(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should not be published.
IN THE UNITED STATES COURT OF APPEALS
for the Fifth Circuit
_________________________
No. 94-10551
(Summary Calendar)
_________________________
FEDERAL DEPOSIT INSURANCE CORPORATION
in its Corporate Capacity, ET AL.,
Plaintiffs,
FEDERAL DESPOSIT INSURANCE CORPORATION
in its Corporate Capacity,
versus
Plaintiff-Appellee,
LANDMARK HOTEL CORPORATION, ET AL.,
Defendants,
LANDMARY HOTEL CORPORATION, Defendant- Appellant.
____________________________________________________
Appeal from United States District Court
from the Northern District of Texas
(3:91-CV-2832-X)
__________________________________________________
(March 7, 1995)
Before DUHÉ, WIENER and STEWART, Circuit Judges.*
CARL E. STEWART, Circuit Judge:
This case involves the issue of whether a guarantor should be
released from its guaranty because of a drop in the credit rating
of the creditor, despite the fact that the guaranty itself contains

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1D'Oench, Duhme and Company, Inc. v. FDIC, 315 U.S. 447, 62
S.Ct. 676, 86 L.Ed. 956 (1942).
no provision relating to a required credit rating. The guarantor
contends that the change in credit rating constituted a material
alteration of the guaranty and/or a failure of consideration,
releasing it from liability. The Federal Deposit Insurance
Corporation ("FDIC"), as holder of the guaranty, contends that
there was no material alteration of the guaranty or failure of
consideration, and furthermore, that such affirmative defenses of
failure of consideration and release by alteration are barred by
the D'Oench, Duhme1 doctrine and 12 U.S.C. § 1823(e). The district
court granted summary judgment in favor of FDIC. We affirm.
Facts
The guaranty involved in this lawsuit was executed in
connection with the financing of a Holiday Inn in East Peoria,
Illinois. The City of East Peoria had issued 13% Industrial
Development Revenue Bonds for the benefit of Brock Hotel
Corporation (now Integra-A Hotel and Restaurant Company) to build
the hotel. On February 1, 1986, East Peoria Hotel Corporation
("EPHC") borrowed $9,000,000 from the City. Appellant Landmark
Hotel Corporation ("Landmark") owns 50% of EPHC. The City funded
the loan by selling Floating Rate Weekly Demand Industrial
Development Refunding Revenue Bonds. E.F. Hutton sold the bonds
pursuant to a Bond Purchase Agreement entered into with the City.
One of the conditions of the Bond Purchase Agreement was that
Standard & Poor assign the bonds ratings of "AA" or "A-1+" or
equivalent ratings. Neither RepublicBank nor Landmark was a party

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3
to the Bond Purchase Agreement.
EPHC used the $9 million loan proceeds to purchase the hotel
by paying off the City's previously sold 13% Industrial Development
Revenue Bonds. To secure payment of the principal, interest, and
other obligations under the bonds, EPH obtained an irrevocable
letter of credit from RepublicBank Dallas, N.A., in the amount of
$9.146,250. EPHC entered into a Reimbursement Agreement with
RepublicBank dated February 1, 1986, in which EPHC agreed to
reimburse RepublicBank for all amounts drawn under the letter of
credit, together with interest, costs, and expenses.
That same day, Landmark also executed a guaranty of all
obligations and liabilities of EPHC to RepublicBank under the
Reimbursement Agreement, and Brock executed a guaranty of all
obligations of EPHC to RepublicBank under the Reimbursement
Agreement. EPHC later went into default under the loan agreement
with the City and the Bonds. On April 27, 1988, the RepublicBank
letter of credit was drawn upon in the amount of $9,051,000.64.
Subsequently, First RepublicBank, the successor to
RepublicBank, was declared insolvent. The FDIC was appointed
receiver of First RepublicBank. FDIC established a bridge bank
known as JRB Bank, N.A. JRB was assigned certain assets and
assumed deposits and specified liabilities of First RepublicBank,
including the Reimbursement Agreement of EPHC and RepublicBank, the
guaranty of Landmark, and the guaranty of Brock. JRB later changed
its name to NCNB Texas National Bank. ("NCNB") NCNB is now known
as NationsBank.

