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Jury Verdict in Failed Bank Legal Malpractice Action

As discussed in an article in the Sarasota Herald Tribune ( here ), on May 22, 2013, a Middle District of Florida jury returned a verdict against Sarasota law firm Icard Merrill , and one of its partners, Robert Messick , in a legal malpractice action arising out of the collapse of the failed First...

FDIC: Banking Sector Improves, Problem Banks Persist

The improvement in the banking sector continued in the first quarter of 2013, according to the FDIC's Quarterly Banking Profile for the first quarter of 2013, which the agency released on May 29, 2013. A copy of the Quarterly Banking Profile can be found here . Overall the industry reported aggregate...

Professional Liability Insurance: Criminal Plea Precludes Insurer's Duty to Defend

An insured's guilty plea to criminal charges relieved his professional liability insurer of its duty under the policy to defend him against related civil claims, according to a June 18, 2013 Order by Southern District of Florida Judge Daniel Hurley. Judge Hurley's decision is interesting ...

When the Business Judgment Rule Isn't Available to Protect Directors

A recurring issue in the litigation the FDIC has filed against the directors and officers of failed banks is the question of whether or not officers – as opposed to directors – can rely on the business judgment rule as a defense under applicable state law. A July 8, 2013 decision by Judge...

Failed Colonial Bank's Accountants Lose Bid to Dismiss FDIC's Suit Against Them

A federal court has denied the motion of the accountants of the failed Colonial Bank’s holding company to dismiss the claims the FDIC, in its capacity as the failed bank’s receiver, had filed against them. As discussed here , the FDIC’s November 2012 lawsuit was the first the agency...

D&O Insurance: Insured vs. Insured Exclusion Unambiguously Precludes Coverage for FDIC Failed Bank Lawsuit

One of the recurring D&O insurance coverage issues that has arisen during the current wave of failed bank litigation has been the question whether coverage for an action by the FDIC in its role as receiver of a failed bank against a failed bank’s directors and officers is precluded by the Insured...

Eleventh Circuit Rejects FDIC's "No Duty" Argument, Allows Post-Receivership Affirmative Defenses Against the Agency

One of the most contentious issues in the litigation the FDIC has been pursuing in its capacity as receiver of various failed banks is whether the defendant former directors and officers can assert affirmative defenses against the FDIC for the agency’s own conduct. In a part of a December 23...

Cornerstone Research: FDIC Lawsuits Continue to Mount, Individuals Contributing Out-of-Pocket to FDIC Claims Settlements

In 2013, the number of lawsuits the FDIC has filed against the directors and officers of failed banks reached the highest annual level during the current wave of failed bank litigation, though the pace of litigation filings peaked in the second quarter and slowed as the year progressed, according to...

Why Did the Bank Fail?: Defending Failed Bank Directors and Officers

Since the early stages of the financial crisis, nearly 500 banks have failed across the U.S., and even though we are now well past the peak of the financial crisis, banks continue to fail. Yet during the same time as scores of banks were failing, many more banks did not fail – which raises the...

FDIC: Banks Improve, Number of Problem Institutions Continues to Decline

The commercial banking industry is continuing its rebound from the subprime meltdown and the global financial crisis. According to the FDIC’s latest Quarterly Banking Profile for the period ending December 31, 2014 ( here ), the industry’s overall earnings continue to improve, largely as...

Georgia Federal Court Rules FIRREA Blocks Jurisdiction for Failed Bank’s D&O Insurer’s Declaratory Judgment Action

As part of our beat here at The D&O Diary , we have to read a lot of judicial decisions. We are well acquainted with the fact that court rulings vary quite a bit, but every now and then we read an opinion that makes us stop and say – “ What? ” That was our reaction to a recent set...

D&O Policy Excluding “Receiver” Claims Bars Coverage for FDIC Failed Bank Lawsuit

In an interesting April 7, 2014 opinion ( here ), Magistrate Judge Stanley A. Boone of the Eastern District of California, applying California law, held that a D&O insurance policy’s insured vs. insured exclusion precludes coverage for claims brought against former officers of the failed County...

