Washington, DC (September 12, 2014) – In a significant ruling against the Federal Deposit Insurance Corporation (FDIC), United States District Court Judge Terrence Boyle (E.D.N.C.) applied the business judgment rule and granted summary judgment in favor of nine former directors and officers of a North Carolina community bank that was seized by the FDIC in June, 2009. The Court, in FDIC v. Willetts (Case No. 7:11-CV-165-BO, Sept. 11, 2014) applied North Carolina’s business judgment rule and found that voluminous documentary and testimonial evidence clearly demonstrated that the defendants acted in good faith, exercised due diligence, and employed a rational process in approving the dozens of loans challenged by the FDIC in its Complaint. The Court found that the loan approval process employed by the bank’s former officers and directors could not have been irrational when FDIC bank examiners had rated the bank a favorable CAMELS “2” grade in the years leading up to the bank’s closing. The decision confirms the long standing principle that directors and officers who exercise their business judgment in making decisions, even if those decisions later turn out to be problematic, will not be held personally liable. The Court dismissed the FDIC’s claims in their entirety and granted judgment in favor of the directors and officers. The Court’s Order also struck one of FDIC’s proffered experts.
Venable LLP – including litigation partner David W. Goewey, who passed away in December, 2013 – has represented the directors and officers throughout the multi-year litigation. The Venable team included lawyers from its litigation and financial services groups. Attorneys Thomas Gilbertsen, Ronald Glancz, Meredith Boylan, Michael Bracken, and Andrew Hernacki prepared the Motion for Summary Judgment.
A copy of the Court’s decision can be found here.