Opposition Brief — Chamness v. Federal Deposit Insurance

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IN THE | OFFOE OF Tus ened

SUPREME COURT OF THE UNITED STAPRS a !

October Term, 1993

No. 93-1573

RONALD E. CHAMNESS AND RHEA ANN CHAMNESS.

Petitioners,

V.

FEDERAL DEPOSIT INSURANCE CORPORATION,

AS RECEIVER FOR MBANK DALLAS, N.A., DEPOSI

INSURANCE BRIDGE BANK, N.A., OREGON, INC..

WILLIAM R. TRIONE, AND ALINDA HILL WIKERT,

Re spondents

Petition For Writ Of Certiorari To The

United States Court of Appeals For The

Fifth Circuit And Request For Summary Reversal

RESPONDENT ALINDA HILL WIKERT’S BRIEF

IN OPPOSITION

G. Roland Love *

State Bar No. 12591700

David J. Metzler

State Bar No. 13982550

McCAULEY, MACDONALD, LOVE

& DEVIN, P.C.

3800 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270-2014

(214) 744-3300

(214) 747-0942 (Facsimile)

ATTORNEYS FOR RESPONDENT WIKERT

* Counsel of Record

No. 93-1573

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1993

RONALD E. CHAMNESS AND RHEA ANN CHAMNESS,

Petitioners,

V.

FEDERAL DEPOSIT INSURANCE CORPORATION,

AS RECEIVER FOR MBANK DALLAS, N.A., DEPOSIT

INSURANCE BRIDGE BANK, N.A., OREGON, INC.,

WILLIAM R. TRIONE, AND ALINDA HILL WIKERT,

Respondents.

Petition For Writ Of Certiorari To The

United States Court of Appeals For The

Fifth Circuit And Request For Summary Reversal

RESPONDENT ALINDA HILL WIKERT’S BRIEF

IN OPPOSITION

G. Roland Love *

State Bar No. 12591700

David J. Metzler

State Bar No. 13982550

MecCAULEY, MACDONALD, LOVE

& DEVIN, P.C.

3800 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270-2014

(214) 744-3300

(214) 747-0942 (Facsimile)

ATTORNEYS FOR RESPONDENT WIKERT

* Counsel of Record

— F

TABLE OF CONTENTS

FARR IE FAN CORED cinsaininssincsnentvnineniniasstaiaadiagaibtecanies ii

SERPENTS SAR” BIND Ge cere ensecesvensensseunscincevsipenenanatubobeioen l

Se. RIGGS SAP PRRURPRPIIETE vrcccosessvenevecebinnssviuemnesbincaanssonn 2

hs DA IPTE: setsdisitncshshatinsinivtiiedatansoubessnmecaiatadnDiauiddaalaabaiannadias 2

A. Petitioner’s Arguments Lack Focus ............cccccccceeeceseeeees 2

B. The Standards of the Circuit Courts are Certain

NG IEE ssscsscsinissnecceervacesenninnissetinticsibldsemektadiianiinins 4

1. Fifth Circuit Affirmed the Summary Judgment

ee Ce CE aes tencisctecntornssuteinnnintdscenintrintnteson 4

2. Standards of Circuit Courts of Appeal are

CRONE BEE CII eccenesecssstcpnsenistncsiniodnecissssassesene 5

3. Chamness’ Authority is Neither Determinative

ROE SI ckiccasecicnessectnsndcintonettaithiamecrssseniciiin 7

4. Chamness Had Full and Fair Opportunity

Oa II siccsncisacocsnnsntaivetscotenkigedouiaaaessidasadsnaenaneendeues 9

&. Fountain 1s Inapplicablle .........00.ccsesccssrercsssoscsssneees 9

b. Chamness Failed to Use Opportunity ................... 9

C. Judgment in Favor of Wikert Does Not Deny

Ie INES OP SN sisi sitsncscnnstnrcencensctasehitoncenicanesies 12

APPENDIX A

District Court Order of April 29, 1993 woo... cccccccccceeeceeeees la

APPENDIX B

Brief of Ronald E. and Rhea Ann Chamness to the

Fifth Circuit Court of Appeal .......cccsscrsrssssssssevesesersesesceseseeee lb

i

CASES

Alfaro Motors Company, Inc. v. Ward,

enn I, | UIT ....-.« csseopevesvereeeusesoveessesoneceorseess 6

Arlingt Ri

nT EEL, TIED nescnbecetunsocereesoersosesvcsenscevessoroteocorevesonee 7

Bath v. National / rae | llegiate Athletics,

we Ba Eh, | 6

ee... :

- oo one ers ;

ee eens eetee att

Dandrid Williams.

397 U.S. 471, 475 fn. 6, 90S. Ct 1153, 25 L. Ed 2d 491 (1970) .. 6, 12

751 F.2d 1548, 1558 (11th Cir. 1985) cert. denied 474 U.S. 1004,

CN , - ) 6

Eversley v. MBank Dallas,

Si ATLL, [UID «<0, .ccecsnssusesssesececeusseetsnotoonsessseees 11

E.D.LC, v. Laguarta,

EE | ene 7

eo

TABLE OF AUTHORITIES

Fidelity F; ‘al C Federal H I Bank.

792 F.2d 1432, 1437 (9th Cir. 1986) cert. denied 479 U.S. 1064,

107 S. Ct. 949, 93 L. Ed. 2d. 998 (1987) .0.........ccccc.cccccccccccssceseeeeees 6

336 U.S. 681, 69 S.Ct. 754, 93 L.Ed. 971 (1949) 000. 3,9

Hanks v. T ; inn Riatident en

eS ae 6

Hooks v. Hooks,

recy yl RL Le eee 6

In Re Howard,

65 B.R. 498, 503 (Bankr. W.D. Tex. 1986 ....ccccccccccccecceceeeeees 10, 11

In Re Niland,

825 F.2d, 801, 808 (Sth Cir. 1987) .......cccccccccccceccesceceeseeseeceeeeees 5,11

Jaffke v. Dunham,

352 U.S. 280, 281, 77 S. Ct. 301, 1 L. Ed. 2d 314 (1957) ....... 6, 12

Johnson vy, Orr,

776 F.2d 75, 83 (3rd Cir. 1985)... OE AAT Te 6

Keith v. Aldrid

900 F.2d 736, 739 (4th Cir. 1990) cert. denied 498 U.S. 900, 111 S.

oe By OM RR RR an eee oes ee 6

Lane v. Peterson,

899 F.2d 737, 742 (8th Cir. 1990) cert. denied 498 U.S. 823, 111 S.

A i I SE 6

Langnes v. Green,

282 U.S. 531, 536-37, 51 S. Ct. 243, 75 L. Ed. 520 (1931)....... 2,6

ili

TABLE OF AUTHORITIES

Patterson v. FDIC,

918 F.2d S40, 547 (Sth Cir. 1990) ...........csccsccsscssrsessvescceeees 5, 10, 11

a ! Wein!

yo ys ff dl Ean one nnnre eR 8, 12

Sally Beauty v. Nexxus Products Company, Inc.,

Ge Se, a, IT UU GEES UII ccctecinctcecestessevscvcemseccnceccstbecesees 6

867 F.2d 240 (Sth Cir. 1989), cert. denied, 110 S.Ct. 63 (1989) .... 4

STATUTES

BD UB. GEIS) ecccccenscocsosssrovsntncvcesorenssnnsctovscssseseseseees 1,4, 10, 11

L_ STATEMENT OF THE CASE

This appeal was brought by Ronald Chamness and Wife, Rhea

Ann Chamness (“Chamness”), complaining of dismissal of their suit

against the Federal Deposit Insurance Corp. as receiver for, MBank

Dallas, N.A. (“FDIC”), Deposit Insurance Bridge Bank, N.A., Or-

egon, Inc., William Trione, and Alinda Hill Wikert (“Wikert”). The

District Court granted FDIC’s Motion for Summary Judgment hold-

ing that Chamness was barred from asserting a homestead claim in

seeking to invalidate a lien held by the FDIC under the doctrine set

out in D’Oench, Duhme & Co. v, Fed. Deposit Ins. Corp., 315 U.S

447, 62 S. Ct. 676, 86 L. Ed. 956 (1942) and 12 U.S.C. $1823(e).

Despite repeated extensions of time, Chamness failed to provide any

response to the FDIC’s Motion for Summary Judgment; therefore,

the District Court accepted as true all of the factual allegations con-

tained in the Motion and entered a Memorandum Opinion and Order

granting summary judgment.’ The District Court also dismissed

Chamness’ claims pursuant to pending Motions for Sanctions filed

by FDIC and Wikert seeking relief under Federal Rules of Civil Pro-

cedure 16(f) and 37 for Chamness’ failure to file a Joint Pre-trial

Order and for discovery abuse. In April of 1993, the Court entered

its Final Order of Summary Judgment and Sanctions.

The Fifth Circuit reviewed the granting of summary judgment

de novo and, in the absence of any response by Chamness, accepted

all facts alleged by the moving party as true. After a review of the

record, the Fifth Circuit determined that an alternative legal ground

for affirming the District Court’s decision was supported by the

record. The Fifth Circuit concluded that because Texas law barred

Chamness’ claim, the question of whether Chamness was also barred

by D’Oench, Duhme and/or §1823, or whether the District Court

was correct in dismissing Chamness’ claim as a sanction for discov-

ery abuse and/or non-compliance with court orders, was not reached.

' Although no summary judgment motion was filed on behalf of Wikert, the grant of

a summary judgment in favor of FDIC constitutes a ruling on Chamness’ claim as to

title to the property in favor of Wikert. Wikert purchased the property pursuant to a

contract with Chamness and an agreed foreclosure sale conducted by Oregon, Inc.,

an agent of MBank Dallas (now FDIC). Oregon, Inc., foreclosed on the lien which

was being challenged by Chamness in the District Court

IL. SUMMARY OF ARGUMENT

Despite allegations of sua sponte acts by both the trial and the

appellate courts, Chamness claims error for the reason that inconsis-

tency exists between the various circuit courts of appeal in deter-

mining when a trial court judgment can be affirmed on legal grounds

other than those relied upon by the trial court, Quite to the contrary,

the circuit courts of appeal are consistent in applying this principle,

a principle recognized by this Court as early as 1931 in the case of

Langnes v. Green, 282 U.S. 531, 536-37, 51 S. Ct. 243, 75 L. Ed.

520 (1931) (the Court is “not limited to a consideration of the points

raised by the [appellant], but ‘must enter the judgment which should

have been entered by the court below on the record before it’”’). The

authority cited by Chamness is simply not applicable.

Significantly, the evidence which Chamness claims he would

have provided the trial court had he known an alternative legal theory

would be relied upon is exactly the same evidence he should have

provided in response to the motion for summary judgment in the

trial court. Absent controverting evidence, the Fifth Circuit properly

affirmed the summary judgment.

Chamness’ claim that he was denied due process because the

Fifth Circuit affirmed the summary judgment in favor of Wikert,

when Wikert did not have a motion for summary judgment on file,

fails to recognize the legal relationship between the two parties.

Wikert is merely a subsequent purchaser of the property in question

whose chain of title includes a foreclosure on the complained of

lien. Wikert has committed no act giving rise to an independent claim,

rather Chamness’ claim against Wikert is dependent upon his ability

to assert Texas homestead protections. The Fifth Circuit’s conclu-

sion that Chamness has “absolutely” no homestead claim is there-

fore a determination of Chamness’ claim against Wikert.

Il. ARGUMENT

A. Petitioner’s Arguments Lack Focus

At first glance, it is not clear what action of the lower courts

Chamness claims to be in error. Under “Question Presented,”

Chamness questions whether a trial court or a court of appeals has

2

the ability to grant or affirm a summary judgment sua sponte or on

grounds not resented in the motion. Id, However, by Chamness’

own account of the case, the trial court judgment was granted on

proper motion and on a ground properly pled. Id. at p. 2. Therefore,

logically, the actions of the trial court cannot be, and are not being,

challenged.

As to sua sponte actions, Chamness implies that the Fifth Cir-

cuit acted “on its own will or motion... without prompting or sug-

gestion.” Black's Law Dictionary, p. 1277 (Sth Ed. 1979). But

Chamness readily admits the Fifth Circuit was reviewing the grant

of a summary judgment by the District Court, and affirmed on an

alternative legal theory. Id, As such, the Fifth Circuit did not grant

summary judgment, sua sponte or otherwise, therefore those cases

cited by Chamness (for example, the Fountain case, which is distin-

guished at length below) discussing sua sponte acts of the appellate

court are inapplicable.

