United States District Court, E.D. California
FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR BUTTE COMMUNITY BANK, Plaintiff,
ROBERT CHING, et al., Defendants.
November 17, 2016, the jury returned a verdict in this case,
finding all defendants guilty of negligence and a breach of
the fiduciary duty of care in connection with an $8, 800, 000
dividend they caused Butte Community Bank to issue. Jury
Verdict, ECF No. 270. The Federal Deposit Insurance
Corporation (FDIC), as receiver for Butte Community Bank, is
the plaintiff in this case. The jury awarded the FDIC $2,
640, 000 in damages for the defendants' conduct giving
rise to the negligence claim, and $880, 000 in damages for
the defendants' conduct giving rise to the breach of duty
of care claim. Id. at 1, 3. Three disputes regarding
the entry of judgment are now pending before the court: (1)
whether the damages the jury awarded are duplicative; (2)
whether pre-judgment interest should be included in the
judgment award; and (3) whether the judgment should be split
equally among defendants, or defendants should be held
jointly and severally liable.
reasons discussed below, the court determines defendants are
jointly and severally liable for a baseline judgment award of
$2, 640, 000, in addition to both pre-judgment and
post-judgment interest at a rate of 0.77 percent.
order dispenses with a general background section, as the
court has reviewed the facts and procedural history of this
case at length in its prior orders. See, e.g., Order
May 27, 2016, ECF No. 168; Order July 27, 2015, ECF No. 86;
Order July 8, 2014, ECF No. 39.
related to the particular issue of a judgment award, the
procedural history is as follows. On November 17, 2016, the
jury found all ten named defendants guilty on claims one
(breach of fiduciary duty of care) and three (negligence).
ECF No. 270. On November 22, 2016, the FDIC filed a request
for an award of pre-judgment and post-judgment interest, ECF
No. 268, which defendants opposed on November 23, 2016, ECF
No. 274. In opposition, defendants argue for the first time
that the two damages awards are duplicative. Id. On
November 28, 2016, the FDIC filed a reply brief on its
request for pre-judgment interest, and in this filing the
FDIC rebutted defendants' claim that the jury awards are
duplicative. ECF No. 275. On November 29, 2016, defendants
filed an unauthorized sur-reply addressing the FDIC's
duplicative awards argument. ECF No. 276. Because defendants
did not seek court approval before filing their sur-reply,
the court does not consider the sur-reply in this order.
December 2, 2016, the court directed the parties to brief the
additional issue of whether the jury's award of damages
for $880, 000 and $2, 640, 000 should be evenly divided among
the ten defendants, or whether the defendants should be
jointly and severally liable for the full amount. Min. Order,
ECF No. 277. In response, the FDIC filed a brief in favor of
joint and several liability, ECF No. 280, and defendants
argued for an even division of the award, ECF No. 279. The
court addresses each dispute below.
noted, the jury handed down two separate damage awards: an
award of $880, 000 on the FDIC's breach of fiduciary duty
claim and one of $2, 640, 000 on the FDIC's negligence
claim. ECF No. 270. The FDIC argues the jury's two
separate damages awards should be treated as cumulative,
totaling $3, 520, 000, ECF No. 275 at 2, while defendants
argue the awards were duplicative because they were based on
the same conduct, and therefore total only $2, 640, 000, ECF
No. 274 at 2.
courts have repeatedly established the general proposition
that a plaintiff may not enjoy “double recovery”
for a single injury. See, e.g., Pac. Fuel Co.,
LLC v. Shell Oil Co., 416 F. App'x 607, 610 (9th
Cir. 2011); Ambassador Hotel Co. v. Wei-Chuan Inv.,
189 F.3d 1017, 1031-32 (9th Cir. 1999); Kissell Co. v.
Gressley, 591 F.2d 47, 50-51 (9th Cir. 1979); Duran
v. Town of Cicero, Ill., 653 F.3d 632, 642 (7th Cir.
