Federal Deposit Ins. Corp. v. Grant, 92-C-1043-H.

Citation8 F.Supp.2d 1275
Decision Date12 January 1998
Docket NumberNo. 92-C-1043-H.,92-C-1043-H.
PartiesFEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, v. Louis W. GRANT, Jr., Charles B. Grant, J. Lawrence Mills, Jr., Keith R. Gollust, Paul E. Tierney, Jr., Edward L. Jacoby, Rod L. Reppe, Donald Bergman, William M. Brumbaugh, Edward H. Hawes, James R. Malone, Robert B. Riss, Robin K. Buerge, W.R. Hagstrom, and David M. Moffett, Defendants.
CourtU.S. District Court — Northern District of Oklahoma

David L. Thomas, Karen Eby, Haswell Jones Hughey Vaughan & Thomas, Oklahoma City, OK, Douglas Nelson Gould, Lyle S. Vaughn, Oklahoma City, OK, Jay Fenton, Federal Deposit Insurance Corporation, Chicago, IL, Alan R. Clever, Resolution Trust Corp, Dallas, TX, for Federal Savings and Loan Insurance Corporation.

Sam P. Daniel, Jon E. Brightmire, Doerner Saunders Daniel & Anderson, Tulsa, OK, for Louis W. Grant, Jr., Charles B. Grant.

Sheila Miller Bradley, Dwayne C. Pollard, Theodore Jon Nelson, Joyce & Pollard, Tulsa, OK, for Lawrence Mills, Jr., W.R. Hagstrom.

Jody Rae Nathan, Joseph R. Farris, Tony Michael Graham, Feldman Franden Woodward & Farris, Tulsa, OK, Jonathan I. Blackman, Cleary Gottlieb Steen & Hamilton, Washington, DC, for Keith R. Gollust, Paul E. Tierney, Jr.

Edward L. Jacoby, Tulsa, Ok, pro se.

Roy D. Johnson, Roy D. Johnsen, Epperson & Johnson, Tulsa, OK, for Rod L. Reppe.

ORDER

HOLMES, District Judge.

Before the Court for consideration is the Report and Recommendation ("Report") of the United States Magistrate Judge Sam A. Joyner (July 21, 1997, Docket # 324), recommending that the motion to dismiss, or alternatively, for summary judgment filed by Defendants Louis W. Grant, Jr. and Charles B. Grant (Docket # 75), and the motions for summary judgment filed by Defendants Keith R. Gollust and Paul E. Teirney (Docket # 76); Lawrence Mills, Jr., Edward L. Jacoby, and W.R. Hagstrom (Docket # 78); and Rod L. Reppe (Docket # 80) be denied. Defendants filed objections to the Report and Plaintiff responded to Defendants' objections. Defendants also filed a reply to Plaintiff's response.

When a party objects to the report and recommendation of a Magistrate Judge, Rule 72(b) of the Federal Rules of Civil Procedure provides in pertinent part that:

[t]he district judge to whom the case is assigned shall make a de novo determination upon the record, or after additional evidence, of any portion of the magistrate judge's disposition to which specific written objection has been made in accordance with this rule. The district judge may accept, reject, or modify the recommendation decision, receive further evidence, or recommit the matter to the magistrate judge with instructions.

Fed.R.Civ.P. 72(b).

The Court has reviewed Defendants' objections to the Report de novo and, based upon the reasoning and authority contained in the Report, the Court concludes that Defendants' objections are without merit. The Court agrees with Judge Joyner's conclusion that the Northtown Investors loans are properly in this lawsuit and that Oklahoma law provides a two year statute of limitations for negligence and contract actions, and a three year statute of limitations on actions alleging a breach of fiduciary duty. Further, the Court agrees that the statute of limitations begins to run once it becomes certain and not speculative that Sooner Federal would suffer damages as a result of Defendants' acts of negligence or breach. Finally, the Court agrees that genuine questions of material fact remain for jury determination as to "what breaches of duty caused harm to Sooner Federal for a particular loan, when those breaches occurred, and when the harm caused by those breaches was certain to occur." Report at 33.

As described above, based upon a careful review of the Report and Recommendation of the Magistrate Judge, Defendants' objections, Plaintiff's response, and Defendants' reply, the Court finds that the Report and Recommendation (Docket # 324) should be adopted in its entirety. Thus, Defendants' motions for summary judgment (Docket # 75, 76, 78, 80) are hereby denied.

IT IS SO ORDERED.

JOYNER, United States Magistrate Judge.

