          TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                        NO.03-02-00214-CV



                                   The Cadle Company, Appellant

                                                   v.

         George Whiteside; and American Physician=s Service Group, Inc., Appellees




                FROM THE COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY
                NO. 258315, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING




                Appellant The Cadle Company (ACadle@) sued appellees George Whiteside and American

Physician=s Service Group, Inc. (collectively, Aappellees@) to recover on a note. Appellees moved for

summary judgment, asserting that Cadle=s claim was barred by limitations. The trial court granted summary

judgment in favor of appellees. By one issue presented, Cadle now appeals. We affirm.


                                          BACKGROUND

                On January 10, 1989, Whiteside executed a promissory note made payable to NCNB

Texas National Bank. On that same date, American Physician=s Service Group, Inc. entered into a

Guaranty Agreement, guaranteeing Whiteside=s payment of the note. According to the terms of the note,

Whiteside was to make monthly payments in the amount of $318.51 through the due date, January 10,

1992. On the due date, Whiteside was to remit a final payment of $323.88. Whiteside, however, failed to

pay the note according to its terms, and accordingly, defaulted on January 10, 1992, the due date.
                 Sometime before January 10, 1992, the note was assigned to the Federal Deposit

Insurance Corporation (Athe FDIC@). On July 21, 1992, the FDIC transferred the note to Cadle. About

two years later, Whiteside made six partial payments to Cadle. The last of the partial payments is dated

November 14, 1995.

                 On August 10, 2001, Cadle filed suit on the note against both appellees. Appellees moved

for summary judgment, asserting that Cadle=s claim was barred by the statute of limitations. The trial court

granted summary judgment in favor of appellees. This appeal follows.


                                              DISCUSSION

                 A traditional motion for summary judgment is properly granted when the movant establishes

that there are no genuine issues of material fact to be decided and that it is entitled to judgment as a matter

of law. Tex. R. Civ. P. 166a(c); Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999); Lear

Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991). All doubts are resolved against the movant,

and the reviewing court must view the evidence in the light most favorable to the nonmovant. Lear Siegler,

819 S.W.2d at 471. When a defendant moves for summary judgment based on an affirmative defense, the

defendant, as movant, bears the burden of conclusively proving each essential element of its defense. See

Rhone-Poulenc, 997 S.W.2d at 223; Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121 (Tex. 1996).

A defendant moving for summary judgment on the affirmative defense of limitations has the burden to

conclusively establish that defense. See Velsicol Chem. Corp. v. Winograd, 956 S.W.2d 529, 530 (Tex.

1997).




                                                      2
                Both appellees acknowledged in their motions for summary judgment that because the note

was already in default at the time the FDIC assigned it to Cadle, Cadle was entitled to the benefit of the

federal six-year statute of limitations. See 28 U.S.C.A. ' 2415 (1994); 12 U.S.C.A. ' 1821 (2001).1 This


          1
                 Two separate statutes apply in this case. Section 2415, the more general of the two,
applies to actions on contracts brought by the United States or its agencies and includes a tolling provision:

          (a) . . . [E]very action for money damages brought by the United States or an officer
              or agency thereof which is founded upon any contract express or implied in law or
              fact, shall be barred unless the complaint is filed within six years after the right of
              action accrues . . . Provided, That in the event of later partial payment or written
              acknowledgment of debt, the right of action shall be deemed to accrue again at
              the time of each such payment or acknowledgment . . . .

28 U.S.C.A. ' 2415 (1994).

Section 1821 was enacted as part of the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (AFIRREA@) and applies to contractual claims held by the FDIC when appointed as a receiver or
conservator of a failed bank:

          (A) In general

               Notwithstanding any provision of any contract, the applicable statute of limitations
               with regard to any action brought by the Corporation as conservator or receiver
               shall beC

               (i)   in the case of any contract claim, the longer ofC

                     (I) the 6-year period beginning on the date the claim accrues; or

                     (II) the period applicable under State law; . . . .

12 U.S.C.A. ' 1821(d)(14) (2001).

         Both statutes provide a six-year limitations period, and assignees of the FDIC are entitled to the
same six-year limitations period under both statutes. See SMS Fin., L.L.C. v. ABCO Homes, Inc., 167
F.3d 235, 240 (5th Cir. 1999). The dispute in this case concerns the applicability of the tolling provision

                                                      3
six-year limitations period begins to run the later of (1) the date that the FDIC acquires the note or (2) the

date on which the cause of action accrues, or in this case, the date of default. 12 U.S.C.A. ' 1821.2

Construing the pleadings in the light most favorable to Cadle as we are required to do, the latest date on



included in section 2415.
        2
            Section 1821 provides:

            (B) Determination of the date on which a claim accrues

                For purposes of subparagraph (A), the date on which the statute of
                limitations begins to run on any claim described in such subparagraph shall
                be the later ofC

                 (i) the date of the appointment of the Corporation as conservator or
                     receiver; or

                (ii) the date on which the cause of action accrues.

