American Council of Life Ins. v. Ludwig, 97-CV-0033.
| Citation | 1 F.Supp.2d 24 |
| Decision Date | 31 March 1998 |
| Docket Number | No. 97-CV-0033.,97-CV-0033. |
| Parties | AMERICAN COUNCIL OF LIFE INSURANCE, Plaintiff, v. Eugene A. LUDWIG, in his Official Capacity as the Comptroller of the Currency of the United States, Office of the Comptroller of the Currency Defendants, Magna Bank, N.A. Intervenor/Defendant. |
| Court | U.S. District Court — District of Columbia |
Before the Court are Defendants Eugene A. Ludwig ("Comptroller") and the Office of the Comptroller of the Currency's ("OCC") motion to dismiss on the pleadings or in the alternative, for summary judgment; the opposition and reply thereto; a statement of points and authorities by amicus curiae, American Bankers Association, Bankers Roundtable, Association of Banks and Missouri Bankers, and the response thereto. Intervenor/Defendant Magna Bank, N.A., has filed its own motion for dismissal or for summary judgment, which is opposed by the Plaintiff.
For the reasons that follow, Defendants' motions to dismiss are denied, but their alternative motions for summary judgment are granted.
The Plaintiff in this case is a non-profit trade association representing 577 insurance companies. Plaintiff filed this action in response to a decision made by the Comptroller of the Currency concerning the Intervenor/Defendant, Magna Bank.
On September 21, 1995, Magna Bank of Missouri and Magna Bank of Illinois, two state-chartered banks, each sent a Letter of Intent to the OCC seeking to convert from state to national bank status, pursuant to 12 U.S.C. § 35 (1994). Magna Bank of Missouri requested to retain ownership in certain corporate assets, which included two subsidiaries: MGI Insurance Agency, Inc. ("MGI Insurance"), and Inbank Insurance Agency, Inc. ("Inbank Insurance"). These subsidiaries act as agents for the sale of annuities, term, universal and whole life insurance, health insurance, disability insurance and long-term care insurance. (A.R. I at 189-92; AR II at 375.) On November 15, 1995, the Comptroller of the Currency issued opinions approving of the conversion of the two banks and granting permission for the merger of Magna Bank of Illinois into Magna Bank of Missouri (collectively "Magna"). The Comptroller also authorized Magna's retention of ownership of the stock of the corporation engaged in insurance agency activities (MGI Insurance and Inbank Insurance). The Comptroller approved Magna's retention of this stock pursuant to 12 U.S.C. § 35, which ostensibly gives him the discretion to permit a state bank converting into a national bank to "retain and carry" certain nonconforming assets.
Plaintiff challenges the Comptroller's interpretation of this provision of the statute and states that it is contrary to the National Banking Act ("NBA"), 12 U.S.C. § 1 et. seq. (1994), which limits the authority of national banks to engage in a wide range of activities. Plaintiffs point specifically to 12 U.S.C. § 92 (1994), which permits national banks to sell insurance, but only if the bank is "located and doing business in any place the population of which does not exceed five thousand inhabitants." 12 U.S.C. § 92. The insurance agencies in this case operate in part in offices situated in communities with populations that exceed 5,000. (A.R. I at 12.)
In its complaint, Plaintiff seeks a declaration that the OCC exceeded the statutory grant of authority in 12 U.S.C. § 35, and in so doing violated the Administrative Procedure Act ("APA"), 5 U.S.C. § 552(a)(1)(D), and the Federal Register Act ("FRA"), 44 U.S.C. § 1505(a)(3). Plaintiff also seeks a permanent injunction prohibiting the OCC from allowing Magna or any other national bank from engaging in insurance activities in violation of the NBA.
The Defendants' motion, in the first instance, is made pursuant to Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when the Complaint fails to state a claim upon which relief can be granted.1 When assessing the adequacy of a Complaint under Federal Rule of Civil Procedure 12(b)(6), the Court must accept the Plaintiff's allegations as true and construe those allegations in a light most favorable to the Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). Moreover, "a motion to dismiss should be granted only when it appears beyond doubt that, under any reasonable reading of the complaint, the Plaintiff will be unable to prove any set of facts that would justify relief." Haynesworth v. Miller, 820 F.2d 1245, 1254 (D.C.Cir.1987).
