177 F.3d 523 (6th Cir. 1999), 97-2005, McQueen v. Williams

Docket Nº:97-2005.
Citation:177 F.3d 523
Party Name:Patrick M. McQUEEN, Plaintiff-Appellant, v. Julie L. WILLIAMS, Defendant-Appellee.
Case Date:May 19, 1999
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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177 F.3d 523 (6th Cir. 1999)

Patrick M. McQUEEN, Plaintiff-Appellant,


Julie L. WILLIAMS, Defendant-Appellee.

No. 97-2005.

United States Court of Appeals, Sixth Circuit

May 19, 1999

Argued Sept. 22, 1998.

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E. John Blanchard, Asst. Attorney General (argued and briefed), Michigan Department of Attorney General, Insurance & Banking Division, Lansing, MI, for Plaintiff-Appellant.

Horace G. Sneed (argued and briefed), Office of Comptroller of Currency, Washington, DC, for Defendant-Appellee.

Before: WELLFORD, NORRIS, and BATCHELDER, Circuit Judges.


WELLFORD, Circuit Judge.

KeyCorp is a bank holding company located in Cleveland, Ohio. In an effort to implement a master plan of combining affiliate banks in Michigan, Indiana, and Ohio, KeyCorp filed three applications with the Office of the Comptroller of the Currency ("OCC") on the same day. The first application sought to convert one of its affiliate banks, Society Bank of Michigan, to a national bank and to designate a branch in Bronson, Michigan, as that bank's "main office." That application also sought to allow the bank to retain the existing branches after the conversion. The second application sought permission to relocate the Bronson "main office" to Angola, Indiana, while at the same time retaining the existing Michigan branches. Finally, in the third application, the bank sought permission to merge with an Indiana national bank, resulting in a national bank based in Angola, while retaining the Indiana and Michigan branches. KeyCorp sought also to establish and to retain all of the former "main offices" as branches. In what the state of Michigan asserts is an unprecedented decision issued on January 5, 1996, the OCC approved the applications. The Commissioner of the Michigan Financial Institutions Bureau ("Commissioner") objected to the OCC's decision, and filed the instant case to have it set aside. The district court below affirmed the decision of the OCC

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and granted summary judgment in its favor. For the reasons stated, we shall REVERSE the district court's grant of summary judgment in favor of the OCC.


The following factual background is largely undisputed. KeyCorp wished to create a major regional banking network and to engage in interstate banking in the Michigan-Indiana-Ohio tristate area. To that end, KeyCorp planned to combine its affiliate banks in those states and to retain all of their over 420 branches through a three-step procedure. 1

KeyCorp's plan may have been permissible pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, Pub.L. No. 103-328; 108 Stat. 2338 ("Riegle-Neal" or "the Act"), which establishes a framework for interstate branching. That Act, however, did not go into effect until June 1, 1997, but each individual state had the opportunity to "opt-in" to the Act prior to that date. Michigan had enacted "opt-in" legislation at the pertinent time to allow interstate banking, but neither Indiana nor Ohio had done so. Furthermore, Michigan's opt-in legislation required reciprocity, so that only an out-of-state bank located in a state whose laws also permit the establishment in that state of a Michigan branch bank was able to establish and operate a branch bank in Michigan. In light of these perceived obstacles, KeyCorp devised a plan to accomplish its goals of interstate banking through a circuitous legal route.

On October 29, 1995, KeyCorp filed its first application to the OCC ("the Conversion Application") seeking to convert one of KeyCorp's affiliate state-chartered banks, Society Bank, Michigan ("Society-Michigan"), which had its principal office in Ann Arbor, Michigan, 2 into a national bank. The converted national bank, which was to be called Society Bank, National Association ("Society-N.A."), sought to designate its "main office" at a small branch office in Bronson, Michigan. 3 The Conversion Application also sought OCC approval for the converted bank to retain Society-Michigan's existing branches under 12 U.S.C. § 36(b)(1), and to establish the large Ann Arbor office as a regular branch. 4 Bronson is considerably more than thirty miles from Ann Arbor.

On the same date, KeyCorp made a second application ("the Relocation Application") to the OCC for approval, after the conversion, for Society-N.A. to relocate its "main office" from Bronson, Michigan, to Angola, Indiana, pursuant to 12 U.S.C. § 30. Angola is approximately twenty miles from the city limits of Bronson and, in 1990, had a population of approximately 8,100. The Relocation Application also requested that, after the relocation, that Society-N.A.

