Federal Deposit Ins. Corp. v. Otero

• Decision Date: 01 May 1979
• Docket Number: Nos. 78-1388,78-1389,s. 78-1388
• Citation: 598 F.2d 627
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, Appellee, v. Andres Acosta OTERO et al., Defendants, Appellees, v. BANCO CENTRAL Y ECONOMIAS, Counterdefendant, Appellant. FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, Appellee, v. Manuel A. LOPEZ DE VICTORIA et al., Defendants, Appellees, v. BANCO CENTRAL Y ECONOMIAS, Counterdefendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 627

598 F.2d 627

FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, Appellee, v. Andres Acosta OTERO et al., Defendants, Appellees, v. BANCO CENTRAL Y ECONOMIAS, Counterdefendant, Appellant.

FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, Appellee, v. Manuel A. LOPEZ DE VICTORIA et al., Defendants, Appellees, v. BANCO CENTRAL Y ECONOMIAS, Counterdefendant, Appellant.

Nos. 78-1388, 78-1389.

United States Court of Appeals, First Circuit.

Argued Feb. 6, 1979.

Decided May 1, 1979.

Jose A. Gonzalez Gierbolini, Trujillo, P. R., with whom Juan E. Rodriguez Diaz, and Sweeting, Pons, Gonzalez & Rodriguez, San Juan, P. R., were on brief, for counterdefendant, appellant.

Ruben O. Figueroa, Hato Rey, P. R., with Figueroa & Nassar, Hato Rey, P. R., was on brief, for defendants, appellees.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

COFFIN, Chief Judge.

This is an appeal by a third-party defendant Banco Central y Economias from the refusal of the district court to remand two collection suits to state court. Appellant claims that defendants could not remove these actions under 12 U.S.C. § 1819(4) ¹ because the Federal Deposit Insurance Corporation (FDIC) was not an original party plaintiff to the state court suit and because the FDIC is the only party that can remove an action under the Federal Deposit Insurance Act. In the alternative appellant argues that the district court lacked subject matter jurisdiction to hear appellees' counterclaim against appellant. We affirm.

The factual background of this case is fairly straightforward. Banco Economias, a commercial bank organized under the laws of the Commonwealth of Puerto Rico, sued the defendants in Commonwealth court to collect on defaulted loans. Defendants counterclaimed for fraud, seeking rescission and damages. While the Commonwealth court suits were pending, the FDIC purchased the obligations of the defendants from the failing Banco Economias in the course of a reorganization plan whereby the FDIC bought the "bad" assets of the failing bank while Banco Central assumed by merger the remaining assets and liabilities. The FDIC then stepped in as party plaintiff in the collection suits and Banco Central y Economias assumed the role of the former Banco Economias as defendant in the counterclaims. Defendants then removed the actions to federal court. The appellant and the FDIC unsuccessfully moved to remand, FDIC v. Lopez Victoria, 448 F.Supp. 843 (D.P.R.1978), ² giving rise to this appeal.

Appellant first argues that the "mere substitution" of the FDIC as a party should not transform a suit into one arising under the laws of the United States. Appellant's primary argument is based upon the "well pleaded complaint" rule of Gully v. First Nat'l Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936). Unfortunately for appellant, it is well established that when the plaintiff by a voluntary act interposes a federal question that did not appear in the complaint as originally filed, the defendant may remove the case to federal court. 28 U.S.C. § 1146(b); Great Northern Ry. Co. v. Alexander, 246 U.S. 276, 280, 38 S.Ct. 237, 62 L.Ed. 713 (1918); See 1A Moore's Federal Practice P 0.157(12). We do not think that a different result should pertain when a federal question arises from the intervention of the FDIC as party plaintiff. It makes sense that "arising under" jurisdiction should be applicable when the involvement of a federal agency may put in issue the federal laws governing its rights and liabilities as a creditor. See FDIC v. Godshall, 558 F.2d 220 (4th Cir. 1977); FDIC v. Vogel, 437 F.Supp. 660, 662 (E.D.Wis.1977). We see no reason to preclude the availability of federal jurisdiction when the FDIC sues as the assignee of assets of a failing bank simply because the bank had already begun a collection suit before going under. Indeed, our research reveals that it is a common practice for the FDIC to intervene in pending suits on bad assets and remove to federal court. See, e. g., FDIC v. Vogel, supra; FDIC v. Julius Richman, Inc., 428 F.Supp. 593 (E.D.N.Y.1977).

