Joy Juedes, Staff Writer
Posted: 04/13/2011 08:06:03 PM PDT
LOS ANGELES – Lawyers for former directors and officers of the Redlands-based 1st Centennial Bank on Wednesday filed a motion to dismiss a suit filed against the ex-officials by the Federal Deposit Insurance Corporation.
Lawyers for Morrison & Foerster LLP in Los Angeles, who represent 12 former bank directors and officers, filed the motion in U.S. District Court, Central District of California late Wednesday.
The FDIC, represented by lawyers with Scott + Scott LLP in Los Angeles and New York, sued 12 named and five unnamed former directors and officers for negligence Jan. 14. The complaint stated the former directors and officers “utterly failed to manage the Bank and its commercial real estate lending division in a prudent, safe and reasonable manner.”
The dismissal motion’s memorandum stated the FDIC “disregards the plunge in real estate values in the Inland Empire, where 1st Centennial was duty bound to make most of its loans, and ignores its own Guidelines for Real Estate Lending Policies.”
The memorandum stated that the FDIC seeks to hold the bank’s former directors and two former officers “personally liable for losses the Bank recognized after borrower defaulted on 16 construction and real estate loans.” The memorandum stated the FDIC “does not allege facts showing that any Defendant personally benefitted from the loans” or that loan committee members “`failed to provide even scant care’ before making the business decision to approve any of the 16 loans.”
The California Department of Financial Institutions shut 1st Centennial Bank down in January 2009 and the FDIC was named receiver. The bank’s failure cost the Deposit Insurance Fund $163 million, according to the FDIC complaint.
The suit asked for a minimum of $26.8 million in damages and any other amounts to be determined at trial.
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