Resolution Trust Corp. v. Gibson, Civ. A. No. 92-0140-CV-W-8-6.

• Citation: 829 F. Supp. 1110
• Decision Date: 30 August 1993
• Docket Number: Civ. A. No. 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. 1110

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.

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

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

August 30, 1993.

COPYRIGHT MATERIAL OMITTED

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

Joel Pelofsky, Russell S. Jones, Jr., Robert R. Raymond, James C. Sullivan, Shughart, Thomson & Kilroy, Kansas City, MO, Daniel R. Young, Smith, Gill, Fisher & Butts, Kansas City, MO, Franklin T. Thackery, Daniel Lee Duncan, Martin M. Bauman, P.C., St. Joseph, MO, Patrick C. Cena, Thomas E. Deacy, Jr., Deacy & Deacy, Donald W. Giffin, Spencer, Fane, Britt & Browne, Peter E. Strand, Shannon Reynolds Spangler, Shook, Hardy & Bacon, James W. Humphrey, Jr., John B. Gillis, Kuraner & Schwegler, Glenn McCann, Knipmeyer, McCann, Smith, Manz & Gotfredson, David M. Harding, Van Osdol, Magruder, Erickson & Redmond, P.C., Michael J. Thompson, John G. Mazurek, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, MO, Douglas M. Greenwald, McAnany, Van Cleave & Phillips, P.A., Kansas City, KS, Patrick D. McAnany, McAnany, Van Cleave & Phillips, P.A., Lenexa, KS, for defendants.

Steven W. Mathena, pro se.

MEMORANDUM AND ORDER

SAFFELS, Senior District Judge, Sitting By Designation.

This matter is before the court on motions by defendants John M. Gibson, Gertrude W. Gibson, William R. Kidwell (Doc. 437), and Floyd R. Gibson (Doc. 431) for summary judgment on Counts I, breach of fiduciary duty, and II, negligence and/or gross negligence, of Resolution Trust Corporation's ("RTC's") complaint.¹ Floyd R. Gibson adopts and joins in the motion of the other three mentioned defendants. For the reasons set forth in this order, defendants' motions for summary judgment are granted in part and denied in part.

FACTUAL BACKGROUND

RTC brought this action against former officers and directors of Blue Valley Federal Savings and Loan Association ("Blue Valley"). Blue Valley was a federally chartered, mutual savings and loan association. On or about February 16, 1989, the Federal Home Loan Bank Board ("FHLBB") determined that Blue Valley was insolvent and appointed the Federal Savings and Loan Insurance Corporation ("FSLIC") as conservator. Sometime thereafter, RTC became the conservator and then the receiver of Blue Valley.

Defendants argue that the court should grant their summary judgment motions on both Counts I and II because claims of breach of fiduciary duty and simple negligence are legally insufficient under any factual circumstances. Defendants propose two theories in support of their motions. First, they claim that under 12 U.S.C. § 1821(k), RTC may pursue only claims against officers and directors based on their gross negligence. Second, they argue that if the savings clause of § 1821(k) allows state law to set the standard of liability, the relevant state's law, Missouri, does not allow directors to be liable on simple negligence.

ANALYSIS

A court shall render summary judgment upon a showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The rule provides that "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1985). The substantive law identifies which facts are material. Id. at 248, 106 S.Ct. at 2510. A dispute over a material fact is genuine when the evidence is such that a reasonable jury could find for the nonmovant. Id.

A court must view the facts in the light most favorable to the nonmovant and allow the nonmovant the benefit of all reasonable inferences to be drawn from the evidence. Green v. United States Dept. of Labor, 775 F.2d 964, 973 (8th Cir.1985).

Rule 56(c) requires the court to enter summary judgment against a party who fails to establish the existence of an essential element to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Such a complete failure of proof on an essential element of the nonmovant's case renders all other facts immaterial. Id. at 323, 106 S.Ct. at 2552.

Essentially, the court performs the threshold inquiry of determining whether a trial is necessary. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511. That is, whether there are any genuine factual issues that can be resolved only by a finder of fact because they reasonably may be resolved in favor of either party. Id.

