According to the Counterclaim, when the examination report was finally released in 1985, the information resulted in (a) the removal of Sunrise's senior management; (b) a material reduction in Sunrise's net worth; and (c) a Second Supervisory Agreement. Id. at P 17.
Deloitte argues that the Second Counterclaim arises from FSLIC's de facto takeover of Old Sunrise in April, 1985 as a result of the Second Supervisory Agreement, prior to FSLIC's appointment as receiver.
Among other things, Deloitte charges that FSLIC: caused the resignations of the president, chief lending officer and chief compliance officer of Sunrise; caused the resignation of senior experienced lending personnel of Sunrise; caused the resignation of most of Sunrise's experienced "work-out" personnel; and completely disabled Sunrise management from prudently administering Sunrise's loan portfolio. Deloitte's Second Counterclaim in Recoupment, at PP 5-10.
In addition, the Counterclaim alleges that FSLIC took over day-to-day control of such administration and managed Sunrise in a reckless, arbitrary and imprudent manner. Id. at PP 11-12. Deloitte claims that by superseding the remaining management of Sunrise and taking over its operations no later than June, 1985, FSLIC caused a cessation of all attempts to work out loans and all loan disbursements. Id. at P 14. Allegedly, FSLIC caused the shutdown of virtually every major Sunrise construction project, triggered defaults by borrowers and caused a run by Sunrise depositors. Id. at P 15.
The Second Counterclaim concludes that as a foreseeable result of the FSLIC takeover "FSLIC caused or substantially contributed to the insolvency of Sunrise. Said wrongful conduct proximately resulted in injury to [Deloitte]." Id. at P 16.
Deloitte asserts the Third Counterclaim against FDIC as successor-in-interest to Sunrise. Based on the allegations of the indictment of United States v. Jacoby, Crim. No. 87-6034, in the United States District Court for the Southern District of Florida, and the subsequent convictions of Robert C. Jacoby, the president of Old Sunrise, and Thomas Skubal, the vice president of Sunrise Mortgage Corporation, a wholly-owned subsidiary of Sunrise, Deloitte alleges that Jacoby, Skubal and William Frame committed intentional and negligent acts of fraud and deceit on behalf of Sunrise, which acts were intended to, and had the effect of, impeding, frustrating and interfering with Deloitte's audit of Sunrise. Deloitte's Third Counterclaim, at P 3.
This Counterclaim seeks an affirmative recovery against FDIC as successor-in-interest to Sunrise for all damages inflicted upon Deloitte by the criminal and negligent acts committed by the senior management of Sunrise on behalf of the institution.
C. Deloitte's Affirmative Defenses
FDIC also moves to strike certain of the affirmative defenses asserted by Deloitte. The affirmative defenses at issue, which essentially fall into four groups, are as follows:
1. Deloitte's Sixth Affirmative Defense, which is based on the comparative negligence of Old Sunrise's management, and the Twenty-First Affirmative Defense, which enumerates various defenses against FDIC as successor-in-interest to Sunrise.
2. Deloitte's Seventh and Tenth Affirmative Defenses, which, in effect, allege that FDIC is "equitably estopped" from suing Deloitte by reason of the conduct charged in Deloitte's First Counterclaim.
3. Deloitte's Fourth, Eleventh, Thirteenth and Seventeenth Affirmative Defenses, which are based on the imputation to FDIC's predecessor-in-interest, i.e., Old Sunrise, of the criminal and negligent acts of former senior Sunrise management.
4. Deloitte's Twentieth Affirmative Defense, which incorporates by reference defenses asserted by Deloitte's co-defendants, some of which were stricken by this Court in a July, 1987 decision.
A. The First and Second Counterclaims
FDIC argues that the Court lacks subject matter jurisdiction over Deloitte's First and Second Counterclaims because they are barred by the doctrine of sovereign immunity unless brought pursuant to the terms of the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346(b), 2671 et seq. Deloitte responds that its First and Second Counterclaims are claims in recoupment which are not barred because when a federal agency institutes an action it waives the defense of sovereign immunity as to all counterclaims in recoupment.
