(caption unavailable)

*Local Rule 47.5 provides: "The publication of opinions that have no precedential value and merely decide
particular cases on the basis of well-settled principles of law imposes needless expense on the public and burdens
on the legal profession." Pursuant to that Rule, the Court has determined that this opinion should not be
published.
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 92-5541
RTC AS RECEIVER FOR OCCIDENTAL
NEBRASKA FEDERAL SAVINGS BANK, ET AL.,
Plaintiffs-Appellees,
versus
J.D.R. CORPORATION, ET AL.,
Defendants-Appellants.
Appeal from the United States District Court
For the Western District of Texas
(SA 89 CV 1581)
March 22, 1993
Before REAVLEY, SMITH, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:*
I. FACTS AND PROCEDURAL HISTORY
In 1981, Bluff Point, Ltd., (Bluff Point), a California
partnership, purchased property in Bexar County, Texas to build a
108 unit condominium complex called the Sierra Royale Condominiums

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1 The loan was used to pay off Republic Bank.
2 On June 24, 1983, JDR assigned a 45.05 percent interest in its mechanic's lien to Republic Bank in return
for payment of $17,000.
3 Bluff Point filed for bankruptcy on August 30, 1985. That bankruptcy was eventually dismissed.
2
(the "Condominiums"). The project was originally funded by a
$5,500,000 loan from Republic Bank. On June 15, 1983, Bluff Point
obtained a loan from the Richard Carolyn Company in the amount of
$6,300,000 and executed a construction deed of trust and security
agreement covering the Condominiums.1 The Richard Carolyn Company
assigned the deed of trust and security agreement to
Occidental/Nebraska Federal Savings Bank (Old Occidental), and Old
Occidental filed the deed of trust on June 24, 1983. Bluff Point
borrowed an additional $1 million from Old Occidental, which was
secured by a deed of trust filed November 1, 1984, covering the
Condominiums.
Bluff Point hired J.D.R. Corporation (JDR) as the construction
manager of the project. During the development of the project, a
controversy arose between Bluff Point and JDR, which resulted in
JDR filing a mechanic's lien on the Condominiums for $37,733.39 on
June 1, 1983 for work done in February and March of 1983.2
Subsequently, Bluff Point experienced trouble in meeting its debt
obligations, which resulted in Old Occidental and Bluff Point
entering into a foreclosure and settlement agreement dated May 10,
1985.3 The settlement and foreclosure agreement allowed Old
Occidental to foreclose on the Condominiums, and as a result Old
Occidental obtained record title to the property under a Trustee's
deed filed June 6, 1985.

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3
On May 16, 1985, Shaeffer Construction Company (Shaeffer), a
sub-contractor on the Condominiums project, filed a law suit in
state court against Bluff Point and JDR. Two and one half years
later, on January 19, 1988, JDR initiated a cross-action against
Bluff Point in this same state court suit asserting for the first
time a right to foreclose its mechanic's lien affixed back on June
1, 1983. On March 18, 1988, the state court entered a default
judgment against Bluff Point on the JDR cross-action. On July 8,
1988 a sheriff's deed was issued granting JDR title to the
property, and JDR subsequently sold the property to the Reenans.
On September 16, 1988, JDR demanded that Old Occidental vacate the
premises.
On January 18, 1989, Old Occidental sued JDR and the Reenans
in a different state court seeking a declaratory judgment that it
was the owner of the property. On July 13, 1989, the FSLIC was
appointed receiver of Old Occidental, New Occidental was created,
and the assets of Old Occidental were transferred to New Occidental
pursuant to a transfer and acquisition agreement. The FSLIC and
New Occidental then intervened in this second suit. On August 9,
1989, the RTC was substituted for the FSLIC by operation of law.
The RTC removed this second state suit to the United States
District Court for the Western District of Texas (USDC) on November
6, 1989. On February 7, 1991, the USDC, on the recommendation of
the magistrate, held that the RTC was the owner of the property and
granted it summary judgment. The USDC held that (1) Old Occidental
was not in privity with Bluff Point and therefore the RTC was not
bound by the prior state court judgment against Bluff Point; (2)
JDR's claim on its mechanic's lien was barred by the four-year

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4 Res judicata, or claims preclusion, bars relitigation of a claim that has been finally adjudicated as well as
related matters, which in the exercise of due diligence, should have been litigated in the prior suit. Barr v.
Resolution Trust Corp., ex rel. Sunbelt Federal Savings, 837 S.W.2d 627, 628 (Tex. 1992). Collateral estoppel,
or issue preclusion, prevents the relitigation of issues previously resolved in a prior suit. Id. at 628, 629.
5 See also, Gray v. Joyce, 485 S.W.2d 311, 313 (Tex. Civ. App.--Tyler 1972, writ ref'd n.r.e.).
4
statute of limitations; and (3) the provisions of the settlement
and foreclosure agreement between Old Occidental and Bluff Point
did not bind the RTC to the state court judgment because such
agreement was barred by D'Oench, Duhme and 12 U.S.C. § 1823(e).
The Reenans and JDR appeal the judgment of the USDC.
II. DISCUSSION
1. Privity
JDR and the Reenans contend that the principles of res
judicata and collateral estoppel prevent Old Occidental from
challenging the prior state court default judgment awarding title
in the property to JDR.4 The RTC does not dispute the
applicability of res judicata and collateral estoppel to the
parties in the first suit--JDR and Bluff Point--, but contends that
since Old Occidental obtained record title to the property before
JDR asserted its cross-action and Old Occidental was never a party
to the first state court suit, the RTC is not bound by that state
court judgment.
The case of Frede v. Lauderdale,5 322 S.W.2d 379, 381 (Tex.
Civ. App.--San Antonio 1959, writ ref'd n.r.e.), is particularly
instructive on the issue raised in the present case. In Frede, the
defendant contended in a trespass to try title suit that he was the
owner of a tract of land, because a link in the plaintiffs' chain
of title was defective in that a default judgment had been taken
against the plaintiffs' predecessor in interest. The court

