F.D.I.C. v. Barton
| Decision Date | 26 September 1996 |
| Docket Number | No. 95-30926,95-30926 |
| Parties | FEDERAL DEPOSIT INSURANCE CORPORATION, as statutory successor to Resolution Trust Corporation, in its corporate capacity, Plaintiff-Appellant, v. Gerald C. BARTON, Gerald G. Rothman, William W. Vaughn, Peter R. Kirwin-Taylor, Gilbert I. Newman, Jack G. Golson, Norman L. Peck, Bernard Ille, Albert Reichman, Joe W. Walser, Jr., and Joseph V. Olree, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Jerome Anthony Madden, Federal Deposit Insurance Corporation, Legal Division, Washington, DC, James A. Brown, Stevia M. Walther, John M. Wilson, Dena Lynn Olivier, Liskow & Lewis, New Orleans, LA, Richard Edgar Anderson, Bencomo & Associates, New Orleans, LA, for plaintiff-appellant.
Richard L. Tapp, Jr., McNair Law Firm, Charleston, SC, Ellis B. Murov, Deutsch, Kerrigan & Stiles, New Orleans, LA, for defendants-appellees, Barton, Vaughan, Ille, Walser and Olree.
Hugh Steven Wilson, Steven D. Atlee, Robert A. Long, Latham & Watkins, Los Angeles, CA, Robert N. Habans, Jr., Habans, Bologna & Carriere, New Orleans, LA, for defendants-appellees, Rothman, Newman and Reichmann.
Ronald W. Stevens, Bruce H. Nielson, Kirkpatrick & Lockhart, Washington, DC, Roy C. Cheatwood, Jennifer Bowers Zimmerman, Phelps Dunbar; New Orleans, LA, for defendants-appellees, Kirwin-Taylor and Peck.
Lyman G. Hughes, Carol Collins Payne, George M. Kryder, III, Carrington, Coleman, Sloman & Blumenthal, Dallas, TX, Robert B. Bieck, Jr., Timothy Scott Cragin, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for defendant-appellee, Golsen.
Jack R. Lawrence, G. Neal Rogers, Lawrence & Ellis, Oklahoma City, OK, for defendant-appellee, Ille.
Jack G. Bush, Oklahoma City, OK, for defendant-appellee, Walser.
David S. Daly, New Orleans, LA, John V. Baus, Jr., Hammett & Baus, New Orleans, LA, for amicus curiae, New England Ins. Co.
George Davidson Fagan, New Orleans, LA, for Gaudet, Robert S. Maloney, Sr., Heidingsfelder, Michell, Robert S. Maloney, Jr., Riedl and Lecler.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before REYNALDO G. GARZA, DeMOSS and PARKER, Circuit Judges.
The Federal Deposit Insurance Corporation appeals from a summary judgment in favor of Appellees. For the reason stated below, we AFFIRM the decision of the district court.
The Federal Deposit Insurance Corporation ("FDIC") appeals from the district court's dismissal of its suit against the former directors ("the Directors") of Oak Tree Savings Bank ("Oak Tree"). The Resolution Trust Corporation ("RTC") 1 sued the Directors, alleging that they caused over $200 million in losses by being grossly negligent in managing the thrift and its lending practices in the 1980's. The Directors moved to dismiss the suit on the ground of liberative prescription. 2 The district court, holding that the RTC's claims were time-barred, granted the Directors' motion and dismissed this suit. The FDIC appeals from that dismissal.
Before its failure in 1991, Oak Tree was Louisiana's largest thrift. The Directors served on Oak Tree's board when it approved the four loans and one land purchase that are the subject of this lawsuit. The Directors approved the first of those transactions in 1984, and the last of them in 1989. The FDIC alleges that Oak Tree lost over $200 million on those transactions and that the transactions occurred because the Directors were grossly negligent. The FDIC also alleges that the Directors breached their fiduciary duty to Oak Tree by being grossly negligent.
On October 13, 1991, the Office of Thrift Supervision ("OTS") closed Oak Tree and appointed the RTC as its receiver. Three years later, on October 12, 1994, the RTC filed its original complaint against the Directors, alleging that they were grossly negligent in approving five transactions between 1984 and 1989. The RTC later amended its complaint to allege that the Directors breached their fiduciary duty to Oak Tree by being grossly negligent. The Directors moved to dismiss the action on the ground of liberative prescription.
