The Federal Deposit Insurance Corporation as receiver sued certain directors and officers of a failed bank, alleging that the bank had incurred substantial losses due to their actions and omissions. The district court granted summary judgment in favor of the defendants Rockleigh S. Dawson, Jr., Kirk K. Weaver, and Michael D. Maloy, and the FDIC appeals. We affirm.
I.
The defendants in this action were all directors or employees of Texas Investment Bank, N.A. (“TIB”), a federally insured banking institution organized, existing, and operating under the laws of the United States. On May 21, 1987, the United States Office of the Comptroller of the Currency (“OCC”) declared TIB to be insolvent. The OCC ordered TIB closed and appointed the FDIC as receiver. As part of its effort to recover on losses to the federal deposit insurance fund caused by the failure of TIB, the FDIC sued to recover damages allegedly resulting from the negligent discharge of duties by defendants Rockleigh S. Dawson, Jr. (“Dawson”), Kirk K. Weaver (“Weaver”), Michael D. Maloy (“Maloy”), and Wayne C. Desselle (“Desselle”) as officers or directors of TIB.
Defendant Dawson became president and chief executive officer of TIB on March 17, 1981, and was elected as a director of TIB on January 19, 1982. He served as a director and as president until his resignation on May 12, 1987. Additionally, he served as chairman of TIB’s loan committee from April 28, 1981, until April 28, 1987. Defendant Weaver became a director of TIB on January 19, 1982, and he served as a director until his resignation on April 28, 1987. Defendant Maloy was a loan officer for TIB from January 18, 1983, through April 28, 1987. Additionally, he served as vice-chairman of the loan committee from January 18, 1983, until August 26, 1984. Although there is some dispute, it appears that Maloy was a nonvoting advisory director from April 1984 until he was elected as a full board member in 1986 or 1987.
The structure of TIB’s organization with respect to its lending function is somewhat complicated. Until April 21, 1982, there was a “Loan and Discount Committee” made up of TIB directors. This committee was not re-elected by the board on that date, and the board did not again establish a board level loan committee until August 21,1984, when it created the “Executive and Loan Committee.” From December 31, 1980, to August 27, 1984, TIB’s lending functions were supervised by a loan committee composed of Dawson, Maloy, and other bank officers.
This suit was brought by the FDIC based on the activities of defendant Desselle, who is not a party to this appeal. Desselle was hired by TIB as a loan officer on or about August 31, 1981, and he was elected a vice-president on September 15,1981. The FDIC alleges that Desselle, Maloy, and Dawson made a series of 82 unsafe and unsound loans beginning on February 18,1982, and continuing through October 5,1984. The FDIC also alleges that these loans constituted unsafe and unsound banking practices that should have been detected and prevented by Dawson and the other members of TIB’s board of directors. Desselle resigned effective January 1984. The last allegedly unsound loan was made by Dawson on October 5, 1984.
Having been appointed receiver of TIB, the FDIC brought suit against Dawson, Weaver, Maloy, and Desselle on April 2, *1306 1990. The complaint alleged negligence and breach of fiduciary duty on the part of the defendant directors for a number of acts and omissions related to their failure to supervise Desselle. The complaint also alleged that the defendant directors’ acts and omissions constituted a breach of a contract formed when each director took his oath of office. The FDIC moved for summary judgment against Desselle, and the district court entered summary judgment against Desselle after he failed to respond.
Dawson and Weaver moved for dismissal and summary judgment as to all of the FDIC’s claims, alleging that the claims were barred by the statute of limitations. On December 10, 1991, the district court granted Weaver’s motions for summary judgment and to dismiss; it denied Dawson’s motion for summary judgment as moot and granted his motion to dismiss. Maloy then moved for summary judgment and to dismiss, and his motion was granted on May ,4, 1992. This appeal followed.
H.
Because the parties presented matters outside the pleadings to the court and the court did not exclude them in deciding these motions to dismiss and motions for summary judgment, we treat all of the district court’s decisions as summary judgment decisions. Fed.R.Civ.P. 12(b), (c);
see also Fraire v. City of Arlington,
III.
