against him.”); Voidable, Black’s Law Dictionary (11th

ed. 2019) (defining “voidable” as “capable of being affirmed or

rejected at the option of one of the parties”); 1 Williston on

Contracts, supra, § 1:20 (observing that because a voidable contract

“is capable of ratification, it affects from the outset the legal

relations of the parties” and “is properly defined as a contract”); 1

Corbin on Contracts, supra, § 1.6 (explaining that “[i]n every case

[of a voidable contract], . . . it will be found that one of the parties

has a legal power, either of avoidance or of ratification, or of both”

and that it is equally accurate to describe such contracts as

“ratifiable”).16

In stark contrast, a truly void contract cannot be ratified and

become enforceable. 1 Williston on Contracts, supra, § 1:20 (“[I]f

a promise is void, it creates no legal obligation[,] and the promisor

is without power to ratify promise [sic].”); Restatement (Second)

16Even if agent Hardwick manifests an assent to a contract with Crescent

without authority, the principal in turn has two choices: it may elect to ratify—

that is, manifest an assent to be bound by—the contract, or to avoid it. 12

Williston on Contracts, supra, § 35:22 (“When an agent lacks actual authority

to agree on behalf of the principal, the principal may still be bound if it

acquiesces in the agent’s action, or fails promptly to disavow the unauthorized

conduct after acquiring knowledge of the material facts.”).

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20-13735 Opinion of the Court 75

of Contracts, supra, § 163 cmt. c (explaining, as to the distinction

between void and voidable contracts, that “the recipient of a

misrepresentation may be held to have ratified the contract if it is

voidable but not if it is ‘void’”). It is, was, and always will be a legal

nullity that is enforceable against no one.

We do recognize that the dissent identifies decisions,

applying state law, that conclude that void contracts can be ratified.

Dissenting Op. at 30. 17 On the other hand, we located many other

decisions, applying state law, which held a “void” contract is

incapable of ratification. See, e.g., Wamsley v. Champlin Refin. &

Chems., Inc., 11 F.3d 534, 539 (5th Cir. 1993) (“Promises that are

void cannot be ratified.”) 18; Kelley v. Kelley, 798 S.E.2d 771, 777

(N.C. Ct. App. 2017) (“It is well settled that a void contract cannot

be the basis for ratification or estoppel.”); Kellar v. Est. of Kellar,

291 P.3d 906, 917 (Wash. Ct. App. 2012) (“[A] contract that is void

at its inception, as opposed to merely voidable, is an absolute

17 The dissent cites mostly state cases, but its cited federal case also applies

state law. See Jensen v. Ray Kim Ford, Inc., 920 F.2d 3, 4 (7th Cir. 1990)

(applying Illinois law).

18 The Fifth Circuit’s explanation is apt here:

Promises that are void cannot be ratified. The reason for this

is simple: Void promises are not legally binding and thus, are

not contracts. [Restatement (Second) of Contracts, supra,] § 7

cmt. a. Without an antecedent contract to ratify, there can be

no ratification.

Wamsley, 11 F.3d at 539.

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76 Opinion of the Court 20-13735

nullity and is incapable of ratification.”); Ockey v. Lehmer, 189 P.3d

51, 56 (Utah 2008) (“A contract or a deed that is void cannot be

ratified or accepted, and anyone can attack its validity in court. In

contrast, a contract or deed that is voidable may be ratified at the

election of the injured party.” (footnotes omitted)); Est. of Molino,

81 Cal. Rptr. 3d 512, 521 (Cal. Ct. App. 2008) (“Void contracts

cannot be ratified.”); Richmond Printing v. Port of Hous. Auth.,

996 S.W.2d 220, 224 (Tex. Ct. App. 1999) (“As a general rule, void

contracts cannot be ratified.”). In sum, we are faced with

nonbinding authority on both sides of that issue.

Again, it is unnecessary and unwise to enter this state-law

fray. As we observed in Section VI.E, courts sometimes use the

terms “void” and “voidable” interchangeably. See Griffin, 989 F.3d

at 934 n.7. And if we take this case authority at face value and

assume that courts always correctly use the terms “void” and

“voidable,” the conflicting decisions—void contracts can versus

cannot be ratified—seem impossible to reconcile.

