O'melveny & Myers v. Federal Deposit Insurance Corporation As Receiver for American Diversified Savings Bank et al. (512 U.S. 79)
U.S. Supreme Court · decided June 13, 1994 · Supreme Court Database (Spaeth)
- Citation
- 512 U.S. 79 · 114 S. Ct. 2048
- Decided
- June 13, 1994
- Term
- October Term 1993
- Vote
- 9–0
- Majority author
- Justice Scalia
- Issue area
- Federalism
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Scalia delivered the opinion of the Court. The issue in this case is whether, in a suit by the Federal Deposit Insurance Corporation (FDIC) as receiver of a federally insured bank, it is a federal-law or rather a state-law rule of decision that governs the tort liability of attorneys who provided services to the bank. I American Diversified Savings Bank (ADSB or S&L) is a California-chartered and federally insured savings and loan. The following facts have been stipulated to, or are uncontroverted, by the parties to the case, and we assume them to be true for purposes of our decision. ADSB was acquired in 1983 by Ranbir Sahni and Lester Day, who respectively obtained 96% and 4% of its stock, and who respectively served as its chairman/CEO and president. Under their leadership, ADSB engaged in many risky real estate transactions, principally through limited partnerships sponsored by ADSB and its subsidiaries. Together, Sahni and Day also fraudulently overvalued ADSB’s assets, engaged in sham sales of assets to create inflated “profits,” and generally “cooked the books” to disguise the S&L’s dwindling (and eventually negative) net worth. In September 1985, petitioner O’Melveny & Myers, a Los Angeles-based law firm, represented ADSB in connection with two real estate syndications. At that time, ADSB was under investigation by state and federal regulators, but that fact…
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