Appellant's second argument turns on the specific language of 12 U.S.C. § 1819(4) that "the Corporation may remove" a pending state action in which it is a party. Appellant would have us read the statute as giving removal power exclusively to the FDIC. ³ We think this too strained a reading. We begin with the observation that prior to 1966, section 1819(4) provided merely that suits in which the FDIC was a party should be deemed as "arising under" the laws of the United States. This meant that Any defendant, including the FDIC could remove. Franklin Nat'l Bank Securities Litigation v. Andersen, 532 F.2d 842, 844 (2d Cir. 1976). Appellant's argument requires us to assume that the 1966 amendment which adds that "(T)he Corporation may, without bond or security, remove any such action . . . ." effectively cancelled the power of non-FDIC defendants to remove under the pre-1966 statute.

We would make such a leap only if no other rational explanation existed for the 1966 amendment. But there seems to us to be an eminently understandable and different interpretation of that amendment. As the Second Circuit observed, the FDIC serves in a dual capacity, being both an insurer of customers' deposits and a receiver of an insolvent bank, the latter role often forcing the FDIC to act as a party plaintiff. The amendment, therefore, permitted the removal of any suit to which the FDIC was a party, "whether as a defendant or a subrogated or a realigned derivative suit plaintiff." Franklin Nat'l Bank Securities Litigation, supra, 532 F.2d at 845. We would add that the amendment also sought to make removal by the FDIC convenient, by eliminating the ordinary requirement of bond or security.

In short, the 1966 amendment is entirely reconcilable with the prior language of section 1819(4), without reading it as confining all removal power to FDIC exclusively. While today one may decry giving removal power to private defendants in suits which have no connection with federal matters other than the presence of FDIC as a party, this is the way the law stood before 1966 and there is no indication that the Congress was truncating removal power by the 1966 amendment. The Senate Report states merely that the amendment would "authorize the removal of such actions to the Federal courts." S.Rep.No. 1483, 89th Cong., 2d Sess., reprinted in (1966) U.S. Code Cong. & Admin.News, pp. 3532, 3559. Finally, we note that where Congress has chosen to create exceptions to the general rule of removability under § 1441, it has done so in language much clearer than that used here. See, e. g., 28 U.S.C. § 1445; Franklin Nat'l Bank Securities Litigation, supra, at 845. In sum, we are not persuaded that Congress intended by the 1966 amendment to section 1819(4) to limit the power to remove suits in which the FDIC is a party to the FDIC alone.

Appellant next argues that even if defendant-appellees could remove the FDIC suit, the counterclaim could not be removed. Appellant points out that it is in federal court as defendant in a claim based solely on state law and that there is no independent basis for federal jurisdiction over that claim. In other words, appellant is a "pendent party". Citing only Aldinger v. Howard, 427 U.S. 1, 96 S.Ct. 2413, 49 L.Ed.2d 276 (1976), appellant argues that it cannot be hailed into federal court and that the counterclaim must be remanded to Commonwealth court.

The district court, in a well researched but unpublished opinion, decided that despite Aldinger it had discretion to assume jurisdiction over the counterclaim and over appellant as a pendent party. The trial court reasoned that, but for the novel situation of a "bifurcated plaintiff", the defendants' fraud claim would be a compulsory counterclaim over which there is unquestioned ancillary jurisdiction. See Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, 469 n. 1, 94 S.Ct. 2504, 41 L.Ed.2d 243 (1974); Moore v. New York Cotton Exchange, 270 U.S. 593, 46 S.Ct. 367, 70 L.Ed. 750 (1926). The district court pointed out that the fraud claim raised the same issues of law and the same factual questions involved in the FDIC's suit on the notes. Moreover, sending the fraud counterclaim back to Commonwealth court would raise the distinct possibility of conflicting judgments. Finally, the district court did not feel that Aldinger barred "pendent party" jurisdiction because that case is expressly limited to its facts.

The district court's assumption of jurisdiction requires us to decide an issue we recently left open in Ortiz v. United States, 595 F.2d 65 (1st Cir. 1979). In Ortiz, plaintiff sued the United States, asserting jurisdiction under the Federal Tort Claims Act. The government impleaded Hospital Mimiya, asserting jurisdiction under 28 U.S.C. § 1345. Plaintiff then amended her complaint to add a claim against Hospital Mimiya. We held that plaintiff's new claim, assuming it shared a common nucleus of operative facts with the FTCA claim, was within the jurisdiction of the district court. We relied, in part, upon the fact that the third-party defendant, Hospital Mimiya, was already a "federal party" one hailed into federal court under an independent basis of federal jurisdiction. In the case at bar, defendants assert a state-law claim against one not subject to an independent basis of federal jurisdiction. We hold that, on the peculiar facts of this case, the district court nevertheless had discretion to hear defendants' counterclaim.

First, we note that Aldinger does not purport to answer the question at bar. While holding that pendent party jurisdiction cannot be used by a plaintiff in a civil rights action to bring otherwise immune defendants into federal court, the Court in Aldinger Noted that "(o)ther statutory grants (of jurisdiction) and other alignments of parties and claims might call for a different result." 427 U.S. at 18, 96 S.Ct. at...