Federal Deposit Insurance ex rel. American Diversified Savings Bank v. O'Melveny & Meyers

The Federal Deposit Insurance Corporation (“FDIC”), as receiver for the failed savings and loan association American Diversified Savings Bank (“ADSB”), sued the law firm of O’Melveny & Meyers (“O’Mel- *746 veny” or “the Firm”) claiming professional negligence in connection with its legal advice and services to ADSB. After reviewing de novo the district court’s grant of O’Melveny’s summary judgment motion, we reverse and remand to the district court for further proceedings.

I

Facts and Procedural History 1

ADSB was acquired in 1983 by Ranbir Sahni and Lester Day. Sahni served as Chairman and Chief Executive Officer of ADSB, and Day was its President. ADSB’s principal activity was the purchase, development and sale of real estate through limited partnerships sponsored by ADSB and its subsidiaries. These activities were funded by ADSB’s insured deposits, which totaled $958 million by December, 1985. ADSB’s deposits were insured by what was then known as the Federal Savings and Loan Insurance Corporation (“FSLIC”). 2

In September, 1985, ADSB retained O’Melveny, one of the largest and most prominent law firms in the country, to assist with two real estate syndications, Wells Park…