The opinion of the court was delivered by: Richard Mills, District Judge:
Will the adverse domination doctrine be applied in
Illinois? If so, does it toll the statute of limitations? Let
Security Savings and Loan Association, F.A. located in
Peoria, Illinois, (Security) was a federally chartered savings
and loan which was placed into receivership by the Office of
Thrift Supervision on August 17, 1989. The Office of Thrift
Supervision appointed the Resolution Trust Corporation (RTC) as
Security's receiver. On August 14, 1992, the RTC filed this
lawsuit against the former President, Senior Vice-President and
Directors of Security, alleging negligence and gross
negligence, breach of fiduciary duty and breach of contract.
This Court dismissed the negligence, breach of fiduciary duty
and breach of contract claims, and that dismissal has been
affirmed by the United States Court of Appeals for the Seventh
Circuit on interlocutory appeal. Resolution Trust Corp. v.
Chapman, 29 F.3d 1120 (7th Cir. 1994).
After receiving the Seventh Circuit's mandate, the RTC filed
an Amended Complaint alleging gross negligence against the
Senior Vice-President and the former Directors.*fn1 The Senior
Vice-President, Richard Robinson, died shortly before the
Amended Complaint was filed and the parties subsequently agreed
to dismiss all claims against Mr. Robinson. Accordingly, all
were formerly Directors of Security at various times between
1971 and 1989.
When ruling on Defendants' original motion to dismiss, the
Court rejected Defendants' argument that several of the RTC's
claims were barred by the statute of limitations. This Court
held that under the adverse domination doctrine, all of the
RTC's claims had been timely brought. In making this
determination, the Court relied upon federal common law. This
ruling can no longer stand under O'Melveny & Myers v.
FDIC, ___ U.S. ___, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994).
In O'Melveny, the Supreme Court reaffirmed the
position first announced in Erie R. Co. v. Tompkins,
304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), that "[t]here
is no federal general common law." O'Melveny, ___ U.S.
at ___, 114 S.Ct. at 2053 (quoting Erie, 304 U.S. at
78, 58 S.Ct. at 822). The Court went on to find that under the
comprehensive framework of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (FIRREA), Pub.L. 101-73,
103 Stat. 183, if Congress did not specifically address an
issue in FIRREA, that particular issue is to be governed by
In answering the central question of displacement
of [state] law, we of course would not contradict
an explicit federal statutory provision. Nor would
we adopt a court-made rule to supplement federal
statutory regulation that is comprehensive and
detailed; matters left unaddressed in such a
scheme are presumably left subject to the
disposition provided by state law.
O'Melveny, ___ U.S. at ___, 114 S.Ct. at 2054
There is no provision in FIRREA adopting the adverse
domination doctrine. Accordingly, under O'Melveny, the
adverse domination doctrine can only be used to toll the
statute of limitations in this case if Illinois law would apply
the doctrine. On this point, both parties agree.
The parties disagree, however, as to whether or not Illinois
law recognizes the adverse domination doctrine.
In ruling on a motion to dismiss, the Court "must accept the
well pleaded allegations of the complaint as true. In addition,
the Court must view these allegations in the light most
favorable to the plaintiff." Gomez v. Illinois State Bd. of
Educ., 811 F.2d 1030, 1039 (7th Cir. 1987). Although a
complaint is not required to contain a detailed outline of the
claim's basis, it nevertheless "must contain either direct or
inferential allegations respecting all the material elements
necessary to sustain a recovery under some viable legal
theory." Car Carriers, Inc. v. Ford Motor Co.,
745 F.2d 1101, 1106 (7th Cir. 1984), cert. denied,
470 U.S. 1054, 105 S.Ct. 1758, 84 L.Ed.2d 821 (1985). Dismissal is
not granted "unless it appears beyond doubt that the plaintiff
can prove no set of facts in support of his claim which would
entitle him to relief." Conley v. Gibson, 355 U.S. 41,
45, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957).
The RTC's gross negligence claims are based on two lending
programs entered into by Security with the approval of the
Board of Directors. The first lending program involved the
purchase of $10.6 million in low-grade consumer automobile
paper. This lending program took place between May 1987 and
January 1988. Defendants do not claim ...