Farha v. F.D.I.C.

• Decision Date: 23 April 1992
• Docket Number: No. 91-6191,91-6191
• Parties: Fareed M. FARHA, Trustee of the Farha Sales, Inc., Defined Benefit Pension Plan, Plaintiff/Appellant, Fareed M. Farha, an individual, Additional Party Plaintiff/Appellant, Rebecca O. Farha, an individual, Additional Party Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION, a corporation, Defendant/Appellee, Federal Deposit Insurance Corporation, as Liquidating Agent for First National Bank of Luther, Luther, Oklahoma, Intervenor-Additional Defendant/Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 283

963 F.2d 283

Fareed M. FARHA, Trustee of the Farha Sales, Inc., Defined

Benefit Pension Plan, Plaintiff/Appellant, Fareed M. Farha, an individual, Additional Party Plaintiff/Appellant, Rebecca O. Farha, an individual, Additional Party Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION, a corporation,

Defendant/Appellee,

Federal Deposit Insurance Corporation, as Liquidating Agent

for First National Bank of Luther, Luther,

Oklahoma, Intervenor-Additional

Defendant/Appellee.

No. 91-6191.

United States Court of Appeals, Tenth Circuit.

April 23, 1992.

F.H. Wright, Wright & Cole, Oklahoma City, Okl., for plaintiff/appellant.

Ricki Sonders, Edwards, Sonders & Propester, Oklahoma City, Okl. (Joel W. Harmon, Edwards, Sonders & Propester, with her on the brief), for defendant/appellee.

Before ANDERSON, ALDISERT, ^* and BRORBY, Circuit Judges.

ALDISERT, Senior Circuit Judge.

Fareed M. Farha, individually and as trustee of a benefit pension plan, and Rebecca Farha, filed a complaint in the district court against the Federal Deposit Insurance Corp. (FDIC) to recover two certificates of deposit (CDs) or their cash equivalent. The CDs were issued originally by the First National Bank of Luther, Oklahoma, and later transferred, following the bank's insolvency, to the First Wagoner Bank and Trust Co. under a Purchase and Assumption Agreement supervised by the FDIC. The deposits themselves were disbursed by the FDIC, primarily to offset a debt owed the Luther bank by Mr. Farha, as an individual, with the balance being paid over to the payees listed on the CDs.

The complaint asserts two causes of action. The "First Cause of Action (Replevin)," App. 6-8, contains a request for return of the CDs or in the alternative a money judgment in the amount represented by the CDs. The "Second Cause of Action (Breach of Contract)," App. 8-9, requests money damages in the amount of the CDs. The district court entered summary judgment in favor of the FDIC. Fareed M. Farha, individually and as trustee, has appealed.

The principal issue before us is whether the appellant may obtain relief from the FDIC under theories of contract or tort. We hold that he may not and thus affirm.

The district court entertained jurisdiction pursuant to 12 U.S.C. § 1819 (Fourth) and 28 U.S.C. § 1331. Appeal was timely filed under Rule 4(a), Fed.R.App.P. We have jurisdiction in this appeal from a final judgment. 28 U.S.C. § 1291.

I.

The facts are not in dispute. Plaintiff Fareed M. Farha was trustee and sole participant in the Farha Sales, Inc. Defined Benefit Pension Plan. He came before the court as an individual and in his capacity as trustee. His wife Rebecca was also a plaintiff but did not appeal from the district court's judgment.

Farha individually owed certain debts to the First National Bank of Luther, amounting to $291,874.24, evidenced by promissory notes which came due on August 18, 1987, but were not paid. Three CDs, representing deposits in the Luther bank, also figure in this litigation. The CDs listed various persons as payees:

                CD No.           Payees
                5328             Fareed M. Farha
                                 Rebecca O. Farha
                                 the pension plan
                5336             Fareed M. Farha
                                 Rebecca O. Farha
                                 the pension plan
                5371             Fareed M. Farha
                                 the pension plan
                

The Luther bank was declared insolvent on August 13, 1987, and the FDIC was appointed the liquidating agent. At that time, the CDs were in possession of the bank and were listed in the Inventory of Safekeeping prepared by the FDIC after the bank was closed. App. 50, 57. They are also listed on two General Receipt and Safekeeping Agreements. App. 13, 16. These agreements purport to be between the payees and the bank but are not signed.

After the Luther bank failed, the deposits represented by the CDs were transferred to First Wagoner Bank and Trust Co., under the terms of a Purchase and Assumption Agreement. FDIC, in its corporate capacity, acquired the promissory notes owed by Farha.

On September 10, 1987, First Wagoner sent Farha, individually and as trustee, and Rebecca Farha, a cashier's check for $140,705.91, representing the proceeds from CD No. 5336. The check reflected the listing of payees on the CD: Farha, Rebecca Farha, and the pension plan. All of the payees, however, did not endorse the check; it was endorsed by only one of the three payees, Farha, as trustee of the pension plan. App. 27.

