FDIC: 1991 - Docket No. FDIC-90-156c&b


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[¶5168B] In the Matter of Janice J. France, Berrien E. Moore, Ada P. Sands, Leonard S. Sands, Crowley & Cuneo, and Christensen, White, Miller, Fink & Jacobs, First Pacific Bank, Beverly Hills, California, Docket No. FDIC-90-156c&b (10-15-91).

Board denies motion for reconsideration of its decision in ¶5166A.

[.1] Practice and Procedure—Reconsideration—Standard

Reconsideration is granted only when petitioner states a valid reason for it, and sets forth relevant information that for good cause was not previously set forth.

In the Matter of
JANICE J. FRANCE,
BERRIEN E. MOORE,
ADA P. SANDS,
LEONARD S. SANDS,
CROWLEY & CUNEO, and
CHRISTENSEN, WHITE, MILLER, FINK & JACOBS
and FIRST PACIFIC BANK
BEVERLY HILLS, CALIFORNIA
(In Receivership)
DECISION AND ORDER ON
MOTION
FOR RECONSIDERATION
FDIC-90-156c&b

   The Federal Deposit Insurance Corporation ("FDIC") initiated this cease and desist proceeding on August 10, 1990 pursuant to section 8(b) and 8(c) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. § 1818(b) and (c). The Notice of Charges and of Hearing ("Notice") named First Pacific Bank, Beverly Hills, California ("Bank"), and certain individual Respondents, including Janice J. France, its chief executive officer, Berrien E. Moore, Ada P. Sands, and Leonard S. Sands ("Respondents"). The Notice was also issued to four law firms, including the law firms of Christensen, White, Miller, Fink & Jacobs and Crowley & Cuneo ("respondent law firms").¹ The Notice alleged that a total of $180,000 had been transferred from the Bank to the law firms with knowledge that the FDIC considered the Bank to be in an insolvent condition and subject to imminent closure by the state.
   On December 5, 1990, Respondent Janice J. France filed a Motion for Summary Judgment. Individual Respondents Berrien E. Moore, Ada P. Sands, and Leonard S. Sands, on December 19 and 21, 1990, filed Notices of Joinder to the Motion for Summary Judgment. The respondent law firms filed Motions for Summary Judgment on February 13 and 14, 1991. In Recommended Decisions dated March 19, 1991, and March 22, 1991, the Administrative Law Judge ("ALJ") recommended that the Motions for Summary Judgment be granted and that the Notice be dismissed as to each of the Respondents and the respondent law firms. In a Decision and Order issued July 16, 1991, the Board determined that the Motions for Summary Judgment should be denied and remanded the matter for a hearing before the ALJ to determine whether the transfers constituted an unsafe or unsound banking practice and whether restitution is appropriate.
   On August 1, 1991, Respondent Janice J. France filed a Motion for Reconsideration pursuant to 12 C.F.R. § 308.44(b). Respondent law firm Cuneo & Crowley, as well as Respondents Berrien E. Moore, Ada P. Sands, and Leonard S. Sands, and respondent law firm Christensen, White, Miller, Fink & Jacobs, also filed Motions for Reconsideration on August 13, 1991, and August 16, 1991, respectively. The motions request that the Board reconsider its Decision and Remand Order and find that there is no genuine issue of material fact relative to reimbursement or restitution under section 8(b)(6) of the FDI Act, 12 U.S.C. 1818(b)(6).

