882 F. Supp. 2d 859
E.D.N.C.2012Background
- FDIC sues as receiver for Cooperative Bank, alleging officers' and directors' negligence, gross negligence, and breach of fiduciary duties.
- Plaintiff points to aggressive growth through 2005–2007 with rising acquisition, development, and construction loan concentration as a risk.
- Plaintiff alleges lax loan approvals and repeated regulator warnings about high-risk loans, with continued real estate focus after 2007.
- Defendants include six outside directors and three officers; they move to dismiss under Rule 12(b)(6) on six grounds.
- FDIC seeks recovery on specific high-risk loans and deficiencies alleged for each loan; court initially denies dismissal as to negligence and fiduciary claims.
- Procedural posture includes a later order denying reconsideration and denying a motion to strike, with ongoing questions about applicable standards under NC law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ordinary negligence can be pled against directors/officers in suit by the corporation. | FDIC argues NC ordinary negligence standard applies to corporate officers/directors. | Defendants contend only gross negligence or business judgment rules apply. | Ordinary negligence may apply; not dismissed at pleadings stage. |
| Whether the business judgment rule shields defendants from liability at this stage. | Plaintiff contends ordinary negligence claims are not foreclosed by the business judgment rule. | Defendants assert the rule precludes liability for informed, good-faith decisions. | To be determined with further fact development; dismissal inappropriate at this stage. |
| Whether outside director reliance on information can defeat negligence claims. | FDIC alleges reliance issues do not bar claims at this stage. | Outside director reliance may provide defenses under NC law. | Insufficient evidence to decide reliance vs. actual knowledge; dismissal inappropriate. |
| Whether NC exculpation provisions preclude liability for director misconduct. | Gives consideration to exculpation but not dispositive. | Exculpation could bar some claims. | Exculpatory clause not determinative at this stage; not dismissed. |
| Whether the pleadings adequately plead gross negligence. | Complaint details numerous defects in loans and processes supporting gross negligence. | Defendants challenge sufficiency of allegations. | Pleadings sufficiently allege gross negligence under Rule 8; not dismissed. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleadings must show facial plausibility for claims to proceed)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (facial plausibility required for relief; threadbare recitals insufficient)
- Atherton v. FDIC, 519 U.S. 213 (U.S. 1997) (FIRREA permits state-law claims when state law allows ordinary negligence)