Opinion ID: 752485
Heading Depth: 2
Heading Rank: 2

Heading: FDIC'S Right to Shareholder Claims

Text: 12 Pareto's assertion that the FDIC did not accede to his derivative stockholder claims against the allegedly miscreant directors of the bank must founder on the rocks of 12 U.S.C. § 1821(d)(2)(A)(i), which is part of FIRREA. 2 That section states that the FDIC shall, as conservator or receiver, and by operation of law, succeed to ... all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution.... 13 Plainly, the section vests all rights and powers of a stockholder of the bank to bring a derivative action in the FDIC. One of those rights or powers is the pursuit of the very claims asserted here. The FDIC can decide to bring an action against the directors for their wrongdoing, if any there was. See 12 U.S.C. § 1821(k). If stockholders have a right to demand corporate action, the corporation must have a duty to proceed. On the other hand, if they have the power to proceed against a third party for the corporation's benefit, that party will be liable to respond when they do so. See Wesley Newcomb Hohfeld, Some Fundamental Legal Conceptions As Applied In Judicial Reasoning, 23 Yale L.J. 16, 28-49 (1913). But, again, the statute has vested all stockholders' rights and powers in the FDIC itself. Perhaps with an eye on Hohfeldian analysis, id., Congress also covered privileges just to be sure that nothing was missed. In other words, Congress has transferred everything it could to the FDIC, and that includes a stockholder's right, power, or privilege to demand corporate action or to sue directors or others when action is not forthcoming. 14 Having read the section in that manner, we can bring our analysis to an end, unless, of course, the result would be absurd or impracticable. See Oregon Natural Resources Council, Inc., v. Kantor, 99 F.3d 334, 339 (9th Cir.1996). The result of our interpretation is neither absurd nor impracticable. Rather, it helps assure the expeditious and orderly protection of all who are interested in the bank by placing the pursuit of its rights, protection of its assets, and payment of its liabilities firmly in the hands of a single, congressionally designated agency. 15 A number of courts, which have considered the matter, have reached the selfsame conclusion. See FDIC v. American Casualty Co., 998 F.2d 404, 406 (7th Cir.1993); In re Southeast Banking Corp., 827 F.Supp. 742, 746 (S.D.Fla.1993), rev'd in part on other grounds, 69 F.3d 1539 (11th Cir.1995); cf. Bauer v. Sweeny, 964 F.2d 305, 307-308 (4th Cir.1992). 16 It is true that the cases are not uniform on this issue. Pareto primarily relies on Branch v. FDIC, 825 F.Supp. 384 (D.Mass.1993) for the opposite conclusion. The district court in that case recognized that the statute would appear to place all of the stockholders' rights in the FDIC. Id. at 404. It, however, pointed out that 12 U.S.C. § 1821(d)(11)(B) provides that if everyone else with an interest has been paid, any residual assets shall be distributed to the stockholders. From this the district court gathered that the stockholders must have some remaining rights and must, therefore, have a continuing right to pursue and protect the assets of the bank. See id. at 404-05. We agree that in construing a statute we must consider all of its parts. See Dole v. United Steelworkers of America, 494 U.S. 26, 35, 110 S.Ct. 929, 934, 108 L.Ed.2d 23 (1990); Higa v. Transocean Airlines, 230 F.2d 780, 784 (9th Cir.1955). But we cannot agree with Branch 's conclusion. The mere fact that any residue will go to the stockholders is not surprising. Indeed, where else would it go after all depositors, creditors, other claimants, and administrative expenses had been paid? One would hardly expect Congress to order an escheat. But that remaining vestige of the stockholders' rights can hardly be said to allow a wholesale invasion of the FDIC's control over proceedings. 17 Branch 's additional concern that the stockholders will otherwise go without protection does nothing to advance the argument. They, like all others who have some interest in recovering funds from the closed bank, must simply rely upon the FDIC to do its job. For similar reasons, we do not agree with the decisions of other courts which, without analysis, seem to have simply assumed that stockholders and others retain the ability to bring derivative actions after commencement of an FDIC receivership. See American Casualty Co. v. FDIC, 39 F.3d 633, 636-637 (6th Cir.1994); In re Sunrise Sec. Litig., 916 F.2d 874, 879, 889 (3d Cir.1990). Of course, we need not concern ourselves with what claims, if any, interested parties may have against the FDIC should it commit some wrongdoing. That issue is not before us. 18 Therefore, Pareto did not have standing to assert this derivative action against the FDIC and the former directors of the bank.