Federal Deposit Ins. Corp. v. Haddad

• Decision Date: 26 July 1991
• Docket Number: No. 90-0779-CIV.,90-0779-CIV.
• Citation: 778 F. Supp. 1559
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff, v. Said HADDAD, James McMullin, Martin Schwartz, Ismael De Cardenas, Ramon C. Sanchez, Cayetano Midolo, Juan J. Martinez, Fileno Izquierdo, Jorge N. Carvallo and Carlos Sanchez, individually, jointly and severally, Defendants.
• Court: U.S. District Court — Southern District of Florida

778 F. Supp. 1559

FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff, v. Said HADDAD, James McMullin, Martin Schwartz, Ismael De Cardenas, Ramon C. Sanchez, Cayetano Midolo, Juan J. Martinez, Fileno Izquierdo, Jorge N. Carvallo and Carlos Sanchez, individually, jointly and severally, Defendants.

No. 90-0779-CIV.

United States District Court, S.D. Florida.

July 26, 1991.

ORDER ADOPTING IN FULL OMNIBUS REPORT AND RECOMMENDATION

ATKINS, Senior District Judge.

THIS CAUSE comes before the court on the Omnibus Report and Recommendation ("R & R") of the Honorable Linnea R. Johnson, see docket entry 100, which recommended the following: (1) that defendants Haddad, De Cardenas, Izquierdo and Sanchez's motions to dismiss the complaint, see docket entries 40, 43, 50 & 51, be GRANTED with prejudice as to Counts III, IV and V, and be DENIED as to the complaint as a whole; (2) that defendant McMullin's motion to dismiss the complaint, see docket entry 36, be GRANTED with prejudice as to III, IV and V, and be DENIED as to Counts I and II and the complaint as a whole; (3) that defendant Schwartz's motion to dismiss the complaint, see docket entry 55, be GRANTED with prejudice as to Counts III, IV and V, and be DENIED as to Counts I and II and the complaint as a whole; and (4) that defendant Sanchez's motion to dismiss, see docket entry 51, be DENIED as it relates to a stay of proceedings and an evidentiary hearing.

Upon independent consideration of the record—including the motions, responsive memoranda, the R & R, objections thereto, responses thereto, and supplemental memoranda —and the relevant rules and caselaw, it is ORDERED AND ADJUDGED that the R & R is ADOPTED IN FULL based on the reasoning therein and made the order of this court.

DONE AND ORDERED.

OMNIBUS REPORT AND RECOMMENDATION

LINNEA R. JOHNSON, United States Magistrate Judge.

THIS CAUSE is before the Court on the following motions: (1) Defendant Said Haddad's Motion to Dismiss, filed May 23, 1990 (D.E. 40); (2) Defendant Ismael De Cardenas' Motion to Dismiss, filed June 15, 1990 (D.E. 50); (3) Defendant Ismael De Cardenas' Motion to Adopt Defendant Haddad's Memorandum of Law in Support of Motion to Dismiss, filed June 15, 1990 (D.E. 50); (4) Defendant Fileno Izquierdo's Motion to Dismiss, filed June 1, 1990 (D.E. 43);¹ (5) Defendant James McMullin's Motion to Dismiss Complaint Under Rule 12(b)(6), filed May 23, 1990 (D.E. 39); (6) Defendant Martin Schwartz's Motion to Dismiss, filed June 18, 1990 (D.E. 55); and (7) Defendant Carlos Sanchez' Motion to Dismiss, filed June 15, 1990 (D.E. 51).² These matters were referred to the undersigned United States Magistrate on July 2, 1990 by the Honorable C. Clyde Atkins, United States District Court Judge for the Southern District of Florida and are now ripe for judicial review.

BACKGROUND

The Trust Bank ("Trust Bank") was a banking corporation organized under the laws of the State of Florida, which conducted business in Dade County, Florida, from June 15, 1985 to January 29, 1988. Trust Bank was a member of the Federal Reserve System and was insured by the Federal Deposit Insurance Corporation (the "FDIC"). As a "state-member bank," Trust Bank was under the regulatory supervision of the Federal Reserve Board and the Florida Department of Banking and Finance. Thus, Trust Bank was subject to the Federal Reserve Act, 12 U.S.C. § 221 et seq., and the Florida Banking Code, Fla. Stat. Chs. 658, 660-663 (1985).

On January 29, 1988, the Florida Department of Banking and Finance declared Trust Bank insolvent. Thereafter, in accordance with Fla.Stat. §§ 658.79, 658.80, the FDIC was appointed as liquidator of the bank and simultaneous therewith, the Eleventh Judicial Circuit Court in and for Dade County, Florida, confirmed the FDIC's appointment and approved the sale of a portion of the bank's assets to another bank. Subsequently, pursuant to Fla.Stat. § 658.83(1)(b), the liquidator assigned its rights to sue for and defend all claims involving the bank to the FDIC in its corporate capacity.