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"N.A. be able to retain all of its existing branches in Michigan and establish a branch at its former "main office" location in Bronson pursuant to 12 U.S.C. § 36(c).

Finally, on the same date, KeyCorp made a third application ("the Merger Application") to the OCC for approval to merge Society National Bank, Indiana ("Society-N.A., Indiana"), having its "main office" in South Bend, Indiana, more than thirty miles from Angola, with and into Society N.A., Michigan, pursuant to 12 U.S.C. §§ 215a & 1828(c). The application requested that the merged institution be able to retain the branches of both merging banks in Michigan and Indiana, and for the Indiana "main office" in South Bend to be established as a branch after the merger.

In sum, KeyCorp's applications sought to accomplish the following:

1. Conversion Application

(a) Convert Society-Michigan into a National Bank called Society-N.A.;

(b) Designate a branch in Bronson, Michigan, as Society-N.A.'s "main office;"

(c) Retain all of the existing Michigan branches after the conversion; and

(d) Establish the location in Ann Arbor (formerly the "principal office") as a branch.

2. Relocation Application

(a) Relocate Society-N.A.'s "main office" to Angola, Indiana;

(b) Retain all existing Michigan branches after the relocation;

(c) Establish the location in Bronson (the "main office" designated in the Conversion Application) as a branch.

3. Merger Application

(a) Merge Society-N.A., Indiana, with Society-N.A., Michigan;

(b) Retain all existing Michigan and Indiana branches after the merger; and

(c) Establish the location in South Bend, formerly the "main office" of Society-N.A., Indiana, as a branch.

KeyCorp's master plan also involved a subsequent relocation of the Angola, Indiana, "main office" from Angola, Indiana, to Bryan, Ohio, about 25 miles away. 5 Through that relocation and other mergers, KeyCorp sought to own and operate a three-state midwestern regional bank with its headquarters in Cleveland, Ohio, and over 420 branches. For purposes of this appeal, we consider only the three applications outlined above.

On October 31, 1995, the Assistant Vice-President and General Counsel of Society-Michigan sent a letter to the Commissioner of the Michigan Financial Institutions Bureau, Patrick McQueen ("Commissioner"), which basically outlined the company's intentions that had been discussed at an earlier meeting between Commissioner McQueen and representatives of Society-Michigan. 6 The letter indicated that Society-Michigan believed that the mergers could not take place before June 1, 1997, unless Indiana and Ohio enacted qualifying "opt-in" legislation. On November 15, 1995, however, a Deputy Comptroller telephoned the Commissioner's Chief Deputy and informed him that the OCC was of the view that Society-Michigan's "main office" could be established at any location at the time of conversion, just as in the case of a de novo charter. Thus, under the OCC's view as espoused by the Deputy Comptroller, the mergers could be accomplished under the existing federal law despite the serious problem recognized only a few

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days before by Society-Michigan's general counsel.

On November 22, 1995, the Commissioner submitted a formal written protest to the OCC to object to the bank's plan. Concurrently with his protest, the Commissioner issued a "cease and desist" order against the bank to prevent it from pursuing the plan in Michigan. That Michigan administrative proceeding is presently stayed pending this appeal.

On January 5, 1996, the OCC issued a 38-page decision approving all three of the applications filed by KeyCorp/Society Bank. On February 27, 1996, the Commissioner filed his complaint in the district court seeking judicial review of the OCC's decision, asking that the court set it aside as having been arbitrary and capricious, an abuse of discretion, and not in accordance with the law. The complaint also sought a declaration that the OCC's simultaneous approval of the three applications: (1) violated state law; (2) violated federal law; (3) resulted in competitive inequality between state chartered banks and national banks; (4) subverted the long-standing competitive equality concept; and (5) circumvented the Riegle-Neal Act and the McFadden Act. Pub.L. No. 103-328; 108 Stat. 2338 (the "Riegle-Neal Act"); 12 U.S.C. § 36(c) (the "McFadden Act").

The parties filed cross-motions for summary judgment, and the district court granted summary judgment in favor of the OCC in all respects. First, the court found that the OCC's decision to allow Society-Michigan to designate Bronson as the location of its "main office," rather than choosing the original "principal office" located in Ann Arbor in the state charter, constituted a reasonable interpretation of the applicable statutes. Next, the court upheld the OCC's decision to allow what would then be called Society-N.A. to relocate its "main office" to Angola, Indiana, and to retain its Michigan branches after the relocation, in accordance with Ghiglieri v. Sun World Nat'l Ass'n, 117 F.3d 309 (5th Cir.1997). The district...

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