January 28, 1997
by John Flynn Rooney
Law Bulletin staff writer

An attorney for the U.S. Rep. Henry Hyde told a federal judge Tuesday that a claim against his client stemming from a failed suburban savings and loan association has been resolved and that the Republican congressman won't contribute to the $850,000 settlement.

But U.S. District Judge George M. Marovich delayed dismissing the case Tuesday against Hyde and 11 other former directors of the failed Clyde Federal Savings and Loan Association after an attorney for the Federal Deposit Insurance Corp. objected.

"It's over as far as my client is concerned," Chicago lawyer William J. Harte told Marovich during a status hearing in the case alleging gross negligence by Hyde and the other directors.

Marovich set a status hearing for March 5, when he could be presented with final settlement documents and dismiss the case.

Donald C. Shine, a Nisen & Elliott partner who represents defendant Thomas Martin, suggested that Marovich dismiss the lawsuit and allow the government to refile the case within 30 days if the settlement was not finalized.

But FDIC attorney Karen L. Levine objected. Although the settlement agreement went through seven drafts, the final agreement does not yet include all of the defendants' signatures, and the agency has yet to receive the settlement payment, she added.

"We need the money before Mr. Hyde can be released" from the case, Levine, a partner with the Chicago law firm of Novack and Macey, told Marovich.

Marovich told the attorneys he was willing to dismiss the case with the condition that the FDIC could refile it in a month if the settlement was not finalized. But after Levine objected, Marovich set the March status date.

"I am not interjecting myself into your little squabble," Marovich told the attorneys.

The Resolution Trust Corp. filed the lawsuit in 1993 seeking to recover about $17 million, following the failure of the North Riverside-based thrift three years earlier. The FDIC took the case over when the RTC went out of business.

The proposed settlement includes two agreements - one covering Hyde and another for the other 11 defendants, according to attorneys in the case.

Harte told Marovich that Hyde will pay nothing toward the settlement. Harte said after the hearing, "[Hyde] is not paying any money. He still asserts he is not liable. The documents will indicate that."

FDIC spokesman David Barr said Hyde and the other defendants will not be released from the lawsuit until the $850,000 is paid.

While charges of simply negligence, breach of fiduciary duty and breach of contract are still pending, Rep. Hyde and the other directors filed an amended motion to dismiss those charges earlier this month.

Barr added that Hyde requested a separate settlement agreement, which is not unusual in a global settlement such as was proposed in the Clyde Federal case.

Jeffrey Ross Williams, an FDIC counsel in Washington D.C., said he expects that his office will receive a signed settlement agreement by week's end and that officials will then receive the $850,000 in settlement funds.

Hyde left the Clyde Federal board in 1984 after more than two years as an outside director. Harte has said that Hyde did nothing wrong while on the S&L board. The case is Resolution Trust Corp. v. Lydia Franz, et al., No. 93 C 2477.