F.D.I.C. v. Abraham
| Decision Date | 13 March 1998 |
| Docket Number | No. 97-30411,97-30411 |
| Citation | 137 F.3d 264 |
| Parties | FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver and subrogee of Capital-Union Savings FA and Capital-Union Savings Association and in its corporate capacity as manager of the FSLIC Resolution Fund, Plaintiff-Appellant, v. Insa S. ABRAHAM, et al., Defendants, Insa S. Abraham, Naylor M. Cragin, James S. Emery, Charles C. Garvey, William L. Miller, G. Allen Penniman, Jr., Raymond G. Post, Jr., M.J. Rathbone, Jr., Paul R. Reeves, Robert M. Stuart, O.M. Thompson, Jr., O.M. Thompson, III, William H. Wright, Jr., Daniel H. Hoffman, Jr., Hibernia National Bank, in its capacity as curator of the property and estate of Henry W. Jolly, Jr., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Lawrence H. Richmond, FDIC, Legal Div., Washington, DC, Victor L. Roy, III, Kyle M. Keegan, Susannah M. Denicola, Roy, Kiesel & Tucker, Baton Rouge, LA, Maria Beatrice Valdez, FDIC, Washington, DC, Donna Garbarino Schwab, Baton Rouge, LA, for Plaintiff-Appellant.
Charles S. Weems, III, James Ogden Middleton, II, Gold, Weems, Bruser, Sues & Rundell, Alexandria, LA, for Abraham.
William C. Kaufman, III, Baton Rouge, LA, for Cragin, Reeves and Hoffman.
Catherine Susan St. Pierre, Scott Holland Crawford, Baton Rouge, LA, for Emery and Miller.
Tom F. Phillips, Robert Wylie Barton, Harry Joseph Philips, Jr., Taylor, Porter, Brooks & Phillips, Baton Rouge, LA, for Garvey, Penniman, Post, Rathbone, Stuart, O.M. Thompson, Jr. and Wright.
A. Shelby Easterly, III, Denham Springs, LA, for O.M. Thompson, III.
Charles L. Stern, Jr., Steeg & O'Connor, New Orleans, LA, A. Leon Hebert, David O. Mooney, Baton Rouge, LA, for Hibernia Nat. Bank.
George Davidson Fagan, New Orleans, LA, for Gaudet, Robert S. Maloney, Sr., Heidingsfelder, Michell, Robert S. Maloney, Jr., Riedl and Lecler, Amicus Curiae.
Appeal from the United States District Court for the Middle District of Louisiana.
Before JOLLY, WIENER and STEWART, Circuit Judges.
The FDIC, as statutory successor to the RTC, appeals the district court's grant of summary judgment dismissing the suit filed by the RTC in June 1993 against fifteen (15) former officers and directors (collectively, Appellees) of Capital-Union Savings, F.A. The gravamen of the district court's judgment was its determination that the claims asserted against Appellees for breach of their fiduciary duties sounded in unintentional tort, i.e., negligence (or gross negligence), and were thus time barred by Louisiana's one-year prescriptive period; that none of the claims against Appellees--including the claim arising from the repurchase of another thrift's participation in the so-called Esplanade Mall Loan 1--rose to the level of fraud, self-dealing, bad faith, or any other kind of misdeed that would constitute a breach of Appellees' fiduciary duty of "good faith" under the applicable state statute. 2
The district court concluded that its decision was mandated by our holding in FDIC v. Barton, 3 in the opinion of which we state that "[g]ross negligence is a violation of the duty of care, but unless it is coupled with fraud, a breach of trust or other ill acts, it does not constitute a breach of fiduciary duty." 4 The Barton opinion goes on to say that "[t]o set out a claim for the breach of fiduciary duty, the FDIC would have to have alleged the failure of good faith and loyalty by the Directors." 5
The principal thrust of the FDIC's position on appeal is that, irrespective of what we held in Barton, we are now Erie-bound to abandon that case as binding precedent and follow the subsequent, purportedly opposite holding of a Louisiana intermediate court of appeal in Theriot v. Bourg. 6 In considering the fiduciary duty of corporate directors in Louisiana under the Business Corporation Law, 7 which contained language identical to the wording of the statutes that applied to bank and savings and loan directors at the times relevant to the instant suit, the Theriot court merely approved the trial court's jury charge which described the duty of officers and directors of Louisiana corporations as 8 The Theriot court went on to say that it was unpersuaded by our decision in Louisiana World Exposition v. Federal Insurance Company. 9
The Louisiana Supreme Court denied writs in Theriot; and it is clear that in doing so the court was aware of our Barton opinion, as it was argued in support of the writ application. What effect, if any, Barton may have had in the decision to deny writs is unknown. What is known, however, is that Theriot did not involve the issue of time bar. Neither can the opinion in Theriot be read as a clear and unequivocal holding--as the FDIC would have us read it--that (1) the version of the state statute defining the fiduciary duty of officers and directors of banks and savings and loan associations then in effect created a single duty, (2) such duty was personal under the Louisiana scheme rather than general or delictual, or (3) the prescriptive period applicable to any breach of the duty, whether it be the facet implicating loyalty and good faith or the facet comprising the "prudent man" rule, was subject to the prescriptive period of ten years.
