IN RE: Hamilton Bank (of Atlanta) Securities Litigation

Case MDL No. 288 Document 2 Filed 05/05/15 Page 1 of 11- . Hip a Se
BEFORE THE JUDICIAL PANEL ON MULTIDISTRICT RITIGATION 7, SoLy. . PE oe : :
MDL-288	-- In re Hamilton Bank (of Atlanta) sécuritils/fpitigation REVLE ENE Bg ¢y . -
ORDER DENYING MOTION AS MOOT CE eT
| ORDER DENYING HOTION 85 HOOT a NUL.It appearing that an order was entered in the Lo
action filed in the Eastern District of Tennessee trans-
ferring that action to the Northern District of Georgia :
pursuant to 28 U.S.C. §1406(c), Co
IT IS THEREFORE ORDERED that the motion pursuant . TT i :
to 28 U.S.C. §1407 for transfer of the action filed in the i :
Eastern District of Tennessee and listed on the attached
Schedule A to the Northern District of Georgia be, and the Co
‘same hereby is, DENIED as moot. ’
: FOR THE PANEL: :
Ed
CI Gn FIL TN ae 8
John Minor Wisdom
Chairman

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SCHEDULE A MDL- 288
NORTHERN DISTRICT OF GEORGIA
The Hamilton Bank & Trust Co. v. T. Wendell . Civil Action
Holliday, et al. : No. C76-1558A
William L. Gunter, et ux. v. Theodore M. Civil Action
Hutcheson, et al. No. 76-1702A
: EASTERN DISTRICT OF TENNESSEE
Federal Deposit Insurance Corp., et al. v. Civil Action
William L. Gunter, et al.* No. 1-76-248
(*) Transferred on January 25, 1977 to the United States
~ District Court for the Northern District of Georgia
under 28 U.S.C. §1406(c).

Case MDL No. 288 Document 2 Filed 05/05/15 Page 3 of 11
| JUDICIAL PANEL OH = = © =
DOCKET NO. 288 MULTINSTRICT LITCA oe
FILED |
BEFORE THE JUDICIAL PANEL ON MULTIDISTRICT LITIGATION NPR 2G 1977 SE : ~
IN RE HAMILTON BANK (OF ATLANTA) SECURITIES LITIGATION BATRA I EAR Co Ce Ea
CLERK	OF THE PANE
TO COUNSEL FOR ALL PARTIES INVOLVED IN THE HAMILTON BANK ¢ a
(OF ATLANTA) SECURITIES LITIGATION .
ORDER TO SHOW CAUSE gomYou and each of you are hereby ordered to show cause why EE ST
the actions listed on the attached Schedule A should not be CO TELIA ME
transferred pursuant to 28 U.S.C. §1407 to a single district : i
for coordinated or consolidated pretrial proceedings.
Responses to this order shall conform with the requirements
of Rule 8, of the Rules of Procedure of the Judicial Panel on
Multidistrict Litigation, 65 F.R.D. 253 (1975). :
You are further notified that the issuing of this order
by the Panel does not affect or suspend orders and discovery Pe
proceedings in the district court in which said multidistrict a
litigation is pending. RPJPML (Rule 16). Po oo
FOR THE PANEL:
pro . LD	PN Moran. isfenan
John Minor Wisdom
Chairman
Attachment
}
ii
:

Case MDL No. 288 Document 2 Filed 05/05/15 Page 4 of 11
® DOCKET NO. 288 SCHEDULE A
NORTHERN DISTRICT OF GEORGIA
The Hamilton Bank & Trust Co. v. T. Civil Action
Wendell Holliday, et al. No. C76-1558A
William L. Gunter, et ux. v. Theodore M. Civil Action
- Hutcheson, et al No. C76-1702a
EASTERN DISTRICT OF TENNESSEE
Kyle R. Weems, Trustee v. N. Roundtree Civil Action
Youmans, et al. No. 1-77-30

