Marchese v. US
| Decision Date | 23 December 1991 |
| Docket Number | No. 91 Civ. 1300 (CSH).,91 Civ. 1300 (CSH). |
| Parties | Anthony J. MARCHESE and Rhombus Financial Services, Ltd., Plaintiffs, v. The UNITED STATES of America and Federal Deposit Insurance Corporation, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Gary A. Mastronardi, Bridgeport, Conn., for plaintiffs.
Stuart M. Gerson, Asst. Atty. Gen., Jeffrey Axelrad, Bridget A. Gauntlett, U.S. Dept. of Justice, Washington, D.C., for defendant U.S.
Marguerite Sagatelian, Federal Deposit Ins. Corp., New York City, for defendant Federal Deposit Ins. Corp.
This case is before the Court on the motion of defendant United States of America under Rules 12(b)(1) and 12(b)(6), Fed.R.Civ.P., to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim; and the motion of defendant Federal Deposit Insurance Corporation ("FDIC") to dismiss under Rule 12(b)(6).
For the reasons set forth below, defendants' motions are granted.
Plaintiffs Anthony J. Marchese and Rhombus Financial Services Limited ("Rhombus") filed the instant action against the United States and the FDIC seeking to recover interest allegedly owing on two certificates of deposit which were withheld by the FDIC, after People's National Bank of Rockland County, New York ("People's National"), the institution where plaintiff's purchased the CDs, became insolvent and the FDIC was appointed as receiver.
On or about June 30, 1983, plaintiff Marchese purchased a certificate of deposit from People's National in the amount of $400,000. Plaintiff Rhombus, a company which previously did business under the name Central Financial Services, Ltd., purchased a certificate of deposit from People's National in the amount of $100,000 in March 1985. People's National subsequently made three loans to Marchese all of which were collateralized by his certificate of deposit. Complaint ("Compl.") ¶¶ 5-7.
On September 6, 1985 People's National deducted $276,096.35 from Marchese's $400,000 in order to satisfy principal and interest payments on the three loans Marchese had outstanding from the bank. After this set-off and after interest was credited, the principal balance then remaining in Marchese's certificate of deposit was $125,909.12. Compl. ¶ 6, Exh. A.
On September 13, 1985 the Office of the Comptroller of the Currency declared People's National to be insolvent and appointed the FDIC to be the receiver for the Bank. People's National was then acquired by the First National Bank of Highland, New York. When the assets of People's National were transferred to first National Bank of Highland, the FDIC withheld payment of the insured portion of plaintiffs' certificates of deposit, pursuant to its authority under 12 U.S.C. § 1822(d), pending a determination as to whether the funds should be offset as payment for liabilities owed to People's National. Compl. ¶¶ 8-9.
On March 21, 1990 the FDIC paid Marchese and Rhombus the insured portion of their accounts, together with rateable dividends paid out of the receivership estate in partial satisfaction of the uninsured amounts of their deposits. Since the limit for insured deposit is $100,000 Marchese and Rhombus each received $100,000 checks and checks for part of the uninsured amounts. Compl. ¶ 10, Exh. B. Plaintiffs did not receive interest on these certificates of deposit for the period between September 13, 1985, when the certificates of deposits were withheld, and March 21, 1990, the date the principal amounts were returned to them. Compl. ¶ 11.
By letter dated April 9, 1990 counsel for plaintiffs wrote the FDIC to inquire under what authority the certificates of deposit had been seized and under what authority they had been held by the FDIC without the payment of interest. By letter dated May 1, 1990 an attorney for the FDIC responded that pursuant to 12 U.S.C. § 1822(d), the certificates of deposit were held for payment against various loans which were in arrears, and once the FDIC decided not to pursue a claim against plaintiffs, payment was made by letter dated March 21, 1990. The attorney for the FDIC also stated that "the FDIC is not required to pay interests on deposits which are subject to a contingent claim." Compl. ¶ 11, Exh. C.