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6 The agreed order issued by the bankruptcy court entitled "Order Authorizing And Directing Assumption Of
Executory Contracts" was based on and did not alter the terms of the settlement and foreclosure agreement.
5
disagreed, holding that the judgment was not binding on the
plaintiffs, who were the record owners of the property when the
prior suit was filed, because they were not made a party to such
suit. The court stated:
a suit brought against a record owner's
predecessors in title without joining the
record owner is not binding upon the record
owner. Otherwise, one could accomplish as
much, and more easily, by suing persons who
have parted with their property as by suing
the record owner. Predecessors in title often
have little or no real interest in a suit for
lands they no longer claim to own, and,
[therefore] . . . may fail to contest the
case.
Id. at 381.
JDR and the Reenans concede that generally a party to a suit
concerning title to property must join the entity that presently is
the record title owner to the disputed property in order for that
entity to bound by the suit; but, contend that Old Occidental and
thus the RTC are bound by the judgment in the first state court
case because Old Occidental was in contractual privity with Bluff
Point such that "Bluff Point became the agent of Old Occidental for
the purposes of litigating the lien claims" in that state court
suit. Appellant's brief at 8. As support for that contention, JDR
and the Reenans rely on the settlement and foreclosure agreement
between Old Occidental and Bluff Point and the later agreed
bankruptcy order, which they contend prove that Bluff Point was the
agent of Old Occidental for litigating JDR's mechanic's lien.
The settlement and foreclosure agreement6 states in pertinent
part that:

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6
C. O/NFSB [Old Occidental] will not be
assigned potential claims as now or
hereinafter may be litigated by Bluff Pt.
against any previous `General' and/or Sub
Contractors under contract with Bluff Pt.
Bluff Pt. also agrees to indemnify O/NFSB from
any such litigation and to hold O/NFSB
harmless from any results therefrom. Bluff Pt.
may proceed with the litigation as it sees fit
and may claim all title, rights, and interest
which may be forth coming as a result of such
litigation.
E. The contracts, as may be existing between
Bluff Pt. and the "General" Contractors will
not be assigned to O/NFSB nor does O/NFSB
claim or have any responsibilities for nor
liabilities on such contracts and on which
Bluff Pt. does hereby indemnify and hold
harmless O/NFSB.
H. Immediately following foreclosure, O/NFSB
shall obtain a title policy and to the extent
that there are liens affecting the title of
O/NFSB for which funds have been escrowed at
Alamo Title, those funds shall be assigned to
O/NFSB. All other funds that have been
escrowed with Alamo Title Company shall be
released to Bluff Pt. and Bluff Pt. shall
assume the full responsibility of the
litigating against any such claims for which
liens do not follow the property into O/NFSB
after foreclosure.
We do not interpret the agreement to provide that Bluff Point
was responsible to Old Occidental for defending against all claims
involving the property. The agreement provides that Bluff Point
was allowed to prosecute offensive claims against various
contractors and subcontractors, and that Bluff Point agreed to hold
Old Occidental harmless from the results of those offensive
actions. Further, the agreement provides that Bluff Point was to
defend against all lien claims that did not follow the property
into Old Occidental after foreclosure. The agreement contemplates
and reflects the intent of the parties that funds would be escrowed
with Alamo Title for lien claims that did follow the property into

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7
Old Occidental after foreclosure--such as JDR's mechanic's lien--
and that Old Occidental would remain responsible for defending
against those claims. We hold therefore that Bluff Point and Old
Occidental were not in privity as to the JDR lien claim; and that
Bluff Point was not an "agent" of Old Occidental for litigating
JDR's mechanic's lien. As a result, the RTC is not bound by the
state court judgment against Bluff Point.
III. CONCLUSION
Old Occidental succeeded to Bluff Point's ownership in the
Condominiums before JDR filed the cross-action against Bluff Point.
The foreclosure agreement did not provide that Old Occidental was
in privity with Bluff Point so that Old Occidental was bound by the
prior state court judgment. The RTC is therefore not bound by the
prior state court judgment. We affirm on the first ground relied
upon by the District Judge, and find it unnecessary to address the
other two grounds for its ruling. For the foregoing reasons, the
judgment of the district court is AFFIRMED.

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