In deciding the Directors' motion to dismiss, the district court had to decide several issues. First, it had to decide which statute of prescription applied. The Directors argued that Louisiana Revised Statutes Section 6:787, which was enacted after the RTC was appointed receiver, applied. In the alternative, the Directors argued that the one-year prescriptive period for delictual actions applied. In response, the FDIC contended that the ten-year prescriptive period for personal actions applied. For reasons that will be discussed below, the district court held that the one-year prescriptive period applied.
Next, the district court had to decide whether the doctrine of contra non valentem agere nulla currit applied to suspend prescription. The district court held that the doctrine tolled prescription during the period that the Directors' domination of Oak Tree's board prevented Oak Tree from suing them. However, the district court found that prescription ceased to be tolled as early as September 11, 1990, when the OTS had the power to appoint a receiver but chose instead to enter into a Supervisory Agreement with the institution. Because the prescriptive period
began to run on September 11, 1990, the court reasoned, Oak Tree's claim against the Directors was prescribed when the RTC was appointed receiver in October 1991. Therefore, the district court dismissed the suit on the ground of prescription.
The district court held that the FDIC's claims against the Directors were barred by prescription. The FDIC appeals from this holding, arguing that: (1) the claims were not prescribed because Louisiana's ten year prescriptive period for personal actions applied; and (2) alternatively, assuming that Louisiana's one year prescriptive period applied, prescription was tolled by the doctrine of contra non valentem agere nulla currit. The Directors counter by arguing that the FDIC's claims were prescribed by either Louisiana's one-year prescriptive period for delictual actions, or by Louisiana Revised Statutes Section 6:787, a statute that applies special prescriptive and peremptive periods in suits against savings and loan officers and directors. The Directors also contend that contra non valentem does not apply in this case. For the reasons stated below, we hold the FDIC's claims are barred by prescription.
We first turn to the question of whether Louisiana Revised Statutes Section 6:787 applies to the FDIC's claims. Section 6:787 provides a one-year prescriptive period and a three-year peremptive period in suits against savings and loan officers and directors. 3 If Section 6:787 applies, the Directors contend that it would bar the FDIC's claims against them.
We hold that Section 6:787 does not apply in this case because the RTC was appointed receiver eight months before the section was enacted. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") provides a federal statute of limitations for claims brought by the RTC as receiver. 4 This statute, however, does not allow the RTC to bring a state law claim that had expired before the RTC was appointed receiver. 5 Therefore, this Court requires district courts to use a two-step analysis in determining whether the RTC's claims are barred by limitations. First, the district court must "determine whether the claims being brought by the [RTC] were viable under the applicable state statute of [prescription] at the time the [RTC] was appointed receiver." 6 If the state statute of prescription has not yet run when the RTC was appointed receiver, then the district court must determine whether FIRREA's statute of limitations has run; that is, whether the RTC filed its claim within three years from the date it was appointed as receiver. 7
In this case, the applicable statute of prescription in effect on October 13, 1991 (the date upon which the RTC was appointed receiver) was set out in Louisiana Civil Code Article 3492. 8 Section 6:787 did not become effective until June 30, 1992. Therefore, the district court correctly looked to Article 3492, The Directors contend that this Court should apply Section 6:787 retroactively, and use it to determine whether Oak Tree's claims were time-barred at the time the RTC was appointed receiver. The Directors' argument is premised upon the Act that enacted Section 6:787, which provided that "[t]he provisions of this Act shall be applied both retrospectively and prospectively...." 9 Because the retroactive application of Section 6:787 would undermine FIRREA's statutory scheme, however, we reject the Directors' argument.
the law in effect at the time the RTC was appointed receiver, rather than Section 6:787, when determining whether Oak Tree's claims were viable at the time that the RTC was appointed receiver.
The purpose of FIRREA's preemption of state statutes of limitations is to give the RTC three years from the date upon which it is appointed receiver to decide whether to bring any causes of action held by a failed savings and loan. This three-year period allows the RTC to investigate and determine what causes of action it should bring on behalf of a failed institution. Allowing a state statute enacted after the RTC was appointed receiver to take a claim away from the institution is inconsistent with this purpose. We therefore hold that, in determining whether an institution held a viable claim at the time the RTC was appointed receiver, courts must look to the law in effect at the time of appointment.
We now turn to the question of whether Louisiana Civil Code Article 3499 or Article 3492 provides the applicable prescriptive period in this case. Article 3499 provides a ten-year prescriptive period in personal actions, including actions for breach of fiduciary duty. Article 3492...
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