2011) (“A judgment that can be read to allow a
plaintiff to recover twice for the same injury contains a
manifest error of law.”); Nada Pac. Corp. v. Power
Eng'g & Mfg., Ltd., 73 F.Supp.3d 1206, 1218
(N.D. Cal. 2014) (“Double or duplicative recovery for
the same items of damage amounts to overcompensation and is
therefore prohibited.”) (citation and internal
quotation marks omitted).
courts are in accord. Under California law,
“[r]egardless of the nature or number of legal theories
advanced by the plaintiff, he is not entitled to more than a
single recovery for each distinct item of compensable damage
supported by the evidence.” Tavaglione v.
Billings, 4 Cal.4th 1150, 1158 (1993) (internal
quotation marks omitted); Shell v. Schmidt, 126
Cal.App. 2d 279, 291 (1954) (where a party “ha[s]
alleged the existence of but one primary right, and but one
violation of that right, ” the “complaint states
but one cause of action, even though two or more theories of
recovery are alleged.”) (citation omitted); see
also Plotnik v. Meihaus, 208 Cal.App.4th 1590, 1613
(2012) (reversing an award for intentional infliction of
emotional distress because the injury had been compensated in
awards conferred on other claims for the same conduct);
Roby v. McKesson Corp., 47 Cal.4th 686, 702-03
(2009) (remanding for a new trial due to the potential of
duplicative noneconomic damages where jury was instructed to
assess damages separately but given no direction on how to
avoid the possibility of overlapping damages).
nothing in the record before the court indicates
defendants' negligence in authorizing the dividend caused
an injury distinct from, or in addition to, defendants'
breach of their fiduciary duty of due care in authorizing
that same dividend. The FDIC's two claims relate to the
same event, namely defendants' conduct that caused the
authorization of the dividend. As such, regardless of how
many legal theories the FDIC has advanced, it cannot recover
more than once for this single injury under California law.
Tavaglione, 4 Cal.4th at 1158; Shell, 126
Cal.App. 2d at 291.
verdict form, based on the FDIC's proposal, instructed
the jury to identify the “total damages” it
awarded the FDIC “for the conduct of
defendant(s)” “in connection with Butte Community
Bank's May 5, 2008 dividend, ” and specifically
instructed the jury not to “consider whether or not
such damages will be cumulative with damages awarded for
other claims.” ECF No. 270 at 2, 4. Thus, the verdict
form called for a separate award of damages on each claim
even if separate claims were based on the same wrongdoing.
The verdict form expressly instructed the jury to consider
each claim in isolation and in doing so make an award of
“total damages” as if the FDIC would not receive
any other compensation. Absent evidence to the contrary, the
court assumes the jury did as instructed and awarded
“total damages” to compensate for defendants'
negligence without regard for the damages the jury awarded
for defendants' breach of fiduciary duty of care, and
FDIC argues that by instructing the jury not to consider
whether damages would be cumulative, the verdict form left
the jury “with the reasonable impression that its
damages could be added together.” ECF No. 275 at
2:25-3:1-2. The FDIC asserts the jury “allocated 25% of
its damages award to the breach of fiduciary duty claim and
75% to the negligence claim.” Id. at 3:2-4.
The FDIC offers no support for this assumption. The FDIC
claims its interpretation is the “logical and
probable” outcome because $3, 520, 000 is “almost
exactly that portion of the $8, 800, 000 dividend that
ultimately went into the pockets of the bank
directors.” Id. at 2:13-15. To support its
argument, the FDIC cites Schutzky Distributors, Inc. v.
Kelly, 643 F.Supp. 57 (N.D. Cal. 1986).
however, is distinguishable in several important respects. In
this case, the ten defendants were found equally liable on
each claim and the conduct complained of and the resulting
injury for each claim is the same. In Schutzky, in
contrast, the jury awarded damages based on the
“countless misrepresentations” two defendants had
separately made, and the court therefore found each award of
damages should be partitioned based on each defendant's
individual conduct. Schutzky, 643 F.Supp. at 59,
61-62. The Schutzky court explained that if the two
damages awards were not aggregated, they would have been
inconsistent with the jury's finding of liability.
Id. at 59. This was especially true considering the
verdict form in Schutzky, unlike in this case, did
not instruct the jury to determine “total
damages” for each separate cause of action. The
Schutzky court found it “entirely
logical” that the jury awarded separate damages based
on the separate harm each ...