Stuyvesant Ins. Co. v. Dist. Dir., INS, USD of Jus., 75 C 1043.

CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
Citation407 F. Supp. 1200
Docket NumberNo. 75 C 1043.,75 C 1043.
Decision Date02 December 1975


Samuel D. Myers, Freedman, Freedman & Myers, Ltd., Chicago, Ill., for plaintiffs.

Samuel K. Skinner, U. S. Atty., Chicago, Ill., for defendant.


JULIUS J. HOFFMAN, Senior United States District Judge.

The defendant District Director of the Immigration and Naturalization Service moves to dismiss this action by a plaintiff surety company and two of its agents for a declaratory judgment that four immigration bonds have not been breached. The grounds for the motion, which presents questions of first impression, are that the court lacks subject matter jurisdiction and that the complaint fails to state a claim upon which relief can be granted. Under Rule 12(b) of the Federal Rules of Civil Procedure, the court will consider the motion as one for summary judgment under Rule 56, defendant having filed a record of administrative proceedings and plaintiffs having raised matters in their memorandum which do not appear in the complaint. See National Family Insurance Company v. Exchange National Bank of Chicago, 474 F.2d 237 (7th Cir. 1973); Sager Glove Corporation v. Aetna Insurance Company, 317 F.2d 439 (7th Cir. 1963).

In the four-count complaint, the Stuyvesant Insurance Company alleges its capacity as surety on the immigration bonds of Glenn G. Moore, Miguel Gonzalez-Lopez, Jose Figueroa-Arroyo, and Bachir Zabadneh. Immigration bonds are given as consideration for permission, granted by the District Director to aliens, to enter and reside temporarily in the United States. A so-called delivery or appearance bond guarantees the appearance of an alien for deportation and at hearings in exclusion proceedings. Conceptually, the delivery bond does not differ from the familiar bail bond. Departure bonds insure that an alien admitted temporarily will maintain a particular status (for example, he will remain unemployed) and depart within the designated period. The surety executes such bonds in return for a premium paid by the alien. Immediately upon a default of the conditions of the bond, the obligation to pay the principal accrues. The obligation is cancelled if the alien complies with the conditions.

Plaintiffs allege that defendant declared breaches of the respective bonds without according minimum standards of procedural due process. Specifically, they assert that defendant arbitrarily declared the breaches without prior notice and an evidentiary hearing. Plaintiffs also aver that defendant is "estopped" from enforcing the bonds because of his delay in notifying plaintiff of the breach declarations after they had been made. Finally, plaintiffs allege that the vague terms of the bonds preclude their enforcement. The prayer is for a declaratory judgment that the bonds have not been breached.

I. Subject Matter Jurisdiction

The first question presented is whether plaintiffs have properly invoked the subject matter jurisdiction of the court.

At the outset, the court observes that the Tucker Act, 28 U.S.C. § 1362(a), cannot confer subject matter jurisdiction of this action for declaratory relief. Under the Act, which under specified conditions waives the sovereign immunity of the United States, the district court may consider claims for money damages only, and even then, claims for less than $10,000. Claims for more than that amount are determined by the Court of Claims. DiBattista v. Swing, 135 F.Supp. 938 (D.C.Md.1955). See also International Engineering Co. v. Richardson, 167 U.S. App.D.C. 396, 512 F.2d 573 (1975).

In the complaint, plaintiffs predicate subject matter jurisdiction on the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Administrative Procedure Act, 5 U.S.C. § 701 et seq. Defendant correctly points out that the Declaratory Judgment Act is not an affirmative grant of federal jurisdiction. Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 81 L.Ed. 617 (1937); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). And it is true, as defendant suggests, that the Circuit Courts of Appeals are divided on the question of whether the Administrative Procedure Act is an affirmative jurisdictional grant. Recently, however, the Court of Appeals for the Seventh Circuit aligned itself with those courts holding that the Administrative Procedure Act does independently confer jurisdiction. Sanders v. Weinberger, 522 F.2d 1167 (7th Cir. 1975).

