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Federal Deposit Insurance Corporation v. Dosland

United States District Court, N.D. Iowa, Western Division

February 11, 2015

FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of Vantus Bank, Plaintiff,
v.
MICHAEL W. DOSLAND, MICHAEL S. MODERSKI, ARLENE T. CURRY, BARRY E. BACKHAUS, GARY L. EVANS, RONALD A. JORGENSON, JON G. CLEGHORN, and CHARLES D. TERLOUW, Defendants. MICHAEL W. DOSLAND, MICHAEL S. MODERSKI, ARLENE T. CURRY, BARRY E. BACKHAUS, GARY L. EVANS, RONALD A. JORGENSON, JON G. CLEGHORN, and CHARLES D. TERLOUW, Third-Party Plaintiffs,
v.
THE UNITED STATES OF AMERICA, Third-Party Defendant.

MEMORANDUM OPINION AND ORDER REGARDING D&O DEFENDANTS' MOTION FOR ADDITIONAL JURISDICTIONAL DISCOVERY

MARK W. BENNETT, District Judge.

I. INTRODUCTION

A. Procedural Background

This case, arising from the failure of Vantus Bank in Sioux City, Iowa, is now before me on the D&O Defendants' December 22, 2014, Motion For Additional Jurisdictional Discovery (docket no. 104).[1] Some of the procedural history relevant to the present motion is set out in my October 7, 2014, Memorandum Opinion And Order (docket no. 95), concerning the D&O Defendants' original August 8, 2014, Motion For Jurisdictional Discovery (docket no. 71), so I will not repeat it here.

Suffice it to say that, on May 27, 2014, the D&O Defendants filed their Third-Party Complaint (docket no. 54), asserting that the United States, acting as the Office of Thrift Supervision (OTS), negligently violated its duty to Vantus Bank, its stockholders, members, accountholders, depositors, officers, directors, the FDIC, and the Deposit Insurance Fund by failing to analyze accurately Vantus Bank's investments and to take more timely action to remedy Vantus Bank's alleged investment violations. In a Motion To Dismiss (docket no. 63), filed July 15, 2014, the OTS sought dismissal of the Third-Party Complaint for at least two independent reasons: (1) this court lacks jurisdiction, because the "discretionary function exception" to the Federal Tort Claims Act (FTCA), 28 U.S.C. § 2671 et seq., applies in this case; and (2) even if this court has jurisdiction, the Third-Party Complaint fails to state a claim upon which relief can be granted, because the regulators and examiners owed no duty to the failed bank.

On August 8, 2014, the D&O Defendants filed their original Motion For Jurisdictional Discovery (docket no. 71) on issues raised in the OTS's Motion To Dismiss. Somewhat more specifically, they sought discovery "to determine the existence of a statute, regulation, or policy specifically prescribing a course of action or a mandatory timeline for the OTS to act with respect to Vantus Bank." Motion (docket no. 71) at 3 ¶ 7. As I pointed out in my subsequent Memorandum Opinion And Order (docket no. 95), filed October 7, 2014, such discovery sought facts relevant to the first prong of the inquiry to determine the applicability of the "discretionary function exception." See Memorandum Opinion And Order at 19 (citing Herden v. United States, 726 F.3d 1042, 1046-47 (8th Cir. 2013)). I added, in a footnote, that it was not clear to me that the D&O Defendants had ever asserted that the "discretionary function exception" is inapplicable, even if the challenged action is discretionary, at the second prong of the inquiry, which asks whether the government employee's discretionary judgment or choice was based on considerations of social, economic, and political policy. Id. at 19 n.3 (citing Herden, 726 F.3d at 1047). I granted the D&O Defendants' original Motion For Jurisdictional Discovery to the extent of allowing " very limited jurisdictional discovery, " consisting of one of three options that I specified or "[s]uch other discovery method as the parties may agree upon." Id. at 23-24 (emphasis in the original).

The parties agreed to two seventy-five minute depositions-a Rule 30(b)(6) deposition of Anthony Jarieu, an OTS regulator, and a deposition of Audit Manager Deborah L. Harker, of the Treasury Department's Office of the Inspector General (OIG), who was a major contributor to the OIG's Audit Report, SAFETY AND SOUNDNESS: Material Loss Review of Vantus Bank-and the D&O Defendants also received what they described as "ongoing document production." Motion (docket no. 104) at 2 ¶¶ 6-7. Based on the information obtained, on December 2, 2014, the D&O Defendants requested, and, on January 1, 2015, were granted, leave to file an Amended Third-Party Complaint. See Motion (docket no. 98); Order (docket no. 112); Amended Third-Party Complaint (docket no. 113). In their Amended Third-Party Complaint, the D&O Defendants attempt to negate the OTS's "discretionary function" defense by alleging that the OTS had and violated a mandatory duty, and that, even if the OTS had discretion, its choice did not involve a decision based on considerations of social, economic, and political policy. In other words, in their Amended Third-Party Complaint, the D&O Defendants addressed, for the first time, the second prong of the inquiry concerning the applicability of the "discretionary function exception." See Herden, 726 F.3d at 1047.

Before leave to file their Amended Third-Party Complaint was granted, the D&O Defendants also filed the December 22, 2014, Motion For Additional Jurisdictional Discovery (docket no. 104), which is now before me.

B. The Motion For Additional Jurisdictional Discovery

1. The motion

In their Motion For Additional Jurisdictional Discovery, the D&O Defendants seek the following:

a. Production of all remaining but not yet produced OIG materials relating to the Sept. 20, 2011, OIG Audit Report, Safety and Soundness: Material Loss Review of Vantus Bank; and
b. A deposition of Joanne Haakinson, former employee of OTS, with discoverable knowledge as to whether an actual decision was made by OTS in August, 2007, but implementation of that decision did not actually occur until February 13, 2008.

Motion (docket no. 104), 3 ¶ 13. Thus, in subparagraph (b), the D&O Defendants now seek discovery related to the second prong of the "discretionary function exception" inquiry, having only just asserted allegations in their Amended Third-Party Complaint ...


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