Opinion ID: 2966345
Heading Depth: 3
Heading Rank: 2

Heading: The Reimbursement Motion

Text: Although the RTC took control of the Bank, the original boards of directors remained in control of the Debtors until September 1992. Once the RTC was appointed conservator of the Bank, it immediately moved the district court to lift the temporary restraining order so that it could call a shareholders meeting and exercise its ownership rights over the Debtors. However, the district court, acting as the bankruptcy court, denied the RTC's motion and converted the temporary restraining order into a preliminary injunction. See Landmark Land Co. of Carolina v. Resolution Trust Corp. (In re Landmark Land Co. of Okla.), 134 B.R. 557 (D.S.C. 1991), rev'd 973 F.2d 283 (4th Cir. 1992). The RTC was not able to take control of the subsidiaries until _________________________________________________________________ 3 Cone died during the course of this litigation and is represented by his estate. 11 this Court lifted the injunction on August 18, 1992. See In re Landmark Land Co. of Okla., 973 F.2d 283 (4th Cir. 1992). On September 12, 1992, the RTC took control of the Debtors, terminated the original boards of directors, and fired the Debtors' attorneys. During the eleven-month interim when the original board controlled the Debtors, the Directors arranged for the Debtors to pay for the fees and costs of defending themselves against the OTS charges. On March 26, 1992, the Debtors filed a Reimbursement Motion requesting permission to fund the Directors' indemnification. After making the motion, several of the Debtors' boards of directors met to approve the indemnification. On April 8, 1992, the board of directors for Landmark Oklahoma met to discuss and vote on indemnification for Walser and Ille. Landmark Oklahoma's board consisted of three members: Barton, Lowery Bea Roselle, and Bill D. Thompson. Only Roselle and Thompson were present, but the two constituted a quorum. They found that Walser and Ille had acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of [Landmark Oklahoma]. Accordingly, the board voted in favor of indemnification. On April 21, 1992, the board of directors for Clock Tower met to discuss and vote on indemnification for Barton and Vaughan. Clock Tower's board consisted of five members: Barton, Vaughan, Roselle, Thompson, and a fifth director. At the time of the meeting, the fifth director had resigned and had not yet been replaced. The other four members of the board were present, constituting a quorum. The board found that Barton and Vaughan had acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of [Clock Tower]. Roselle and Thompson voted in favor of indemnification, and Barton and Vaughan abstained from the vote. Although the Employees were not included in the Reimbursement Motion, the board of directors for Landmark Louisiana met on April 21, 1992 to discuss and vote on indemnification for the Employees. Landmark Louisiana's board consisted of five members: Barton, Vaughan, Cone, Roselle, and Thompson. Cone was not present, but the other four directors constituted a quorum. The board found that 12 the Employees had acted in good faith and in the best interests of Landmark Louisiana, and they voted unanimously to indemnify the Employees for their expenses. Barton and Vaughan participated in the vote. On June 3, 1992, the district court held a hearing on the Reimbursement Motion. The court did not rule on the motion at the time, and the motion remained dormant for almost two years. On August 27, 1992, the Debtors amended their Reimbursement Motion to include the Employees' legal expenses. Even before this formal application, however, the Debtors had already begun indemnifying the Employees. In March 1992, Clock Tower paid $21,825 toward Motahari's legal expenses, and Landmark Louisiana paid $1,000 toward Braun's expenses. In June 1992, Clock Tower paid $35,398.48 toward Cone's, Motahari's, and Trapani's legal expenses. Thus, Clock Tower paid more than $57,000 toward the Employees' legal expenses, even though its board never voted to indemnify them. In total, the Debtors have paid $122,493.20 of the Employees' legal expenses.