The FTCA is the exclusive remedy for tort claims against the federal government. 28 U.S.C. § 2679; Federal Deposit Ins. Corp. v. Cheng, 787 F. Supp. 625, 631 (N.D.Tex. 1991). Under the FTCA, claims against a federal agency normally must be brought against the United States and not the agency. Federal Savings and Loan Ins. Corp. v. Burdette, 696 F. Supp. 1183, 1185, n.2 (E.D.Tenn. 1988).
There is an exception to this rule, however: where a federal agency brings a suit the defendant may counterclaim against the agency for recoupment. Federal Deposit Ins. Corp. v. Lattimore Land Corp., 656 F.2d 139, 143 (5th Cir. 1981); Burdette, 696 F. Supp. at 1185, n.2; see also Livera v. First Nat'l State Bank, 879 F.2d 1186, 1195-96 (3d Cir. 1989).
Recoupment is defined as "the right of the defendant to have the plaintiff's monetary claim reduced by reason of some claim the defendant has against the plaintiff arising out of the" transaction or occurrence giving rise to the plaintiff's claim. Federal Savings and Loan Ins. Corp. v. Smith, 721 F. Supp. 1039, 1042 (E.D.Ark. 1989). In Frederick v. United States, 386 F.2d 481, 488 (5th Cir. 1967), the Court held:
When the sovereign sues it waives immunity as to claims of the defendant which assert matters in recoupment -- arising out of the same transaction or occurrence which is the subject matter of the government's suit, and to the extent of defeating the government's claim but not to the extent of a judgment against the government which is affirmative in the sense of involving relief different in kind or nature to that sought by the government or in the sense of exceeding the amount of the government's claims; but the sovereign does not waive immunity as to claims which do not meet the "same transaction or occurrence test" nor to claims of a different form of nature than that sought by plaintiff. . . .
Id. at 488.
Thus, a claim for recoupment is akin to a compulsory counterclaim. Fed.R.Civ.P. Rule 13(a) requires that compulsory counterclaims be brought so that all related controversies between the parties to a single suit may be resolved at one time. Banco Nacional De Cuba v. Chase Manhattan Bank, 658 F.2d 875, 885 (2d Cir. 1981). The assertion of what is alleged to be a compulsory counterclaim requires that the counter-defendant and the plaintiff be the same entity, and, as a result, if a party sues in one capacity the defendant may not counterclaim against plaintiff in another capacity. Id.
The FDIC argues that Deloitte's First and Second Counterclaims are not compulsory counterclaims in recoupment because they are brought against FDIC as regulator and not FDIC as assignee of Sunrise's claims and thus have not been brought against the party who has asserted the original claim. Deloitte asserts that the Counterclaims are made against FDIC-Corporate, the entity that owns the claims against Deloitte and the real-party-in-interest.
It is well-settled that the FDIC can operate in separate and independent capacities. Cheng, 787 F. Supp. at 634 ; Federal Deposit Ins. Corp. v. Berry, 659 F. Supp. 1475, 1481 (E.D.Tenn. 1987) (FDIC-Receiver and FDIC-Corporate are two separate entities). Courts repeatedly have recognized that counterclaims cannot be asserted against the FDIC in a capacity other than that in which it brings the action. See Cheng, 787 F. Supp. at 634 ; Smith, 721 F. Supp. 1039, 1042-43 (E.D.Ark. 1989).
In Federal Deposit Ins. Corp. v. Manatt, 723 F. Supp. 99 (E.D.Ark. 1989), the FDIC in its corporate capacity purchased from the FDIC as receiver certain assets and interests of an insolvent bank and, as assignee, brought suit against various officers and directors of the bank. Defendant Williams filed a counterclaim alleging that the FDIC negligently supervised the Bank's operations, was negligent in liquidating the Bank's assets and made false representations. The Court rejected Williams' contention that his counterclaim was compulsory because it was "directed towards the FDIC's acts as a federal regulator, not to FDIC's status as assignee of the Bank's claim" and thus, the counterclaim was "not asserted against the 'same party' as plaintiff. . . ." Id. at 103. Moreover, for the same reasons the Court held that Williams' counterclaim was not one for recoupment. Id. at 104.
