## Facts

- Sun Belt Federal Bank, F.S.B. retained attorney George Bevan, a partner at McGinnis, Juban, Bevan, Mullins & Patterson, P.C., to serve as closing attorney for a loan to Mande Cove, Inc.
- Sun Belt paid legal fees to Bevan’s firm for work connected to the transaction.
- The receiver (FSLIC, later succeeded by FDIC) alleged Bevan:
  - Performed a negligent title search on the loan collateral.
  - Failed to disclose that the loan would violate a federal “one-borrower” regulation because proceeds would be used to pay past-due interest on prior loans to the same principals.
  - Failed to disclose a conflict arising from his simultaneous representation of the borrower’s principals in earlier transactions while acting as Sun Belt’s closing attorney.
- Mande Cove defaulted; Sun Belt failed and entered receivership.
- The receiver sued Bevan, his firm, and the firm’s insurer for malpractice and breach of fiduciary duty and sought to impose vicarious liability on the firm.

## Issues

1. Whether the law firm could be held vicariously liable, as a matter of law, for Bevan’s alleged negligence, intentional torts, fraud, and fiduciary breaches arising from his work on the loan closing.
2. Whether estoppel-type defenses based on Sun Belt’s internal knowledge or misconduct could be asserted against the FDIC/FSLIC acting as receiver.

## Decision

- Denied the defendants’ motion for partial summary judgment seeking a categorical ruling that the firm could not be vicariously liable for Bevan’s alleged intentional, fraudulent, or fiduciary-breach conduct.
- Denied the FDIC’s cross-motion seeking an across-the-board ruling that the firm was vicariously liable for all alleged wrongdoing by Bevan as a matter of law.
- Granted the FDIC’s motion, largely striking estoppel and related defenses that rested on imputing Sun Belt’s knowledge or misconduct to the FDIC as receiver.
- Left the vicarious-liability determination largely for the factfinder based on the particulars of Bevan’s engagement and conduct.

## Legal Principles

- Under Louisiana partnership and agency principles, a partnership may be liable for a partner’s wrongful acts committed in the ordinary course of partnership business or within the scope of the partner’s employment.
- Vicarious liability is not categorically barred merely because the alleged misconduct is intentional, fraudulent, or a breach of fiduciary duty; the controlling inquiry is whether the conduct was sufficiently connected to the partner’s firm work.
- When the FDIC/FSLIC sues as receiver for a failed financial institution, estoppel-type defenses premised on the institution’s internal misconduct, knowledge, or undisclosed arrangements are sharply limited under federal doctrine associated with D’Oench, Duhme and related statutory policy.
- Defendants generally may not defeat the receiver’s claims by imputing wrongdoing or knowledge of the failed institution’s officers and directors to the FDIC/FSLIC in its receiver capacity.

## Conclusion

The court removed most estoppel defenses asserted against the FDIC as receiver but declined to resolve, on summary judgment, whether the law firm was vicariously liable for its partner’s alleged malpractice and fiduciary breaches, holding that scope-of-employment questions required a fact-specific determination.


Fed. Sav. & Loan Ins. Corp. v. McGinnis, Juban, Bevan, Mullins & Patterson, P.C., 808 F. Supp. 1263 (E.D. La. 1992)