Landmark Land Co. of Oklahoma, Inc., In re

Decision Date05 October 1992
Docket NumberNos. 91-2715,s. 91-2715
Citation973 F.2d 283
Parties, 23 Bankr.Ct.Dec. 556, Bankr. L. Rep. P 74,812 In re LANDMARK LAND COMPANY OF OKLAHOMA, INCORPORATED, an Oklahoma Corporation, Debtor. LANDMARK LAND COMPANY OF CAROLINA, INCORPORATED, a Delaware Corporation; Clock Tower Place Investments, Limited, a California Corporation; Landmark Land Company of California, Incorporated, a Delaware Corporation; Landmark Land Company of Florida, Incorporated, a Delaware Corporation; Landmark Land Company of Louisiana, Incorporated, a Louisiana Corporation; Landmark Land Company of Oklahoma, Incorporated, an Oklahoma Corporation, Plaintiffs-Appellees, v. RESOLUTION TRUST CORPORATION, as Conservator for Oaktree Federal Savings Bank, Defendant-Appellant, Landmark Communities Committee, Incorporated, Intervenor, Official Unsecured Creditors' Committee, Intervenor, and Oaktree Savings Bank, S.S.B., a Savings Bank Chartered by the State of Louisiana, Defendant, United States Trustee, Party in Interest. In re LANDMARK LAND COMPANY OF OKLAHOMA, INCORPORATED, a Delaware Corporation, Debtor. LANDMARK LAND COMPANY OF CAROLINA, INCORPORATED, a Delaware Corporation; Clock Tower Place Investments, Limited, a California Corporation; Landmark Land Company of California, Incorporated, a Delaware Corporation; Landmark Land Company of Florida, Incorporated, a Delaware Corporation; Landmark Land Company of Louisiana, Incorporated, a Louisiana Corporation; Landmark Land Company of Oklahoma, Incorporated, an Oklahoma Corporation, Plaintiffs-Appellees, v. RESOLUTION TRUST CORPORATION, as Conservator for Oaktree Federal Savings Bank, Defendant-Appellant, and Oaktree Savings Bank, S.S.B., a Savings Bank Chartered by the State of Louisiana, Defendant, United States Trustee, Party in Interest. In re CLOCK TOWER PLACE INVESTMENTS, LIMITED, a California Corporation, Debtor. LANDMARK LAND COMPANY OF CAROLINA, INCORPORATED, a Delaware Corporation; Clock Tower Place Investments, Limited, a California Corporation; Landmark Land Company of California, Incorporated
CourtU.S. Court of Appeals — Fourth Circuit

Rex R. Veal, Powell, Goldstein, Frazer & Murphy, Atlanta, Ga., argued (G. Patrick Watson, Powell, Goldstein, Frazer & Murphy, Atlanta, Ga., Richard T. Aboussie, Associate Gen. Counsel, Mark P. Hileman, Acting Sr. Counsel, P. Matthew Sutko, Sr. Atty., Resolution Trust Corp., Washington, D.C., James S. Crockett, Jr., Edward E. Scher, Mays & Valentine, Richmond, Va., Lawrence W. Johnson, Jr., Adams, Quackenbush, Herring & Stuart, Columbia, S.C., on brief), for defendant-appellant.

Patrick Michael Duffy, McNair Law Firm, P.A., Charleston, S.C., argued (Michael M. Beal, McNair Law Firm, P.A., Charleston, S.C., John L. Douglas, R. Neal Batson, Dennis J. Connolly, David E. Brown, Jr., Alston & Bird, Atlanta, Ga., Michael Paul Kirschner, Hastie & Kirshner, Oklahoma City, Okl., Richard F. Broude, Mayer, Brown & Platt, New York City, Barnaby Zall, Williams & Jenson, Washington, D.C., on brief), for plaintiffs-appellees.

J. Mark Jones, Nelson, Mullins, Riley & Scarborough, Columbia, S.C., argued (Donald H. Stubbs, Thornwell F. Sowell, George B. Cauthen, on brief), for intervenors.

Before HALL and LUTTIG, Circuit Judges, and MICHAEL, United States District Judge for the Western District of Virginia, sitting by designation.

OPINION

K.K. HALL, Circuit Judge:

The Resolution Trust Corporation ("RTC"), as conservator of Oak Tree Federal Savings Bank ("New Oak Tree"), appeals the judgment of the district court enjoining it from exercising ownership rights over New Oak Tree's subsidiaries by initiating or convening a shareholders' meeting while the subsidiaries are under the protection of the bankruptcy court. We reverse and remand.

I.

The predecessor of New Oak Tree, Oak Tree Savings Bank, S.S.B. ("Oak Tree"), was the sole shareholder of appellee Clock Tower Place Investments, Ltd. ("Clock Tower"), and Clock Tower owned the majority of stock in the five appellee Landmark Land companies. 1 For several years, the Landmark Land companies invested profitably in real estate using Oak Tree's lower cost funds to finance their operations. The Landmark Land companies develop, own, and manage resort residential communities, such as Kiawah Island and Palm Beach Polo and Country Club. Along with golf courses, the developments include tennis and polo facilities to which memberships are sold.

In August 1989, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub.L. No. 101-73, 103 Stat. 183 (1989) (to be codified in scattered sections of 12 U.S.C.). The primary purpose of FIRREA is to provide affordable home mortgage financing, establish organizations to resolve failed thrifts, and dispose of the assets of failed thrifts. H.R.Rep. No. 101-54I, 101st Cong., 1st Sess. 291, 307, reprinted in 1989 U.S.C.C.A.N. 86, 103. FIRREA is also intended to improve the distinction

between the regulatory and insurance functions of the thrift industry by (1) ensuring a well capitalized and independent thrift insurance fund, (2) enhancing thrift industry regulation by providing for stronger supervisory oversight of the industry under the Department of Treasury; establish stronger capital standards for thrifts; and, enhance the regulatory enforcement powers of the depository institution regulatory agencies to protect against fraud, waste and insider abuse.

Id. at 307-08, reprinted in 1989 U.S.C.C.A.N. at 103-04.

Pursuant to FIRREA, Oak Tree and its subsidiaries undertook a five-year plan to sell real estate. In addition, the Office of Thrift Supervision ("OTS") required Oak Tree to change its investment patterns and institute accounting changes designed to more accurately reflect the value of its assets. Eventually, sales of real estate and sales of club memberships in the residential communities declined, and Oak Tree became insolvent.

On October 11, 1991, when receivership of the insolvent Oak Tree by the OTS was imminent, Clock Tower and its subsidiaries (Clock Tower and its subsidiaries hereinafter referred to as the "subsidiaries") petitioned for relief under Chapter 11 of the Bankruptcy Code. On that same day, the subsidiaries sought and received, ex parte, a temporary restraining order from the United States Bankruptcy Court for the District of South Carolina against Oak Tree to prevent it from calling a shareholders' meeting to elect new members to their boards of directors.

Two days after the subsidiaries filed their petitions in bankruptcy, the OTS appointed the Resolution Trust Corporation ("RTC") to act as receiver for Oak Tree pursuant to 12 U.S.C.A. § 1464(d)(2)(E) (West Supp.1992). The RTC then organized, and the OTS chartered, New Oak Tree. Pursuant to a purchase and assumption agreement, New Oak Tree purchased all of the RTC's right, title and interest in Oak Tree's assets, including its wholly owned subsidiaries. The OTS then appointed the RTC as conservator for New Oak Tree.

After its appointment as conservator of New Oak...

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