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4
This lawsuit was first filed in Texas state court by NCNB.
NCNB sued Landmark and Integra as co-defendants on their respective
guaranties of the indebtedness of EPHC. NCNB assigned and
transferred its right, title and interest in the guaranties, as
well as its claims in this lawsuit, to FDIC. The FDIC intervened
in the state court action and timely removed the action to the
federal district court in Texas.
FDIC moved for summary judgment against both guarantors,
asserting that it is the owner and holder of the Reimbursement
Agreement and the guaranties. Landmark and Integra opposed the
motions, and filed cross-motions for summary judgment, contending
that RepublicBank's credit rating dropped, which resulted in the
letter of credit being called, and that the drop in credit rating
constituted a material alteration of the guaranty or a failure of
consideration, thus releasing them from liability. The trial court
granted summary judgment in favor of FDIC and denied Landmark's
cross-motion for summary judgment. Landmark has appealed.
Standard of Review
We review a district court's grant of summary judgment de
novo. Topalian v. Ehrman, 954 F.2d 1125 (5th Cir. 1992). Summary
judgment is proper if the pleadings, depositions, answers to
interrogatories, and admissions on file together with the
affidavits filed in support of the motion, if any, show that there
is no genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law. Celotex Corp. v. Catrett,
477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

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5
Discussion
Landmark does not dispute that it is a guarantor, that it
executed the guaranty in question, or that EPHC was in default.
Thus, Landmark concedes that the guaranty agreement was valid and
due, absent some defense. Landmark has forwarded a whole host of
defenses and assignments of error, which are inextricably
interwoven but which we deem meritless because they rely on
circumstances and alleged implied agreements extrinsic to the
guaranty and loan documents themselves.
Landmark's arguments and defenses center around an alleged
agreement or "understanding" between the players in this
transaction that RepublicBank would maintain its "AA" credit
rating, apparently during the life of the various bonds and loans.
The credit rating allegedly made the bonds more marketable and
favorably impacted the interest rate under the Loan Agreement.
Landmark argues that it bargained for and issued its guaranty in
support of the loan whose only hope of avoiding default was if it
received the benefits of the materially reduced interest rates of
the lower floater bonds. Landmark contends that the lower floater
rates were available only so long as the bonds could be sold. The
bonds could be sold only so long as the credit behind them in the
form of Republic's letter of credit was trustworthy. Thus,
Landmark contends that when Republic's credit failed, the whole
transaction failed, and therefore, the credit rating of
RepublicBank was a contingency of the entire transaction. We
disagree.

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6
The bond purchase agreement between EPHC and E.F. Hutton,
which issued the bonds, required that the bonds have a Standard &
Poor's rating of "AA" and "A-1+" or "equivalent ratings. However,
as FDIC points out, neither RepublicBank nor the guarantors are a
party to the bond purchase agreement, nor is it referenced in the
guaranty agreement under which Landmark obligated itself.
Moreover, the bond purchase agreement refers to the rating of the
bonds, not the bank, and simply limits E.F. Hutton's obligation to
purchase the bonds. The existence of a contingency pertaining to
credit rating of the bonds in the bond purchase agreement cannot be
construed as an express condition of the guaranty relating to the
credit rating of the bank. Moreover, none of the documents to the
transaction require that RepublicBank maintain any particular
credit rating. If the success or failure of the entire transaction
depended upon the credit rating of RepublicBank, the documents
should have been drafted accordingly.
Material Alteration/Failure of Consideration
Landmark contends that the drop in RepublicBank's credit
rating constituted a material alteration of the agreements to which
Landmark lent its guaranty, thereby releasing Landmark. Material
alteration is a defense to payment on a guaranty which is
recognized under Texas law. Vastine v. Bank of Dallas, 808 S.W.2d
463, 464-65 (Tex. 1991); McKnight v. Virginia Mirror Co., 463
S.W.2d 428, 430 (Tex. 1971). Under this defense, a guarantor may
be released from liability if there is a material alteration and/or
deviation from the terms of the contract between the debtor and the

