Schock v. U.S., 97-530L.

• Decision Date: 16 July 1999
• Docket Number: No. 97-530L.,97-530L.
• Citation: 56 F.Supp.2d 185
• Parties: Eleanor C. SCHOCK, Plaintiff, v. UNITED STATES of America and Federal Deposit Insurance Corporation, in its capacity as Receiver of Old Stone Bank FSB, Defendants.
• Court: U.S. District Court — District of Rhode Island

56 F.Supp.2d 185

Eleanor C. SCHOCK, Plaintiff, v. UNITED STATES of America and Federal Deposit Insurance Corporation, in its capacity as Receiver of Old Stone Bank FSB, Defendants.

No. 97-530L.

United States District Court, D. Rhode Island.

July 16, 1999.

COPYRIGHT MATERIAL OMITTED

John D. Deacon, Medeiros, Karman & Sanford Inc., Providence, RI, for Plaintiff.

Robin Feder, Assistant U.S. Attorney, Providence, RI, Joseph F. Shea, Nutter, McClennen & Fish, LLP, Boston, MA, David J. Lawson, Partidge, Snow & Hahn, Providence, RI., Scott Birdwell, Federal Deposit Ins. Corp., Washington, DC, for Defendants.

MEMORANDUM AND ORDER

LAGUEUX, Chief Judge.

This case arises from the villainy of Attorney Pat Nero, who looted the Estate of his client Ragnar Miller in 1993. Eleanor Schock ("Schock"), Miller's daughter and only heir, is pursuing $23,331.72 as the assignee of the Estate's claims. Here, she has sued the United States and the Federal Deposit Insurance Corporation ("FDIC") because the bank accounts into which Nero dipped were held by a bank being run by the FDIC as conservator.¹ That bank, Old Stone Federal Savings Bank ("New Old Stone"), was a successor to Old Stone Bank, a Federal Savings Bank ("Original Old Stone"), that had been closed by the FDIC on January 29, 1993. New Old Stone was liquidated in turn July 8, 1994.

Most of the facts of this case were outlined in an earlier opinion and need not be reiterated here. See Schock v. United States, 21 F.Supp.2d 115, 117 (D.R.I.1998) (hereinafter Schock I). Schock's core grievance is that she believes New Old Stone should not have given the money in Miller's bank account to Nero.² Plaintiff's Amended Complaint alleges three counts: Count I is against the United States under the Federal Tort Claims Act, 28 U.S.C. § 2674 (the "FTCA"), nominally for conversion;³ Count II is against the FDIC ("FDIC-Receiver") as conservator of New Old Stone and operator of the bank on August 27, 1993 for breach of contract; and Count IV is against the United States under the FTCA for negligence.⁴

This case is now before this Court on two motions. The United States moves for summary judgment on Counts I and IV, suggesting three distinct arguments that would preclude plaintiff's recovery. This Court considers each at length below, but in sum, the motion is granted as to Count I and denied as to Count IV. See Sections II, III & IV, infra.

Schock renews her motion for summary judgment as to Count II against FDIC-Receiver. She asks this Court to reconsider its prior legal ruling and offers new evidence. Neither tack succeeds, and the motion is denied. See Section V, infra.

I. Legal standard

Rule 56(c) of the Federal Rules of Civil Procedure sets forth the standard for ruling on summary judgment motions:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of any material fact and that the moving party is entitled to a judgment as a matter of law.

Therefore, the critical inquiry is whether a genuine issue of material fact exists. "Material facts are those `that might affect the outcome of the suit under the governing law.'" Morrissey v. Boston Five Cents Sav. Bank, 54 F.3d 27, 31 (1st Cir.1995) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). "A dispute as to a material fact is genuine `if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Id.

On a motion for summary judgment, the Court must view all evidence and related inferences in the light most favorable to the nonmoving party. See Springfield Terminal Ry. Co. v. Canadian Pac. Ltd., 133 F.3d 103, 106 (1st Cir.1997). "[W]hen the facts support plausible but conflicting inferences on a pivotal issue in the case, the judge may not choose between those inferences at the summary judgment stage." Coyne v. Taber Partners I, 53 F.3d 454, 460 (1st Cir.1995). Similarly, "[s]ummary judgment is not appropriate merely because the facts offered by the moving party seem more plausible, or because the opponent is unlikely to prevail at trial." Gannon v. Narragansett Elec. Co., 777 F.Supp. 167, 169 (D.R.I. 1991).

II. "Government Employee" Under the FTCA

The United States may succeed at trial on Counts I and IV by proving that the people who allowed Nero to withdraw the money were not government employees. The FTCA only apples where there is negligence by an employee of the government. See 28 U.S.C. § 1346(b)(1). The United States argues that the women at issue, Judy Polanco and Kerry D'Ambra, were employees of New Old Stone, the newly-chartered entity that succeeded Original Old Stone. Although there does not appear to be a dispute that these people were employed by New Old Stone, there remains a genuine dispute as to whether that made them employees of the United States under the FTCA.

