Page 1
695 So.2d 431, 22 Fla. L. Weekly D1310
(Cite as: 695 So.2d 431)
District Court of Appeal of Florida,
Fourth District.
Brent Tracy KASKET, Appellant,
v.
CHASE MANHATTAN MORTGAGE CORP.,
Appellee.
No. 95-1965.
May 21, 1997.
Rehearing Denied July 1, 1997.
In mortgage foreclosure action brought by the
Resolution Trust Corporation (RTC), as conservator
for failed savings and loan association, mortgagor
raised affirmative defenses and counterclaims,
alleging violations of the Truth in Lending Act
(TILA) and requesting rescission of the mortgage and
damages. The RTC subsequently assigned the
mortgage to a nongovernmental entity. The Circuit
Court, Fifteenth Judicial Circuit, Palm Beach County,
Moses Baker, Jr., J., found that the Financial
Institutions Reform, Recovery, and Enforcement Act
(FIRREA) barred mortgagor from bringing his
affirmative defenses and counterclaims, and
mortgagor appealed. The District Court of Appeal,
Warner, J., held that: (1) mortgagor's failure to bring
rescission claim, as affirmative recoupment defense,
within three years from date of mortgage transaction
barred claim; (2) mortgagor's affirmative recoupment
defense for damages pursuant to TILA section
governing creditor's failure to comply with statutory
disclosure requirements was not “claim” that required
administrative exhaustion; (3) nongovernmental
assignee of the mortgage could be liable for damages,
even though the RTC, as federal agency, would have
been exempt; and (4) D'Oench, Duhme doctrine did
not apply to protect assignee from liability for alleged
mistakes on face of loan documents.
Reversed and remanded with instructions.
West Headnotes
[1] Consumer Credit 92B 65
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
92B Consumer Credit
92BII Federal Regulation
92BII(C) Effect of Violation of Regulations
92Bk64 Actions for Violations
92Bk65 k. Time to Sue and
Limitations. Most Cited Cases
In mortgage foreclosure action brought by the
Resolution Trust Corporation (RTC), mortgagor's
failure to bring rescission claim under Truth-in-
Lending Act, as affirmative recoupment defense,
within three years from date of mortgage transaction
barred claim. Truth in Lending Act, § 102 et seq., as
amended, 15 U.S.C.A. § 1601 et seq.
[2] Banks and Banking 52 508
52 Banks and Banking
52XI Federal Deposit Insurance Corporation
52k508 k. Actions. Most Cited Cases
Two-part Schonacher test is used to determine which
counterclaims and defenses raised in litigation are
subject to mandatory administrative claims process
under the Financial Institutions Reform, Recovery,
and Enforcement Act (FIRREA): first, affirmative
defense or counterclaim must be of the type
described in the statute and, second, court must
determine whether the claim could have been brought
independently by defendant against the institution or
the receiver and, if it can, then it is “claim” for which
exhaustion of administrative remedies is mandatory.
Federal Deposit Insurance Act, § 2[1] et seq., as
amended, 12 U.S.C.A. § 1811 et seq.
[3] Building and Loan Associations 66 42(16)
66 Building and Loan Associations
66k42 Insolvency and Receivers
66k42(16) k. Actions by or Against Receivers
or Assignees for Creditors. Most Cited Cases
In mortgage foreclosure action brought by the
Resolution Trust Corporation (RTC), as conservator
for failed savings and loan association, mortgagor's
affirmative recoupment defense for damages pursuant
to Truth in Lending Act (TILA) section governing
creditor's failure to comply with statutory disclosure
requirements was not “claim” that required