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7
creditor without the guarantor's consent and to the guarantor's
prejudice. Ibid.
The trial court held that the express terms of the written
guaranty expressly waived material alteration as a defense to
liability. The guaranty states:
[Landmark] hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished,
impaired, reduced, or affected by the occurrence of any
one or more of the following events: (a) the taking or
accepting of any other security or guaranty for any or
all of the Guaranteed Indebtedness; (b) any release,
surrender, exchange, subordination, or loss of any
security at any time existing in connection with any or
all of the Guaranteed Indebtedness . . . .
Landmark's first contention is that the district court erred
in finding that the above-cited language constituted a waiver of
the defense of material alteration. It points out that Republic's
letter of credit was never "security at any time existing in
connection with any or all of the Guaranteed Indebtedness."
Landmark points out that the Letter of Credit was in fact called
and paid, not released, surrendered, exchanged, subordinated or
lost. Landmark contends that the failure of Republic's credit was,
however, a major and material alteration of the Agreements to which
Appellant lent its guaranty.
We conclude that even if there was no waiver of the defense of
material alteration, there was in fact no material alteration of
the guaranty such that Landmark would be released from liability.
The question of whether a material alteration has occurred is
one of law and not of fact. Spin-Line Co. v. United Concrete Pipe
Corp., 420 S.W.2d 744, 752 (CCA-Dallas 1967), affirmed in part,

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8
revs'd in part on other grounds, 430 S.2d 360 (Tex. 1968)
Other language in the guaranty relied upon by the district
court provides that " . . . this guaranty being a guaranty of
payment and not of collection, and in no way conditional or
contingent." (Emphasis added.) Based upon this language, it is
clear that Landmark and Integra's obligation to pay was not
dependent upon any condition such as the credit rating of
RepublicBank. Neither the guaranty itself nor any of the loan
documents required that RepublicBank maintain any particular credit
rating. Thus, because the credit rating of RepublicBank was not a
condition or term of the guaranty, a change in the credit rating of
RepublicBank is not a material alteration of the guaranty or of the
arrangement between EPHC and RepublicBank and will not absolve
Landmark of liability.
Landmark's also argues that the decrease in RepublicBank's
credit rating constituted a failure of consideration. It contends
that the trial court misunderstood its defense in this regard. The
trial court stated that there was no requirement in the guaranty or
the Reimbursement Agreement that RepublicBank maintain any
particular credit rating or that the guaranty was contingent upon
RepublicBank's credit rating; thus, the trial court regarded as
meritless Landmark's contention that the decline in First
RepublicBank's credit rating was a material alteration of the
guaranty or a failure of consideration. We agree.
However, Landmark contends that when the credit of
RepublicBank failed, the consideration for Landmark's guaranty

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9
failed. In brief, Landmark asks rhetorically, "Why was Republic
lending its letter of credit to the transaction?" This single
unanswered question forwarded by Landmark seems to form the entire
basis for its "failure of consideration" argument. In this regard,
Landmark seems to overlook the fact that letters of credit are
widely used in commercial transactions. We reject Landmark's
contention that the failure of RepublicBank's credit constituted a
failure of consideration of the guaranty. As FDIC correctly notes,
what Landmark argues, in effect, is that any change in circumstance
which could force it to honor its guaranty is a material alteration
or failure of consideration. In other words, Landmark argues that
the guaranty agreement never anticipated payment by the guarantor.
We refuse to read the very clear and express terms of the guaranty
in this way.
D'Oench, Duhme and 12 U.S.C. § 1823(e)
FDIC also points out that the D'Oench, Duhme doctrine and 12
U.S.C. § 1823(e) are applicable to an agreement such as this
guaranty which has been acquired by the Federal Deposit Insurance
Corporation. Accordingly, FDIC contends that Landmark is barred
from asserting any defense based upon an inferred or implicit
understanding among the parties which was not made a part of the
guaranty and related documents. We agree.
12 U.S.C. § 1823(e) provides:
No agreement which tends to diminish or defeat the
interest of the Corporation in any asset acquired by it
under this section or section of this title, either as
security for a loan or by purchase or as receiver of any
insured depository institution, shall be valid against
the Corporation unless such agreement--

