Miller v. Federal Deposit Ins. Corp.

• Decision Date: 22 June 1990
• Docket Number: No. 89-2784,89-2784
• Parties: J.D. MILLER, Plaintiff-Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 972

906 F.2d 972

59 USLW 2015

J.D. MILLER, Plaintiff-Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Defendant-Appellee.

No. 89-2784.

United States Court of Appeals Fourth Circuit.

Argued May 8, 1990.

Decided June 22, 1990.

Robert Harvey Chappell, Jr. (David C. Kohler, on brief), Christian, Barton, Epps, Brent & Chappell, Richmond, Va. (William E. Watson, Marc B. Chernenko, William E. Watson & Associates, Wellsburg, W.Va.), for plaintiff-appellant.

Robert Scott Cessar, Sr. Atty. (Thomas A. Schulz, Asst. Gen. Counsel, Charles L. Cope, II, Sr. Counsel, on brief), Federal Deposit Ins. Corp., Washington, D.C., for defendant-appellee.

Before ERVIN, Chief Judge, RUSSELL, Circuit Judge, and BULLOCK, United States District Judge for the Middle District of North Carolina, sitting by designation.

ERVIN, Chief Judge:

J.D. Miller ("Miller") appeals from a decision of the district court granting summary judgment in favor of the Federal Deposit Insurance Corporation (the "FDIC") on its claim for civil penalties which had been assessed against Miller pursuant to the Change in Banking Control Act of 1978, as amended, 12 U.S.C. Sec. 1817 (1988) (the "Act"). On appeal, Miller contends that the district court disregarded a disputed issue of material fact in granting summary judgment to the FDIC, and applied the wrong standard of review in evaluating the amount of the civil money penalty assessed against him by the FDIC. For the reasons articulated below, we affirm the district court's grant of summary judgment with respect to Miller's liability under the Act, and remand on the issue of the amount of the civil money penalty.

I.

The Citizens Bank of Weirton, West Virginia ("CBW"), is a state-chartered, federally insured bank. On February 26, 1986, the FDIC charged Miller with violating the Act by purchasing a controlling interest in the stock of CBW without providing sixty days' prior written notice of the proposed acquisition as required under 12 U.S.C. Sec. 1817(j)(1). The FDIC sought to collect a $300,000 civil money penalty from Miller for the violation, and he was notified of the charges and given an opportunity to respond to them as provided under 12 U.S.C. Sec. 1817(j)(16). An administrative law judge ("ALJ") conducted a formal agency hearing, concluded that Miller had willfully violated the Act, and recommended a penalty in the amount of $250,000. Thereafter, the FDIC adopted the ALJ's determination of liability, but increased the penalty to $375,640.

Prior to the administrative hearing, Miller filed a civil complaint against the FDIC in the United States District Court for the Northern District of West Virginia seeking to obtain injunctive and declaratory relief. The district court declined to enjoin the FDIC from pursuing its enforcement action against Miller. At the conclusion of its administrative proceedings, the FDIC filed a late-maturing counterclaim against Miller in the district court pursuant to 12 U.S.C. Sec. 1817(j)(16) to collect the $375,640 civil money penalty assessed against him. On cross-motions for summary judgment on the parties' respective claims, the district court entered summary judgment in favor of the FDIC as to Miller's liability under the Act, and as to the amount of the penalty. Miller now appeals that decision.

II.

Summary judgments are appropriate in those cases where there is no genuine dispute as to a material fact and it appears that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). In other words, summary judgments should be granted in those cases where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law. Charbonnages De France v. Smith, 597 F.2d 406, 414 (4th Cir.1979); Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir.1950). On summary judgment, any permissible inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). However, where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate. Id. at 587, 106 S.Ct. at 1356; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Most importantly, summary judgments are reviewed de novo on appeal. Higgins v. E.I. DuPont De Nemours & Co., 863 F.2d 1162, 1166-67 (4th Cir.1988); Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1127-28 (4th Cir.1987).

III.

