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Midge R. Warmuth and Joseph Warmuth v. Federal Deposit Insurance Corporation

November 14, 2011

MIDGE R. WARMUTH AND JOSEPH WARMUTH, PLAINTIFFS,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, IN ITS OWN NAME AND AS RECEIVER FOR INDYMAC BANK, F.S.B., PASADENA, CA; DOES 1 THROUGH 10, DEFENDANTS.



The opinion of the court was delivered by: Margaret M. Morrow United States District Judge

E-FILED 11.14.11

FINDINGS OF FACT AND CONCLUSIONS OF LAW

On July 11, 2008, the Office of Thrift Supervision ("OTS") closed IndyMac Bank, F.S.B. ("IndyMac") and appointed the Federal Deposit Insurance Corporation ("FDIC") as the bank's receiver pursuant to 12 U.S.C. § 1821(c)(2)(A). That same day, the FDIC formed IndyMac Federal Bank, a newly chartered depository institution, and transferred IndyMac's insured deposits to it. The FDIC made deposit insurance determinations for accounts held at IndyMac and notified depositors of the determinations via letter. Some depositors, including plaintiffs, later filed actions challenging the FDIC's deposit insurance determinations and/or alleging wrongful acts by IndyMac or its former employees prior to commencement of the receivership.

Plaintiffs filed an opening brief on November 25, 2009.*fn1 The defendant filed an opening brief on November 30, 2009.*fn2 The defendant filed a response on December 21, 2009.*fn3 Following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") on July 21, 2010, the parties submitted supplemental briefing regarding the FDIC's revised deposit insurance determinations for plaintiffs' accounts.*fn4

I. FINDINGS OF FACT

A. The Accounts

1. Plaintiffs Midge Warmuth and Joseph Warmuth had six accounts with IndyMac prior to July 11, 2008.*fn5

2. Prior to that date, account XXXXXX3972 had a balance of $135,971.93 and was held by Midge Warmuth and Josepth Warmuth ITF Thru the Bible Radio.*fn6

3. Account XXXXXX5837 had a balance of $13,382.87 and was held by Joseph Warmuth ITF Midge Warmuth and Thru the Bible Radio.*fn7

4. Account XXXXXX0831 had a balance of $15,327.95 and was held by Midge Warmuth and Josepth Warmuth ITF Thru the Bible Radio.*fn8

5. Account XXXXXX8325 had a balance of $90,011.22 and was held by Midge Warmuth ITF Josepth Warmuth and Thru the Bible Radio.*fn9

6. Account XXXXXX8491 had a balance of $25,580.45 and was held by Joseph Warmuth ITF Midge Warmuth and Thru the Bible Radio.*fn10

7. Account XXXXXX6982 had a balance of $7.23 and was held by Joseph Warmuth and Midge Warmuth in joint ownership.

8. With the exception of account XXXXXX6982, all accounts were informal revocable trust accounts. Account XXXXXX6982 was a joint ownership account.*fn11

B. The FDIC's Recovery of IndyMac Data

9. Before IndyMac Bank closed, the FDIC requested deposit account records maintained by the computer deposit system at IndyMac Bank. The FDIC requested approximately 45 data fields for each deposit account along with electronic copies of trial balances, deposit application reconciliations, and the general ledger of the bank. The FDIC requested this data in advance of IndyMac Bank's closure to test delivery capabilities, prove the balancing and reconciliation processes, and make certain that all required data fields had been included.*fn12

10. As a result, from March 20 to July 18, 2008, FDIC employees transferred files from the computers of IndyMac Bank to those of the FDIC. Prior to IndyMac Bank's closure, the FDIC's technical staff worked with IndyMac Bank to verify the accuracy of the data so that the files provided to the FDIC could be processed properly. The FDIC verified the sum of the current balance and accrued interest data fields. It also checked data against the bank's general ledger to ensure that the FDIC received all deposit products.*fn13

11. Subsequently, the FDIC transferred the computerized deposit account records of IndyMac Bank to its Receivership Liability System ("RLS"). This process involved three types of files maintained at IndyMac Bank:

a. The "Deposit.csv" file, known as the "Deposit File," a database of deposit accounts;

b. The "CIF.csv" file, known as the "Customer Information File," a database of all customers; and

c. The "DIF_CIF.csv" file, known as the "CIF Joint File," which maps customers and their relationships to deposit accounts.*fn14

12. Combining information from the Deposit File and the Customer Information File, the FDIC created an account title in the RLS for each IndyMac Bank deposit account. The Deposit and Customer Information files provided the account number, the owner or owners of each account, the "relationship code" for the names on the account, the then-current deposit balance, the accrued interest, and the date the account was opened, among other information.*fn15

13. The "relationship code" is a code included in IndyMac Bank's Customer Information File that described the relationship between the account owner or owners and other names on the account, including beneficiaries. Names and relationship codes in the Customer Information File were used to create the account title for each account loaded into the RLS. These codes included:

a. "BNI," which stands for "beneficiary -- individual trust," i.e., a beneficiary of a revocable trust account held by a single owner;

b. "BNJ," which stands for "beneficiary -- joint trust," i.e., a beneficiary of a revocable trust account held by multiple owners;

c. "JBO," which stands for "joint owner with a beneficiary," i.e., a joint revocable trust account;

d. "JTO," which stands for 'joint owner," i.e., a joint ownership account; e. "SLB," which stands for "sole owner with beneficiary," i.e., a beneficiary of a revocable trust account;

f. "SOL," which stands for "individual owner," i.e., a single ownership account; g. "TRS," which stands for "trustee," i.e., funds held by a bank pursuant to an irrevocable trust account; and

h. "TST," which stands for "trust," i.e., a formal revocable ...


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