West Park Associates v. Butterfield Sav. & Loan Ass'n, s. 93-35004
| Decision Date | 28 July 1995 |
| Docket Number | Nos. 93-35004,93-35194,s. 93-35004 |
| Citation | 60 F.3d 1452 |
| Parties | 95 Cal. Daily Op. Serv. 5904, 95 Daily Journal D.A.R. 10,144 WEST PARK ASSOCIATES, a California limited partnership; Gateway Loop Land Limited, I, an Oregon limited partnership; Roseburg Mini-Warehouse, Ltd., an Oregon limited partnership; Atwood Arms, Ltd., a partnership; et al., Plaintiffs-Appellants, v. BUTTERFIELD SAVINGS & LOAN ASSOCIATION, a California savings and loan association; Butterfield Development Corporation, a California corporation; Butterfield Venture Corporation, a California corporation; Butterfield Capital Corporation, a California corporation, et al.; Schwabe, Williamson, Wyatt, Moore and Roberts; Pike, Urand and Morello, Defendants-Appellees. WEST PARK ASSOCIATES, a California limited partnership; Gateway Loop Land Limited, I, an Oregon limited partnership; Roseburg Mini-Warehouse, Ltd., an Oregon limited partnership; Atwood Arms, Ltd., a partnership; et al., Plaintiffs-Appellants, v. BUTTERFIELD SAVINGS & LOAN ASSOCIATION, a California savings and loan association; Butterfield Development Corporation, a California corporation; Butterfield Venture Corporation, a California corporation; Butterfield Capital Corporation, a California corporation, et al.; Schwabe, Williamson, Wyatt, Moore and Roberts; Pike, Urand and Morello, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Frederick T. Smith, J. Bradford Shiley, John P. Crowell, Carla Anderson, Portland, OR, for plaintiffs-appellants.
Arden E. Shenker, Michael J. Gentry, Tooze, Shenker, Duden, Creamer, Frank & Hutchison, Portland, OR, for defendant-appellee Pike, Urland & Morello.
Thomas W. Brown, Cosgrave, Vergeer & Kester, Portland, OR, for defendant-appellee Schwabe, Williamson, Wyatt, Moore & Roberts.
Peter J. Deidrich, Pettit & Martin, Los Angeles, CA, and Ann S. DuRoss, F.D.I.C., Washington, DC, for defendants-appellees F.D.I.C.
Appeals from the United States District Court for the District of Oregon.
Before: TANG * and WIGGINS, Circuit Judges, and HENDERSON, ** District Judge.
OVERVIEW
Plaintiffs-Appellants ("Appellants") are thirty-two property owners who sold property in Oregon and Washington to Butterfield Savings & Loan ("Old BSL") in exchange for preferred stock in the bank holding company that was the sole owner of Old BSL. Shortly thereafter, Old BSL was declared insolvent and was placed into a receivership by federal banking regulators. As a result, the bank holding company was left without any assets and Appellants' stock therein was rendered essentially worthless. We are asked to consider whether and against whom Appellants
may seek to recover. The district court granted summary judgment for Defendants-Appellees ("Appellees"). We have jurisdiction pursuant to 28 U.S.C. Sec. 1291. We affirm in part, reverse in part, and remand.
In early 1984, the ratio of Old BSL's equity to its deposits had fallen below the requirements imposed by the Federal Home Loan Bank Board ("FHLBB"). To forestall regulatory action, the sole owner of Old BSL, Butterfield Equities Corporation ("BEC"), had to enhance Old BSL's equity. BEC and Old BSL decided to issue preferred stock in BEC in order to purchase real estate that would be used to increase BSL's equity cushion. The real estate was purchased from Appellants by Old BSL and/or its subsidiaries ("the Butterfield Subsidiaries"). 1
The last of the stock-for-property transactions with Appellants closed on September 30, 1984. The following day, Old BSL and the FHLBB entered into a "no-growth order" prohibiting any further expansion by Old BSL. The real estate transactions failed to shore up Old BSL's balance sheet, however, and on August 7, 1985, the FHLBB declared Old BSL insolvent and appointed the Federal Savings and Loan Insurance Corporation ("FSLIC") receiver for Old BSL. That action stripped BEC of its only asset and rendered Appellants' stock in BEC essentially worthless. The Federal Deposit Insurance Corporation ("FDIC") later succeeded the FSLIC as receiver. 2
Rather than liquidate Old BSL, the FHLBB directed the FDIC, as receiver for Old BSL ("FDIC-Receiver"), to enter into a Purchase and Assumption ("P & A") Agreement with Butterfield Federal Savings and Loan ("New BSL"). Accordingly, immediately after it seized the assets of Old BSL, FDIC-Receiver entered into an Acquisition Agreement with New BSL whereby most of the assets and liabilities of Old BSL were acquired by New BSL. Expressly exempted from that transfer were certain of Old BSL's liabilities to "shareholders." In conjunction with execution of the Acquisition Agreement, FDIC-Receiver entered into a "Receiver Agreement" with the FDIC in its corporate capacity ("FDIC-Corporate"), whereby FDIC-Corporate acquired the remaining assets and most of the remaining liabilities of Old BSL. Left with FDIC-Receiver, however, were Old BSL's liabilities to its "stockholders."
