Shea v. First Federal Sav. and Loan Ass'n of New Haven

• Decision Date: 26 May 1981
• Citation: 184 Conn. 285,439 A.2d 997
• Court: Connecticut Supreme Court
• Parties: , 1981-1 Trade Cases P 64,046 Francis X. SHEA v. FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF NEW HAVEN.

Page 997

439 A.2d 997

184 Conn. 285, 1981-1 Trade Cases P 64,046

Francis X. SHEA v. FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF NEW HAVEN.

Supreme Court of Connecticut.

Argued Jan. 9, 1981.

Decided May 26, 1981.

Francis X. Shea, Danbury, with whom, on the brief, were Ronald E. Cassidento, West Hartford, and Walter J. Williams, Danbury, for appellant (plaintiff).

John R. Lacey, Asst. Atty. Gen., with whom, on the brief, were Carl R. Ajello, Atty. Gen. and Robert M. Langer, Asst. Atty. Gen., for appellant (intervening plaintiff).

Shaun S. Sullivan, New Haven, with whom were Linda L. Randell and Madeleine F. Grossman, New Haven, for appellee (defendant).

Before BOGDANSKI, PETERS, ARMENTANO, SHEA and WRIGHT, JJ.

BOGDANSKI, Associate Justice.

This appeal arises from a private antitrust action brought by the plaintiff, a member of the Connecticut bar, against the defendant, a federally chartered, state licensed savings and loan association. The complaint alleged: (1) that the defendant, in concert with a limited number of attorneys, including four of its directors, maintained and wrongfully employed an exclusionary listing of attorneys; (2) that the defendant's conduct injured the professional practice of the plaintiff and other attorneys by steering clients toward attorneys favored with the defendant's stamp of approval and thus inducing clients to refuse to deal with attorneys excluded from the defendant's list; (3) that the defendant's conduct was designed to cause borrowers to assume either that only attorneys on the defendant's approved list may represent borrowers at closings when the defendant finances the mortgage or that the attorneys on the defendant's list provide better representation than unlisted attorneys to borrowers at such closings; and (4) that those acts violate the Connecticut Anti-Trust Act, General Statutes §§ 35-26, 35-27, and 35-28(c) and (d). ¹

The defendant denied the allegations and, as a special defense, asserted that under the comprehensive scheme of regulations governing federal savings and loan associations, exclusive jurisdiction in this case lies with the Federal Home Loan Bank Board, pursuant to the Federal Home Loan Bank Act, and that the Superior Court, therefore, had no subject matter jurisdiction. The attorney general intervened as a plaintiff. See General Statutes § 35-32.

Following a lengthy trial, the Superior Court concluded that federal law excluded this action from a state court's jurisdiction because the defendant is a federally chartered savings and loan association. To prevent a retrial should its first conclusion prove incorrect, the court weighed the evidence produced at trial. On the merits the court found the issues for the defendant. From that judgment the plaintiff and the plaintiff-intervenor appealed. Thereafter, pursuant to an order of this court, the trial court filed a supplementary memorandum of decision. We reject the trial court's conclusion that it lacked subject matter jurisdiction but affirm its judgment on the merits. The judgment file states without specification that the court found the issues for the defendant. It therefore needs no correction.

I

Subject matter jurisdiction is the power of the court to hear and determine cases of the general class to which the proceedings in question belong. England v. Coventry, --- Conn. ---, ---, --- A.2d ---- (42 Conn.L.J., No. 40, pp. 1, 2) (1981); Henry F. Raab Connecticut, Inc. v. J. W. Fisher Co., --- Conn. ---, ---, 438 A.2d 834 (42 Conn.L.J., No. 33, pp. 7, 8) (1981). The claims made by a plaintiff determine whether federal jurisdiction excludes state jurisdiction. Eastern Shore Natural Gas Co. v. Stouffer Chemical Co., 298 A.2d 322, 326 (Del.1972). See Bell v. Hood, 327 U.S. 678, 681, 66 S.Ct. 773, 775, 90 L.Ed. 939 (1946). Nowhere in his complaint does the plaintiff invoke any federal statute or regulation.

The federal constitution's supremacy clause ² suspends any state law that conflicts with federal law or that applies to issues which arise within an area exclusively occupied by federal law. ³ Ray v. Atlantic Richfield Co., 435 U.S. 151, 157-58, 98 S.Ct. 988, 994-95, 55 L.Ed.2d. 179 (1978); see DeCanas v. Bica, 424 U.S. 351, 356-65, 96 S.Ct. 933, 936-41, 47 L.Ed.2d 43 (1976); Parker v. Brown, 317 U.S. 341, 350, 63 S.Ct. 307, 313, 87 L.Ed. 315 (1942). The possibility, however, that federal law has preempted the substantive state law upon which a plaintiff has relied and that the averments are therefore not legally sufficient to state a claim upon which relief can be granted does not deprive a court of subject matter jurisdiction; see Bell v. Hood, supra, 327 U.S. 682, 66 S.Ct. 776; unless such jurisdiction is incompatible with congressional objectives. Stratford v. Bridgeport, 173 Conn. 303, 308-11, 377 A.2d 327 (1977); Putterman v. Miller, 133 Conn. 70, 72, 48 A.2d 235 (1946); Kaski v. First Federal Savings & Loan Assn., 72 Wis.2d 132, 142, 240 N.W.2d 367 (1976). See Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 507, 82 S.Ct. 519, 522, 7 L.Ed.2d 483 (1962); Claflin v. Houseman, 93 U.S. 130, 136, 23 L.Ed. 833 (1876). Therefore, unless Congress expressly vested jurisdiction exclusively in the federal courts we should presume state courts have concurrent jurisdiction. ⁴ Sands v. Weingrad, 99 Misc.2d 598, 416 N.Y.S.2d 969 (1979); 13 Wright, Miller & Cooper, Federal Practice & Procedure: Jurisdiction § 3527.

