Judge Refuses to Dismiss Fraud Claims in Bank Case

An Orange County judge refused Friday to throw out a government agency’s fraud claims against a number of former Heritage Bank officials, including Douglas E. Patty, deposed chairman of the failed bank, even though he dismissed similar claims against 12 other defendants two months ago.

Reasons for the decision by Superior Court Judge Robert C. Todd will be spelled out in a letter to be sent soon to lawyers in the case, Todd’s court clerk said.

Todd also is expected to rule soon on whether the Federal Deposit Insurance Corp. acted properly in settling its complaint against another defendant in the Heritage suit, Orange Coast Savings & Loan Assn., now Charter Savings Bank in Huntington Beach.

The FDIC had included the S&L; in its $150-million lawsuit because a number of its former shareholders and directors, including Patty, were shareholders and directors of Heritage, which regulators declared insolvent and closed in March, 1984.

The judge’s approval of the settlement would clear the way for a major national law firm to continue as counsel for the FDIC in the complex litigation, which already has been under way for 22 months. The firm--Finley, Kumble, Wagner, Heine, Underberg, Manley, Meyerson & Casey--already has earned more than $1.5 million in attorney fees and stands to earn an additional $2 million over the next year or so if it remains on the case.

Todd had disqualified the law firm from representing the FDIC because the firm had hired a former Orange Coast S&L; lawyer, creating a conflict of interest. His ruling is being appealed by the FDIC.

Todd two months ago dismissed the agency’s fraud claims against a dozen defendants in the Heritage suit and indicated that he might apply the ruling to Patty and all other defendants as well. After he ruled Friday that he would not do so, lawyers for the various parties declined comment, saying that they were waiting to see Todd’s written decision.