Owensboro Nat. Bank v. Moore, Civ. A. No. 91-3.

CourtUnited States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
Writing for the CourtJohn T. McGarvey, Morgan & Pottinger, Louisville, Ky., for amicus curiae American Bankers Ass'n
Citation803 F. Supp. 24
PartiesThe OWENSBORO NATIONAL BANK, et al., Plaintiffs, and United States of America, Intervening Plaintiff, v. Ronnie C. MOORE, Commissioner, Defendant, and Kentucky State Association of Life Underwriters, et al., Intervening Defendants.
Docket NumberCiv. A. No. 91-3.
Decision Date04 August 1992

803 F. Supp. 24

The OWENSBORO NATIONAL BANK, et al., Plaintiffs,
and
United States of America, Intervening Plaintiff,
v.
Ronnie C. MOORE, Commissioner, Defendant,
and
Kentucky State Association of Life Underwriters, et al., Intervening Defendants.

Civ. A. No. 91-3.

United States District Court, E.D. Kentucky, at Frankfort.

August 4, 1992.


803 F. Supp. 25
COPYRIGHT MATERIAL OMITTED
803 F. Supp. 26
M. Brooks Senn, Senn, Miller & Smith, Louisville, Ky., for plaintiffs

U.S. Atty., Lexington, Ky., Anne L. Weismann, Paul W. Bridenhagen, Dept. of Justice, Rosa M. Koppel, Sr. Attorney, Litigation Div., Office of Comptroller of Currency, Washington, D.C., for intervening plaintiff.

John T. McGarvey, Morgan & Pottinger, Louisville, Ky., for amicus curiae American Bankers Ass'n.

Stephen B. Cox, Asst. Gen. Counsel, Kentucky Dept. of Ins., Frankfort, Ky., for defendant.

Terrell L. Black, Larry R. Blanton, Black, Carle, Maze & Wilmes, Louisville, Ky., Jonathan B. Sallet, Ann M. Kappler, Jenner & Block, Washington, D.C., for intervening defendants.

803 F. Supp. 27

MEMORANDUM OPINION AND ORDER

HOOD, District Judge.

This matter is before the court upon several pending motions. The defendant, Ronnie C. Moore, the Commissioner of the Kentucky Department of Insurance (the Commissioner), has moved to dismiss the complaint. Record # 4. The intervening defendants (collectively referred to as "the associations") have also filed a motion to dismiss. Record # 7. The plaintiffs have moved for summary judgment, Record # 14, as have the Commissioner and the associations. Record # 28. Finally, the United States has moved for summary judgment on its intervening complaint. Record # 60. These motions have been fully briefed and argued to the court, and this matter is ready for consideration.

I. FACTUAL BACKGROUND

The underlying facts of this case are undisputed. The plaintiff banks are national banking associations organized under the laws of the United States. Two of the plaintiffs, The First National Bank of Louisa, and Citizens National Bank of Paintsville are located in Kentucky towns with less than 5,000 inhabitants, as shown by the 1990 Decennial Census. The other banking plaintiff, The Owensboro National Bank, maintains a branch in Whitesville, Kentucky, which also has a 1990 population of less than 5,000 persons. Each plaintiff bank is owned by a bank holding company.

In the fall of 1990, the plaintiff banks communicated to the Commissioner their wish to apply for licenses to act as general lines and life insurance agents. Responding by letter dated January 10, 1991, the Commissioner declined to immediately provide the requested applications, stating that "such a dramatic change in our long-standing interpretation of both statutory and case law should not be lightly granted." Letter from Commissioner Elizabeth Wright to M. Brooks Senn (January 10, 1991) Record # 16, Tab 6. Rather, the Commissioner scheduled a public hearing for February 13, 1991, to determine "whether or not the Kentucky Department of Insurance shall issue the insurance agents licenses requested ... upon completion of the applicable licensing procedures as set forth in KRS 304, Subtitle 9...." Record # 30, Tab 2.

On January 24, 1991, the plaintiffs filed the present action in this court seeking a declaration of rights and injunctive relief. Record # 1. Specifically, the plaintiffs asked this court to require the Commissioner's compliance with 12 U.S.C. § 92, which purportedly permits national banks having an office in towns with less than 5,000 inhabitants to act as insurance agents.

The day prior to filing suit, one of the plaintiffs, the Kentucky Bankers Association (the KBA), apparently distributed a memorandum to its members stating that the Commissioner's hearing "could prove to be a circus", and may be "nothing more than a `name-calling' session." Memorandum from Ballard W. Cassidy, Jr. to KBA Members (January 23, 1991) Record # 5, Exhibit C. The KBA urged its members not to attend the hearing. Nevertheless, the plaintiffs did attend, but called no witnesses. Rather, they submitted written objections to the hearing itself, and restated their legal arguments.

No resolution was attained at the hearing, and the hearing officer permitted the Commissioner to engage in limited discovery, over plaintiffs' objections. Record # 11, Tabs 5 & 6. The hearing was recessed until April 8, 1991, and at that time additional evidence was presented by the Commissioner. No final action ever resulted from the hearing, and further proceedings in the Department of Insurance were eventually stayed, pending the outcome of this litigation, by order of the Franklin Circuit Court. Record # 24, Exhibit 1.

This matter has been submitted to this court on cross-motions for summary judgment, and the parties have presented arguments on those motions. However, the Commissioner and the associations have asserted that this court does not have subject matter jurisdiction over this action. That assertion must be addressed prior to any

803 F. Supp. 28
consideration of the motions for summary judgment

II. JUSTICIABILITY

The Commissioner and the associations raise several arguments in support of their contention that this court lacks subject matter jurisdiction. They contend that this matter is not ripe for decision as no final action has been taken by the Commissioner. They further assert that the plaintiffs have not exhausted their state remedies. Finally, they argue that this court should abstain from adjudicating this action because to do so would interfere with ongoing state proceedings, and because the plaintiffs' claims raise unsettled questions of state law.

