Lee v. Gutierrez
| Decision Date | 12 January 1994 |
| Docket Number | No. 3-93-183-CV,3-93-183-CV |
| Citation | 876 S.W.2d 382 |
| Parties | Kenneth D. LEE and Norma B. Lee, Appellants, v. Jorge A. GUTIERREZ, Liquidating Agent for Rio Grande Savings and Loan Association, and Rio Grande Savings and Loan Association, Appellees. |
| Court | Texas Court of Appeals |
William L. Morrow, Harlingen, for appellants.
John B. McFarland, Graves, Dougherty, Hearon & Moody, Austin, for appellees.
Before POWERS, JONES and KIDD, JJ.
This case is a product of the savings and loan crisis of the late 1980s. Appellants Kenneth D. Lee and Norma B. Lee are representatives of the class of Individual Retirement Account ("IRA") depositors at the failed Rio Grande Savings and Loan Association. The IRA depositors brought a class-action suit against Rio Grande and Jorge A. Gutierrez, the state-appointed liquidating agent (collectively "Rio Grande"), contending that as IRA depositors, they were entitled to priority over other Rio Grande depositors in the institution's liquidation and should receive 100% reimbursement for the funds in their IRA accounts. The district court rendered final judgment in favor of Rio Grande, determining that the IRA depositors had the same priority in the distribution of liquidation proceeds as Rio Grande's other depositors. We will affirm.
The facts of this case are not in dispute. Rio Grande was a state-chartered savings and loan association located in Harlingen, Texas. In April 1988, the Texas Savings and Loan Department declared Rio Grande insolvent and appointed Jorge Gutierrez as its liquidating agent. See Savings and Loan Act, Tex.Rev.Civ.Stat.Ann. art. 852a, § 8.09(b) (West Supp.1993). The Savings and Loan Act requires that the liquidating agent liquidate the remaining assets of an insolvent savings and loan and distribute the proceeds to the institution's depositors and other creditors according to the priority set forth in the act. Tex.Rev.Civ.Stat.Ann. art. 852a, § 8.09(c), (g) (West Supp.1993). Mr. Gutierrez determined that Rio Grande had insufficient assets to repay 100% of its deposit accounts. Rio Grande was at the time the only savings and loan in Texas whose accounts were not insured by the Federal Savings and Loan Insurance Corporation.
During the liquidation, a dispute arose between Gutierrez and some of Rio Grande's IRA depositors. Gutierrez had approved the IRA depositors' claims but had assigned them the same priority in the liquidation as other depositors. The IRA depositors contended that their claims were entitled to While the federal suit was pending, the Lees and other IRA depositors filed suit in Travis County district court, asserting the same causes of action as in their federal suit, but not as a class action. Rio Grande responded with both a motion to designate the class of IRA depositors and a counterclaim for a declaratory judgment that the IRAs were general rather than special deposits, and therefore not entitled to special priority. See Uniform Declaratory Judgments Act, Tex.Civ.Prac. & Rem.Code Ann. §§ 37.001-37.011 (West 1986 & Supp.1993). In addition, Rio Grande asserted that the claims of most of the IRA depositors were barred by the three-month limitation period that applies to appeals of claim determinations by savings and loan liquidators. See Tex.Rev.Civ.Stat.Ann. art. 852a, § 8.09(f) (West Supp.1993). In response, the state court certified the class of IRA depositors, designating the Lees as class representatives. See Tex.R.Civ.P. 42.
special priority because their IRAs were held as trust accounts, and thus constituted "special deposits." Of Rio Grande's 6,300 depositors, approximately 617 were IRA accounts, representing $3.9 million of Rio Grande's $75 million in total book deposits. A group of Rio Grande's IRA depositors, among them Kenneth and Norma Lee, filed a class action lawsuit against Rio Grande and Gutierrez in the United States District Court for the Southern District of Texas in Brownsville. The IRA depositors sought a declaration that the funds in their IRA accounts were trust funds and therefore entitled to priority over other Rio Grande deposits. The IRA depositors' suit also alleged that Gutierrez's decision on their claims had deprived them of their property under color of law and was made without due process, in violation of the Federal Civil Rights Act. See 42 U.S.C.A. § 1983 (1981)
After a bench trial, the state court ruled that: (1) the IRAs were special deposits, entitled to priority over general deposits; (2) the IRA depositors were not entitled to interest on their claims after the date Rio Grande was placed in conservatorship; and (3) the federal suit tolled the three-month limitations period. The court also awarded attorney's fees to the IRA depositors.