The Superior Court has jurisdiction of all matters expressly committed to it and of all other judicially cognizable matters not within the exclusive jurisdiction of another court. Carten v. Carten, 153 Conn. 603, 612, 219 A.2d 711 (1966). Section 35-33 ⁵ of the General Statutes specifically confers on the Superior Court jurisdiction over any action brought for violation of the Connecticut Anti-Trust Act. See Mazzola v. Southern New England Telephone Co., 169 Conn. 344, 354, 363 A.2d 170 (1975). Congress has not expressly vested in the federal courts exclusive jurisdiction over the claims raised by the plaintiff in cases where the defendant is a federal savings and loan association. Furthermore, state jurisdiction over this action is compatible with congressional objectives because the supremacy clause binds the judges in every state to refuse to enforce federally preempted state law. U.S.Const., art. VI. Thus, even if federal law preempted the Connecticut Anti-Trust Act, the Superior Court had subject matter jurisdiction to adjudicate the plaintiff's claims. ⁶ Murphy v. Colonial Federal Savings & Loan Assn., 388 F.2d 609, 612 (2d Cir. 1967); Home Federal Savings & Loan Assn. v. Insurance Department of Iowa, 428 F.Supp. 992 (N.D.Iowa 1977), rev'd on other grounds, 571 F.2d 423 (8th Cir. 1978); City Federal Savings & Loan Assn. v. Crowley, 393 F.Supp. 644, 655 (E.D Wis.1975); Kaski v. First Federal Savings & Loan Assn., supra, 72 Wis.2d 142, ⁷ 240 N.W.2d 367.

II

The defendant contends that Congress has occupied the field of regulating federal savings and loan associations, or, at least, the field of regulating such associations' closing practices. The defendant also argues that under the circumstances of this particular case, state law impedes execution of the full purposes and objectives of Congress.

The particular circumstances of each case are of compelling importance in deciding whether federal law has preempted state law. Because the language, interpretation, and interaction of the state and federal laws and the likely or actual conflicts between the two statutory schemes must provide the answers to specific questions, no one test can work in all cases. Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941).

In areas of coincident federal and state regulation, United States Supreme Court decisions counsel restraint in seeking out conflicts where none clearly exists. Exxon Corporation v. Governor of Maryland, 437 U.S. 117, 130-32, 98 S.Ct. 2207, 2216-17, 57 L.Ed.2d 91 (1978). Absent persuasive reasons courts may not infer that federal regulation preempts state regulatory power. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963). Furthermore, when federal law preempts state law it does so only to the extent necessary to achieve federal goals. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Ware, 414 U.S. 117, 127, 94 S.Ct. 383, 389, 38 L.Ed.2d 348 (1973). Ordinarily a state's exercise of its police power is not superseded unless: (1) Congress clearly has manifested an intent to exclusively occupy a field; Rice v. Santa Fe Elevator Corporation, 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947); (2) "compliance with both federal and state regulations is a physical impossibility"; Florida Lime & Avocado Growers, Inc. v. Paul, supra, 373 U.S. 142-43, 83 S.Ct. 1217-18; or (3) state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." DeCanas v. Bica, supra, 424 U.S. 363, 96 S.Ct. 940, quoting Hines v. Davidowitz, supra, 312 U.S. 67, 61 S.Ct. 404.

If Congress has occupied a particular field, courts may not enforce even consistent or complementary state laws in the occupied area. Therefore, in applying the occupation basis for preemption, a court must determine the boundaries of the occupied field which, in turn, depend upon the breadth of the statutes in question. Derenco, Inc. v. Benjamin Franklin Federal Savings & Loan Assn., 281 Or. 533, 542, 577 P.2d 477, cert. denied, 439 U.S. 1051, 99 S.Ct. 733, 58 L.Ed.2d 712 (1978). Because courts must examine federal legislation to determine whether state law overlaps a congressionally occupied field they usually denominate the inquiry as a search for congressional intent to preclude state law. National State Bank v. Long, 630 F.2d 981, 985 (3d Cir. 1980).

We must infer that Congress intended to preclude state regulations when: (1) the pervasiveness of the federal regulations in...