The OCC seeks dismissal on the basis that the Comptroller's decision to allow Magna Bank to retain its nonconforming assets following conversion, is discretionary and therefore not judicially reviewable.
The APA sets forth provisions for judicial review of agency actions, 5 U.S.C. §§ 701-706, with a strong presumption toward judicial reviewability. See Dickson v. Secretary of Defense, 68 F.3d 1396 (D.C.Cir.1995). That presumption, however, is limited by 5 U.S.C. § 701(a)(2), which prevents judicial review of agency decisions "to the extent that ... [the] agency action [at issue] is committed to agency discretion by law." The reasoning behind section 701(a)(2) is that judicial review should not be available in those instances where a court would have no meaningful standard against which to judge the agency's exercise of discretion. Heckler v. Chaney, 470 U.S. 821, 830, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985). In other words, in such situations, discretion really does mean absolute discretion.
While determining which cases warrant such treatment has been the subject of some interpretation, authority is in general agreement that such unreviewability is a narrowly drawn exception. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). In Chaney, for instance, the Supreme Court, while finding unreviewable the Food and Drug Administration's decision not to undertake certain enforcement action, also reaffirmed the narrowness of this exception. 470 U.S. at 837. Six months after the Supreme Court decided Chaney, the Court of Appeals for this circuit analyzed the reviewability issue in Robbins v. Reagan, 780 F.2d 37 (D.C.Cir.1985). In Robbins, the Court of Appeals viewed the Chaney decision simply as adding agency non-enforcement decisions to the small list of presumptively non-reviewable agency action, along with State Department action in foreign affairs and Federal Reserve Board decisions setting interest rates. 780 F.2d at 45 quoting (Cardoza v. Commodity Futures Trading Comm'n, 768 F.2d 1542, 1549 (7th Cir.1985)). More important, however, Robbins provides a framework for measuring suitability of judicial review for discretionary agency actions taken pursuant to 5 U.S.C. § 701(a)(2). That framework permits courts, even in the absence of statutory guidelines, to look not only to agency policy statements, but also to the statutory scheme by which congressional intent of a general goal might be inferred. 780 F.2d at 45.
The Plaintiff's position is that the discretionary language of 12 U.S.C. § 35 does not give the Comptroller the authority permanently to override statutory limitations on national bank activities as set forth in the NBA, and that this conflict provides a meaningful standard for judicial review. Pl. Opp. at 16.2 As a further standard, Plaintiff points to section 35 itself which states that converting banks "shall have the same powers and privileges" as originally organized national banks.
With regard to any policy statements, Plaintiff cites the OCC's own policy manual issued to its field examiners which states "[g]enerally, converting institutions must dispose of ineligible assets within a reasonable time after conversion." (A.R. II at 561, (Corporate Reference Manual/Conversion Examinations).)
Finally, the Plaintiff argues that the Comptroller's longstanding prior practice of requiring converting banks to divest themselves of nonconforming assets, is a standard by which to measure the Comptroller's discretion here. The OCC does not dispute that this has been its practice. (Pl.'s Opp. to Def.'s motion at 16.)
The Court agrees with the Plaintiff. Given the presumption of judicial review and insofar as the Robbins case allows the Court to look toward such factors as a statutory scheme and/or policy statements, there are standards here by which this Court can measure the discretionary activity of the Comptroller. The existence of the NBA and its provisions limiting the very activities the Comptroller has granted, as well as the Comptroller's own policy statements and longstanding practices concerning that discretion, indicate to the Court that such discretion was not intended to be absolute, but subject to judicial review.
Having found that such review is available, the motion to dismiss on the pleadings must be denied. The remaining issues, whether the Comptroller properly exercised his discretion, are fact-dependent and, although there does not appear to be any factual dispute, are more appropriately analyzed under the OCC's alternative motion for summary judgment.
Unlike a motion to dismiss, which is made pursuant to ...
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