Weitz Morgan Receives Favorable Arbitration Award and Attorneys’ Fees For Client
In a recent arbitration where Weitz Morgan represented individuals against PlainsCapital Bank, the arbitrator rendered a decision that two promissory notes transferred from a failed bank to PlainsCapital were void. The case was decided on competing motions for summary judgment, and the arbitrator granted Weitz Morgan’s motion requesting a return of all sums paid under the notes and then awarded $75,200 in attorneys’ fees. The district court subsequently confirmed the award and entered a final judgment.
The case involved a unique aspect of the D’Oench Doctrine, first established in D’Oench, Duhme & Co. v. Fed. Deposit Ins. Corp., 315 U.S. 447 (1942), and posed the question of whether D’Oench applies to a situation of fraud in fact as opposed to fraud in the inducement. In Langley v. Fed. Deposit Ins. Corp., 484 U.S. 86 (1987), the United States Supreme Court held that when a failed bank commits fraud in fact there is not an asset to transfer and the requirement that fraud be evident from the bank documents is not applicable.
In this case, the failed bank had instituted a concerted effort to illegally bolster its financial strength by making loans to customers for the purpose of buying stock in the bank. The customers never actually received any money, but rather had the money passed through their accounts. The bank then improperly booked the transactions making its financial statement appear stronger. Given this conduct is prohibited under state and federal law, the notes were void, and PlainsCapital as the successor bank therefore could not claim the notes as assets (to collect upon) as part of the transfer from the failed bank. #successstories #representativematters