The Supreme Court suggests that when the FDIC takes over a bank, it steps into the bank's shoes as a matter of law. See O'Melveny & Myers v. FDIC, 512 U.S. 79, 85-86, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994). However, that does not shed light on whether the bank — when it is run by the FDIC — becomes a part of the U.S. government as well. Neither the United States nor this Court can find authority that holds that Old Stone Bank was not a federal agency under the FTCA.

A. Defining Employee

The FTCA defines an "employee of the government" to "include officers or employees of any federal agency." 28 U.S.C. § 2671. Federal agencies include "corporations primarily acting as instrumentalities or agencies of the United States." Id.

Many courts have wrestled with the issue of whether individuals can be regarded as employees of the government, see, e.g., Larsen v. Empresas El Yunque, Inc., 812 F.2d 14, 14-16 (1st Cir.1986) (comparing government employee with independent contractor); Miller v. George Arpin & Sons, Inc., 949 F.Supp. 961, 965-66 (D.R.I. 1997) (same), and whether they acted in the scope of their employment, see, e.g., Attallah v. United States, 955 F.2d 776, 782 (1st Cir.1992) (discussing scope of employment). See also cases collected in Reply to P.'s Obj. to United States of America's Mot. For Summ. J. at 3-5. However, this Court finds no precedent to suggest how the First Circuit would decide whether New Old Stone was a corporation acting primarily as an instrumentality of the United States. This Court must rely on the plain language of the statute.

B. Applied to this Case

The United States offers affidavits from employees of New Old Stone and of the FDIC. FDIC employee Sally McCormick, who was director of operations for the RTC in 1993, said that employees of New Old Stone were not employees of the RTC. She emphasized that the RTC, which was a predecessor to the FDIC, created New Old Stone as a new institution.

In opposition, Schock points to interrogatory answers filed in this case in which the FDIC-Receiver says that New Old Stone and the RTC were a single entity and that New Old Stone's employees were supervised by the RTC under RTC rules. The language is so blunt that, when this Court awards all inferences to Schock, the FDIC-Receiver appears to be saying that the bank's employees were RTC employees. First, the FDIC-Receiver repeated at least four times in its answers that:

There is no distinction between the entity Plaintiff defines as "New Old Stone Bank," on the one hand, and the Resolution Trust Corporation, as Conservator of Old Stone Federal Savings Bank, on the other.

(Supplemental Responses of FDIC as Receiver of Old Stone Federal Savings Bank to P.'s Fourth Document Request and Third Set of Interrogatories to D.s at 2-4 (attached as Exhibit 8 to P.'s Obj to Mot. For Summ. J. by D. USA).) Second, the FDIC-Receiver said that:

The Resolution Trust Corporation, as Conservator of Old Stone Federal Savings Bank, administered the work-related activities of employees of the Resolution Trust Corporation, as Conservator of Old Stone Federal Savings Bank, pursuant to policies and procedures of the Resolution Trust Corporation, as Conservator of Old Stone Federal Savings Bank.

(Id. at 3.)

Thus, there is a genuine dispute as to how New Old Stone was controlled and, therefore, how its employees were controlled. Generally, an institution controlled by the federal government would qualify as "a corporation primarily acting as an instrumentality of the United States." Specifically in this case, the FDIC-Receiver's answers to interrogatories create, at least, a genuine dispute about whether New Old Stone was a government agency or perhaps even part of the RTC. Without precedent or sufficient facts, this Court cannot decide the question. Therefore, this Court cannot grant summary judgment to the United States on this issue.

To be clear, this Court does not decide today whether, as a matter of law, a bank under receivership qualifies as a "government agency" under the FTCA. Nor does it decide factually whether New Old Stone was a government agency. Those questions will have to be answered after a full evidentiary hearing and after complete briefing by the parties.

III. The Statute of Limitations

The United States seeks summary judgment on Counts I and IV on the ground that the FTCA statute of limitations applies. This Court has already held previously that the discovery rule applies in this case. See Schock I, 21 F.Supp.2d at 119. In order for the statute of limitations to be tolled, the factual basis for the cause of action must have been inherently unknowable at the time of the injury. See Attallah, 955 F.2d at 780; Tagliente v. Himmer, 949 F.2d 1, 4 (1st Cir.1991). The action accrues when the injured party knew or, in the exercise of reasonable diligence, should have known the factual basis for the cause of action. See United States v. Kubrick, 444 U.S. 111, 121-25, 100 S.Ct. 352, 62 L.Ed.2d...