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Nov

13

2012

Joseph & Cohen Settles All Claims by FDIC Against Five Former Officers of County Bank

SAN  FRANCISCO,  CA  –  November  13,  2012. Joseph  &  Cohen,  Professional Corporation, located in San Francisco, California, announced today that it successfully structured a settlement for its clients, five former officers of County Bank, Merced, California,  in  connection  with  a  lawsuit  brought  by  the  Federal  Deposit  Insurance Corporation, in its capacity as receiver for County Bank.   County Bank, which collapsed in February 2009, had been the wholly-owned banking subsidiary of Capital Corp of the West (Nasdaq: CCOW).

The case, which was filed by the FDIC in the Federal Court in Fresno, California in January 2012, was titled FDIC, as receiver for County Bank v. Hawker, et al., (Case No. 1:12-CV-000127-LJO) (“FDIC v. Hawker”). The settlement completely settles and satisfies all claims  brought by the FDIC against the five former officers of the Bank: Thomas Hawker, Edward Rocha, John Incandela, David Kraechan and Jay Lee (the “officers”).

A companion case that the officers filed against BancInsure, Inc. and the FDIC in July 2012, in the same Fresno based Court, remains outstanding.  In that case,  Hawker et al v. BancInsure (Case No. 1:12-cv-01261-LJO-GSA), Tom Hawker and the other officers asserted claims against  BancInsure for declaratory relief, breach of contract, bad faith, punitive  damages  and  reformation.  The  officers  were  forced  to  sue  BancInsure,  the professional liability insurer for County Bank, after it  abandoned them and refused to defend the claims in the FDIC Action.

Jonathan Joseph, counsel for the officers stated “We believed that we had strong legal and factual  defenses to the FDIC’s claims.   In our view, County Bank collapsed as a result of the greatest recession in our lifetime.  So, we vigorously defended Tom Hawker and the other four officers of County Bank against all of the government’s allegations. But, after the D&O Insurer abandoned our clients and refused to defend them or settle the FDIC lawsuit, we are pleased to have successfully structured this deal with the FDIC as the settlement eliminates all claims, further uncertainty and the trouble, risk and expense associated with the litigation.”

An essential element of the settlement involved an assignment to the FDIC by the officers of their lawsuit against BancInsure including claims for bad faith and breach of contract. The officers retained the right  to recover their defense expenses incurred prior to the FDIC settlement from BancInsure.  The officers  maintained the right to continue to control and prosecute this retained claim against BancInsure.

Tom Hawker, former CEO of County Bank and President and CEO of CCOW, said “I am relieved to put this case behind me as it eliminates further uncertainty, cost or risk to me and my family.  I am outraged that the Bank’s D&O insurer abandoned me as I would have  been  financially  ruined  if  I  continued  to  defend  myself  against  the  FDIC’s allegations despite having excellent legal and factual defenses to their claims.”

As a result of the settlement, the FDIC will control and prosecute the officers’ assigned claims against BancInsure at its cost and expense.  Jon Cohen, litigation partner at Joseph & Cohen, explained “We look forward to litigating alongside the FDIC on behalf of our clients  to  prove  that  BancInsure  improperly  applied  the  so-called  “insured  versus insured” exclusion to deny the coverage our clients had expected and relied upon.”

The parties exchanged other valuable covenants including an agreement not to bring any other civil claims against each other and a promise by the FDIC not to take any further action or assert any claims against any of the property or assets of the officers.

Joseph & Cohen, Professional Corporation, is an AV® rated law firm based in San Francisco,  California,  that  emphasizes  the representation  of community and  regional banks  and  bank  holding  companies  and  their  officers  and  directors.  The firm also specializes in representing financial service companies, credit unions and private equity firms in connection with corporate, securities, regulatory, litigation, executive employment and merger matters.  Joseph & Cohen is known for sophisticated expertise, extraordinary  commitment  to  clients,   relationship-based services, and  a  range of specialized capabilities typically found only in the largest American law firms.

For additional information about the Joseph & Cohen, Professional Corporation, please visit our website at  www.josephandcohen.com or Facebook at www.facebook.com/josephandcohen.