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[Utah Code Table of Contents]
[TITLE 7. Table of Contents]
7-21-1 Purpose of chapter.
(1) The purposes of this chapter are to improve public confidence in the stability and integrity of thrift institutions operated under the laws of the state, to compromise and settle certain litigation and claims that have arisen against the state with respect to the Industrial Loan Guaranty Corporation and certain thrift institutions in a manner that the Legislature determines to be in the best interest of the state and its inhabitants, and to avoid any unnecessary delay and expense to the state that might result from further prosecution of the litigation and claims against the state.
(2) The Legislature finds and declares that the funding of the program to settle, compromise, resolve, and dispose of litigation and claims against the state as provided in this act constitutes a proper public purpose.
(3) In enacting this chapter, the Legislature does not waive any legal right, claim, or defense of the state including, without limitation, any right, claim, or defense of immunity that the state or the Legislature may have, nor does the Legislature acknowledge or admit any legal obligation or liability in connection with the chartering, operation, and regulation of the thrift institutions or the creation, operation, regulation, supervision, and financial condition of the Industrial Loan Guaranty Corporation.
(4) This chapter is not intended to reduce or eliminate any discretion and control that the court in the depositor class action may have under Rule 23 of the Utah Rules of Civil Procedure or any other rule of law over the process and substantive outcome of the depositor class action. The court shall give liberal effect to the terms of this chapter for the benefit of the settlement process it embodies.
(5) In funding this program to settle litigation and claims against the state, the Legislature intends to benefit primarily the members of the certified class of depositors. In determining the reasonableness of any attorneys' fees awarded to depositors' attorneys, the court shall consider the factors set forth in Rule 1.5(a)(1) through (7) of the Rules of Professional Conduct adopted by the Supreme Court effective January 1, 1988, the time and effort actually expended in this litigation, the current status of this litigation, and all other relevant factors. The Legislature recommends that the court consider the sum of $1,500,000 as being a reasonable maximum limit to the costs and attorneys' fees payable out of the funds provided by this act.
(6) The Legislature encourages other defendants in the
litigation to negotiate settlements as soon as practicable
so that the entire matter may be put to rest for the benefit
of the public.
1988
7-21-2 Definitions.
As used in this chapter:
(1) "Class" and "depositor class" mean the class of depositors in the depositor class action but does not include depositors who lawfully opt out of the class.
(2) "Depositor class action" means the suit of Plumb et al. v. State of Utah et al., Third District Court, State of Utah, No. C-87-4879.
(3) "Depositors," unless the context specifically requires otherwise, means those who on July 31, 1986, held one or more deposit accounts in whatever form in one or more of the thrift institutions who have not on the date for distribution of the settlement proceeds identified in this chapter received the return of their deposit account balances.
(4) "Distribution agent" means the entity appointed by the class action court or retained by the plaintiffs in the depositor class action, subject to approval of the class action court and appropriate bonding or other fiduciary controls, to perform the duties under Section 7-21-6 .
(5) "Guaranty corporation" means the Industrial Loan Guaranty Corporation under Chapter 8a or any predecessor entity.
(6) "Liquidate," when used in connection with the disposition of assets, includes, but is not limited to, the acts of selling, liquidating, collecting, accounting, pursuing claims and causes of action, and any other act necessary or proper in disposing of assets.
(7) (a) "Liquidator" means each liquidator and receiver appointed to administer the thrift institutions and the guaranty corporation, namely:
(i) the accounting firm of Grant Thornton with respect to Charter Thrift and Loan, Copper State Thrift and Loan, Interlake Thrift and Loan, and Western Heritage Thrift and Loan;
(ii) Larry Miller with respect to Commerce Financial; and
(iii) the commissioner of financial institutions with respect to the guaranty corporation.
(b) "Liquidator" includes any successor appointed, and approved by the court where necessary, to succeed any of the liquidators in Subsection (7)(a). This subsection does not alter any requirement for court approval or any standard the court may use in determining whether to appoint or approve a successor.
(8) "Nonsettling carriers" means the insurance carriers of the state that are not parties to the settlement agreement.
(9) "Settlement agreement" means the written settlement agreement between the state, California Union Insurance Company, and the depositors to compromise and settle litigation and depositors' claims against the state in the depositor class action.
(10) "Settling carriers" means the insurance carriers of the state that are parties to the settlement agreement.
(11) (a) "Share in liquidation proceeds" means the share transferred to the state in the right, title, interest, claim, and right to payment of each depositor who is a member of the certified class in the assets and in the beneficial interests in the assets being administered in the liquidation proceedings to which the thrift institutions and the guaranty corporation are subject. Such assets include, but are not limited to, claims against the thrift institutions and the guaranty corporation under Chapter 2, rights to payment, accounts receivable, choses in action, claims for relief, insurance claims, real and personal property, and other such property rights and interests of any kind or nature.
