United States District Court, D. Nebraska
FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Mid City Bank, Inc.; Plaintiff,
PATRICIA M. FITL, as Personal Representative of the Estate of James G. Fitl, Deceased; Defendant
MEMORANDUM AND ORDER
Smith Camp, Chief United States District Judge.
matter is before the Court on the Partial Motion to Dismiss
for Failure to State a Claim (“Motion to
Dismiss”) (Filing No. 33), filed by Defendant Patricia
Fitl (“Defendant”) as Personal Representative of
the Estate of James G. Fitl (“Fitl”), deceased,
and the Motion to Strike Certain Affirmative Defenses
(“Motion to Strike”) (Filing No. 42), filed by
Plaintiff Federal Deposit Insurance Corporation
(“FDIC”), as Receiver for Mid City Bank, Inc.
(“Bank”). For the reasons stated below, the
Motion to Dismiss will be denied and the Motion to Strike
will be granted in part.
following facts, alleged in the Amended Complaint (Filing No.
5), are assumed true for purposes of the Motion to Dismiss.
The Bank's main office and all four of its branch offices
were located in Omaha, Nebraska. (Filing No. 5 ¶ 10.)
Fitl served as its President from August 16, 1971, to
September 15, 2010, and as Chairman of its board from March
6, 1972, to October 8, 2010. (Id. ¶ 5.) During
that time, every Bank loan was made with Fitl's full
knowledge and direct approval. (Id. ¶ 12.)
August 13, 2009, the Bank operated under several versions of
a lending policy (“Loan Policy”), lacking any
practical guidance. (Id. ¶ 13.) None of these
versions mandated or provided any (i) processes for approval,
funding, and file documentation for loans; (ii) control and
oversight mechanisms; or (iii) risk management mechanisms.
(Id.) The Loan Policy did not include limits on
certain key metrics, such as debt-to-income ratio limits or
minimum credit scores. (Id. ¶ 14.) Some
versions lacked loan-to-value ratio limits. (Id.)
Loan Policy merely instructed the Bank's loan officers to
consider general factors in evaluating potential loans, such
as the borrower's financial condition, management
capability, plan of repayment, and the economic environment.
(Id.) The Loan Policy encouraged loan officers to
have “an accurate and thorough understanding of each
customer's financial needs and conditions” and
“complete confidence in the borrower's honesty and
integrity, and reasonable confidence in his ability to
repay.” (Id. ¶ 13.) Before the Loan
Policy's revision in 2009, loan documentation was
“nearly nonexistent.” (Id. ¶ 15.)
For several years, the Bank operated with no written policy
regarding loan approval authority for Bank management.
(Id. ¶ 16.)
2009, the Bank revised its Loan Policy to require maintenance
of a complete credit file on each borrower. (Id.
¶ 15.) The credit files contained information such as
collateral valuations and borrower financial information.
(Id.) Also in 2009, the Bank established a Loan
Committee to review and approve loans. (Id.)
FDIC alleges that approvals of seventeen loans (“Target
Loans”) by the Bank and Fitl between July 6, 2007, and
March 8, 2010, were deficient in at least one of the
following ways: (i) failure to analyze the borrowers' and
guarantors' ability to repay the loans; (ii) lending to
borrowers with inadequate cash flow; (iii) reliance on
outdated, unverified, and inadequate financial information
for borrowers and guarantors; (iv) failure to analyze the
value of collateral; (v) failure to require adequate
collateral for loans; (vi) failure to acquire adequate
appraisals; and (vii) lending outside the Bank's trade
market area. (Id. ¶ 17.)
these alleged deficiencies, Fitl approved the Target Loans.
(Id. ¶ 20.) In so approving, Fitl failed to
undertake analysis necessary to evaluate the Target Loans,
and violated Loan Policy requirements. (Id. ¶
18.) Fitl also approved loans without documentation, and
created no standard credit or loan memoranda prior to 2010.
