Barnes v. Harris
- Summarized by William Wallo , Bakke Norman, S.C.
- 8 years 7 months ago
- Citation:
- Barnes v. Harris, __ F.3d __, 2015 WL 1786861 (10th Cir. April 21, 2015)
- Tag(s):
-
- Ruling:
- Dismissal of shareholders' action against officers and directors of failed bank holding company for breach of fiduciary duty was affirmed as all claims were either derivative or insufficient to state a claim.
- Procedural context:
- Shareholders filed suit against failed bank holding company and its officers and directors, alleging breaches of fiduciary duties. FDIC intervened and removed action to federal court, where FDIC and defendants moved to dismiss for failure to state a claim. The district court granted the motion. On appeal, the 10th Circuit ruled that the FDIC's intervention was sufficient to allow removal of the action to federal court and that the FDIC owned any derivative breach of fiduciary duty claims. As the shareholder claims were either derivative or failed to state a claim, the complaint was properly dismissed. Affirmed.
- Facts:
- After the failure of a bank which had been placed into FDIC receivership, three shareholders of the parent holding company brought an action in state court against the holding company and its officers and directors. The specific factual allegations in the complaint centered on mismanagement of the bank. The FDIC intervened in the state court action and removed it to federal court. The plaintiffs amended their complaint to try and focus on mismanagement of the holding company, rather than the bank. The FDIC and the defendants moved to dismiss the amended complaint. The FDIC's intervention was sufficient to permit removal and it would be treated as a party; as such the district court had jurisdiction over the matter. Under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), once the bank entered receivership the FDIC became the holder of all rights that the holding company possessed in regard to the bank and its assets. The majority of the plaintiffs' claims did not involve harm to the holding company that was separate and distinct from alleged harm to the bank. These claims were derivative and consequently held by the FDIC, not the plaintiffs. The remaining claim did not sufficiently state a cause of action and was also properly dismissed. Affirmed.
- Judge(s):
- Lucerno, Murphy, and McHugh
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