F.D.I.C. v. Dawson

• Decision Date: 21 October 1993
• Docket Number: No. 92-2460,92-2460
• Citation: 4 F.3d 1303
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, Receiver of Texas Investment Bank, Plaintiff-Appellant, v. Rockleigh S. DAWSON, Jr., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1303

4 F.3d 1303

62 USLW 2254

FEDERAL DEPOSIT INSURANCE CORPORATION, Receiver of Texas

Investment Bank, Plaintiff-Appellant, v. Rockleigh S. DAWSON, Jr., et al., Defendants-Appellees.

No. 92-2460.

United States Court of Appeals, Fifth Circuit.

Oct. 21, 1993.

Joan E. Smiley, FDIC, Washington, DC, Walter H. Mizell, Brown, McCarroll & Oaks Hartline, Austin, TX, for plaintiff-appellant.

Hugh J. Plummer, Plummer & Farmer, Houston, TX, for Maloy.

Steven E. Couch, W. Garney Griggs, Griggs & Harrison, Houston, TX, for Dawson.

J. Michael Dorman, Kathleen W. Osman, Lidedell, Sapp, Zivley, Hill & Laboon, Houston, TX, for Weaver.

Appeal from the United States District Court for the Southern District of Texas.

Before REAVLEY, KING, and GARWOOD, Circuit Judges.

KING, Circuit Judge:

The Federal Deposit Insurance Corporation as receiver sued certain directors and officers of a failed bank, alleging that the bank had incurred substantial losses due to their actions and omissions. The district court granted summary judgment in favor of the defendants Rockleigh S. Dawson, Jr., Kirk K. Weaver, and Michael D. Maloy, and the FDIC appeals. We affirm.

I.

The defendants in this action were all directors or employees of Texas Investment Bank, N.A. ("TIB"), a federally insured banking institution organized, existing, and operating under the laws of the United States. On May 21, 1987, the United States Office of the Comptroller of the Currency ("OCC") declared TIB to be insolvent. The OCC ordered TIB closed and appointed the FDIC as receiver. As part of its effort to recover on losses to the federal deposit insurance fund caused by the failure of TIB, the FDIC sued to recover damages allegedly resulting from the negligent discharge of duties by defendants Rockleigh S. Dawson, Jr. ("Dawson"), Kirk K. Weaver ("Weaver"), Michael D. Maloy ("Maloy"), and Wayne C. Desselle ("Desselle") as officers or directors of TIB.

Defendant Dawson became president and chief executive officer of TIB on March 17, 1981, and was elected as a director of TIB on January 19, 1982. He served as a director and as president until his resignation on May 12, 1987. Additionally, he served as chairman of TIB's loan committee from April 28, 1981, until April 28, 1987. Defendant Weaver became a director of TIB on January 19, 1982, and he served as a director until his resignation on April 28, 1987. Defendant Maloy was a loan officer for TIB from January 18, 1983, through April 28, 1987. Additionally, he served as vice-chairman of the loan committee from January 18, 1983, until August 26, 1984. Although there is some dispute, it appears that Maloy was a non-voting advisory director from April 1984 until he was elected as a full board member in 1986 or 1987.

The structure of TIB's organization with respect to its lending function is somewhat complicated. Until April 21, 1982, there was a "Loan and Discount Committee" made up of TIB directors. This committee was not re-elected by the board on that date, and the board did not again establish a board level loan committee until August 21, 1984, when it created the "Executive and Loan Committee." From December 31, 1980, to August 27, 1984, TIB's lending functions were supervised by a loan committee composed of Dawson, Maloy, and other bank officers.

This suit was brought by the FDIC based on the activities of defendant Desselle, who is not a party to this appeal. Desselle was hired by TIB as a loan officer on or about August 31, 1981, and he was elected a vice-president on September 15, 1981. The FDIC alleges that Desselle, Maloy, and Dawson made a series of 82 unsafe and unsound loans beginning on February 18, 1982, and continuing through October 5, 1984. The FDIC also alleges that these loans constituted unsafe and unsound banking practices that should have been detected and prevented by Dawson and the other members of TIB's board of directors. Desselle resigned effective January 1984. The last allegedly unsound loan was made by Dawson on October 5, 1984.

Having been appointed receiver of TIB, the FDIC brought suit against Dawson, Weaver, Maloy, and Desselle on April 2 1990. The complaint alleged negligence and breach of fiduciary duty on the part of the defendant directors for a number of acts and omissions related to their failure to supervise Desselle. The complaint also alleged that the defendant directors' acts and omissions constituted a breach of a contract formed when each director took his oath of office. The FDIC moved for summary judgment against Desselle, and the district court entered summary judgment against Desselle after he failed to respond.

