$40-Million Butterfield Case : S&L; Insurer to Pay FSLIC $5 Million in Damage Suit

The liability insurer for two top former Butterfield Savings & Loan executives has agreed to pay $5 million to the Federal Savings and Loan Insurance Corp. to settle the agency’s $40-million damage suit against the pair, Donald and David Endresen.

The FSLIC spent more than $281 million trying to unravel Santa Ana-based Butterfield’s problems after the S&L; was declared insolvent and seized by government regulators in 1985.

The agency originally filed the damage suit against former Butterfield president Donald Endresen; his father, David, who was chairman of the company; his brother, William, a vice president; four other individuals, and Butterfield Equities Corp., the Endresen-controlled holding company that owned the S&L.;

The other defendants had already either settled for smaller amounts or, in the case of William Endresen and Butterfield Equities, had filed for bankruptcy protection.

The settlement on behalf of the Endresens was agreed to by Harbor Insurance Co. of New York, which had carried liability insurance on Butterfield’s executives.

Under the settlement, neither Endresen admitted wrongdoing, their attorney said.

An attorney for the FSLIC said a trial is pending in a separate civil action seeking $40 million in damages from a group of businessmen in Washington and Oregon who sold real estate properties to Butterfield under what the FSLIC alleges were questionable circumstances.

Butterfield, which once was one of the fastest-growing S&Ls; in the state, was operated under a government-sponsored management program from the time it was seized until it was sold to Downey S&L; of Newport Beach last year.