Henry v. Office of Thrift Supervision

Decision Date16 December 1994
Docket NumberNo. 94-3032,94-3032
Citation43 F.3d 507
PartiesAnne P. HENRY, Plaintiff-Appellant, v. OFFICE OF THRIFT SUPERVISION, Defendant-Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Aaron B. Kahn, Asst. Chief Counsel (Carolyn B. Lieberman, Acting Chief Counsel, Thomas J. Segal, Deputy Chief Counsel, Teresa A. Scott, Sr. Trial Atty., with him on the brief), Office of the Chief Counsel, Office of Thrift Supervision, Washington, DC, for appellee.

Michael Thompson (Brian Fries, with him on the brief) Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, MO, for appellant.

Before MOORE, BARRETT and HENRY, Circuit Judges.

BARRETT, Senior Circuit Judge.

Anne P. Henry (Henry) appeals from the district court's Memorandum and Order 1 granting the defendant Office of Thrift Supervision's (OTS) motion to dismiss for lack of subject matter jurisdiction.

Facts

On appeal from a motion to dismiss, we accept all well-pleaded factual allegations of the complaint as true. Lafoy v. HMO Colo., 988 F.2d 97, 98 (10th Cir.1993); Hospice of Metro Denver, Inc. v. Group Health Ins. of Okla., Inc., 944 F.2d 752, 753 (10th Cir.1991). Accordingly, all facts recited herein are taken exclusively from Henry's Complaint for Declaratory and Injunctive Relief. (Appellant's Appendix, Exh. A).

Henry, of Johnson County, Kansas, was a director and shareholder of both Overland Park Savings and Loan Association (S & L) and Santa Fe Financial Corporation (Santa Fe), a service corporation wholly owned by S & L when, on January 21, 1988, her brother-in-law, Fred N. Coulson, III (Coulson), presented to the board of directors of Santa Fe the opportunity to purchase an office building in Westwood, Kansas, known as Westwood Plaza Towers (Towers). Coulson was a professional real estate developer and a member of the boards of directors of both S & L and Santa Fe.

The Santa Fe board, Coulson abstaining, voted to purchase Towers and, as compensation to Coulson for having referred the transaction to Santa Fe, agreed to grant a portion of the profits realized on the transaction to Coulson and his partner. Before consummating the purchase, S & L wrote to the Federal Home Loan Bank (FHLB) seeking approval both of the transaction and Santa Fe's contract with a company partially owned by Coulson to rehabilitate, lease and manage Towers. On November 17, 1988, the FHLB advised S & L that the transaction did not require a filing under applicable regulations.

On December 14, 1988, Santa Fe purchased Towers for $3,880,000. A brokerage company in which Coulson had an interest negotiated a sale on September 1, 1989, of Towers to Midwest Organ Bank for $6,200,000 and a brokerage fee of two percent was paid by Santa Fe. In another transaction, Santa Fe purchased property in Kansas City, Missouri (Midwest Property) for $1,000,000 which was appraised shortly thereafter for $950,000. Santa Fe expended $193,000 for various zoning and development activities, taxes, and other expenses relative to that property.

In December of 1989, the OTS conducted an examination of S & L and Santa Fe, including the Towers and Midwest Property transactions and made no criticism of those transactions at that time.

In July, 1990, Wilson Siemens, president of S & L, testified adversely to OTS in a lawsuit involving another savings and loan association while an OTS official was present in the courtroom. In February, 1991, OTS undertook another examination of S & L and singled out the Towers and Midwest Property transactions. OTS contended that these transactions were improper because of the fees paid to Coulson.

As a result of an accounting change mandated by OTS, OTS declared that S & L was in violation of federal capitalization requirements. Discussions between the board of directors of S & L and OTS occurred in 1991 through most of 1992 concerning recapitalization or sale of S & L, including a potential sale to Advance Financial, Inc. (AFI).

On June 5, 1991, OTS wrote to Henry announcing its intention to seek civil money penalties against her as a result of the Towers and Midwest Property transactions. On June 28, 1991, Henry responded and asserted that she had not violated any OTS regulations.

By late July, 1992, OTS demanded of Henry that she pay civil money penalties and, in addition, that she compensate S & L for the "losses" suffered as a result of the Towers and Midwest Property transactions, although no actual losses had occurred. OTS informed Henry that if she did not agree to the imposition of a cease and desist order upon the terms insisted on by OTS, that S & L would be closed and placed into receivership.