REPORT AND RECOMMENDATION

The following motions have been referred to the undersigned for report and recommendation:1

1. "Motion to Dismiss or, In the Alternative, Motion for Summary Judgment ... of Defendants Louis W. Grant, Jr. and Charles B. Grant" [Doc. No. 75];2

2. "Motion for Summary Judgment of Defendants, Gollust and Tierney" [Doc. No. 76];3

3. "Motion for Summary Judgment of Defendants J. Lawrence Mills, Jr., Edward Jacoby and W.R. Hagstrom" [Doc. No. 78];4 and

4. "Motion for Summary Judgment of Defendant Rod L. Reppe" [Doc. No. 80].5

Messrs. Gollust, Grant, Hagstrom, Jacoby, Mills, Reppe and Tierney (hereinafter referred to as the Defendants) argue that Plaintiff's claims against them must be dismissed because (1) the applicable statute of limitations bars Plaintiff's claims, (2) Plaintiff is estopped from asserting its current accrual argument in connection with the applicable statute of limitations, and/or (3) various loans identified by Plaintiff for the first time in its November 11, 1993 court-ordered Disclosure Report cannot be asserted in this case. For the reasons discussed below, the undersigned recommends that Defendants' motions be DENIED.

I. INTRODUCTION

Defendants were inside officers and/or directors of Sooner Federal Savings and Loan Association ("Sooner Federal"), a federally chartered, federally insured depository institution. Defendants have previously been referred to in this litigation as the nongroup I/inside directors. Plaintiff seeks to hold Defendants liable for loans approved, made and/or supervised by Defendants. Plaintiff alleges that by making, approving and/or supervising the loans, Defendants (1) were negligent, (2) breached their contract with Sooner Federal to serve as prudent officers and directors, and/or (3) breached their fiduciary duty to Sooner Federal. See Second Amended Complaint, Counts I, II and III, Doc. No. 35. Defendants argue that under all of the theories of liability asserted by Plaintiff, a claim based on a bank officer's or director's making, approving and/or supervising a loan accrues when the bank disburses the loan proceeds (i.e., when the loan is made). Under Defendants' accrual theory, most, if not all, of Plaintiff's claims would be barred by the applicable statute of limitations.

A. FIRREA's APPLICATION

By late 1989, Sooner Federal was in trouble and on November 16, 1989, the Department of the Treasury's Office of Thrift Supervision ("OTS") appointed the Federal Deposit Insurance Corporation ("FDIC")6 as conservator for Sooner Federal pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. §§ 1441a(b), 1464(d)(2) and 1821(c)(6). See Exhibit D, Doc. No. 315. Pursuant to 12 U.S.C. § 1821(d)(2)(A)(i), the FDIC steps into the shoes of a failed, federally insured depository institution and thereby obtains those rights of the institution which existed prior to the conservatorship. O'Melveny & Myers v. FDIC, 512 U.S. 79, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994).

Ordinarily, the statute of limitations applicable to an action for money damages brought by the United States or one of its agencies is 28 U.S.C. § 2415. With FIRREA, Congress sought to strengthen the enforcement powers of Federal regulators of depository institutions. Consequently, FIRREA provides the FDIC with a special statute of limitations in its role as conservator of a failed depository institution. This special statute expands the limitations periods in § 2415. See 12 U.S.C. § 1821(d)(14). The applicable portion of FIRREA's special statute of limitations provides as follows:

(A) In general

Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the [FDIC/RTC] as conservator or receiver shall be —

(i) in the case of any contract claim, the longer of —

(I) the 6-year period beginning on the date the claim accrues; or

(II) the period applicable under State law; and

(ii) in the case of any tort claim ..., the longer of —

(I) the 3-year period beginning on the date the claim accrues; or

(II) the period applicable under State law.

(B) Determination of the date on which a claim accrues

For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such subparagraph shall be the later of —

(i) the date of the appointment of the [FDIC/RTC] as conservator or receiver;

or

(ii) the date on which the cause of action accrues.

12 U.S.C. § 1821(d)(14).

The shortest limitations period in § 1821(d)(14) is three years from the date the FDIC/RTC is appointed as conservator. Plaintiff became Sooner Federal's conservator on November 16, 1989 and this lawsuit was filed less than three years later on November 13, 1992. Thus, all of Plaintiff's claims are timely under FIRREA's extended statute of limitations.

Plaintiff must, however, pass one more hurdle for its claims to be considered timely. Plaintiff obtains the benefit of FIRREA's extended statute of limitations only if Plaintiff's claims were timely under state law on the date Plaintiff was appointed as conservator.7 In other words, Plaintiff has the benefit of § 1821(d)(14)'s longer statute of limitations only if its claims against Defendants were timely under Oklahoma law on November 16, 1989, the date Plaintiff was appointed as Sooner Federal's conservator. The parties agree that this is the law. Because they each have different views as to when Plaintiff's claims "accrue" under Oklahoma law, the parties disagree on the issue of whether Plaintiff's claims would have been timely under Oklahoma law on November 16, 1989. Thus, Defendants' motions present the following central issue: What statute of limitations does Oklahoma apply to Plaintiff's...

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