Resolution Trust Corp. v. Gibson, 92-0140-CV-W-8-6.

• Citation: 829 F. Supp. 1103
• Decision Date: 01 June 1993
• Docket Number: No. 92-0140-CV-W-8-6.,92-0140-CV-W-8-6.
• Parties: RESOLUTION TRUST CORPORATION, Plaintiff, v. John M. GIBSON, William R. Kidwell, Jr., Robert K. McBride, Steven W. Mathena, Charles F. Mehrer, III, John W. Lounsbury, Floyd R. Gibson, Gertrude W. Gibson, Joseph H. Peters, William L. Brooks, William R. Cockefair, Jr., Ewing L. Lusk, Jr., Paul F. Woodard, Hugh G. Hadley, L.H. Johanson, Jack L. Reddin, M.D., Annette N. Morgan, Personal Representative of the Estate of William B. Morgan, deceased, and Campbell, Morgan & Gibson, P.C., Defendants.
• Court: U.S. District Court — Western District of Missouri

829 F. Supp. 1103

RESOLUTION TRUST CORPORATION, Plaintiff, v. John M. GIBSON, William R. Kidwell, Jr., Robert K. McBride, Steven W. Mathena, Charles F. Mehrer, III, John W. Lounsbury, Floyd R. Gibson, Gertrude W. Gibson, Joseph H. Peters, William L. Brooks, William R. Cockefair, Jr., Ewing

L. Lusk, Jr., Paul F. Woodard, Hugh G. Hadley, L.H. Johanson, Jack L. Reddin, M.D., Annette N. Morgan, Personal Representative of the Estate of William B. Morgan, deceased, and Campbell, Morgan & Gibson, P.C., Defendants.

No. 92-0140-CV-W-8-6.

United States District Court, W.D. Missouri, W.D.

June 1, 1993.

Clifford K. Stubbs, Lawrence D. Greenbaum, Douglas M. Greenwald, McAnany, Van Cleave & Phillips, P.A., Kansas City, KS, Patrick D. McAnany, McAnany, Van Cleave & Phillips, P.A., Lenexa, KS, David A. Vorbeck, Resolution Trust Corp., Kansas City, MO, Charles A. Getto, Lenexa, KS, for Resolution Trust Corp., plaintiff.

Joel Pelofsky, Russell S. Jones, Jr., Robert R. Raymond, James C. Sullivan, Shughart, Thomson & Kilroy, Kansas City, MO, for John M. Gibson and William R. Kidwell, Jr.

Steven W. Mathena, pro se.

Daniel R. Young, Smith, Gill, Fisher & Butts, Kansas City, MO, for Charles F. Mehrer, III.

Franklin T. Thackery, Daniel Lee Duncan, Martin M. Bauman, Martin M. Bauman, P.C., St. Joseph, MO, for John W. Lounsbury.

Patrick C. Cena, Thomas E. Deacy, Jr., Deacy & Deacy, Kansas City, MO, Joel Pelofsky, Russell S. Jones, Jr., James C. Sullivan, Shughart, Thomson & Kilroy, Kansas City, MO, for Floyd R. Gibson, Gertrude W. Gibson.

Donald W. Giffin, Spencer, Fane, Britt & Browne, Kansas City, MO, for Joseph H. Peters, Hugh G. Hadley.

Peter E. Strand, Shannon Reynolds Spangler, Shook, Hardy & Bacon, Kansas City, MO, for William L. Brooks.

James W. Humphrey, Jr., Kuraner & Schwegler, Kansas City, MO, Daniel Lee Duncan, St. Joseph, MO, John B. Gillis, Kuraner & Schwegler, Kansas City, MO, for William R. Cockefair, Jr.

Daniel Lee Duncan, St. Joseph, MO, Glenn McCann, Knipmeyer, McCann, Smith, Manz & Gotfredson, Kansas City, MO, for Ewing L. Lusk, Jr., Jack L. Reddin, M.D.

David M. Harding, Van Osdol, Magruder, Erickson & Redmond, P.C., Kansas City, MO, for Paul F. Woodard.

Michael J. Thompson, John G. Mazurek, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, MO, for Annette N. Morgan, Personal Representative of the Estate of William B. Morgan, deceased.

MEMORANDUM AND ORDER

SAFFELS, District Judge, sitting by designation.

This matter is before the court on motions by the plaintiff Resolution Trust Corporation ("RTC") to strike certain affirmative defenses pleaded by the various defendants (Doc. 174), and on motions to dismiss filed by defendants John Gibson, Gertrude Gibson, and William Kidwell (Doc. 254) and Floyd Gibson (Doc. 259). This is an action for damages against former officers and directors of Blue Valley Federal Savings and Loan Association ("Blue Valley").

MOTION TO STRIKE AFFIRMATIVE DEFENSES

The RTC moves this court to strike certain affirmative defenses pleaded in the answers of John M. Gibson, William R. Kidwell, Jr., Floyd R. Gibson, Gertrude W. Gibson, Charles F. Mehrer, III, John W. Lounsbury, Joseph H. Peters, Hugh G. Hadley, William L. Brooks, William R. Cockefair, Jr., Ewing L. Lusk, Jr., Paul F. Woodard, Jack L. Reddin, and Annette N. Morgan, personal representative of the estate of William B. Morgan.

As an initial matter, the court finds that the motion is moot as to defendant William L. Brooks, because the court recently approved a settlement between Mr. Brooks and the RTC. The court also is aware that some of the defendants listed above have reached a settlement with the RTC in principle, but the settlements have not been formalized. It appears to the court, however, that all of the defenses subject to this motion are pleaded by defendants who have not reached a settlement and the court must address the merits of the RTC's motion as to each affirmative defense. The court will note that its order is effective as to the defendants remaining in the case at the time this order is filed. Further, the court will address the affirmative defenses without reference to which defendants rely upon each defense. Those defenses stricken may not be maintained by any defendant and those not stricken are available, subject to filing deadlines, to any defendant as applicable.

