Biscayne Federal Sav. & Loan Ass'n v. Pratt

• Decision Date: 08 October 1986
• Docket Number: Civ. A. No. 85-3183.
• Citation: 646 F. Supp. 371
• Court: U.S. District Court — District of Columbia
• Parties: BISCAYNE FEDERAL SAVINGS & LOAN ASSOCIATION and Kaufman & Broad, Inc., Plaintiffs, v. Richard T. PRATT, Edwin J. Gray, Jamie Jackson, Thomas P. Vartanian, D. James Croft and H. Brent Beesley, Defendants.

646 F. Supp. 371

BISCAYNE FEDERAL SAVINGS & LOAN ASSOCIATION and Kaufman & Broad, Inc., Plaintiffs, v. Richard T. PRATT, Edwin J. Gray, Jamie Jackson, Thomas P. Vartanian, D. James Croft and H. Brent Beesley, Defendants.

Civ. A. No. 85-3183.

United States District Court, District of Columbia.

October 8, 1986.

J. Jonathan Schraub, Golden, Frod & Schraub, Washington, D.C., Patricia Ireland, Carol W. Soret, Stearns Weaver Miller Weissler Alhadeff & Sitterson, Miami, Fla., for plaintiffs.

Michael Martinez, Asst. U.S. Atty., Dept. of Justice, Civil Div., Elizabeth R. Moore, Dept. of Justice, Torts Branch, Washington, D.C., for defendants.

MEMORANDUM OPINION

SPORKIN, District Judge.

Plaintiffs Biscayne Federal Savings and Loan Association of Miami, Florida ("Biscayne") and its principal shareholder, Kaufman & Broad ("K & B"), seek $30 million in damages from six high-level officials of the Federal Home Loan Bank Board (the "Board") and the Federal Savings and Loan Insurance Corporation (the "FSLIC").¹ On April 6, 1983, the Board, acting pursuant to its statutory authority under 12 U.S.C. Section 1464(d)(6)(A), appointed the FSLIC receiver for Biscayne, whose net worth had reached a negative $30 million. Shortly thereafter, the FSLIC took possession of the property and assets of Biscayne and conveyed them to a new federal mutual association.

Plaintiffs brought suit in the United States District Court for the Southern District of Florida (the "Florida court") within hours after the Board appointed the receiver. In its complaint (Counts I-V), plaintiffs sought an order requiring the Board to remove the receiver. Specifically, Count I alleged that the Board was estopped from asserting Biscayne's insolvency as a basis for the receiver's appointment because defendants, singly and in concert, created that insolvency. Count II alleged that the Board's appointment of the receiver was arbitrary and capricious and an abuse of discretion. Count III claimed that in view of the lengthy negotiations between the Board and plaintiffs, the Board abused its discretion by failing to use a less drastic remedy before appointing a receiver. Count IV alleged that the Board's ex parte appointment of a receiver violated Biscayne's due process rights under the Fifth Amendment. Count V alleged that the Board violated Biscayne's right to equal protection by appointing a receiver while not appointing one for similarly situated institutions.

The remaining counts (Counts VI-VIII) deal with damage claims against the six individual defendants in their individual capacities. Count VI alleges common law fraud. Count VII complains of a tortious interference with an advantageous business relationship. Count VIII claims that the individual defendants engaged in intentional, constitutional torts violating plaintiffs' Fifth Amendment rights to due process and equal protection.

The Florida court decided to try first the claims against the Board and the FSLIC (Counts I-V) and, after an expedited bench trial, ruled on them on September 9, 1983. Biscayne Federal Savings & Loan Association v. Federal Home Loan Bank Board, 572 F.Supp. 997 (S.D.Fla.1983). The Florida court held the contention under Count III to be without merit.² The Florida court also found in favor of the Board on Counts I and IV and granted defendants' motion to dismiss plaintiffs' equal protection claim (Count V) with prejudice.³ In rejecting the estoppel claim (Count I), the Florida court found that the Board did not create Biscayne's insolvency. Biscayne Federal Savings & Loan, 572 F.Supp. at 1031.

The Florida court did find in favor of Biscayne under Count II (abuse of discretion claim), and ordered that Biscayne be returned to its shareholders. After detailing the history of Biscayne's slide into insolvency and communications between K & B and the Board, the Florida court found that the conduct of the staff during the period from late 1982 through April 6, 1983 was arbitrary, capricious and an abuse of discretion. The Florida court found that on several occasions the Board's staff had misrepresented the Board's position with regard to proposals made by K & B in hopes of generating working capital. The Florida court made it clear that it did not ascribe a vindictive motive to the staff's actions, although it characterized the staff's conduct as "outrageous," "outlandish," "egregious" and "wrapped in a shroud of deception."⁴ The Florida court ruled that the staff's conduct, unregulated by Board directives or policies, was imputed to the Board. The Board's action in appointing a receiver, therefore, was held to have constituted an abuse of discretion.

