Federal Deposit Insurance Corporation v. Hawker et al

Filing 59

ORDER for further briefing - Accordingly, it is HEREBY ORDERED that on or before Wednesday, April 18, 2013, Plaintiff shall file a brief addressing the issue of prejudgment interest. On or before Wednesday, May 1, 2013, Defendant shall file a responsive brief. Order signed by Magistrate Judge Stanley A Boone on 3/14/2013. (Hernandez, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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FEDERAL DEPOSIT INSURANCE
CORPORATION,

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Case No. 1:12-cv-00127-SAB
ORDER FOR FURTHER BRIEFING

Plaintiff,
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v.
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THOMAS T. HAWKER, et al.,
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Defendants.
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On January 7, 2013, Plaintiff Federal Deposit Insurance Corporation, as receiver for
County Bank (“Plaintiff”) filed a motion for default judgment. (ECF No. 35.) Upon review of
Plaintiff’s motion and the evidence submitted at the hearing that took place on February 13, 2013,
the Court finds that further briefing is necessary on the issue of prejudgment interest.
Plaintiff and Defendant discussed the applicability of California Civil Code § 3287 with
respect to prejudgment interest. Presumably, the parties analyzed state law because Plaintiff
asserted state law claims and, generally, the Court looks to state law for the appropriate measure
of damages. See Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S.
257, 278 (“In a diversity action, or in any other lawsuit where state law provides the basis of
decision” propriety of a particular form of damages is question of state law.); Clausen v. M/V
NEW CARISSA, 339 F.3d 1049, 1064-65 (9th Cir. 2003) (proper measure of damages is

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substantive in nature and inseparably connected with the right of action).

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However, Plaintiff also cited 12 U.S.C. § 1821(l) in its brief requesting prejudgment

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interest, which on its face sets forth the remedies available to the FDIC in cases such as this one.

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Section 1821(l), entitled “Damages,” states that “[i]n any proceeding related to any claim against

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an insured depository institution’s director, officer, [etc.] ... recoverable damages determined to

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result from the improvident or otherwise improper use or investment of any insured depository

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institution’s assets ... shall include ... appropriate interest.” 12 U.S.C. § 1821(l). Plaintiff

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interprets this language as authorizing prejudgment interest but Plaintiff’s analysis only addresses

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whether prejudgment interest is appropriate under state law. Plaintiff did not address why Section

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1821(l) should be interpreted to authorize a prejudgment interest award under state law standards.

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In the Court’s view, further analysis is necessary to determine the purpose of Section 1821(l) and

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the interplay between this federal statute and the state law claims brought by plaintiff.

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The Court will order further briefing from the parties on the issue of prejudgment interest
under Section 1821(l). Specifically, the Court will order the parties to brief the following issues:

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1) Does Section 1821(l) authorize an award of prejudgment interest in accordance with state

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law standards when a state law claim is brought, see generally California Civil Code §

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3287, or does Section 1821(l) authorize an award of prejudgment interest in accordance

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with federal law standards, see generally U.S. v. Gordon, 393 F.3d 1044, 1058-59 (9th

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Cir. 2004) (discussing prejudgment interest in federal cases)?

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2) Does “appropriate interest,” as the phrase is used in Section 1821(l), refer to an

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appropriate rate of interest or does it refer to appropriate circumstances warranting an

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award of interest? See Grant Thornton, LLP v. FDIC, 435 Fed. Appx. 188 (4th Cir.

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2011);

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3) If Section 1821(l) authorizes an award of prejudgment interest, how does the availability

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of this federal prejudgment interest remedy coexist with the corresponding state

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prejudgment interest remedy when asserting a state law claim (i.e., does Section 1821(l)

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preempt state law prejudgment interest laws, does it establish a minimum or a “floor” on

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the measure of damages that can be exceeded if state law so provides, should Plaintiff be
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required to elect to recover under state law or federal law, or should Plaintiff be permitted

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to recover under either state or federal law)? and

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4) If Section 1821(l) authorizes an award of prejudgment interest under federal law

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standards, what amount of interest should be awarded in this case, if any (i.e., what rate of

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interest applies)?

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Since Plaintiff is the party requesting the award of prejudgment interest, the Court orders

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Plaintiff to first submit a brief on the aforementioned issues.

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responsive brief thereafter. No further reply briefing will be permitted unless leave of Court is

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first obtained.

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Accordingly, it is HEREBY ORDERED that:

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1.

The Defendant shall file a

On or before Wednesday, April 18, 2013, Plaintiff shall file a brief addressing the

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issue of prejudgment interest under 12 U.S.C. § 1821(l) as set forth above;
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On or before Wednesday, May 1, 2013, Defendant shall file a responsive brief.

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IT IS SO ORDERED.

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Dated:
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March 14, 2013

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DEAC_Signature-END:

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_

UNITED STATES MAGISTRATE JUDGE
i1eed4

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