Our well-known standard of review of the district court's grant of summary judgment is de novo. 10 "To the extent a district court's grant of summary judgment is based on an interpretation of state law, our review of that determination is also de novo." 11
Even though federal subject matter jurisdiction of the case we review on appeal today is not grounded in diversity of citizenship, we nonetheless apply the rules of interpretation that have evolved since Erie Railroad v. Tompkins 12 to the controlling state law here under examination. "When adjudicating claims for which state law provides the rules of decision, even when those claims are 'federal questions' in form, we are bound to apply the law as interpreted by the state's highest court." 13 And, when a state's highest court has not spoken on an issue, our task is to determine as best we can how that court would rule if the issue were before it. In so doing, we are bound by an intermediate state appellate court decision only when we "remain unconvinced 'by other ... data that the highest court of the state would decide otherwise.' " 14
Among the "other ... data" that might contribute to our remaining unconvinced that the Louisiana Supreme Court would decide contrary to our decision in Barton is the fact that the Louisiana statutes that delineate the fiduciary duties of an officer or director of a bank or other financial institution were amended in 1992 by legislation (which, incidentally, appears to conform to our holding in Barton) clarifying that an action for the breach of an officer's or director's duty of care (including a breach based on gross negligence) has a different prescriptive period than a breach of the duty of good faith (intentional breaches of the duty of loyalty, and acts or omissions of bad faith, fraud, or violations of law). The clarifying legislation specifies that negligence actions against such fiduciaries must be filed within one (1) year following the date of the act, omission, or neglect, or within one (1) year after it was or should have been discovered, but in no case later than three (3) years from the date of the act, omission or neglect. On the other hand, that legislation specifies a two-year prescriptive period and four-year preemptive period for such fiduciaries' intentional and fraudulent breaches of the duty of good faith of such fiduciaries. 15 Such expressions by the Louisiana legislature augur against an eventual Louisiana Supreme Court holding that would make Barton clearly wrong.
And, if we are chary to rely on--much less be bound by--the holding of one intermediate state appellate court as the harbinger of such a future ruling by the state's highest court, we are doubly so when, as now, the state in question is Louisiana, where the primary sources of law are its constitution, codes, and statutes and the decisions of its courts are secondary sources of law until and unless the numbers and unanimity of such decisions achieve the force of law through the Civil Law doctrine of jurisprudence constante. 16 Likewise, our usual reluctance to use the single holding of but one among a number of intermediate state courts of appeal as the foundation of an "Erie-guess" about how the highest court of the state might rule on a given issue of state law is further heightened in the instant case by the realization that the FDIC's purpose in urging us to do so is to have us disregard our decision in Barton in favor of such a guess. Thus the appeal we consider today places us squarely at the legal intersection where the foregoing Erie rules for interpreting state law collide with the doctrine of stare decisis.
We are, of course, a strict stare decisis court. One aspect of that doctrine to which we adhere without exception is the rule that one panel of this court cannot disregard, much less overrule, the decision of a prior panel. 17 Adherence to this rule is no less immutable when the matter determined by the prior panel is the interpretation of state law: Such interpretations are no less binding on subsequent panels than are prior interpretations of federal law. 18 Thus, when a panel is considering a governing question of state law on which a prior panel has ruled, the subsequent panel's obligation to follow that ruling is not alleviated by intervening decisions of intermediate state appellate courts unless such "subsequent state court decisi...
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