The FDIC presents two arguments for reversal. First, it argues that the statute of limitations was tolled during the tenure of the corporate wrongdoers under the doctrine of adverse domination. Second, the FDIC argues that the district court erred by applying the tort statute of limitations to its claim based on the directors’ oath of office instead of the longer statute of limitations for breach of contract actions. We address the FDIC’s second argument first.
A.
The threshold issue on this appeal is whether the district court applied the correct statute of limitations to the FDIC’s claims. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”)
1
provides a federal statute of limitations for claims brought by the FDIC as receiver. 12 U.S.C. § 1821(d)(14).
2
This
*1307
statute, however, has been interpreted not to revive stale state law claims acquired by the FDIC.
Randolph v. Resolution Trust Corp.,
The district court applied the correct analysis to the FDIC’s claims, first deciding whether the claims had expired under Texas law before the FDIC was appointed as receiver. The Texas statute of limitations for negligence and breach of fiduciary duty is two years. Tex.Civ.Prae. & Rem.Code Ann. § 16.003 (Vernon 1986);
Russell v. Board of Trustees of the Firemen, Policemen and Fire Alarm Operators’ Pension Fund,
The FDIC argues that the four-year limitations period should apply to its “breach of contract” claim against the appellants for violating their oath of office, in which they promised to diligently execute their duties and neither to violate nor to permit to be violated any law of the United States. Ac-cprding to the FDIC there is a “substantial question” as to whether this claim sounds in tort or contract, and therefore the district court should have applied the longer statute of limitations.
Badaracco v. Commissioner,
There is no substantial question regarding this issue; the law in this circuit is long-settled that claims based upon an oath of office sound in tort.
McNair v. Burt,
The district court correctly applied the two-year statute of limitations to all of the FDIC’s claims. The FDIC was appointed receiver no earlier than May 21, 1987. The unsound banking practices on which this suit is based ended in 1984. Unless there exists some .reason to toll the statute, the district court was correct to grant summary judgment in favor of the appellees based on limitations.
*1308 B.
The FDIC argues that the doctrine of adverse domination tolled the statute of limitations in this case so that the claims it acquired upon being appointed receiver were not time-barred. Generally a statute of limitations begins to run against an action against directors of a corporation for malfeasance or nonfeasance from the time of the perpetration of the wrongs complained of. 3A Stephen M. Flanagan & Charles R.P. Keating, Fletcher Cyclopedia of the Law of Private Corporations § 1306 (1986). The doctrine of adverse domination, however, tolls the statute of limitations for as long as a corporate plaintiff continues under the domination of the wrongdoers. Id. § 1306.2. The FDIC argues that the doctrine of adverse domination made this case inappropriate for summary judgment. Before proceeding to the merits of this argument, however, we must resolve several preliminary disputes.
Standard of Review
The parties disagree as to the appropriate standard of review of the district court’s decision on this issue. The FDIC argues that we should apply the ordinary de novo standard to the adverse domination issue because the district court ruled on the issue by way of granting summary judgment. The appellees, on the other hand, argue that we should apply an abuse of discretion standard because adverse domination is an equitable doctrine. In the past we have applied the de novo standard of review to similar facts.
Cruz v. Carpenter,
Waiver
Next, appellee Weaver raises the argument that the FDIC may not rely on adverse domination because it did not plead the doctrine in either its original or its amended complaint. We note that the pleading requirements in federal court are governed by Federal Rule of Civil Procedure 8 rather than by state law.
Simpson v. James,
State or Federal Law?
An important preliminary issue not specifically addressed by the parties is whether state or federal law governs the FDIC’s assertion of the adverse domination doctrine. The Tenth Circuit has squarely held in a similar ease that the question of whether the state’s statute of limitations was equitably tolled was a question of federal law. Farmers
& Merchants Nat’l Bank v. Bryan,
We are not convinced that the
Bryan
court is correct in its statement that federal equitable tolling principles apply when federal courts borrow state statutes of limitations. As the Seventh Circuit has recently noted, the continued vitality of
Holmberg
and its progeny is in doubt after the Supreme Court’s decisions in
Board of Regents v. Tomanio,
Wholly apart from the flaws in the
Bryan
court’s reasoning, we disagree with its holding for the more fundamental reason that the federal court is not “borrowing” a state statute of limitations at all in these cases brought by the FDIC under FIRREA. As was well said in
Howse,
the first step in the analysis of the limitations issue is whether the applicable state statute of limitations had already expired when the FDIC acquired the claim.