The subsequent summary of arguments contained on pages 3

and I1 of the petition appears to clarify the issue somewhat. Here

Chamness challenges a court of appeals’ ability to affirm summary

judgment on grounds other than those relied upon by the trial court

by asserting (1) there is a lack of certainty between the appellate

courts as to when the judgment can be affirmed on alternative

grounds; and (2) the practice violates due process. Chamness then

gets disoriented in his own lack of clarity by re-urging the sua

sponte reference (pp. 7, 8, 10) and again questioning the powers of

the trial court (pp. 8, 10). Chamness also challenges a grant of a

summary judgment in favor of Respondent Wikert when no such

action has been taken. Petition, p. 7-8. Rather Chamness again con-

fuses the issues by failing to recognize that the only reason Wikert

is involved in this suit is that she purchased the property in ques-

tion with a chain of title that includes a foreclosure on the alleg-

edly invalid lien. Therefore, a finding by the Fifth Circuit (and the

District Court) that Chamness “has no legitimate homestead claim”

is a determination on the entirety of Chamness claims and is nec-

essarily a finding in favor of Wikert. Petitioner’s Appendix A, p. 7.

See also Respondent’s Appendix A, p. 4a. In other words, if

Chamness has no claim of title to the property, he has no claim

against those who subsequently hold title.

3

In the end, the only argument which remains is under what con-

ditions can a court of appeals render summary judgment on legal

grounds not relied upon by the trial court. After peeling away the

inconsistencies in his Petition, Chamness argues simply that the vari-

ous courts of appeal are not consistent in applying the standards used

for affirming summary judgments on an alternative legal basis and

that the practice is in violation of due process. It is these arguments

which are before the Court and which are addressed by this response.

B. The Standards of the Circuit Courts are Certain and Consistent.

1. Fifth Circuit Affirmed the Summary Judgment on Other

Grounds.

In its Memorandum Opinion and Order of August 24, 1990, the

District Court determined that Chamness was barred by D’Oench,

Duhme and §1823(e) from asserting that the property in question

was his homestead. Chamness had asserted in his Complaint that the

property encumbered by the FDIC’s lien was protected by the Texas

homestead laws but offered no summary judgment evidence that the

property was his homestead. On the other hand, the FDIC provided

the Non-Homestead Affidavits of Chamness which stated that the

property in question was not homestead. As a result, the District

Court found that the representations made in the Non-Homestead

Affidavits operated as a bar to his claim of homestead under Templin

yv. Weisgram, 867 F.2d 240 (Sth Cir. 1989), cert. denied, 110 S.Ct. 63

(1989); D’Oench, Duhme & Co. v, FDIC, 315 U.S. 447 (1942); and

12 U.S.C. §1823(e). Petitioner’s Appendix D, p. 9. More specifi-

cally. the District Court held the “federal protections of the FDIC

override the homestead protection generally afforded by the Texas

constitution.” Id. Chamness’ case was also dismissed as a sanction

for failure to participate in the filing of a Joint Pretrial Order and

other discovery abuse. Petitioner’s Appendix D, p. 9.

On appeal, the Fifth Circuit did not consider FDIC protections

afforded by D’Oench, Duhme or §1823(e) nor the dismissal of

Chamness’ claims as a sanction. Instead, as pointed out in the Dis-

trict Court’s Order of April 29, 1993 (included as Appendix A), and

Respondent Wikert’s brief to the Fifth Circuit, the Fifth Circuit rec-

ognized that the uncontroverted summary judgment evidence estab-

lished that under Texas law Chamness was estopped to assert home-

4

stead protections. More specifically, based upon the evidence be-

fore the District Court, it was uncontradicted that: (1) Mr. Chamness

executed affidavits which disclaimed any homestead interest he may

have had in the property; and (2) Mr. Chamness did not occupy the

property in question at the time he executed the Non-Homestead

Affidavits. Under Texas law, a homestead claimant is estopped to

assert homestead rights in property if the claimant made a sworn

declaration to the contrary and there was no actual use or possession

of the property at the time of the sworn declarations. in re Niland,

825 F.2d 801, 808 (Sth Cir. 1987); Patterson v. FDIC, 918 F.2d 540,

547 (Sth Cir. 1990). In other words, when an owner of real estate is

not occupying the property, while representing that the property is

not homestead, the owner is estopped to later assert the homestead

protections. Patterson, 918 F.2d at 547.

In upholding the District Court’s ruling, the Fifth Circuit deter-

mined that it had the ability to affirm summary judgment on “grounds

other than those stated by the district court.” Petitioner’s Appendix

A, p. 6. In support of this conclusion, which Chamness finds to be in

error, the Fifth Circuit cited the case of Bernhardt v. Richardson-

Merrell, Inc., 892 F.2d 440, 444 (Sth Cir. 1990). Recognizing the

futility of challenging the right of a circuit court of appeals to apply

the Alternative Basis Principal,’ Chamness instead attempts to manu-

facture conflict between the various courts of appeal by claiming a

“split of authority and [a] lack of clarity.” Chamness’ conclusions

are misplaced.

2. Standards of Circuit Courts of Appeal are Certain and

Consistent.

Before clearing up the alleged inconsistencies between the cir-

cuit courts created by Chamness’ misinterpretation of authority, a

review of an illustrative case from each circuit court is helpful. The

opening comments of Chamness’ Petition refer this Court to various

opinions which reveal unwavering consistency in acknowledging

the following rule:

? For brevity, the appellate principal which allows a reviewing court to affirm summary

judgment on an alternative legal basis supported by the record shall be referred to

herein as the “Alternative Basis Principle.”

5

——— ee

—— ee ee

A court of appeals is free to affirm a district court’s

decision on any ground supported by the record, even

if the issue is not pleaded, tried or otherwise referred

to in the proceedings below.

See Chamberlin v. 101 Realty, Inc., 915 F.2d 777, 783 n.8 (Ist Cir.

1990); Alfaro Motors Company, Inc. v. Ward, 814 F.2d 883, 887

(2nd Cir. 1987); Johnson v. Orr, 776 F.2d 75, 83 (3rd Cir. 1985);

Keith v. Aldridge, 900 F.2d 736, 739 (4th Cir. 1990) cert. denied 498

U.S. 900, 111 S. Ct. 257, 112 L. Ed. 2d 215 (1990); Bernhardt v.

Richardson-Merrell, Inc., 892 F.2d 440, 444 (Sth Cir. 1990); Hooks

v. Hooks, 771 F.2d 935, 945 (6th Cir. 1985); Sally Beauty v, Nexxus

Products Company, Inc., 801 F.2d. 1001, 1005 (7th Cir. 1986); Lane

v. Peterson, 899 F.2d 737, 742 (8th Cir. 1990) cert. denied 498 U.S.

823, M1 S. Ct. 74, 112 L. Ed. 2d 48 (1990); Fidelity Financial Cor-

, 792 F.2d 1432, 1437 (9th Cir.

1986) cert. denied 479 U.S. 1064, 107 S. Ct. 949, 93 L. Ed. 2d. 998

(1987); Bath v. National Association of Intercollegiate Athletics, 843

F.2d 1315, 1317 (10th Cir. 1988); Estate of Whitt v. C.LR., 751 F.2d

1548, 1558 (11th Cir. 1985) cert. denied 474 U.S. 1004, 106 S. Ct.

523, 88 L. Ed. 2d. 456 (1985). Chamness attempts to portray the

decisions of Keith and Bernhardt as not requiring the alternative

grounds to be supported by the record before the district court; how-

ever, a closer examination reveals that these cases also contain this

requirement. Keith, 900 F.2d at 739; Bernhardt, 892 F.2d at 444.

This very Court has also applied the principal relied upon by the

Fifth Circuit in cases where the record of the lower court is reviewed

de novo, noting the Court is “not limited to a consideration of the

points raised by the [appellant], but ‘must enter the judgment which

a have been entered by the court below on the record before

’” See Langnes v. Green, 282 U.S. 531, 536-37, 51 S. Ct. 243, 75

L Ed. 520 (1931). The Fifth Circuit’s review of the summary judg-

ment was a de novo review of the record. Hanks v. Transcontinental

Gas Pipe Line Corp., 953 F.2d 996, 997 (Sth Cir. 1992). This Court

has also ruled similarly in Jaffke v. Dunham, 352 U.S. 280, 281, 77

S. Ct. 301, 1 L. Ed. 2d 314 (1957) (“A successful party in District

Court may sustain its judgment on any ground that finds support in

the record.”) and Dandridge v. Williams, 397 U.S. 471, 475 fn. 6, 90

6

S. Ct 1153, 25 L. Ed 2d 491 (1970) (“The prevailing party may, of

course, assert in a reviewing court any ground in support of his judg-

ment, whether or not the ground was relied upon or even considered

by the trial court”).

3.Chamness’ Authority is Neither Determinative nor Controlling.

The main thrust of Chamness’ Petition is that the Fifth Circuit

improperly affirmed a summary judgment on factual and legal theo-

ries not before the District Court, thereby depriving Chamness of

any opportunity for rebuttal. Despite overwhelming authority from

all of the Circuit Courts of Appeal and the United States Supreme

Court to the contrary, Chamness attempts to create inconsistency in

the “standards” used by the various appellate courts for utilizing this

procedural tool. However, Chamness has failed to carefully review

the authority he cites, authority which does not support his position.

i Chamness primarily relies upon four cases. The first case, a Fifth

Circuit opinion, recognizes the Alternative Basis Principle, but de-

clines to apply it where a new defense was raised for the first time in

a supplemental brief filed the day before oral argument. F.D.LC. v.

Laguarta, 939 F.2d 1231, 1240 (Sth. 1991). The Court determined

that it would not be proper under those circumstances to affirm on

the newly injected theory. Id. In a footnote, however, the Court stated:

We do not suggest that if the issues were implicit

or included in those raised below or the evidence

in support thereof, or if the record appears to be

adequately developed in respect thereto, that affir-

mance may not rest thereon. However, this is not

the case here.

Id. at 1240 n.20.

The second case cited by Chamness, Arlinghaus v. Ritenour, 622

F.2d 629 (2nd Cir. 1980), is similar to Laguarta. The Second Circuit

first recognized its ability to affirm the ruling of the lower court on

summary judgment on “any argument which is supported by the

record” if: (1) the issue was adequately presented below; (2) the

parties had a full opportunity to develop the relevant facts; and (3)

7

the appellate court had the benefit of thorough briefing. Id. at 683.

The Second Circuit then affirmed the summary judgment on grounds

raised for the first time at oral argument, reasoning the issue was

discussed in post-trial briefs, the issue was explored in discovery

and supplemental briefs had been requested. Id. at 639.

In Charbonnages De France v. Smith, 597 F.2d 406 (4th Cir.

1979), the Fourth Circuit held an appellate court is “not bound on

review to consider only those specific grounds upon which the dis-

trict court based its grant of summary judgment, but could affirm if

[it] perceived alternative grounds.” Id. at 416. The Fourth Circuit

however, declined to affirm on alternative grounds, reasoning “sum-

mary judgment was not warranted on any alternative basis” sup-

ported by the record. Id.

Finally, Chamness cites Ramirez de Arellano v. Weinberger, 745

F.2d 1500 (D.C. Cir. 1984) which, upon close examination, does not

even speak to the issue at hand. In Ramirez, the Court rejected a

dissent by the minority (which, incidentally, included Justice Scalia)

attempting to convert a district court’s order granting of a Rule

12(b)(6) Motion to Dismiss into a summary judgment. Id. at 1536.

The D.C. Circuit rejected the dissent’s argument that Rule 12(b)

permitted a motion to dismiss to be converted to a summary judg-

ment because the rule was intended to apply to the trial court, not

the appellate court. Id. at 1537. The D.C. Circuit did recognize, how-

ever, that if the trial court record and pleadings “squarely raised” the

alternative issue such that the relevant facts had been explored, af-

firming the trial court’s dismissal on an alternative theory in a sua

sponte motion for summary judgment would be appropriate. Id.

Chamness argues that these cases demonstrate inconsistency be-

tween the appellate courts “concerning when a Court may sua

sponte... affirm [summary judgment] on grounds not raised in the

motion.” Petition, p. 7. However, the authorities cited by Chamness

do not provide this Court with any basis for determining that there is

a “split of authority” or a “lack of certainty” as to the standards which

must be applied when a court of appeals utilizes the Alternative Ba-

sis Principal. By contrast, each of these cases recognize the standard

which is clearly enunciated in the very opinions Chamness refer-

ences. Additionally, none of these cases are factually similar to the

case at hand. The Texas law relied upon was raised in the Response

8

to Chamness’ Motion to Reconsider in the District Court, noted in

the Order accompanying the Final Judgment of the District Court,

and briefed for the Fifth Circuit. Therefore, any exception allegedly

created by the authority cited by Chamness is clearly not applicable.

4. Chamness Had Full Opportunity to Respond.

a. Fountain is Inapplicable.

Apparently acknowledging the lack of authority, Chamness then

completely abandons his “inconsistency” argument and reasons that

it is simply “improper for a court of appeals to grant summary judg-

ment in the absence of a fair opportunity for a non-movant to set forth

grounds for denying the motion for summary judgment.” Petition, p.

