United States Supreme Court
409 U.S. 315 (1991)
Thomas A. Gaubert (plaintiff) was the chairman and largest shareholder of the Independent American Savings Association (IASA), a Texas chartered federally insured savings and loan. In 1984, the Federal Home Loan Bank Board (FHLBB) sought to have IASA merge with Investex Savings, a failing Texas thrift. The FHLBB and the Federal Home Loan Bank-Dallas (FHLB-D) requested that Gaubert sign a neutralization agreement to remove him from IASA’s management and to post a $25 million interest in real property as security for his personal guarantee that IASA’s net worth would exceed regulatory minimums. Gaubert agreed. Federal officials then provided regulatory and financial advice to complete the merger. In the spring of 1986, regulators threatened to close IASA unless its management and board of directors were replaced. IASA’s current management and board agreed to step down and were replaced with persons recommended by FHLB-D. After new management took over, FHLB-D became heavily involved in IASA’s daily management. Although IASA had been financially sound while Gaubert managed it, in 1987, the new directors announced that IASA had a substantial negative net worth. Gaubert filed a claim under the Federal Tort Claims Act (FTCA) in the United States District Court for the Northern District of Texas, seeking $100 million in damages for the alleged negligence by FHLBB and FHLB-D officials. The court of appeals found for Gaubert, finding that the federal officials were not exempt from liability under the FTCA under the FTCA’s exception for liability for discretionary functions. The government appealed and the Supreme Court granted certiorari.
Rule of Law
Holding and Reasoning (White, J.)
Concurrence (Scalia, J.)
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