(b) The assets referred to in Subsection (11)(a) do not include:
(i) any claims or potential claims (including claims not yet asserted) of one or more of the thrift institutions as represented by the liquidators of the thrifts against:
(A) any person or entity other than the state and the guaranty corporation arising from the insolvency of the guaranty corporation and the thrift institutions (other than claims in the ordinary course of business arising from loans or other normal commercial relationships); or
(B) the owners, directors, officers, trustees, attorneys, accountants, or managing agents of the thrift institutions, the guaranty corporation, or the depositors in Utah thrifts; or
(ii) (A) any claims of any nature, including potential claims and claims not yet asserted, of the guaranty corporation against any party or person other than the state of Utah; or
(B) the rights of the guaranty corporation, if any, to participate or share standing to make claims with the depositors, the thrift institutions, or other entities or persons on behalf of the depositors of the thrift institutions.
(12) "Thrift institutions" means collectively: Charter
Thrift and Loan, Commerce Financial, Copper State Thrift
and Loan, Interlake Thrift and Loan, and Western Heritage
Thrift and Loan, each of which has operated under the laws
of this state as a thrift institutionand is presently the
subject of insolvency proceedings.
1995
7-21-3 Conditions for funding settlement.
Each of the conditions listed in this section shall be fulfilled before the funding authorized in this act may be appropriated or distributed or the share in state assets may be transferred to depositors. The state shall cooperate with the depositor class representatives in fulfilling these conditions. This section does not alter any standard or law to which the required conditions, including court approvals, may be subject, including Rule 23 of the Utah Rules of Civil Procedure, but those requirements shall be interpreted liberally, as allowed by law, to give effect to the settlement agreement:
(1) The depositor class shall have been certified as a class representing all depositors in the thrift institutions whose deposit balances as of July 31, 1986, have not been fully repaid as of the date of distribution of settlement proceeds under the settlement agreement. In fulfilling this condition, the state shall join in the motion before the depositor class action court to certify the class. Each depositor who opts out of the class shall cease to be a member of the class.
(2) The class action court shall have found that no more than 10% of the depositors have opted out of the class.
(3) The court shall have approved the settlement agreement.
(4) The settling carriers and the nonsettling carriers shall have provided the sum of $19,000,000 for the financing of their portion of the settlement agreement, subject only to consummation of the settlement.
(5) As soon as reasonably practicable, the liquidators shall have reported in writing their current estimate of the amounts owing to each individual depositor as of July 31, 1986. The report shall be made to the liquidation court, the state, the depositor class action court, and the depositor class representatives.
(6) The class action court shall have approved the transfer of the share in liquidation proceeds to the state. To evidence fulfillment of the transfer, a court-appointed agent of the depositor class shall execute and deliver a written transfer of the share to the state. The order approving the transfer shall state the amount to be distributed to the distribution agent in exchange for the share in liquidation proceeds.
(7) (a) The class action court shall have appointed a distribution agent; or
(b) The plaintiffs in the depositor class action shall have selected a responsible entity to act as distribution agent and the court shall have approved that selection.
(8) The settlement agreement shall comply with Section 7-21-4 and shall have been countersigned by the class action judge to signify preliminary approval and prospective implementation of the settlement contained in that agreement, subject to the requirements of Rule 23 of the Utah Rules of Civil Procedure.
(9) The parties shall have obtained other court approval,
if required by law, to consummate the settlement agreement
and effect the transfer of the share in liquidation proceeds
to the state.
1988
7-21-4 Terms of settlement agreement.
The settlement agreement shall contain at least the following terms, among others:
(1) (a) A depositor is not entitled to receive from the settlement distribution an amount that, when added to that depositor's share of withdrawals and distributions made since July 31, 1986, exceeds 100% of the principal account balance and accrued interest owing to that depositor as of July 31, 1986, until and unless each other depositor in the class shall have received at least the same proportionate return.
(b) In making the distributions under this chapter, the liquidator and distribution agent shall attempt to provide each depositor in the class with the same proportionate return.
(2) The parties shall agree that the class action court may reserve or distribute from the amount distributed in settlement to the depositor class a sinking fund for expenses of the class action, including prospective litigation costs not to exceed $1,000,000.
