Professional Asset Management v. Penn Square Bank

Decision Date02 June 1983
Docket NumberNo. CIV-82-1357-W.,CIV-82-1357-W.
Citation566 F. Supp. 134
PartiesPROFESSIONAL ASSET MANAGEMENT, INC., a California corporation, Plaintiff, v. PENN SQUARE BANK, N.A., now known as Deposit Insurance National Bank of Oklahoma City; Federal Deposit Insurance Corporation, receiver; First Penn Corporation, an Oklahoma corporation; Peat, Marwick, Mitchell & Co., a partnership; James Blanton; Dean York; Bill P. Jennings; Frank L. Murphy; Eldon L. Beller; Bill G. Patterson; Richard T. Dunn; John R. Preston; Ronald H. Burks; Elizabeth Merrick Coe; Gary M. Cook; J.C. Cravens; Richard C. Haugland; Ken L. Kenworthy; C.F. "Tag" Kimberling; Marvin K. Margo; H. Mead Norton; James G. Randolph; Jerry Richardson; W.A. "Dub" Ross; Gene Smelser; Bill Stubbs; Carl W. Swan; J.D. Allen; Longhorn Gas Programs, Inc.; Longhorn Gas Co., Inc.; Longhorn Oil and Gas Company; Longhorn 1980 Private Drilling Program; Robert A. Hefner, III; GHK Corporation; Kenneth E. Tureaud; Saket Petroleum Co.; Kesat; Saket Racing Stables; Saket River Ridge Development Co., Defendants.
CourtU.S. District Court — Western District of Oklahoma

Ross Arbiter, Lyle R. Mink, K. Phillip Knierim and Barbara Brown, Gordon, Weinberg, Zipser, Rogers & Wells, Erwin E. Adler, Patricia A. Beaman, Carol B. Sherman, Los Angeles, Cal., Gene A. Castleberry and Robert A. Wiener, Oklahoma City, Okl., for plaintiff.

Stephen P. Friot, Spradling, Alpern, Friot & Gum, Oklahoma City, Okl., for Cravens, J.C. and Norton, H. Mead.

John W. Vardaman, Jr., John K. Villa, Gerson A. Zweifach, Williams & Connolly, Washington, D.C., Peter B. Bradford, Bradford, Haswell, Jones, Oklahoma City, Okl., for Swan, Carl W.

Philip F. Horning, Horning, Johnson & Grove, Oklahoma City, Okl., for Dunn, Richard T.

Jack G. Bush, Gary R. Underwood, Oklahoma City, Okl., for Kimberling, C.F. "Tag".

Robert C. Margo, George F. Short, S. Thomas Adler, Short, Barnes, Wiggins, Margo, Adler & Worten, Oklahoma City, Okl., for Margo, Marvin K.

J. William Conger and James C. Prince, Larry D. Hartzog, Hartzog, Conger & Cason, Earl D. Mills, John M. Perry III, Foliart, Mills & Niemeyer, Oklahoma City, Okl., for Peat, Marwick, Mitchell & Co., Blanton, James and York, Dean.

Charles C. Green, Turner, Turner, Green & Braun, Oklahoma City, Okl., for Jennings, Bill P.

Richard B. Talley, Talley, Perrine & Smith, Norman, Okl., for Beller, Eldon L.

James W. Bill Berry, James W. Bill Berry & Associates, Oklahoma City, Okl., for Burks, Ronald H.

John C. Snodgrass and David T. Hedges, Jr., Vinson & Elkins, Houston, Tex., James E. Work, Shirk, Work, Robinson & Williams, Oklahoma City, Okl., for Coe, Elizabeth Merrick, Cook, Gary M., Haugland, Richard C., Kenworthy, Ken L., Randolph, James G., Richardson, Jerry, Ross, W.A. "Dub" and Smelser, Gene.

Harold M. Durall, Oklahoma City, Okl., for Murphy, Frank L.

Stephen D. Powell, Kirk & Chaney, Oklahoma City, Okl., for Stubbs, Bill.

John N. Goodman, Oklahoma City, Okl., for Preston, John R.

Burck Bailey, Warren F. Bickford, IV, Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Okl., for Patterson, Bill G.

Charles C. Baker, Oliver S. Howard, Gable & Gotwals, Tulsa, Okl., for Penn Square Bank, N.A., now known as Deposit Insurance National Bank of Oklahoma City and Federal Deposit Insurance Corp., receiver.


LEE R. WEST, District Judge.

