Gaubert v. U.S.

• Decision Date: 17 October 1989
• Docket Number: No. 88-1923,88-1923
• Citation: 885 F.2d 1284
• Parties: Thomas M. GAUBERT, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1284

885 F.2d 1284

58 USLW 2274

Thomas M. GAUBERT, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 88-1923.

United States Court of Appeals Fifth Circuit.

Oct. 17, 1989.

Abbe David Lowell, Elizabeth C. Brooks, Sean Connelly, Brand & Lowell, Washington, D.C., for plaintiff-appellant.

Jerome A. Madden, Trial Atty., Torts Branch, Civ. Div., U.S. Dept. of Justice, Washington, D.C., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before GEE, GARZA, and JONES, Circuit Judges

GARZA, Circuit Judge:

This case requires us to further define the scope of the discretionary function exception to the Federal Tort Claims Act. Appellant's case below was dismissed for lack of subject matter jurisdiction. We find the discretionary function exception to the Torts Claims Act inapplicable to certain of the alleged actions taken in this case. However, we find that Gaubert does not have standing to sue for the lost value of his shares, and we must dismiss that part of his suit.

Background

When deciding a motion to dismiss for lack of subject matter jurisdiction under Fed.Rule Civ.Proc. 12(b)(1), we construe the complaint broadly and liberally, although argumentative inferences favorable to the pleader will not be drawn. Norton v. Larney, 266 U.S. 511, 45 S.Ct. 145, 69 L.Ed. 413 (1925); see also Fed.Rule Civ.Proc. 8(f). We will also accept as true all uncontroverted factual allegations of the pleadings. Gibbs v. Buck, 307 U.S. 66, 59 S.Ct. 725, 83 L.Ed. 1111 (1939). We therefore present the facts of this case, which are alleged in Gaubert's complaint, in light of the above standards.

Appellant Thomas M. Gaubert was, at all times relevant to this case, the largest shareholder and chairman of the board of Independent American Savings Association ("IASA"), a Texas state-chartered and federally-insured savings and loan. From January 1983 through March 1986, IASA grew and its financial health remained good.

In the Fall of 1984, officials at the Federal Home Loan Bank Board ("FHLBB") wanted IASA to merge with a failing Texas thrift, Investex Savings. The closing of this transaction was delayed, however, by an investigation of another S & L in which Gaubert had been involved. In order to resolve this impasse, the FHLBB and Federal Home Loan Bank-Dallas ("FHLB-Dallas") requested that Gaubert sign a neutralization agreement in order to secure Gaubert's effective removal from the affairs of IASA. Gaubert agreed to this proposal. Gaubert was also required, as part of the merger transaction, to personally guarantee that the net worth of IASA would not fall below regulatory minimums. To accomplish this, Gaubert was asked to contribute a personal interest in real estate valued at more than $25 million; Gaubert ultimately lost this property when IASA became insolvent. No other shareholder or director of IASA was required to sign a neutralization agreement, give a personal guarantee, or asked to contribute property.

Officials at the federal agencies then assisted IASA in its merger with Investex by providing regulatory and financial advice. They advised IASA on how it should present the transactions to its shareholders for approval and helped draft proxy statements disclosing Gaubert's neutralization agreement. During this period, IASA was not under a supervisory agreement, receivership, conservatorship, or cease-and-desist order. Rather, the federal involvement came as a result of the inherent persuasive power of the FHLBB, which no doubt arises from the position of authority it occupies; the government euphemistically refers to this ability to pressure S & Ls as "jawboning."

Officials at FHLB-Dallas next sought the replacement of IASA's management and Board of Directors. In February or March of 1986, the Board was told that FHLB-Dallas would close IASA if it did not actively cooperate with this plan. FHLB-Dallas then searched for and selected the new Board of Directors and officers of IASA. In order to persuade the existing directors and officers to resign, Gaubert was freed from his neutralization agreement in return for his efforts to encourage the IASA Board of Directors to resign and allow FHLB-Dallas to pick the new directors and manage IASA.

