Ard v. Fed. Deposit Ins. Corp..

• Decision Date: 11 February 2011
• Docket Number: Case No. CV 10–03767 MMM (AJWx).
• Parties: Lesley ARD, Steven Ard, Plaintiffs,v.FEDERAL DEPOSIT INSURANCE CORPORATION; Office of Thrift Supervision; United States of America, Defendant.
• Court: U.S. District Court — Central District of California

770 F.Supp.2d 1029

Lesley ARD, Steven Ard, Plaintiffs,

v.FEDERAL DEPOSIT INSURANCE CORPORATION; Office of Thrift Supervision; United States of America, Defendant.

Case No. CV 10–03767 MMM (AJWx).

United States District Court, C.D. California.

Feb. 11, 2011.

David N. Tarlow, Ervin, Cohen & Jessup, LLP, Beverly Hills, CA, Jay Marshall Coggan, Jessica N. Trotter, Coggan and Tarlow, Los Angeles, CA, for Plaintiffs.Deborah E. Yim, AUSA–Office of U.S. Attorney, Los Angeles, CA, for Defendants.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

MARGARET M. MORROW, District Judge.

On July 11, 2008, the Office of Thrift Supervision (“OTS”) closed IndyMac Bank and appointed the Federal Deposit Insurance Corporation (“FDIC”) as the bank's receiver pursuant to 12 U.S.C. § 1821(c)(2)(A). Plaintiffs Lesley Ard and Steven Ard, depositors with IndyMac who lost approximately $2,131,034.00 as a result of the bank's closure, previously filed suit in this district against the FDIC as receiver, alleging wrongful acts by IndyMac (Case No. CV 09–4115).¹ Plaintiffs' claims were dismissed as prudentially moot.² Plaintiffs have now filed an action against the United States seeking damages for alleged negligence by the OTS and the FDIC in its corporate capacity.³

Plaintiffs commenced this action on May 19, 2010.⁴ On June 10, 2010, plaintiffs filed a first amended complaint, naming the United States of America as defendant and dismissing the FDIC and the OTS.⁵ On October 29, 2010, the United States moved to dismiss plaintiffs' amended complaint asserting that their claims are barred by res judicata and collateral estoppel. ⁶ The United States also asserts that the court lacks subject matter jurisdiction to hear plaintiffs' claims under the misrepresentation and discretionary function exceptions to the Federal Tort Claims Act (“FTCA”). ⁷

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs contend that as of the date IndyMac closed, they had three accounts at the bank that had a balance of approximately $4,362,067.90.⁸ Plaintiffs allege that, in early 2008, they began to hear media reports that IndyMac was on the verge of collapse and that depositors' funds were at significant risk.⁹ Plaintiffs assert that in response to these reports, employees, agents, and representatives at the FDIC and the OTS “issued various public statements designed to reassure depositors, including Plaintiffs, that IndyMac was financially sound and that there was no danger of collapse.” ¹⁰ Plaintiffs purportedly relied on these representations, with the result that when the OTS closed IndyMac in July 2008, they lost half of their deposits.¹¹ Plaintiffs contend that the OTS and the FDIC employees knew, or should have known, that their actions would harm individuals like them.¹²

Plaintiffs allege, on information and belief, that the OTS has “certain articulated duties and responsibilities,” including a duty to examine and assess the financial soundness of savings associations, a duty to supervise financial associations, and a duty to monitor the condition of thrifts. ¹³ Similarly, they assert that the FDIC has “certain articulated duties,” including a duty to identify, monitor, and address risks to deposit insurance funds.¹⁴ Plaintiffs acknowledge that neither the OTS nor the FDIC has a duty to inform the public of the condition of financial institutions, but assert that when the agencies assume such a role, they have a duty to convey reliable and accurate information.¹⁵

Plaintiffs plead claims for negligence and negligent supervision based on the statements allegedly made by the OTS and the FDIC concerning the financial stability of IndyMac. They allege that OTS and FDIC employees negligently performed their “articulated and assumed duties” when they issued public statements.¹⁶ They also assert that OTS and FDIC directors, advisors, and agents negligently supervised the employees who made the public statements. ¹⁷