7 citing Fountain v. Filson, 336 U.S. 681, 69 S.Ct. 754, 93 L.Ed. 971

(1949). This is not the issue before the court today; nonetheless the

comment does raise some interesting points in the history of the case.

But before addressing whether Chamness had a “fair opportunity” to

present opposing evidence, it should be pointed out how the Fountain

case is clearly distinguishable from the present facts.

Fountain involved a grant of summary judgment by an appellate

court in favor of a non-moving plaintiff on a claim which had not

been advanced by the plaintiff. Fountain, 336 U.S. at 682. The ap-

pellate court reasoned that a request for “other relief” in the petition

was a sufficient request for summary judgment. Id. The Supreme

Court held that this amounted to a denial of opportunity for the de-

fendant to dispute the facts relied upon by the court of appeals as no

motion had been filed by the plaintiff; therefore the defendant had

no reason to bring any disputing facts before the Court. Id. at 683.

Quite to the contrary, in the present case, the Fifth Circuit affirmed a

ruling of District Court in favor of the moving party. Additionally,

as set forth in more detail below, Chamness had a full and fair

opportunity to present facts which disputed the summary judg-

ment evidence relied upon by the Fifth Circuit, but chose not to

file any response despite numerous extensions. For these reasons,

the Fountain case is simply not on point.

b. Chamness Failed to Use Opportunity

Recognizing he had an opportunity to oppose the Motion for Sum-

mary Judgment, Chamness asserts he did not file a response to the FDIC’s

9

Motion for Summary Judgment because he did not dispute the summary

judgment evidence; namely (1) that he made a representation, and (2) that

the original lender had been placed in receivership. Petition, p. 9. Appar-

ently because the words “estoppel to claim homestead” did not appear in

the motion, Chamness determined there was no need for a response to

the summary judgment. Chamness even goes so far as to call filing a

response a “fool’s errand”. Id, This comment demonstrates Chamness’

cavalier attitude toward his entire case while in the trial court, an attitude

which resulted in a dismissal as a sanction for failure to comply with

numerous court orders. Interestingly though, the response which Chamness

claims he would have filed had he been made aware of these “unknown”

legal theories, is factually the same response he should have filed.

In Chamness’ Appellants’ Brief to the Fifth Circuit (attached as

Appendix B), Chamness challenged the District Court’s bar of Chamness’

homestead claim, primarily relying upon the case of Patterson v. FDIC,

918 F.2d 540 (Sth Cir. 1990), wherein the Fifth Circuit rejected the FDIC’s

attempt to utilize 12 U.S.C. §1823(e) as a bar toa plaintiff’s homestead

claims. Appendix B, p. 18b. Chamness correctly argued that Patterson

holds that a homestead right “exists independent of any agreement of

the parties.” Appendix B, p. 11 (citing Patterson and In Re Howard, 65

B.R. 498, 503 (Bankr. W.D. Tex. 1986)). Relying upon this authority,

Chamness concluded:

Claims and defenses based on facts and circum-

stances existing at the time an instrument was ex-

ecuted in favor of a failed bank are not barred by

FDIC superpowers.

Appendix B, p. 18b (emphasis added). Chamness then argued:

[T]he Chamness family homestead existed because

of the Family’s actual possession, use, and occupancy

of it, not because of any agreement not reflected in

MBank’s official files... The homestead claim arose

because of facts, it was not based on understand-

ings, schemes, representations or agreements.

Appendix B, p. 19b.

10

By Chamness’ own acknowledgement, and under the authority

of Patterson and Howard, to defeat the motion for summary judg-

ment by asserting the protections of D’Oench, Duhme and/or 12

U.S.C. §1823(e), it is necessary to produce evidence of actual use

and/or possession of the property. In other words, to defeat the

D’Oench, Duhme theory, Chamness needed evidence that his home-

stead rights were derived from “actual possession, use, and occu-

pancy,”’ i.e., that his claim was not based upon a “secret side agree-

ment.” See Patterson; Howard. However, Chamness failed to pro-

vide this or any evidence, and the Fifth Circuit properly accepted

the facts contained in the motion for summary judgment as true.

Eversley v. MBank Dallas, 843 F.2d 172, 174 (Sth Cir. 1980). As a

result, the uncontroverted summary judgment evidence was that

Chamness’ did not use, possess or occupy the property as his home-

stead. Petitioner’s Appendix A

By the same token, the estoppel argument on which the Fifth Cir-

cuit based its decision is applicable in circumstances where the bor-

rower has made non-homestead declarations at a time they were not

in actual use and possession of the property. In Re Niland, 825 F.2d,

801, 808 (Sth Cir. 1987); Patterson, 918 F.2d at 547. Therefore, whether

Chamness was opposing a summary judgment based upon the protec-

tions afforded under federal law (D’Oench, Duhme and/or §1823(e))

or the protections afforded by Texas law (estoppel to claim home-

stead), the evidence brought before the District Court would have been

the same: evidence showing that at the time the Non-Homestead Affi-

davits were executed, Chamness was in actual use and possession of

the property. Only with such evidence could Chamness establish a

homestead claim that was not based upon “an agreement, scheme, or

bank representation.” See Patterson, 918 F.2d at 545.

Finally, and most importantly, Chamness continues to ignore his

total failure to respond to the pending motion for summary judg-

ment. Rather, Chamness prefers to characterize himself as a naive

plaintiff who was blindsided by the procedural machinations of the

federal court system. Nothing could be further from the truth. As

noted by the Fifth Circuit, Chamness was granted “repeated exten-

sions of time” for filing a response to the motion for summary judg-

ment, but failed to do so. Petitioner’s Appendix A, p. 6. Such failure

to respond was not due to any act of the District Court, any Defen-

1]

en

dant, nor any outside forces. The failure to take advantage of this

“opportunity to respond” lays squarely on the shoulders of Chamness.

In conclusion, the Fifth Circuit’s affirmation of the District

Court’s summary judgment is consistent with the practices of every

Circuit Court of Appeals and the Supreme Court. Additionally

Chamness had a full and fair opportunity to create fact issues in

response to the summary judgment, but elected not to do so. As a

result, this Court can take no action other than the denial of this

Petition for Writ of Certiorari.

C. Judgment in Favor of Wikert Does Not Deny Due Process to

Chamness

In his second argument to this Court, Chamness claims he has

been denied due process by the Fifth Circuit’s sua sponte summary

judgment in favor of Respondent Wikert. Chamness argues that be-

cause Wikert did not have a motion for summary judgment pending

in the trial court at the time the case was dismissed, the Fifth Circuit

has improperly granted summary judgment for Wikert. Once again

Chamness is off the mark.

The ruling of the Fifth Circuit clearly determines that Chamness

has “absolutely” no homestead interest. Petitioner's Appendix, p. 7.

As explained above, Chamness’ claim against Wikert is based solely

upon the fact that she purchased the property in connection with the

foreclosure of the complained of lien. Wikert has not committed, nor

has Chamness complained of, any independent acts which warrant

any other claim. As such, when the Fifth Circuit affirmed the sum-

mary judgment reasoning that no homestead claim existed, it neces-

sarily made a ruling which determined the fate of Chamness’ claim,

even absent Wikert’s own Motion for Summary Judgment. Therefore,

the dismissal of the claim against Wikert was proper. See Ramirez de

Arellano vy. Weinberger, 745 F.2d 1500, 1537 (D.C. Cir. 1984). See

also Jaffke v. Dunham, 352 U.S. 280, 281, 77 S. Ct. 301, 1 L. Ed. 2d

314 (1957) (“A successful party in District Court may sustain its judg-

ment on any ground that finds suppert in the record”) and Dandridge

y. Williams, 397 U.S. 471, 475 fn. 6, 90S. Ct 1153, 25 L. Ed 2d 491

(1970) (“The prevailing party may, of course, assert in a reviewing,

court any ground in support of his judgment, whether or not the ground

was relied upon or even considered by the trial court”).

\ 12

Chamness contentions that the grant of summary judgment vio-

lates his due process necessarily implies that he would have pre-

pared a substantially different response (or at least a response) to the

pending summary judgment if Wikert had also made such a motion.

However, Chamness completely fails to show how he has been preju-

diced, and instead implies that attorneys would violate their ethical

duties of fair advocacy and risk malpractice in hopes of “sneaking

one” by an opposing party. The cold, hard reality is simply that

Chamness completely failed to provide any summary judgment evi-

dence, not that Chamness’ best efforts were crushed by an unyield-

ing judicial system. Chamness arguments ring hollow in their cry of

denial of due process.

WHEREFORE, PREMISES CONSIDERED, Appellee Alinda

Hill Wikert requests that this Court deny the Petition for Writ of

Certiorari and grant such other and further relief to which Appellee

Wikert may show herself justly entitled.

Respectfully submitted,

By: G. Roland Love

State Bar No. 12591700

David J. Metzler

State Bar No. 13982550

McCAULEY, MACDONALD,

LOVE & DEVIN, P.C.

3800 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270-2014

(214) 744-3300

(214) 747-0942 (Facsimile)

ATTORNEYS FOR

RESPONDENT

ALINDA HILL WIKERT

13

- Appendix A -

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

RONALD E. CHAMNESS,

RHEA ANN CHAMNESS,

LISA C. CHAMNESS,

RONALD E. CHAMNESS, JR.

AND HOLLY A. CHAMNESS,

Plaintiffs,

CIVIL ACTION NO.

V.

3:89-CV-1117-P

FEDERAL DEPOSIT INSUR-

ANCE CORPORATION AS

RECEIVER FOR M-BANK

DALLAS, N.A., DEPOSIT

INSURANCE BRIDGE

BANK, N.A. OREGON, INC.,

WILLIAM R. TRIONE, AND

ALINDA HILL WIKERT,

Defendants.

ORDER

On August 24, 1990, Judge Robert Porter signed a Memoran-

dum Opinion and Order in which he ruled on the motions for sum-

mary judgment of Defendants Federal Deposit Insurance Corpora-

tion (FDIC), Deposit Insurance Bridge Bank, N.A., Oregon, Inc.,

and William R. Trione and motions for sanctions of these defen-

dants and defendant Alinda Hill Wikert. Judge Porter held that the

D’Oench-Duhme doctrine precluded the claim of homestead asserted

| la

—————

a aiacaaainaacaaamaaaa diame eimai

by Plaintiffs in this case and granted summary judgment for all de-

fendants except Alinda Hill Wikert. Judge Porter also granted all of

the defendants’ motions for sanctions and ordered that all of Plain-

tiffs’ claims be dismissed with prejudice against all defendants. Judg-

ment was not entered pending the judge’s ruling on the issue of at-

torneys fees on which the parties were to submit affidavits. At the

time of entry of the Memorandum Opinion and Order, judgment

would have been partial because one of the defendants had a coun-

terclaim pending against plaintiff Ronald E. Chamness. That coun-

terclaim has apparently now been discharged in bankruptcy. (see

motion of Ronald E. and Rhea Ann Chamness to Dismiss their claims

against Defendants William Trione and Oregon, Inc).

On July 23, 1991, and prior to Judge Porter’s ruling on attorneys

fees, plaintiffs Ronald E. and Rhea Ann Chamness filed for bank-

ruptcy. The bankruptcy stay was lifted on June 8, 1992. Subsequent

to the lifting of the bankruptcy stay, plaintiffs Ronald and Rhea Ann

Chamness filed a Motion to Reconsider and Vacate Judge Porter’s

Memorandum Opinion and Order of August 24, 1990 and a motion

to dismiss their claims against defendants FDIC, Oregon, Inc. and

William Trione. Plaintiffs ronald E. Chamness, Jr., Holly A.

Chamness, and Lisa C. Chamness filed motions to dismiss all of

their claims as to all defendants. In response, the defendants filed

motions opposing the motion to reconsider, opposing the dismissal

of any of the plaintiffs’ claims without prejudice, and motions to

strike and objecting to late filed discovery responses of plaintiffs.

The late filed discovery responses is an apparent attempt by plain-

tiffs to correct some of the conduct for which Judge Porter imposed

sanctions in his Memorandum Opinion and Order of August 24, 1990.

For reasons set forth below, the court denies plaintiffs Ronald E.

and Rhea Ann Chamness’ motion to reconsider and motion to dis-

miss defendants FDIC, Oregon Inc. and William Trione, and denies

plaintiffs Ronald E. Chamness, Jr., Holly A. Chamness and Lisa C.

Chamness’ motion to dismiss their claims.

Motion to Reconsider

In their motion to reconsider, plaintiffs advance two main ar-

guments. First, that the August 24, 1990, order is in error because

it incorrectly applied the D’Oench-Duhme doctrine to preciude

2a

plaintiffs’ homestead claim. Second, that dismissing the case as an

imposition of sanctions was improper because there was no dis-

cussion in the order of the consideration of any lesser sanction

and, a review of the record reveals that the extreme sanction of

dismissal was inappropriate.

