69 F.3d 1539 (11th Cir. 1995), 94-4611, In re Southeast Banking Corp.

Docket Nº:94-4611, 94-5027.
Citation:69 F.3d 1539
Party Name:In re SOUTHEAST BANKING CORPORATION, Debtor. William A. BRANDT, Jr., as Trustee of Southeast Banking Corporation, Plaintiff-Appellant, v. Florence S. BASSETT, as Personal Representative of the Estate of Harry Hood Bassett, Donald N. Boyce, Joseph A. Boyd, M. Anthony Burns, Edward D. Duda, et al., Defendants-Appellees. FEDERAL DEPOSIT INSURANCE CORP
Case Date:November 30, 1995
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1539

69 F.3d 1539 (11th Cir. 1995)

In re SOUTHEAST BANKING CORPORATION, Debtor.

William A. BRANDT, Jr., as Trustee of Southeast Banking

Corporation, Plaintiff-Appellant,

v.

Florence S. BASSETT, as Personal Representative of the

Estate of Harry Hood Bassett, Donald N. Boyce,

Joseph A. Boyd, M. Anthony Burns, Edward

D. Duda, et al., Defendants-Appellees.

FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for

Southeast Bank, N.A., Intervenor-Plaintiff,

v.

William A. BRANDT, Jr., as Trustee of Southeast Banking

Corporation, Florence S. Bassett, as Personal

Representative of the Estate of Harry

Hood Bassett, et al.,

Intervenors-Defendants.

William A. BRANDT, Jr., as Trustee of Southeast Banking

Corporation, derivatively and on behalf of the Federal

Deposit Insurance Corporation as receiver of Southeast Bank,

N.A. and Southeast Bank, West Florida, Plaintiff-Appellant,

v.

Florence S. BASSETT, as Personal Representative of the

Estate of Harry Hood Bassett, Donald N. Boyce,

Joseph A. Boyd, et al., Defendants-Appellees.

Nos. 94-4611, 94-5027.

United States Court of Appeals, Eleventh Circuit

November 30, 1995

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J. Joseph Bainton, Jose A. Baez, New York City, for appellant in No. 94-4611.

Stuart J. Baskin, Shearman & Sterling, New York City, for appellees in No. 94-4611.

Joel S. Perwin, Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, P.A., Miami, FL, for Outside Directors.

Michael Nachwalter, Brian F. Spector, Kenny Nachwalter, Seymour, Arnold Critchlow & Spector, P.A., Miami, FL, Jerome G. Snider, Davis Polk & Wardwell, New York City, C. Harris Dittmar, Jacksonville, FL, for Zwick in No. 94-4611.

J. Joseph Bainton, John G. McCarthy, Ross & Hardies, New York City, for appellant in No. 94-5027.

Robert T. Wright, Mershon, Sawyer, Johnston, Dunwoody & Cole, P.A., Miami, FL, for Bassett in No. 94-5027.

Stuart J. Baskin, Shearman & Sterling, New York City, for D. Boyce, J. Boyd, M. Burns, E. Duda, A. Fanjul, J. Forese, R. Goode, H. Henry, M. Jacobs, K. Johnson, N. Katzenbach, J. McLamore, W. Robinson, & D. Weaver in No. 94-5027.

C. Harris Dittmar, Bedell, Dittmar, Devault & Pillans, P.A., Jacksonville, FL, for C. Towers.

Jerome E. Snider, Davis, Polk & Wardwell, P.A., Washington, DC, Michael Nachwalter, Brian F. Spector, Kenny, Nachwalter, Seymour, Arnold, Critchlow & Spector, P.A., Miami, FL, for C. Zwick in No. 94-5027.

Aaron S. Podhurst, Joel S. Perwin, Podhurst, Orseck, Josefsberg, Easton, Meadow, Olin & Perwin, Miami, FL, for Boyce, Boyd,

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Burns, Duda, Fanjul, Forese, Goode, Henry, Jacobs, Johnson, Katzenbach, McLamore, Robinson and Weaver in No. 94-5027.

Appeals from the United States District Court for the Southern District of Florida.

Before HATCHETT and CARNES, Circuit Judges, and OWENS [*], District Judge.

CARNES, Circuit Judge:

This is a consolidated appeal from two district court orders dismissing certain averments brought by a Chapter 7 bankruptcy trustee on behalf of a bank holding company against former directors and officers of the holding company and its subsidiary bank.