Thereafter, the FDIC filed the instant action against defendants Said Haddad ("Haddad"), James McMullin ("McMullin"), Ismael De Cardenas ("De Cardenas"), Carlos Sanchez ("Sanchez"), Martin Schwartz ("Schwartz"), Fileno Izquierdo ("Izquierdo"), and other defendants seeking to recover damages for certain losses caused to the Trust Bank during the time that defendants held various positions as Trust Bank officers and/or directors. Plaintiff's five-count complaint contains four counts against all of the defendants for negligence and other wrongful conduct (Count I), Breach of Fiduciary Duties (Count II), Gross Negligence pursuant to 12 U.S.C. 1821(k) (Count III), and Breach of Contract (Count V), and one count against defendant directors for violation of their oaths of office pursuant to 12 U.S.C. § 73 (Count IV). Defendants Haddad, McMullin, De Cardenas, Sanchez, Schwartz, and Izquierdo have all filed, whether jointly or separately, motions to dismiss FDIC's complaint. The merits of these motions is the subject of the within Omnibus Report and Recommendation.

STANDARD OF REVIEW

Defendants predicate their request for dismissal of the Amended Complaint on Fed.R.Civ.P., Rules 12(b)(6) and 9(b). When a federal court considers a 12(b)(6) motion of dismissal at the pleading stage, the court must apply the Federal Rules of Civil Procedure and not the state law in question. Eastern Refractories Co. v. Forty Eight Insulations, Inc., 658 F.Supp. 197 (S.D.N.Y.1987); Hiatt v. Schreiber, 599 F.Supp. 1142 (D.C.Colo. 1984). According to Fed.R.Civ.P. 8(a), a complaint shall contain "a short and plain statement of the claim showing that the pleader is entitled to relief". Caster v. Hennessey, 781 F.2d 1569, 1570 (11th Cir. 1986). Courts have interpreted this standard liberally. While the pleading must be sufficient to give the defendant fair notice of what the claim is and the grounds upon which it rests, the pleading is not required to set forth the detailed facts upon which the claim is based. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Neizil v. Williams, 543 F.Supp. 899 (D.C.Fla.1982).

Furthermore, the court must accept well pleaded allegations of the complaint as true, and all ambiguities or doubts concerning sufficiency of the claim must be resolved in favor of the pleader. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984); Johnson v. Wells, 566 F.2d 1016, 1017 (5th Cir. 1978); Doe v. U.S. Department of Justice, 753 F.2d 1092 (D.C.Cir.1985); Quinones v. Durkis, 638 F.Supp. 856 (S.D.Fla.1986); Blatchford v. Guerra, 548 F.Supp. 406 (S.D.Fla.1982). Finally, the court cannot dismiss unless it appears beyond doubt that under no set of facts can plaintiff state a claim which would entitle it to relief. Bradberry v. Pinnellas County, 789 F.2d 1513, 1515 (11th Cir.1986); McKinnis v. Mosely, 693 F.2d 1054, 1058 (11th Cir.1982); Hammer v. Armstrong World Industries, 679 F.Supp. 1096, 1098 (S.D.Fla.1987); Donovan v. American Leader Newspapers, Inc., 524 F.Supp. 1144 (M.D.Fla.1981). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Hammer v. Armstrong World Industries, 679 F.Supp. 1096, 1098 (S.D.Fla. 1987).

Fed.R.Civ.P. 9(b) requires that "in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." This rule, however, must not be read to abrogate Rule 8(a). Friedlander v. Nims, 755 F.2d 810, 813 (11th Cir.1985). "A court should always be careful to harmonize the directives of Rule 9(b) with the broader policy of notice pleading." Id., (citing, Zuckerman v. Franz, 573 F.Supp. 351, 356 (S.D.Fla.1983)). See also Xaphes v. Shearson, Hayden, Stone, Inc., 508 F.Supp. 882, 887 (S.D.Fla.1981).

LEGAL ANALYSIS

I. MOTIONS TO DISMISS FILED BY HADDAD, DE CARDENAS, IZQUIERDO, AND SANCHEZ³

A. Count III—Gross Negligence Under 12 U.S.C. § 1821

In Count III, plaintiff alleges a claim against defendants for gross negligence pursuant to 12 U.S.C. § 1821(k). Section 1821(k), which is part of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), states, in pertinent part, as follows:

(k) Liability of directors and officers

A director or officer of an insured depository institution may be held personally liable for monetary damages in any civil action by, on behalf of, or at the request or direction of the Corporation, which action is prosecuted wholly or partially for the benefit of the Corporation—

* * * * * *

for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law. Nothing in this paragraph shall impair or affect any right of the Corporation under other applicable law.

12 U.S.C. § 1821(k) (West 1989). The Effective date of this statute was August 9, 1989.

Defendants argue that Count III of plaintiff's complaint should be dismissed with prejudice on the grounds that § 1821(k) may not be applied retroactively to conduct which took place prior to the enactment of the statute. Plaintiff concedes that the conduct at issue took place prior to the enactment of the statute on August 9, 1989, but argues that an order of dismissal is not warranted as retroactive application of the FIRREA is appropriate. This Court disagrees.

"Retroactivity is not favored in the law." Bowen v. Georgetown University Hosp., 488 U.S. 204, 208, 109 S.Ct. 468, 471, 102 L.Ed.2d 493 (1988). Absent the "unequivocal and inflexible import of its terms, and the manifest intent of the legislature", courts must presume that a law applies prospectively from...