The Utah Department of Financial Institutions wants to be dismissed as a defendant in a lawsuit filed by the former owners of the defunct Foothill Thrift and Loan, according to papers filed in 3rd District Court.

A memorandum maintains the state is immune from the lawsuit under Utah's Governmental Immunity Act, which was designed to provide immunity resulting from the exercise of governmental function.Attorney Dennis K. Poole, an attorney representing Richard S. Prows and Robert W. Wood, former Foothill owners, said he is preparing his response to contest the state's motion requesting dismissal.

Prows and Wood acquired Foothill Jan. 1, 1986, and became obligated to pay financial assessments to the Industrial Loan Guaranty Corp., a private deposit fund established by the state to insure deposits in state chartered industrial loan corporations.

In their lawsuit, Prows and Wood maintain the department failed to inform them of the true condition of the ILGC, failed to say the ILGC was insolvent, it could not be rehabilitated under existing levels of assessments and the ILGC was unable to cover the statutory level of insurance of $15,000 per depositor.

In April 1987 a television station reported Foothill was operating without deposit insurance, and Prows and Wood say the report caused a run on the company and severely damaged its assets. The lawsuit the two men filed seeks to recover the $9 million they lost when the state took over the thrift in response to the run.