Rio Grande appealed to this Court, contending that the trial court erred first in declaring the IRAs to be special deposits, and second in determining that the federal suit tolled the three-month limitations period. Gutierrez v. Lee, 812 S.W.2d 388, 390 (Tex.App.--Austin 1991, writ denied). We reversed the trial court's decision, holding that the federal suit did not toll the three-month limitation period. Id. at 392. Because the trial court had made no findings as to whether the state court suit was timely for each of the class members under the terms of section 8.09(f), we remanded the cause. We did not address whether the IRA accounts were general or special accounts.
On remand, the district court conducted an evidentiary hearing and concluded that the only IRA depositors whose claims were not time-barred were those to whom Gutierrez had sent notices on or after October 4, 1988. The district court identified thirty-three such depositors in its findings of fact and conclusions of law, and in its final judgment. Furthermore, the district court reversed itself on the principal substantive question of the suit, holding that the IRA accounts were general deposits, with the same priority in the liquidation as other Rio Grande deposits.
In the instant appeal, the IRA depositors assail the district court's judgment, raising three points of error. In their first point of error, the IRA depositors argue that they are entitled to the full amounts of their IRA deposits because these funds were held in trust by Rio Grande. Appellants contend that as trust funds, their deposits were "special deposits" under Texas law. While a "general deposit" creates a debtor-creditor relationship between the financial institution and the depositor, no debtor-creditor relationship is created with a special deposit; instead, the bank holds a special account as a trustee or bailee. Hudnall v. Tyler Bank & Trust Co., 458 S.W.2d 183, 186 (Tex.1970). While an agreement between the depositor and the bank is required to create a special deposit, appellants contend that the documents signed to create their IRA accounts Rio Grande responds that the IRA depositors are entitled to no greater priority for their deposits than the rest of Rio Grande's depositors. Rio Grande points to the fact that the IRA depositors received passbooks in the name of the IRA trust just like all other depositors, and likewise were paid interest for their deposits. Further, Rio Grande contends that the IRA disclosure statement explained that Rio Grande was to deposit IRA funds as directed by the IRA depositor. Therefore, Rio Grande argues that because the IRA depositors directed Rio Grande to deposit the IRA funds in interest-bearing accounts, there was no agreement that Rio Grande hold the IRA deposits as special deposits and return the funds intact. Rio Grande asserts that if the agreement had been to hold the funds in trust and return them intact, Rio Grande would not have paid interest on the accounts.
demonstrate that their IRA funds were meant to be special deposits.
The IRA depositors also contend, in their second and third points of error, that the trial court erred in finding all but thirty-three of the IRA depositors' claims time-barred, and that the trial court erred in not awarding interest on the IRA deposits. Rio Grande responds by arguing that the trial court correctly held that the IRA depositors to whom claim notices had been mailed prior to October 4, 1988, were time-barred, and that the IRA depositors were not entitled to interest. Rio Grande also brings a cross-point contending that the trial court erred in not finding that IRA depositors to whom notice was mailed before November 21, 1988, were time-barred.
In their first point of error, the IRA depositors contend that the trial court erred in holding that their IRA accounts were general rather than special accounts, and not entitled to priority over other depositors in the liquidation of Rio Grande's assets. We disagree.
The Texas Supreme Court reviewed in detail the difference between general and special deposits in Hudnall v. Tyler Bank & Trust Co.:
When money or its equivalent is deposited in a bank without any special agreement, the law implies that it is to be mingled with the other funds of the bank, the relation of debtor and creditor is created between the bank and the depositor, and the deposit is general. In such a transaction the bank becomes the owner of the fund. When, on the other hand, money or its equivalent is so deposited with an accompanying agreement that the identical thing deposited shall be returned, or that the same shall be paid out for a specific purpose, the relation thus created is not that of debtor and creditor. Such a transaction is a special deposit, and the bank is liable only as bailee. In such a case the fund is a trust fund, the bank acquires no title thereto, and is a mere trustee for the safe-keeping, return, or disbursement of the fund, according to the special contract by which the deposit is made.
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