II. DISCUSSION

A. Legal Standard Governing Motions to Dismiss for Lack of Subject Matter Jurisdiction

A defendant who seeks dismissal of a complaint for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure can facially challenge the sufficiency of the jurisdictional allegations in the complaint; when this type of attack is mounted, the court must accept as true all well-pleaded facts and draw all reasonable inferences in favor of the plaintiff. Ass'n of American Medical Colleges v. United States, 217 F.3d 770, 778–79 (9th Cir.2000). Alternatively, the party challenging subject matter jurisdiction can proffer evidence extrinsic to the complaint. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.2004). Where extrinsic evidence is submitted, the uncontroverted allegations in the complaint must be accepted as true, and “conflicts between the facts contained in the parties' affidavits must be resolved in [plaintiff's] favor....” AT & T Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir.1996) (citing WNS, Inc. v. Farrow, 884 F.2d 200, 203 (5th Cir.1989)). Whatever the nature of the challenge, the party seeking to sue in federal court bears the burden of establishing that the court has subject matter jurisdiction to hear the action. Ass'n of American Medical Colleges, 217 F.3d at 778–79.

B. Whether Plaintiffs' Claims Are Barred By Exceptions to the Federal Tort Claims Act

The United States, as sovereign, is immune from suit unless it has waived its immunity. As Justice Thurgood Marshall explained, “[i]t is elementary that the United States, as sovereign, is immune from suit save as it consents to be sued ..., and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.” United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980). For this reason, the Supreme Court has instructed lower courts to dismiss actions against the United States for lack of jurisdiction unless a plaintiff can show that the United States has waived its immunity. Id.

28 U.S.C. § 1346(b)(1) contains statutory waivers of immunity for suits under the FTCA. It provides that district courts have “exclusive jurisdiction of civil actions on claims against the United States ... for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.” The FTCA thus waives sovereign immunity for certain torts committed by government employees. See Blackburn v. United States, 100 F.3d 1426, 1429 (9th Cir.1996) (“The FTCA waives the Government's sovereign immunity for tort claims arising out of the negligent conduct of government employees acting within the scope of their employment,” citing Valdez v. United States, 56 F.3d 1177, 1179 (9th Cir.1995)); see also Sheridan v. United States, 487 U.S. 392, 398, 108 S.Ct. 2449, 101 L.Ed.2d 352 (1988) (stating that the FTCA “gives federal district courts jurisdiction over claims against the United States for money damages ‘for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred,’ ” citing 28 U.S.C. § 1346(b)).

This waiver of immunity, however, is limited by the “discretionary function” exception set forth in 28 U.S.C. § 2680(a). The United States bears the burden of proving that the discretionary function exception applies. See Prescott v. United States, 973 F.2d 696, 702 (9th Cir.1992) (“Because an exception to the FTCA's general waiver of immunity, although jurisdictional on its face, is analogous to an affirmative defense, we believe the Sixth and Seventh Circuits correctly placed the burden on the United States as the party which benefits from the defense.... We thus hold explicitly that the United States bears the burden of proving the applicability of one of the exceptions to the FTCA's general waiver of immunity”); see also Bear Medicine v. United States ex rel. Sec'y of the Dep't of the Interior, 241 F.3d 1208, 1213 (9th Cir.2001) (“The burden of proving the applicability of the discretionary function exception is on the United States”). In cases where the exception applies, the court lacks subject matter jurisdiction to hear the action. See Lesoeur v. United States, 21 F.3d 965, 967 (9th Cir.1994) (“federal courts do not have subject matter jurisdiction over tort actions based on federal defendants' performance of discretionary functions”).

1. Legal Standard Governing the Discretionary Function Exception

The discretionary function exception provides that the waiver of immunity contained in the FTCA does not apply to claims “based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.” 28 U.S.C. § 2680(a). “In this way, the discretionary function exception serves to insulate certain governmental decision-making from ‘judicial second guessing of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort.’ ” Terbush v. United States, 516 F.3d 1125, 1129 (9th Cir.2008) (quoting United States v. S.A. Empresa de Viacao Aerea Rio Grandense, 467 U.S. 797, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984)).

The Supreme Court has devised a two-part test for determining whether the discretionary function exception applies to bar a claim. See United States v. Gaubert, 499 U.S....