                      United States Court of Appeals,

                                 Fifth Circuit.

                                  No. 92-9010.

               Merlyn J. POLLOCK, Plaintiff-Appellant,

                                       v.

FEDERAL DEPOSIT INSURANCE CORPORATION, As Receiver for First City
Texas Dallas, Defendant-Appellee.

                                 April 4, 1994.

Appeal from the United States District Court for the Northern
District of Texas.

Before GOLDBERG, JOLLY, and BARKSDALE, Circuit Judges.

      GOLDBERG, Circuit Judge:

      The parties in this case have separately orchestrated a series

of    mortgage      transactions       and     have     fashioned      clashing

interpretations of a common work.           Both Merlyn Pollock ("Pollock")

and   the   Federal    Deposit    Insurance    Corporation      ("FDIC")     have

attempted to present a melodious symphony to the court.                 Despite

utilizing    the   same   notation,    the    same    sheet   music,   the   same

instruments documenting their transaction, the parties produce

contrapuntal arrangements whose dominant tones fail to generate

harmonious melodies.      Although successful in individually creating

euphonious arrangements, sung together, their mellifluous tunes

degenerate into more cacophony than symphony.

      Because both sides to this dispute harmonize the instruments

of the agreement in a reasonable fashion, we find that the relevant

documents are essentially ambiguous.              We therefore reverse and

remand the case to allow the district court to determine the most


                                       1
melodic interpretation of the parties' intentions.

                               I. Background

     We sound the opening notes of our composition by laying out

the facts which form the background rhythms over which we can then

lay out the conflicting melodies.          Merlyn Pollock entered into an

agreement in August of 1986 to purchase from First City Bank—Valley

View ("First City") the Kreck Foods meat processing plant and

property ("meat plant").          Pollock executed a promissory note

("Original Pollock Note") in favor of First City to finance the

acquisition of the meat plant.        The note, in the principal amount

of $1,879,242, was secured by a deed of trust ("Original Deed of

Trust").

     The   Original   Deed   of    Trust    pledged   the    meat    plant   as

collateral   for   First   City    under    the   Original   Pollock     Note.

Importantly, the Original Note was a non-recourse loan. Thus, upon

default by Pollock, the meat plant itself was the only asset

available as security for First City.             Pollock was to have no

personal liability under the loan.

     In September of 1986, two weeks after signing the original

loan documents, Pollock executed a security agreement ("Security

Agreement") in favor of First City, pledging a Certificate of

Deposit in   the   principal      amount   of   $89,179.71   to     secure   all

existing and future indebtedness that Pollock had with First City.

The Security Agreement provided that the Certificate of Deposit

would remain as security on all Pollock's indebtedness until First

City executed a written termination statement and returned the


                                      2
collateral to Pollock.

     In March of 1987, Pollock and First City entered into an

agreement to restructure Pollock's meat plant debt pursuant to

which Pollock executed a second promissory note ("Renewal Note") in

the principal amount of $1,975,000 in favor of First City.      As

Pollock had made no payments under the Original Note, the entire

amount of that debt was rolled into the Renewal Note.   As part of

the renewal and extension of the Original Note, Pollock executed a

second deed of trust ("Renewal Deed of Trust") in favor of First

City to secure his continuing indebtedness.

     The Renewal Note contained, similar to the Original Note, a

non-recourse provision that stated, "If this Note is not paid at

maturity, ... Holder's sole remedy shall be to foreclose its

security interest and lien upon the Property described in the Deed

of Trust, and Maker shall have no personal liability to Holder for

the Indebtedness herein described."   The accompanying Renewal Deed

of Trust then described "mortgaged property" to include "any and

all security and collateral of any nature whatsoever, now or

hereafter given for the repayment of the Indebtedness or the

performance and discharge of the Obligations."1

     When Pollock failed to make the first payment under the

Renewal Note, the Note was accelerated and the meat plant property

was posted for foreclosure.   After the property was sold and the

proceeds applied to the indebtedness due under the Renewal Note,

     1
      The construction of the phrase "now or hereafter given" in
the Renewal Deed of Trust is the central dispute in this
controversy.

