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Abuse of Discretion – Damages

By: Derek Hawkins//November 1, 2021//

Abuse of Discretion – Damages

By: Derek Hawkins//November 1, 2021//

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7th Circuit Court of Appeals

Case Name: Federal Deposit Insurance Corporation v. Chicago Title Insurance Company, et al.,

Case No.: 20-1572

Officials: WOOD, HAMILTON, and KIRSCH, Circuit Judges.

Focus:  Abuse of Discretion – Damages

This case arose from the fraudulent financing of purchases of four properties in Chicago back in 2006. The borrowers concealed their lack of equity from the lender. All defaulted, and the lending bank later went into receivership. As receiver for that bank, the FDIC brought this suit against the title insurance company that conducted the fraudulent closings and an appraisal company that aided the transactions.

The FDIC settled with the appraisal company and went to trial against the title insurance company, winning a verdict but for less than the FDIC believes was warranted. The FDIC’s appeal raises three issues. The first is whether the district court erred by denying prejudgment interest to the FDIC. That issue requires us to address a somewhat Delphic statutory provision telling courts to award “appropriate” prejudgment interest in FDIC receivership cases that blend federal and state law. See 12 U.S.C. § 1821(l). We conclude that the statute gave the district court authority to exercise its discretion and to look to state law for guidance, and we find no legal error or abuse of discretion in denying prejudgment interest. The second and third issues are narrower and more specific to this case. Our second conclusion is that, because of difficult causation issues, the district court did not abuse its discretion in refusing to amend the jury verdict to add more damages. Our third, however, is that the district court erred in giving the title company a $500,000 setoff for the appraisal company’s settlement. We affirm the judgment for the FDIC as far as it went but remand with instructions to add the setoff amount back into the judgment.

Affirmed in part. Reversed and remanded

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Derek A Hawkins is Corporate Counsel, at Salesforce.

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