Court Opinion

ID: 71284
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:15:59+00
Date Added: 2024-06-11T09:03:31.967588
License: Public Domain

United States Court of Appeals,

                          Eleventh Circuit.

                            No. 95-4655.

          In re SOUTHEAST BANKING CORPORATION, Debtor.

  William A. BRANDT, Jr., Plaintiff-Appellant, Cross-Appellee,

                                 v.

    FIRST UNION CORP., First Union National Bank of Florida,
Defendants-Appellees, Cross-Appellants,

  Federal Deposit Insurance Corporation, Third-Party Defendant-
Appellee.

                           Sept. 3, 1996.

Appeals from the United States District Court for the Southern
District of Florida. (No. 94-1803-CIV-DTKH), Daniel T.K. Hurley,
Judge.

Before TJOFLAT, Chief Judge, BLACK, Circuit Judge, and REAVLEY*,
Senior Circuit Judge.

     PER CURIAM:

     Brandt is the Chapter 7 bankruptcy trustee for the estate of

Southeast Bank Corporation (the Holding Company).      The Holding

Company owned all of the shares of the now defunct Southeast Bank.

On September 19, 1991, Southeast Bank was closed by federal and

state regulators, and the F.D.I.C. was named as its receiver.

First Union purchased a majority of Southeast Bank's assets at the

F.D.I.C. sponsored auction.    Brandt filed the instant action on

behalf of the shareholders (i.e., the Holding Company) of Southeast

Bank against First Union Corporation and First Union National Bank

(collectively, First Union) for breach of contract and various

statutory and common law torts. The F.D.I.C. intervened, and First

     *
      Honorable Thomas M. Reavley, Senior U.S. Circuit Judge for
the Fifth Circuit, sitting by designation.
Union filed a third-party complaint against the F.D.I.C. seeking

contribution for any liability owed to the Holding Company.     The

cause found its way to district court where both the third-party

complaint and the Holding Company's complaint were dismissed. Both

the Holding Company and First Union appeal.

     We review the district court's dismissal under Rule 12(b)(6),

accepting as true the plaintiffs' allegations. South Florida Water

Management Dist. v. Montalvo, 84 F.3d 402, 406 (11th Cir.1996). We

affirm the district court's dismissal of the Holding Company's

complaint.   The third-party complaint is therefore moot.

     In 1991, due to impending financial troubles of Southeast

Bank, the Holding Company sought capital infusion through a merger

with First Union. The parties entered into an agreement to explore

such a possibility. The agreement permitted First Union to examine

the internal financial documents of Southeast Bank on the condition

that the information remain confidential.        The agreement also

precluded First Union from obtaining a financial position in the

Holding Company or its subsidiaries, which included Southeast Bank.

The only exception to this standstill provision was that First

Union was able to bid at any F.D.I.C. auction.

     The Holding Company alleged that First Union leaked financial

information concerning Southeast Bank to bank regulators resulting

in the closure of the bank.    The claim was that, after forcing

Southeast Bank into receivership, First Union, acting on superior

information, could acquire the bank. While there was a contractual

relationship between First Union and the Holding Company, the

Holding Company's injury, if any, was the result of the Comptroller
of the Currency's decision to close Southeast Bank.                 In paragraph

39   of    its     complaint,   the    Holding   Company    alleges   that     when

Southeast Bank was taken over in September of 1991, it was "solvent

and profitable, with capital reserves substantially in excess of

those required by law."         This was clearly not the view of federal

or state regulators who declared the bank insolvent.

       Contending that Southeast Bank was liquid and should not have

been      closed    by   regulators,    and   being   unable   to   sue   federal

regulators for their discretionary act of closing the bank, the

Holding Company instead claims that the closure was precipitated by

First     Union's     disclosures     of   confidential    information    to    the

federal regulators.         Nevertheless, "[o]nly the Comptroller's final

decision damaged [the Holding Company,] and no prior act or acts

could have so caused the damage [alleged to have occurred by First

Union] without the ultimate declaration of insolvency."                   FDIC v.

Irwin, 916 F.2d 1051, 1055 (5th Cir.1990).                   The Comptroller's

decision is not an act for which First Union can be held liable.

See id., at 1053-56.

       The Holding Company is attempting to do what it otherwise

could not do, sue for its damages as a result of the government's

alleged improper closure of Southeast Bank.               During oral arguments

and in its brief, the Holding Company half-heartedly recognizes its

inability to sue federal regulators for their decision to close the

bank.      They have couched their suit in terms of the timing of the

regulators' decision to close the bank, that is, that because of

First Union's prompting the government officials decided to close

the bank sooner than otherwise would have occurred. But underlying
this   claim   (and   throughout   their   complaint)   is   the   Holding

Company's belief that Southeast Bank was solvent and should not

have been closed by federal regulators. Despite these efforts, the

Holding Company cannot sue for the discretionary act of federal

regulators in closing the bank.      Nor can they sue First Union for

"precipitating" the government's ultimate action by disclosing

information the government was entitled to have.

       AFFIRMED.