Instead of trying to reconcile these decisions applying state

law, we again rely on Langley, our D’Oench precedent, and the

general definitions of “void” and “voidable,” found in treatises and

legal dictionaries, which establish that a principal’s power to elect

to ratify an agent’s unauthorized contract by definition makes the

contract merely voidable. See Voidable, Black’s Law Dictionary

(11th ed. 2019); Restatement (Second) of Contracts, supra, § 7 cmt.

e; 1 Williston on Contracts, supra, § 1:20. While the principal may

elect to avoid the contract, the contract is not “void” in the

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20-13735 Opinion of the Court 77

technically accurate meaning of that term. See Griffin, 989 F.3d at

923; Haggart, 143 F. at 27. Because all agree that the Hardwick law

firm could have ratified the security agreement in this case, that

agreement was voidable and constituted an interest that was

capable of transfer for purposes of D’Oench. See Gordy, 928 F.2d

at 1565.

At bottom, the dissent fails to distinguish voidable contracts

from binding contracts. Rather, the dissent conflates binding

contracts with voidable contracts and applies a binding v. void

dichotomy. For example, the dissent argues that: “The status of a

contract executed by an agent as void or voidable turns on whether

the agent has the authority to bind the principal.” Dissenting Op.

at 15. As we have explained, the question is not whether the

contract was ultimately binding on the Hardwick law firm.

Instead, the proper and narrow inquiry for D’Oench transfer

purposes is whether the facially valid and fully executed written

contract was already void or merely voidable when the FDIC took

over. The void-voidable dichotomy should be applied here, and

the security agreement was voidable because it was capable of

being affirmed or rejected at the option of the law firm. See supra

Section V.B at 37–43.

H. Comment c to § 4.01 of the Third Restatement of

Agency (2006) and comment a to § 82 of the Second

Restatement of Agency (1958)

Finally, we address the dissent’s reliance on Restatement

comments. The dissent attempts to “mak[e] sense of the

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78 Opinion of the Court 20-13735

conflicting authority in this area of law,” but admits that “is no easy

task.” Dissenting Op. at 32. To do so, the dissent cites (1) comment

c to § 4.01 of the Third Restatement of Agency; and (2) comment a

to § 82 of the Second Restatement of Agency. Id. at 33–34. While

the dissent purports to “shed[] light on the matter,” it misconstrues

these two comments to support its arguments that no contract, or

only a void contract, was formed. See id. at 32.

Neither comment states, or even suggests, an agent’s

unauthorized contract is void unless ratified by the principal.

Indeed, the dissent alleges only that comment a to § 82 of the

Second Restatement “strongly implies that a contract entered by

an agent who lacks authority, prior to ratification, is void.” Id. at

32–33. There is also no use of the term “void” in the corresponding

text of the Restatement where these comments appear. At a

minimum, these comments do not bear the heavy weight the

dissent places on them.

The dissent also argues that under agency law “a principal

must take affirmative steps to ratify a contract formed by an agent

who lacked authority.” Id. at 35. The Third Restatement,

however, makes clear that ratification can also result from a

principal’s failure to act. Restatement (Third) of Agency, supra,

§ 4.01 cmt. f. Specifically, a principal with notice “may ratify an act

by failing to object to it or to repudiate it” or by delaying

“expressing an objection to an unauthorized act.” Id. In fact, the

principal need not even communicate the ratification to the agent

or the third party for it to be effective. Id. § 4.01 cmt. d. It is telling

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20-13735 Opinion of the Court 79

that the dissent fails to explain how ratification-by-silence is an

affirmative act that binds the principal.

In addition, even assuming for sake of argument that the

principal must affirmatively manifest assent to ratify a contract

entered by an agent, that contract still would be ratifiable and thus

voidable. The Restatements’ commentary does not support the

dissent’s contention that “a contract entered by an agent who lacks

authority, prior to ratification, is void, not voidable.” Dissenting

Op. at 32–33.

VII. CONCLUSION

We conclude that Landcastle’s lack-of-authority claims are

barred under D’Oench because they rely on evidence that was

outside Crescent’s records when the FDIC took over and sold the

Hardwick loan and CD collateral to Renasant.

We do not “invent” any new, much less “radical and

untenable,” rules of agency or contract law. Id. at 1, 37–38. Rather,

we also conclude that Hardwick’s acting outside the scope of his

authority did not render the security agreement void but, at most,

only voidable. As Langley teaches, a voidable interest is sufficient

to pass the CD security agreement to the FDIC and to trigger the

D’Oench shield. See 484 U.S. at 94, 108 S. Ct. at 402.

Accordingly, we reverse the district court’s order, dated June

8, 2020, and remand with instructions to enter final judgment in

favor of Renasant.

REVERSED AND REMANDED.

