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Larry Dunn and Danny Dunn v. Federal Deposit Insurance Corporation

May 31, 2012

LARRY DUNN AND DANNY DUNN, PLAINTIFFS,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, IN ITS OWN NAME AND AS RECEIVER FOR INDYMAC BANK, F.S.B.; DOES 1 THROUGH 10, DEFENDANTS.



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

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.

The parties filed opening briefs on November 30, 2009,*fn1 and responding briefs on December 21, 2009.*fn2 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 Dunn's accounts.*fn3

I. FINDINGS OF FACT

A. The Accounts

1. Plaintiff Larry Dunn had three accounts with IndyMac prior to July 11, 2008.*fn4

2. Prior to July 11, 2008, account XXXXXX5064 had a balance of $54,736.70, account XXXXXX5073 had a balance of $109,504.01, and account XXXXXX9144 had a balance of $108,733.47.*fn5 The funds deposited in the three accounts thus totaled $272,974.18.*fn6

3. All three accounts -- Nos. XXXXXX5064, XXXXXX5073, and XXXXXX9144 -- were single ownership accounts.*fn7

B. The FDIC's Recovery of IndyMac Data

4. 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.*fn8

5. 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 the 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 it received all deposit products.*fn9

6. 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.*fn10

7. 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.*fn11

8. 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 ...


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