I. WHETHER 12 U.S.C. § 1821(K) PROVIDES THAT RTC MAY PURSUE ONLY CLAIMS BASED ON GROSS NEGLIGENCE

RTC brings its claims under 12 U.S.C. § 1821(k). In pertinent part, § 1821(k) provides as follows:

A director or officer of an insured depository institution may be held personally liable for monetary damages in any civil action ... for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law. Nothing in this paragraph shall impair or affect any right of the Corporation under other applicable law.

12 U.S.C. § 1821(k) (emphasis added).

In an earlier order in this case, this court, following the Ninth and Tenth Circuit Courts of Appeal, held that § 1821(k) does not impose a national standard of gross negligence for officers and directors of financial institutions. RTC v. Gibson, 829 F.Supp. 1103 (W.D.Mo.1993) (citing FDIC v. McSweeney, 976 F.2d 532 (9th Cir.1992), cert. denied, ___ U.S. ___, 113 S.Ct. 2440, 124 L.Ed.2d 658 (1993) and FDIC v. Canfield, 967 F.2d 443 (10th Cir.1992), cert. dismissed, ___ U.S. ___, 113 S.Ct. 516, 121 L.Ed.2d 527 (1992)).

Section 1821(k) does not preempt state law claims based on standards of liability below gross negligence. McSweeney, 976 F.2d at 537; Canfield, 967 F.2d at 446. As this court stated earlier,

the statute addresses those situations in which states passed laws attempting to immunize officers and directors of financial institutions from liability. To the extent a state statute insulates officers and directors from liability for gross negligence, the state statute is preempted, but state law causes of action for less culpable conduct remain viable.

Gibson, 829 F.Supp. at 1109.

The language reproduced from the earlier order makes it clear this court previously adopted the interpretation of § 1821(k) followed by the Ninth and Tenth Circuits, the only two circuit courts to have ruled directly on state preemption. Accordingly, defendants' arguments are unpersuasive insofar as they rely on § 1821(k)'s preemption of state law simple negligence claims.

Additionally, for reasons explained in part II, section B of the memorandum, defendants' arguments are unpersuasive insofar as they rely on preemption of federal common law.

II. WHETHER RTC'S ACTIONS ARE LEGALLY INSUFFICIENT UNDER "OTHER APPLICABLE LAW"

Although § 1821(k) does not prohibit claims based on simple negligence, it does not provide for them unless they arise "under other applicable law." In the instant case, the possible sources of "other applicable law" are Missouri law and federal common law. Therefore, if RTC is to be able to assert claims for breach of fiduciary duty and simple negligence, they must arise under Missouri law or federal common law.

Defendants argue that there is no applicable law under which RTC can recover upon proof of simple negligence or "simple breach" of fiduciary duty. Specifically, defendants contend that Missouri law bars such claims against officers and directors of savings and loans by its codification of the business judgment rule in R.S.Mo. § 369.109.4. Additionally, defendants contend that § 1821(k) preempts federal common law. Therefore, they conclude RTC may not maintain actions premised on culpability below gross negligence because no "other applicable law" supplies such actions.

A. Missouri Law

RTC brings claims for breach of fiduciary duty and simple negligence and/or gross negligence under Missouri law. Defendants argue that Missouri recognizes neither (1) actions for breach of fiduciary duty in the absence of self-dealing nor (2) claims for simple negligence against officers and directors of savings and loans.

(1) Breach of Fiduciary Duty

This court, as it stated in a previous order in this case, does not understand Missouri law to require RTC to prove self-dealing as part of its claim for breach of fiduciary duty. Gibson, 829 F.Supp. at 1110. Additionally, this court does not read Forinash v. Daugherty, 697 S.W.2d 294 (Mo.App.1985), to limit the concept of fiduciary duty to conduct involving self-dealing.

In RTC v. Gershman, 829 F.Supp. 1095, a recent case from the Eastern District of Missouri, RTC sued former officers and directors of a state chartered savings and loan association for breach of fiduciary duty. Gershman, 829 F.Supp. 1095, 1101-02 (E.D.Mo.1993). Although RTC failed to allege defendants breached their duty of loyalty, the court refused to dismiss the breach of fiduciary duty...