In support of their first argument, plaintiffs cite the case of

Patterson v. FDIC, 918 F. 2d. 540 (Sth Cir. 1990) as an “identical

case that was decided against the FDIC.” In the Patterson case, the

court held 12 U.S.C. § 1823(e) was not “so broad as to override the

Texas Homestead Laws... we hold that under the facts of this case, §

1823(e) does not preclude Patterson from attempting to prove her

homestead under Texas law.”, Patterson, at 545. Defendants counter

that Patterson is inapposite because it involved 12 U.S.C. $ 1823(e)

and not the D’Oench-Duhme doctrine and cite the case of Buchanan

v. FSLIC, 935 F.2d. 83 (Sth Cir. 1991) where the court held that the

D’ Oench-Duhme doctrine could preclude assertion of a homestead

claim. Defendants also argue that plaintiffs are estopped from as-

serting their homestead claim because at the time that plaintiffs ex-

ecuted the affidavit of Non-Homestead, they were not occupying

the residence in question.

The Court finds that on both of their arguments, the defendants

are correct, Under Texas law, someone who represents that certain

property is not his homestead and he is not occupying the property

when the representation is made, is estopped from later making a

homestead claim as to that property. As part of its motion for partial

summary judgment, the FDIC submitted the affidavit of C.C.

Prudhomme III, an employee of Bank One, Texas, formerly known

as Deposit Insurance Bridge Bank. Attached to this affidavit are five

exhibits (A-E) which are copies of five documents that plaintiff

Ronald E. Chamness executed on four different dates. In each of

these document, Chamness represents that the property in question

is not his homestead. Exhibit B is a Non-Homestead Affidavit ex-

ecuted by Chamness on June 3, 1981. In it Chamness states, under

oath, that “He does not now reside upon” the property in question.

Exhibit D is an affidavit executed by Chamness on June 21, 1983. In

this affidavit Chamness states, under oath, that he purchased the prop-

erty in question in May, 1979, and began extensive renovation work

on it in June, 1979. In paragraph three of that affidavit, Chamness

3a

states that the property “was not ready for occupancy until August

20, 1991, and was not occupied.” This summary judgment evidence

has not been controverted, and was accepted by Judge Porter as un-

disputed in his Memorandum Opinion and Order of August 24, 1990.

The Homestead Affidavit dated June 11, 1980, and the Non-Home-

stead Affidavit dated June 3, 1981, were executed by Chamness when

he was not residing in the property in question. The plaintiffs are,

therefore, estopped as a matter of law from asserting their home-

stead claim. Patterson, supra., and cases cited therein.

Additionally, in Buchanan, supra., the court stated that in deter-

mining whether D’Oench applied to bar a party’s claim, the appli-

cable test was whether the party “lent himself to a scheme or ar-

rangement whereby the banking authority on which the FDIC relied

in insuring the bank was or as likely to be misled.” Under that test,

the court looks at the “relative culpability of the party making the

claim.” Buchanan, supra., at 85. It is clear from the evidence recited

above that the plaintiffs have lent themselves to a scheme to mislead

the banking authorities, and are now precluded, under the D’Oench-

Duhme doctrine, from asserting their homestead claim against the

defendants.

Plaintiffs also seek reconsideration of Judge Porter’s decision to

dismiss all of plaintiffs’ claims as an imposition of sanctions. The

Fifth Circuit has stated that dismissal of a case as a sanctioz. will be

upheld where there is a showing of “a clear record of delay or contu-

macious conduct by the plaintiff and when lesser sanctions would

not serve the best interests of justice.” Sturgeon v. Airborne Freight

Corp., 778 F.2d 1154 (Sth Cir. 1985). In summary, the record in this

case reveals that plaintiffs have failed to produce documents in re-

sponse to two Requests for Production of Documents filed by the

FDIC. In particular, the record with respect to the First Request for

Production is illuminating with respect to plaintiffs’ conduct in this

case. That request was filed on September 13, 1989. On October 26,

1989, the FDIC filed a Motion to Compel. Various negotiations en-

sued between the parties and the motion to compel was not heard.

Plaintiffs’ counsel was allowed to withdraw by Magistrate Judge

Tolle by order dated December 20, 1989, but Judge Tolle informed

the parties that his order did not “extend the dates upon which re-

sponse to outstanding discovery requests must be made.” Neverthe-

4a

aati ela

less, the documents were not produced, and on February 21, 1990,

the FDIC sent Chamness a letter requesting that he produce the docu-

ments requested. On March 2, 1990, the FDIC filed its second Mo-

tion to Compel. On March 12, 1990, after a hearing, Judge Tolle

ordered plaintiffs to produce the documents by March 30, 1990. At

the hearing, Judge Tolle told Chamness personally that no more ex-

tensions of time would be forthcoming. On March 27, 1990, plain-

tiffs filed another motion for extension of time seeking more time to

file a response to defendants motion for partial summary judgment

and to extend the discovery and scheduling deadlines. This was plain-

tiffs’ seventh motion for extension of time. After a hearing on April

2, 1990, the motion was denied by Judge Tolle. In his order denying

plaintiffs’ request for more time, Judge Tolle stated, “Plaintiffs have

shown nothing which would justify further delay in this case. Plain-

tiffs have repeatedly asked for extensions of time to file required

responses and to extend scheduling deadlines, and this Court has

repeatedly granted those requests. At a hearing on March 12, 1990,

the undersigned magistrate once again granted Plaintiffs’ request

for extension of time, but advised Plaintiff Chamness personally that

no further extensions of time would be forthcoming.” Judge Tolle’s

order of March 12, 1990, ordering production of the documents by

March 30, 1990, was not complied with, and on April 9, and May

18, 1990, the FDIC sent letters to plaintiffs requesting production of

the documents. As of the date of Judge Porter’s Order of August 24,

1990, plaintiffs had still not complied with Judge Tolle’s order.

The record also shows that plaintiffs had not complied with

Judge Tolle’s order of March 12, 1990, that documents be pro-

duced by March 30, 1990, pursuant to the FDIC’s Second Request

for Production of Documents filed or, December 8, 1989. Addi-

tionally, plaintiffs failed to comply with Requests for Admissions,

and Interrogatories were answered nine days late and were not an-

swered under oath.

By order dated October 4, 1989, Judge Porter required the par-

ties to submit a joint Pre-Trial Order by June 22, 1990. By motion of

March 27, 1990, plaintiffs sought to have that deadline extended.

The motion was denied by Judge Tolle in his order of April 2, 1990,

but plaintiffs failed to participate in the preparation and submission

of a joint Pre-Trial Order.

Sa

Plaintiff also failed to file any response to the defendants’ mo-

tions for summary judgment, even though the time for filing responses

was extended twice.

Finally, in his Memorandum Opinion and Order of August 24,

1990, Judge Porter noted that plaintiffs had not filed responses to

two motions for sanctions filed by the FDIC in June, 1990, nor to

two motions for sanctions filed by defendant Wikert also in June,

1990. These motions for sanctions were the basis for the dismissal

of plaintiffs’ claims by Judge Porter. In their July 28, 1992, Motion

to Reconsider, plaintiffs, for the first time, challenge the motions for

sanctions filed by the defendants. This is over three years after the

motions were filed by defendants and almost three years since Judge

Porter entered his Memorandum Opinion and Order.

Judge Porter found that plaintiffs had “repeatedly engaged in

willful and bad faith conduct” with respect to meeting deadlines and

court orders and with respect to discovery. After a review of the

record, this court agrees with those findings and with the finding

that dismissal of Plaintiffs’ claims was the appropriate sanction.

Plaintiffs’ Motions to Dismiss

Plaintiffs’ Ronald E. Chamness and Rhea Ann Chamness seek

dismissal of their claims against defendants FDIC, Oregon, Inc., and

William Trione. Plaintiffs Ronald E. Chamness, Jr., Lisa C.

Chamness, and Holly A. Chamness move to dismiss all of their claims

as to all defendants. Rule 41(a) (1), Fed. Rules Civ. Proc., allows a

plaintiff to dismiss claims prior to service of an answer or of a mo-

tion for summary judgment. In this case, the defendants had both

answered and filed motions for summary judgment. Rule 41(a) (2)

allows dismissal of a suit by plaintiffs only “upon order of the court

and upon such terms and conditions and the court deems proper.”

Under the facts of this case, the court does not believe it would

be proper to grant plaintiffs’ motions to dismiss. The motions are

untimely made, having been filed almost three years after the court

had ruled on the merits of this case and found against the Plaintiffs.

Accordingly, it is ORDERED that plaintiffs Motion to Recon-

sider and Vacate Memorandum Opinion is denied, as are all plain-

tiffs’ motions to dismiss. Since the counterclaim by Bank One against

Chamness is no longer in the case, and the issue of attorneys fees

6a

has been waived by the defendants, the court will enter final judg-

ment for the defendants in accordance with this order and the Memo-

randum Opinion and Order of August 24, 1990.

SO ORDERED

SIGNED this 29th day of April, 1993.

/s/

JORGE A. SOLIS

UNITED STATES DISTRICT JUDGE

Ta

- Appendix B -

NO. 93-1486

IN THE UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

RONALD E. CHAMNESS AND RHEA ANN CHAMNESS,

Appellants,

V.

FEDERAL DEPOSIT INSURANCE CORPORATION,

AS RECEIVER FOR MBANK DALLAS, N.A., DEPOSIT

INSURANCE BRIDGE BANK, N.A., OREGON, INC.,

WILLIAM R. TRIONE, and LINDA HILL WIKERT,

Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION

BRIEF FOR THE APPELLANTS

RONALD E. CHAMNESS AND RHEA ANN CHAMNESS,

WILLIAM 0. HOLSTON, P.C.

SULLIVAN & AVE

State Bar No. 09915300

3535 Travis, Suite 130

Dallas, TX 75204

Ph: (214) 528-9560

Fax: (214) 528-9581

JACK A. MOFFITT, JR.

JACK MOFFITT AND ASSOCIATES,P.C.

State Bar No. 14251300

624 North Good Latimer Expy.

Suite 110

Dallas, TX 75204

Ph: (214) 823-7394

Fax: (214) 827-8194

ATTORNEYS FOR APPELLANTS

Ib

NO. 93-1486

IN THE UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

RONALD E. CHAMNESS AND RHEA ANN CHAMNESS,

Appellants,

V.

FEDERAL DEPOSIT INSURANCE CORPORATION,

AS RECEIVER FOR MBANK DALLAS, N.A., DEPOSIT

INSURANCE BRIDGE BANK, N.A., OREGON, INC.,

WILLIAM R. TRIONE, and LINDA HILL WIKERT,

Appellees.

CERTIFICATE OF INTERESTED PARTIES

The undersigned counsel of record certifies the following list of

persons have an interest in the outcome of this case. These represen-

tations are made so that the judges of this Court may evaluate pos-

sible disqualifications or recusals.

The following individuals have an interest in the outcome of

this appeal:

1. Ronald E. Chamness, Appellant and Plaintiff Below,

2. Rhea Ann Chamness, Appellant and Plaintiff Below;

3. Lisa C. Barfield (formerly Chamness,) Plaintiff;

4. Ronald E. Chamness, Jr., Plaintiff;

5. Holly A. Chamness, Plaintiff;

6. William R. Trione, Appellee; and

7. Alinda Hill Wikert, Appellee.

2b

The following corporations are involved or are concerned with

this appeal:

Deposit Insurance Bridge Bank, N.A.;

I

2. Oregon, Inc.; and

3. Bank One, N.A.

The following government agency or agencies are concerned with

ihis appeal:

1. Federal Deposit Insurance Corporation, as receiver for

MBank Dallas, N.A.

The following law firms and counsel have been involved or are

presently involved in this case:

Law, Snakard & Gambill

A. Burch Waldron, III

James H. Cheatham

M. Elaine Buccieri

Baker, Mills & Glast, P.C.

William Frank Carrol

John Mitchell Nevins

Bruce L. Collins

McCauley, Macdonald, Love &

Devin, P.C.

G. Roland Love

David J. Metzler

Kayte S. Weiner

Winstead, McGuire, Sechrest

& Minick

W. Marke Baggett

Linda Rutherford

Shark, Irwin, Conant, Lipsky

& Casterline

Ivan Irwin, Jr.

Allen R. Weed

Steven L. Russell

Jack Moffitt & Associates, P.C.

Jack A. Moffitt, Jr.

