Magellsen v. Federal Deposit Insurance Corporation

• Decision Date: 27 April 1972
• Docket Number: Civ. No. 935.
• Citation: 341 F. Supp. 1031
• Parties: William C. MAGELLSEN, Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION et al., Defendants.
• Court: U.S. District Court — District of Montana

341 F. Supp. 1031

William C. MAGELLSEN, Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION et al., Defendants.

Civ. No. 935.

United States District Court, D. Montana, Billings Division.

April 27, 1972.

Charles F. Moses, Sandall, Moses & Cavan, Billings, Mont., for plaintiff.

Cale Crowley, Crowley, Kilbourne, Haughey, Hanson & Gallagher, Billings, Mont., for F. D. I. C. and Roger B. West.

George Manuel, pro se.

MEMORANDUM OPINION AND ORDER

BATTIN, District Judge.

Plaintiff brings this action against these defendants with jurisdiction based on the Federal Deposit Insurance Act, 12 U.S.C. § 1811, et seq. Specifically, jurisdiction is based on Section 1819, which makes Federal Deposit Insurance Corporation (F.D.I.C.) a corporation which can sue and be sued.

Plaintiff was the major shareholder, managing director and creator of two banks. He applied for insurance with F.D.I.C. on January 15, 1970. This insurance was not favorably acted upon until November 25, 1970. Plaintiff alleges:

1. That defendants F.D.I.C. and West delayed arbitrarily and unreasonably in acting upon his applications;

2. That defendants F.D.I.C. and West negligently failed and refused to act on the applications;

3. That defendant West deliberately aroused suspicion against plaintiff and discriminated against him in applying the rules and regulations of F.D.I.C.;

4. That defendants F.D.I.C. and West violated 12 U.S.C. § 1820 by not administering these regulations fairly, impartially, and without discrimination; and

5. That by this procedure defendants F.D.I.C. and West violated the Fourteenth Amendment and deprived plaintiff of a fair hearing through selective enforcement of the regulations, oppressive demands, discriminatory policies towards plaintiff, and arbitrary and unfair treatment of plaintiff's application.

Plaintiff also alleges that this action made him vulnerable to various "con artists", including defendant Manuel. Defendants allegedly knew of Manuel's reputation; plaintiff argues that they should have told him of the danger in dealing with Manuel. Plaintiff alleges that had defendants provided him with this information, he would have terminated his dealings with Manuel. As a result of his dealings with Manuel, plaintiff alleges that he suffered the injuries set out in the complaint. Finally, plaintiff alleges that, because of this dealing and his subsequent loss, the F. D. I. C. investigated plaintiff and suspended him from banking operations.

Defendant F.D.I.C. maintains that the complaint should be dismissed as to it, since plaintiff has not filed a claim with the agency as required by 28 U.S.C. § 2401(b), as amended July 18, 1966, Pub. L. 89-506, Section 7, 80 Stat. 307, and 28 U.S.C. § 2675(a), as amended July 18, 1966, Pub.L. 89-506, Section 2, 80 Stat. 306.

Defendant West maintains that he is immune from suit by virtue of the fact that he was acting within the scope of his office with relation to general matters under his control and supervision by law and by rules and regulations of the F.D.I.C.

It is the opinion of the court that F.D.I.C. cannot be sued directly, since it is a federal agency. Therefore, it comes within the definition of the Federal Tort Claims Act, 28 U.S.C. § 2671 et seq., and any suit must be instituted against the United States rather than the F.D.I.C. itself. In Freeling v. F. D. I. C., 221 F.Supp. 955 (W.D.Okl.1962), aff. 326 F.2d 971 (10th Cir. 1963), the court in a slander suit against F.D.I.C. ruled, on a motion to dismiss, that F.D.I.C. could not be sued directly under the Federal Tort Claims Act. The court decided that F.D.I.C. was a federal agency under the definition of the Federal Tort Claims Act. The court noted that, prior to the passage of the Federal Tort Claims Act in 1946, a federal agency could be sued under the "sue and be sued" clause of the creating legislation. The Federal Tort Claims Act, however, withdrew this right with regard to tort claims against federal agencies. Therefore, suit must be directed against the United States and not against its agent when the action is for monetary damages arising out of a tort.

