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Federal Deposit Insurance Corporation v. Arthur

United States District Court, D. Maryland

March 2, 2015

FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR BRADFORD BANK, Plaintiff,
v.
DALLAS R. ARTHUR, et al., Defendants.

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

Plaintiff Federal Deposit Insurance Corporation ("FDIC"), as Receiver for Bradford Bank, brings this suit pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § 1821 ("FIRREA"). The FDIC seeks damages in excess of $7.4 million from Defendants Dallas R. Arthur, Mary Beth Taylor, Gilbert D. Marsiglia, and John O. Mitchell, III (collectively, "Defendants"), four former officers of Bradford Bank. Defendants filed a Joint Motion to Dismiss, or, in the Alternative, Motion for Summary Judgment (ECF No. 10). The Motion was fully and adequately briefed by both parties. The parties' submissions have been reviewed, and a hearing was held on February 24, 2015. See ECF No. 30. For the reasons that follow, Defendants' Joint Motion to Dismiss[1] (ECF No. 10) is GRANTED IN PART and DENIED IN PART. Specifically, it is GRANTED as to Plaintiff's negligence claims (Counts I and III), which are dismissed, but it is DENIED as to the gross negligence claims (Counts II and IV).

BACKGROUND

In a ruling on a motion to dismiss, this Court must accept the factual allegations in the plaintiff's complaint as true and construe those facts in the light most favorable to the plaintiffs. See, e.g., Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).

The FDIC was appointed as receiver for Bradford Bank ("the Bank") on August 28, 2009. Pl.'s Compl. ¶¶ 1-2, ECF No. 1. The FDIC brings this suit seeking damages in excess of $7.4 million from Defendants, four former officers of the bank. Id. FDIC alleges that Defendants were negligent, grossly negligent, and breached their fiduciary duties to the Bank by ignoring the Bank's Loan Policy and failing to exercise due care in recommending and/or approving seven commercial loan transactions, resulting in substantial losses to the Bank.[2] See Id. ¶¶ 2-6.

Defendant Dallas R. Arthur ("Arthur") was President of Bradford Bank from March 26, 2001, a director from July 18, 2001, and a member of the Bank's Loan Committee (the "Loan Committee") from February 20, 2002 until the Bank failed in 2009. Id. ¶ 8.

Defendant Mary Beth Taylor ("Taylor") was the Bank's Senior Executive Vice President of Commercial Lending from July 26, 2001, until she resigned on November 17, 2008. Id. ¶ 9. In this capacity, Taylor earned ten percent commissions on fees generated by the bank's commercial loan unit. Id.

Defendant Gilbert D. Marsiglia ("Marsiglia") was a director of the Bank beginning in February 19, 2003, and a member of the Loan Committee from July 23, 2003, until the Bank failed. Id. ¶ 10.

Defendant John O. Mitchell, III ("Mitchell") was a director of the Bank from April 20, 1983, and a member of the Loan Committee from February 29, 2002, until the Bank failed. Id. ¶ 11.

STANDARD OF REVIEW

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, 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). Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be granted. The purpose of Rule 12(b)(6) is "to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).

The Supreme Court's recent opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), "require that complaints in civil actions be alleged with greater specificity than previously was required." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citation omitted). The Supreme Court's decision in Twombly articulated "[t]wo working principles" that courts must employ when ruling on Rule 12(b)(6) motions to dismiss. Iqbal, 556 U.S. at 678. First, while a court must accept as true all the factual allegations contained in the complaint, legal conclusions drawn from those facts are not afforded such deference. Id. (stating that "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to plead a claim); see also Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012) ("Although we are constrained to take the facts in the light most favorable to the plaintiff, we need not accept legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments." (internal quotation marks omitted)).

Second, a complaint must be dismissed if it does not allege "a plausible claim for relief." Iqbal, 556 U.S. at 679. Under the plausibility standard, a complaint must contain "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555. Although the plausibility requirement does not impose a "probability requirement, " id. at 556, "[a] 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." Iqbal, 556 U.S. at 678; see also Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 291 (4th Cir. 2012) ("A complaint need not make a case against a defendant or forecast evidence sufficient to prove an element of the claim. It need only allege facts sufficient to state elements of the claim." (emphasis in original) (internal quotation marks and citation omitted)). In making this assessment, a court must "draw on its judicial experience and common sense" to determine ...


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