Federal Deposit Ins. Corp. v. Former Officers and Directors of Metropolitan Bank
| Decision Date | 13 September 1989 |
| Docket Number | No. 88-3638,88-3638 |
| Citation | 884 F.2d 1304 |
| Parties | FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff-Appellant, v. FORMER OFFICERS AND DIRECTORS OF METROPOLITAN BANK, Daniel R. Abrams, W. Todd Coffelt, Steven Hungerford, Frank Lee and Charles A. Dale; Former Officers and Directors of Willamette Falls State Bank, Gene A. Rickert, Larry A. Schoenborn, P. Dean Nichols, John Molendyk, Joyce Evans, K. Peter Norrie, Gary L. Dennison, Lewis Johnson and Irving W. Potter; Former Officers and Directors of Independent Bank of Sandy, C. Dale Brookens, Lester Hardy, John Rowell and Thomas Wolf, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
C. Stephen Howard, Tuttle & Taylor, Los Angeles, Cal., for plaintiff-appellant.
Barrie J. Herbold, Markowitz, Herbold, Stafford & Glade, Portland, Or., for defendant-appellee, Frank Lee.
Jeffrey M. Batchelor, Spears, Lubersky, Bledsoe, Anderson, Young & Hilliard, Portland, Or., for defendants-appellees, K. Peter Norrie and Lewis Johnson.
Appeal from the United States District Court for the District of Oregon.
Before ALARCON, BRUNETTI and O'SCANNLAIN, Circuit Judges.
The Federal Deposit Insurance Corporation ("FDIC") appeals the district court's grant of summary judgment in favor of the former officers and directors of the United Bank of Oregon, a failed bank consisting of the merged assets of three predecessor banks. The district court granted summary judgment for defendants, ruling that claims of breach of fiduciary and statutory duties were barred by the statute of limitations. 705 F.Supp. 505. We reverse.
In January 1983, three ailing Oregon banks, Metropolitan Bank ("Metropolitan"), Willamette Falls State Bank ("Willamette Falls"), and Independent Bank of Sandy ("IBS") merged to form the United Bank of Oregon ("UBO"). The new fourteen-member UBO board of directors was composed of directors from the three constituent banks: eight from Metropolitan, three from Willamette Falls, and three from IBS. On March 2, 1984, UBO was declared insolvent, and the Federal Deposit Insurance Corporation was appointed receiver of the bank. The FDIC in its capacity as receiver assigned certain assets of UBO to the FDIC in its corporate capacity, including the claims of the constituent banks against their former officers and directors and all claims of UBO against its former officers and directors.
On February 27, 1987, FDIC filed a complaint in federal district court, alleging that twenty former officers and directors of the constituent banks had also been directors of UBO. FDIC claims against these officers and directors included breach of fiduciary duty, negligence, and statutory violations and claims for indemnity. These claims were based on the alleged mismanagement of the loan portfolios of the constituent banks.
Eight of the defendants moved for summary judgment, contending that all claims were barred by the statute of limitations. The district court granted summary judgment, holding (1) FDIC's claims sounded in tort, rather than contract, so that the relevant statute of limitations was the three-year period applicable to torts; (2) the right of action accrued when the loans were made, regardless of whether the government possessed the claims at that time; and (3) the statute of limitations was not tolled due to control or domination of the banks by the defendants. The district court concluded that the applicable statute of limitations, 28 U.S.C. Sec. 2415(b), barred the action.
FDIC filed a motion for reconsideration, apparently based on Fed.R.Civ.P. 60(b)(6). In this motion FDIC argued that the district court erred in applying federal law to its claims; that a six-year statute of limitations should have been used; and that discovery should have been permitted. All three arguments were rejected by the district court. The district court also granted summary judgment for two more defendants. To expedite the appeal, FDIC moved for, and the district court granted, judgment in favor of all defendants in this action. FDIC timely appealed and argues that the district court erred (1) in its characterization of FDIC's claims as sounding in tort rather than in contract; (2) in holding that the statute of limitation began to run before FDIC acquired its claims; and (3) in granting summary judgment on the issue of adverse domination by the defendants.
