How Does D'Oench, Duhme Apply to Failed Credit Unions: Campbell v. Castle Stone Homes
Like failed banks, the D'Oench, Duhme doctrine applies to claims against the National Credit Union Administration Board ("NCUAB") acting as liquidator for a failed credit union. And D'Oench, Duhme has a statutory companion for failed credit unions in the Federal Credit Union Act too: 12 U.S.C. §1787(p)(2). A federal court in Utah recently used the D'Oench, Duhme doctrine and §1787(p)(2). The decision: Campbell v. Castle Stone Homes, Inc. (PDF).
Backstory: Campbell v. Castle Stone Homes, Inc.
A Utah home builder known as Castle Stone Homes used the Internet, radio, and TV to solicit people with good credit scores to invest in a real estate investment scheme. The investors allege that the builder used their good credit scores to obtain loans, then used the loan proceeds to construct, market, and sell homes. Then the builder would split the home sale profits with the investors.
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