12 U.S.C.A. ' 1821(d)(14).




                                                      4
which Whiteside could have defaulted was the due date on the note, January 10, 1992. It is unclear when

the FDIC originally acquired the note; however, it must have acquired the note before transferring it to

Cadle, and Cadle acquired the note on July 21, 1992. Thus, the latest date that the FDIC could have

acquired the note is July 21, 1992. And, accordingly, the latest date that the statute of limitations could

have begun to run is July 21, 1992. Cadle did not file its cause of action until August 10, 2001Cmore than

six years after the latest date that the statute of limitations could have begun to run.

                 In response to appellees= motions for summary judgment, Cadle asserted that Whiteside=s

partial payments triggered the accrual of a new cause of action and a new six-year limitations period.

Relying on section 2415, Cadle maintained that because it was entitled to the six-year statute of limitations

provided in that statute, it was also entitled to take advantage of the tolling provision in the statute.3

Similarly, Cadle argues on appeal that when the FDIC assigned the note to Cadle, Cadle acquired all of the

statute of limitations rights attendant with the note. Because either acknowledgment of a debt or partial

payments on a debt tolls the limitations period under section 2415, the six-year limitations period began to

run anew after the last partial payment was made. For support, Cadle relies on SMS Financial, L.L.C. v.

ABCO Homes, Inc., 167 F.3d 235, 240-41 (5th Cir. 1999).




        3
            In its responses to appellees= motions for summary judgment, Cadle asserted the following:
APlaintiff, as an assignee of the Federal Deposit Insurance Corporation, is entitled to the application of
federal statutes of limitations and of tolling.@ For authority, Cadle cited both section 2415 and section 1821
and SMS Financial, L.L.C. v. ABCO Homes, Inc., 167 F.3d 235 (5th Cir. 1999). Thus, the only issue
presented by Cadle to the trial court was whether it was entitled to benefit from the federal tolling provision
found in section 2415; likewise, that is the only issue before us on appeal. See Houston v. Clear Creek
Basin Auth., 589 S.W.2d 671, 677-78 (Tex. 1979).


                                                       5
                 In SMS Financial, the FDIC transferred a note to SMS Financial. At the time of the

transfer, the maker of the note, ABCO Homes, was in default on the note. A few months after the note

matured, but before SMS Financial acquired the note, ABCO made two payments on the note. The Fifth

Circuit held that section 2415 and section 1821 should be construed together and that the tolling provision

in section 2415 could apply to an assignee of the FDIC. Id. at 242. In that case, however, the event that

triggered the tolling of the statute of limitations, i.e., the payments on the note and a written acknowledgment

of the debt, occurred before the FDIC transferred the note to SMS Financial. In this case, Whiteside=s

partial payments were made after the FDIC transferred the note to Cadle. SMS Financial is therefore not

on point.

                 Although we have found no Texas case directly on point, the supreme court has discussed

the policy considerations supporting the application of the federal statute of limitations to assignees of the

FDIC. In Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001), the supreme court

recounted the two justifications generally cited as support for extending the six-year limitations period

provided by section 1821 to assignees of the FDIC. First, extending the federal statute of limitations to

assignees of the FDIC ensures a market for the assets of failed depositories. Without the extension of the

federal limitations period, the FDIC would be forced to prosecute all notes where state limitations had

expired, which would be contrary to the policies behind the statute=s enactment. Id. at 573; accord FDIC

v. Bledsoe, 989 F.2d 805, 810-11 (5th Cir. 1993). The second justification is explained by the premise

that A[a]n assignee stands in the shoes of his assignor.@ Wolf, 44 S.W.3d at 573 (quoting General Fin.

Servs., Inc. v. Practice Place, Inc., 897 S.W.2d 516, 520 (Tex. App.CFort Worth 1995, no writ));


                                                       6
accord Bledsoe, 989 F.2d at 810. In other words, the FDIC=s right to an extended limitations period is

part of the bundle of rights that it transfers to subsequent assignees. Wolf, 44 S.W.3d at 573. The court,

however, refused to extend the federal statute of limitations when these policy considerations were not

served. Id. at 574; accord Cadle Co. v. 1007 Joint Venture, 82 F.3d 102, 105-06 (5th Cir. 1996).