The applicable statutes of limitations are found in 28 U.S.C. Sec. 2415. Subsection (a) provides for a six-year time limitation within which any action for money damages may be brought by an agency of the United States "which is founded upon any contract express or implied in law or fact...." 28 U.S.C. Sec. 2415(a). Subsection (b) provides a three-year time limit within which any action for money damages may be brought by an agency of the United States "which is founded upon a tort." 28 U.S.C. Sec. 2415(b). These statutes of limitations apply to FDIC as an agency of the United States. See FDIC v. Roldan Fonseca, 795 F.2d 1102, 1108 (1st Cir.1986); FDIC v. Petersen, 770 F.2d 141, 143 (10th Cir.1985).
On this appeal, FDIC contends that its claims for breach of fiduciary duties to the banks outlined in its complaint sound in contract for the purposes of determining the relevant statute of limitations. 1 FDIC argues that its claims are founded both on express contract, based on the statutory oath required of defendants, and on implied contract from each defendant undertaking to serve as officer or director of a federally insured bank. This characterization of FDIC's claims would allow it to benefit from the six-year statute applicable to contracts claims.
Congress, in establishing a statute of limitations for government claims, assigned time periods according to the common law division of actions. United States v. Limbs, 524 F.2d 799, 801 (9th Cir.1975). To determine the relevant statute of limitations under section 2415, therefore, a court generally must characterize the action. United States v. Neidorf, 522 F.2d 916, 919 (9th Cir.1975), cert. denied, 423 U.S. 1087, 96 S.Ct. 878, 47 L.Ed.2d 97 (1976).
This circuit has held, however, that when there is a "substantial question" which of two conflicting statutes of limitations to apply, the court should apply the longer. Guam Scottish Rite Bodies v. Flores, 486 F.2d 748, 750 (9th Cir.1973) (). See also Payne v. Ostrus, 50 F.2d 1039, 1042 (8th Cir.1931) (); Hughes v. Reed, 46 F.2d 435, 440 (10th Cir.1931) ().
Was there a substantial question as to whether FDIC's claims sounded in tort or in contract? We conclude there was. The fact that several courts have determined that an action for breach of fiduciary duties sounds in contract, rather than in tort suggests that there is a substantial question as to the nature of the action. See Payne, 50 F.2d at 1042; Hughes, 46 F.2d at 440-41; FSLIC v. Aetna Cas. & Sur. Co., 701 F.Supp. 1357, 1360 (E.D.Tenn.1988). Indeed, at least one court has stated that a claim for breach of fiduciary duty may be characterized as either a contract or a tort action. See International Surplus Lines Ins. Co. v. Marsh & McLennan, Inc., 838 F.2d 124, 128-29 (4th Cir.1988) (). Since there is a substantial question whether FDIC's claims for breach of fiduciary duty are properly characterized as sounding in tort or in contract, we conclude that the six-year statute of limitations governs.
Appellees assert that several arguments made by FDIC before this court were not raised in the district court and thus may not be raised on appeal. Appellees claim (1) that FDIC failed to assert before the district court that its claims for breach of fiduciary duty sounded in contract; (2) that FDIC failed to claim that the oaths of office constituted an express contract; and (3) that FDIC failed to characterize its claims for breach of fiduciary duty as "contracts implied in law" and is thus foreclosed from making this argument on appeal.
We reject these claims. The district court explicitly ruled on the issue whether the claims for breach of fiduciary duty could be characterized as contractual. Although the district court opinion does not discuss the point, FDIC's complaint specifically refers to the oath of office taken by the officers and directors in connection with the fiduciary duties of the officers and directors. Finally, even though FDIC failed to use the technically correct legal term to characterize its implied contract claim, the context of the district court opinion makes it clear that FDIC's claim involved a contract implied in law, rather than one implied in fact.
When did the causes of action accrue? Because, as an analytical matter, the claims could be deemed to accrue either when the faulty lending practices occurred or when the FDIC acquired the claims by assignment, 2 it can be argued that some of the claims accrued outside the six-year statute of limitations that we have found applicable to the breach of fiduciary duty claims.
Courts are divided on the issue of when the statute of limitations begins to run on claims acquired by the FDIC. Compare FDIC v. Hinkson, 848 F.2d 432, 435 (3d Cir.1988) (dicta) (accrual begins when government acquires claim); FDIC v. Cardona 23 F.2d 132, 134 (1st Cir.1983) (same) (dicta); FDIC v. Carlson, 698 F.Supp. 178, 180 (D.Minn.1988); FSLIC v. Burdette, 696 F.Supp. 1196, 1200 (E.D.Tenn.1988) (same); FDIC v. Hudson, 673 F.Supp....
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