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Federal Deposit Insurance Corp. v. Loudermilk

United States Court of Appeals, Eleventh Circuit

April 24, 2018

FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for the Buckhead Community Bank, Plaintiff - Appellee,
v.
R. CHARLES LOUDERMILK, SR., HUGH C. ALDREDGE, DAVID B. ALLMAN, MARVIN COSGRAY, LOUIS J. DOUGLASS, III, GREGORY W. HOLDEN, LARRY P. MARTINDALE, DARRYL L. OVERALL, Defendants - Appellants.

          Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:12-cv-04156-TWT

          Before TJOFLAT, MARTIN and ANDERSON, Circuit Judges.

          PER CURIAM.

         CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF GEORGIA PURSUANT TO O.C.G.A. § 15-2-9

         TO THE SUPREME COURT OF GEORGIA AND ITS HONORABLE JUSTICES:

         This appeal involves three unsettled questions of Georgia law that are central to its resolution. The first question is whether Georgia's apportionment statute, O.C.G.A. § 51-12-33, applies to tort claims for purely pecuniary losses against bank directors and officers. The second is whether § 51-12-33 abrogated Georgia's common-law rule imposing joint and several liability on tortfeasors who act in concert. The third is whether, in a negligence action premised upon the negligence of individual board members in their decisionmaking processes, a decision of a bank's board of directors is a "concerted action" such that the board members should be held jointly and severally liable for negligence.

         Because these questions are central to the case before us and have not been squarely answered by the Georgia Supreme Court or the Georgia Court of Appeals, we respectfully certify them for resolution.

         I.

         In December 2009, during the financial crisis, the Georgia Department of Banking and Finance ("GDBF") closed the Buckhead Community Bank. Founded in 1998, the bank was a state nonmember bank that was regulated and overseen by the GDBF. The GDBF ordered the bank to be closed after the failure of several large commercial loans the bank issued. The Federal Deposit Insurance Corporation ("FDIC") then took receivership of the bank. Thereafter, the FDIC filed a diversity action against eight former directors and officers of the bank ("the Officers") in the Northern District of Georgia, alleging that the Officers were negligent and grossly negligent under Georgia tort law in their approval of ten commercial real-estate loans. Seven of the Officers were members of the bank's loan committee, and one underwrote one of the loans at issue.

         The Officers answered the complaint and moved to dismiss the FDIC's claim, arguing that Georgia's business-judgment rule precluded them from liability for ordinary negligence. The District Court determined that the issue was unsettled under Georgia law and accordingly certified the question to the Georgia Supreme Court. The Supreme Court answered the question in the negative, holding that O.C.G.A. § 7-1-490(a) authorizes ordinary negligence claims against bank officers and directors insofar as those claims are premised on the officers and directors' "failure to exercise ordinary care with respect to the way in which business decisions are made." FDIC v. Loudermilk, 761 S.E.2d 332, 342 (Ga. 2014).

         The case continued. Prior to trial, the parties filed various motions, one of which is relevant to this certified question. The Directors moved the District Court to instruct the jury to apportion damages among the eight Directors if it found the Directors liable. The Court denied the request, and the case proceeded to trial. During the trial, the District Court again denied the Directors' request to instruct the jury to apportion damages. The jury found that the Directors were negligent in approving four of the ten loans in question. It thus found the Directors liable and awarded the FDIC $4, 986, 993 in damages. Pursuant to the verdict, the District Court entered final judgment in that amount. The judgment held the Directors jointly and severally liable. The Directors timely appealed.

         II.

         We present the questions in sequence. Because the final two questions are interdependent, we ...


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