Colorado Business Litigation Lawyer Blog

According to the Federal Deposit Insurance Corporation (FDIC), there were 157 bank failures in 2010. Through January 21st of this year, 7 banks have failed. The most recent failure is United Western Bank in Denver, Colorado, whose deposits have been assumed by First Citizens Bank & Trust Co. of Raleigh, N.C. The year 2009 saw 140 failures, while there were only 25 failures in 2008, 3 in 2007 and none for 2006 and 2005. These failures paint a stark picture of the condition of our economy and of the banking system in particular, especially over the past two full years.

On the bright side, the deposits of most failed banks were assumed by other banks in transactions that were basically seamless, with the assuming banks opening for business either immediately or very shortly after the closure of the failed bank. Depositors of insured accounts were not affected by the transition. As most people are aware, checking and savings accounts in banks and thrift institutions are insured by the FDIC up to $250,000 per depositor, per insured bank, for each account ownership category.

The FDIC, an independent agency of the federal government, began operating on January 1, 1934, following the thousands of bank failures that occurred in the 1920s and early 1930s. The agency was created for the purpose of promoting confidence in the financial system. Today, the FDIC insures more than $7 trillion of deposits in virtually every bank and thrift in the U.S. No depositor of insured funds has lost a single cent since the FDIC began operations.

Funding for the FDIC is not provided by taxpayer dollars. Rather, it is funded by premiums that banks and thrift associations pay for deposit insurance coverage and from earnings from investments in U.S. Treasury securities. A five-person board of directors is appointed by the President and confirmed by the Senate. No more than three directors can be from the same political party.

To help determine if your deposits are fully insured, click here.

As reported in the Denver Post, the Tenth Circuit Court of Appeals in a September 10, 2010 opinion reversed a $926 million award made to an estimated 15,000 owners of property south of the former Rocky Flats nuclear weapons plant, a short distance northwest of Denver.

The award was made in a lawsuit filed in 1990 and tried in a four- month long trial in 2006. The plaintiffs showed that their property had been polluted by plutonium from the weapons plant. The appeals court remanded the case to the U.S. District Court in Colorado because of erroneous jury instructions. In effect, the court held that the plaintiffs were required to prove actual damage to their property caused by the plutonium contamination, rather than merely proving that their property values decreased.

Dow Chemical Co. and the former Rockwell International Corp. successively operated the plant for the Department of Energy from the 1950s until 1989, when the plant was closed for safety and environmental reasons.

The appellate court said, "on remand, Plaintiffs will be tasked with producing additional evidence that could support that a nuclear incident occurred, in the form of 'loss of or damage to property or loss of use of property.' "

This 46-page opinion [click here for link] starkly demonstrates that the strict letter of the law and plain old common sense sometimes do not go hand-in-hand. And we say this with the utmost of respect for the law, the courts and the judges.

Hypothetically, if you are a landowner whose property has been polluted by plutonium and you want to sell the land, would a prospective buyer who is aware of the pollution really care if the property has in fact been damaged, irrespective of the niceties of the law? Who should bear the cost of the diminished value of the property, even if it is caused by the buyer’s honest, yet perhaps speculative fear that the property has been damaged? Why should the innocent landowners have to wait 20 years and another unknown number of years for this litigation to end?