SETTLEMENT AGREEMENT AND 

MUTUAL RELEASE 

1. PARTIES: The parties to this Settlement Agreement ("Agreement") are Plaintiff 

~EDERAL DEPOSIT INSURANCE CORPORATION as Receiver for DoWney Savings& Loan 

Association. F.A. ("FDIC-R"), and Defendant,. JOHN ROBERT SEELEY, an individual 

("Seeley"). The FDIC-R and Seeley are sometimes herein collectively referred to as the 

.. Parties."' 

2. RECITALS: This A~ment is made with reference to the following facts: 

2.1 Certain claims arose between the Parties concerning a loan application that 

were subtnitted by Seeley who was then employed as a loan officer with Freestand Financial, a 

dissolved Arizona coq}oration. The loan application was submitted to Downey Savings & Loan 

Association, F.A. ("Downey'') in 2005 ("Loan") on behalf of borrower Deborah Gaxiola 

("Gaxiola .. ), Downey approved the loan application and fUnded the Loan which was secured by 

a trust deed on real property that was then owned by Gaxiola. 

2.2 The Loan subsequently defaulted and following a foreclosure sale, the real 

property reverted to Downey, resulting in an alleged loss to the thrift of over $163,000. 

2.3 In November 2008, the FDIC·R was appointed the Receiver over aU of 

Downey's assets and liabil;ties. Among the assets the FDIC·R is charged with trying to recover 

upon is the loss relating to the Loan (•'Claims''). 

2.4 The Claims subsequently became the subject of a Complaint 

("Complaint .. ) entitled FDIC-R v. Freestand Financial, ere., eta/., Case No. SACVl0-00437 

DOC (RNBx). filed by the FDIC-R ("Action") and now pending in the United States District 

CQurt for the Central District of California, Southern Division. 

2.5 In its Complaint, the FDIC-R alleges that Seeley was acting as the subagent for the licensed mortgage broker, Freestand Financial and its principals, Martha and Jesse 

Gee, in submitting the Gaxiola Loan application to Downey. Seeley was served with the 

summons and Fourth Amended Complaint in the Action, and answered in pros~. 

Uj By this Agreement, the PaJiies hereto intend to settle and dispose of fully 

and completely, any and all claims, demands~ causes of action, obligations, damages, and 

liabilities that arise out of or relate to the Action and the Claims alleged therein by the FDIO·R 

against the Defendant. 

2.7 The Federal Deposit Insurance Corporation in its separate corporate 

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE 
capacity as the insurer of deposits and bank regulator, and all other federal agencies of the . \ . . 

United States of America, are not parties to this Agreement and are not bound in any manner to 

its terms and conditions. The FDIC-R enters into this Agreement solely in its limited capacity as 

the appointed Receiver of Downey Savings & Loan Association, F.A., and no other receivership 

now existing, previously existing or hereafter appointed. 

3. NO ADMISSION RE MERITS OF CLAIMS: The Parties agree that nothing in 

this Agreement, and no perfonnance under this Agreement, shall be construed as an admission 

b.y any Party of the validity or invalidity of the Claims alleged in the Action; and, the Patties 

agree that this ·Agreement is entered into solely for the purpose of cOnvenience and to 

compromise the disputed Claims the FDIC-R has alleged in the Action against the Defendants. 

4. SETTLEMENT TERMS: The Parties agree to the following settlement terms: 

4.1 The FDIC-R agrees to stipulate with Defendant to dismiss the Defendant 

from the Action with prejudice in exchange for Defendant's waiver of attorney's fees and costs 

and the execution of this Settlement Agreement and Mutual Release. 

5. MVfUAL RELEASES AND WAIVER OF CIV. CODE§ 1542: 

5.1 In consideration of the Settlement terms as set forth in Paragraph 4 abOve, 

and all other promises, covenants and consideration provided for herein, the Parties agree that, 

except as to such rights or claims as may be created by this A8feement, they hereby covenant not 

to· sue each other ever again ori the Claims ·and· the Parties acknowledge full and complete 

satisfaction of. and hereby release, remise, and forever discharge each other, including their 

respective insurers, officers, directors, affiliated companies, agents, representatives, spouseS, 

heirs, suceessors or predecessors in interest, assignees, attomeys, employees and contractors 

from any and all the Claims, demands, counts, obligations, agreements, damages, liabilities, 

losses, costs and expenses of any kind, in law or in equity, whether known or unknown, that 

either Party now holds, or has ever held against the other, or may hold in the future, that arise out 

of or are in any way connected with, the Claims alleged in the Action. 

5.2. This Agreement shall be binding on the Parties and on their respective 

officers, directors,: affiliated companies, insurers, agents, representatives, spouses, heirs, 

successors or predecessors in interest, assignees, attorneys, employees and contractors and shall 

inure to thp benefit of1he Parties, and each of them. 

5.3 The Parties specifically ihtend that the release contained in this Agreement 

shall bar all released claims, including those which are currently unknown to them. f:he Parties 

understand and accept tho risk that they may later discover a .claim encompassed by the Release 

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SETfLEMENT AGREEMENT AND MUTUAL RELEASE 
.in this Agreement which they did not know or suspect to exist, or which they oould not have 

known or suspected to exist. The Parties hereby specifically waive the protection of Civil Code 

section 1542 which reads as follows: 

A general release does not extend to claims which the creditor doe~ not 

know or suspect to exist in his or her favor at the time of executing the 

release, which if known by him or her must have materially affected his .or 

her settlement with the debtor. 