— Case MDL No. 288 Document 2 Filed 05/05/15 Page 5 of 11
x= © ==
BEFORE THE JUDICIAL PANEL oe a ao Co
ON mx o=E SUEUR BE
MULTIDISTRICT LITIGATION pe ~ Do RR :Flos = |. Si I :
IN RE HAMILTON BANK (OF ATLANTA) ) DOCKET oz 288 ©
SECURITIES LITIGATION ) Sn ==
OPINION AND ORDER Soy
-_— 111BEFORE JOHN MINOR WISDOM, CHAIRMAN, AND EDWARD WEINFELD, EE EE
EDWIN A. ROBSON, JOSEPH S. LORD, III, STANLEY A. WEIGEL, EE TSLIFE	NE SE
ANDREW A. CAFFREY AND ROY W. HARPER, JUDGES OF THE PANEL. So Cs cL
PER CURIAM
This litigation consists of three actions pending in two oo
federal districts -- two in the Northern District of Georgia oo Co
and one in the Eastern District of Tennessee. The principal oo Co
actors in this litigation are Hamilton Naticnal Bank of
Chattanooga (Chattanooga bank); Hamilton Factors, a company
engaged in the business of establishing pools of accounts,
notes and obligations of other persons and selling :
participations in those pools; Hamilton Mortgage Corpora-
tion; Hamilton Bancshares, a bank holding corporation Co
which allegedly owned the stock of the above entities oo
(collectively referred to as the Hamilton family of insti-
tutions); officers and directors of the above entities;
the accountants for Hamilton Bancshares; Hamilton Bank and
Trust Co. (Atlanta bank); William L. and Camille S. Gunter,
individual investors in the Atlanta bank; and the Federal
Deposit Insurance Corporation (FDIC), in its capacities as

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C receiver and liquidator for the Chattanooga bank and as
successor in interest to the Atlanta bank. The members
of the Hamilton family of institutions are presently in
bankruptcy proceedings, and are therefore not named as
defendants in any of the actions before the Panel. Eighteen
individuals are each named as defendants in all three actions,
nineteen individuals are each named as defendants in two of
the three actions, and several other individuals are named
as defendants in only one action.
One of the Georgia actions was filed by the Atlanta
bank under the federal securities laws, Georgia securities
laws and principles of common law fraud against certain
® officers and directors of Hamilton Factors and Hamilton
Bancshares. The Atlanta bank states that it purchased certain
loan participations from Hamilton Factors in September 1974
and May 1975.- In each instance, the Atlanta bank alleges,
it was a passive investor in the loan pool and, in making
the decision to invest, relied on prospectuses and oral
communications concerning the operation of the loan pool
and the quality and security of the loans in the loan pool.
Subsequently, the Atlanta bank alleges, it discovered
that those prospectuses and oral communications contained
material misrepresentations and that therefore it had been
fraudulently induced to invest in the loan pool. The
Atlanta bank seeks rescission	of the purchase of the loan
@® participations, or, in the alternative, damages of $700,000.

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: 5
® The other Georgia action (Gunter) was filed by William :
and Camille Gunter under, inter alia, the federal securities
laws, Georgia securities laws and principles of common law
fraud against certain officers and directors of the
Chattanooga bank and Hamilton Bancshares. The Gunters
state that on December 30, 1974, they were induced by the
defendants to purchase 302,373 shares of common stock in
the Atlanta bank for a total of $5.5 million. In payment
for the stock, the Gunters allege that they executed notes
payable to the Chattanooga bank in the amounts of $2.5
million and $3 million. The Gunters allege that in making
their decision to invest they relied on the representations of
® the defendants concerning, among other factors, the financialcondition of the Atlanta bank and the soundness of certain loan
participations which the Atlanta bank had acquired from |
Hamilton Factors. Plaintiffs allege that subsequent investi-
gation has revealed that the representations made to induce
them to invest were fraudulent; that the Atlanta bank has
since failed; and that they have suffered substantial damages.
The Gunters seek to rescind the purchase contract, or
alternatively, they seek damages from the defendants.
The complaint in the Gunter action has been amended to
add the FDIC as a defendant.
The Tennessee action was filed by the trustee in
bankruptcy for Hamilton Bancshares under, inter alia, the
() federal securities laws and principles of negligence and

