Resolution Trust Corp. v. Gaudet, Civ.A. No. 92-2661.

• Decision Date: 22 June 1995
• Docket Number: Civ.A. No. 92-2661.
• Citation: 891 F. Supp. 301
• Parties: RESOLUTION TRUST CORPORATION v. James J. GAUDET, et al.
• Court: U.S. District Court — Eastern District of Louisiana

891 F. Supp. 301

RESOLUTION TRUST CORPORATION v. James J. GAUDET, et al.

Civ.A. No. 92-2661.

United States District Court, E.D. Louisiana.

June 22, 1995.

Peter Allen Kopfinger, Blondeau, Caire & Gregorie, Baton Rouge, LA, Ben Weldon Lightfoot, Victor L. Roy, III, Kyle Melbourne Keegan, Susannah Marie DeNicola, Joseph E. Stockwell, III, William L. Caughman, III, Roy, Kiesel & Tucker, Baton Rouge, LA, and Donna Garbarino Schwab, Baton Rouge, LA, David O. Mooney, Baton Rouge, LA, for plaintiff.

Stephen Kenneth Conroy, John A. Stassi, II, Stassi, Griffith & Conroy, Metairie, LA, Douglas Scott Draper, Draper & Culpepper, New Orleans, LA, Peter Scott Michell, Hammond, LA, Bruce Victor Schewe, Debra J. Hale, Phelps Dunbar, New Orleans, LA, and Michael Richard Allweiss, Lowe, Stein, Hoffman, Allweiss & Hauver, New Orleans, LA, for defendants.

Harold Heidingsfelder, Jefferson, LA, pro se.

ORDER AND REASONS

JONES, District Judge.

Pending before the Court are the motions by defendants James J. Gaudet, Emile J. LeCler Jr., Robert S. Maloney Sr., Robert S. Maloney Jr., Albro P. Michell Jr., Edward W. Riedl Sr. and Joseph G. Scheib Jr. for judgment on the pleadings.¹ Having reviewed the memoranda of the parties, the record and the applicable law, the Court GRANTS the motions in part and DENIES the motions in part.

Background

The Resolution Trust Corporation (hereinafter "RTC"), in its capacity as receiver² of Citizens Homestead Federal Savings Association (hereinafter "Citizens"), filed this lawsuit seeking "recovery for losses sustained by Citizens Homestead Association ... caused by the negligence, gross negligence, and breaches of fiduciary duty committed by former officers and directors of Citizens Homestead." (R.Doc. 1, p. 1.)

RTC alleged two counts against defendants, "Breach of Fiduciary Duties" in Count I and "Negligence and Gross Negligence" in Count II, arising from the activities of Citizens Homestead Association" during the 1980s. Id. at 22-26. As to Count I, RTC alleged that defendants as directors and/or officers of Citizens Homestead Association "individually and collectively, breached their fiduciary duties to Citizens, and its depositors and shareholders, in that they did not discharge their duties in good faith, and in that they failed to exercise that degree of diligence, care, loyalty, judgment and skill required of them in the conduct, direction, supervision and control of the business and affairs of Citizens." Id. at 23-24, Paragraph 58.

As to Count II, RTC first alleged that "the negligent failure of the Defendant Directors and Officers to exercise reasonable care, skill, diligence, loyalty and good faith in the discharge of their responsibilities include, but are not limited to" acts alleged in the complaint. Id. at 25, Paragraph 63. "RTC further shows that the acts and omissions of the Defendant Directors and Officers were so imprudent, reckless and careless as to amount gross negligence on the part of the Defendants." Id. at 25-26, Paragraph 64 (emphasis added).

In addition to answering, the defendants whose motions are at issue filed counter-claims, seeking attorneys' fees and costs as a result of RTC's pursuit of "simple negligence" and breach of fiduciary duty claims contrary to applicable law. (R.Docs. 66 and 70.)

Defendants bring the instant motions seeking to have the "simple negligence" and breach of fiduciary duty claims dismissed, relying principally on RTC v. Miramon, 22 F.3d 1357 (5th Cir.1994).

In opposition, RTC argues first that it has not brought a simple negligence claim. Instead, according to the RTC, a proper reading of Count II shows that defendants have "clearly asserted that the defendants' conduct exceeded simple negligence and constituted gross negligence." (R.Doc. 73, p. 2.) Additionally, RTC argues that it is entitled to bring a breach of fiduciary duty claim based on state law.

Defendants also seek an award of damages and attorneys' fees pursuant to LSA-R.S. 6:786.F. This statute imposes such liability on "any person who unsuccessfully attempts to impose a higher standard of responsibility or liability than that provided by" LSA-R.S. 6:786.B., which requires proof of gross negligence to establish the liability of an officer or director of a financial institution.³ The RTC opposes such an award on the basis that it has not alleged any claim other than gross negligence. Alternatively, the RTC argues that defendants have not been forced to incur attorneys' fees or been damaged in the defense of this matter because the factual allegations of its complaint are the same under any cause of action it alleges.