Appellants filed suit in Oregon state court against New BSL, the Butterfield Subsidiaries, and the two law firms that participated in BEC's preferred stock offering (Pike, Urland & Morello, and Schwabe, Williamson, Wyatt, Moore & Roberts). Appellants did not name BEC as a defendant. The FDIC, as receiver for Old BSL, intervened as a party defendant and removed the case to federal court (FDIC-Receiver, New BSL, and the Butterfield Subsidiaries are referred to collectively as the "Butterfield Defendants"). In their sixth amended complaint, Appellants alleged three state-law claims for relief: (1) violation of Oregon Blue Sky Law for the offer to sell unregistered securities; (2) violation of Oregon Blue Sky Law for the sale of unregistered securities; and (3) sale of securities by untrue statements or omissions.
Only the district court's rulings that are the subject of this appeal will be described. By order dated September 3, 1991, the district court dismissed the claims for sale of unregistered securities (count two) of ten plaintiffs who sold property in Washington ("the Washington Plaintiffs"). By order dated November 26, 1991, the district court granted summary judgment against Appellants on all their claims against two of the Butterfield Defendants, New BSL and the Butterfield Subsidiaries, because the court determined that FDIC-Receiver was the only Butterfield Defendant potentially liable on Appellants' claims. On November 25, 1992 (as amended on January 26, 1993), the district court granted summary judgment in favor of all the remaining defendants on all Judgment was entered on November 25, 1992. Appellants timely appeal, raising four arguments: (1) the district court erred in determining that BEC was the sole "seller" of the stock and in granting total summary judgment for Appellees on that basis; (2) the magistrate judge erroneously concluded that defendant Schwabe could not be liable as a "controlling person"; (3) the district court erroneously dismissed the Washington Plaintiffs' claims in count two; and (4) the district court erred by granting summary judgment in favor of New BSL and the Butterfield Subsidiaries.
three of Appellants' claims. The court based that ruling on its conclusion that BEC, who was not a defendant, was the sole "seller" of the stock; accordingly, none of the defendants could be liable for violating Oregon's Blue Sky Law relating to the sale of securities, as alleged in the complaint. Having granted summary judgment in favor of all Appellees on all counts, the court did not rule on Magistrate Judge Dale's finding that defendant Schwabe, Williamson, Wyatt, Moore & Roberts ("Schwabe") could not be liable as a "control person" under Oregon law.
We review the district court's grant of summary judgment de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). We must determine, viewing the evidence in the light most favorable to Appellants (the non-moving party), whether there are any genuine issues of material fact and whether the lower court correctly applied the relevant substantive law. See id.
We also review de novo the lower court's interpretation of a statute, Home Sav. Bank v. Gillam, 952 F.2d 1152, 1156 (9th Cir.1991) (federal banking statute); Palmer v. United States, 945 F.2d 1134, 1135 (9th Cir.1991) (state statute), and the court's dismissal on statute of limitations grounds of count two as to the Washington Plaintiffs, see Washington v. Garrett, 10 F.3d 1421, 1428 (9th Cir.1993).
Appellants' second cause of action in their sixth amended complaint alleges that the stock-for-property transactions violate Oregon's Blue Sky Law because they involve the sale of unregistered securities. See Or.Rev.Stat. Sec. 59.055 (1988) (); Or.Rev.Stat. Sec. 59.115 (1988) ().
Appellants do not assert a violation by BEC, the entity that registered and issued the securities. Instead, Appellants allege that the Butterfield Defendants were "sellers" of the stock, and that BEC's registration does not apply to them, thus rendering the stock they sold "unregistered." The lower court concluded that BEC was the sole "seller" of the stock and on that basis granted summary judgment for Appellees. The lower court never reached the question of proper registration.
If BEC had issued the stock to Appellants in return for a promise to reduce the price for which the properties were to be sold to the Butterfield Defen...
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