695 So.2d 431, 22 Fla. L. Weekly D1310
(Cite as: 695 So.2d 431)
administrative exhaustion pursuant to the Financial
Institutions Reform, Recovery, and Enforcement Act
(FIRREA). Federal Deposit Insurance Act, § 2[1] et
seq., as amended, 12 U.S.C.A. § 1811 et seq.; Truth
in Lending Act, § 102 et seq., as amended, 15
U.S.C.A. § 1601 et seq.
[4] Consumer Credit 92B 61.1
92B Consumer Credit
92BII Federal Regulation
92BII(C) Effect of Violation of Regulations
92Bk61 Civil Liabilities and Penalties for
Violations
92Bk61.1 k. In General. Most Cited
Cases
Damages awarded pursuant to Truth in Lending Act
(TILA) section governing creditor's failure to comply
with statutory disclosure requirements constitute civil
penalty. Truth in Lending Act, § 130, as amended, 15
U.S.C.A. § 1640.
[5] Consumer Credit 92B 63
92B Consumer Credit
92BII Federal Regulation
92BII(C) Effect of Violation of Regulations
92Bk61 Civil Liabilities and Penalties for
Violations
92Bk63 k. Persons Liable; Assignees.
Most Cited Cases
Under Truth in Lending Act (TILA) section
exempting governmental agencies from any civil or
criminal penalty under TILA, liability for damages
for failure to comply with statutory disclosure
requirements could not be imposed on the Resolution
Trust Corporation (RTC), as conservator for failed
savings and loan association. Truth in Lending Act,
§§ 113(b), 130, as amended, 15 U.S.C.A. §§ 1612(b),
1640.
[6] Consumer Credit 92B 63
92B Consumer Credit
92BII Federal Regulation
92BII(C) Effect of Violation of Regulations
92Bk61 Civil Liabilities and Penalties for
Violations
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 2
92Bk63 k. Persons Liable; Assignees.
Most Cited Cases
In mortgage foreclosure action brought by the
Resolution Trust Corporation (RTC), as conservator
for failed savings and loan association, voluntary
nongovernmental assignee of the mortgage could be
liable for damages under the Truth in Lending Act
(TILA), even though the RTC, as federal agency,
would have been exempt from liability. Truth in
Lending Act, §§ 113(b), 131, as amended, 15
U.S.C.A. §§ 1612(b), 1641.
[7] Banks and Banking 52 505
52 Banks and Banking
52XI Federal Deposit Insurance Corporation
52k505 k. Powers, Functions and Dealings in
General. Most Cited Cases
D'Oench, Duhme doctrine can be asserted by
assignees of the Federal Deposit Insurance
Corporation (FDIC).
[8] Banks and Banking 52 505
52 Banks and Banking
52XI Federal Deposit Insurance Corporation
52k505 k. Powers, Functions and Dealings in
General. Most Cited Cases
Building and Loan Associations 66 42(6)
66 Building and Loan Associations
66k42 Insolvency and Receivers
66k42(6) k. Rights, Powers, Duties, and
Liabilities of Receiver in General. Most Cited Cases
“D'Oench, Duhme doctrine” prevents assertion of
side agreements to defeat the interest of the Federal
Deposit Insurance Corporation (FDIC) or the
Resolution Trust Corporation (RTC) where those
agreements are not in records or books of the failed
institution.
[9] Building and Loan Associations 66 42(6)
66 Building and Loan Associations
66k42 Insolvency and Receivers
66k42(6) k. Rights, Powers, Duties, and
Liabilities of Receiver in General. Most Cited Cases

