196 F.3d 592 (5th Cir. 1999), 97-20819, Rhoades v Casey

Docket Nº:97-20819
Citation:196 F.3d 592
Party Name:ROBERT E. RHOADES, Trustee for the FirstBanc Savings Association Employee Stock Ownership Plan, Plaintiff-Appellee, v. MICHAEL E. CASEY; ET AL., Defendants, MICHAEL E. CASEY, Defendant-Counter Claimant-Appellant, v. THE TEXAS SAVINGS AND LOAN DEPARTMENT; KATHY BARNES; VIVIAN WECHIE, Defendants-Appellees, and THE OFFICE OF THRIFT SUPERVISION, Defend
Case Date:December 03, 1999
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 592

196 F.3d 592 (5th Cir. 1999)

ROBERT E. RHOADES, Trustee for the FirstBanc Savings Association Employee Stock Ownership Plan, Plaintiff-Appellee,

v.

MICHAEL E. CASEY; ET AL., Defendants,

MICHAEL E. CASEY, Defendant-Counter Claimant-Appellant,

v.

THE TEXAS SAVINGS AND LOAN DEPARTMENT; KATHY BARNES; VIVIAN WECHIE, Defendants-Appellees,

and

THE OFFICE OF THRIFT SUPERVISION, Defendant-Counter Defendant-Appellee.

DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION, US DEPARTMENT OF THE TREASURY, Plaintiff-Appellee,

v.

MICHAEL E. CASEY, Defendant-Appellant.

No. 97-20819

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

December 3, 1999

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[Copyrighted Material Omitted]

Page 594

Appeals from the United States District Court for the Southern District of Texas

Before KING, Chief Judge, SMITH, and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Defendant-Appellant Michael E. Casey appeals the district court's grant of summary judgment in favor of the Office of Thrift Supervision and the Texas Savings and Loan Department. The appellant also challenges the district court's order which distributed the disputed retirement benefits to other retirement plan participants, and the award of attorney's fees to Plaintiff-Appellee Robert Rhoades. For the following reasons we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This appeal arises from a complicated set of factual and procedural circumstances. Michael E. Casey ("Casey") was the first president and chief executive officer of FirstBanc. FirstBanc's Employees Stock Ownership Plan ("ESOP") was established May 1, 1987. Casey was the plan's trustee and an ESOP participant.

In 1991, the Office of Thrift Supervision ("OTS") and the Texas Savings and Loan Department ("TSLD") raised questions regarding the administration of the FirstBanc ESOP. The OTS and TSLD commenced a formal examination of FirstBanc and the FirstBanc ESOP. The agencies investigated to determine whether Casey had committed violations of banking regulations, breached fiduciary duties, and engaged in unsafe or unsound banking practices. These investigations led to settlement negotiations between OTS, TSLD and Casey. In order to avoid the initiation of administrative litigation against him by OTS and TSLD on June 21, 1993 Casey entered into two separate consent agreements titled Stipulation and Consent to Issuance of Order to Cease and Desist ("consent agreements") with OTS and TSLD respectively. In the consent agreements signed by Casey, he assented to issuance of the cease and desist orders ("cease and desist orders" or "orders"). These consent agreements further stated that Casey agreed to comply with the cease and desist

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orders that would be forthcoming from OTS and TSLD. Casey also stipulated that the orders complied with all requirements of law. The consent agreements clearly explained that the cease and desist orders were final orders, effective, and fully enforceable by the agencies. Casey also waived his right to seek judicial review of the orders or to otherwise challenge the validity of the order.

The cease and desist orders issued by OTS and TSLD were comprehensive. The orders stripped Casey of his association with FirstBanc as a director and of his position as trustee of the ESOP. Most importantly for this appeal, the orders stated that Casey would waive his rights and interests in his ESOP benefits. The OTS order stated in part, "Casey shall forfeit, waive, and release any ESOP benefits, interests, distribution or claim for ESOP benefits, interests, and distributions."1 In April 1995, over two years after the consent agreements were signed and the orders had been issued, the OTS Midwest Regional director sent a letter to Casey requesting that he execute a waiver of his ESOP benefits as required by the order. Casey, responding to the letter through counsel, refused to execute the waiver.

In August 1995, Robert Rhoades, the new trustee of the FirstBanc ESOP, dissolved the FirstBanc ESOP. At that time, Rhoades distributed the ESOP funds to the ESOP participants or their beneficiaries. OTS and TSLD wrote to Rhoades and reminded him of the orders in place against Casey and asserted that Casey's ESOP benefits were subject to the orders which required Casey to forfeit and waive his benefits. Casey also contacted Rhoades and disputed the validity of the orders. Casey requested that Rhoades release and distribute to him his portion of the ESOP fund.