DISCUSSION

[.1] In order for a party to seek reconsideration from the Board, the Motion for Reconsideration must 1) specify the reasons why the Board should reconsider its decision and 2) set forth relevant information that for good cause shown was not previously set forth. 12 C.F.R. § 308.44(b). Respondents' and respondent law firms' motions must be denied because they fail to state any valid reasons why the Board should

¹ Nine additional respondents and two additional law firms were named in the Notice. However, only the specified Respondents and respondent law firms are before the Board of Directors ("Board") of the FDIC at this time.
{{4-30-92 p.A-1808.9}}reconsider its Decision and fail to present new information not previously considered by the Board.
   Respondents and respondent law firms raise essentially two issues in their motions. The first issue raised by the Respondents' and respondent law firms' filings is the question of when the time period for filing the Motions for Reconsideration begins to run. Section 308.44(b) provides that the motion should be filed fifteen days after issuance of the Board's decision. The date of issuance of the Board's Decision was July 16, 1991. The date of service of the Board's Decision and Order was July 25, 1991. The Office of the Executive Secretary informally gave the parties 15 days from the receipt of the Decision and Order to file a Motion for Reconsideration. Under the circumstances, the time period for filing the motions for reconsideration began to run upon the Respondents' and respondent law firms' receipt of the Decision and Order.
   Respondent France received the Decision and Order on July 29, 1991, and filed her motion on August 1, 1991. The law firm of Crowley & Cuneo received its Decision and Order on July 30, 1991, and filed its motion on August 13, 1991. Respondents Moore, Ada P. Sands, and Leonard S. Sands and the firm of Christensen, White, Miller, Fink & Jacobs received the Decision and Order on August 6 and August 7, respectively, and filed their motions on August 16, 1991. The Board finds that the filings in this case are timely.
   The Board in its July 16, 1991, Decision and Order denying Respondents' and respondent law firms' motions for summary judgment and remanding the proceeding to the ALJ, concluded that the ALJ had incorrectly interpreted the Hoffman² decision. On the issue of restitution, the Board determined that the statutory framework of section 8(b) of the FDI Act, 12 U.S.C. 1818(b), requires a determination whether an unsafe or unsound practice occurred or whether the violation or practice involved a reckless disregard for the law. Board Decision ("B.D."), at 17. The Board found that the record was insufficient to make such a finding and articulated a reasonableness standard for determining if an unsafe or unsound practice or violation or practice in reckless disregard of the law has occured when an insolvent institution has expended legal fees prior to closure.
   In ordering a remand of the case to the ALJ, the Board is requiring a full evidentiary hearing upon which to base such a determination. Among the factors to be analyzed in making that determination are: 1) the size of the retainer in relation to the size of the institution; 2) the existence of a retainer agreement; 3) the timing of the expense; and 4) the scope of services performed. B.D., at 15. To the extent that there is evidence in the record on these issues, the Board found it insufficient. In addition, the evidence was not presented in an adversarial setting, thus depriving the opposing party of an opportunity to evaluate its veracity and accuracy.
   As to Respondents' and respondent law firms' Motions for Reconsideration, the parties to the instant proceeding have not presented any evidence that alters the Board's conclusion. The statute provides the forum of a hearing to afford the parties an opportunity for cross-examination of the witness, and for full examination and clarification, as necessary, of the proffered documents. Such an exchange also gives the Board the benefit of a full and complete record on which to base its determination. The record before the Board was—and still is—devoid of such a full development of the evidence. The development of evidence on the above-specified issues is critical since, if no evidence is presented as to unsafe or unsound practices or violations which constitute a reckless disregard of law, no grounds for requiring restitution or reimbursement can exist in this proceeding.

CONCLUSION

For the foregoing reasons, the Board denies the Respondents' and respondent law firms' Motions for Reconsideration.

ORDER

   The Board, having reviewed the record and the applicable law, hereby orders that the Motions for Reconsideration are denied.
   By director of the Board of Directors.
   Dated at Washington, D.C., this 15th day of October, 1991.
   /s/ Hoyle L. Robinson
   Executive Secretary

² In the Matter of Harold A. Hoffman, et al., Alaska Continental Bank, 1990 FDIC Enf. Dec. (P-H) 5140, aff'd on appeal sub nom., Hoffman v. FDIC, 912 F.2d 1172 (9th CIr. 1990).

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