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RESOLUTION TRUST CORP. v. GARDNER

July 30, 1992

The Resolution Trust Corporation, Plaintiff,
v.
Michael R. Gardner, Defendant.



The opinion of the court was delivered by: CHARLES R. RICHEY

 Before the Court are the parties' cross-motions for partial summary judgment on the statute of limitations defense raised as to certain claims, and the plaintiff's motion to amend the complaint in the above-captioned case. The Court has carefully considered the submissions of the parties, the applicable law, and the entire record herein, and concludes that the plaintiff's motion to amend the complaint must be granted. The Court also finds that the statute of limitations in this case was tolled under the equitable doctrine of adverse domination. Therefore the plaintiff's motion for partial summary judgment shall be granted, and defendant's motion for partial summary judgment shall be denied.

 I. Background

 The RTC bases its case on seven payments made to the defendant by Lincoln and LinCom between May 3, 1985 and December 4, 1986, which total $ 1.5 million. *fn1" Pl. Statement of Material Facts as to Which There is No Genuine Issue ("Pl. Facts") P 37. *fn2" It is undisputed that at all times relevant to this action, the business decisions of Lincoln were controlled by Keating, although Keating never held any official title or office at Lincoln. Pl. Facts P 5. On April 14, 1989, the Federal Home Loan Bank Board ("FHLBB") found that Lincoln was in unsafe condition for conducting business and that there had been a substantial dissipation of assets. FHLBB placed Lincoln into conservatorship under the management of the Federal Deposit Insurance Corporation ("FDIC"). Pl. Facts P 6. All directors were removed from authority by the federal regulators. Pl. Facts P 8. On August 9, 1989, Lincoln was placed into receivership and with the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), Pub. L. No. 101-073 (1989), the RTC became Conservator for Lincoln. On March 7, 1991, the RTC became receiver of Lincoln. Pl. Facts P 6.

 During the periods relevant to this action, Lincoln and LinCom's directors included Judy T. Wischer, Charles Keating, III ("Keating III"), Robert J. Kielty, Robert J. Hubbard, Jr., Andre A. Niebling, Kathryn Leary, Andrew F. Ligget, Bruce Dickson, and Mark S. Sauter. Pl. Facts PP 13-17. In addition, Wischer, Niebling, Sauter, Kielty, Hubbard, Robert Wurzelbacher and Dickson served as officers of Lincoln or LinCom or both at some time between January 1985 and April 14, 1989. Pl. Facts PP 18-21.

 Almost all of these individuals have acknowledged civil or criminal liability for the management of Lincoln, or have been found liable in court. Keating has been convicted of securities fraud and is incarcerated. Id. P 22. Keating III has been indicted for bank fraud and is scheduled for trial in August 1992. He has been sued by the RTC for racketeering, breach of fiduciary duty and negligence and has consented to entry of judgment against him in the amount of $ 30 million. Id. P 23. Wischer pled guilty to bank fraud in connection with her participation in the management of Lincoln. She has been sued by the RTC for racketeering, breach of fiduciary duty and negligence and has consented to entry of judgment against her in the amount of $ 25 million. Id. P 24.

 Also, Kielty has been sued by the RTC for racketeering, breach of fiduciary duty and negligence and has consented to entry of a judgment for the RTC in the amount of $ 25 million. Id. P 28. Hubbard has been sued by the RTC for racketeering, breach of fiduciary duty and negligence and has consented to entry of a judgment for the RTC in the amount of $ 15 million. Id. P 29. Niebling has been sued for breach of fiduciary duty and negligence and has consented to entry of a judgment for the RTC in the amount of $ 5 million. Id. P 30. The only other officer during the relevant period, Wurzelbacher, has not been subjected to civil or criminal liability; however, he has been indicted for criminal fraud. Id. P 31.

 The defendant had his first substantial contact with Keating during the presidential campaign of Secretary John Connally in 1978-79, for which Gardner was general counsel and Keating was an active fund raiser and senior campaign member. Def. Statement of Material Facts as to Which There Is No Genuine Issue ("Def. Facts") P 1. In 1982, Gardner became a partner in the Washington, D.C. office of the law firm of Akin, Gump, Strauss, Hauer & Feld ("Akin Gump") where he established and directed the firm's communications practice. Def. Facts P 2. In 1983, American Continental Corporation ("ACC") *fn3" became a client of Akin, Gump regarding communications-related matters, and, in addition, Keating consulted Gardner on a variety of business questions in the communications area. Gardner recommended that ACC enter the broadcasting business. Def. Facts PP 4-5.

 The parties dispute the substance of the advice the defendant gave to Keating; however, it is undisputed that their discussions involved participation by ACC and Lincoln in the communications field and possible takeover candidates. See Def. Facts PP 4-5; Pl. Statement of Genuine Issues and Disputed Facts at 1. The parties also dispute the nature of the payment arrangement by which the monies at issue in this case were paid to Gardner. It is undisputed, however, that timing and amounts of individual payments were not specifically agreed upon. See Pl. Facts P 42; Def. Statement of Material Facts as to which There Is a Genuine Issue P 42. The parties agree that the defendant has never served as a director, officer, or employee of ACC, Lincoln, LinCom, or any related entity. Def. Facts PP 20-22.

 II. Analysis

 The parties dispute whether the statute of limitations has expired on all claims arising from the 1985 payments, which total one million dollars. The statute of limitations issue was previously raised by the defendant on a motion to dismiss, which the Court denied on March 25, 1992. See Memorandum Opinion filed March 25, 1992. The Court declined to dismiss the 1985 claims at that time, holding that a ruling on the issue was premature in a motion to dismiss because there were factual issues which would affect the decision. Id. The plaintiff has also filed a motion for leave to amend the complaint to include a count of legal malpractice. The Court shall consider each of these motions in turn.

 A. Cross-Motions for Partial Summary Judgment on the Statute of Limitations Defense

 Rule 56(c) of the Federal Rules of Civil Procedure requires that the Court grant a motion for summary judgment if the pleadings and supporting affidavits and other submissions "show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." "The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmovant]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). However, it is well established that the Court must believe the non-movant's evidence and draw all justifiable inferences in its favor. Id. at 255.

 Under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), the RTC may assert claims acquired from the financial institutions for which it is appointed receiver or conservator. FIRREA prescribes ...


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