Loftus v. Fed. Deposit Ins. Corp.

• Citation: 989 F.Supp.2d 483
• Decision Date: 28 October 2013
• Docket Number: C.A. No. 2:13–CV–00379–PMD.
• Court: U.S. District Court — District of South Carolina
• Parties: Patrick W. LOFTUS, Jr., Andrew S. Johnston, and J. Edward Norris, Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION as Receiver for Plantation Federal Bank; Plantation Federal Bank Salary Continuation Agreement; Plantation Federal Bank Split Dollar Agreement; and Plantation Federal Bank, Defendants.

989 F.Supp.2d 483

Patrick W. LOFTUS, Jr., Andrew S. Johnston, and J. Edward Norris, Plaintiffs,

v.FEDERAL DEPOSIT INSURANCE CORPORATION as Receiver for Plantation Federal Bank; Plantation Federal Bank Salary Continuation Agreement; Plantation Federal Bank Split Dollar Agreement; and Plantation Federal Bank, Defendants.

C.A. No. 2:13–CV–00379–PMD.

United States District Court,

D. South Carolina,

Charleston Division.

Oct. 28, 2013.

Brian Matthew Lysell, Richard Carl Detwiler, Callison Tighe and Robinson, Columbia, SC, for Plaintiffs.

Hardwick Stuart, Jr., Leonard R. Jordan, Jr., Berry Quackenbush and Stuart, Columbia, SC, for Defendants.

ORDER

PATRICK MICHAEL DUFFY, District Judge.

This matter is before the Court on motion of Defendant Federal Deposit Insurance Corporation (“FDIC”), as Receiver for Plantation Federal Bank (“Bank”), to dismiss Plaintiffs' Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Defendant also requests that the Court take judicial notice of six exhibits accompanying its Motion to Dismiss and Reply. For the reasons set forth herein, Defendant's Motion to Dismiss and Request for Judicial Notice is denied.

BACKGROUND

This action arises out of the FDIC's denial of benefits purportedly owed to Plaintiffs based on Plaintiffs' previous employment with the Bank. Accepting the truth of the allegations in Plaintiffs' Complaint and viewing all inferences in the light most favorable to Plaintiffs, e.g., E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir.2011), the facts, for purposes of ruling on Defendant's Motion to Dismiss, are as follows.

Chartered in 1986, Plantation Federal Bank was based in Pawley's Island, South Carolina. Plaintiffs are former executives of the Bank. Although Plaintiffs' responsibilities, roles, and titles apparently changed over the years, at the time the Bank was chartered, Plaintiff J. Edward Norris (“Norris”) was the Bank's president and Plaintiff Patrick W. Loftus, Jr. (“Loftus”) was the Bank's chief financial officer. Plaintiff Andrew S. Johnson (“Johnson”) joined the Bank shortly after its founding as chief lending officer, vice president, and Pawley's Island market executive.

Plaintiffs claim that under their leadership and direction, the Bank expanded significantly, in terms of both its assets and its branch offices, and that the Bank remained profitable and well-capitalized. Plaintiffs allege that in 2002, the Bank implemented the Plantation Federal Bank Salary Continuation Agreement (“Salary Continuation Agreement”) and the Plantation Federal Bank Split Dollar Agreement or Split Dollar Endorsement (“Split Dollar Agreement”) (collectively “Agreements” or “Plan”). According to Plaintiffs, the Salary Continuation Agreement was intended to provide for the payment of a salary to Plaintiffs following their termination, and the Split Dollar Agreement was intended to provide Plaintiffs' designated beneficiaries with a benefit at the time of each Plaintiff's death. Specifically, Plaintiffs contend that the Plan was to provide annual benefits upon retirement to Plaintiff Johnson in the amount of $50,000 and Plaintiffs Loftus and Norris in the amount of $75,000. Additionally, Plaintiffs assert that the value of the Plan's benefits under the Split Dollar Agreement ranged from $550,000 to $800,000 after the Bank had received its allotted cash value and percentage of the death benefits. At the time the Bank implemented or executed the Agreements, Plaintiffs had been employed by the Bank for a period in excess of fifteen years.

