Resolution Trust Corp. v. Miramon

• Decision Date: 21 June 1994
• Docket Number: No. 93-3183,93-3183
• Citation: 22 F.3d 1357
• Parties: RESOLUTION TRUST CORPORATION, Plaintiff-Appellant, v. Louis A. MIRAMON, Jr., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1357

22 F.3d 1357

63 USLW 2017

RESOLUTION TRUST CORPORATION, Plaintiff-Appellant, v. Louis A. MIRAMON, Jr., et al., Defendants-Appellees.

No. 93-3183.

United States Court of Appeals Fifth Circuit.

June 21, 1994.

Robert E. Arceneaux, Matthew K. Brown, Anita M. Warner, Barham & Arceneaux, New Orleans, LA, for Resolution Trust Corp.

Harold B. Carter, Jr., Robert E. Durgin, Sally I. Gaden, Stephen L. Williamson, Montgomery, Barnette, Brown, Read, Hammond & Mintz, New Orleans, LA, for Miramon, Wascom, Englande.

George D. Fagan, Leake & Anderson, New Orleans, LA, for Cook, Lowry, Fritchie, Oulliber.

Robert M. Thomas, pro se.

Theodore G. Wunder, Jr., pro se.

Curtis A. Hennesy, John M. Girault, Monroe & Lemann, New Orleans, LA, for Becker.

Richard T. Simmons, Jr., Kurt D. Engelhardt, Metairie, LA, for Bossier.

Stuart J. Baskin, Joseph F. Haggerty, Wm. F. Ranieri, James R. Warnot, Jr., Shearman & Sterling, New York City, for Amici-Am. Bankers & Independent Bankers--Supporting Miramon, et al.

Mary E. Arceneaux, La. Bankers Assoc., Baton Rouge, LA, for Amicus-La. Bankers Assoc.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before JOHNSON, GARWOOD, and JOLLY, Circuit Judges.

JOHNSON, Circuit Judge:

The Resolution Trust Corporation (RTC) sued several officers and directors (collectively, "the defendants") of a failed savings and loan institution alleging 1) negligence, 2) breach of fiduciary duty and 3) gross negligence. Under Fed.R.Civ.P. 12(b)(6), the district court dismissed the negligence and breach of fiduciary duty claims holding that they failed to state a claim on which relief could be granted. The district court then certified this case pursuant to Fed.R.Civ.P. 54(b) and the RTC appeals. We AFFIRM.

FACTS AND PROCEDURAL HISTORY

For purposes of this appeal, only a brief recitation of the facts is needed. On August 7, 1989, the Federal Home Loan Bank Board closed South Savings and Loan Association ("South Savings"), a federally-insured, state-chartered institution located in Slidell, Louisiana. The Federal Savings and Loan Insurance Corporation (FSLIC) was initially appointed as receiver, but, after the passage of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) ¹ on August 9, 1989, the RTC succeeded the FSLIC as receiver.

On August 9, 1992, the RTC filed the instant action against the defendants who were former directors or officers of South Savings. The RTC sought to recover losses suffered by South Savings allegedly caused by the defendants' negligence, breach of fiduciary duties and gross negligence.

The defendants moved to dismiss, under F.R.Civ.P. 12(b)(6), the causes of action for The district court found that section 1821(k) did set a federal standard of care of gross negligence and that any federal common law to the contrary was preempted. As the RTC's negligence and breach of fiduciary duty claims alleged lesser standards of liability than gross negligence, the district court granted the defendants' motions and dismissed those claims. The district court then certified this case for interlocutory review pursuant to Fed.R.Civ.P. 54(b).

negligence and breach of fiduciary duty contending that these theories failed to state claims on which relief could be granted. In making these motions, the defendants argued that section 1821(k) of FIRREA established gross negligence as a national standard of liability for directors and officers of federally-insured depository institutions. The RTC, by contrast, argued that federal common law survived the passage of FIRREA and allows actions against directors and officers of depository institutions based on simple negligence.

Accordingly, the RTC now appeals the district court's dismissal of its causes of action against the defendants based on simple negligence and breach of fiduciary duty contending that despite section 1821(k), these causes of action remain viable under the federal common law. The defendants responded and were joined by the American Bankers Association and Independent Bankers Association of America who filed an amicus curiae brief which voiced that group's position that section 1821(k) created a federal standard of gross negligence. Lastly, in a supplemental round of briefing, the RTC advances for the first time that even if it has no causes of action for simple negligence or breach of fiduciary duty under federal common law, those causes of action are available under Louisiana state law.