The court went on to state:

"There can be no doubt, from reading the report Senate Report 1400, 79th Congress, Second Session, but that Congress intended to place federal agencies with a `sue and be sued' clause in the same position as federal agencies without such authority, if the action was a tort action for money damages. If the particular tort action happened to be excluded by a section of the Act, such as Section 2680, the plaintiff would have to support jurisdiction on the basis of another act. In no instance would the `sue and be sued' clause nor the corporate status support jurisdiction.

"I am of the opinion that the plaintiff cannot maintain this action directly against the Federal Deposit Insurance Corporation, even though recovery may be precluded under the Federal Tort Claims Act if the plaintiff attempted to proceed directly against the United States. The Federal Tort Claims Act is the exclusive remedy available to the plaintiff, and the `sue and be sued' clause will not support jurisdiction."

221 F.Supp. at 957. Accord, James v. F. D. I. C., 231 F.Supp. 475 (W.D. La.1964).

In contradiction to this proposition, plaintiff cites In re Anjopa Paper & Board Mfg. Co., 269 F.Supp. 241 (S.D. N.Y.1967). This case dealt with an appeal by F.D.I.C. from the decision of the Referee in Bankruptcy. F.D.I.C. was a receiver of a bank which had received alleged preferential assignments from Anjopa who had been declared bankrupt. The finding was against F.D.I.C., which claimed, among other things on review, that the referee's findings were invalid, since it could not be proceeded against as the United States in state procedings. The court ruled that F.D.I.C. was not protected by sovereign immunity but stood in the position of the bank. The cases cited by the court in support of its proposition were decided prior to the passage of the Federal Tort Claims Act and are inapposite to the present case. Moreover, Anjopa is not applicable to the situation at hand because it is not a tort action. 269 F.Supp. at 252-254.

Defendant West maintains that he is immune from suit because he was acting in the scope of his authority and in regard to matters submitted to his discretion and control by law and by those regulations of the F.D.I.C. From defendant West's uncontroverted affidavit, it appears that he was acting within his discretion. Section 2680 of 28 U.S.C. provides that:

"The provisions of this chapter and section 1346(b) of this title 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." (Emphasis supplied.)

This provision of the Federal Tort Claims Act was construed first by the United States Supreme Court in Dalehite v. United States, 346 U.S. 15, 73 S.Ct. 956, 97 L.Ed. 1427 (1953). That case was an action seeking damages from the United States for the death of Dalehite in a fertilizer explosion. Suit was filed under the Federal Tort Claims Act, and Section 2680 was pleaded as a defense. Plaintiffs claimed negligence on the part of federal officials and employees involved in a program of fertilizer production in which a fire and explosion occurred. The fertilizer was produced and distributed under the specifications and control of the United States. Under Congressional authority, a program had been created to experiment with, and subsequently to produce, nitrate-based fertilizers. No specific acts of negligence could be shown and the suit alleged that the Government was liable because of its participation in the manufacture and transportation of the fertilizer. The negligence charged was that the United States, without proper investigation of the properties of the fertilizer, allowed it to be shipped through a congested area without warning of the possibility of explosion under certain conditions.

The Supreme Court ruled that plaintiffs' claim was barred by Section 2680 of the Federal Tort Claims Act. The Court noted that there were two types of acts of government employees which were excepted from liability. The first exception included "acts or omissions of government employees, exercising due care in carrying out statutes or regulations whether valid or not. 346 U.S. at 33, 73 S.Ct. at 966. The purpose of this exception was to prevent tort action testing the legality of statutes and regulations. The second exception involved acts of discretion in performance of governmental functions or duties, whether or not this discretion was abused. The Court noted that "not only agencies of government are covered but all employees exercising discretion." Id. This clause of Section 2680 was held to include both negligent and wrongful acts by employees, if done in the exercise of their discretion. The Court added, with reference to the intent of Congress.

"So we know that the draftsmen did not intend it Section 2680 to relieve the Government from liability for such common-law torts as an automobile collision caused by the negligence of an employee, see 346 U.S. p. 28 73 S.Ct. 964, supra, of the administering agency. We know it was intended to cover more than the administration of a statute or regulation because it appears disjunctively in the second phrase of the section. The `discretion' protected by the section is not that of the judge — a power to decide within the limits of positive rules of law subject to judicial review. It is the discretion of the executive or the administrator to act according to one's judgment of the best course, a concept of substantial historical

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