The opinion of the court was delivered by: McDADE, District Judge.
Before the Court is Defendant Randy Reiman's Clarification to the Court
[Doc. # 143]. In its previous Order of February 28, 1996, the Court held
that Plaintiff's punitive damages claim in Count I should be dismissed on
the basis that "RTC stepped into the shoes of a defunct corporation
without any right to punitive damages." See O'Melveny & Myers v. Federal
Deposit Ins. Corp., — U.S. —, 114 S.Ct. 2048, 2054, 129
L.Ed.2d 67 (1994). In arriving at this conclusion, the Court noted its
reliance upon Reiman's factual assertion on page five of his motion to
dismiss that "SECURITY FEDERAL is a defunct financial organization that
was formed by the Office of Thrift Supervision to receive certain assets
of another defunct financial institution, SECURITY." Order, at 10 n. 2.
To the extent that Reiman is arguing that Illinois law should control
regardless of whether Security or Security Federal were dissolved prior
to RTC's receivership, the Court rejects this argument. As the district
court held in Resolution Trust Corp. v. Liebert, 871 F. Supp. 370, 373
(C.D.Cal. 1994), the mere prohibition of an assignment under state law
does not affect RTC's rights to receivership under FIRREA §
1821(d)(2)(A)(i). RTC is receiving the corporation by operation of
federal law, not having it assigned under state contract law. See RTC v.
S & K Chevrolet, 868 F. Supp. 1047, 1053 (C.D.Ill. 1994) ("Contrary to
Reiman's argument, it is clear that transfer of assets from Security to
Security Federal and from Security Federal to the RTC were accomplished
by operation of law."). Reiman's argument concerning contractual
assignment of claims continues to ring hollow.
Moreover, Reiman's contention is incorrect that if the corporation has
been dissolved at any time, the state law on punitive damages must
control. Under O'Melveny, it appears that the critical time for
determining the RTC's rights under FIRREA is the time of receivership.
This is the point in time at which RTC "steps into the shoes" of the
insolvent corporation and acquires all of the rights that it has under
state law. — U.S. at —, 114 S.Ct. at 2054;
12 U.S.C. § 1821(d)(2)(A)(i). Thus, the dissolution of the
corporation after receivership is no longer guided by Illinois law.
IT IS THEREFORE ORDERED that the portion of the Court's Order dated
February 28, 1996, granting Defendant's motion to dismiss Plaintiff's
punitive damages claim in Count I, be vacated. The punitive damages claim
in Count I is reinstated.
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