Plaintiffs allege that, notwithstanding the success of the Bank during their tenure, the Bank's board of directors voted in 2006 to “embark on a new commercial banking strategy.” In furtherance of this strategy, the board of directors employed a new management team to operate the Bank. According to Plaintiffs, the Bank's new management team acted to reduce or eliminate Plaintiffs' respective authority and management responsibilities. Nevertheless, Plaintiffs remained with the Bank following the 2006 transition, citing the benefits promised under the Agreements as the primary reason for doing so.

Plaintiffs allege that the Bank's financial stability and viability declined significantly under the direction of the new management team. Plaintiffs assert that, as a result of this decline, the Bank ultimately entered into a Supervisory Agreement with the Office of Thrift Supervision in 2009, and in 2010, the Bank was issued an Order to Cease and Desist from undertaking or participating in any unsound banking practices. On April 6, 2012, in accordance with the Supervisory Agreement, the Bank submitted an Application for Benefits to the Office the Comptroller of the Currency (“OCC”) and the FDIC. The Application for Benefits requested that the OCC and FDIC terminate the Agreements and distribute the benefits according to the terms of the Agreements. The Bank subsequently failed, and the OCC placed the Bank in receivership and appointed the FDIC as its Receiver. On April 27, 2012, the FDIC accepted its appointment as the Bank's Receiver and proceeded to close the Bank and deny the Bank's request for termination of, and distribution pursuant to, the Agreements. Plaintiffs thereafter submitted individual claims to the FDIC, which were disallowed on December 13, 2012. Following the FDIC's rejection of their claims and repudiation of the Agreements, Plaintiffs instituted this action.

PROCEDURAL HISTORY

On February 11, 2013, Plaintiffs filed the instant lawsuit alleging one cause of action for benefits, taxable costs, interest, and attorney's fees pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), (g). On June 12, 2013, Plaintiffs filed an Amended Complaint, adding a second cause of action for actual direct compensatory damages pursuant to the Financial Institutions Reform, Recovery Enforcement Act (“FIRREA”), 12 U.S.C. § 1821(e)(3)(A). Defendant subsequently filed its Motion to Dismiss and Request for Judicial Notice, accompanied by a Memorandum in Support, on August 15, 2013. Specifically, Defendant moves to dismiss Plaintiffs' Amended Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Additionally, Defendant requests that the Court take judicial notice of five exhibits attached to the Memorandum in Support. Plaintiffs filed a Response in Opposition on September 13, 2013, objecting to Defendant's request that the Court take judicial notice of certain exhibits and also maintaining that the Amended Complaint states a claim for relief under both causes of action sufficient to withstand Defendant's Motion to Dismiss. Defendant thereafter filed a Reply on September 23, 2013, also requesting that the Court take judicial notice of a sixth exhibit. The Court has jurisdiction pursuant to 28 U.S.C. § 1331 (2006). This matter is now ripe for consideration.

STANDARD OF REVIEW

A motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir.2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992) (“A motion to dismiss under Rule 12(b)(6) ... does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally sufficient a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court “articulated a ‘two-pronged approach’ to assessing the sufficiency of a complaint.” Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 288 (4th Cir.2012) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). First, the complaint must “contain factual allegations in addition to legal conclusions.” Id. Under Rule 8's pleading standard, “a formulaic recitation of the elements of a cause of action will not do,” id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955) (internal quotation marks omitted), and “ ‘naked assertion[s]’ devoid of ‘further factual enhancement’ ” will not suffice, Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Second, the complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). More specifically, to state a facially plausible claim the complaint must demonstrate that the plaintiff's right to relief is more than a mere possibility, but it need not rise to the level of evincing a probability of success. Id. Nevertheless, under notice pleading, a complaint must simply provide the defendant with “fair notice” of the claim and the grounds upon which the plaintiff seeks to obtain relief. E.I. du Pont de Nemours & Co., 637 F.3d at 440. Accordingly, “[d]etermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

When ruling on a Rule 12(b)(6) motion to dismiss, the trial judge must accept as true all of the facts alleged in the plaintiff's complaint and construe all reasonable inferences in favor of the plaintiff. E.g., E.I. du Pont de Nemours & Co., 637 F.3d at 440. The court must determine whether the allegations give rise to a plausible right to relief, Iqbal, 556 U.S. at...