695 So.2d 431, 22 Fla. L. Weekly D1310
(Cite as: 695 So.2d 431)
In mortgage foreclosure action brought by the
Resolution Trust Corporation (RTC), as conservator
for failed savings and loan association, in which
mortgagor asserted affirmative recoupment defenses
and counterclaims for violations of the Truth in
Lending Act (TILA), D'Oench, Duhme doctrine did
not apply to protect RTC's assignee from TILA
liability for alleged mistakes on face of loan
documents. Truth in Lending Act, § 130, as amended,
15 U.S.C.A. § 1640.
*432James A. Bonfiglio, Boynton Beach, for
appellant.
Anne S. Mason of Mason & Associates, P.A.,
Clearwater, for appellee.
WARNER, Judge.
When the Resolution Trust Corporation (RTC), as
conservator for Carteret Savings, a failed savings and
loan association, filed suit to foreclose the mortgage
on appellant's home, appellant raised affirmative
defenses and counterclaims alleging violations of the
Truth in Lending Act (TILA), *43315 U.S.C. § 1601
et seq., in the consummation of this loan transaction.
For relief, appellant requested both rescission of the
mortgage and damages. The trial court granted
neither, finding that appellant was barred by the
Financial Institutions Reform, Recovery, and
Enforcement Act (FIRREA), 12 U.S.C. § 1811 et
seq., from bringing his affirmative defenses and
counterclaims. Based on Beach v. Great Western
Bank, 692 So.2d 146 (Fla.1997), we affirm insofar as
appellant sought rescission but we reverse as to
appellant's affirmative defenses requesting damages.
Appellant entered into a mortgage on his home with
Carteret in April of 1991. In December of 1992,
Carteret was taken over by the RTC, which
transferred the appellant's mortgage to the new thrift
corporation established to receive the old thrift's
assets. Appellant defaulted on his payments on the
mortgage in March of 1994, and the RTC filed suit to
foreclose in July of 1994.
In response to the suit, appellant filed affirmative
defenses and a counterclaim alleging various
violations of TILA. He requested rescission pursuant
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 3
to section 1635 of TILA and damages pursuant to
section 1640 of TILA. The RTC contended in its
reply that the court lacked subject matter jurisdiction
of the affirmative defenses and counterclaim because
appellant had not brought a claim under section 1821
of FIRREA. In its answer to the counterclaim, RTC
also claimed that it was barred by the statute of
limitations.
During the pendency of the suit, Chase Manhattan
Mortgage Corporation (Chase) bought the mortgage
and note from the RTC as part of the process of
cleaning up the Carteret failure. At the final hearing,
appellant argued that Chase could not assert the
FIRREA defenses of the RTC. In ruling in favor of
Chase, the court held that Chase, as a successor-in-
interest to the RTC, could raise FIRREA defenses
and that under FIRREA, appellant's affirmative
defenses and counterclaim were “claims” within the
meaning of FIRREA. Because appellant had failed to
exhaust his remedies through the administrative
claims process, the court lacked subject matter
jurisdiction to hear appellant's affirmative defense
and counterclaim. See 12 U.S.C. § 1821(d)(13)(D).
The court also held that RTC had not waived
compliance with the claims procedure by failing to
give notice to appellant of the claims procedure. The
court then entered a judgment of foreclosure, and
appellant filed his appeal.
[1] After this case was orally argued, we stayed the
proceedings awaiting the supreme court's ruling in
Beach, as that case would affect the outcome of the
instant suit. In Beach, the supreme court held that the
rescission remedy under section 1635 of TILA could
not be brought as an affirmative defense in the nature
of recoupment after the expiration of three years from
the date of the mortgage transaction, as the statutory
right to rescission under that section expired after that
period. Because the appellant did not bring his action
within that time, Beach bars his claims for rescission.
We therefore deal only with the claims for damages
under section 1640 of TILA.
Moreover, we deal only with the issues raised in the
trial court and on appeal. We would note that at no
time did the RTC or Chase raise the issue of whether
it is exempt from liability under section 1641(a) of
the Truth in Lending Act. That section provides for