In Cheng, 787 F. Supp. at 625 , the FDIC brought suit as the assignee of the claims of Guaranty Federal Savings and Loan Association and defendants E.F.Hutton and Shearson Lehman Hutton Holdings, Inc. filed a counterclaim seeking recoupment from the FDIC for any damages for which defendants were found liable.
The Court held that Hutton's counterclaim did not meet the requirement of Fed.R.Civ.P. Rule 13(a) because it was directed toward the Federal Home Loan Bank Board's ("FHLBB")
and FSLIC's acts as a federal regulator and not toward the FDIC in its capacity as assignee of Guaranty's claim. Id. at 632. Because Hutton's counterclaim "concerns only the regulatory activities of the FHLBB," the allegations did not state a claim, "for recoupment or otherwise," against the FDIC and was not asserted against the "'same party' as Plaintiff." Id. at 632-33. As is explained in Federal Deposit Ins. Corp. v. Berry, 659 F. Supp. 1475 (E.D.Tenn. 1987), where the FDIC brings an action as an assignee of a failed bank's claims,
the FDIC in such capacity steps into the shoes of [the failed bank] as plaintiff in this suit. As such the FDIC/Corporation is not subject to defenses asserted against it for actions prior to the assignment . . . . Since the . . . negligence counterclaims involve actions prior to the assignment upon which this action is based, these defenses and counterclaims as a matter of law are not assertable against the plaintiff.
Id. at 1482-83. See also Cheng, 787 F. Supp. at 634 (quoting Berry).
In this case, FDIC brought its claims against Deloitte in its corporate capacity as assignee of Old Sunrise's claims. Although the assignment did not take place until January 2, 1986, Deloitte's First Counterclaim alleges misrepresentations based upon the alleged conduct of federal bank examiners in a 1984 examination and its Second Counterclaim alleges that FSLIC managed Sunrise in a reckless manner after assuming day-to-day control over the institution in April, 1985.
Because the Counterclaims involve alleged actions prior to the assignment upon which the FDIC's action is based and because, pursuant to Berry, the FDIC in its corporate capacity is not subject to defenses asserted against it for actions prior to the assignment, these Counterclaims are not assertable against plaintiff. Moreover, I am persuaded by Manatt and Cheng that FDIC as regulator and FDIC in its corporate capacity as assignee of Sunrise's claims are two separate entities. Because Deloitte's First and Second Counterclaims are not directed at the party that brought this action, the Court lacks jurisdiction to hear them. Accordingly, I will dismiss the First and Second Counterclaims.
B. The Third Counterclaim
The Third Counterclaim seeks an affirmative recovery against FDIC as successor-in-interest to Sunrise for all damages inflicted upon Deloitte by the criminal and negligent acts committed by the senior management of Sunrise on behalf of Sunrise. FDIC argues that the Counterclaim should be dismissed because it did not bring this action as the successor-in-interest of Old Sunrise and because, even if such conduct could be imputed to an ordinary assignee, the conduct of Old Sunrise's officers and directors cannot be imputed to FDIC. Deloitte responds that FDIC is the successor-in-interest of Old Sunrise and that the actions of Old Sunrise's officers and directors properly should be imputed to Old Sunrise and thus to FDIC.
FDIC contends that the plaintiff in this action, "FDIC in its corporate capacity as an instrumentality of the United States and as assignee of claims for damages arising out of the wrongful acts of the former officers, directors, attorneys and auditors of Old Sunrise," is not the successor-in-interest to Old Sunrise. FSLIC's Reply to DH &S' Opposition to FSLIC's Motion to Dismiss Counterclaims and to Strike Affirmative Defenses, at 3. It contends further that in the Fiduciary Duty Case plaintiff "is FDIC in its corporate capacity as assignee of Old Sunrise's claims against its officers, directors, attorneys and accountants. . . . Only the claims that are the subject of this action -- just a portion of Old Sunrise's assets -- were transferred to FSLIC-Corporate; the liabilities remain with the Receiver." Memorandum In Support of FSLIC's Motion to Dismiss Counterclaims and Strike Affirmative Defenses of DH &S, at 28-29. Accordingly, FDIC argues that it is not the "opposing party" against whom this Counterclaim may be asserted under Fed.R.Civ.P.Rule 13.
