Federal Savings and Loan Insurance Corp. v. Fielding

• Decision Date: 10 May 1972
• Docket Number: Civ. No. LV-1222.
• Parties: FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, a corporation, Plaintiff, v. Robert C. FIELDING et al., Defendants.
• Court: U.S. District Court — District of Nevada

343 F. Supp. 537

FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, a corporation, Plaintiff, v. Robert C. FIELDING et al., Defendants.

Civ. No. LV-1222.

United States District Court, D. Nevada.

May 10, 1972.

COPYRIGHT MATERIAL OMITTED

Alan J. Moscov, Gen. Counsel, Max Wilfand, Deputy Gen. Counsel, Washington, D. C., Munger, Tolles, Hills & Rickershauser, Los Angeles, Cal., Milton W. Keefer, Las Vegas, Nev., for plaintiff.

Thomas R. Sheridan, Los Angeles, Cal., George E. Franklin, Jr., Ross, Snyder, Goodman & Bryan, Bell & Morris, Lloyd D. George, Samuel S. Lionel, Singleton, DeLanoy, Jemison & Reid, Las Vegas, Nev., Guild, Hagen & Clark, John J. McCune, Reno, Nev., Jones, Jones, Close, Bilbray & Kaufman, Austin & Thorndal, Las Vegas, Nev., for defendants.

ORDER DENYING MOTION TO SUPPRESS AND RELATED MOTIONS

BRUCE R. THOMPSON, District Judge.

The twenty principal individual defendants in this action, by motions to suppress, for an injunction and objections to interrogatories and to requests for production of documents, seek to terminate this litigation by asserting the lawyer-client privilege and the policies prohibiting conflicts of interest. The general character of the lawsuit has been described in earlier opinions. Federal Savings and Loan Insurance Corporation v. Fielding, 309 F.Supp. 1146 (D. C.Nev.1969); Federal Savings and Loan Insurance Corporation v. Fielding, 316 F.Supp. 82 (D.C.Nev.1970).

Extensive discovery has been conducted and there is little dispute in the facts bearing upon the merits of the instant motions.

The twenty defendants are former officers, directors and employees of First Western Financial Corporation (FWFC) and First Western Savings and Loan Association (FWSLA). The plaintiff, Federal Savings and Loan Insurance Corporation (FSLIC), prosecutes this action against defendant in part on the basis of an assignment from FWSLA of certain claims in an earlier filed Nevada State case, A-43922, which is substantially the same litigation as the case at bar.

FWSLA is a wholly owned subsidiary of FWFC, and the genesis of that corporate control can be traced to 1959 where, in a series of complex corporate transactions, certain of the defendants herein, Messrs. Fielding, Landa, Jones, and Albert G. Neumeyer, Deceased, effected FWFC's stock ownership of FWSLA. In these transactions, Landa, a partner in the law firm of Davies, Richberg, Tydings, Landa & Duff (hereinafter the "Davies" firm), and Fielding, a client of the Davies firm, acted on behalf of themselves and a group of investors with the legal counsel and assistance of the Davies firm. Members of the firm, including Delmar W. Holloman, also a defendant herein, and George D. Webster, represented Fielding and Landa personally in these transactions, which resulted in these individuals becoming substantial stockholders and part of management in FWFC.

During the ensuing years, both FWFC and FWSLA had complicated financial, tax, corporate, stock and management transactions. The Davies firm, including Landa, Holloman and Webster and subsequently Brebbia, was directly involved as legal counsel in these transactions. The Davies firm also represented many of the principals of FWFC and FWSLA in their personal capacities. In addition, certain defendants in this action, Landa, Fielding, Neumeyer, Holloman and Clifford Jones, received personal counsel and advice with respect to their official acts as members of management of FWFC and FWSLA.

From 1960 through December of 1965, Holloman, as a partner of the Davies firm, was general counsel to FWFC. During these years, Holloman, Webster and Landa performed many legal services for FWFC and FWSLA, such as negotiations and representations before the Securities and Exchange Commission, the Federal Home Loan Bank Board, the New York Stock Exchange, the Internal Revenue Service, and plaintiff in this action, FSLIC. The relationship between the Davies firm and the management of the two corporations is further highlighted by the fact that not only did Holloman serve as general counsel for FWFC, but Landa was a director of the corporation, and, from the beginning, Webster was assistant secretary.

In 1965, John Henry Brebbia became an associate in the Davies firm. Upon his association with the firm, he assisted Holloman and Webster in representing FWFC and FWSLA. In June of 1966, Mr. Webster, who had already become general counsel, succeeded Landa as a director of FWFC; thereafter, in December of 1966, Webster was elected Chairman of the Board, and, by amendment to the by-laws, Chief Executive Officer. At the same time, Brebbia became a member of the Board of Directors and subsequently the President of FWFC. At the time, Webster and Brebbia were still partner and associate, respectively, in the Davies firm.