The United States Court of Appeals for the Eleventh Circuit reversed the district court's order as to Count II, holding that the district court had no authority to order the dismissal of the receiver. Biscayne Federal Savings & Loan Association v. Federal Home Loan Bank Board, 720 F.2d 1499 (11th Cir.1983). The Eleventh Circuit held the "insolvency" of Biscayne by itself justified the appointment of a receiver in that 12 U.S.C. Section 1464(d)(6)(A);⁵

... does not require the Board to negotiate with or set guidelines for restructuring a failing association. The undisputed satisfaction of a statutory ground for the appointment of a receiver, coupled with the fact that there was no finding by the trial court that the Board's `outrageous conduct' in any way contributed to Biscayne's insolvent status as of April 6, thus renders the district court without authority to proceed further.⁶

Biscayne Federal Savings & Loan, 720 F.2d at 1504.

The Eleventh Circuit's ruling, coupled with the Florida court's decision, disposed of all claims against the Board and FSLIC, leaving unresolved only the damage claims against the individuals in Counts VI-VIII. On December 5, 1984, the Florida court denied a motion by the individual defendants to dismiss the complaint on several grounds but agreed with defendants' venue arguments that the case be transferred to this Court. Presently before the Court is defendants' motion for summary judgment on the ground that they are shielded from all claims by various legal immunities.

1. Common Law Fraud and Tortious Interference with Advantageous Business Claims (Counts VI & VII)

Plaintiffs have asserted common law fraud and tortious interference with advantageous business claims against the six individual defendants. Defendants counter that they are entitled to absolute immunity against these common law claims. The Court agrees and finds that, under the doctrine enunciated by Barr v. Matteo, 360 U.S. 564, 79 S.Ct. 1335, 3 L.Ed.2d 1434 (1959), these claims must be dismissed.

Under Barr, a federal official is absolutely immune from common law claims arising out of discretionary acts undertaken "within the outer perimeter of his line of duty." Barr, 360 U.S. at 575, 79 S.Ct. at 1341. The "outer perimeter" test of Barr is met "if the official performed an act not `manifestly or palpably beyond his authority' and `having more or less connection with the general matters committed by law to his control or supervision'...." Gray v. Bell, 712 F.2d 490, 505 (D.C.Cir. 1983), cert. denied, 465 U.S. 1100, 104 S.Ct. 1593, 80 L.Ed.2d 125 (1984), (quoting Spaulding v. Vilas, 161 U.S. 483, 498, 16 S.Ct. 631, 637, 40 L.Ed. 780 (1896)).

The Supreme Court's decision in Barr was motivated by the fear of chilling legitimate official conduct. Justice Harlan concluded that an absolute privilege was required because

... officials of government should be free to exercise their duties unembarrassed by the fear of damage suits in respect of acts done in the course of those duties—suits which would consume time and energies which would otherwise be devoted to governmental service and the threat of which might appreciably inhibit the fearless, vigorous, and effective administration of policies of government.

Barr, 360 U.S. at 571, 79 S.Ct. at 1339.

The Barr doctrine is now a legal fixture in this Circuit. See, e.g., McKinney v. Whitfield, 736 F.2d 766 (D.C.Cir.1984); Gray v. Bell, 712 F.2d 490 (D.C.Cir.1983), cert. denied, 465 U.S. 1100, 104 S.Ct. 1593, 80 L.Ed.2d 125 (1984); Sami v. United States, 617 F.2d 755 (D.C.Cir.1979); Expeditions Unlimited Aquatic Enterprises, Inc. v. Smithsonian Institution, 566 F.2d 289 (D.C.Cir.1977) (en banc). Barr has been accorded a "generous reception in two respects: both the persons sheltered and the torts covered have been expansively interpreted." McKinney, 736 F.2d at 768. Indeed, "officials have successfully raised Barr as a defense to a full range of common law delicts: negligence; malicious use of process; tortious interference with business; false arrest, false imprisonment, and malicious prosecution; blackmail, fraud, and intimidation; and, under some circumstances, assault and battery."⁷McKinney, 736 F.2d at 769 (citations omitted but contained in footnote seven below). See also Ricci v. Key Bancshares of Maine, 768 F.2d 456 (1st Cir.1985).

A careful review of the Florida court's detailed account of the events giving rise to this lawsuit and the job descriptions submitted by defendants compel the finding that defendants' actions were within the "outer perimeter" of their official duties if not the inner perimeter. Every action each defendant took dealt directly with his official duties to protect depositors and supervise federally-chartered savings and loan associations.

Board members Pratt, Gray and Jackson clearly acted within the scope of their authority when they considered Biscayne's deep insolvency and acted affirmatively on resolutions imposing a receivership on Biscayne. Pratt, purely in his capacity as the Chief Executive Officer of the Board, received and responded to briefings from its staff on matters relating to discussions between K & B and the Board's staff concerning K & B's repeated "financial" proposals.

Vartanian, the Board's chief legal advisor, and Beesley, as...