                                3
First City applied Pollock's Certificate of Deposit against the

remaining deficiency.

     On January 25, 1991, Pollock filed a civil action in Texas

state court, seeking recovery against First City, Texas—Dallas,

successor in interest by merger with First City Bank, Valley View,2

for the proceeds of the Certificate of Deposit.   Cross motions for

summary judgment were filed, arguing that the Certificate of

Deposit either did or did not collateralize the Renewal Note and

therefore could or could not be applied against the deficiency

incurred under that note.

     The state district court entered a judgment in favor of First

City as a matter of law.    The court held that the loan documents

evinced the parties' intention to utilize the Certificate of

Deposit as security on Pollock's meat plant loan.        The Bank,

according to the state court, had therefore acted properly in using

the proceeds from the Certificate of Deposit as an offset against

the deficiency on the loan.

     Pollock perfected an appeal to the state appellate court on

January 15, 1992.    Oral argument was scheduled for November 4,

1992.    On October 30, the Texas Banking Commission appointed the

Federal Deposit Insurance Corporation as receiver for First City,

and, on November 3, the FDIC intervened in this suit.      That same

day, the FDIC removed the action to the United States District

Court pursuant to 12 U.S.C. § 1819(b)(2)(B).   The federal district


     2
      For the sake of clarity, we will also refer to the
successor organization as "First City."

                                 4
court adopted the judgment of the state court and transferred the

case to our court for review.

                               II. Analysis

      For the central movement of this dispute, Pollock suggests two

distinct thematics, one jurisdictional, the other substantive. His

jurisdictional argument submits that the federal district court

acted improperly in adopting and transferring the case to this

court and that this case was improperly removed from the state

court in the first place.           On the substantive side, Pollock

contends that the state court erred in granting summary judgment in

favor of First City because the Renewal Note and Deed of Trust did

not   allow   recourse   to   the   Certificate   of   Deposit.    In   the

alternative, Pollock asserts that the documents are ambiguous as to

the collateralization of the Certificate of Deposit.           We begin by

addressing     the   procedural      and   jurisdictional     issues    and

subsequently confront the substantive questions raised against the

judgment.

                     A. Federal Court Jurisdiction

       Pollock complains that we cannot have jurisdiction over his

case because the adoption and transfer order issued by the district

court does not constitute a "final decision."          As such there was no

adjudication on the merits by the federal district court, and

therefore, he claims there can be no order that could properly be

appealed to this court.       His arguments have no merit in light of

our recent en banc decision in In re Meyerland, 960 F.2d 512 (5th

Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 967, 122 L.Ed.2d


                                      5
123 (1993).

      The district court in the instant case precisely followed the

instructions laid out in Meyerland and by subsequent rulings

interpreting   that   decision.   In   Meyerland,   we   held   that   the

district court should "take the state judgment as it finds it,

prepare the record as required for appeal, and forward the case to

a federal appellate court for review."     960 F.2d at 520.      This is

precisely the course of action taken by the district court here.

Meyerland continues:

      A case removed from state court simply comes into the federal
      system in the same condition in which it left the state
      system. Granny Goose Foods, Inc. v. Brotherhood of Teamsters,
      Etc., 415 U.S. 423, 435-36, 94 S.Ct. 1113, 1122-23, 39 L.Ed.2d
      435 (1974).    For instance, if the notice of appeal was
      adequate in the state court system, it should be deemed
      adequate when it enters the federal courts, regardless of
      whether the state technical requirements for notice of appeal
      differ from the federal.

Id.   Meyerland 's reasoning upholding the adoption and transfer

procedure has been routinely reaffirmed since the announcement of

that decision.   See In re 5300 Memorial Investors, Ltd., 973 F.2d

1160 (5th Cir.1992);    McMillan v. MBank Fort Worth, N.A, 4 F.3d 362

(5th Cir.1993); NCNB Texas National Bank v. Johnson, 11 F.3d 1260,

1264 (5th Cir.1994).    Under the scheme set out in these cases, the

lower court in this case acted properly and Pollock's argument as

to this point is simply without merit.

