Plaintiff Michael E. Kelly (“Mr. Kelly”) is CEO and sole common shareholder of Plaintiff FBOP Corporation (“FBOP”). FBOP was a bank holding company that held nine banks: (1) Park National Bank; (2) San Diego National Bank; (3) Pacific National Bank; (4) BankUSA; (5) North Houston Bank; (6) Madison State Bank; (7) Community Bank of Lemont; (8) Citizens National Bank; and (9) California National Bank (“FBOP Subsidiaries”).
FBOP has standing and asserts claims for relief on behalf of the FBOP Subsidiaries, which owned $898,448,392 in GSE preferred shares when the conservatorships were unlawfully imposed on the GSEs on September 6, 2008.
The imposition of the conservatorships violated Plaintiffs’ constitutional rights under the Fifth Amendment, as well as Plaintiffs’ contractual rights. Based on the facts set forth herein, Plaintiffs assert three causes of action: (1) unlawful taking and/or illegal exaction, as a direct claim; (2) unlawful taking and/or illegal exaction, alternatively as a derivative claim; and (3) breach of implied regulatory contract.
Although the Government purported to gain the consent of the GSEs’ boards, that consent was invalid, as it was obtained by coercion and given only under duress.
5. The immediate impact of the Government’s actions on September 6 and 7 was to deprive the private shareholders, including Plaintiffs, of their property rights as shareholders, including the loss of their dividend and voting rights, and to destroy the economic value of the shares themselves. Given the Government’s efforts to encourage banks such as the FBOP Subsidiaries and River Capital to invest in the GSEs, the Government’s destruction of the shareholders’ rights and the value of their property was a dramatic departure from Plaintiffs’ reasonable expectations when they purchased the GSE shares.