Sullivan & Ave

William 0. Holston

Freedman & Associates

Peter Perron

Lawrence Freidman

Kleinkauf, McCallum & Riggs

William J. Kleinkauf

Rose, Jackson, Brouillette &

Shapiro

Leonard Rose

Gary V. Fulghum

David W. Howard

STATEMENT REGARDING ORAL ARGUMENT

Appellants request an opportunity to make oral argument to

the Court. The issues in this case include complex issues regarding

the interplay between Texas homestead and bank regulation law,

including, but not limited to the D’Oench-Duhme doctrine and 12

U.S.C. §1823(e). These issues have been addressed by the Fifth

Circuit Court of Appeals in prior written opinions, and the conflict

between the ruling by the District Court in this case and the Fifth

Circuit Court’s prior rulings compels counsel for Appellant to re-

quest oral argument. There are also a number of discovery requests

and responses in this case which are the subject matter of a “death

penalty” Sanctions Order; to avoid any confusion, Appellants’ coun-

sel wish to make themselves available to the Court for clarifica-

tions of any such questions.

4b

TABLE OF CONTENTS

FEE GH Fels FUMIE crcinnccieconicncorscnnsacesvnsnevsconeeses 10b

i I cis ceniinticiniecibntasionepipinermnmungenenennsiinies 10b

BEAR EET Se GEE CII RIES rencreccenssctepsevseenveveterennttoseacennsewniens 10b

A. COURSE OF PROCEEDINGS AND DISPOSITION IN

TET htaricssteantidncaiicesinnenianmbamtindibcinnimeenianiiinnn 10b

Merc gh bey. Se een See l1b

SUMMARY OF THE ARGUING cccceccerceresevoscssocsscnescescesseose 16b

I aida cccnstaetpicicieadiainieiiibeiasiaianacinipeionesern 16b

The District Court erred in granting the FDIC’s

Motion for Partial Summary Judgment, as neither

the D’Oench-Duhme doctrine nor 12 U.S.C.

§1823(e) prohibit the assertion of homestead in the

face of conflicting statements contained in a failed

bank’s official file.

EE iia inctvinincstanetesadelipgvctaiieanionnmienniienneievn 20b

The Trial Court erred in entering death penalty sanc-

tions dismissing the appellants’ claims because there

was no discovery abuse, a pretrial order was filed,

and the Appellants were therefore deprived of a trial

without due process of law.

SNE hieeeinsicaciccecisissucventhsnisieisinntambaniinennetitngntuatiniieniantios 30b

Ca I GA IIE cei cereecnictincevsensivopervessveienontnenvecnitinns 32b

5b

TABLE OF AUTHORITIES

CASES

Batson v. Neal Ice A lates

Fe Se eiiiitnictcitnwsecsatervinidarncbicariniassncd A

Buchanan v. FSLIC, 935 F.2d 83 (Sth Cir. 1991) o.oo. 19b

Bonadventure v. Butler, 593 F.2d 625 (Sth Cir. 1979)......0......... 27b

D’Oench-Duhme & Co. v. FDIC, 315 U.S. 447 (1942) ..... 14b, 16b

Dorsey v. Academy Moving and Storage,

Aaa ca, nn 26b

Durgin v. Graham, 372 F.2d 130 (Sth Cir. 1969)

Sees, mmaes SOP UIT. DO) (ISG on ccceccccccasseccccccccccesecesvccesesecees 27b

Emerick v. Fenick Industries, Inc..,

me | ee eee ee 27b

FDIC v. Bluerock Shopping Center,

Pe ey, ETE Se rae ee a er 17b

Fjelstad v. American Honda Motor Companies,

Fe ee i ich vnche cectoniciieidesetissiestvinisibctiass 29b, 30b

Fox v. Studebaker Worthington,

SU ra a 25b

Frame v. S-H, Inc., 967 F.2d 194 (Sth Cir. 1992) woo. 30b

Garrett v. Commonwealth Mo Corp. of America,

er I i cindeiaeemanbeanenduounes 19b

Griffin v. Aluminum Co. of America,

rg Pigg tw Ry: RRC ein ered lok 27b

Henderson v, Duncan, 779 F.2d 1421 (9th Cir. 1986) ................ 29b

In Re Howard 65 B.R. 498 (Bankr. W.D. Tex. 1986) ................. 17b

Langley v, FDIC, 484 U.S. 86, (1987) ......cccsccscccsscsccesssevscceesees 18b

Malone v stal Service, 833 F.2d 128 (9th Cir.

1987) cert. denied 488 U.S. 819 (1987) occ cece eeeeeeeeeeeeeee 28b

Marshall v. Segona, 621 F.2d 763 (Sth Cir. 1980) ...............0.0004. 27b

National Hockey League v. Metropolitan Hockey Club, Inc.,

BEF Cites Cae CES TO) IGT CITED osencccreevceevevevesizevevensesevecesesenvees 27b

In re Niland, 825 F.2d 801 (Sth Cir. 1987) oo... ccc eeeceeeeeeeeeeees 16b

Olivia v. Sullivan, 958 F.2d 272 (9th Cir. 1992)... ee. 28b

Patterson v. FDIC, 918 F.2d 540 (Sth Cir. 1990)........ 17b, 18b, 19b

Plyw Litigation; French Quarter Apartments, Ltd. v.

CRs Gao Fae GET CS CU, EDGED cece evininvernessrevsercovovscenzevees 25b

Societe Internationale Pour Participations Industrielles Et

Commercicales, SA v. Rogers, 357 U.S. 197 (1958) .......00... 26b

Templin v. Weisgram, 867 F.2d 240 (Sth Cir. 1989)

ECCI EE Henn RS OF OR LER 18b

Texas Refrigeration Supply, Inc. v. FDIC,

ee re ee ED sc sssinmsoyennuaseuceesetwandeveweosnnes 19b

Thompson v. Housing Authority, 782 F.2d 829 (9th Cir.),

EE Se, Boe © POD wtsnecesiveracosenvvvasecndnbsceseecresscnessess 29b

U.S. v. National Medical Enterprises, Inc.,

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U.S. v. Sumitomo Marino and Fire Ins. Co., 617 F.2d 1365

RES rar Oe ae es Oe 29b

Youmans v. Simon, 791 F.2d 341, (Sth Cir. 1986) ..................... 15b

CONSTITUTIONAL PROVISIONS, STATUTES, AND RULES

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LEGAL PUBLICATIONS

Soules and Wallace, Discovery Death Penalty Sanctions Reviews,

De Novo Standard 55, Tex. B.J. 135 (1992) ......cccccccccccccccececeeeees 30b

The Texas Homestead Protections: A Chink in the Section 1823(e)/

D’Oench, Duhme Armor,

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8b

NO. 93-1486

IN THE UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

RONALD E. CHAMNESS AND RHEA ANN CHAMNESS,

Appellants,

V.

FEDERAL DEPOSIT INSURANCE CORPORATION,

AS RECEIVER FOR MBANK DALLAS, N.A., DEPOSIT

INSURANCE BRIDGE BANK, N.A., OREGON, INC.,

WILLIAM R. TRIONE, and LINDA HILL WIKERT,

Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION

BRIEF FOR THE APPELLANTS

RONALD E. CHAMNESS AND RHEA ANN CHAMNESS,

STATEMENT OF JURISDICTION

The Fifth Court of Appeals of the United States of America

properly has jurisdiction over the appeal presented herein pursuant

to 28 U.S.C. §1291. The judgment against Appellants was entered

on the 29th day of April, 1993, and Appellants timely filed their

notice of appeal within thirty (30) days thereafter.

STATEMENT OF ISSUES

1. Did the District Court improperly grant summary judgment

in favor of Defendant FDIC on the grounds that D’Oench-

Duhme and 12 U.S.C. §1823(e) precluded the Appellants’

homestead claim under applicable Texas law; and

Did the District Court err in entering Death Penalty Sanc-

tions dismissing Appellants’ claims?

STATEMENT OF THE CASE

A. Cours Pr i i ition in the Court Below.

This case commenced when Plaintiffs Ronald E. Chamness

(“Ronald Chamness’”’), Rhea Ann Chamness (who is referred to

herein with Ronald Chamness as “Mr. and Mrs. Chamness’’), Lisa

C. Chamness, Ronald E. Chamness, Jr. and Holly A. Chamness

(collectively “the Chamness Family”) filed an Original Petition in

the 134th Judicial District Court of Dallas County, Texas against

MBank Dallas, N.A., Oregon, Inc., William R. Trione and Linda

Wikert (the “Original Defendants”). The Chamness Family claimed

that certain real property and improvements located at 4208

Armstrong Parkway in Highland Park, Texas constituted the home-

stead of the Chamness Family pursuant to the Constitution of the

State of Texas and the statutes enacted thereunder. The Original

Petition further claimed that a purported foreclosure of certain deeds

of trust against the homestead was void. The Chamness Family

claimed the deeds of trust were improper clouds upon the title to

the homestead. The Chamness Family also sought damages and

attorney’s fees.

Subsequent to the filing of the original Petition in state court,

MBank, N.A. failed. The Federal Deposit Insurance Corporation

(“FDIC”) appeared in the case and removed the case to federal court.

nw

10b

The FDIC, in its capacity as receiver, continued its defense against

the monetary claims asserted against MBank by the Chamness Fam-

ily. Deposit Insurance Bridge Bank (“DIBB”) entered an appear-

ance as an additional Defendant, apparently the holder of the coun-

terclaim originally asserted by MBank.

While the case was pending before the Northern District of Texas,

Dallas Division, the District Court entered a Memorandum Opinion

and Order granting a motion by FDIC for summary judgment and

motions by FDIC and Defendant Wikert for sanctions pursuant to Rules

16(f) and 37. (This Order is hereinafter referred to as the “Memoran-

dum Opinion” .) In the Memorandum Opinion, the District Judge (the

Late Honorable Robert W. Porter) ordered that judgment be entered

against the entire Chamness Family pursuant to FDIC’s Motion for

Summary Judgment and that the Family’s claims be dismissed pursu-

ant to Rules 16(f) and 37. The Court further directed that proceedings

be held to determine attorneys fees to be awarded to all Defendants.

Prior to ruling on the attorneys fees requested and entering further

orders or a final judgment, Judge Porter died. The Memorandum Opin-

ion marked the beginning of an approximate 30-month period during

which no further action was taken by the District Court.

After a replacement District Judge (Honorable Jorge Solis) was

appointed to the bench, Mr. and Mrs. Chamness filed motions for

reconsideration and vacation of the Memorandum Opinion. Mr. and

Mrs. Chamness also sought to dismiss their claims against the FDIC

and the MBank related defendants [Oregon Inc., FDIC, DIBB, and

Trione]. If granted, these motions would have resulted in a simple

suit by Mr. and Mrs. Chamness against Wikert alone, as the pur-

ported purchaser of the property. The members of the Chamness

Family, other than Mr. and Mrs. Chamness, requested voluntary dis-

missals of all of their claims.

On April 29, 1993, the District Court denied all of the Chamness

Family members’ motions, and entered judgment in accordance

with the Memorandum Opinion. It is from this judgment that Mr.

and Mrs. Chamness now appeal.

B. Statement of Facts.

The following statement of facts is compiled from the uncon-

tested facts appearing from the record in this case and are primarily

1b

drawn from the FDIC’s Motion for Partial Summary Judgment. {The

Motion and exhibits to the Motion referred to herein, are contained

in the appendix to this Brief. ]

On May 17, 1979, Ronald Chamness and A. Marlene Chamness

purchased two lots in Dallas County, Texas known az Lots 12, 14,

Block 103, Highland Park West, Number | from the Estate of Flo-

rence M. Moss. The street address for this property is 4208 Armstrong

Parkway, Highland Park, Texas (the “Armstrong Property”), Vol-

ume 5, Page 25. Ronald Chamness took possession of the Armstrong

Property and proceeded to renovate it in June, 1979. /d. From the

date Ronald Chamness purchased the Armstrong Property until Au-

gust 20, 1980, the Chamness Families lived at 6550 Cliffbrook, Dal-

las, Texas 75240 (the “Cliff brook Property”) . Jd. Ronald Chamness

claimed a homestead exemption at the Cliffbrook property, until he

moved from it on August 20, 1980. id. The improvements to the

Armstrong Property consisted of a dwelling or a house. /d. Subse-

quent to Ronald Chamness purchase of the Armstrong Property and

subsequent to the abandonment of the Cliffbrook Property, Chamness

granted deeds of trust (which are relevant to these proceedings)'

against the Armstrong Property as follows:

January 9, 1981 A Deed of Trust to Curtis Hawley, Trustee,

given to secure a guaranty of an unspeci-

fied date, and a Note dated December 18,

1980, (owing to Republic National Bank of

Dallas} which deed of trust is referred to

hereinafter us the “Hawley Deed of Trust.”

Vol. 5, pp. 63-69. Chamness executed a sub-

ordination agreement at the time wherein

he agreed the property did not “constitute

his homestead.” Vol. 5, pp. 105-109.

' There are other documents contained in the exhibits to the Motion for Summary

Judgment filed by FDIC containing homestead “waivers’’, but since they are irrelevant

and remote in time from the Republic, First City and MBank transactions, they are

not discussed. FDIC's inclusion of these items demonstrates the breadth FDIC would

give D’Oench-Duhme and 12 U.S.C. §1823(e), as these documents related to earlier

real estate transactions to which MBank was not even a party.