      Pollock additionally challenges the removal to federal court

by arguing that 12 U.S.C. § 1819(b)(2)(B) does not grant subject

matter jurisdiction to the federal courts under the facts of this




                                  6
case.3   That section makes clear that, except in very limited

circumstances, all civil cases to which the FDIC is a party are

deemed to arise under federal law.4   Pollock concedes the general

rule of removal but asserts that this case falls within the

exception expressed in 12 U.S.C. § 1819(b)(2)(D).       Under that

provision, an action shall not be deemed to arise under the laws of

the United States if it is an action:

     (i) to which the Corporation, in the Corporation's capacity as
     receiver of a State insured depository institution by the
     exclusive appointment by State authorities, is a party other
     than as a plaintiff;

     (ii) which involves only the preclosing rights against the
     State insured depository institution, or obligations owing to,
     depositors, creditors, or stockholders by the State insured
     depository institution; and

     (iii) in which only the interpretation of the law of such
     State is necessary

12 U.S.C. § 1819(b)(2)(D).

     The resolution of this issue is found through a simple and

straightforward application of the last requirement—this is not a

case in which only the interpretation of state law is necessary.




     3
      12 U.S.C. § 1819(b)(2)(B) provides that "Except as provided
in subparagraph (D), the Corporation may, without bond or
security, remove any action, suit, or proceeding from a State
court to the appropriate United States district court before the
end of the 90-day period beginning on the date the action, suit,
or proceeding is filed against the Corporation or the Corporation
is substituted as a party."
     4
      12 U.S.C. § 1819(b)(2)(A) provides that "Except as provided
in subparagraph (D), all suits of a civil nature at common law or
in equity to which the Corporation, in any capacity, is a party
shall be deemed to arise under the laws of the United States."

                                7
The FDIC has asserted the special defense of D'Oench Duhme5 and the

codification of that defense set forth at 12 U.S.C. § 1823(e).   It

is well settled that when such federal defenses are raised, the

exception expressed in section 1819(b)(2)(D) is inapplicable. Diaz

v. McAllen State Bank, 975 F.2d 1145, 1149 (5th Cir.1992).       In

determining whether a case involves only the interpretation of

state law, courts are "to consider the case as a whole—complaint

and likely defenses as well."    Capizzi v. Federal Deposit Ins.

Corp., 937 F.2d 8, 10 (1st Cir.1991).   Courts have abandoned the

well-pleaded complaint rule under section 1819(b)(2)(D) in favor of

a test which focuses on the question of whether the federal

defenses are colorable.   Diaz, 975 F.2d at 1149-50, Capizzi, 937

F.2d at 8.

     In this case the FDIC has asserted colorable D'Oench and

federal statutory defenses to Pollock's claim.6       The district

     5
      The doctrine of D'Oench, Duhme & Co. v. Federal Deposit
Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), as
we have previously stated, "protects the FDIC, as receiver of a
failed bank or as purchaser of its assets, from a borrower who
has "lent himself to a scheme or arrangement' whereby banking
authorities are likely to be misled." Bowen v. Federal Deposit
Ins. Corp., 915 F.2d 1013, 1015 (5th Cir.1990) (quoting Beighley
v. Federal Deposit Ins. Co., 868 F.2d 776, 784 (5th Cir.1989)).
     6
      We do not feel it necessary to express an opinion as to the
merits of the D'Oench defenses in the present appeal. See Diaz,
975 F.2d at 1150 (in determining whether a defense is colorable,
the court "need not express an opinion on the merits of the
case...."). These defenses will only become relevant upon remand
when the lower court evaluates evidence extrinsic to the bank's
records in determining the intent of the parties at the time of
the formation of the loan agreements.