Deloitte counters that in reality FDIC is the successor-in-interest to Old Sunrise in that, since New Sunrise no longer exists, FDIC-Corporate ultimately is the only party with an economic stake in the outcome of the case. Moreover, claiming that FDIC-Receiver is only a representative through which the burdens and benefits of claims by and against Deloitte ultimately will flow, Deloitte argues that FDIC-Corporate cannot claim "capacity" distinctions to avoid the fact that it is the real opponent here.
I do not believe that the distinction between successor-in-interest and assignee is determinative in the instant case. Although there is no dispute that FDIC is the assignee of Old Sunrise's claims against Deloitte, it is not readily apparent that the FDIC is certain as to whether it brought this suit as the successor-in-interest to Old Sunrise. In its memoranda in support of its motion, it argues that it is merely the assignee since only a portion of Old Sunrise's assets -- the claims that are the subject of this action -- were transferred to FSLIC-Corporate and Old Sunrise's liabilities remain with the Receiver. Yet in a prior motion in this action, which dealt with the compelled production of discovery, FDIC (at that time FSLIC) argued that FSLIC-Corporate was successor-in-interest to Sunrise, "since all rights against Blank Rome 'previously held by FSLIC-Receiver have been assigned to FSLIC-Corporate.'" In re Sunrise Securities Litigation, 130 F.R.D. 560, 564 (E.D.Pa. 1989), quoting FSLIC's Reply to Blank Rome's Response to FSLIC's Motion to Compel, at 2.
In light of that statement and in light of the fact that FDIC has not produced any case law in support of its proposition, I conclude that Deloitte's Counterclaim meets the "opposing party" requirement of Rule 13.
2. Imputation of officers' and directors' conduct
FDIC also asserts that the Third Counterclaim should be dismissed because the conduct of Old Sunrise's officers and directors cannot be imputed to it.
In Federal Deposit Ins. Corp. v. Ernst & Young, 967 F.2d 166 (5th Cir. 1992), the FDIC as receiver for the failed Western Savings and Loan Association brought suit against the accounting firm that audited the association, alleging negligence and breach of contract. The FDIC brought the suit only as the assignee of a claim by Western against the auditors.
While recognizing that certain situations require courts to treat the FDIC differently from other assignees, the Court of Appeals for the Fifth Circuit held that the FDIC is not entitled to special protection when it brings a tort claim against a third party on behalf of a defunct financial entity. Id. at 170. The Court reasoned: "No statutory justification or public policy exists to treat the FDIC differently from other assignees when the FDIC as a matter of choice in this case has limited its claim to that of an assignee." Id.
At least one other Court of Appeals, however, has held that a public policy does exist which justifies treating the FDIC differently from other assignees. In Federal Deposit Ins. Corp. v. O'Melveny & Meyers, 969 F.2d 744 (9th Cir. 1992), the FDIC as receiver for the failed savings and loan association American Diversified Savings Bank ("ADSB") sued a law firm, claiming professional negligence in connection with its legal advice and services to ADSB. In a summary judgment motion, O'Melveny argued that the conduct of ADSB's wrongdoing officers must be imputed to ADSB, that FDIC as receiver stood in the shoes of ADSB and, therefore, that as an ordinary assignee FDIC was barred from pursuing any claims against O'Melveny.
The Court of Appeals for the Ninth Circuit rejected O'Melveny's arguments, holding that federal, not state, law governs the application of defenses against FDIC. Id. at 751.
After noting that it was permitted to incorporate state law to provide the federal rule of decision but was not bound to do so, the Court turned to "the age-old principles that equity does equity" and concluded that "equitable defenses good against a bank do not carry over against the bank's receiver." Id. The Court explained:
A receiver, like a bankruptcy trustee and unlike a normal successor in interest, does not voluntarily step into the shoes of the bank; it is thrust into those shoes. It was neither a party to the original inequitable conduct nor is it in a position to take action prior to assuming the bank's assets to cure any associated defects or force the bank to pay for incurable defects. This places the receiver in stark contrast to the normal successor in interest who voluntarily purchases a bank or its assets and can adjust the purchase price for the diminished value of the bank's assets due to their associated equitable defenses. In such cases, the bank receives less consideration for its assets because of its inequitable conduct, thus bearing the cost of its own wrong.