12b

I

June 3, 1981 A Modification to the Hawley Deed of Trust

was executed to increase the debt to Repub-

lic Bank; Vol. 5, pp. 75-80; along with a

“NonHomestead Affidavit” whereby any

homestead rights in the Armstrong Property

were purportedly renounced. Vol. 5, p. 73.

June 21, 1983 A Deed of Trust to Dewaine V. Hill, Trustee,

was executed by Chamness to secure a note

to First City Bank in the sum of $2,550,000;

along with an affidavit the Armstrong prop-

erty was not Chamness’ homestead. Vol. 5,

pp. 8596. This Deed of Trust is referred to

hereinafter as the “Hill Deed of Trust”. The

proceeds of the Note to First City Bank,

secured by the Hill Deed of Trust, paid off

the Hawley Deed of Trust Note. Vol. 5, p. 5.

March 9, 1984 A Deed of Trust to Jim Reynolds, Trustee,

was executed by Chamness to secure a guar-

anty in favor of MBank of apparent busi-

ness debts of CM Mechanical Corporation

of $7.5 million. Vol. 5, p. 97. This deed of

trust is hereinafter referred to as the

“Reynolds Deed of Trust.” The Reynolds

Deed of Trust contained a purported home-

stead renouncement and disclaimer.

March 8, 1985 MBank takes an assignment of the Hill Deed

of Trust. Vol. 5, p. 5.

After granting the deeds of trust described above, Ronald

Chamness obligations to MBank came to be in default, and MBank

purported to exercise its rights under the Hill Deed of Trust'and the

13b

Reynolds Deed of Trust.’ Foreclosure of the Armstrong Property

allegedly occurred on June 3, 1986. Vol. /, p. 8. In that foreclosure,

the Armstrong Property was allegedly auctioned by MBank officer,

William Trione (“Trione”’), to Oregon, Inc. (“Oregon”) , an MBank

subsidiary. /d. The Armstrong Property was then allegedly conveyed

by Oregon in a prearranged transaction, on the same day, to Defen-

dant Wikert. /d. at 8-9. Thereafter, the Chamness Family commenced

this suit, seeking a declaration that the purported foreclosure of the

Hill and Reynolds Deeds of Trust had no legal effect, was improper,

that the membe:s of the Chamness Family were the rightful owners

of the Armstrong Property, and that each were entitled to damages

against all Defendants. /d. at 7-14.

Subsequent to the filing of the Original Petition, MBank failed and

the FDIC removed the proceeding to the District Court. Vol. /, p. /.

During the pendency of the case, several motions concerning

discovery were filed by the parties and discovery was propounded

by each side. A more detailed description of the facts surrounding

these procedural matters is contained in the Argument No. 2 section

of this Brief. /nfra.

FDIC filed a Motion for Partial Summary Judgment on the basis

that the official MBank files, of which FDIC had taken possession

in its capacity as receiver, contained non-homestead declarations,

and therefore the D’Oench-Duhme doctrine and 12 U.S.C. §1823(e)

barred the Chamness Family’s claim of homestead. Vol. 5, pp. 1-9.

In addition, the FDIC filed a 164 page brief in support of the Mo-

tion, where the FDIC’s sole argument was that the Chamness suit

could not be maintained insofar as the Chamness Family’s claims

contradicted the official bank file in the FDIC’s possession. Addi-

tionally, all Defendants filed a motion for sanctions under Federal

Rules of Civil Procedure 37 and 16(f). Vol. 2, pp. 476-479; Vol. 2,

pp. 480-488; Vol. 2, pp. 489-496; Vol. 8, pp. 1-11.

? There is no Summary Judgment evidence that a foreclosure occurred or what

liens were foreclosed, this statement is based on the same assumptions made of the

District Court. This error is immaterial however since the sole subject of the Summary

Judgment granted to FDIC was the global preclusion of homestead rights based on

Doench-Duhme and 12 U.S.C. §1823(e).

14b

The Motion for Partial Summary Judgment was granted. The District

Court concluded that D’Oench-Duhme and 12 U.S.C. §1823(e) barred all

homestead claims by the Chamness Family because such claims contra-

dicted the terms of the documents in the official bank files. Vol. 3, p. 520.

The District Court also granted each Defendant’s Motion for

sanctions, finding:

that the Plaintiffs have repeatedly engaged in will-

ful and bad-faith conduct: (1) in refusing to adhere

to the various deadlines ordered herein, including

the submission of a joint pretrial order, and (2) in

failing to produce documents responsive to the

FDIC’s First Request for Production in the time and

manner as provided by the Federal Rules, and in

direct contravention of the order entered herein by

U.S. Magistrate Tolle on 3/12/90. Vol. 3, p. 524.

After the Memorandum Opinion was entered, but before further

proceedings were had in the case, Judge Porter died. Additionally,

during the interim, Mr. and Mrs. Chamness filed a Chapter 7 Bank-

ruptcy case. Vol. 3, p. 545. On June 8, 1992, the automatic stay was

lifted (Vol. 3, p. 603), and on July 2, 1992, 24 days later, Mr. and

Mrs. Chamness filed a Motion for Reconsideration and Vacation of

the Memorandum Opinion. Vol. 3, p. 557. In the Motion for Recon-

sideration, Wr. and Mrs. Chamness sought relief from the Memo-

randum Opinion on two grounds: (1) the Fifth Circuit authority pub-

lished after the entry of the Memorandum Opinion, and other au-

thority, directly conflicted with the legal conclusion in the Memo-

randum Opinion, that D’ Oench-Duhme and 12 U.S.C. §1823(e) pre-

cluded the assertion of homestead rights against contrary statements

in a failed bank’s official file; and (2) the death penalty sanction was

excessively harsh and not meted out according to Fifth Circuit guide-

lines. Vol. 3, p. 557. On April 29, 1993, the District Court (Honor-

able Jorge Solis) denied the motion to reconsider and entered judg-

ment in accordance with the Memorandum Opinion.’

3 Pursuant to the rule stated in Youmans v. Simon, 791 F.2d 341, 349 (Sth Cir.

1986), Mr. and Mrs. Chamness claim error in the memorandum opinion, not the

order denying Plaintiff's Motion for Relief from that opinion, although an same

error was repeated in the order denying the Motion.

15b

SUMMARY OF THE ARGUMENT

Issue 1. Did the District Court improperly grant summary judg-

ment in favor of Defendant FDIC on the grounds that D’Oench-

Duhme and 12 U.S.C. §1823(e) precluded the Appellants’ home-

stead claim under applicable Texas Law?

Argument No. 1. The District Court erred in granting the FDIC's

Motion for Summary Judgment, as neither the D’Oench-Duhme doc-

trine nor 12 U.S.C. §1823(e) prohibit the assertion of homestead in the

face of conflicting statements contained in a failed bank’s official file.

Issue 2, Did the District Court err in entering the Death Penalty Sanc-

tions against Appellants, on the grounds stated in the Court’s order?

Argument No. 2. The Trial Court erred in entering Death Pen-

alty Sanctions dismissing the Appellants’ claims because there was

no discovery abuse, a pretrial order was filed, and the Appellants

were therefore deprived of a trial without due process of law.

ARGUMENT NO. 1

Issue No. |. Did the trial court err in granting summary judgment in

favor of Defendant FDIC on the grounds that D’Oench-Duhme and

12 U.S.C. §1823(e) precluded the Appellants’ homestead claim un-

der applicable Texas Law?

Argument No. L. The trial court did err in granting the FDIC’s Motion

for Partial Summary Judgment, as neither the D’Oench-Duhme doc-

trine nor U.S.C. §1823(e) prohibit the assertion of homestead in the

face of conflicting statements contained in a failed bank’s official file.

The Chamness Family suit was brought on the basis that the

Family owned, occupied, and used the Armstrong Property as its

homestead and that the disclaimers of homestead and non-home-

stead affidavits executed by Ronald Chamness were ineffective.

Vol. 1, p. 8. It is well established that a homestead cannot be “de-

clared” away by a Texas resident and disclaimers of homestead rights

are of no effect, barring additional facts. See In re Niland, 825 F.2d

801 (Sth Cir. 1987). In the case at bar the FDIC asserted that MBank’s

failure was such an additional fact and it filed a Motion for Partial

Summary Judgment based solely on its claims that D’ Oench-Duhme

and 12 U.S.C. §1823(e) prohibited the Chamness Family homestead

claim. The FDIC’s Motion was granted in the Memorandum Opin-

ion, upon which judgment was later entered.

16b

The District Court erred in granting the sole defense asserted in

the Motion by FDIC for the Chamness Family homestead claim.

The District Court applied the D’Oench-Duhme principle [D’ Oench-

Duhme & Co. v. FDIC, 315 U.S. 447 (1942)] and 12 U.S.C. §1823(e)

to prohibit the homestead claim. However, in Patterson v. FDIC,

918 F.2d 540 (Sth Cir. 1990), an identical case was decided against

the FDIC. In Patterson, the Fifth Circuit rejected the FDIC’s argu-

ment that 12 U.S.C. §1823(e) precluded contradiction of a home-

\_ Stead designation for the reason that a homestead right “exists inde-

pendent of any agreement between the parties.” Patterson, 918 F.2d

at 843, citing with approval, In Re Howard, 65 B.R. 498, 503 (Bankr.

W.D. Tex. 1986) which relied upon EDIC vy. Bluerock Shopping

Center, 766 F.2d 744, 753 (3d Cir. 1985). The Court correctly noted,

in Patterson, that D’Oench-Duhme and 12 U.S.C. §1823(e) preclude

defenses based on “agreements,” not defenses based on facts.

The facts in Patterson (which were much more developed than

in the case at bar, insofar as the homestead claimant *««. se Patterson,

was at least afforded a trial) are basically identical <.’ iose claimed

to exist by the FDIC in the case at bar: (i) a deed of wust had been

given a bank to secure a note, (ii) a document containing a statement

inconsistent with a later claimed homestead was executed by the

homestead claimant and was found by the FDIC in a failed bank

portfolio, and (iii) the FDIC sought to enforce the note and deed of

trust in slavish respect of the documents in the failed bank’s official

files. Patterson at 918 F.2d 541-542. The superpowers granted by 12

U.S.C. §1823(e) and the prodigy of D’Oench Duhme were an ap-

pealing argument to the trial court in Patterson, as in the case at bar.

During trial, Jeanne Patterson was not allowed to present any evi-

dence to the jury that the property in question was used as a home-

stead. The trial court in Patterson apparently believed that the state-

ments in the failed bank’s official file were elevated to the status of

dogma by the FDIC superpowers, and that reality was of little or no

significance.‘ The Fifth Circuit Court clearly distinguished Patterson’s

* Apparently the District Court in the case at bar found these superpowers pervasive

as well as powerful, since it held that D’Oench-Duhme and 12 U.S.C. 1823(e) barred

not only Ronald Chamness’ claims, but those of the entire Chamness Family. Only

Ronald Chamness signed a document inconsistent with a homestead claim. ‘

17b

situation from the ‘scheme’ defenses and agreements, that D’Oench-

Duhme and 12 U.S.C. §1823(e) preclude. Patterson 918 F.2d at 543.

The Patterson court declared that claims and defenses based on

facts and circumstances existing at the time an instrument was

executed in favor of a failed bank are not barred by FDIC su-

perpowers. Id. at 545. On the other hand, the Patterson court noted

that a defense based on an “agreement, -cheme, or bank representa-

tion” was a defense that the superpowers of the FDIC barred. /d. at

545. To illustrate the distinction in Patterson, this Court cited Templin

vy. Weisgram, 867 F.2d 240 (Sth Cir. 1989) cert, denied. In Templin,

the Court noted that a side agreement, an agreement between banker

and borrower, that a sale of a homestead was a sham, was the type of

agreement to which the FDIC superpowers applied “full force.”

Templin 867 F.2d at 242. In other words, this Court recognized that

D’Oench-Duhme and 1823(e) are ineffective as to defenses not de-

pendent upon agreements.

There are other landmark cases which illustrate the distinction

noted in Patterson. On the one hand there are the scheme, arrange-

ment, or agreement cases. These cases have one common element

not existing in the case at bar - the defense was based on an (i) agree-

ment, (ii) an understanding, or (iii) a communication from or to an

agent of the failed financial institution. Examples of this type of

defense are evident from a review of this Court’s and the Supreme

Court’s leading cases:

Templin: Homestead claimant's claims depended upon knowl-

edge that purported sale of homestead was a sham. Supra. The first

paragraph of the opinion reveals that a borrower, a banker and a

third party agreed to stage a sale of the homestead, and that it was

not to be effective.

Langley: Borrower claimed a defense to suit on a note based on

oral promises from a bank officer. Langley v, FDIC, 484 U.S. 86 (1987).

D’Oench-Duhme: Borrower had secret agreement with bank

officer that facially enforceable note would not be enforced pursuant

to its terms. D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447, (1942).

