Federal Deposit Insurance Corporation, as Receiver for Carson River Community Bank v. Jacobs

Filing 162

ORDER denying 151 Motion to Stay. Signed by Judge Robert C. Jones on 9/16/14. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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FEDERAL DEPOSIT INSURANCE CORP.,

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Plaintiff,
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v.
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JAMES MICHAEL JACOBS et al.,
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Defendants.
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_______________________________________ )

3:13-cv-00084-RCJ-VPC
ORDER

This case arises out of the failure of a bank due to alleged malfeasance by its directors and

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officers in approving bad loans. Pending before the Court is a Motion to Stay (ECF No. 151). For

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the reasons given herein, the Court denies the motion.

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I.

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On February 26, 2010, the Financial Institutions Division of the Nevada Department of

FACTS AND PROCEDURAL HISTORY

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Business and Industry revoked the charter of non-party Carson River Community Bank (the “Bank”)

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and appointed Plaintiff Federal Deposit Insurance Corp. (“FDIC”) as receiver pursuant to 12 U.S.C.

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§ 1821(c). (See Compl. ¶¶ 4–5, Feb. 22, 2013, ECF No. 1). FDIC sued Defendant James M. Jacobs

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in this Court for gross negligence and breach of fiduciary duties, alleging that approximately $3.6

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million of the Bank’s losses were attributable to Jacobs’s malfeasance as director and member of the

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Senior Loan Committee. (See id. ¶¶ 6–7). Plaintiff alleges that Jacobs used his position to obtain

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approval for loans to uncreditworthy borrowers so that those borrowers could satisfy existing
troubled loans owed to other banks. (See id. ¶¶ 8–10).

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The First Amended Complaint (“FAC”) added Bank officers/directors Charlie Glenn, Daniel

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Dykes, Byron Waite, and Richard McCole as Defendants. (See generally First Am. Compl., June 13,

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2013, ECF No. 24). Jacobs answered and filed crossclaims for indemnification and contribution

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against co-Defendants, a counterclaim against the FDIC for an unspecified cause of action arising out

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of the FDIC’s alleged failure to mitigate damages by selling Bank assets in a commercially

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reasonable manner, and third-party claims against Barbara Sikora, Franklin Bishop, Walter Cooling

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for indemnity and contribution, against Jake Huber and Lillian R. Dangott for breach of guaranty,

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against Kathy Grant and Charles N. Grant for breach of guaranty, and against William V. Merrill,

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Kathy Lynn Merrill, and the Bill and Kathy Merrill Family Trust for breach of guaranty.

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(See Answer, Aug. 2, 2013, ECF No. 35).

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Co-Defendants conditionally settled for a total of $37,500: Glenn ($12,500); Dykes

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($10,000); Waite ($7500); and McCole ($7500). (See Settlement Agreement 3 ¶ 2, June 13, 2013,

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ECF No. 40-1). The FDIC asked the Court to rule under state law that the settlement was made in

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good faith. The Court denied that motion. The FDIC also moved to strike certain affirmative

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defenses, to dismiss the counterclaim, and to strike two unauthorized surreplies. The Court granted

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those motions. Jacobs moved for leave to amend the Answer. The Court denied that motion and

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later reconsidered in part, permitting Jacobs to amend his Answer to more particularly identify the

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legal bases of his defenses, although the Court noted such amendment would not be necessary to

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preserve those defenses. The Court later granted motions to voluntarily dismiss Defendants Dykes,

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Waite, and McCole and Third-Party Defendants Huber and Dangott, as well as Plaintiff’s motion to

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file a second amended complaint omitting the dismissed Defendants. Plaintiff filed the Second

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Amended Complaint (“SAC”). Jacobs has now asked the Court to stay the case.

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II.

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DISCUSSION
Jacobs notes that there is a pending action before this Court in which a corporate insurance

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company has sued Defendants in the present action for a declaration of non-liability based upon the

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alleged malfeasance at issue in this case. (See Bancinsure, Inc. v. Jacobs, No. 3:13-cv-302 (the “‘302

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Case”)). Bancinsure, Inc. is now known as Red Rock Insurance Co. (“Red Rock”). A state court in

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Oklahoma has ordered Red Rock to show cause why it should not be put into receivership based on
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its alleged insolvency. Jacobs argues that if Red Rock is put into receivership, Red Rock will likely

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be liquidated and the ‘302 Case terminated. He argues that his defense strategy in the present case

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may be affected by such events and that he would rather the present case were stayed so that he may

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prepare his defense strategy knowing whether Red Rock will be put into receivership and the ‘302

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case terminated.

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Plaintiff responds that the receivership of Red Rock would have no effect on the present case,

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unlike the ‘302 Case. The Court agrees that the availability of insurance via Red Rock has nothing

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to do with the claims against Defendants. Evidence of such insurance would not even be admissible

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at trial. See Fed. R. Evid. 411. The Court will not stay the present case based upon the potential

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liquidation of an insurance company with whom Defendants have allegedly contracted to help them

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satisfy a judgment in the present case. That issue concerns only Defendants’ ability to satisfy an

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eventual judgment. It has nothing to do with the merits of the present case.

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CONCLUSION

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IT IS HEREBY ORDERED that the Motion to Stay (ECF No. 151) is DENIED.

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IT IS SO ORDERED.

16 Dated: This 16th day of September, 2014.
Dated this 19th day of August, 2014.
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_________________________________
ROBERT C. JONES
United States District Judge

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