Berens & Miller secures victory for FDIC with U.S. District Court Decision over Jackson Walker
~April 2014 A Minnesota U.S. District Court judge on April 17, 2014 ordered Jackson Walker LLP, a Texas law firm, to return to the Federal Insurance Deposit Corporation the amount remaining on a retainer paid by a Minnesota-based bank that went into receivership. Jackson Walker argued that there is no “magic language” required to create a security interest in the retainer and that the retainer agreement made clear that the firm was allowed to hold onto the funds, thus ensuring that the firm would be paid for its services. The FDIC argued that none of the documents on which Jackson Walker relied created a security interest in the retainer and that the law firm failed to take steps, such as timely submitting invoices, to protect properly its claim for payment.
U.S. District Judge Ann D. Montgomery rejected Jackson Walker’s contention that it had a security interest in a $100,000 retainer fee that it held in a trust for Home Savings of America before it was taken over by the FDIC because the retainer agreement did not include any intent to create a security interest. “Jackson Walker must therefore return to the FDIC any balance of this amount not already paid, and may then pursue the collection of its legal service fees as an unsecured creditor,” the Judge wrote in her decision.
For questions about business litigation matters, please call Barbara Berens at Berens & Miller, 612-349-6171.