Law and Application

I. Standard of Review for Motion for Judgment on the Pleadings

In Park Center, Inc. v. Champion International Corporation, 804 F.Supp. 294, 301 (S.D.Ala.1992), the district court provided a succinct summary of the standard of review on a motion for judgment on the pleadings:

On a motion for judgment on the pleadings, Federal Rule of Civil Procedure 12(c) requires the Court to view the pleadings in the light most favorable to, and to draw all reasonable inferences in favor of, the nonmovant.

The Court may grant judgment on the pleadings if it appears beyond doubt that the non-movant sic can plead or prove no set of facts in support of his claim which would entitle him to relief. Judgment on the pleadings is also appropriate where material facts are undisputed and where judgment on the merits is possible merely by considering the contents of the pleadings. The Court may grant judgment on the pleadings only if, on the admitted facts, the moving party is clearly entitled to judgment.

(Citations omitted.) See also Greenberg v. General Mills Fun Group, Inc., 478 F.2d 254, 256 (5th Cir.1973) (comparing motion for judgment on the pleadings to motion for summary judgment); Wright & Miller, Federal Practice & Procedure: Civil 2d § 1368.

II. Application of Standard

With the applicable legal standard in mind, the Court turns to the issues before it. The Court deals first with the question of whether the RTC alleged a claim under "simple negligence" and, if so, whether defendants are entitled to judgment on the pleadings on this claim in light of RTC v. Miramon, supra. The Court then addresses defendants' motion as to the allegation of breach of fiduciary duty.

A. Negligence

Although the RTC argues to the contrary, it is clear from the plain language of the complaint that the RTC not only made a claim against defendants for gross negligence but also made a claim for simple negligence. This is evidenced by the Complaint itself. For example, the RTC's use of the word "and" in the title of Count II, "Negligence and Gross Negligence," shows that the RTC meant to make a claim against defendants for simple negligence. Additionally, the RTC expressed its claim for negligence against defendants in Paragraph 63, separate and apart from its claim of gross negligence against defendants in Paragraph 64. Moreover, as quoted above, in a section of the Complaint entitled "Preliminary Statement," the RTC stated that it sought recovery for losses "caused by the negligence, gross negligence, and breach of fiduciary duty by" defendants. (R.Doc. 1, p. 1.) (Emphasis added.) Therefore, the Court rejects the RTC's argument that it has not made a claim for negligence in its complaint.

The next question is whether such a claim is viable. The Fifth Circuit in RTC v. Miramon specifically rejected this argument, holding that no claim exists under either federal common law or Louisiana law based on negligence of officers and directors of a financial institution. RTC v. Miramon, 22 F.3d at 1364-65. Thus, because RTC can prove no set of facts in support of its claim which would entitle it to relief on its simple negligence cause of action, defendants are entitled to judgment on the pleadings as to this issue.⁴

B. Breach of Fiduciary Duty

For the following reasons, however, the Court finds that defendants are not entitled to judgment on the pleadings as to RTC's claim for breach of fiduciary duty. This decision is supported by a review of RTC v. Miramon, supra, and cases cited therein.

The first issue before the Fifth Circuit in RTC v. Miramon was "whether the RTC can sue directors or officers of federally-insured (sic) depository institutions for simple negligence and breach of fiduciary duty under the federal common law." 22 F.3d at 1359 (emphasis added). The Court held that 12 U.S.C. § 1821(k) preempts federal common law.⁵ The Fifth Circuit specifically did not address the similar but distinct issue "of whether state common law is preempted by § 1821(k)." Id., n. 2. The court of appeals noted that two other circuit courts

have held that state common law standards which allow causes of action against directors and officers of federally-insured (sic) institutions based on simple negligence are not preempted. These courts concluded that state law is preempted only to the extent that states attempt to insulate directors and officers by establishing a more forgiving standard of care than gross negligence.

Id., n. 2, citing FDIC v. Canfield, 967 F.2d 443, 447-48 (10th Cir.1992) (en banc); FDIC v. McSweeney, 976 F.2d 532, 538-39 (9th Cir.1992).

A second issue arose in RTC v. Miramon when the RTC argued in a supplemental brief that, even if its simple negligence claim under federal common law was preempted by § 1821(k), it was entitled to bring a simple negligence claim under Louisiana law. Id. at 1359. The Court reviewed Louisiana statutory and judicial law and concluded that "the standard of care ... for the imposition of liability against directors and officers is gross negligence." Id. at 1365. Because "neither federal law nor Louisiana law recognizes a cause of action against directors or officers of depository institutions for lesser breaches of duty than gross negligence," the Fifth Circuit upheld the district court's dismissal of such claims. Id.

Neither in ...