On January 22, 1988, First Wagoner remitted to FDIC the deposits represented by the two remaining CDs. FDIC in its corporate capacity then offset the deposits against the promissory notes, applying $302,870.53 in proceeds against Farha's individual debt in that amount. FDIC paid the remaining proceeds of $14,093.76 to the pension plan.

II.

In the replevin claim in the district court, plaintiffs sought to recover the two unredeemed CDs or the equivalent value thereof. In the alternative claim, they sought to recover the equivalent value as damages under a breach of contract theory. They also argued that the offset performed by the FDIC was wrongful, a claim that the district court found to sound in tort. Finally, they argued that a prior, unpublished ruling of this court, Federal Deposit Ins. Corp. v. Farha, No. 87-1530 (10th Cir. Oct. 10, 1989), had preclusive effect as to the wrongfulness of using the deposits to offset Farha's debts as an individual.

The district court determined that plaintiffs had not satisfied the requirements of res judicata or collateral estoppel regarding the October 1989 decision and that jurisdiction of any contract or tort claims did not lie. The court ruled that it did not have jurisdiction to entertain the claim in contract because the dispute concerns a sum in excess of $300,000, and the U.S. Court of Claims has exclusive jurisdiction of contract claims against the FDIC in excess of $10,000. 28 U.S.C. § 1346(a)(2). The court also ruled that it could not entertain a claim sounding in tort, because the Federal Tort Claims Act, 28 U.S.C. § 2671 et seq., controlled, and Farha had failed to file a claim with the FDIC prior to filing the action in court. Accordingly, the court entered summary judgment in favor of FDIC. Farha's timely appeal, individually and as trustee, followed (We will refer to him collectively as "Farha").

III.

On appeal from a grant of summary judgment, this court employs de novo review. Wheeler v. Hurdman, 825 F.2d 257, 260 (10th Cir.), cert. denied, 484 U.S. 986, 108 S.Ct. 503, 98 L.Ed.2d 501 (1987). We consider the evidence in the light most favorable to the nonmoving party and determine if a genuine issue exists as to any material fact and if the court below correctly applied the relevant law. Ash Creek Mining Co. v. Lujan, 934 F.2d 240, 243 (10th Cir.1991) (citing Hokansen v. United States, 868 F.2d 372, 374 (10th Cir.1989)).

IV.

We first consider whether the district court erred in refusing to give preclusive effect to a prior decision of this court. We find no error in the district court's ruling. The court noted, "While the Trustee has argued that the doctrines of res judicata and collateral estoppel bar the instant litigation, he has not attempted to explain how these doctrines apply to the issues in the case at bar. Mere conclusions that such doctrines are applicable are not sufficient." D.Ct. Op. at 5.

Farha's argument before this court is similarly unsupported. The prior decision concerned FDIC's power to garnish certain funds of the pension plan in another context. The question bears some resemblance to the issues raised here, but mere resemblance is not enough. All elements of issue preclusion must be present to establish the prior case's preclusive effect. They are not present here. We find no error in the district court's determination.

V.

We next address what we perceive to be the major contention raised by Farha, which concerns the precise character of his claims against the FDIC. He appears to argue that his first claim sounds neither in contract nor tort but is based exclusively on replevin. Replevin in Oklahoma is governed by Okl.St.Ann. tit. 12, § 1571 et seq. The statutory remedy is set out in § 1580, which provides in relevant part:

In an action to recover the possession of personal property, judgment for the plaintiff may be for the possession, or for the recovery of possession, or the value thereof in case a delivery cannot be had, and of damages for the detention.

Under Oklahoma law, replevin tests the right to possess the disputed personal property. Brook v. James A. Cullimore & Co., 436 P.2d 32, 34 (Okla.1967). The Oklahoma Supreme Court has recognized replevin as an appropriate form of action to recover a promissory note, Enid Bank & Trust Co. v. Noll, 183 Okla. 647, 84 P.2d 24 (1938), and a certificate of deposit is essentially a promissory note. Hendricks v. Grant County Bank, 379 P.2d 693, 696 (Okla.1963); U.C.C. § 3-104(j), 2 U.L.A. 26 (1991). Federal courts will entertain state-law replevin actions. Rule 64, Fed.R.Civ.P. See, e.g., Garoogian v. Medlock, 592 F.2d 997, 998, 1000 (8th Cir.1979).

A.

Clearly, Farha may not recover possession of the CDs as written instruments signifying the Luther bank's indebtedness to him. The general deposits evidenced by the CDs had already been disbursed by FDIC as liquidating agent for the Luther bank. Farha was one of the payees of a portion of the proceeds, and he accepted them without question; the balance was applied by FDIC to offset the personal debt owed by Farha, individually, to the Luther bank. Accordingly, the CDs were no longer in existence as viable commercial paper at the time the replevin action was filed in federal court. Not being in existence as commercial instruments of value, they no longer could be subject to the possessory remedy of the Oklahoma replevin statute.

B.

Faced with this reality, and recognizing the procedural obstacles that prevent his asserting an...