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20-13735 WILLIAM PRYOR, C.J., dissenting 1

WILLIAM PRYOR, Chief Judge, dissenting:

This appeal concerns whether the Federal Deposit Insurance

Corporation can steal assets from third parties when it takes over a

failed bank. Named after the Supreme Court decision in which it

was first recognized, D’Oench, Duhme & Co. v. Federal Deposit

Insurance Corp., 315 U.S. 447 (1942), the D’Oench doctrine bars

private parties from raising claims or defenses that rely on evidence

outside the failed bank’s records. But the doctrine applies only

when the claim or defense would “diminish or defeat” an “interest”

that the failed bank transferred to the Deposit Corporation. See 12

U.S.C. § 1823(e); see also Lindley v. Fed. Deposit Ins. Corp., 733

F.3d 1043, 1052–53 (11th Cir. 2013). Here, a private party argues

that its agent lacked the authority to enter into a purported agree-

ment on its behalf and that the principal was not bound, so the

failed bank obtained no “interest” in the purported agreement that

could have been transferred to the Deposit Corporation in the first

place. See 12 U.S.C. § 1823(e). In that context, the D’Oench doc-

trine is not implicated, so I would affirm the judgment of the dis-

trict court.

The majority erroneously determines, as a matter of federal

common law, that the D’Oench doctrine applies anyway. To reach

this conclusion, it relies on a radical and untenable interpretation

of agency law. According to the majority, an agent acting without

actual or apparent authority can nevertheless bind its purported

principal. The principal must then take affirmative steps if it wishes

to avoid the contract the unauthorized agent made. Because the

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2 WILLIAM PRYOR, C.J., dissenting 20-13735

majority’s decision relies on fundamental misunderstandings about

agency relationships and contract formation, creates serious Tak-

ings Clause concerns, and contradicts Supreme Court precedent, I

respectfully dissent.

I. BACKGROUND

The relevant facts in this appeal are largely undisputed. Na-

than Hardwick was a named partner at Morris Hardwick Schnei-

der, LLC, a law firm wholly owned by MHSLAW, P.C. MHSLAW

was the sole member of Morris Hardwick. Hardwick and the firm’s

other named attorneys, Arthur Morris and Randolph Schneider,

were managers of Morris Hardwick and owners of MHSLAW.

Hardwick owned 50% of MHSLAW, and Morris and Schneider

each owned 25%.

Morris Hardwick’s operating agreement and MHSLAW’s

bylaws governed how the respective companies’ assets could be

pledged. Morris Hardwick’s operating agreement prohibited any

manager from causing the company to guarantee the obligation of

a person “without the affirmative vote of the [m]embers holding a

[m]ajority [i]nterest.” (Emphasis omitted.) Because MHSLAW was

the sole member of Morris Hardwick, the operating agreement ef-

fectively required MHSLAW to vote to pledge Morris Hardwick’s

assets to guarantee a third party’s obligation. MHSLAW’s bylaws,

in turn, prohibited directors from pledging assets “without the af-

firmative vote of the majority of . . . the shareholders.” (Emphasis

omitted.) So, none of the named attorneys, including Hardwick,

could pledge any firm asset to guarantee a third party’s obligation

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20-13735 WILLIAM PRYOR, C.J., dissenting 3

unless Hardwick and at least one of the other named attorneys

voted to authorize the guarantee.

In 2009, Hardwick entered into several agreements with

Crescent Bank & Trust Company, some of which he signed in his

personal capacity and some of which he signed as a “managing

member” of Morris Hardwick. First, he used $631,276.71 to pur-

chase a certificate of time deposit from Crescent. The parties dis-

pute who owned the funds that Hardwick used to purchase the cer-

tificate, but both parties agree that Crescent issued the certificate

to Morris Hardwick. Hardwick then took out a personal loan from

Crescent for the same amount, $631,276.71. Next, to secure his per-

sonal loan with sufficient collateral to satisfy Crescent, Hardwick—

purporting to act as “managing member” of Morris Hardwick even

though he was not a member—pledged the certificate to Crescent.

Hardwick executed four separate documents. He executed

a commercial security agreement, which listed the certificate as his

personal property and as collateral on the personal loan. He also

executed several documents as a “managing member” of Morris

Hardwick: a corporate resolution, an assignment of the certificate

to Crescent, and a hypothecation agreement. Robert Driskell, Mor-

ris Hardwick’s Chief Financial Officer, also signed the corporate

resolution as an “authorized signer” for the certificate-of-deposit

account. Neither party disputes that no shareholder vote author-

ized Hardwick to execute these documents, and there is no evi-

dence that Morris or Schneider knew about these particular trans-

actions.

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4 WILLIAM PRYOR, C.J., dissenting 20-13735

The corporate resolution “grant[ed] . . . [d]eposit authority

by the governing body of the business entity to specified individu-

als.” The document is formatted as a checklist of possible authori-

zations. The resolution specifies that the “[w]ords or phrases pre-

ceded by a [box] are applicable only if the [box] is marked.” No

boxes on the document wer

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