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.