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10
(1) is in writing,
(2) was executed by the depository institution
and any person claiming an adverse interest
thereunder, including the obligor,
contemporaneously with the acquisition of the
asset by the depository institution,
(3) was approved by the board of directors of
the depository institution or its loan
committee, which approval shall be reflected
in the minutes of said board or committee, and
(4) has been, continuously, from the time of
its execution, an official record of the
depository institution.
There is nothing in any of the written documents relating to
this transaction which establish that Landmark's guaranty was
contingent upon RepublicBank's credit rating. Thus, under 12
U.S.C. § 1823(e), Landmark's contentions fail because such a
contingency, even if understood by the parties to be the "real
deal" at the time, was not put into writing, executed, approved by
the board of directors, and made an official part of the bank's
records as the statute requires.
The D'Oench, Duhme doctrine likewise is designed to protect
the interests of the FDIC in assets it acquires as receiver of a
failed bank. The doctrine prevents the introduction of such
unrecorded or "side" agreements which would contravene the express
terms of contracts and defeat the government's reliance on a bank's
records. D'Oench, Duhme, supra. Thus, the doctrine bars defenses
and claims based on unrecorded agreements with the failed bank.
NCNB Texas Nat'l Bank v. Johnson, 11 F.3d 1260, 1267 (5th Cir.
1994).
Landmark implies in brief that the D'Oench, Duhme doctrine
would not be applicable in this case because it contends that it is

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2Landmark also contends that the district court erred in
refusing to consider extrinsic evidence of the alleged credit
rating contingency established Landmark attempted to establish
through parol evidence. The trial court stated: "Landmark's
attempts to alter through deposition testimony the specific
agreements contracted for in the guaranty and other documents are
contrary to the parol evidence rule, which bars admission of
evidence at trial of a prior oral agreement." Because we find that
the D'Oench, Duhme doctrine and 12 U.S.C. § 1823(e) are applicable,
the existence of parol evidence which might establish an implicit
understanding among the parties as to a required credit rating is
inapposite.
11
not relying on a secret or oral agreement. Landmark argues that
RepublicBank's agreement is implied by the other bank documents and
is further evidenced by deposition testimony2 establishing what it
contends to be the true understanding of the parties. Such a
scenario is precisely that prohibited by D'Oench, Duhme.
Application of the doctrine is not limited to surreptitious or
deceitful side agreements, and extends to any defense tending to
undermine the integrity of debt instruments of failed financial
institutions or to diminish the funds available for the
satisfaction of depositors and creditors of those institutions.
As FDIC points out, Landmark is attempting to string a series
of documents together through cross-references to infer an
obligation by RepublicBank to maintain its Standard & Poor's credit
rating. In light of the D'Oench, Duhme doctrine and § 1823(e), we
cannot permit Landmark to escape its liability on the inference of
such an agreement. "Scattered evidence in corporate records from
which one could infer the existence of an agreement does not meet
the requirements of the statute. The purpose of the doctrine is
certainty and an "inference" of an alleged agreement does not meet

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12
the requirements of § 1823(e)." (internal citation omitted.)
Castleglen, Inc. v. Resolution Trust Corp., 984 F.2d 1571, 1579
(10th Cir. 1993). Accordingly, summary judgment in favor of FDIC
was appropriate.
Conclusion
For the foregoing reasons, the district court's grant of
summary judgment in favor of FDIC and its denial of Landmark's
cross-motion for summary judgment are AFFIRMED.

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