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Universal Assurors Life Insurance Company, Commerce Bank of St. Joseph, N.A. v. Gary Holtsclaw, Third-Party Federal Deposit Insurance Corporation, 994 F.2d 467, 3rd Cir. (1993)
Universal Assurors Life Insurance Company, Commerce Bank of St. Joseph, N.A. v. Gary Holtsclaw, Third-Party Federal Deposit Insurance Corporation, 994 F.2d 467, 3rd Cir. (1993)
2d 467
Creath S. Thorne, St. Joseph, MO (Ronald S. Reed, Jr., on the brief), for
appellant.
J. Scott Watson, Washington, DC, argued (Richard J. Osterman, Jr. and
Ann S. DuRoss, on the brief), for appellee.
Before JOHN R. GIBSON, Circuit Judge, HEANEY, Senior Circuit
Judge, and BOWMAN, Circuit Judge.
HEANEY, Senior Circuit Judge.
In October 1985, First National was declared insolvent, and the FDIC was
appointed receiver. Commerce then entered into a "purchase and assumption"
agreement with the FDIC, pursuant to which Commerce acquired certain assets
and assumed certain liabilities of the insolvent First National. One of the
accounts transferred to Commerce was the demand checking account created in
Great Missouri's name in December 1983. The signature card for the account
named Great Missouri as the holder of the account and carried the signatures of
Gary Holtsclaw and Jeff Daum. In the "remarks" section of the card was the
notation "Trust Agreement--Bob Coil." For the purposes of this appeal, it is
assumed that Commerce did not receive a copy of the trust agreement from the
FDIC.1
In 1988, Commerce paid out all of the funds from the checking account in
question--a total of $46,190--upon the demand of Gary Holtsclaw. Upon
discovery of the funds' disbursal, Universal brought suit against Commerce
alleging breach of fiduciary duty, breach of contract, and violation of
provisions of the Uniform Commercial Code. It was not until after the funds
had been paid out that Commerce received a copy of the trust agreement from
Universal.
II
6
7 [FDIC] will indemnify and hold [Commerce] harmless from and against the
The
following:
8....
9 Any and all claims whatsoever not covered by [the previous clauses] and (a)
(5)
based upon any action or inaction by [First National], its directors, officers, or agents
prior to [October 11, 1985,] or (b) based upon the execution and delivery of the
Agreement or the consummation of the transactions contemplated thereby....
10
App. at 61. The indemnity agreement also included the following disclaimer: "
[E]xcept as expressly provided in this Indemnity Agreement, the [FDIC] shall
not be liable to [Commerce] for any action or inaction on the part of
[Commerce] after [October 11, 1985]." The purchase and assumption
agreement specifically provided that the FDIC would transfer to Commerce "
[s]ignature cards, orders, and contracts between [First National] and its
depositors, and records of similar character." App. at 45.
11
12
the first place, but that no liability could have arisen but for First National's
failure properly to record the trust agreement and the FDIC's failure to provide
Commerce with the same agreement.
13
14
15
The district court stated that the interpretation proposed by Commerce "serve[s]
to render the stated time limitation meaningless and obligate[s] the FDIC to
indemnify Commerce in perpetuity." Universal Assurors Life Ins. Co. v.
Commerce Bank, No. 906116-CV-SJ-2, slip op. at 8 (W.D.Mo. May 21, 1992).
We disagree. The time limitation in question simply precludes indemnification
for liability that arises from actions by Commerce. Commerce would not be
indemnified, for example, if it had been provided with all the proper
documentation but nonetheless paid out funds from the trust account without
Universal's approval after the date in question. Likewise, the FDIC would not
be obligated to indemnify Commerce anytime it might be sued over its handling
of one of the purchased accounts. The time limitation is not intended as a
termination point for all of the indemnification provided, and the agreement
contains no such ending date. The FDIC does appear to be obligated in
perpetuity to indemnify Commerce for the liability that falls within section
2(1)-(6), but that fact cannot support our reading the time limitation in one
Moving from the confines of our hypothetical to the case before us, we must
consider the significance of the remarks on the signature card. The FDIC
argues that regardless of the scope of the indemnity in our hypothetical
situation, liability in this case turns on the exercise of independent business
judgment by Commerce in ignoring the notation "Trust Agreement--Bob Coil."
FDIC further argues that such liability is expressly excluded from the
indemnity agreement. Commerce, of course, argues to the contrary. Though we
agree with the FDIC that a jury could find both that the notation put Commerce
on notice of the existence of the trust agreement and that Commerce should
reasonably have investigated the notation, we believe that resolution of this
issue through summary judgment is inappropriate at this stage in the
proceeding. On the record before us, it cannot be said that the FDIC "is entitled
to a judgment as a matter of law," Fed.R.Civ.P. 56(c), because this issue could
"reasonably be resolved in favor of either party." Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).
III
17
Having found that the FDIC was not entitled to summary judgment on the
record before us, we reverse the order of the district court and remand for
further proceedings consistent with this opinion.
The district court indicated in its order that "nothing in the file or pleadings
supports the allegation that either the FDIC or First National failed to record the
trust documents or convey them to Commerce." Universal Assurors Life Ins.
Co. v. Commerce Bank, No. 90-6116-CV-SJ-2, slip op. at 8 n. 3, 1992 WL
494970 (W.D.Mo. May 21, 1992). Though this finding did not control the
district court's ruling, the statement is nonetheless incorrect. Commerce
included with its response to the FDIC's motion an affidavit by William A.
Carpenter, Chairman of the Board of Commerce Bank, in which he states that
Commerce was first provided a copy of the trust agreement by Universal, that
the agreement "was not previously part of any records in the possession of or
made known to Commerce Bank," that Commerce "was never informed of the
existence of this agreement" by the FDIC or First National, and that the
agreement "was not part of the trust department business of the First National
Bank at the time that the Commerce Bank assumed that business and has never
been part of same." App. at 88. The FDIC supplied no counteraffidavit because
it argues that this fact is not material to the scope of the indemnification
agreement