(Id. ¶ 19.)
November 4, 2011, the Bank ceased operation, and the Nebraska
Department of Banking and Finance appointed the FDIC as the
Bank's receiver. (Id. ¶ 3.) Fitl died on
October 30, 2014. On November 3, 2014, the FDIC filed this
action against Fitl personally, seeking damages of $4, 018,
000.00 stemming from the approval of the Target Loans, and
asserting claims based on gross negligence under §
1821(k) of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") (“Count
I”), see 12 U.S.C. § 1821(k); and Breach
of Fiduciary Duty in violation of Nebraska Law (“Count
II”). The next day, November 4, 2014, the FDIC filed an
action in the County Court of Douglas County, Nebraska, to
name Galen Stehlik (“Stehlik”) as Special
Administrator for Fitl's estate, and the FDIC amended its
Complaint in this Court, naming Stehlik as a defendant in his
capacity as Special Administrator. (Id. ¶ 4.)
Although the Defendant acknowledges that the County Court
granted the FDIC's motion for appointment of Stehlik as
Special Administrator on November 4, 2014, the Defendant
alleges that the County Court did not issue formal letters of
appointment to Stehlik until the next day, November 5, 2014.
(Defendant's Brief, Filing No. 48 at 16; Answer, Filing
No. 35 ¶ 97.)
Motion to Dismiss: Rule 12(b)(6)
survive a motion to dismiss, the factual allegations in a
complaint, assumed true, must suffice ‘to state a claim
to relief that is plausible on its face.'”
Northstar Indus., Inc. v. Merrill Lynch & Co.,
576 F.3d 827, 832 (8th Cir. 2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint
must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). “[A]lthough a complaint need not
include detailed factual allegations, ‘a
plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.'” C.N. v. Willmar
Pub. Sch., Indep. Sch. Dist. No. 347, 591 F.3d 624, 629-
30 (8th Cir. 2010) (quoting Twombly, 550 U.S. at
555). “Instead, the complaint must set forth
‘enough facts to state a claim to relief that is
plausible on its face.'” Id. at 630
(quoting Twombly, 550 U.S. at 570).
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ritchie v. St. Louis Jewish Light,
630 F.3d 713, 716 (8th Cir. 2011) (internal quotation marks
omitted) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)). “Courts must accept . . . specific factual
allegations as true but are not required to accept . . .
legal conclusions.” Outdoor Cent., Inc. v.
GreatLodge.com, Inc., 643 F.3d 1115, 1120 (8th Cir.
2011) (internal quotation marks omitted) (quoting Brown
v. Medtronic, Inc., 628 F.3d 451, 459 (8th Cir. 2010)).
When ruling on a defendant's motion to dismiss, a judge
must rule “on the assumption that all the allegations
in the complaint are true, ” and “a well-pleaded
complaint may proceed even if it strikes a savvy judge that
actual proof of those facts is improbable, and ‘that a
recovery is very remote and unlikely.'”
Twombly, 550 U.S. at 555-56 (quoting Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974)). The complaint,
however, must still “include sufficient factual
allegations to provide the grounds on which the claim
rests.” Drobnak v. Andersen Corp., 561 F.3d
778, 783 (8th Cir. 2009).
Motion to Strike: Rule 12(f)
Federal Rule of Civil Procedure 12(f), “[t]he court may
strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous
matter.” Fed.R.Civ.P. 12(f). “[A] district court
enjoys ‘liberal discretion'” in ruling on a
Rule 12(f) motion to strike. Stanbury Law Firm v.
I.R.S., 221 F.3d 1059, 1063 (8th Cir. 2000) (quoting
Thor Corp. v. Automatic Washer Co., 91 F.Supp. 829,
832 (D.C. Iowa 1950)). “Despite this broad discretion
however, striking a party's pleadings is an extreme
measure, and, as a result, . . . ‘[m]otions to strike