Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, March 27, 1991 TAG: 9103270082
SECTION: NATIONAL/INTERNATIONAL PAGE: A-2 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The unanimous decision killed a lawsuit against federal regulators by Thomas M. Gaubert, former owner of and largest shareholder in the Texas-based Independent American Savings Association.
Gaubert had sought to recover $25 million worth of real estate he lost when the thrift went bust.
A federal appeals court had cleared the way for a trial on his allegations that regulators' bungling led to the savings and loan's financial ruin in 1987. But the high court reversed the appeals court ruling.
Government lawyers had told the justices that 132 similar cases were pending, seeking more than $3 billion in damages from the government.
The appeals court ruling "can only hobble and confine federal efforts to deal with the current crisis affecting the savings-and-loan industry" and "poses an extraordinarily grave danger," the lawyers said.
After learning of Tuesday's decision, Harris Weinstein of the Office of Thrift Supervision said, "We're very gratified. I think it eliminates doubts about what the [appeals court] decision might have established about the freedom of action that regulators have when they take over and manage institutions."
Gaubert, a prominent political fund-raiser who once persuaded former House Speaker Jim Wright, D-Texas, to intervene with federal regulators in his behalf, acquired a controlling interest in the thrift in 1983.
The rapidly expanding institution proposed in 1984 to merge with the failing Investex Savings and purchase 22 branch offices from United Savings Association.
Before approving the merger, the Federal Home Loan Bank Board got Gaubert to sign an agreement that effectively removed him from the thrift's affairs. Gaubert also personally guaranteed its minimal net worth with real estate worth more than $25 million.
Federal officials subsequently assisted Independent American Savings Association in its merger with Investex.
The thrift's board of directors was replaced under bank board supervision.
In 1987, the Texas Savings and Loan Department closed the thrift and the federal bank board appointed the FSLIC as a receiver.
Gaubert sued under a law that in some instances waives the federal government's sovereign immunity. The law, the Federal Tort Claims Act, does not allow lawsuits based on federal employees' discretionary duties - and government lawyers cited that exception in seeking to have Gaubert's suit dismissed.
The 5th U.S. Circuit Court of Appeals ruled for Gaubert, saying that the regulator's day-to-day running of the thrift did not fall under the federal law's discretionary-function exception.
The Supreme Court said the appeals court was wrong.
"The appeals court erred in holding that the exception does not reach decisions made at the operational or management level of the bank involved in this case," Justice Byron White wrote.
by CNB