Accordingly, if a cause of action has not yet accrued when the FDIC transfers a note, the transferee is not

entitled to benefit from the federal limitations period. Wolf, 44 S.W.3d at 573; 1007 Joint Venture, 82

F.3d at 106.

                 Similarly, the United States Court of Appeals for the First Circuit has held that the federal

statute of limitations does not apply to assignees of the FDIC exactly as it would to the FDIC. Beckley

Capital Ltd. P=ship v. DiGeronimo, 184 F.3d 52 (1st Cir. 1999). In Beckley, DiGeronimo guaranteed a

note that was in default while the FDIC held it. Id. at 54. The FDIC sold the note to Beckley, and

DiGeronimo died a month later. Id. Because the note was already in default when the FDIC sold it to

Beckley, DiGeronimo was already subject to suit while the FDIC held the note. Beckley sued

DiGeronimo=s estate for the outstanding balance on the note. Id. A state statute, however, required that

suit be brought against an estate within one year from the decedent=s death, which Beckley failed to do. Id.

The First Circuit acknowledged that, had the FDIC sued the estate, FIRREA would have allowed it to do

so despite the state one-year statute of limitations. Id. at 57. Extending this benefit to the FDIC=s

assignees, however, is not justified under federal policy considerations, and therefore, the court held that the

assignees are not entitled to the same benefits where no federal policy is served. Id. at 57-58.




                                                       7
                 Both the Texas Supreme Court and the First Circuit recognized that the federal statutes do

not expressly extend the benefit of the six-year limitations period to the FDIC=s assignees. Wolf, 44

S.W.3d at 571; Beckley, 184 F.3d at 55-57;4 accord Jackson v. Thweatt, 883 S.W.2d 171, 174, 175

(Tex. 1994). Rather, the courts relied on policy considerations in extending the federal limitations period to

the FDIC=s assignees. Indeed, the courts refused to apply the federal limitations period when it does not

advance federal policy considerations.

                 As in the Beckley case, no reason exists in this case to extend the benefit of a six-year

limitations period beyond the point where it serves the federal policy, and it does not do so here. The

refusal to expand the federal statute of limitations to include a tolling provision does not significantly impact

the marketability of the FDIC=s notes; a market exists for notes, such as the one in this case, when the

federal statute of limitations has not yet run at the time the note is transferred, even without the tolling

provision. Although, as Cadle argues, the note might not have the same value without the benefit of the

tolling provision, this Amore money@ argument is an insufficient reason to extend the tolling provision to an

assignee of the FDIC when the tolling provision was not triggered before the transfer of the note. See 1007

Joint Venture, 82 F.3d at 106. At the time Cadle acquired the note, it was aware that it would benefit

from a six-year limitations period. No partial payments had been made before Cadle acquired the note.


        4
        Both cases addressed only the applicability of section 1821; the disputes did not concern section
2415. Nevertheless, because assignees of the FDIC are entitled to the same limitations under both statutes,
see SMS Fin., L.L.C., 167 F.3d at 240, we find both cases instructive.




                                                       8
Any subsequent acknowledgment of the debt would result in the same limitations period to sue under state

law as any other person with a similar claim (apart from the FDIC) would have in this state.

                 Moreover, although the extended limitations period may be a part of the Abundle of rights@

that are transferred by the FDIC to subsequent assignees, the limitations period attaches only to an accrued

claim; it has no significance independent of a claim to which it applies. Wolf, 44 S.W.3d at 574. AThe six-

year provision does not >attach= to the bundle of rights passed to subsequent assignees unless FIRREA=s

express terms actually trigger the right.@ Id. Whiteside=s default on the note triggered the six-year limitations

period that was transferred to Cadle. Because no payments were made before the transfer, however, no

tolling rights attached and thus could not have passed to subsequent assignees.


                                               CONCLUSION

                 Because the note was in default when the FDIC assigned it to Cadle, Cadle was entitled to

benefit from the federal six-year statute of limitations. Because it failed to bring its claim within this six-year

period, Cadle=s claim was barred by the statute of limitations. Although Whiteside made several partial

payments, we decline to apply to assignees of the FDIC the tolling provision found in section 2415, when

the statute does not expressly state that it applies to assignees of the FDIC and no federal policy would be

served by the application of the tolling provision. We thus hold that appellees established their affirmative

defense as a matter of law and affirm the trial court=s summary judgment.




                                                        9
                                              Jan P. Patterson, Justice

Before Justices Kidd, Patterson and Puryear

Affirmed

Filed: October 3, 2002

Do Not Publish




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