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RESOLUTION TRUST CORP. v. MOSKOWITZ

March 14, 1994

RESOLUTION TRUST CORPORATION, in its capacity as Receiver of United Savings Bank, F.S.B., Plaintiff,
v.
DONALD J. MOSKOWITZ, et al., Defendants.



The opinion of the court was delivered by: ALFRED M. WOLIN

 WOLIN, District Judge

 This matter is opened to the Court by defendant Fidelity & Deposit Company of Maryland ("F&D") to dismiss all crossclaims for contribution and indemnification which have been or hereinafter may be filed against F&D by codefendants, for failure to state a claim upon which relief can be granted. The motion was unopposed. Having considered the submissions of F&D, the Court will grant its motion.

 BACKGROUND

 The Court is confronted with yet another instance where the Resolution Trust Corporation ("RTC") has had to step into the shoes of an insolvent bank and liquidate the institution. This action concerns the closing and liquidation of United Savings Bank, SLA ("United"), of Paterson, New Jersey. On May 15, 1990, the Office of Thrift Supervision ("OTS") declared United insolvent and appointed the RTC to act as its receiver. See Complaint for Declaratory Relief, Ex. B at P 6. On the same day, a new federal and savings association called United Savings Bank, F.S.B. ("United Federal") was formed. Id. at P 7. The RTC, as receiver of United and United Federal entered into an agreement which transferred United's right, title and interest in any claim against United's former directors and offices to the latter. Id. at P 7. OTS then immediately placed United Federal into conservatorship and appointed the RTC as its conservator. Id. at P 8. On December 12, 1990, OTS closed United Federal and appointed the RTC to act as its receiver. Id. at P 9.

 Like a medical examiner pouring over a body to determine the cause of death, the RTC has spent the past three years trying to ascertain the cause of United's demise. On May 14, 1993, the RTC as receiver for United Federal filed a blunderbuss-like complaint against certain of United's former officers and directors, along with others associated with United. *fn1" In total, thirty-five defendants, including ten former directors and offices of United and 4 individuals who are the executors and/or beneficiaries of the estates of former directors and officers of United, are named defendants. The claims allege that each is liable for United's insolvency. Id. at P 3. Specifically, the RTC asserts causes of action for breach of contract, negligence, gross negligence, breach of fiduciary duty, conversion and fraud.

 RTC claims that United's losses due to the fraud and dishonesty of its employees and that those losses are covered by a Financial Institution Bond ("the Bond") defendant F&D issued to United Savings Bank, F.S.B. ("United"). *fn2" In Count 15, RTC claims that the failure of F&D to honor its obligation to pay for those losses constitutes a breach of contract and that F&D's breach has caused it to suffer damages in excess of $ 2.5 million.

 F&D filed a counterclaim seeking recision of the Bond on grounds, inter alia, that its issuance was fraudulently induced by misrepresentations made by United in connection with the Bond application. In addition, F&D filed crossclaims for contribution, indemnification and subrogation against certain co-defendants.

 Many of the co-defendants in this action have filed crossclaims against F&D for contribution pursuant to the New Jersey Joint Tortfeasors Contribution Law, N.J.S.A. 2A:53A-1 et seq., and/or common law indemnification.

 DISCUSSION

 F&D seeks to have all of the cross claims dismissed pursuant to Federal Rules of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted for three reasons. F&D contends that the language of the Bond must control. The express terms of the bond limit any right of recovery to the named insured, United. Moreover, the overwhelming majority of courts confronted with similar fidelity bonds have rejected third party claims and have limited recovery exclusively to the named insured. They assert that F&D cannot be a joint tortfeasor required to pay contribution under the Joint Tortfeasor Contribution Law because RTC's claims against them are not tort claims. And, third, they argue that F&D is not subject to common law indemnity as there is no "special legal relationship" between F&D and codefendants and because the loss suffered by RTC as a result of F&D's alleged breach is different in kind from that caused by codefendants' tortious conduct. Each reason will be discussed and analyzed separately.

 I. The Express Terms of the Bond

 It is well settled that when the terms of an insurance contract are clear and unambiguous, it is the court's duty to enforce the contract as written and in accordance with its plain and commonly understood meaning. State, DEP v. Signo Trading International, Inc., 235 N.J. Super. 321, 332, 562 A.2d 251 (App. Div. 1989), aff'd, 130 N.J. 51, 612 A.2d 932 (1992). See also Doolan v. Doolan Steel Corp., 591 F. Supp. 1506, 1509-1510 (E.D. Pa. 1984), aff'd, 772 F.2d 894 (3d Cir. 1985). While ambiguities in insurance contracts are to be resolved in favor of the insured, in cases where the language is unambiguous, "there is no place for judicial construction" and "a court has no authority to alter, rewrite or modify the contract." J. Appleman, Insurance Law and Practice, § 7384 at 50-56 (1976); see also Kindervater v. Motorists Casualty Ins. Co., 120 N.J.L. 373, 199 A. 606 (1938).

 Here, the Bond clearly limits F&D's indemnity obligation to losses suffered by United. Insuring Agreement A of the Bond ...


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