The opinion of the court was delivered by: Richard Mills, District Judge:
This cause is before the Court on a motion in limine filed
on behalf of Plaintiff, Federal Deposit Insurance Corporation
(FDIC). Also before the Court is a matter styled "Memorandum
of Defendants on Propriety of Expert Testimony."
Plaintiff, in its motion in limine, requests that this Court
exclude any evidence purporting to diminish the FDIC's right
of recovery by virtue of decisions made by it in connection
with the collection of the assets of the Coffeen National
Bank. In support of its motion, Plaintiff cites Federal Savings
& Loan Insurance Corp. v. Roy (D.Md. June 28, 1988) (available
on Westlaw, 1988 WL 96570). That case involved an action by the
FSLIC against former officers and directors of a failed
Maryland savings and loan. The FSLIC alleged that the
defendants were negligent in approving and recommending 27
commercial loans. The loans allegedly resulted in losses
totaling more than $40 million.
The defendants attempted to assert the affirmative defenses
of contributory negligence and assumption of risk. They
asserted that if the FSLIC's own negligence caused or
contributed to its losses, its claims would be barred or
reduced. The court recognized that the defendants' position
would have merit in an ordinary tort case but held that the
case before it was not an ordinary tort case but instead arose
within a special context invoking special considerations of
public policy. The court stated that the FSLIC had been
created to preserve the integrity of the national banking
system by providing an insurance fund to cover the deposits of
failed institutions. The FSLIC owed no duty to the
institutions or their officers and directors. Rather, the
court stated, the public is the intended beneficiary of the
FSLIC. It would be contrary to sound public policy to have the
public bear the risk of errors of judgment by officials of the
FSLIC. Thus, the court found that FSLIC's alleged negligence
was immaterial to the issues of the case.
Defendants, in their response to the motion in limine,
assert that they intend to introduce evidence that as to
certain loans there existed sources of repayment, and thus
FDIC incurred no loss. Defendants assert that FDIC was on
notice that there would be a source of repayment for certain
loans but that FDIC sold the loans as part of a bulk sale.
Thus, Defendants argue, because Plaintiff may have been able
to collect on these loans, there was no loss attributable to
The Court agrees with the position taken by the district
court in Roy. Public policy concerns mandate a finding that the
duty of FDIC to collect on assets of a failed institution runs
to the public and not to the former officers and directors of
the failed institution. Thus, the decision of the FDIC that it
would be more cost effective to sell certain loans as part of a
bulk sale rather than incur the considerable expense involved
in collecting certain assets cannot be the basis of reduction
of FDIC's claims.
The defendants attempted to assert the affirmative defense
of contributory negligence claiming that the FDIC as receiver
had failed to maximize the recovery available on a number of
bad loans after the bank's failure. The court cited
Roy with approval and found that FDIC as receiver owed no duty
to the officers and directors to collect bad loans without
negligence. In addition, the court cited a long line of cases
holding that FDIC has no duty to warn banks of improprieties
its examinations reveal in order to protect the bank from
losses. See, e.g., First State Bank of Hudson County v. United
States, 599 F.2d 558 (3d Cir. 1979); Harmsen v. Smith,
586 F.2d 156 (9th Cir. 1978); Federal Deposit Insurance Corp. v.
Butcher, 660 F. Supp. 1274 (E.D.Tenn. 1987); Federal Savings and
Loan Insurance Corp. v. Williams, 599 F. Supp. 1184 (D.Md.
Evidence purporting to diminish the FDIC's right of recovery
by virtue of decisions made by it in connection with the
collection of the assets of the Coffeen National Bank is
immaterial to the issues in the case at bar. Thus, Plaintiff's
motion in limine will be allowed.
II — Propriety of Expert Testimony
Also before the Court is a matter styled "Memorandum of
Defendants on Propriety of Expert Testimony." Defendants seek
to limit the use of expert testimony by Plaintiff for several
reasons. First, Defendants allege that the loan transactions
in issue are not complicated, that the average juror would
have no difficulty understanding the issues, and that expert
testimony will be unduly prejudicial.
"If scientific, technical, or other specialized knowledge
will assist the trier of fact to understand the evidence or to
determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may
testify thereto in the form of an opinion or otherwise."
Fed.R.Evid. 702. The Court finds that expert testimony will
assist the trier of fact to understand the evidence or
determine facts in issue. Thus, expert testimony is proper.
Second, Defendants cite Panter v. Marshall Field & Co.,
646 F.2d 271 (7th Cir. 1981), cert. denied, 454 U.S. 1092, 102
S.Ct. 658, 70 L.Ed.2d 631 (1981), for the proposition that the
Seventh Circuit has indicated that expert testimony on the
standard of conduct expected of directors should not be
permitted. The Court, however, does not agree with Defendants'
characterization of Panter. The Panter court simply stated that
an expert may not usurp the court's function of determining the
appropriate legal ...