Federal Savings and Loan Insurance Corp. v. McGinnis, Juban, Bevan, Mullins & Patterson, P.C.

George Bevan was a partner in the law firm of McGinnis, Juban, Bevan, Mullins & Patterson, P.C. (McGinnis). Bevan had expertise in real estate matters. Sun Belt Federal Bank, F.S.B. (Sun Belt), hired Bevan to serve as closing attorney on a loan to Mande Cove, Inc., and paid McGinnis legal fees in connection with the closing. Mande Cove defaulted on the loan. Sun Belt was declared insolvent, and the Federal Savings and Loan Insurance Corporation (FSLIC) (plaintiff) was appointed receiver. The FSLIC sued Bevan as well as McGinnis and its insurance carrier (collectively, the McGinnis parties) (defendants) claiming that if Bevan had not breached his fiduciary duty, Sun Belt would not have made the loan or would have restructured it. The FSLIC alleged that Bevan performed a negligent title search on the collateral, intentionally or negligently failed to inform Sun Belt’s disinterested officers and directors that the loan would violate the federal one-borrower regulation because Mande Cove’s principals intended to use the loan proceeds to pay past-due interest on prior Sun Belt loans, and failed to inform Sun Belt’s disinterested officers and directors that Bevan was representing the Mande Cove principals in past loans while also acting as Sun Belt’s closing attorney. The McGinnis parties moved for summary judgment, seeking an order that McGinnis was not vicariously liable for Bevan’s intentional or fraudulent torts or breach of fiduciary duty. The Federal Deposit Insurance Corporation (FDIC), which succeeded to FSLIC’s interest as plaintiff, cross-moved for summary judgment, seeking an order that McGinnis was vicariously liable for all of Bevan’s alleged wrongdoing.