Federal Deposit Ins. Corp. v. Stuart, 761 F. Supp. 31 (W.D. La. 1991)

Bruce J. Pederson, FDIC, Washington, DC., Joseph B. Olinde, Jr., David S. Rubin, Kantrow, Spaht, Weaver & Blitzer, Baton Rouge, La., for FDIC.

Ross, Dixon & Masback, Eleni M. Constantine, Washington, D.C., Emmett C. Sole, William B. Monk, Stockwell, Sievert, Viccellio, Clements & Shaddock, Lake Charles, La., for American Cas. Co. of Reading, Pa.

Scofield, Gerald, Veron, Hoskins & Soileau, John B. Scofield, Trial Atty., Lake Charles, La., for Leopold Weill, Jr.

D. Mark Bienvenu, Voorhies & Labbe, Lafayette, La., for F.K. Dowty, Richard E. Orgeron and Bob E. Wright.

Davidson, Meaux, Sonnier, McElligott & Swift, James J. Davidson, III, Lafayette, La., for Walter B. Stuart III, Robert E. Tujaque, J.J. Burdin, Robert E. Billeaud, Wm. H. Mouton, Cletus B. Cribbs and W.D. Huff, Jr. and Cecil D. Trahan.

LITTLE, District Judge.

This lawsuit arose from the ashes of American Bank, one of the many financial institutions that failed during the past few years. The Louisiana Commissioner of Financial Institutions closed American on 26 September 1986 and appointed plaintiff Federal Deposit Insurance Corporation (FDIC) as its receiver and liquidator. The FDIC subsequently sued the directors of the bank, alleging that they had breached their fiduciary responsibilities and failed to exercise due care in managing American's affairs. This initial action has been consolidated with a second suit that had been filed against a group of defendants that had been dismissed without prejudice from the first proceeding.

On 17 December 1990 this court deferred ruling on plaintiff's motion to strike (or, in the alternative, to grant partial summary judgment on) defendant Leopold Weill, Jr.'s fourth, fifth, sixth, and seventh affirmative *32 defenses. All of these defenses relate to the actions of the FDIC after it took control of American. The thrust of Weill's allegations is that "the FDIC's delay and failure to diligently pursue collection of these debts contributed to the losses alleged in this suit.... The affirmative defenses asserted by Leopold Weillcontributory negligence, laches, waiver, delay, and so forth focus upon whether the losses would have occurred had the FDIC acted with the same diligence it asserts the defendants were bound to exercise when they directed the bank." See Memorandum in Opposition to FDIC's Motion to Strike and Amended Motion to Strike p. 3 (emphasis in original).

The court did not rule on plaintiff's motion because the Supreme Court had accepted certiorari in Gaubert v. United States, 885 F.2d 1284 (5th Cir. 1989), rev'd, ___ U.S. ___, 111 S. Ct. 1267, 113 L. Ed. 2d 335 (1991). In Gaubert the Fifth Circuit had held that an investor could assert a negligence claim against the FDIC if its actions "became operational in nature." Id. at 1289. This court had previously noted Gaubert to be factually inapposite to a case involving the FDIC's ability to strike a defense alleging that it was negligent for post-receivership actions. See FDIC v. Barham, No. CV 89-0776 (12 February 1990 ruling granting FDIC's motion to strike affirmative defenses). Nevertheless, the court chose to defer ruling on the FDIC's motion to see if the Supreme Court would provide any broad legal principles that could apply by analogy to the case at bar.

A few days ago, however, the Supreme Court reversed the decision of the Fifth Circuit. Speaking for a unanimous Court, Justice White stated:

In the end, Gaubert's Amended Complaint alleges nothing more than negligence on the part of the regulators. Indeed, the two substantive counts seek relief for "negligent selection of directors and officers" and "negligent involvement in day-to-day operations." App. 17, 18.... If the routine or frequent nature of a decision were sufficient to remove an otherwise discretionary act from the scope of the [discretionary function] exception, then countless policy-based decisions by regulators exercising day-to-day supervisory authority would be actionable. This is not the rule of our cases. Because from the face of the Amended Complaint, it is apparent that all of the challenged actions of the federal regulators involved the exercise of discretion in furtherance of public policy goals, the Court of Appeals erred in failing to find the claims barred by the discretionary function exception of the Federal Tort Claims Act.

United States v. Gaubert, ___ U.S. ___, ___, 111 S. Ct. 1267, 1279-80, 113 L. Ed. 2d 335 (1991).

In Barham this court held the FDIC's position that a defense based on post-receivership negligence could not be asserted against it was supported by "convincing and compelling" reasoning. Because the Supreme Court's Gaubert decision did nothing to change this court's opinion, the FDIC's motion to strike defendant Weill's fourth, fifth, sixth, and seventh affirmative defense is likewise GRANTED. An appropriate judgment shall issue.