Howse,
Texas Law of Adverse Domination
Having determined that Texas law governs the application of the adverse domination doctrine in this case, we must next determine the contours of that doctrine in Texas. As will be seen, Texas case law on the topic is sparse, and our interpretation of Texas law will be informed by modern trends in adverse domination law from other jurisdictions. We focus on three questions of paramount importance in this case: (1) How completely must the wrongdoers dominate their corporation in order to trigger adverse domination tolling? (2) Must a plaintiff relying on the adverse domination doctrine sue all allegedly culpable directors? (3) How culpable must a director’s conduct be before he will be considered a “wrongdoer” within the meaning of the adverse domination doctrine?
(1)
Two competing theories have emerged with respect to the showing a plaintiff must make in order to establish “domination” of a corporation by wrongdoers. The more difficult test is the “complete domination” test, under which a plaintiff who seeks to toll the statute under adverse domination must show “full, complete and exclusive control in the directors or officers charged.”
Mosesian v. Peat, Marwick, Mitchell & Co.,
Other courts have taken a more prophylactic approach known as the “majority test.” Under this approach, the plaintiff need not show that the wrongdoers completely dominated the corporation, but rather must show only that a majority of the board members were wrongdoers during period the plaintiff seeks to toll the statute.
Howse,
As long as the majority of the board of directors are culpable they may continue to operate the association and control it in an effort to prevent action from being taken against them. While they retain control they can dominate the non-culpable directors and control the most likely sources of information and funding necessary to pursue the rights of the association. As a result it may be extremely difficult, if not impossible, for the corporation to discover and pursue its rights while the wrongdoers retain control.
Id. at 1193-94 n. 12.
We
agree
with the
Howse
court that Texas follows the “majority” version of the adverse domination doctrine.
Howse,
(2)
The issue most hotly contested by the parties is whether a plaintiff seeking to toll the statute of limitations under the adverse domination doctrine must sue all allegedly culpable directors. The FDIC argues that there is no requirement that all culpable directors must be sued in order for adverse domination to apply, although plainly the FDIC would still bear the burden of proving that a majority of the directors was culpable to obtain the benefit of the adverse domination doctrine. The appellees, on the other hand, argue that the cases indicate that all directors constituting the culpable majority must be sued.
Again, Allen provides this court with the necessary guidance. In Allen, the plaintiff was the creditor of a corporation, and he sued one member of the corporate debtor’s four-person board for withdrawing funds from the corporation’s account. Id. at 500-01. The case was tried to the court, and the defendant raised limitations as a defense. The trial judge granted judgment in favor of the plaintiff without making findings of fact, thereby implicitly holding that the statute had been tolled. Id. at 496, 500. The court of civil appeals. affirmed, holding that the trial judge could properly have tolled the statute because there was sufficient evidence that one of the three non-defendant directors was also not “disinterested.” Id. at 501. Allen thus plainly demonstrates that a plaintiff may sue only a minority of the board and still assert adverse domination to toll the statute of limitations under Texas law.
The appellees urge that the Allen rule will work injustice to defendant directors because it will force them to defend the non-defendant directors when those directors have neither the standing nor the incentive to provide their own defense. The FDIC responds that it must be free to make independent litiga *1311 tion decisions regarding which directors it will sue and not sue. As the FDIC points out, there may be a host of reasons for it to choose to sue less than a majority of the board, such as a prior or pending discharge in bankruptcy, prior settlement of the claim or a prior restitution order, pendency of criminal proceedings against an individual or entity, judicial economy, and cost-effectiveness.
In response to the appellees’ concerns, we note that the plaintiff still bears the burden of proving that a majority of the board consisted of wrongdoers for the relevant time period; the Allen rule does not shift onto the defendants the burden of proving that a majority of the board was not culpable. Nor is it necessarily true that the non-defendant directors have no incentive to fight the plaintiffs allegations that they were culpable. If shown to be culpable, the non-defendant directors could possibly be held liable to the defendant directors for contribution, or could later be joined as defendants themselves. In any event, our responsibility here is to apply Texas law as it exists, not to make policy decisions about what that law should be. The district court incorrectly assumed that the adverse domination doctrine could not apply because the FDIC sued fewer than a majority of TIB’s board of directors.