(3) The state's contribution of funds for the settlement agreement shall be derived only from the following sources and shall be limited in the following amounts:
(a) $10,000,000 from the General Fund for distribution to depositors through the distribution agent;
(b) $15,000,000 from the General Fund for distribution to depositors through the distribution agent in exchange for a share in liquidation proceeds; and
(c) $19,000,000 to be provided by one or more of the state's insurance carriers pursuant to the settlement agreement.
(4) The parties shall agree that the maximum amount of the state's contribution to the settlement agreement is $44,000,000, subject to a proportionate reduction to account for depositors who opt out of the class. This reduction shall be shared by the state and the settling carriers in the form of a prorated reduction in each of the amounts set forth in Subsection (3).
(5) The parties shall agree to each of the following terms with respect to any amount, other than recoveries assigned to the state by the transfer of the share in liquidation proceeds, that the state, the depositors, and the state's settling carriers recover from claims against others in the class action or any other persons, except for claims that may exist against nonsettling carriers, whether or not the state or the depositors are parties, arising from or related to the thrift institutions, the guaranty corporation, or their insolvencies, regardless of whether or when the claims or actions are filed or asserted:
(a) The state and its settling carriers shall join in the depositor class action by intervention on the side of the depositors as plaintiffs or in such other designation as the class action court shall agree adequately states and represents the state and the carriers' interests and standing in the litigation. The state, the depositor class, and the carriers may collectively or separately appoint and instruct counsel as they consider appropriate, and the settling carriers may participate in the class action in the name and on behalf of the state.
(b) The depositor class and the state shall share equally the first $5,000,000 recovered and shall have discretion as provided in the settlement agreement over the persons or entities from whom recovered, the timing of settlement, if any, and the nature and extent of claims reduced to judgment, compromised, or dismissed to produce that result.
(c) After the amount in Subsection (b) has been recovered, the depositor class shall be entitled to one-third, the state to one-third, and the settling carriers to one-third of additional recoveries, after deducting costs of litigation, obtained in actions pursued by the state, the state's insurance carriers, or by the class. A party recovering any amount under this provision shall do so subject to a division of the funds or property in accordance with the formula in this subsection.
(d) The settling carriers, the state, and the depositor class shall share equally in the out-of-pocket costs of further litigation, as provided in the settlement agreement, in the same proportion as recovery is permitted under this subsection. The depositors shall bear their own costs of litigation up to the court-approved date of the settlement agreement. Costs of litigation, as used in this subsection, do not include attorneys' fees but shall include all other expenditures incurred directly for the benefit of the litigation, whether or not taxable as costs in the litigation.
(e) The future litigation in this subsection is subject to the approval of the Thrifts Panel as provided in Section 7-21-7 .
(6) To the end that the state will have no further exposure or risk whatever of liability to the depositor class directly or indirectly by way of contribution or indemnification to others, the settlement agreement shall contain a release providing that the depositor class and their representatives shall:
(a) release the state from all liability to the depositor class arising out of the subject matter of the settlement; and
(b) reduce and satisfy any judgment or claims which the depositor class has or may obtain against the defendants or others to the extent that such defendants or others can or do obtain a judgment or judgments against the state for indemnification or contribution.
(7) The depositors shall agree to transfer to the state a share in liquidation proceeds in exchange for $15,000,000, less the amount necessary to account for depositors who opt out of the class.
(8) Regarding the transfer to the state of a share in liquidation proceeds, the depositors shall agree that:
(a) the state shall distribute the amount it pays for its share to the distribution agent;
(b) the state's share in liquidation proceeds entitles it to be the direct recipient of 50% of all amounts to which class members are entitled as a result of the sale, liquidation, or other disposition of assets subject to the liquidation proceedings until the state has received the full amount it paid in exchange for its share;
(c) the liquidators shall pay the state its share directly;
(d) after the state has received the full amount it paid in exchange for its share in liquidation proceeds, the depositors shall be entitled to their liquidation proceeds without sharing with the state;
(e) the state's share in liquidation proceeds shall extend to the proceeds of the liquidation of the guaranty corporation; and
(f) with regard to funds held by the liquidator of the guaranty corporation for distribution to depositors, the liquidator shall:
(i) distribute the amounts payable to members of the class through the liquidators of the thrift institutions so that the state can, in turn, receive its share; or
(ii) otherwise facilitate the accounting of the distribution
so that the amount the state receives out of the distribution
correctly reflects and amortizes its share in liquidation
proceeds from each thrift.
1988
7-21-5 Release of claims by depositor class.
(1) The class action court, on behalf of all depositors who have not opted out of the class action settlement with the state, shall execute on behalf of the depositors, or instruct another to execute, a general release of all claims of the depositors arising out of the subject matter of this act and the settlement of claims by the depositors against the parties specified in Subsection (2), as provided in the settlement agreement. This release shall apply to known and unknown claims, whether or not liquidated or contingent, and regardless of whether any such claim has been filed in litigation.