Dawson and Weaver moved for dismissal and summary judgment as to all of the FDIC's claims, alleging that the claims were barred by the statute of limitations. On December 10, 1991, the district court granted Weaver's motions for summary judgment and to dismiss; it denied Dawson's motion for summary judgment as moot and granted his motion to dismiss. Maloy then moved for summary judgment and to dismiss, and his motion was granted on May 4, 1992. This appeal followed.

II.

Because the parties presented matters outside the pleadings to the court and the court did not exclude them in deciding these motions to dismiss and motions for summary judgment, we treat all of the district court's decisions as summary judgment decisions. Fed.R.Civ.P. 12(b), (c); see also Fraire v. City of Arlington, 957 F.2d 1268, 1273 (5th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 462, 121 L.Ed.2d 371 (1992). We review the grant of summary judgment de novo, using the same criteria used by the district court in the first instance. Id. The evidence and inferences to be drawn therefrom are reviewed in the light most favorable to the non-moving party. Id. Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

III.

The FDIC presents two arguments for reversal. First, it argues that the statute of limitations was tolled during the tenure of the corporate wrongdoers under the doctrine of adverse domination. Second, the FDIC argues that the district court erred by applying the tort statute of limitations to its claim based on the directors' oath of office instead of the longer statute of limitations for breach of contract actions. We address the FDIC's second argument first.

A.

The threshold issue on this appeal is whether the district court applied the correct statute of limitations to the FDIC's claims. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") ¹ provides a federal statute of limitations for claims brought by the FDIC as receiver. 12 U.S.C. Sec. 1821(d)(14). ² This statute, however, has been interpreted not to revive stale state law claims acquired by the FDIC. Randolph v. Resolution Trust Corp., 995 F.2d 611, 619 (5th Cir.1993); FDIC v. Regier Carr & Monroe, 996 F.2d 222, 225-26 (10th Cir.1993); FDIC v. Shrader & York, 991 F.2d 216, 220 (5th Cir.1993); FDIC v. McSweeney, 976 F.2d 532, 534 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 2440, 124 L.Ed.2d 658 (1993); see also Resolution Trust Corp. v. Krantz, 757 F.Supp. 915, 921 (N.D.Ill.1991) (reasoning that a literal reading of the statute would allow the FDIC to "revive claims relating to acts done during the Great Depression" by merely taking receivership of a bank). Under these cases, the district court must first determine whether the claims being brought by the FDIC were viable under the applicable state statute of limitations at the time the FDIC was appointed receiver. If the state statute has not yet run, the period provided by 12 U.S.C. Sec. 1821(d)(14)(A) then begins to run. See, e.g., Shrader & York, 991 F.2d at 220-27 (holding that a legal malpractice claim brought by the FDIC was time-barred because the Texas statute of limitations had expired before the FDIC was appointed receiver); FDIC v. Howse, 736 F.Supp. 1437, 1447 (S.D.Tex.1990) (holding that the period provided in 12 U.S.C. Sec. 1821(d)(14) begins to run when the FDIC is appointed receiver, as long as the state limitations period has not already expired).

The district court applied the correct analysis to the FDIC's claims, first deciding whether the claims had expired under Texas law before the FDIC was appointed as receiver. The Texas statute of limitations for negligence and breach of fiduciary duty is two years. Tex.Civ.Prac. & Rem.Code Ann. Sec. 16.003 (Vernon 1986); Russell v. Board of Trustees of the Firemen, Policemen and Fire Alarm Operators' Pension Fund, 968 F.2d 489, 492-93 (5th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1266, 122 L.Ed.2d 662 (1993); Hoover v. Gregory, 835 S.W.2d 668, 676 (Tex.App.--Dallas 1992, writ denied). The Texas statute of limitations for contract claims is four years. Tex.Civ.Prac. & Rem.Code Ann. Sec. 16.004 (Vernon 1986). The district court applied the two-year statute of limitations to all of the FDIC's claims, holding that the FDIC's claim for breach of contract actually sounded in tort.

The FDIC argues that the four-year limitations period should apply to its "breach of contract" claim against the appellants for violating their oath of office, in which they promised to diligently execute their duties and neither to violate nor to permit to be violated any law of the United States. According to the FDIC there is a "substantial question" as to whether this claim sounds in tort or contract, and therefore the district court should have applied the longer statute of limitations. Badaracco v. Commissioner, 464 U.S. 386, 391, 104 S.Ct. 756, 760, 78 L.Ed.2d 549 (1984) ("Statutes of limitation sought to be applied to bar rights of the Government, must receive a strict construction in favor of the Government.").

There is no...