(3)
The final issue is whether Texas law would allow a plaintiff to establish the adverse domination doctrine by proving that a majority of a corporation’s directors was merely negligent. We phrase the issue in this manner because our review of the summary judgment evidence shows that the FDIC raised an issue of fact with respect to whether TIB’s board may have been negligent in supervising Desselle’s lending activities. The FDIC filed with the district court the affidavit of an expert witness, William Watkins, who reviewed numerous TIB documents and OCC reports regarding TIB. According to the Watkins affidavit, the OCC cited TIB several times for serious deficiencies in its lending operations between January 1982 and May 1987. The TIB board “knew of and discussed at numerous board meetings the serious problems disclosed in the OCC examination reports between May 1982 and April 1987.” In particular, Watkins opined that it was a “serious deficiency” for the TIB board to delegate oversight of the lending function to a loan committee composed entirely of internal bank employees up until August 1984. From these facts, we conclude that the FDIC raised a genuine issue of fact as to whether the non-defendant directors of TIB may have been negligent, but that it did not produce any evidence that the non-defendant directors were active participants in wrongdoing or fraud.
Texas ease law provides little guidance to this court on this issue. Plainly in
Allen
the defendant director, who was sued for withdrawing funds from the corporation’s accounts, acted with more than mere negligence.
Allen,
We therefore turn to the law of other jurisdictions in order to predict how a Texas court would decide this issue. Before doing so, we remind ourselves that statutes of limitations are themselves expressions of important legislative policies and should not be judicially abrogated without due consideration of those policies. As the Texas Supreme Court has stated, statutes of limitations
afford plaintiffs what the legislature deems a reasonable time to present their claims and protect defendants and the courts from having to deal with eases in which the search for truth may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents or otherwise. The purpose of a statute of *1312 limitations is to establish a point of repose and to terminate stale claims.
Murray v. San Jacinto Agency, Inc.,
The development of the adverse domination doctrine under state law in recent years has occurred almost exclusively in federal courts, with many district courts predicting in the absence of controlling state precedent that the states in which they sit would adopt the doctrine.
See, e.g., Resolution Trust Corp. v. Kerr,
We do not believe that Texas courts would extend the “very narrow doctrine,”
Shrader & York,
California cases such as
Burt v. Irvine Co.,
The facts of the instant case demonstrate that the adverse domination theory is inappropriate when the majority of the board is merely negligent. The FDIC’s own evidence tended to show that most of TIB’s directors may have been negligent in failing to supervise the lending functions. Yet, at the same time, the board never concealed its “serious deficiencies” from examination by the OCC or anyone else. Even after the OCC notified TIB’s board of its shortcomings in supervising TIB’s lending function, there is no evidence to suggest that an organized majority coalesced to prevent any other parties from discovering the problems. Thus, the danger of fraudulent concealment by a culpable majority of a corporation’s board seems small *1313 indeed when the culpable directors’ behavior consists only of negligence, and the presumption of such concealment that underlies the adverse domination theory is unwarranted.
We therefore hold that, under Texas law, a corporate plaintiff cannot toll the statute of limitations under the doctrine of adverse domination unless it shows that a majority of its directors was more than negligent for the desired tolling period. 4 Because the FDIC’s summary judgment evidence, viewed in the light most favorable to the FDIC, showed only negligence on the part of the majority of TIB’s board of directors, summary judgment in favor of the defendants was proper.
IV.
For the foregoing reasons, we AFFIRM the judgment of the district court.
Notes
. Pub.L. No. 101-73, 103 Stat. 183 (1989).
. 12 U.S.C. § 1821(d)(14) provides:
(A) In general
Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the [FDIC] as conserva-, tor or receiver shall be—
(i) in the case of any contract claim, the longer of—
(I) the 6-year period beginning on the date the claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of—
(I) the 3-year period beginning on the date the claim accrues; or
(II) the period applicable under State law.
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such subparagraph shall be the later of—
(i) the date of the appointment of the [FDIC] as conservator or receiver; or
(ii) the date on which the cause of action accrues.
.
But see Smith,
. We need not address the issue of precisely how culpable a majority of directors must be before adverse domination tolling is available, and we accordingly express no opinion on the subject beyond today's holding that mere negligence is not enough.