741 F.3d 1342
11th Cir.2013Background
- FDIC sues former Integrity Bank directors and officers for alleged negligence and breach of fiduciary duty after bank failure in 2008; FDIC acts as receiver.
- District court dismissed FDIC’s ordinary-negligence claims against directors/officers under Georgia’s business judgment rule, and denied FDIC’s partial summary judgment to strike affirmative defenses.
- FDIC asserted defenses including failure to mitigate, reliance, and estoppel, which the district court treated together under federal no-duty analysis.
- Georgia law question exists whether bank directors/officers can be liable for ordinary negligence despite good faith, due to ordinary-diligence standard in O.C.G.A. §§ 7-1-490 and 51-1-2.
- Eleventh Circuit certifies two questions to Georgia Supreme Court under O.C.G.A. § 15-2-9 because state-law ruling is determinative and unsettled.
- On the federal-law issue, court refuses to create a federal common-law no-duty rule to bar defenses against FDIC; affirms denial of partial summary judgment on those defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does good faith but lack of ordinary diligence violate § 7-1-490? | FDIC argues ordinary negligence remains viable if diligence is not ordinary. | Defendants rely on business judgment rule presumption of good faith to bar ordinary-negligence claims. | Question certified; state-law answer awaited. |
| May bank officers be held liable for ordinary negligence under Georgia law after applying business judgment rule? | FDIC contends ordinary-negligence claims can survive with breach of fiduciary duty based on ordinary negligence. | Defendants argue business judgment rule shields them from liability absent fraud, bad faith, or abuse of discretion. | No-duty rule not established; district court’s denial affirmed; interlocutory certification preserved. |
Key Cases Cited
- Flexible Prod. Co. v. Ervast, 643 S.E.2d 560 (Ga. Ct. App. 2007) (dicta: business judgment rule forecloses ordinary-negligence liability)
- Brock Built, LLC v. Blake, 686 S.E.2d 425 (Ga. Ct. App. 2009) (presumption of good faith; lack of fraud/bad faith/abuse of discretion required)
- Rosenfeld v. Rosenfeld, 648 S.E.2d 399 (Ga. App. 2007) (illustrates possible inconsistency in Georgia director-liability standards)
- O’Melveny & Myers v. FDIC, 114 S. Ct. 2048 (1994) (federal common law is limited to few, conflict-driven situations)
- Jones v. Dillard’s, Inc., 331 F.3d 1259 (11th Cir. 2003) (certification when state-law question is determinative and unsettled)
- Miller v. Scottsdale Ins. Co., 410 F.3d 678 (11th Cir. 2005) (framework for certifying state-law questions to state supreme court)