In the first case, No. 94-4611, the district court dismissed some averments in the complaint on the ground that they constitute a derivative action which can be asserted only by the Federal Deposit Insurance Corporation, as receiver and successor in interest to the holding company's subsidiary bank. The district court dismissed other averments as barred by the statute of limitations, and dismissed the complaint in its entirety insofar as it concerns two of the defendants. The district court directed entry of final judgment on the dismissed averments pursuant to Fed.R.Civ.P. 54(b). As to that case, we hold that we lack jurisdiction to review the statute of limitations ruling because it was not a final judgment properly subject to Rule 54(b) certification. For the same reason, we do not have jurisdiction to review the district court's dismissal of the averments that it held constitute a derivative action. We do, however, have jurisdiction over the final judgment dismissing the entire complaint insofar as it concerns two of the defendants, and we reverse that judgment.

In the second case, No. 94-5027, a forthright derivative action, the district court dismissed the trustee's entire complaint, holding that it is collaterally estopped by a holding in the first case. We have jurisdiction to review the judgment in the second case, and we affirm it.

I. BACKGROUND

  1. The Bankruptcy Proceedings

    Southeast Banking Corporation ("the holding company") is a bank holding company incorporated under the laws of the State of Florida. It is the holding company for Southeast Bank, N.A. ("the subsidiary bank"), which was placed in receivership by the FDIC in September of 1991. Two days after that happened, the holding company filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code, 11 U.S.C. Sec. 101, et seq., in the United States Bankruptcy Court for the Southern District of Florida. William J. Brandt, Jr., is the trustee in bankruptcy of the holding company.

  2. The Direct Action Litigation--Case No. 94-4611

    In June of 1992 the trustee filed, on behalf of the holding company, a complaint in the district court against eighteen former directors and officers of the holding company, claiming that they had consciously disregarded their duties to the holding company and that they had acted contrary to the holding company's best interest in order to entrench themselves as directors and officers. With one exception, the defendants also were directors and officers of the subsidiary bank. In July of 1993, the district court held that the complaint alleged primarily derivative claims arising out of the defendants' conduct in managing the subsidiary bank, instead of direct claims arising out of the defendants' conduct as directors and officers of the holding company. In re Southeast Banking Corp., 827 F.Supp. 742 (S.D.Fla.1993). The court further held that, pursuant to the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"), 12 U.S.C. Sec. 1821(d)(2)(A)(i) (1988), all such derivative claims belong exclusively to the FDIC as receiver and successor in interest to the shareholders of the subsidiary bank, and

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    therefore dismissed the complaint. Id. The trustee filed a first amended complaint, which the district court again dismissed, this time on the ground that it did not contain sufficient specific factual allegations to comply with Fed.R.Civ.P. 8.

    The trustee then filed a second amended complaint alleging the following: (1) the defendants refused to consider in good faith any merger involving the holding company that would jeopardize their positions as directors and officers; (2) the defendants directed the holding company to acquire several Florida banks without regard to whether such acquisitions were in its best interest, in order to make it too large for a hostile takeover; (3) the defendants distributed dividends on the holding company's common stock against the best interest of the holding company and its shareholders, in order to cover up the defendants' mismanagement of the holding company; and (4) the defendants directed and caused a precipitous increase in lending by the subsidiary banks in order to make the holding company too large for a hostile takeover. The defendants moved, under Fed.R.Civ.P. 12(b)(6), to dismiss the second amended complaint on a number of grounds, including their contentions that the statute of limitations bars many of the averments, and that any action related to the lending practices of the subsidiary bank can be asserted only by the FDIC as receiver and successor in interest to the shareholders. In re Southeast Banking Corp., 855 F.Supp. 353, 356 (S.D.Fla.1994).

    In May of 1994, the district court denied the motion to dismiss as to most of the second amended complaint. However, it did dismiss the averments that the defendants improperly directed the subsidiary bank's lending practices and all of the averments relating to conduct that occurred before September 20, 1987, the date beyond which the action is barred by the statute of limitations, according to the district court. Id. at 358. The court also dismissed the entire complaint insofar as it concerns two of the defendants, James J. Forese and Charles D. Towers, Jr., who had been on the holding company board of directors only a short period of time. Id. The district court directed entry of a final judgment on the dismissed claims pursuant to Fed.R.Civ.P. 54(b), expressly determining that there is no just reason for delay. Id. at 361. The trustee has appealed the district court's judgments, and that appeal is our case No. 94-4611.

  3. The Derivative Action Litigation--Case No. 94-5027

    In September of 1993, the trustee filed a "First Amended Verified Derivative Complaint" against virtually the same defendants, 1 alleging that they had consciously disregarded their duties as directors and officers of the subsidiary bank and of another of the holding company's subsidiary banks. The district court dismissed the derivative complaint on grounds that it is collaterally estopped by the prior holding in the direct action that such derivative claims can only be asserted by the FDIC. The trustee's appeal of that judgment is our case No. 94-5027.

    II. THE DIRECT ACTION

    LITIGATION,

    No. 94-4611

  4. Appellate Jurisdiction

    Initially, we must determine if we have jurisdiction to hear the appeal in case No. 94-4611, the direct action litigation. None of the district court's decisions...

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