Miller v. Standard Federal Savings and Loan Ass'n

• Decision Date: 07 August 1972
• Docket Number: No. 37901.,37901.
• Citation: 347 F. Supp. 185
• Parties: George Dennis MILLER, III, et al., Plaintiffs, v. STANDARD FEDERAL SAVINGS AND LOAN ASSOCIATION, Defendant.
• Court: U.S. District Court — Western District of Michigan

347 F. Supp. 185

George Dennis MILLER, III, et al., Plaintiffs, v. STANDARD FEDERAL SAVINGS AND LOAN ASSOCIATION, Defendant.

No. 37901.

United States District Court, E. D. Michigan, S. D.

August 7, 1972.

Harry Gibson, Robert Houston, Lloyd E. Powell, Detroit, Mich., for plaintiffs.

Nathan B. Goodnow, Detroit, Mich., for defendant.

MEMORANDUM OPINION

JOINER, District Judge.

Jurisdiction in this case is claimed to be based on Sections 1331, 1337 and 1343 of the Judicial Code (28 U.S.C. Sections 1331, 1337 and 1343). Defendant has moved to dismiss this case for want of jurisdiction. For the reason stated in Gibson, et al. v. First Federal Savings and Loan Association, 347 F.Supp. 560, Eastern District of Michigan, and for further reasons stated in this Opinion, the motion is overruled. Gibson sustains jurisdiction under Section 1337 U.S.C.

The Plaintiff in this action prays that the Defendant, a federal savings and loan association, be directed to cease and desist from certain practices set forth in the complaint that are alleged to violate federal law, regulations and guidelines. He prays further that judgment be entered against the Defendant for the money due to the Plaintiff and for all money due to persons in the same class as the Plaintiff. He prays that the Defendant specifically be directed to change its procedures for collecting escrow money and for punitive damages.

The case involves allegations on the part of the Plaintiff that the Defendant has required the Plaintiff to pay into its escrow account amounts larger than permitted under 11 C.F.R. 545.6-11 for the purpose of paying taxes and insurance on property mortgaged to the Defendant as security for a loan.

Jurisdiction of this Court can be sustained under Section 1331 of the United States Code. That a federal question has been stated is shown by the fact that Plaintiff relies for its case on the fact that the Defendant has allegedly violated 11 C.F.R. Section 545.6-11:

"A federal association may require that an equivalent of one-twelfth of the estimated annual taxes, assessments, insurance premiums and other charges on real estate security be paid in advance . . . to enable the association to pay such charges as they become due from the funds so received . . ."

Plaintiff asserts that this section should be interpreted so as to prohibit the acts which he asserts should be stopped, i. e. the collection of escrow account funds not permitted by the regulation. This case is therefore not a case based on contract under state law, but one bottomed squarely on a federal statute or regulation, and therefore the kind of case that ought to be heard in this Court if a jurisdictional amount can be found, Gibson v. First Federal Savings and Loan Association, 347 F.Supp. 560, Eastern District of Michigan, (1972); Bernstein Bros. Pipe and Machinery Company v. Denver & R. G. W. R. Co., 193 F.2d 441 (10 Cir. 1951); see also, J. I. Case Company v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964); Wills v. Trans World Airlines, Inc., 200 F.Supp. 360 (S.D.Cal.1961). In fact, if ever there was a case in which the litigation should be determined in the federal court as distinguished from the state court, this is it. This is a federal savings and loan association operating under federal regulations, a violation of which is the basic charge against the Defendant. Clearly, the federal court is a better forum for making the determinations called for in this case than is a state court. Cases such as Andersen v. Bingham and Garfield Railroad Company, 169 F.2d 328 (10 Cir. 1948), denying jurisdiction because the federal regulation does not authorize an affirmative right to sue are not controlling.

The main problem is one of amount in controversy. It is admitted that the specific amount due and owing the Plaintiff is substantially less than $10,000. From the standpoint of the Plaintiff as an individual, therefore, only a few dollars, at the most the interest on the funds allegedly wrongfully required to be deposited in account, less than $100 a year, are involved. On the other hand, if Defendant is required to cease and desist from collecting the sums of money allegedly collected in violation of 11 C.F.R. 545.6-11 for its whole operation, many times $10,000 will be affected by the Court's Order. Because the Defendant is a federal savings and loan association regulated by a federal agency and the interpretation of a provision of the regulations of that agency is at the heart of this action, it is not possible to grant the relief requested in this case affecting only the Plaintiff and the Defendant. Any such affirmative relief must directly affect all other escrow accounts. Thus from the standpoint of the Defendant, if he is forced to comply...