Moreover, in DiBattista v. Swing, 135 F.Supp. 938 (D.C.Md.1955), the court suggested that the only appropriate vehicle for declaratory relief from a declaration of a breach of an immigration bond is an action under § 10 of the Administrative Procedure Act against the officer whose action is to be reviewed. DiBattista was an alien's action under the Tucker Act against the Attorney General and Commissioner of Immigration and Naturalization Service for declaratory relief from breach declarations. The court dismissed the case for lack of subject matter jurisdiction principally because of the absence of a claim for money.

Defendant contends that two exceptions to the availability of judicial review under the Administrative Procedure Act apply to the case at bar. It is asserted first that the decision to declare a breach of an immigration bond is committed by statute to the discretion of the District Director. Second, defendant claims that plaintiffs have failed to exhaust administrative remedies with respect to Counts II and IV.

Generally, judicial review is available under the Administrative Procedure Act to persons aggrieved by agency action ". . . except to the extent that — (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." 5 U.S.C. § 701(a). Defendant cites 8 U.S.C. § 1103, defining the responsibilities of the Attorney General and the Commissioner of Immigration and Naturalization with respect to immigration and naturalization matters; 8 U.S.C. § 1184(a), empowering the Attorney General to promulgate regulations concerning the admission of non-immigrants; and 8 U.S.C. § 1252(a), authorizing judicial review of ". . . any determination of the Attorney General concerning detention, release on bond, or parole pending final decision of deportability . . .." None of these sections expressly precludes judicial review of breach declarations or commits them solely to agency discretion. Moreover, the DiBattista court assumed that administrative declarations of breach were judicially reviewable when it observed that the appropriate vehicle for review is an action under the Administrative Procedure Act against the officer whose action is sought to be reviewed. Furthermore, the possibility that the District Director may be required to institute court proceedings to enforce a bond obligation likewise assumes judicial review. The Administrative Procedure Act provides in part that "except to the extent that prior, adequate, and exclusive opportunity for judicial review is provided by law, agency action is subject to judicial review in civil or criminal proceedings for judicial enforcement." 5 U.S.C. § 703. The court holds, therefore, that judicial review is not precluded by the statutes cited by defendant.

While it is familiar doctrine that a party must exhaust administrative remedies before a court will accept jurisdiction, the application of the rule has produced conflicting decisions, some of which have overlooked the applicable section of the Administrative Procedure Act. The task of the court in the case at bar is to determine whether the rule applies to the failure of plaintiffs to take administrative appeals from the declarations of breach on the delivery bond of Miguel Gonzalez-Lopez (Count II) and the maintenance of status and departure bond of Bachir Zabadneh (Count IV).

The applicable statute, 5 U.S.C. § 704, provides in pertinent part that an administrative appeal is not a prerequisite to judicial review, unless the agency otherwise "requires" by rule and provides that the action "meanwhile shall be inoperative." See K. Davis, Administrative Law Treatise, § 20.08. It has, according to Professor Davis, been almost "completely ignored" in judicial opinions. Id. See, e. g. Rigby v. Rasmussen, 275 F.2d 861 (10th Cir. 1960); United States v. Carroll, 203 F.Supp. 423 (W.D.Ark.1962). While the regulations of the Immigration and Naturalization Service (INS) allow for administrative appeals, they do not "require" such appeals to be taken. See 8 CFR § 3.1(b)(7), providing that appeals "shall lie" from "determinations relating to a bond," to the Board of Immigration Appeals. The form (I-323) for communicating notice of breach provides, inter alia, that the District Director's decision is "final," if no appeal is filed within 15 days of the date of the notice. There is, furthermore, no provision in the regulations providing that the action "meanwhile shall be inoperative." It would appear from this analysis of the statute, without more, that plaintiffs' failure to take administrative appeals in the cases of Lopez and Zabadneh is not fatal to the subject matter jurisdiction of this court.

Some of the relevant case law, however, suggests a less liberal view of the doctrine of exhaustion than is suggested by a reading of 5 U.S.C. § 704. See Rigby v. Rasmussen, supra; United States v. Carroll, supra. Prior to the enactment of the Administrative Procedure Act, the Supreme Court denied an alien relief from an exclusion order on the ground of failure to prosecute an administrative appeal. United States v. Sing Tuck, 194 U.S. 161, 24 S.Ct. 621, 48 L.Ed. 917 (1904).

The Court of Appeals for the Seventh Circuit takes a comparatively flexible approach....

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