The FDIC has been more actively filing failed bank lawsuits than may have been apparent. With the November 20, 2012 update to its online list of failed bank lawsuits, the FDIC made known that it has in recent weeks filed a number of lawsuits that had not previously hit our radar screens. In addition to the agency’s recently filed lawsuit in Georgia (which I discussed in a recent post, here, second item), the agency has also recently filed three additional lawsuits in West Virginia, California and Florida, bringing the total number of failed bank lawsuits the FDIC has filed during the current bank failure wave to 39.
The FDIC filed the first of these three additional lawsuits on October 26, 2012 in the Southern District of West Virginia. Acting in its capacity as receiver of the failed Ameribank, of Northfork, West Virginia, the agency has sued five of the bank’s former officers for the defendants alleged negligence, gross negligence and breach of fiduciary duty in allegedly improperly delegating their duties and for failing to properly supervise a third-party mortgage broker and originator, Bristol Home Mortgage Lending. A copy of the FDIC’s complaint in the Ameribank case can be found here.
The second of these three lawsuits was filed November 6, 2012 in the Central District of California. The FDIC filed its complaint in its capacity as receiver for the failed Pacific Coast National Bank of San Clemente California. The complaint, which can be found here, asserts claims against six former officers and directors of the bank for negligence, gross negligence and breaches of fiduciary duty in operating and managing the lending function of the Bank.
The FDIC filed the third of these three lawsuits on November 9, 2012 in the Middle District of Florida. The FDIC filed its lawsuit in its capacity as receiver of the failed Century Bank of Sarasota, Florida. The agency’s complaint, which can be found here, asserts claims against five former directors (one of whom was also an officer) of the failed Bank for negligence and gross negligence in connection with ten “speculative and high risk transactions.”
The new California and Florida lawsuits were both filed as the third-year anniversary of the failures of the banks in question approached. Both of the banks involved had failed on November 13, 2009, and so the FDIC filed those complaints just prior to the third-year anniversary. Interestingly, the West Virginia lawsuit was filed well after the third-year anniversary had passed; the bank involved had failed on September 18, 2008, yet the lawsuit was not filed until October 23, 2012. In the absence of other considerations, the defendants in the West Virginia lawsuit could have significant statute of limitation. It seems likely that some sort of tolling agreement was in place although the complaint says nothing about any agreement.
With these three new lawsuits and the others that have recently been filed and noted on this blog, the FDIC has now filed a total of 39 D&O lawsuit as part of the current bank failure wave, 21 of which have been filed in 2012. There had been a period during the mid-part of this year when it seemed as if the agency had entered some sort of a filing lull; as noted here, between the beginning of May and the end of September, the agency filed only two new lawsuits, after a flurry of filing activity earlier in the year. However, since October 1, 2012, the agency has now filed seven new failed bank lawsuits, and the seeming lull during the summer appears to have ended.
The high water market in terms of numbers of bank failures was during late 2009 and early 2010, so during the coming months the third anniversaries of the failures of an increasing number of banks will be coming up, which suggests there could be even further filings ahead. Indeed, with the latest update to the FDIC’s litigation page (here), the agency disclosed that as of November 15, 2012, the FDIC has authorized suits in connection with 84 failed institutions against 700 individuals for D&O liability. These figures are inclusive of the 39 filed D&O lawsuits naming 308 former directors and officers that the agency has already filed. Given the number of authorized suits, it seems likely that the new failed bank lawsuit filings will mount in the months ahead.
With the addition of the lawsuits filed above, the FDIC has now filed failed bank suits in eleven different states as well as the in Puerto Rico. The states with the largest number of lawsuits are Georgia (11), California (7) and Illinois (6), which is not surprising as these states are also among the leaders in terms of numbers of failed banks. However, Florida is also among the states with the highest numbers of bank failures but even with the new lawsuit described above, the state still has had only two failed bank lawsuits.