In addition to its Federal Rule 12(b)(6) challenge to the sufficiency of the complaint, which is addressed in a separate order of this court, the Federal Deposit Insurance Corporation hereinafter "FDIC" as receiver of the Penn Square Bank has moved to strike the plaintiff's claim for punitive damages as to it under Federal Rule 12(f). The plaintiff has responded, both to the FDIC's initial motion, going to the original complaint, and its supplemental motion, going to the first amended complaint. For the reasons discussed below, the FDIC's motion is granted.

The FDIC's application is styled a motion to strike. However, Federal Rule of Civil Procedure 12(f) does not permit the relief which the FDIC seeks. By its own terms, Rule 12(f) only allows the court to strike insufficient defenses or "any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). The plaintiff's claim for punitive damages fits into neither category. See generally 5 C. Wright & A. Miller, Federal Practice and Procedure §§ 1381 (insufficient defenses), 1382 (redundant, immaterial, impertinent, or scandalous matter) (1969).

Nevertheless, this Court will treat the FDIC's improperly denominated motion to strike as a motion to dismiss under Federal Rule 12(b)(6). See Commercial Union Insurance Co. v. Upjohn Co., 409 F.Supp. 453, 454-55 (W.D.La.1976). Cf. Hometowne Builders, Inc. v. Atlantic Nat'l Bank, 477 F.Supp. 717, 719-20 (granting Rule 12(b)(6) motion to dismiss claim for punitive damages). See generally 5 C. Wright & A. Miller, Federal Practice and Procedure, supra, § 1380 at 782-83 ("the technical name given to a motion challenging a pleading is of little importance inasmuch as prejudice hardly can result ..."). To do otherwise would be to retreat to the strict, technical form of common law practice that the Federal Rules have abandoned. See e.g., Fed.R.Civ.P. 1, 7(c), 8(e)(1), and 8(f). See generally 5 C. Wright & A. Miller, Federal Practice and Procedure, supra, §§ 1281, 1286 (regarding the liberal pleading and practice philosophy of the Federal Rules).

Regarding the substance of the motion, the FDIC has made a very persuasive argument that, as receiver of the failed Bank, it is not liable for punitive damages as a matter of law. There are actually two elements to the FDIC's argument, each of which is analyzed separately below.

First, to award punitive damages against the receiver would be contrary to the theory underlying such awards and would be manifestly unjust.1 Punitive or exemplary damages, which are an exception to the general remedial principle of compensation for injury, are imposed for two reasons, to punish the wrongdoer and to deter others. See Oller v. Hicks, 441 P.2d 356, 360 (Okl.1967); C. McCormick, Handbook of the Law of Damages § 77 (1935); 1 T. Sedgwick, A Treatise on the Measure of Damages § 360 (9th ed. 1912). See also Symposium on the Oklahoma Law of Damages, 6 Okla.L.Rev. 289, 293-98 (1953). In the context of the liquidation of a failed national bank, as here, these considerations carry little weight. On July 5, 1982, the Comptroller of the Currency declared Penn Square Bank insolvent pursuant to 12 U.S.C. § 191, closed the Bank, and appointed the FDIC as its receiver pursuant to 12 U.S.C. § 1821(c); as receiver, the FDIC represents the Bank and its depositors, creditors, and shareholders. See Landy v. Federal Deposit Insurance Corp., 486 F.2d 139, 147-48 (3 Cir.1973), cert. denied, 416 U.S. 960, 94 S.Ct. 1979, 40 L.Ed.2d 312 (1974). See also 12 U.S.C. §§ 193, 194, 1821(d). Thus, an award of punitive damages against the receiver...

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    ...of punishment of the wrongdoer and deterrence of others from similar wrongful conduct. See Professional Asset Management, Inc. v. Penn Square Bank, N.A., 566 F.Supp. 134, 136 (W.D.Okla. 1983). "In the context of the liquidation of a failed bank, as here, these considerations carry little we......
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    ...of federal law, the FDIC in its corporate capacity is not subject to a state usury claim"); Professional Asset Management, Inc. v. Penn Square Bank, N.A., 566 F.Supp. 134, 136 (W.D.Okla.1983) ("to award punitive damages against the receiver [FDIC] would be contrary to the theory underlying ......
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    ...Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981). See Professional Asset Management, Inc. v. Penn Square Bank, 566 F.Supp. 134 (W.D.Okla.1983) (punitive damages are inappropriate against government when acting in the public interest). In Tuxedo Beach, the ......
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1 books & journal articles
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