695 So.2d 431, 22 Fla. L. Weekly D1310
(Cite as: 695 So.2d 431)
liability under the act for assignees of the creditor if
TILA violations appear on the face of the disclosure
statements. It excepts, however, involuntary
assignments. Neither the RTC nor Chase has asserted
that because the assignment from Carteret to the RTC
was involuntary, TILA damage remedies are
unavailable. Thus, it is important to note that our
analysis of these issues is made without reliance on
this subsection, the assertion of which may have
made a substantial difference both in our reasoning
and result.
Congress enacted the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 in response
to the emerging crisis in the financial stability of
various banks and savings and loan associations
across the country. Resolution Trust Corp. v. Love,
36 F.3d 972 (10th Cir.1994). When an institution is
taken over by the RTC, it has broad powers to gather
the assets of the institution and settle claims against
it. So as *434 not to burden the courts with a
multitude of claims, and to assure an orderly and
expeditious method of disposing of claims against
failed institutions, 12 U.S.C. § 1821(d)(13)(D)
provides, in part, that:
[N]o court shall have jurisdiction over-
(i) any claim or action for payment from, or any
action seeking a determination of rights with
respect to, the assets of any depository institution
for which the Corporation has been appointed
receiver, including assets which the Corporation
may acquire from itself as such receiver; or
(ii) any claim relating to any act or omission of
such institution or the Corporation as receiver.
Instead, RTC must publish notice of its takeover and
provide for at least 90 days during which creditors
may file claims. 12 U.S.C. § 1821(d)(3)(B), (C). It
must act on any claims within six months. If a claim
is disallowed, administrative review is permitted, or
the claimant may file a suit. If, however, a claim is
not filed within the applicable time period, then that
claim is disallowed and “such disallowance shall be
final.” 12 U.S.C. § 1821(d)(5)(C)(i).
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 4
[2] Appellant contends that his affirmative defenses
and counterclaim are “defenses,” not “claims” within
the meaning of the act. In Resolution Trust Corp. v.
Schonacher, 844 F.Supp. 689 (D.Kan.1994), the
court adopted a two-part test to determine which
counterclaims and defenses are subject to the
mandatory administrative claims process under
FIRREA. First, the affirmative defense or
counterclaim must be of the type described in the
statute. “ ‘[T]he bar embodied in clause (i) reaches
(1) claims for payment from the assets of [the failed
institution], (2) actions for payment from those assets
and (3) actions for a determination of rights with
respect to those assets.’ ” Id. at 694 (quoting Rosa v.
Resolution Trust Corp., 938 F.2d 383, 393 (3d
Cir.1991)). Second, the court must determine whether
the claim could have been brought independently by
the defendant against the institution or the receiver. If
it can, then it is a “claim” for which exhaustion of the
administrative remedies under the act is mandatory.
Schonacher, 844 F.Supp. at 694. In Schonacher, the
court held that an affirmative defense for recoupment
for violations of the Equal Credit Opportunity Act, 15
U.S.C. § 1691(a)(1), by the institution extending
credit, including actual and punitive damages and
attorney's fees, was a claim because the statute
permitted independent recovery for violations.
Other courts have followed Schonacher and have
observed that where an affirmative defense can be
brought as an independent claim, administrative
exhaustion of remedies must occur. See Love, 36 F.3d
at 977;National Union Fire Ins. Co. v. City Sav., 28
F.3d 376, 393-94 (3d Cir.1994).
[3] In the instant case, appellant's claim is based upon
section 1640 of TILA. That statute provides that a
creditor who fails to comply with the statutory
disclosure requirements is liable to its debtor for
actual damages as well as penalty damages. Section
1640(e) provides for a one year statute of limitations
for such actions but permits borrowers to claim
recoupment for section 1640 damages as an
affirmative defense to a creditor's action to collect the
debt. Florida law permits recovery by way of
recoupment even though the statute of limitations has
expired when the party pleads it in defense of an
action brought by the opposing party in connection
with the same transaction. See Allie v. Ionata, 503