On November 1, 1995, Rhoades filed an interpleader action, and subsequently deposited into the Registry of the Court the $77,064.04 in dispute. OTS, TSLD, Casey, and all of the other ESOP plan participants were named as defendants in the interpleader action. This interpleader action was filed in the U.S. District Court for the Southern District of Texas and was assigned to Judge Vanessa Gilmore.

One month later in December 1995, OTS filed a Complaint for Enforcement of Order ("enforcement complaint") in the U.S. District Court for the Southern District of Texas and it was assigned to Judge David Hittner. The enforcement complaint named Casey as the defendant and stated that pursuant to 12 U.S.C. § 1818(I)(1) OTS was entitled to enforcement of the outstanding final order, including obtaining an order from the district court directing Casey to waive his ESOP benefits. On April 23, 1996 OTS filed an unopposed motion to consolidate the Rhoades interpleader action and the OTS enforcement complaint. On April 26, 1996 Judge Gilmore signed an order granting OTS's motion to consolidate the cases.

On February 28, 1997 OTS, TSLD and Casey filed motions for summary judgment. On the same day Rhoades filed a motion for discharge as plaintiff in the interpleader action and for attorney's fees. On April 23, 1997, the district court granted OTS and TSLD's motions for summary judgment denying Casey's motion for summary judgment. The district court also granted Rhoades' motion for attorney's fees. The district court refused to discharge Rhoades as a plaintiff until the court entered a final order distributing the ESOP benefits that were in the court's registry. On June 3, 1997, the district court entered an order that distributed the funds held in the court registry as follows : $23, 955.21 to Rhoades in attorney's fees, and the remaining $53, 108.83 plus all accrued

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interest to be distributed to the ESOP participants in the same proportion as the previous disbursements made by Rhoades.2

In the district court's order granting summary judgment the court stated that the clear language of 12 U.S.C. § 1818(i)(1) defined the district court's jurisdiction to only allow the court to enforce the OTS order, and that a district court should not review or modify the terms of an OTS order. The district court also found that even if it had jurisdiction to modify or rescind the OTS order, the OTS order did not violate the anti-alienation provisions of ERISA. In regards to the TSLD order the district court held that Casey was barred by res judicata from collaterally attacking the TSLD order. The district court further found that the Texas statutes which empowered TSLD to regulate state-chartered savings associations were not preempted by ERISA.

DISCUSSION

Casey argues on appeal that the district court erred in finding that it did not have jurisdiction to consider his defense to the OTS order, and also erred in finding that the OTS order did not violate the anti-alienation provisions of ERISA. Casey also challenges the district court's finding that res judicata bars his challenge to the TSLD order, and that the TSLD order is not preempted by ERISA. Finally, Casey argues that the district court abused its discretion in awarding Rhoades attorney's fees because Rhoades was not a disinterested stakeholder as required to receive attorney's fees in an interpleader action. We will consider each of these issues in turn.

A. OTS Order

This court reviews a grant of summary judgment de novo. See Rivers v. Central and South West Corporation, 186 F.3d 681, 682 (5th Cir. 1999). Summary judgment is appropriate, when, viewing the evidence in the light most favorable to the nonmoving party, the record reflects that no genuine issue of any material fact exists. See Celotex Corp. v. Cartrett, 477 U.S. 317, 322-324, 106 S.Ct. 2548, 91 L.Ed. 2d 265 (1986).

1. District Court's Jurisdiction under 12 U.S.C. § 1818

The district court granted summary judgment to OTS on the grounds that the 12 U.S.C. § 1818(i)(1) limits a district court's jurisdiction to the enforcement of banking agency orders. The district court found that §1818(i)(1) expressly forbids a district court to review, suspend or terminate OTS orders. Casey argues that he did not ask the district court to review, suspend or modify the OTS order. He contends that as a defense to the OTS enforcement action he requested that the district court rule on the legal effect of the OTS order, specifically whether the OTS order was void as a matter of law because the order violated ERISA's anti-alienation provision.

Before the district court were two separate actions which the district court consolidated; the enforcement action brought by OTS against Casey, and the interpleader action brought by Rhoades naming OTS, TSLD, Casey and the other plan participants as defendants. Therefore, we will address the district...

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