          The district court on remand will be faced with the
     question of whether D'Oench can be raised by the FDIC to
     preclude the admission of extrinsic evidence of side

                                8
court, therefore, properly found that it had jurisdiction pursuant

to 12 U.S.C. § 1819(b)(2)(A) and (B) and that the exception to

removal in section 1819(b)(2)(D) does not apply in this case.

Believing that we have solved the jurisdictional conundrums raised

by   Pollock,   we   proceed   to    a       discussion   of   his   substantive

contentions.

                B. Non-Recourse Loan v. Dragnet Clause

      The standard of review for summary judgments in cases that

have been removed to federal court after final judgment by a state

court was set forth in Walker v. Federal Deposit Ins. Corp., 970

F.2d 114 (5th Cir.1992).       In Walker, we held:

           The standard of review is the same as if the federal
      court itself had entered the order.       In effect, we look
      through the federal district judge's eyes at the state court's
      justifications for these orders. Federal rather than state
      procedural law applies since federal law controls the course
      of proceedings from the point of removal.       We review the
      summary judgment award de novo, independently of the state or
      federal district court, and resolving all reasonable doubts
      and drawing all reasonable inferences in favor of the party
      opposing summary judgment.

970 F.2d at 121 (citations removed). The grant of summary judgment

must be affirmed when, in viewing the evidence in the light most

favorable to the opposing party, there are no genuine issues of

material fact to be tried.          See Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986).

As a result, summary judgment is proper "unless there is sufficient

evidence favoring the nonmoving party for a jury to return a


      agreements in clarifying the ambiguous loan agreement.                We
      leave this issue to the district court which should be
      allowed not only the first bite at this apple, but an
      opportunity to consume the entire core.

                                         9
verdict for that party.         If the evidence is merely colorable, or is

not significantly probative, summary judgment may be granted." Id.

at 249-50, 106 S.Ct. at 2510-11 (citations omitted).               Federal Rule

of Civil Procedure 56(c) provides that a grant of summary judgment

is proper where there is no genuine issue as to any material fact

and the moving party is entitled to a judgment as a matter of law.

Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d

265 (1986).

     The trial court granted summary judgment in favor of First

City finding that the terms of the several loan agreements allowed

the bank to offset the Certificate of Deposit against a deficiency

on the meat plant property.            Pollock complains that this decision

is in error because the documents in this transaction are ambiguous

as to whether the Certificate of Deposit was properly subject to

offset    against       the   loan.7     Because   we   find    that    the    loan

transaction documents allow of two reasonable interpretations,

neither of which is obviously preferable, we reverse the grant of

summary judgment and remand for further proceedings to resolve the

ambiguity.

         As common sense would have it, "[a] mortgage is governed by

the same rules of interpretation which apply to contracts."                   Sonny

Arnold,    Inc.    v.    Sentry    Savings    Ass'n,    633    S.W.2d   811,   815

(Tex.1982).       The initial determination of ambiguity is a question

     7
      The FDIC argues that Pollock failed to raise the issue of
ambiguity in the court below. However, it is implicit in the
argument that a document which is unambiguous in one direction
necessarily involves some element that the instrument is, at
least, not unambiguous in the other direction.

                                         10
of law subject to de novo review on appeal.             Guidry v. Halliburton

Geophysical     Servs.,    Inc.,   976    F.2d   938,   940    (5th   Cir.1992);

Childers   v.    Pumping    Systems,     Inc.,   968    F.2d   565,    569   (5th

Cir.1992).      If the court can ascertain that the contract is

"reasonably susceptible to more than one interpretation, it is

ambiguous."     Childers, 968 F.2d at 569;         Towers of Texas, Inc. v.

J & J Systems, Inc., 834 S.W.2d 1, 2 (Tex.1992) ("A written

instrument is ambiguous when its meaning is uncertain and doubtful

or it is reasonably susceptible to more than one meaning, taking

into consideration the circumstances present when the instrument

was executed").     Additionally, we note that "[a] contract is not

ambiguous merely because the parties disagree upon the correct

interpretation." D.E.W., Inc. v. Local 93, Laborers' International

Union, 957 F.2d 196, 199 (5th Cir.1992).