On December 19, 1966, FWSLA entered into a formal assistance agreement with FSLIC. This assistance agreement was negotiated for several months beforehand by Webster and Brebbia on behalf of FWSLA and its then management, the defendants in this action.

The complaint in A-43922, the action filed in the Eighth Judicial District Court of the State of Nevada, in and for the County of Clark, the predecessor of the case at bar, was drafted, signed and filed by John Henry Brebbia and verified by George D. Webster in May of 1967. A few weeks prior to the filing, Webster and Brebbia had withdrawn from the Davies firm and had immediately associated with the firm of Alston, Miller & Gaines, of Atlanta, Georgia. Upon association with the Alston firm, Webster and Brebbia became that firm's Washington, D. C. office. On the night of March 31, 1967, when Webster and Brebbia resigned from the Davies firm, they removed the Davies files and records dealing with FWFC and FWSLA. Subsequently, the Davies files were used by Webster and Brebbia in the litigation of A-43922.

In addition to instituting A-43922, Webster and Brebbia also in May of 1967, caused to be filed a Delaware action against Messrs. Neumeyer and Jones. Webster personally verified the Complaint in the Delaware action.

With respect to the Davies files, their specific whereabouts remained unknown to defendants until Mr. Peter Taft, trial counsel for FSLIC in the present litigation, informed the Court and defendants' counsel that he and his law firm presently had the files and were utilizing them in trial preparation.

Albert G. Neumeyer, Deceased, was, in 1958, President and Managing Officer of First Western Savings and Loan Association. The FWFC-FWSLA corporate structure was formed by negotiations between two groups—that headed by Neumeyer and the Fielding-Landa group. Leonard Silverstein, attorney for Neumeyer, assisted Neumeyer in the establishment of FWFC; subsequently Silverstein entered into negotiations for refinancing with Fielding and Landa. The Davies firm therefore represented Landa and Fielding, vis-a-vis Silverstein, in the development of FWFC.

As an officer of FWFC, Webster performed the duties of an assistant secretary for a period of five years. In this capacity, he has stated that his eyes were open to what he did and what he was called upon to do. In his capacity as a partner in the Davies firm and as an officer of FWFC, Webster handled many matters on behalf of the corporation with various governmental agencies, including the Securities and Exchange Commission, Federal Home Loan Bank Board, New York Stock Exchange and Internal Revenue Service.

In 1963, during the acquisition of the Nevada Bank of Commerce, a defendant in this action, by FWFC, Webster rendered advice on the tax aspects of the acquisition.

During the registration of FWFC stock with the Securities and Exchange Commission in 1963, Webster rendered various opinions on taxation and he was listed under the various preliminary prospectuses and the final prospectus as an officer of the company and a member of the Davies firm.

In addition, Webster held power of attorney for various stockholders in the transactions before the Securities and Exchange Commission. In correspondence between FWFC and the Securities and Exchange Commission, as well as underwriters and the New York Stock Exchange, Webster was designated as a member of the corporation's management, and as such, he was capable of answering inquiries as to various matters.

FWFC, as a holding company, had also acquired First Bancorporation, and when First Bancorporation was spun off by FWFC, Webster dealt with the tax aspects of that spin-off and obtained a ruling from the Internal Revenue Service in that regard.

In 1965, Webster's legal work also included advising the management of FWSLA on foreclosure problems. His work also brought Webster into negotiations with the Federal Home Loan Bank Board. He corresponded with officers of the Bank Board relative to credit requirements and worked on behalf of FWFC with respect to the Home Loan Bank Board's requirements concerning the profits to be taken through foreclosures.

In his work with the Davies firm, Webster also included Nevada banking law as well as federal banking law in his counseling and representation. Moreover, Webster advised management on the provisions of Section 16(b) of the Securities and Exchange Act, as well as on selling their privately held FWFC stock. Webster also advised management on proxy material.

Webster also advised the officers and directors of FWFC and FWSLA on the savings and loan regulations and he worked with officers of the Treasury Department relative to these regulations.

As counsel for FWFC and its subsidiaries, Webster rendered opinions on the issuance of stock dividends under the Securities Act of 1933. He also worked with the accounting firm of Conway, Moe & Hibbs and with Nelson Conway of that firm, defendants in this lawsuit. Nelson Conway sought and received the legal advice of Webster with respect to accounting questions. In the area of accounting methods and their effect upon the earnings and taxes of the corporations,...