Buchanan: Homestead claim was premised on refuting an agree-

ment between homestead claimant and an aluminum siding con-

tractor that a lien was granted before commencement of improve-

ments to homestead when in fact they were not. The agreement be-

18b

tween Buchanan and the contractor was clearly an agreement to en-

able the contractor to get funds from the failed bank. Buchanan v.

FSLIC, 935 F.2d 83 (Sth Cir. 1991).

On the opposing shore, defenses based on independent facts,

not agreements, schemes, or understandings, survive the FDIC su-

perpowers:

Patterson: Homestead defense “existed” independent of any

agreement because of use of property by homestead claimant. Supra.

at 543.

Texas Refrigeration Supply: Complaints regarding timely ac-

celeration or the disposition of collateral are based on the nature of

negotiable instruments and are not eliminated by D’ OenchDuhme

or 12 U.S.C. §1823 (e). In Texas Refrigeration Supply, the entire

analysis of the court in making its determination of the applicability

of the FDIC superpowers was to distill each claim and defense down

to its factual elements and then determine if one element was an

agreement with the failed institution or a representation of such in-

stitution. Texas Refrigeration Supply, Inc. v. FDIC, 953 F.2d 975

(Sth Cir. 1992).

Garrett; Neither D’Oench-Duhme nor 1823(e) prevent claims

or defenses which are independent of agreements, such as breach of

duty or negligence by failed bank. Garrett v. Commonwealth Mort-

gage Corp. of America, 938 F.2d 591, 595 (Sth Cir. 1991).

The pattern and direction of the Fifth Circuit in distinguishing

claims and defenses based on agreements, express or implied, from

“real” claims of defenses was noted only months prior to the publi-

cation of Patterson with uncanny accuracy by Texas Legal Scholars.

The Texas Homestead Protections: A Chink in the Section 1823(e)/

D’Oench, Duhme Armor, 21 Tex. Tech. L. Rev. 104 (1990).

In the case at bar, the Chamness Family homestead existed be-

cause of the Family’s actual possession, use, and occupancy of it, not

because of any agreement not reflected in MBank’s official files. Mr.

and Mrs. Chamness were precluded from presenting facts to demon-

strate their actual use and occupancy of the Armstrong Property, be-

cause it would have conflicted with the official bank file of MBank.

This analysis flies in the face of the Fifth Circuit authorities note above.

The homestead claim arose because of facts, and was not based on

understandings, schemes, representations or agreements. Accordingly,

19b

Mr. and Mrs. Chamness are entitled to proceed to a trial to prove their

homestead rights.

ARGUMENT NO. 2

Issue 2. Did the District Court err in entering the death penalty

against Appellants, on the grounds stated in the Court’s order?

Argument No. 2. The Trial Court erred in entering Death Pen-

alty Sanctions dismissing the Appellants’ claims because there was

no discovery abuse, a pretrial order was filed, and the Appellants

were, therefore, deprived of a trial without due process of law.

The record in this case shows that the Chamness Family’s lawsuit

was dismissed and that they were deprived of the opportunity to present

their argument on the merits, for the preservation of their homestead,

without any showing of discovery abuse. Instead, a review of the record

reflects that the Chamness Family responded to all discovery requests

in the time permitted by the rules or the deadlines required by the

Court with the exception of a 9 day tardiness in serving answers to

interrogatories. There is absolutely no showing in the record of any

evidence where any member of the Chamness Family failed to dis-

close, in response to a discovery request by the Defendants, respon-

sive material in the possession of any member of the Family. The end

result was that the Plaintiffs were deprived of a trial on the merits

based on the Defendants’ aggressive and voluminous mischaracter-

ization of Plaintiffs’ efforts to comply with discovery.”

The various motions for sanctions filed by the FDIC and Wikert

complain of alleged misconduct by the Chamness Family in the fol-

lowing particulars:°

‘ Apparently the FDIC subscribes to a formulation of Immanuel Kant’s

“categorized imperative” and that all things it thinks exist, in fact do. Accordingly if

it thinks a deposition exists it does, and if it tells the trial court that the Chamnesses

are “process abusers” enough, the Court believes it, and the Chamnesses therefore

are “process abusers”.

6 The record demonstrates that the Defendants engaged in a “Ramboesque”

effort to deprive the Chamness family of a trial on the merits by burying them ina

mountain of discovery and filing repetitive and redundant complaints concerning

the family’s good faith efforts at compliance. It should be noted that the First and

Second Requests for Production were submitted to Ronald Chamness only.

20b

1. response to the FDIC’s first request for admissions;

2. response to the FDIC’s first request for production;

3. response to the FDIC’s second request for production;

4. answers to FDIC’s interrogatories; and

5. pretrial order.

Mr. and Mrs. Chamness will describe their good faith compliance

with the discovery requests and pretrial order separately as follows.

|. First Request for Admissions

Defendant FDIC served 140 requests for admission on or about

March 27, 1989. Vol. /, p. 121. The response date for the request for

admissions was extended by agreement to May 11, 1989. Vol. /, p.

122. Subsequently, the parties entered into lengthy negotiations, seek-

ing to resolve the Chamness Family’s objections to certain requests

for admission on the grounds that they sought admissions as to legal

conclusions. The Chamness Family’s efforts to fully cooperate in

responding are detailed in the “Plaintiffs’ Suggestions in Opposi-

tion to Defendant’s Motion to Deem Admissions.” Vol. 2, p. 250. By

September 20, 1989, 121 of the 140 requests had been admitted or

denied or the FDIC no longer sought a response because of

Chamnesses’ objections as to such request. Vol. /, p. 25]. As admit-

ted by the FDIC, the parties finally arrived at a “genuine dispute as

to interpretation of law” as to 19 requests for admissions, which

were submitted to the Court for determination. Vol. /, p. 123. As to

those 19 Requests, FDIC specifically agreed not to request sanc-

tions. Vol. /, p. 188. On November 13, 1989, U.S. Magistrate Tolle

signed an order which required answers by November 27, 1989. Vol.

2, p. 272. Ronald Chamness filed answers on November 24, 1989.

Vol. 3, p. 703. Thus, by November 24, 1989, all of the requests for

admission to which the FDIC sought responses had either been ad-

mitted, denied, or objected to in a timely manner. Despite this fact,

the FDIC refers to the Responses to Requests for Admission in its

motion for sanctions of March 2, 1990. Vol. 6, p. 1-16. Again the

21b

FDIC used innuendo and misrepresentations. Later the FDIC again

refers to the request for admissions in its motion for sanctions of

June 18, 1990 as if they have relevance and establish improper con-

duct. Vol. 8, p. /.

Because the FDIC had twice referred to the request for admis-

sions in motions for sanctions and because the answers were not

contained in current counsel’s files, Mr. and Mrs. Chamness’ new

counsel was misled into believing the admissions had never been

answered and therefore submitted answers to requests for admis-

sion. Vol. 2, p. 570. The FDIC for the first time, then admitted that

the first request for admissions had already been answered in No-

vember, 1989 and complained of the second answers proposed by

Mr. and Mrs. Chamness’ new attorneys. Vol. 3, pp. 599 and 687.

Thus, with regard to the first request for admissions, they were timely

answered within the time required by the U.S. Magistrate.

2. First Request for Production

On or about September 13, 1989, the FDIC submitted its first

request for production to Ronald Chamness. Vol. /, p. 230-335. This

request sought copies of depositions given by Ronald Chamness in

various other litigation matters. The request specifically requested

depositions given in the Industrial Indemnity v. CM Corp., SPW _v.

National Mechanical Corp., Arab Bank Lid. v. CM World, Glaser

Leasing v. Chamness, and Firemans Fund Insurance v. Chamness.

Id. Ronald Chamness timely filed responses and objections to the

request on October 9, 1989. Vol. 1], p. 237. On or about October 26,

1989, the FDIC then filed a motion to compel production. Vol. /, p.

219. Counsel for the FDIC admitted that the Firemans Fund deposi-

tion and the Industrial deposition had been produced. Vol. 2, pp. 309-

310. On or about March 12, 1990, the Honorable U.S. Magistrate

Tolle ordered that the documents responsive to the FDIC’s first re-

quest for production be produced by March 30, 1990. Vol. 2, ID.

333. As demonstrated by the Affidavit of Ronald Chamness, there

were no other depositions available to be produced. Vol. 3, p. 562.

The SPW vy. National deposition could not be, with due diligence,

located. Jd, This deposition had no relevance to the issues in this

case. /d, There were no depositions in either of the two other law-

suits. At no time have the Defendants alleged, and there is no evi-

22b

dence in the record which demonstrates, that there were any addi-

tional documents not produced in response to the first request for

production. Instead, the Defendants simply built a case with innu-

endo and mischaracterization, asking for sanctions on grounds that

the Chamness Family failed to produce documents. Again this oc-

curred without any evidence that any additional depositions actually

existed. The references to the alleged discovery abuse in the various

motions for sanctions relating to the first request for production never

make clear that the documents which are sought are depositions.

Therefore, the implication is that there are documents which Ronald

Chamness never produced. The record, on the other hand, clearly

demonstrates that Ronald Chamness produced all depositions which

existed or could be located within the time required by the Court.

3. Second Request for Production

On or about December 8, 1989, the FDIC served its second request

for production. Vol. 7, p. 1. This request sought voluminous docu-

ments. On or about December 20, 1989, the Chamness Family counsel

withdrew because of non-payment of attorneys’ fees. Vol. 7, p. 22.

Despite being pro se, Ronald Chamness timely filed a Motion to

Extend Time to Respond to Second Request for Production of Docu-

ments. Vol. 2, p. 30]. On or about January 27, 1990, the Honorable

U.S. Magistrate Tolle granted Ronald Chamness pro se Motion to

Extend and extended the time to produce the requested documents

until February 23, 1990. Vol. 2, p. 3/2. On February 22, 1993, the

Ronald Chamness timely filed a pro se Motion to Enlarge Time to

Respond to the FDIC’s Second Request for Production. Vol. 2, p.

317. This Motion explained that there were 20 boxes of documents

shipped from his former counsel in Kansas City and sought time to

review the documents to ensure that privileged communications were

not disclosed. Ronald Chamness’ efforts to contact counsel for the

FDIC to discuss the timing of the production of documents and evi-

dencing the efforts to timely comply with Magistrate Tolle’s orders

are contained in a letter to defense counsel from Ronald Chamness

pro se. Vol. 2, p. 325. On or about March 12, 1990, the Honorable

Magistrate Tolle entered an order requiring the documents to be pro-

duced by March 30, 1990. Vol. 2, p. 333. On or about April 2, 1990,

both Defendants FDIC and Wikert inspected all of the documents

23b

responsive to the second request for production. Vol. 2, p. 477. There

is nothing in the record to reflect that the records were not tendered

on or before March 30 and, again by innuendo, the Defendants have

recited the date of the actual inspection to cast the Chamness Family

in a bad light. It should be noted that the 30th was a Friday and the

2nd was a Monday. The Defendants did not allege that the inspec-

tion on the 2nd was not in timely compliance with Magistrate Tolle’s

March 12 order, but again recite these facts as a basis for sanctions

in complete mischaracterization of the events. As of April 2, 1990,

the Chamness Family had timely produced all available documents

responsive to both the first and second requests for production.

4. Answers to Interrogatories

On or about March 1, 1990, the FDIC forwarded the first set of

interrogatories to the Chamness Family. The interrogatories were

answered on or about April 12, 1990. Vol. 9, pp. 34-41. The com-

plaint by the Defendants was that the answers were 9 days late and

were not signed under oath.’ It is true that the signature is not nota-

rized; however, the paragraph preceding the signature is in substan-

tial compliance with 28 U.S.C. §1746, and arguably in compliance

with the rules. In addition, Ronald Chamness, in an effort to be in

absolute compliance with all discovery, and after retaining current

counsel, filed notarized answers to the interrogatories supplement-

ing the prior answers. Vol. 3. p. 703. The only alleged discovery

abuse related to the interrogatories was, therefore, that they were

not originally notarized.

In addition, the answers to interrogatories were submitted con-

taining general objections to the definitions, as well as objection

responses to interrogatories 3, 4, 5 and 6. The objections are not

required to be signed by the party, but may be signed by the attorney

making then within the meaning of Fed. R. Civ. P. 33(a).

Fed. R. Civ. P. 37(b) provides comprehensively for sanctions for

’ The only answers in the record are unsigned, however the Original Answers in

Counsel's file are signed and not notarized. Pursuant to Local Rules of the Northern

District of Texas, discovery material is not filed and Chamness’ former counsel would

have been custodian of the original. Defendants would not have received anything but

a copy pursuant to such rules. The Rules are silent as to whether the copy is to be

signed or not. See, Local Rules of Procedure, Northern District of Texas, Rule 2.2.

