West Park Associates v. Butterfield Savings & Loan Ass'n

OVERVIEW

Plaintiffs-Appellants (“Appellants”) are thirty-two property owners who sold property in Oregon and Washington to Butterfield Savings & Loan (“Old BSL”) in exchange for preferred stock in the bank holding company that was the sole owner of Old BSL. Shortly thereafter, Old BSL was declared insolvent and was placed into a receivership by federal banking regulators. As a result, the bank holding company was left without any assets and Appellants’ stock therein was rendered essentially worthless. We are asked to consider whether and against whom Appellants *1454 may seek to recover. The district court granted summary judgment for Defendants-Appellees (“Appellees”). We have jurisdiction pursuant to 28 U.S.C. § 1291 . We affirm in part, reverse in part, and remand.

FACTS

In early 1984, the ratio of Old BSL’s equity to its deposits had fallen below the requirements imposed by the Federal Home Loan Bank Board (“FHLBB”). To forestall regulatory action, the sole owner of Old BSL, Butterfield Equities Corporation (“BEC”), had to enhance Old BSL’s equity. BEC and Old BSL decided to issue preferred stock in BEC in order to purchase real estate that would be used to increase BSL’s…