Federal Deposit Insurance Corporation, and Cross-Appellee v. Imperial Bank, and Cross-Appellant

This case involves $10 million fraudulently transferred by wire from Community Bank of Hartford, South Dakota to Imperial Bank of Los Angeles, California. The Federal Deposit Insurance Corporation (“FDIC”), acting as Community Bank’s receiver, seeks to hold Imperial Bank liable for negligence and asserts that the district court erred when it found no proximate cause. In á protective cross-appeal, Imperial Bank claims that the district court erred to the extent it found that Imperial negligently handled the wire transfer.

FACTS AND PROCEEDINGS

Community Bank was formed in 1925. In 1939, Community began its association with Raymond Dana, a local attorney, allowing him to locate his law offices within its branches and hiring him as counsel. Eventually, Dana became president of Community Bank, as well as the executor of the estate which controls the bulk (85%) of the bank’s stock. In addition, Dana and his wife owned ten percent outright; Dana effectively controlled Community Bank, having the right to vote 95% of the stock.

In March 1983, Dana met Anant Kumar Tripati, who made an offer to buy Community Bank, which Dana accepted. In the course of his dealings with Tripati, Dana also…