Earlier, on July 10, 1992, an internal order finding that S & L was in an unsafe and unsound condition requiring the appointment of a receiver was sent to the Commissioner of the Kansas Savings and Loan Department, but this finding was not disclosed to Henry even though OTS was then representing to Henry that if Henry agreed to OTS's terms for a cease and desist order, OTS would work with the S & L board to effectuate a sale of S & L. Had Henry known that OTS was proceeding with the appointment of a receiver for S & L, she would have terminated her negotiations with OTS concerning the cease and desist order. Further, OTS had advised Henry that it would work with S & L to assist in its recapitalization or sale if Henry agreed to the terms demanded by OTS for the cease and desist order.

On August 7, 1992, AFI submitted to OTS a letter of intent setting forth proposed terms for purchase of newly issued S & L stock, wherein AFI proposed a capital infusion for S & L of cash and certain mortgage servicing rights. OTS regulations permitted the use of certain non-cash assets, including mortgage servicing rights, as capital for a savings and loan institution. However, sometime prior to October 28, 1992, OTS had determined not to allow the use of mortgage servicing rights as capital for S & L but this fact was not disclosed to Henry.

On October 16, 1992, in reliance upon the OTS representations that it would work with the S & L directors to facilitate recapitalization or a sale of S & L, Henry entered into a Stipulation and Consent to Issuance of an Order of Civil Money Assessment and a Stipulation and Consent to Issuance of an Order to Cease and Desist for Restitution and Other Affirmative Relief. Henry did not stipulate to the facts upon which the orders were based. OTS represented to Henry that the terms of the cease and desist order were intended to make restitution to S & L for the losses which OTS claimed S & L had suffered.

By agreeing to the entry of the cease and desist order, Henry effectively waived her right to contest the charges made by OTS and to establish her innocence of those charges. Henry entered into the agreement for the purpose of eliciting the assistance of OTS in effectuating a recapitalization or sale of S & L. Had she known of OTS's decisions at the time of the agreement, she would not have agreed to the entry of the cease and desist order.

The cease and desist order issued on October 16, 1992, required Henry to make restitution to S & L of $693,189 representing the difference between the book value of the Midwest Property and the cost of acquiring and renovating the property. The order provided that restitution was to be made by Henry's purchase of the Midwest Property for the cash price of $1,200,000. OTS also imposed a civil money penalty of $1,000 on Henry.

On November 3, 1992, OTS notified AFI's president that the financial terms proposed for the sale of newly issued S & L stock were not acceptable, and on November 13, 1992, OTS appointed the Resolution Trust Corporation (RTC) as receiver for S & L and gave immediate control of S & L to RTC. Soon thereafter, RTC notified Henry that it would impose additional conditions upon the sale of the Midwest Property to her and require payments beyond those authorized or contemplated by the cease and desist order. Henry notified the RTC of her willingness to perform according to the terms of the cease and desist order as of the closing date of November 30, 1992, but RTC refused to close without the additional payments it had demanded. Had Henry known of the additional payments required, she would not have agreed to the cease and desist order.

OTS orally threatened Henry with an administrative freeze of her assets if she did not agree to its demands.

In December 1992, Henry initiated this action in the district court against OTS for declaratory and injunctive relief. In Count I, Henry asked the court to declare that there was no basis for the exercise of its asset freeze power by the OTS and to enjoin the OTS from taking any action with regard to Henry's assets or the assessment of additional civil money penalties.

In Count II, Henry alleged that OTS had failed to disclose material facts to her concerning its intention to place S & L into receivership, and of its determination that the terms for the purchase of newly issued S & L stock by AFI would not be approved. Henry relied on these nondisclosures in entering into the agreement with OTS for entry of the cease and desist order, and had she known, she would not have agreed to entry of the cease and desist order and she would have insisted upon her rights to notice, hearing and judicial review.

District Court Order

In granting OTS's motion to dismiss, the district court held that 12 U.S.C. Sec. 1818(i)(1) prohibited the court from exercising jurisdiction over Henry's complaint. Acknowledging that Henry faced a potentially harsh result, the court held that it was constrained by the unyielding language of Sec. 1818(i)(1):

except as otherwise provided in this section ... no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under [this] section, or to review, modify, suspend, terminate, or set aside any such notice or order.

Observing that Henry had pointed to no...

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