Bakalis v. Crossland Sav. Bank
| Decision Date | 17 December 1991 |
| Docket Number | No. CV-91-4256.,CV-91-4256. |
| Citation | 781 F. Supp. 140 |
| Parties | Charalabos BAKALIS, etc., et ano., Plaintiffs, v. CROSSLAND SAVINGS BANK, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Edwards & Angell, New York City, for plaintiffs.
Nixon Hargrave Devans & Doyle, New York City, for defendant.
This case is currently before this Court on plaintiffs' motion to remand the proceeding to state court pursuant to 28 U.S.C. § 1447(c). For the reasons discussed below this motion is granted.
This case was removed from state court by defendant pursuant to 28 U.S.C. § 1442(a)(1) which, as discussed below, allows, inter alia, persons "acting under" officers of the United States to remove to federal courts certain actions in which they are defendants.
The following facts, except where expressly noted, are not disputed.
Plaintiff Olympian Mortgage Group, Inc. ("OMG") is a private mortgage bank located in Kings County, New York. Charalabos Bakalis a/k/a Bob Bakalis ("Bakalis") is president of OMG.
OMG and Bakalis had credit lines with CrossLand Savings FSB ("CrossLand"). CrossLand is a federally chartered savings bank subject to certain regulations issued by the Office of Thrift Supervision ("OTS"), 12 C.F.R. § 563.180(1)(d), which require the bank to report known or suspected criminal activity that comes to its attention to the OTS and to law enforcement authorities.
The dealings between OMG, Bakalis and CrossLand which led to this litigation involved a series of renegotiations of the credit lines. In the course of these negotiations, on approximately April 18, 1991, CrossLand sent a report concerning changes in the status of the collateral for the credit lines to the Federal Bureau of Investigation ("FBI") and to the OTS.
CrossLand characterizes this report as required by 12 C.F.R. § 563.180(1)(d). Plaintiffs argue this is incorrect because the report was untimely and motivated by a desire for private profit.
In May 1991 CrossLand commenced a law suit in state court against OMG and two other suits against Mr. and Mrs. Bakalis demanding repayment of instruments involved in the credit lines. These were consolidated in Supreme Court, Kings County, before Justice Julius Vinik and are currently pending. The suits were all commenced by motion for summary judgment in lieu of complaint pursuant to New York CPLR § 3213.
On October 8, 1991, plaintiffs brought the current suit in Supreme Court, Kings County. The action was commenced as a separate action rather than as counterclaims to CrossLand's actions because claims such as those presented here are not permissible in actions brought by motion for summary judgment in lieu of complaint.
The case before this Court presents three claims for relief. The first claim is for fraud. This claim alleges that plaintiffs relied to their detriment on affirmative misrepresentations made by CrossLand during the renegotiation of the credit lines.
The second claim is for intentional interference with business relations. This claim alleges that CrossLand's report to the FBI was solely motivated by a desire to harm Bakalis and related business entities and that the report did result in such harm.
The third claim is for defamation. This claim alleges that CrossLand in its report knowingly published incorrect information to the FBI which harmed the business reputation of Bakalis.
On October 30, 1991, CrossLand filed a Notice of Removal of this suit in the Eastern District of New York pursuant to 28 U.S.C. § 1442(a)(1).
On Nov. 12, 1991, Justice Vinik denied CrossLand's summary judgment motions, thereby converting their motions into complaints. CPLR § 3213. At that time, he confirmed the previously granted attachments of plaintiffs' assets.
Plaintiffs seek to have the present suit remanded to state court for consolidation with the three actions already pending before Justice Vinik.
The instant removal is pursuant to 28 U.S.C. § 1442(a)(1) which reads as follows:
In order to satisfy this provision, CrossLand must show that it is a "person," as required by the first sentence of the provision, and both "acting under him" and performing an "act under color of such office," as required by the second sentence. If removal was inappropriate, the suit is remanded under 28 U.S.C. § 1447(c).
CrossLand's contention is that its report to the FBI and OTS was issued by it as a "person acting under" the director of the OTS since the report was required by 12 C.F.R. 563.180(1)(d), which reads as follows:
"Savings associations and service corporations are required to promptly notify the appropriate law enforcement authorities and the OTS after discovery of known or suspected criminal acts."
Subsection 2 defines promptly as within 14 business days after discovery.
