Federal Deposit Insurance v. Jackson

The Federal Deposit Insurance Corporation (“FDIC”) appeals adverse rulings in its actions asserting breach of fiduciary duty, negligence, and gross negligence against the directors of a failed Arizona bank, Century Bank (“Ceintury” or the “Bank”), as well as spousal liability. It is the culmination of a sorry saga of alleged mismanagement by defendants, members of the Board of Directors of Century, a state-chartered, federally insured banking institution, at various times from the Bank’s opening in January 1981 through October 1989. During most of this time, from October 1981 through October 1989, the FDIC, alone or jointly with the Arizona State Banking Department (“ASBD”), conducted yearly examinations of the Bank. These examinations repeatedly identified deficiencies in lending practices, including poor loan documentation, inadequate loss reserves, and inadequate commercial loan supervision. Each set of findings was presented to and acknowledged by the Board. Over the course of the Bank’s existence, the examinations resulted in two mem-oranda of understanding between the regulators and the bank directors and two cease and desist orders. In October 1989, the FDIC and the ASBD…