The RTC brings this motion pursuant to Fed.R.Civ.P. 12(f), which states in pertinent part:

Upon motion made by a party ... or upon the court's own initiative at any time, the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.

Motions to strike are viewed with disfavor and are infrequently granted. Lunsford v. United States, 570 F.2d 221, 229 (8th Cir. 1977). "The motion to strike will be denied if the defense is sufficient as a matter of law or if it fairly presents a question of law or fact which the court ought to hear." Resolution Trust Corp. v. Kerr, 804 F.Supp. 1091, 1098 (W.D.Ark.1992).

The RTC first seeks to strike the defense of comparative negligence. The primary argument is that the defendants cannot compare the conduct of government regulators and agencies with their own conduct. The RTC contends that it owes no duty to the officers and directors of the failed financial institution, so as a matter of law, there can be no negligence. The duty owed by the RTC is to the banking public and the insurance fund. A further reason the RTC asserts that the defense of comparative negligence must be stricken is that governmental entities such as the RTC should not be subjected to judicial second guessing.

The case law is overwhelmingly in favor of striking comparative or contributory negligence defenses pleaded in cases such as the one at bar. First State Bank of Hudson County v. United States, 599 F.2d 558, 561-66 (3rd Cir.1979); Harmsen v. Smith, 586 F.2d 156, 157 (9th Cir. 1978); FDIC v. Stuart, 761 F.Supp. 31, 32 (W.D.La.1991); FDIC v. Ashley, 749 F.Supp. 1065, 1068 (D.Kan.1990); FDIC v. Baker, 739 F.Supp. 1401, 1406-7 (C.D.Cal.1990); FDIC v. Greenwood, 719 F.Supp. 749, 750 (C.D.Ill.1989); FSLIC v. Burdette, 718 F.Supp. 649, 663-64 (E.D.Tenn.1989); FDIC v. Carlson, 698 F.Supp. 178, 179 (D.Minn.1988); FSLIC v. Roy, 1988 WL 96570 at 1, 1988 U.S.Dist.LEXIS 6840 at 4, (D.Md.1988); FDIC v. Berry, 659 F.Supp. 1475, 1484 (E.D.Tenn.1987). But see, FDIC v. Harrison, 735 F.2d 408, 412-13 (11th Cir.1984); FDIC v. Cherry, Bekaert & Holland, 742 F.Supp. 612 (M.D.Fla.1990); FDIC v. Carter, 701 F.Supp. 730 (C.D.Cal.1987).

The primary reasoning relied upon in the cases to strike the comparative negligence defense is the absence of duty owed to the directors or officers of the failed financial institution by the federal regulatory agencies. The statutes creating regulatory agencies such as the Federal Deposit Insurance Corporation ("FDIC") and the RTC provided for federal oversight intended to protect the public, the insurance fund and the depositors. FDIC v. Isham, 782 F.Supp. 524, 531 (D.Colo.1992). Therefore, the duty runs to these entities, although the officers and directors may benefit indirectly. Id. Some courts articulate the absence of duty as the recognition of the policy that federal oversight is directed to the public good, which is embodied in the statutes creating the federal regulatory agencies. The public should not have to bear the risk of errors in judgment by the federal regulators. FDIC v. Greenwood, 719 F.Supp. at 750. Further, the courts have stated that actions of the federal agencies in collecting the assets of the failed financial institution cannot be subjected to second guessing by the very individuals, officers and directors, who are accused of the wrongdoing. Resolution Trust Corp. v. Kerr, 804 F.Supp. 1091, 1099-1100 (W.D.Ark. 1992).

The court recognizes there are some cases which allow the defendant directors and officers to maintain affirmative defenses based upon the federal regulatory agency's conduct. One in particular bears mentioning because of its analysis of this issue. In FDIC v. Carter, the court analyzed the FDIC's actions in terms of whether they were ministerial or proprietary. The court determined that the FDIC's actions in disposing of the assets of the bank were purely ministerial and not grounded in economic or social policy. 701 F.Supp. at 736.¹ Thus, the FDIC's actions could serve as a basis for liability, because the FDIC owed a duty to the officers and directors not to negligently fail to collect on the bank's outstanding loans. Id.

This court, however, finds the reasoning of the majority position persuasive. Analyzing the actions of the agency to determine whether they were ministerial or proprietary may lead to murky and inconsistent results. This is not a tort case brought under the Federal Tort Claims Act, where the actions of the RTC might be implicated. By virtue of the statutory authority conferred on the RTC to oversee the failed financial institutions, at issue are important public policy concerns, such as the need to stabilize the banking industry and promote public confidence. Resolution Trust Corp. v. Greenwood, 798 F.Supp. 1391, 1397 (D.Minn.1992). Whether it is phrased as an absence of duty or for public policy reasons, the court finds that the defendants may not compare their fault with that of the RTC. Therefore, the defense of comparative negligence is insufficient as a matter of law, as it applies between the RTC and the defendants. As aptly stated by one court:

Finally, this area of the law is plagued with shifting fine lines and subtle distinctions between the varying capacities of the FDIC and between ministerial and proprietary functions. The rule in this case paints a bright line and maintains focus on the persons whose alleged wrongdoing brought about an insolvency in the first instance. FDIC v. Isham, 782 F.Supp. at 532.

Further, to the extent any of the defendants...