Plaintiffs argue that this reading of the statute is barred by the recent Supreme Court decision in International Primate Protection League v. Administrators of Tulane Educ. Fund, ___ U.S. ___, 111 S.Ct. 1700, 114 L.Ed.2d 134 (1991). They interpret International Primate to hold that only natural persons are entitled to remove an action to federal court under 28 U.S.C. § 1442(a)(1).
International Primate involved a suit by animal rights groups against the National Institutes of Health ("NIH"), Tulane Educational Fund ("Tulane"), and Institutes for Behavior Resources ("IBR") regarding the alleged mistreatment of certain monkeys. NIH is an agency of the federal government. Tulane is the governing body of a primate research center which entered into an agreement with the NIH in 1986 to care for the monkeys. IBR is a private entity which owns the monkeys. Id. 111 S.Ct. at 1703.
NIH removed the case to federal court pursuant to 28 U.S.C. § 1442(a)(1). The Supreme Court ordered the case remanded. Id. The case clearly holds that federal agencies are not "persons" entitled to remove. It does not, however, clearly state that only natural persons are qualified to do so. The contrary is at least implied by the Court's discussion of the NIH's argument that the remand application should be denied because it would be futile.
NIH had argued the futility of remand because, inter alia, another defendant, Tulane, could clearly remove the case back to federal court. Id. 111 S.Ct. at 1709-10. The Court did not respond to this argument by stating that Tulane was not covered by the statute because it was not a natural person. Instead, it opined:
This passage from the Court's opinion at least implies that the Court perceived the uncertainty to lie in the relationship between Tulane and the NIH, rather than in the status of Tulane. In all events, the Court did not rely for its decision on any conclusion beyond the lack of clarity on its current record of Tulane's ability to remove. Therefore, I consider the instant issue, whether a non-natural juridical person other than a government agency can remove, not resolved by International Primate.
Plaintiffs cite several other authorities for the proposition that "persons" are only natural persons. Several of these only deal with federal agencies or corporations owned by the federal government as opposed to privately owned corporations. Lovell Mfg. v. Export-Import Bank of the U.S., 843 F.2d 725, 733 (3rd Cir.1988); Lance Int'l, Inc. v. Aetna Casualty & Surety Co., 264 F.Supp. 349 (S.D.N.Y. 1967); Harlem River Produce Co., Inc. v. Aetna Casualty & Surety Co., 257 F.Supp. 160, 163 (S.D.N.Y.1965); J. Moore & B. Ringle, Moore's Federal Practice ¶ 0.1641 at 382-84. Moreover, it is important in analyzing these cases to note that for the purpose of the removal statute federal "agency" includes "any corporation in which the United States has a proprietary interest." 28 U.S.C. § 451.
Lowe v. Norfolk & W. Ry. Co., 529 F.Supp. 491 (S.D.Ill.1982), has two relevant holdings. It holds that federal agencies cannot remove under § 1442(a)(1). Id. at 493-95. In addition, it denied removal rights to a private corporation. In that case a private company, Willamette-Western Corp. d/b/a Western Environmental Service ("WES") asked for removal as a "person acting under" a federal officer pursuant to § 1442(a)(1). This was denied but not on the grounds that WES was not a natural person.
The Lowe court gave two reasons. Both of these show that that court was not construing "person."
First, WES was acting pursuant to private contract even though the contract was subject to federal regulations. Second, WES, by following regulations, was obeying the agency as opposed to a specific officer of the agency. Id. at 495. The court's need to make these distinctions at least implies it did not consider the corporate status of WES to be dispositive.
Two of plaintiffs' cases, which have only persuasive authority, do support their argument....
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...11. However, only one of the many cases cited addresses the precise issue at hand, and then only in dicta. See Bakalis v. Crossland Savings Bank, 781 F.Supp. 140 (E.D.N.Y.1991). In Bakalis, a federally chartered savings bank was sued and petitioned to remove under the federal officer provis......
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...The Court did not decide, however, whether a corporation could be a "person acting under an officer." Bakalis v. Crossland Sav. Bank, 781 F.Supp. 140, 142-43 (E.D.N.Y.1991). Federal courts are divided on the question. Compare C.H. v. American Red Cross, 684 F.Supp. 1018, 1023-24 (E.D.Mo.198......
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