All IASA directors tendered their undated resignations, even though no proceedings aimed at obtaining a supervisory agreement had ever been initiated for IASA. In April 1986, the directors were replaced, and a former FHLB-Dallas employee was installed as CEO. The other directors and officers, all selected by FHLB-Dallas, were ultimately elected.

After engineering the resignation and replacement of IASA management, officials at FHLB-Dallas actively involved themselves in IASA's affairs and played an increasingly larger role in the day-to-day operations. FHLB-Dallas officials arranged for the hiring of a consulting company on operational and financial matters and asset management. Advice and recommendations concerning whether, when, and how to place IASA subsidiaries into bankruptcy were given by FHLB-Dallas officials to the IASA Board. Salary disputes between IASA and its senior officers were mediated by FHLB-Dallas, which also reviewed a draft of a complaint in litigation that the Board of Directors contemplated filing. FHLB-Dallas urged that IASA convert from a state-chartered S & L to a federally chartered S & L so that it could become the exclusive government entity with power to control IASA. FHLB-Dallas employees actively intervened with the Texas Savings and Loan Department when the state attempted to install a supervisory agent at IASA.

Shortly after the IASA Board of Directors was replaced, the new directors announced that IASA had over a $400 million negative net worth; this was a surprising development in light of the fact that IASA believed its net worth to be about $74 million positive at the end of 1985. On May 20, 1987, Gaubert filed an administrative tort claim with the FHLBB, FHLB-Dallas, and FSLIC seeking damages in the amount of $75 million for the lost value of his shares, and $25 million for the property he forfeited under the guarantee agreement; that claim was denied by letter dated November 20, 1987. On May 20, 1987, the IASA was placed into the receivership of FSLIC.

Gaubert filed suit individually in United States District Court for the Northern District of Texas under the Federal Tort Claims Act, 28 U.S.C. Sec. 1346, alleging the negligent selection of directors and officers (Count I) and the negligent involvement in day to day operations (Count II) by federal officials. The government moved for dismissal, citing (1) Gaubert's lack of individual standing as a shareholder of IASA, and (2) lack of subject matter jurisdiction as grounds. The district court granted the motion to dismiss for lack of subject matter jurisdiction on September 28, 1988, and did not reach the issue of standing. Gaubert appeals that dismissal here.

Subject Matter Jurisdiction Under the FTCA

When suing the federal government, a plaintiff must first overcome the bar of sovereign immunity, which establishes that the federal government is not liable for damages resulting from sovereign acts performed by it in its sovereign capacity. Horowitz v. United States, 267 U.S. 458, 461, 45 S.Ct. 344, 344, 69 L.Ed. 736 (1925). The Federal Tort Claims Act ("FTCA"), 28 U.S.C. Sec. 1346(b), is a limited statutory waiver of the federal government's sovereign immunity. The FTCA authorizes suits 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 or 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.

28 U.S.C. Sec. 1346(b).

The act, however, contains certain exceptions to the federal government's waiver of immunity. One of these exceptions is known as the Discretionary Function Exception, which reads in pertinent part as follows:

The provisions of [The FTCA] shall not apply to--

(a) Any claim based upon an act or omission of an employee of the government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or 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. Sec. 2680(a). The district court concluded that this exception to the FTCA was applicable to this case, and therefore dismissed the suit for lack of subject matter jurisdiction. Gaubert contends that the district court's conclusion was in error, since the actions of the FHLBB and FHLB-Dallas lost the protection of the discretionary function exception when they began to assume operational, day-to-day control over IASA. Analysis of this well-taken point requires us to plumb the depths of Supreme Court decisions in this area; it is to this task which we now turn.

An early case in the Supreme Court applying the FTCA to negligence which can be characterized as being at the "operational level" of governmental activity is Indian Towing Co. v. United States, 350 U.S. 61, 76 S.Ct. 122, 100 L.Ed. 48 (1955). That case involved the negligent operation by the Coast Guard of a lighthouse light, resulting in the running aground of a barge. The Coast Guard argued that the FTCA, by its terms, excluded liability in the performance of activities which private persons do not perform. Thus, there would be no liability for negligent performance of uniquely governmental functions. The Court rejected this argument, noting that the Coast Guard did not have a duty to undertake the lighthouse service, but that "once it exercised its discretion...