     We also recognize that "mortgages to secure other indebtedness

will be effective to secure only items of indebtedness that were

within the reasonable contemplation of the parties at the time the

mortgage was executed."       Bank of Woodson v. Hibbitts, 626 S.W.2d

133, 134 (Tex.App.—Eastland 1981, writ ref'd n.r.e.). The court in

Bank of Woodson noted that where a deed of trust is unambiguous, an

objective reading of the language of the instrument determines what

the parties reasonably contemplated would be secured.                 Id. at 134-

35 (citing Kimbell Foods, Inc. v. Republic National Bank of Dallas,

557 F.2d 491 (5th Cir.1977), aff'd, 440 U.S. 715, 99 S.Ct. 1448, 59

L.Ed.2d 711 (1979)).

      With these principles in mind, we turn to the language of the


                                         11
documents that make up the meat plant transaction to determine

whether the parties unambiguously intended the Certificate of

Deposit to secure the meat plant loan.      A revisitation of the loan

documents demonstrates that they are susceptible to two reasonable

interpretations.

     Pollock refers us to the Renewal Note and Deed of Trust which

specifically provide that the loan will be non-recourse with the

bank's sole remedy upon default being foreclosure upon the real

estate described in the Deed of Trust.       Pollock was to have "no

personal liability" under the arrangements.

     The FDIC notes, however, that two weeks after signing the

Original loan documents, Pollock executed the Security Agreement

covering the Certificate of Deposit.     That agreement contained a

dragnet clause stating that the collateral specified therein (the

Certificate of Deposit) secured all present and future loans and

obligations   maintained    by   Pollock.       Under   the   original

arrangements, a non-recourse loan and a dragnet clause, we find a

prelude to the disharmony in the documentation of the Pollock-First

City Renewal documents.

     The Renewal Deed of Trust increased the dissonance by securing

First City under the Renewal Note with "any and all other security

and collateral of any nature whatsoever, now or hereafter given for

the repayment of the Indebtedness or the performance and discharge

of the Obligations."   We are forced into contractual confusion by

the phrase "now given".    We have searched for some language in the

contract which establishes the connection or lack thereof, between


                                  12
the Certificate of Deposit and the Renewal loan transaction.

Unfortunately, we have not found the interpretation of the "now

given" phrasing that can bring us out of this choral dissonance.

     Pollock      urges   that    "now    given"     was   intended   to     mean

concurrently given with the Renewal Deed of Trust.                    That is,

Pollock claims that only if the Certificate of Deposit was given

over to First City simultaneously with the execution of the Renewal

Deed of Trust, would it secure the non-recourse loan.                 However,

since the Certificate of Deposit was given to First City prior to

the execution of the Renewal Deed of Trust, Pollock contends that

it was not intended to collateralize the meat plant property

transaction.

     If   First    City   had    intended     to   specifically    include    the

Certificate of Deposit as collateral under the Renewal Deed of

Trust, Pollock suggests that the Renewal Deed of Trust would have

to refer to all security and collateral "now, heretofore, and

hereafter given".     Since the actual Renewal Deed only states "now

or hereafter given" it does not indicate an intention to include

collateral given prior to the Renewal Deed of Trust.              Because there

was no explicit reference to the Security Agreement in any of the

Renewal documents, Pollock argues the Security Agreement, which was

"given" six months earlier, cannot be "now given".

     Sounding an entirely different tune, the FDIC alleges that the

term "now given" should not be given such a narrow construction.

Instead, it claims that "now given" refers to all collateral given

by Pollock up to and including the time of the execution of the


                                         13
Renewal transaction.        The reference of "now given" should be given

a more expansive interpretation which, it urges, is the more

natural reading of the contract.