By letter dated May 22, 1990 counsel for plaintiffs wrote the FDIC and disputed the position taken by the FDIC. Plaintiffs argued that prior to the FDIC's appointment as receiver for People's National, People's National itself had satisfied the outstanding loans by charging them against Marchese's certificate of deposit. Plaintiff contended that the certificate of deposit should never have been seized and that at a minimum the FDIC should have notified plaintiff Marchese that his certificate of deposit had been seized. Counsel for plaintiffs also noted that the Rhombus certificate of deposit was never collateral for any loans. Counsel for plaintiffs asserted that the FDIC had withheld the certificates of deposit in error and asked that the FDIC reconsider its decision not to pay interest on certificates of deposit. Counsel for plaintiff demanded that the FDIC pay interest on the principal amounts of the certificates of deposit. Counsel's letter gave the FDIC thirty days within which to investigate the factual validity of the claims. Letter of Gary A. Mastronardi, Esq. dated May 22, 1990, Compl. ¶ 11, Exh. C.
On December 5, 1990 Marchese and Rhombus filed the instant action to recover the interest which would have accrued on their certificates of deposit. The plaintiffs allege that they "have not received interest on their funds for the period between September 13, 1985 and March 21, 1990." Compl. ¶ 11. The complaint pleads five counts for recovery: wrongful conversion, breach of fiduciary duty, negligence, due process and breach of contract. In the complaint plaintiffs state that jurisdiction is based upon the Fifth Amendment to the United States Constitution and the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 1346(b). Compl. ¶ 1.
Defendant United States now moves to dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6) on the grounds that this Court lacks subject matter jurisdiction because plaintiffs failed to file a notice of claim, that plaintiffs cannot recover prejudgment interest against the United States under the FTCA, and that plaintiffs have failed to state a tort claim cognizable under the FTCA.
Defendant FDIC moves for an order dismissing the complaint pursuant to Fed. R.Civ.P. 12(b)(6) on the grounds that suits for the recovery of prejudgment interest against the FDIC are barred by sovereign immunity and that ordering the payment of interest would penalize the FDIC for delay in paying deposit insurance because of the operation of the offset provisions of the Federal Deposit Insurance Act, 12 U.S.C. § 1822(d).
Plaintiffs respond that they did comply with the notice of claim provisions, that they are seeking damages rather than prejudgment interest, and that the FDIC negligently withheld their certificates of deposit, which gives them a tort action cognizable under the FTCA.
On a motion to dismiss under Rule 12(b)(6), the trial court's function "is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir.1980). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). The district court should grant a Rule 12(b)(6) motion "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)).
Except in certain circumstances, consideration of a motion to dismiss the complaint must focus on the allegations contained on the face of the complaint. Kramer v. Time Warner, Inc., 937 F.2d 767, 773 (2d Cir.1991). On a motion to dismiss, a district court must accept plaintiff's allegations as true, Papasan v. Allain, 478 U.S. 265, 283, 106 S.Ct. 2932, 2943, 92 L.Ed.2d 209 (1986), and the allegations must be "construed favorably to the plaintiff." LaBounty v. Adler, 933 F.2d 121, 123 (2d Cir.1991). "A Rule 12(b)(6) motion to dismiss need not be granted nor denied in toto but may be granted as to part of a complaint and denied as to the remainder." Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 115 (2d Cir.1982).
The United States argues that plaintiffs have not complied with the FTCA's notice of claim requirement, 28 U.S.C. § 2675, and that this action should be dismissed. While the United States concedes that courts do permit amendment of the complaint to show compliance with the notice of claim requirement, it contends that plaintiffs cannot amend because they did not file administrative claims with the appropriate agency prior to filing suit. Memorandum of Law In Support of Defendant United States' Motion to Dismiss ("Gov. Mem.") at 5-6; see Affidavit of Hoyle Robinson, Executive Secretary to the Board of Directors of FDIC. Robinson, who states that all FTCA claims are forwarded to his office and that he maintains a record of such claims, declares that the FDIC has not received any administrative claims or notices of administrative claims under the FTCA from either of the plaintiffs. The government also argues that counsel's May 22, 1990 letter is not an adequate notice of claim because it fails to specify a sum certain. Reply Memorandum In Support of Defendant United States' Motion to Dismiss at 2-3.
Plaintiffs respond that § 2675(a) only requires that a potential plaintiff put...
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