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breach of fiduciary duties. Defendants are officers and
® directors of Hamilton Bancshares, Hamilton Mortgage Corp.
and the Chattanooga bank; and the accountants for Hamilton
Bancshares. The action is brought by the trustee for the
benefit of the creditors and stockholders of those three
Hamilton entities. Plaintiff alleges that mismanagement
of the three Hamilton entities by the officers and directors
and failure by the accountants to ascertain and report
accurately the financial condition of those entities re-
sulted in the failure of the Hamilton family of institutions.
Plaintiff seeks damages in the amount of $150 million, the
alleged losses of the creditors and stockholders.
pursuant to 28 U.S.C. §1407(c)	(i) and Rule 8,
@ R.or.o.p.M.L., 65 F.R.D. 253, 258-59 (1975), the Panel
issued an order to show cause why these three actions
should not be transferred to a single district for coordi-
nated or consolidated pretrial proceedings. All responding
parties except the trustee for Hamilton Bancshares oppose
transfer.
Although we recognize the existence of some common
questions of fact among these actions, we find that trans-
fer under Section 1407 would not necessarily serve the con-
venience of the parties and witnesses or promote the just
and efficient conduct of these actions. Accordingly, the
order to show cause is vacated.
C 1/0One party suggests that, in the event transfer is ordered inthis litigation, the Panel also transfer a fourth action --
Batchelor, et al. v. Hamilton Bancshares, Inc., et al., W.D.
Tennessee, Civil Action No. C-/5-511. Since we are denying
transfer in this litigation, that request is moot.

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® The trustee stresses that there is an overlap amongthe defendants in these three actions; that certain areas
of factual inquiry concerning the activities of those
defendants and others in connection with the failure of the
Hamilton family of institutions, and the alleged misrepre-
sentations by those defendants and others concerning the
financial condition of the Hamilton family of institutions,
will be common to these actions; and that transfer of these
actions to a single district pursuant to Section 1407 is .
therefore appropriate.
We disagree. Only three actions in two districts are
involved here. Viewing the record before us in the light
most favorable to the advocate of transfer, we realize
® that these three actions may share some questions of fact
regarding the operation of Hamilton Factor's loan pools
and some of the allegedly intertwined activities of the
Hamilton entities. The Tennessee action, hewever, is much
broader in scope than the Georgia actions. The complaint
in the Tennessee action alleges general mismanagement of
several Hamilton entities. In contrast, the complaints in
the two Georgia actions focus on alleged misrepresentations
concerning specific transactions involving fewer of those
entities. In any event, we are simply not persuaded at the
present time that the common factual questions that may be
present are complex enough to justify transfer under
® Section 1407. See In re Scotch Whiskey, 299 F. Supp. 543,
544 (J.P.M.L. 1969). our decision is made without prejudice

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. Ce.
eo to the right of any party to move for transfer at a later
date if it believes future circumstances so require.
IT IS THEREFORE ORDERED that the order to show cause
regarding the actions listed on the following Schedule A be,
and the same hereby is, VACATED, without prejudice to the
right of any party to move for transfer under Section 1407
at a later date if it believes future circumstances so
require.
®
®

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Schedule A MDL-288
NORTHERN DISTRICT OF GEORGIA
The Hamilton Bank & Trust Co. V. Civil Action
T. Wendell Holliday, et al. No. C76-1558A
william L Gunter, et ux. v. Civil Action
Theodore M. Hutcheson, et zal. No. C76-1702Aa
EASTERN DISTRICT OF TENNESSEE
Kyle R. Weems, Trustee v. N. Roundtree Civil Action
Youmans, et al. No. 1-77-30