The foregoing waiver is expressly limited to the cl.aims held by the Plaintiff, Federal Deposit. 

Insurance Corporation as Receiver for Downey Savings and Loan Association, F.A., and no 

other receivership, nor to the Federal Deposit Insurance Corporation in its separate corporate 

capacity. as more particularly set for in paragraph 2. 7 above. 

6. A ITORNEYS' FEES: ln the event any action is brought to enforce or interpret 

this Agreement. the prevailing party shall be entitled to an award of reasonable attorneys' fees in 

addition to any other relief to which the prevailing party may be entitled. 

7. REPRESENTATIONS AND WARRANTIES: The Parties represent, warrant, 

and agree as follows: 

7.1 ·The FDIC-R is the lawfully appointed Receiver for Downey and has 

succeeded to and now holds each of the Claims that are the subject of the Action and this 

Agreement. The FDIC-R has the authority to enter into this compromise and settlement of the 

Claims as the Receiver of Downey. 

7.2 Each of the Parties has received or had the opportunity to seek their own 

independent legal advice with respect to the advisability of executing. this Agreement. The 

Parties acknowledge that they have executed this Agreement without fraud, duress, or ~due 

influence. The Parties affirm that they have read this Agreement and Wldeistand the contents · 

hereof. 

7.3 No Party, nor any agent or attorney of any Party, has made any statement, 

representation, or promise to any other Party regarding any facts which the Party has then relied 

upon in entering into this Agreement, and the Parties here each affirm that they have not relied 

upon any statement, representation or promise by any other Party, or of any agent or attorney for 

another Party, in executing this Agreement, or in making the settlement provided for herein, 

.except as is expressly represented or promised in this Agreement. 

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SETILBMENT AGREEMENT ANIYMUTUAL RELEASE ---
(b)(6) H EJ 0 p.l 

7.4 None of the Parties have h fore assigned, transferred, or granted, or 

pru:ported to assign. ttansfer, or grant, any of the C 

7.5 · y additional documents as reasonably 

convenient. necessary or desirable to carry out the pro · ions of this Agreement. 

8. MISCELLANEOUS: 

8.1 This ~ent sball be d ed to bave been executed and delivered 

within the State of California. and the rights. and bligations of the Parties hereto shall be 

constmed and enforced in accordance with,. and gov ed by. the laws of the State of California. 

K2 This Agreement constitutes as· gle, integrated written contract expressing 

the entire agreement of the Parties. This Agreement only be modified in a writing signed by 

all the Parties. 'Ibis Agreement shall be intezpreted · accordance with the plain meaning of its 

terms and not strictly for or against any of the Parties this Agreement. 

8.3 ure contractual and not mere recitals. 

The A~t sball be considered severable, such if any provision or part afthe Agreement 

is ever held invalid under any Jaw or ruling, that pro • on or part of the Agreement shall n:main 

in fo:rce and effect to the extent allowed by law. and other provisions or parts shall remain in 

full force and effect. 

.8.4 This Agreement may be ex in counterparts and shall be effective on 

the date first executed by any one of the Parties if so executed in counterparts (tb.e 

"effective date"). Any signature obtained by facsimil or e-ma11 shall be as valid as an original 

signature. An authenticated copy of this Agreement be used for any purpose for which tb.e 

original may be used. 

DATED: 5- )I- L1 

SEELEY, an individua1 

DATED: __________ _____ 

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SBTTLEMENT AGREBMENT A MUTUAL RELEASE 

(b)(6) 
-----------------~----·······-

7.4 None of the Parties have heretofore assigned, transferred, or granted, or 

purported to assign, transfer, or grant, any of the Claims that are alleged in the Action. 

7.5 Each Party agrees to execute any additional documents us reasonably 

convenient, necessary or desirable to carry out the provisions of this Agreement. 

8. MISCELLANEOUS: 

8.1 This Agreement shall be deemed to have been executed and delivered 

within the State of California, and the rights and obligations of the Patties hereto shall be 

construed and enforced in accordance with, and governed by, the laws of the State ofCalifomia. 

8.2 Tills Agreement constitutes a single, integrated written contract expressing 

the entire agreement of the Parties. This Agreement may only be modified in a writing signed by 

· all the Parties. This Agreement shall be interpreted in accordance with the plain meaning of its 

terms and not strictly for or against any of the Parties to this Agreement. 

8.3 The provisions of this Agreement are contractual and not mere recitals. 

The Agreement shall be considered severable, such that if any provision or part of the Agreement 

is ever held invalid under any law or ruling, that provision or part of the Agreement shall remain 

in force and effect to the extent allowed by law, and all other provisions or parts shall remain in 

full 'force and effect. 

8.4 This Agreement may be executed in counterparts and shall be Cfrective on 

the date first executed by any one of the Parties hereto if so executed in counterparts (the 

"effective date"). Any signature obtained by facsimile or e-mail shall be as valid as an original 

signature. An authenticated copy ofthis Agreement 6an be used for any pwpose for which the 

original may be used. 

DATED: _________ _ 

JOHN ROBERT SEELEY, an individual 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, as Receiver for Downey Savings 

&"1""'.......,......,."""'-'......,"'---------, 

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SETTLEMENT AGREEMENT AND MUTUAL RElEASE 

(b)(6) . 
(b)(6) 

APPROVED AS TO FORM: 

orneys for Federal Deposit Insurance 

orporation as Receiver for Downey 

.___.......~ Savings & Loan Association, F .A. 

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SETILEMENT AGREEMENT Ah'D MUTUAL RELEASE