Federal Deposit Insurance Corp. V. American Casualty Co‪.‬

This case raises two questions decided by the court of appeals in Federal Deposit Ins. Corp. v. Bowen, 824 P.2d 41 (Colo. App. 1991). The court of appeals held that the terms of a "regulatory exclusion" in a directors' and officers' liability insurance policy issued by American Casualty Company to the Buena Vista Bank and Trust Company, a state-chartered banking institution that later was declared insolvent and was closed by the Colorado Banking Commission, unambiguously excluded coverage for claims "based upon or attributable to" actions brought by the Federal Deposit Insurance Corporation (FDIC), either in the FDIC's capacity as a bank regulator or in its capacity as liquidator of the insolvent bank on behalf of the bank's depositors, creditors, and stockholders. The court of appeals also held that neither federal nor state public policy precluded judicial enforcement of the regulatory exclusion under circumstances where the FDIC obtained a judgment against the insolvent bank's former directors for negligence and breach of fiduciary duty in managing the bank and then attempted to garnish the insurance proceeds as an asset of the bank. We granted the FDIC's petition for certiorari to review the court of appeals' resolution of these issues. Although we conclude that the regulatory exclusion is unambiguously written so as to exclude coverage for common law claims asserted by the FDIC against the former directors of the insolvent bank,  we hold that judicial enforcement of the regulatory exclusion contravenes the important public policy underlying the Colorado Banking Code of 1957, §§ 11-1-101 to -11-11-110 and 11-22-101 to -11-23-125, 4B C.R.S. (1987 & 1992 Supp.), of vesting the FDIC, in its role as liquidator of an insolvent state-chartered bank, with the authority and responsibility for protecting the legitimate interests of the bank's depositors, creditors, and stockholders by marshalling the bank's assets and equitably compensating them for their losses resulting from the negligence and breach of fiduciary duty on the part of the bank's former directors. By the term "the bank's assets," we mean the property interest of both the Buena Vista Bank and the bank's former directors in the directors' and officers' liability police issued to the bank. We accordingly reverse the judgment of the court of appeals and remand the case to that court for consideration of any other issues raised by the parties in the original appeal to that court and not resolved by the court of appeals in its opinion.