D&O Insurance: FDIC’s Claims Against Failed Bank’s Directors and Officers Not Related to Earlier Claims, Trigger Separate Policy Period

On July 9, 2014, in yet another in the ever growing line of cases examining whether or not separate D&O claims involve interrelated wrongful acts, District of Puerto Rico Judge Gustavo Gelpi , applying Puerto Rico law, held that the FDIC’s claims against the former directors and officers of...

Should Bank Directors’ Fiduciary Duties Be Expanded?

A recurring question is whether bank directors should be held to a more stringent fiduciary duty than are the directors of other kinds of companies. The question has been raised in the current wave of failed bank litigation, as the FDIC has tried to argue, for example, that bank directors are not entitled...

What to Watch in the World of D&O

Every year just after Labor Day, I take a step back and survey the most important current trends and developments in the world of Directors’ and Officers’ liability and D&O insurance. This year’s survey is set out below. Once again, there are a host of things worth watching in the...

Failed NC Bank Execs Granted Summary Judgment on All FDIC Claims

On September 11, 2014, in a sharply worded order that will give heart to the FDIC’s many other failed bank litigation targets, Eastern District of North Carolina Judge Terrence Boyle, applying North Carolina law, granted the summary judgment motion of the former directors and officers of the failed...

Supreme Court Will Not Consider the Securities Act Statute of Repose Issue in the Indy Mac Case After All

As I had noted on this blog ( here ), one of the important securities law cases on the U.S. Supreme Court’s docket for the upcoming term involved the failed IndyMac bank. The Court had granted cert in the case to decide whether the three-year limitations period in Section 13 of the ’33 Act...

U.S. Supreme Court Dismisses Securities Class Action Against IndyMac

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on Monday dismissed an appeal in a securities class action lawsuit after receiving letter briefs from the involved parties stating that they would voluntarily dismiss the action if a settlement agreement is approved by a federal judge ...

D&O Insurance: Insured vs. Insured Exclusion Applicability to FDIC Failed Bank Claim Held Ambiguous

As I have previously noted on this blog, one of the recurring D&O insurance coverage issues arising during the latest bank failure wave has been the question whether the Insured vs. Insured Exclusion precludes coverage for claims brought by the FDIC in its capacity as receiver for a failed bank against...

D&O Insurance: Eleventh Circuit Holds Insured v. Insured Exclusion’s Applicability to FDIC Failed Bank Claims Ambiguous

Going all the way back to the S&L crisis, a recurring insurance coverage issue that has arisen in the failed bank context has been the question of whether or not coverage for a claim brought by the FDIC in its capacity as receiver of a failed bank against the failed bank’s former directors...

A Closer Look at an FDIC Failed Bank Lawsuit Settlement

According to the FDIC’s website ( here ), as of March 24, 2015, 44 of the 106 failed bank lawsuits the agency has filed have settled. So there is nothing particularly newsworthy about the fact that the parties to another one of the failed bank lawsuit had reached a settlement. Just the same, however...

A Credit Crisis-Era Vestige: Fourth Circuit Affirms Bank Executives’ Criminal Conviction

Federal prosecutors have come in for considerable criticism over their failure to press criminal charges against executives of financial institutions whose stumbles led to the global financial crisis. As Southern District of New York Judge Jed Rakoff pointed out in his blistering January 9, 2014 opinion...

Meanwhile, Back at the FDIC Failed Bank Litigation Ranch

As the global financial crisis has receded further into the past and as other issues have crowded to the top of the agenda, the remaining vestiges from the credit crisis have faded into the background. But though the peak of the crisis is now nearly seven years behind us, the crisis remnants continue...

Tenth Circuit: D&O Insurance Policy’s Insured vs. Insured Exclusion Unambiguously Precludes Coverage for FDIC’s Failed Bank Claims

In an important decision concerning D&O insurance coverage in connection with failed bank claims, the Tenth Circuit, applying Kansas law, held that a D&O policy’s insured vs. insured exclusion unambiguously precluded coverage for claims brought by the FDIC as receiver of a failed bank against...

Fourth Circuit Affirms Dismissal of All Claims Against Failed Bank’s Directors, Revives Negligence Claims Against Bank’s Officers

On August 18, 2015, in an interesting opinion that takes a close look at exculpatory bylaw issues and the business judgment rule under North Carolina law, the Fourth Circuit affirmed in part and reversed in part the district court’s dismissal of the failed bank lawsuit the FDIC had filed against...