695 So.2d 431, 22 Fla. L. Weekly D1310
(Cite as: 695 So.2d 431)
So.2d 1237 (Fla.1987).
At the time that the RTC took over Carteret, the one
year statute of limitations had expired on appellant's
TILA damage claim. However, there remained his
statutory right to assert the claim in recoupment.
Thus, at no time after the RTC took over the
institution could appellant have successfully brought
an independent claim for section 1640 damages
against the RTC. The issue could only be raised as a
defense to a suit for collection by the RTC or its
successor. Therefore, under the two-part test
developed in Schonacher, the appellant's affirmative
defense of recoupment for damages pursuant to
section 1640 was not a claim which had to be filed
through the administrative claims process. As a
consequence, the trial court had jurisdiction to
determine the issue on the affirmative defense. While
the appellant also filed a counterclaim for section
1640 damages,*435 that was barred by the one year
statute of limitations, an issue raised by the RTC in
its answer. The “counterclaim” was therefore merely
an action for recoupment, which is allowed
defensively when faced with an action for collection
of the debt. See Allie. Thus, it cannot be maintained
as an independent claim requiring administrative
exhaustion.FN1
FN1. Because we hold that the affirmative
defense alleging TILA violations and
damages under section 1640 were not claims
which required administrative exhaustion,
we do not need to address the notice issue
raised by appellant.
[4][5]Section 1640 damages, however, constitute a
civil penalty. See Beach v. Great Western Bank, 670
So.2d 986 (Fla. 4th DCA 1996), app'd, 692 So.2d
146 (Fla.1997); Federal Deposit Ins. Corp. v.
Hughes Dev. Co., 684 F.Supp. 616, 621-22
(D.Minn.1988). Therefore, under section 1612(b),
which exempts governmental agencies from any civil
or criminal penalty under TILA, liability for section
1640 damages could not be imposed on the RTC.
[6] The question raised is whether that exemption can
also be asserted by Chase, as an assignee of the RTC.
Appellant cites In re Pinder, 83 B.R. 905
(Bankr.E.D.Pa.1988), which holds that a
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 5
nongovernmental assignee of a mortgage given to a
debtor by a federal agency (in Pinder, HUD) was
liable to the debtor for a recoupment penalty under
TILA, even though HUD would not be liable under
section 1612(b). The court noted that section 1641 of
TILA defines the liability of assignees, and no
exception from liability is provided for voluntary
assignees of governmental agencies. This was a
voluntary assignment between the RTC and Chase.
Therefore, Pinder's rationale would control. We
again note, however, that the appellee has not
asserted an exemption under section 1641 because
the assignment to the RTC from Carteret Savings was
involuntary.
[7][8][9] Chase claims that it is entitled to assert all
of RTC's defenses based on 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), codified
as 12 U.S.C. § 1823(e). The doctrine can be asserted
by assignees of the FDIC. See Porras v. Petroplex
Sav. Ass'n, 903 F.2d 379 (5th Cir.1990). The
D'Oench, Duhme doctrine prevents the assertion of
side agreements to defeat the interest of the FDIC (or
RTC) where those agreements are not in the records
or books of the failed institution. The doctrine
protects the FDIC which on takeover must evaluate
the financial predicament of the failed institution.
The mistakes in the Truth in Lending statements in
this case do not qualify under the terms of D'Oench,
Duhme or section 1823(e), because they come from
the face of the documents of the institution itself.
There is no secret agreement between the failed thrift
and the borrower which would reduce the value of an
asset of the institution, as there was in D'Oench,
Duhme. The RTC or its assignees needed only to
review the truth in lending documents in the records
of Carteret to determine whether they complied with
TILA.
In its argument, Chase makes a policy argument that
RTC “must be able to trust the accuracy of the
documents owned by the failed institution and
liquidate the assets without examining the legality of
the documents.” No citation to any authority is made
for this statement. What is really advocated is that
RTC and its successors should not be required to
evaluate any documents in the failed thrift's loan
portfolio for any errors, such as TILA violations or
 Page 6

695 So.2d 431, 22 Fla. L. Weekly D1310

(Cite as: 695 So.2d 431)

usury or the like. While that may be very convenient,

it is not the law. If Congress intended for both the
RTC and its assigns to be exempt from liability for
any error or misstep in the financial documents of an
institution, it could have provided that in FIRREA. It
did not, and it exempted the RTC only from
agreements not found in the records of the institution.
12 U.S.C. § 1823(e). We do not address the
application of section 1641 because it was not argued
in the briefs.

Therefore, in this case as the issues were presented

and addressed, we hold that Chase can be liable for
section 1640 damages if appellant proves TILA
violations apparent on the face of the loan
documents. Because of its determinations regarding
jurisdiction, the trial court did not reach the merits of
the *436 various TILA violations alleged by the
appellant. While the appellant has addressed the
matter in detail, there are several issues which will
require findings of fact based upon the evidence
presented, which should be more appropriately
accomplished by the trial court. We therefore reverse
and remand to the trial court to determine whether
TILA violations occurred in the original transaction.
If the trial court finds that there are violations, it
should also determine whether these violations are
apparent from the face of the documents within the
meaning of 15 U.S.C. § 1641 so as to render Chase,
as the subsequent assignee of the loan, liable.

Reversed and remanded with instructions.

GLICKSTEIN and POLEN, JJ., concur.

Fla.App. 4 Dist.,1997.
Kasket v. Chase Manhattan Mortg. Corp.
695 So.2d 431, 22 Fla. L. Weekly D1310

END OF DOCUMENT

© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.