
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, May 16, 1993                   TAG: 9305160051
SECTION: BUSINESS                    PAGE: 3D2   EDITION: METRO 
SOURCE: TOM SHEAN LANDMARK NEWS SERVICE
DATELINE:                                 LENGTH: Medium

LAWSUIT FOLLOWS DIRECTOR TO GRAVE

The Resolution Trust Corp., which in December filed to recover $17 million from former officers and directors of the defunct Atlantic Permanent Savings Bank of Norfolk, last month amended its complaint to include the widow of a deceased director and his estate.

The RTC - the government agency responsible for disposing of assets from failed savings and loan associations - repeated its allegations that gross negligence by the late Frank M. Miles and 10 other directors and officers led to the collapse of Atlantic Permanent in 1989.

"We are disappointed that the RTC has filed an amended complaint and believe there are no merits to the allegations," said Robert W. McFarland, a Norfolk lawyer representing the Miles family.

"The RTC could better employ its time and taxpayers' money than to sue a widow who had absolutely no involvement with the allegations in the complaint," he said.

Miles, the head of a Norfolk oyster-processing company who also had been prominent in business and municipal affairs, was on the Atlantic Permanent board from 1962 to 1989. He also served on the S&L's loan committee.

In January, the Miles estate asked that his name be removed from the suit because he had died two years earlier and because the RTC's attempt to serve him with its complaint had been improper.

The Resolution Trust Corp. countered that the presence of Miles' name in the suit had been the fault of his estate, which never responded to four letters the RTC sent to the Miles household seeking financial information.

"These letters made clear that the RTC was examining Miles' conduct as an outside director of Atlantic Permanent and constituted notice within the terms of Virginia probate procedure," the Resolution Trust Corp. argued.

McFarland said that the executor of the Miles estate did respond to at least one of the RTC's letters and informed the agency that Miles was deceased.

In March, U.S. District Judge Richard B. Kellam ruled that the Resolution Trust had failed to follow the prescribed procedure for notifying Miles and ordered his name removed from the complaint.

"Service by posting a copy of the summons and complaint on the door of Mrs. Miles" residence is not sufficient, said Kellam, who gave the RTC time to amend its suit.

In its amended complaint, the RTC said it named Miles' widow, Carolyn B. Miles, as a defendant because "she presently has assets in excess of $1 million that were inherited from her late husband."

The RTC also repeated its earlier allegations that, beginning in 1981, Atlantic Permanent officers and directors breached their fiduciary duties by allowing the thrift to make several high-risk commercial real estate loans in unfamiliar markets.

These officers and directors, the RTC argued, failed to properly evaluate some of these borrowers and their projects. The heavy losses that Atlantic Permanent suffered from several acquisition, development and construction loans led to the institution's failure and eventual liquidation.

In December 1989, federal thrift regulators seized Atlantic Permanent and put it into the RTC's hands. In July 1991, the Resolution Trust closed Atlantic Permanent's operations and sold most of its deposits to two banks.

by CNB