     The       FDIC   additionally      argues     that    it    can     offer    an

interpretation of the instruments which brings all the documents

into accord. Texas law requires that courts construe a contract so

as to bring its various provisions into harmony.                Chapman v. Orange

Rice Milling Co., 747 F.2d 981 (5th Cir.1984).             The FDIC points out

that the Security Agreement provided that the Agreement would

continue in full force and effect until First City executed a

written    termination      statement     and    reassigned     to     Pollock   the

Certificate of Deposit. The Security Agreement had a definite date

of inception and a ritual for termination.                Because the evidence

establishes that there has been no such termination, the FDIC

concludes that the Security Agreement was in continuing effect at

the execution of the Renewal Deed of Trust and should therefore be

considered "now given".

     As    a    postlude,    the   FDIC      argues   that      even    under    the

interpretation of "now given" suggested by Pollock, the Renewal

Deed of Trust would include the Certificate of Deposit as security

on the meat plant loan as long as there was language in the Renewal

Deed of Trust specifically referring to the Security Agreement in

such a way that it could be considered given simultaneously.                     The

FDIC notices that Section 11.1 of the Renewal Deed of Trust

expressly provides for the survival of all security previously

given for the debt.         Section 11.1 of the Renewal Deed of Trust


                                        14
states:      "Each and all of the Obligations shall survive the

execution     and     delivery     of     the    Security       Documents,         and     the

consummation of the loan called for therein, and shall continue in

full force and effect, until the Indebtedness shall have been paid

in full." In its definition of the Security Documents, the Renewal

Deed includes        "any   and    all    other      documents       now     or    hereafter

executed by [Pollock] or any other person or party to evidence or

secure the payment of the Indebtedness...."

       The thrust of these provisions, according to the FDIC, is that

the    Security      Agreement      was     referenced          in     the    renewal      of

obligations.        The Security Agreement, given six months previous,

must be considered "now executed" under the terms of this renewal

section in order for this provision to make sense.                            That is, it

would not be necessary to provide for the survival of documents

executed     at     the   time    of     renewal      since     a    document        created

simultaneously with the renewal would not require renewal.                            Thus,

the FDIC argues that this section implicitly includes the Security

Agreement in the survival provision of the Renewal Deed of Trust.

In other words, the FDIC claims that section 11.1 renews the giving

of    the   Certificate     of    Deposit       in   such   a    way    as    to    make    it

simultaneously given with the Renewal Deed of Trust and thus within

the mortgaged property available to secure the meat plant loan.

       Our own reading of the documents shows that the loan contracts

and security agreements allow for the interpretations advanced by

both parties.       We have a genuine ambiguity, and the case will have

to be returned to the lower court for consideration of extrinsic


                                           15
evidence in order to discover which interpretation most closely

follows the intent of the parties.8          See Childers, 968 F.2d at 574.

      Obviously the documents in the present context were not

paradigms of clarity.        The lower court will have to bring some

pellucidity to their words.         This can be done by reference to the

environment at the time of the formation of the agreement as well

as to the discussions which surrounded the execution of the loan

documents.

      It is impossible to determine based on the loan documents

alone,    without    reference     to   extrinsic   evidence,   whether      the

certificate of deposit was intended to secure the Renewal Note. We

have a non-recourse loan conflicting with a security agreement

containing a dragnet clause purporting to secure Pollock's entire

indebtedness.       Furthermore, the Renewal Deed of Trust includes

language which suggests the Certificate of Deposit was intended to

come within the ambit of secured property under the meat plant loan

while concurrently stating that Pollock will bear no personal

liability under that loan.

      In sum, we find that the loan documents dispute, which is

properly before this court, can only be resolved by evaluating the

circumstances of the formation of the contract. The dissonance can

be   harmonized     by   looking   to   extrinsic   evidence    in   order    to

determine the parties' intentions as to whether the Certificate of

Deposit was intended to secure the meat plant property loan.                 The

      8
      As noted above, the court on remand will have to consider
the merits of the D'Oench defenses in this regard. See supra
note 6.

                                        16
case is remanded for additional proceedings to make the required

findings of fact.9    For the preceding reasons, we remand this case

for further action.

                           III. Conclusion

     The judgment of the lower court is REVERSED, and we REMAND

this case for further proceedings in accordance with this opinion.




     9
      See supra note 6.

                                  17
