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Legal Memorandum: Breach of a Fiduciary Duty in CO

Issue: Whether any statute or other law grants immunity to the FDIC for breach of fiduciary duty by employees of a failed financial institution acting as escrow agents.

Area of Law: Banking & Finance Law
Keywords: Breach of fiduciary duty; Financial institution; Escrow agent
Jurisdiction: Colorado, Federal
Cited Cases: 510 U.S. 471; 946 F.2d 103; 83 F.3d 1317; 898 P.2d 1049; 180 F.3d 1124
Cited Statutes: 12 U.S.C. § 1823 (c)(2), § 1821 (d)(5), § 1821(d)(5)(C)(ii)(I); 28 U.S.C. § 2680
Date: 06/01/2010

A purchase-and-assumption allows a bank that acquires the assets of a failed bank to limit the liabilities it acquires. 12 U.S.C. § 1823 (c)(2).  The risks not borne by the assuming bank “are shifted to the F.D.I.C. in its corporate capacity.”  2 Robert M. Taylor III, Banking Law § 49.11[1].  Courts have assumed, without much discussion, that the FDIC may be held liable for torts committed by financial institutions before the bank entered receivership.  See, e.g., Motorcity of Jacksonville, Ltd. v. Southeast Bank, N.A., 83 F.3d 1317 (11th Cir. 1996), rev’d on other grounds sub nom. Hess v. FDIC, 519 U.S. 1087 (1997). 

Before an action may be commenced against the FDIC, the administrative remedies provided by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73, 103 Stat. 183 (codified as amended in scattered sections of 12 U.S.C.) must be exhausted.  The Tenth Circuit has held that FIRREA provides the exclusive avenue of relief for creditors with claims that arose prior to receivership.  Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103, 106 (10th Cir. 1991).  If the claim is disallowed, the creditor may file suit.  Id.  The procedure for filing a claim is set out in 12 U.S.C. § 1821 (d)(5).  If a claim is not filed within the time set out in the notice that a bank has been closed, the claim is disallowed.  12 U.S.C. § 1821 (d)(5)(c).  The only exception is for claims filed by […]

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