A. RIPENESS

This court is limited to the adjudication of actual cases or controversies. U.S. Const. art. III, § 2. For this court to exercise jurisdiction over this case, it must be ripe for decision. The doctrine of ripeness "dictates that the courts should decide only existing, substantial controversies, not hypothetical questions or possibilities." City Communications, Inc., v. City of Detroit, 888 F.2d 1081, 1089 (6th Cir.1989). In the context of administrative action, this doctrine prevents courts from becoming involved in disagreements over administrative policies and protects agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties. Abbott Laboratories v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967).

Here, the Commissioner and the associations argue that because the Department of Insurance was not permitted to complete its administrative process before this suit was filed, the dispute is not ripe for decision. It is true that this action was filed on January 24, 1991, after the plaintiffs received notice of the public hearing on their request for applications, but before the hearing was held. However, as will be seen in detail later, the Commonwealth of Kentucky, acting through its Attorney General and/or the Commissioner, has long taken the position that the plaintiff banks are not authorized to act as insurance agents in Kentucky.

In addressing the issue of ripeness, the court is persuaded by the reasoning of the Supreme Court in Columbia Broadcasting System v. United States, 316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942). In CBS, the Federal Communications Commission had issued a regulation which would have prevented the issuance of radio licenses to stations which signed network affiliation contracts with certain provisions. Although no license had been revoked and the FCC had not refused to grant any license based upon the regulation, the Court held that a challenge to the regulation was ripe. The court specifically noted that the FCC action was no less reviewable because promulgation of the regulation itself did not deny or cancel a license. It was enough that failure to comply with the regulation would penalize the licensees, and ultimately CBS, the contracting network. Id, at 417, 62 S.Ct., at 1200; see also United States v. Storer Broadcasting Co., 351 U.S. 192, 76 S.Ct. 763, 100 L.Ed. 1081 (1956).

The present situation is similar. Although the Commissioner has not taken final action with respect to the plaintiff banks' requests for applications, his long-standing view of the questions involved constitute action which is sufficiently final to concretely affect the plaintiffs interests. This view is amply supported by the aggressive stance the Commissioner has taken in this litigation in setting forth his view of both federal and state law in this area and the interaction between both spheres. Ripeness is now viewed as a matter of common sense, and the court is convinced that absolutely no purpose would be served by permitting the Commissioner to continue with his charade of evaluation before this court addresses the merits of this litigation. See McCoy-Elkhorn Coal Corp. v. United States Environmental Protection Agency, 622 F.2d 260, 264 (6th Cir. 1980).

This decision comports with the Supreme Court's two part ripeness test articulated in

803 F. Supp. 29
Abbott Laboratories. There the Court determined that ripeness depends upon both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration. Abbott Laboratories, 387 U.S., at 149, 87 S.Ct., at 1515. This action presents purely legal questions which are fit for judicial decision at this time. In addition, this court has no difficulty concluding that hardship to the plaintiffs would result if judicial consideration were withheld. This matter is ripe for decision by this court

B. EXHAUSTION

When the actions of an administrative agency are involved, exhaustion of remedies is generally required to prevent premature interference with agency processes, so that the agency may function efficiently and correct its own mistakes, to afford the parties and the court the...

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    ...a motion for summary judgment, to which defendants responded by filing a cross-motion for summary judgment. In a published opinion, see 803 F.Supp. 24 (E.D.Ky.1992), the district court determined that the case was justiciable, 1 granted plaintiffs' Page 390 motion for summary judgment, and ......
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    ...of Governors of the Federal Reserve System"), rev'd on other grounds, 69 F.3d 1539 (11th Cir.1995); Owensboro National Bank v. Moore, 803 F.Supp. 24, 31 (E.D.Ky. 1992) ("Unlike national banks, which are primarily regulated by the Comptroller of the Currency, primary regulatory authority for......
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5 cases
  • Wiggins v. Bank of Am., Case No. 2:19-cv-3223
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • September 21, 2020
    ...of preemption, "the standard for preemption does not change simply because national banks are involved." Owensboro Nat'l Bank v. Moore , 803 F. Supp. 24, 34 (E.D. Ky. 1992). The Supreme Court in Cipollone v. Liggett Group, Incorporated explained that a federal law preempts state law under t......
  • 940813 La.App. 1 Cir. 3/3/95, First Advantage Ins., Inc. v. Green
    • United States
    • Court of Appeal of Louisiana (US)
    • March 3, 1995
    ...was enacted to strengthen small national banks by providing them with an additional source of revenue. Owensboro National Bank v. Moore, 803 F.Supp. 24, 34-35 (E.D.Ky.1992). However, the granting of power to national banks which involves insurance does not transform this section into a regu......
  • Owensboro Nat. Bank v. Stephens, Nos. 92-6330
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • March 15, 1995
    ...a motion for summary judgment, to which defendants responded by filing a cross-motion for summary judgment. In a published opinion, see 803 F.Supp. 24 (E.D.Ky.1992), the district court determined that the case was justiciable, 1 granted plaintiffs' Page 390 motion for summary judgment, and ......
  • Norwest Bank Minnesota Nat. Ass'n v. Sween Corp., Civ. File No. 3-95-387.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • February 20, 1996
    ...of Governors of the Federal Reserve System"), rev'd on other grounds, 69 F.3d 1539 (11th Cir.1995); Owensboro National Bank v. Moore, 803 F.Supp. 24, 31 (E.D.Ky. 1992) ("Unlike national banks, which are primarily regulated by the Comptroller of the Currency, primary regulatory authority for......
  • Request a trial to view additional results

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