24b

i

failure to obey discovery orders. It has no application if there has

not been a court order ... however, many of the sanctions available

under 37(b) are incorporated by reference in Rule 37(d) with regard

to interrogatories do not apply when the failure to comply is any-

thing less than a total failure to respond. Fox v. Studebaker

Worthington, 516 F.2d 989, 994-995 (8th Cir. 1975) [Citations and

other discussions omitted]. In other words, Rule 37(d) sanctions are

proper only when there has been a complete or nearly total failure of

discovery. Fox v. Studebaker Worthington, at 995. It should be noted

however, that under appropriate circumstances, evasive and incom-

plete, answers to interrogatories can be tantamount to no answers at

all. Plywood Antitrust Litigation: French Quarter Apartments, Ltd.

vy. Georgia, 655 F.2d 627 (Sth Cir. 1981).

The answers and objections given by the Plaintiffs here were not

evasive. The Defendants failed to file a motion to compel and there is

no order coinpelling more complete, sworn answers to the interroga-

tories or disobedience of such order. In fact Ronald Chamness’ objec-

tions were never ruled upon or otherwise addressed. There is, there-

fore, no basis for determining that Ronald Chamness’ answers consti-

tute “no answer” to discovery which would justify the imposition of

death penalty sanctions to the entire Chamness Family.

5. Pretrial order

On or about October 4, 1989, the Honorable Court required a

pretrial order be submitted by June 22, 1990. The Chamness Family

and Defendants filed Pretrial Orders although, not pretrial orders

signed by both parties. Supplemental Transcript. The factors relat-

ing to the submission of a separate pretrial orders are described in

the FDIC’s Motion for Sanctions. Vol. 3, pp. 662-663, 671-673. Ap-

parently, the Defendants submitted their version of a pretrial order

because Plaintiffs’ counsel had not contacted them by June 20. Vol.

3, p. 672. To the extent that the submission of a separate pretrial

order was the basis for the sanctions, the record reflects no fault on

behalf of the Chamness Family and only arguable fault by their coun-

sel. “Finally dismissal may be inappropriate when neglect is plainly

attributable to an attorney rather than a blameless client...” Batson v.

Neal Spelce Associates, 765 F.2d 511, 514 (Sth Cir. 1985). There is

absolutely no evidence that the Chamness Family, then represented

25b

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by counsel, refused to cooperate with their attorney regarding the

preparation of the pretrial order, or that there was any prejudice re-

sulting from the failure to have all parties’ signature on the two pre-

trial orders submitted.

Legal Authority

The sanctions available under Rule 37(b) for such

conduct are predicated upon the presence of such

factors as willful disobedience, gross indifference

to the right of adverse party, deliberate callousness,

or gross negligence. The sanctions are not predicated

upon a party’s failure to satisfy fully the requirements

of production order when the failure was “due to

inability fostered neither by its own conduct nor by

circumstances within its control. [The Rule] should

not be construed to authorize dismissal because of

noncompliance of a pretrial production order when

it has been established that failure to comply has been

due to inability, and not to willfulness, bad faith, or

any other fault of petitioner.”

Dorsey v. Academy Moving and Storage, 423 F.2d 858, 860 (Sth

Cir. 1970) (Citing Societe Internationale Pour Participations

Industrielles Et Commercicales, SA v. Rogers, 357 U.S. 197, 211-

212 (1958).

The Fifth Circuit has set out the factors to be considered by the

Court in determining what sanction is appropriate under Rule 37:

But we have also recognized that dismissal is too

harsh a sanction where a number of factors, singly

or in combination, are present, or where the District

Court’s relevant findings of historical fact are clearly

erroneous. First, dismissal is to be sparingly used

and only in situations where its deterrent value can-

not be substantially achieved by the use of less dras-

tic sanctions. Whether the other party’s preparation

for trial was substantially prejudiced is a consider-

ation. Dismissal is generally inappropriate and lesser

sanctions are favored where neglect is plainly at-

tributable to an attorney, rather than to his blameless

26b

client. Nor does a party’s simple negligence grounded

in confusion or sincere misunderstanding of the

Court’s orders, warrant a dismissal. Finally, the Rule

“should not be construed to authorize dismissal when

it has been established that failure to comply is due

to inability.”

Marshall v. Segona, 621 F.2d 763, 767-768 (5th Cir. 1980) (Citing

National Hockey League v, Metropolitan Hockey Club, Inc., 427

U.S. 639, 643 (1976) (per curiam)).

“Although our task in reviewing a sanction imposed

under Rule 37(b) is to determine whether the dis-

trict judge abused his discretion in ordering the sanc-

tion, we have noted before that a district judge should

use the draconian remedy of dismissal with preju-

dice only in extreme circumstances.” Griffin v. Alu-

minum Co. of America, 564 F.2d 1171, 1172 (Sth

Cir. 1977). “Deliberate, repeated refusals to comply

with discovery orders have been held to justify the

use of this ultimate sanction.” See also, Emerick v.

Fenick Industries, Inc., 539 F.2d 1379 (Sth Cir. 1976);

Durgin v. Graham, 372 F.2d 130 (Sth Cir. 1969) [cert.

denied 389 U.S. 941 (1969)].

Bonadventure v, Butler, 593 F.2d 625 (Sth Cir. 1979) [Bracketed

cite history inserted].

“Although the District Court’s discretion under Rule 37 is broad,

we have repeatedly emphasized that it is not unlimited, and we have

often characterized the dismissal with prejudice as a Draconian rem-

edy, or a remedy of last resort only to be applied in extreme circum-

stances.” Batson v. Neal Spelce Associates, 765 F.2d 511, 515 (Sth

Cir. 1985). The Court in Batson reversed the District Court’s dismissal

with prejudice, and noted the absence in the record of any consider-

ation by the District Court of whether a less drastic action than a dis-

missal with prejudice would have furthered the important deterrent

aspect of Rule 37. Id. at 516. It should be noted that in Batson, the

matter was remanded to the District Court. The District Court once

again dismissed with prejudice, after making express findings that

lesser sanctions were not appropriate. This order was affirmed by the

27b

SEE MERI DM BRR ats ON ad te Se OS ie

Fifth circuit in Batson v. Neal Spelce Associates, 765 F.2d at 546.

“A district court ‘Abuses its discretion if it imposes a sanction of

dismissal without first considering the impact of the sanction and the

adequacy of less drastic sanctions.’” Olivia v. Sullivan, 958 F2d 272,

274 (9th Cir. 1992) Citing U.S. v. National Medical Enterprises, Inc.,

792 F.2d 906, 912 (9th Cir. 1986). The Ninth Circuit Court of Appeals,

in reversing a sua sponte dismissal by a district court stated that,

“[nJothing in the record demonstrates that counsel was on notice that

the case would be dismissed. “Failure to warn has frequently been a

contributing factor in our decisions to reverse orders of dismissal.” Id,

at 274. Admittedly, the facts of the Olivia decision concern the court’s

sua sponte dismissal of a case in the absence of a motion to dismiss. The

Ninth Circuit, however, has stated three factors in determining whether

or not a district court has considered alternatives to dismissal:

“(1) did the court explicitly discuss the feasibility of

less drastic sanctions and explain why alternative

sanctions would be inadequate? (2) did the Court

implement alternative methods of sanctioning or

curing the malfeasance before ordering dismissal?

(3) Did the court warn the plaintiff of the possibility

of dismissal before actually ordering dismissal?”

Malone v. United States Postal Service, 833 F.2d 128, 132 (9th Cir.

1987) cert. denied 488 U.S. 819 (1987). There is absolutely no dis-

cussion in Judge Porter’s order, or anywhere in the record, of any

consideration or discussion of alternatives to the sanction of Dis-

missal being considered or discussed.

The Ninth Circuit Court has stated five leading factors to be

considered by a trial court in determining whether or not to dismiss

a case for failure to comply with a court order.

A district court must weigh five factors in determin-

ing whether to dismiss a case for failure to comply

with a court order; ‘(1) the public’s interest in expe-

ditious resolution of litigation; (2) the court’s need

to manage its docket; (3) the risk of prejudice to the

defendants; (4) the public policy favoring disposi-

tion of cases on their merits; and (5) the availability

of less drastic sanctions.’ ‘It is not necessary for a

28b

district court to make explicit findings to show that

it has considered these three factors.’

Malone v. United Postal Service, 833 F.2d at 130. Citing Thompson

y. Housing Authority, 782 F.2d 829, 832 (9th Cir.), cert. denied, 107

S.Ct. 12 (1986) and Henderson v. Duncan, 779 F.2d 1421, 1423 (9th

Cir. 1986).

A similar standard for review on Rule 37 sanctions is set forth in

the Fifth Circuit opinion of Fjelstad v. American Honda Motor Com-

panies, 762 F.2d 1334 (Sth Cir. 1985):

The District Court’s ‘discretion will not be disturbed

unless we have a definite and firm conviction that

the Court committed a clear error of judgment in the

conclusion it reached upon weighing of the relevant

factors. Where the drastic sanctions of dismissal or

default are imposed, however, the range of discre-

tion is narrowed and the losing party’s noncompli-

ance must be due to willfulness, fault, or bad faith.

Id. at 1337 Citing U.S. v. Sumitomo Marino and Fire

Ins. Co., 617 F.2d 1365, 1369 (9th Cir. 1980). The

constitutional basis of the limitations on the use of

death penalty sanctions has been recognized by the

Fifth Circuit. “Due process limits the imposition of

the severe sanctions of dismissal or default to ex-

treme circumstances in which the deception relates

to the matters in controversy and prevents their im-

position merely for punishment of an infraction that

did not threaten to interfere with the rightful deci-

sion of the case.” Fjelstad 162 F.2d at 1338.

Arecent article in the Texas Bar Journal fully discusses the Con-

stitutional limitations on the “death penalty” sanctions.

“A case of the Fifth Circuit, Bonair Hotel, Inc. v.

Time, Inc., captures the Constitutional sensitivity of

the United States Supreme Court with regard to the

death penalty sanctions, and holds that the dismissal

of an action with prejudice is a drastic remedy and

should be applied only in extreme circumstances.”

29b

Sane a gabe

Soules and Wallace, Discovery Death Penalty Sanctions Reviews,

De Novo Standard 55, Tex. B.J. 135 (1992). “Fairness demands the

severe sanction of default may not be imposed under Rule 37(b)(2) in

the absence of willfulness, bad faith or fault.” Fjelstad at 1340.

As we have demonstrated above, the discretion of a

district court to award sanctions and render judg-

ment based on those sanctions is quite broad. That

discretion is bounded at its outer limits, however by

constitutional due process concerns.

Frame v. S-H, Inc., 967 F.2d 194, 204 (Sth Cir. 1992); See also USA

Const., Amend. V.

SUMMARY OF ARGUMENT NO. 2

The draconian measure of sanctions dismissal without warming

was not warranted in the case at bar for any reason. The sanction

was an abrogation of the Chamness Family’s constitutional and pro-

cedural rights, which were not warranted by the conduct of any mem-

ber of the Family. The sanction was imposed without the common

law safeguards announced in this Court’s decisions. The dismissal

should be reversed.

CONCLUSION

The District Court erred in this case in two respects. First, it

exclusively applied the superpowers granted to the FDIC and used

them to defeat the homestead claim of the Chamness Family.

Secondly, the District Court entered the ultimate sanction

deprivation of the right to trial - without adhering to the procedural

requirements established by the Fifth Circuit Court of Appeals. The

Chamnesses pray the Court order that the judgment be set aside, that

the Memorandum Opinion be vacated, and that this case be remanded

for trial in the District Court.

ak Palen te Ee AIA atnce AUS. tas. ar RS —— ‘ -

Respectfully submitted,

SULLIVAN & AVE

By:/s/

WILLIAM O. HOLSTON, P.C.

State Bar No. 09915300

3535 Travis, Suite 130

Dallas, TX 75204

Ph: (214) 528-9560

Fax: (214) 528-9581

JACK MOFFITT AND ASSOCIATES, P.C.

BY:/s/

JACK A. MOFFITT, JR.

State Bar No. 14251300

624 North Good Latimer Expy.

Suite 110

Dallas, TX 75204

Ph: (214) 823-7394

Fax: (214) 827-8194

ATTORNEYS FOR APPELLANTS

31b

CERTIFICATE OF SERVICE

The undersigned hereby certifies that two true and correct cop-

ies of this Brief and one copy of Appellants’ Appendix/Record Ex-

cerpts were served on the 16th day of July, 1993, via hand delivery,

upon

A. Burch Waldren

James H. Cheatham IV

Law, Snakard & Gambill

3200 Team Bank Building

500 Throckmorton Street

Fort Worth, Texas 76102

G Roland Love

David J. Metzler

McCauley, Macdonald, Love & Devin

3800 Renaissance Tower

1201 Elm Street

Dallas, TX 75270

Signed this 16th day of July, 1993.

/s/

JACK A. MOFFITT, JR.

State Bar No. 14251300

32b