With this standard of review in mind, we turn to Miller's principal assignment of error. As part of the proof scheme under the Act, the FDIC must show that a violation resulted from willful conduct. The relevant provision states:

Any person who willfully violates any provision of this subsection, or any regulation or order issued by the appropriate Federal banking agency pursuant thereto, shall forfeit and pay a civil penalty of not more than $10,000 per day for each day during which such violation continues. The appropriate Federal banking agency shall have authority to assess such a civil penalty, after giving notice and an opportunity to the person to submit data, views, and arguments, and after giving due consideration to the appropriateness of the penalty with respect to the size of financial resources and good faith of the person charged, the gravity of the violation, and any data, views, and arguments submitted. The agency may collect such civil penalty by agreement with the person or by bringing an action in the appropriate United States district court, except that in any such action, the person against whom the penalty has been assessed shall have a right to trial de novo.

12 U.S.C. Sec. 1817(j)(16). ¹ Miller argues that the district court erred in granting the FDIC's motion for summary judgment because there is a disputed issue of material fact with respect to whether he committed a willful violation of the Act. Specifically, Miller maintains that the record contains conflicting evidence on this question. He also cites to the general rule that summary judgment is seldom appropriate in cases wherein particular states of mind are decisive elements of a claim or defense. See Ross v. Communications Satellite Corp., 759 F.2d 355, 364-65 (4th Cir.1985), abrogated on other grounds, Price Waterhouse v. Hopkins, --- U.S. ----, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989); Morrison v. Nissan Co., Ltd., 601 F.2d 139, 141 (4th Cir.1979); Charbonnages De France v. Smith, 597 F.2d at 414. The rationale for this rule is that determinations of intent frequently depend upon the credibility of witnesses. Ross, 759 F.2d at 364; Morrison, 601 F.2d at 141.

This rule, however, has no application in the instant case because Miller admitted on several occasions that he willfully violated the Act. For example, in his deposition taken by the FDIC on January 9, 1986, Miller testified as follows:

Q. At that meeting, you told Mr. Schmitt [of the FDIC] that you had purchased thirty-eight percent (38%) of the stock of Citizens of Weirton from Theo Rosenberg?

A. [Miller] I believe I did, yes.

Q. Did you tell him that you knew that purchase was in violation of the Change of Bank Control Act?

A. Yes.

In addition, Miller filed two Notices of Acquisition of Control with the FDIC on April 26 and May 3, 1985. These statutory filings identified Miller as an "acquiring party" and the owner of 6995 shares of CBW stock, which represented fifty-six percent of the outstanding shares in that corporation. In a letter dated May 29, 1985, Miller also informed the FDIC that "the bottom line is that I will eventually have to make an injection into capital [at CBW] if my application for change of control is approved." In that letter, Miller stated that, while he did not intend to mislead the FDIC or misrepresent his actions, the opportunity to acquire a controlling interest in CBW arose so abruptly that he was either unable to provide the requisite sixty days' notice or unwilling to delay the purchase. Referring to the sale, Miller wrote: "All of a sudden it became available and I had to act fast." ²

In his own defense, Miller contends that he had acquired a controlling interest in CBW merely as an agent or "conduit" for Jeremy McCamic ("McCamic"), another CBW shareholder who apparently sought to obtain a controlling interest in CBW. Miller, who is an attorney, claims that McCamic retained him to negotiate the purchase of the 4706 shares of CBW stock held by Bellas because of a strong personality conflict between McCamic and Theo Rosenberg, Bellas' legal representative and daughter. At his administrative hearing, Miller testified that the stock which he acquired from Bellas "went into my name that particular day via a certificate, but I assigned that certificate the same day on the back of it and gave the stock certificate to Jerry McCamic. I was buying the four thousand seven hundred and six shares of stock for Jeremy McCamic."

The record, however, does not support Miller's assertions that he was acting exclusively as McCamic's agent in this matter. First, Miller acquired the Bellas-Rosenberg stock in his own name, and there is no evidence that he transferred any of the shares to McCamic. Moreover, ten months after he purchased the Bellas-Rosenberg stock, Miller testified at his deposition:

Q. Have you sold any of your stock of Citizens of Weirton?

A. [Miller] No.

Q. You still own approximately seven thousand shares?

A. Are you saying that I own it? Is that a statement?

Q. That's a question, do you still own approximately seven thousand shares?

A. I believe I own it, yes.

Furthermore, on two occasions after he acquired a controlling interest in CBW, Miller...