(2) The release under this section shall apply to:
(a) the state and the settling carriers;
(b) any of the following who sign a general release in a form approved by the attorney general which releases the state and the settling carriers from all claims arising out of the subject matter of this act:
(i) any person who has served as a trustee or an officer of the guaranty corporation for any act, error, or omission made while acting in that capacity, except to the extent of claims for criminally culpable conduct; and
(ii) any person who has served as an owner, an officer,
or a director of any thrift institution which obtained insurance
from the Federal Deposit Insurance Corporation at the request
of the state or in compliance with state law or rule, or
any thrift institution which obtained insurance from the
Federal Deposit Insurance Corporation at the request of the
state or in compliance with state law or rule for any act,
error, or omission made while acting in that capacity, except
to the extent of claims for criminally culpable conduct.
1995
7-21-6 Distribution agent duties, authorized expenses, and court approval.
(1) The distribution agent appointed or approved by the class action court shall receive funds from the state, its insurance carriers, or any other source for distribution to the depositor class under the settlement agreement. Until distributing the funds, the distribution agent shall invest them in any investment approved for investment by trustees under 11 U.S.C. Sec. 101 et seq., the United States Bankruptcy Code.
(2) The class action court shall, as part of the class action settlement procedure, control and approve the activities of the distribution agent, who may petition the class action court for instructions as the distribution agent considers necessary.
(3) The distribution agent may, as approved by the class action court in the process established by the court under Rule 23 of the Utah Rules of Procedure relating to the distribution of settlement funds on behalf of the state, preside over any dispute over the title, amount, or beneficial interest in depositor accounts to be credited with settlement proceeds.
(4) The distribution agent's expenses shall, as approved by the court, be paid out of the class action proceeds for distribution in settlement or from proceeds of other settlements or judgments that the class may receive. The distribution agent may, with prior court approval, employ independent legal counsel to assist it in fulfilling its obligations.
(5) The distribution agent shall on the completion of
its duties, or at such intermediate time or occasion as the
court shall approve, receive a discharge for all its prior
acts as distribution agent, whereupon no claim or demand
of any kind shall be made on the distribution agent for its
prior services or any act undertaken in that service, except
for acts or omissions resulting from intentional misconduct
or breach of fiduciary duty.
1988
7-21-7 Thrifts Panel created - Members named - Screening process.
(1) There is created a Thrifts Panel to screen all claims for recovery under Subsection 7-21-4 (5). This panel shall have binding power to authorize or refuse to authorize any litigation in these claims, whether arising from the interests of the depositor class, the state, or the settling carriers.
(2) The panel shall consist of three members, not more than two from any political party, who are not legislators. One member of the panel shall be selected by the governor from candidates nominated by settling carriers; one member shall be selected by the governor; and the remaining member shall be selected by the other members.
(3) In making its determination, the panel shall consider, among other things, whether:
(a) the claims appear to be grounded in fact or warranted by existing law or by a good faith argument for the extension, modification, or reversal of existing law;
(b) the proposed claim can be collected or would be equitable to pursue; and
(c) action on the claim may create more liability for
the state.
1988
7-21-8 No payment to depositors opting out.
A depositor who opts out of the certified class of thrift depositors is not entitled to and may not receive:
(1) any portion of the amounts appropriated under this act; or
(2) any portion of the amounts provided by the state's
insurance carriers under the settlement agreement.
1988
7-21-9 Division of Finance title, receipt and deposit of state share of liquidation proceeds.
(1) The Division of Finance on behalf of the state is authorized to:
(a) take title to the share in liquidation proceeds transferred or to be transferred to the state in accordance with the settlement agreement;
(b) receive distributions, including interim distributions by the liquidators under Title 7, Chapter 2, made payable to the state by the transfer of the share in liquidation proceeds to the state; and
(c) deposit all proceeds and distributions received into a restricted account in the General Fund created for that purpose.
(2) This section does not limit the state's authority
to exercise any other power it may have to take title to
and receive its share in liquidation proceeds.
1988
7-21-10 Conditions for repeal of chapter - Severability.
(1) This chapter shall be repealed 90 days after its effective date if any of the conditions stated in Section 7-21-3 , except for the condition stated in Subsection 7-21-3 (2), has not been fulfilled as of that date.
(2) If any provision of this chapter, or the application
of any provision to any person or circumstance, is held invalid,
the remainder of this chapter shall be given effect without
the invalid provision or application.
1988