DISCUSSION

The issues in this case involve questions of statutory construction which we review under a de novo standard of review. Cruz v. Carpenter, 893 F.2d 84, 86 (5th Cir.1990).

1. Federal Common Law

The issue herein is whether the RTC can sue directors or officers of federally-insured depository institutions for simple negligence and breach of fiduciary duty under the federal common law. The district court held that the RTC could not because the court found that federal common law had been preempted by the plain language of section 1821(k) which the court held established gross negligence as the federal standard of care. This section states, in pertinent part, that

[a] director or officer of an insured depository institution may be held personally liable for monetary damages in any civil action by, on behalf of, or at the request or direction of the Corporation ... 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. Sec. 1821(k).

This issue of whether section 1821(k) preempts federal common law has been addressed by only one other federal appellate court. ² That court, in RTC v. Gallagher, 10 F.3d 416 (7th Cir.1993), concluded that section 1821(k) preempted federal common law and that the sole cause of action against directors and officers under federal law was for gross negligence. This has also been the conclusion of the majority of district courts It is important to note at the outset the very limited role of federal common law. Federal courts are not common law courts possessing a general power to develop and refine their own rules of decision. Wayne v. Tennessee Valley Authority, 730 F.2d 392, 398 (5th Cir.1984), cert. denied, 469 U.S. 1159, 105 S.Ct. 908, 83 L.Ed.2d 922 (1985); Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). Rather, the direction of national policy by the enactment of a federal rule is "generally, and purposely, reserved to the legislative branch of the government." Wayne, 730 F.2d at 398. Federal common law is merely a necessary expedient "resorted to 'in the absence of an applicable Act of Congress' " when federal courts are forced to consider issues which cannot be answered from federal statutes alone. Milwaukee v. Illinois, 451 U.S. 304, 314, 101 S.Ct. 1784, 1791, 68 L.Ed.2d 114 (1981) (quoting Clearfield Trust Co. v. United States, 318 U.S. 363, 367, 63 S.Ct. 573, 575, 87 L.Ed. 838 (1943)). When Congress does speak to an issue previously governed by federal common law, the need to resort to this unusual lawmaking by the federal courts disappears. Milwaukee, 451 U.S. at 313-15, 101 S.Ct. at 1791.

                that have addressed this issue. 3  For the reasons stated below, we agree with these courts and hold that section 1821(k) preempts federal common law
                

In assessing whether congressional legislation has preempted a federal common law rule, "we start with the assumption that it is for Congress, not federal courts, to articulate the appropriate standards to be applied as a matter of federal law." Id. at 317, 101 S.Ct. at 1792. Even so, when Congress legislates in an area governed by common law, it is not writing on a clean slate. Rather, there is a longstanding principle that statutes which invade the common law are to be read with a presumption favoring the retention of well-established principles, except when a statutory purpose to the contrary is present. United States v. Texas, --- U.S. ----, ----, 113 S.Ct. 1631, 1634 (1993). This principle applies to federal common law as well as state common law. Id.

In light of this principle, we note that it is not necessary for Congress, in order to abrogate a federal common law provision, to affirmatively proscribe the common law rule. Milwaukee, 451 U.S. at 313-15, 101 S.Ct. at 1791. However, Congress must "speak directly" to the question addressed by the common law. Id. After considering the plain language of section 1821(k), we find that Congress did "speak directly" to the issue of the federal standard of care for directors and officers of federally-insured depository institutions thus preempting any resort to federal common law. ⁴

The starting point for any question of statutory interpretation is the statute itself. Absent a clearly expressed legislative intent to the contrary, " 'that language must ordinarily be regarded as conclusive.' " Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 110 S.Ct. 1570, 1575, 108 L.Ed.2d 842 (1990) (quoting Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980)). In this case, the statute clearly provides that "[a] director or officer ... may be held personally liable for monetary damages In urging us to reach a different conclusion, the RTC contends that the gross negligence standard set out in section 1821(k) is not exclusive. Section 1821(k), the RTC points out, provides that a director or officer "may" be held liable under a gross negligence standard. If that section were meant to be exclusive, the RTC argues, it would have said "may only." The RTC finds further support for its argument in the general savings clause of section 1821(k) which...