United Missouri Bank South v. United States

• Decision Date: 16 December 1976
• Docket Number: No. 73 CV 516-W-4.,73 CV 516-W-4.
• Citation: 423 F. Supp. 571
• Parties: UNITED MISSOURI BANK SOUTH, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Western District of Missouri

423 F. Supp. 571

UNITED MISSOURI BANK SOUTH, Plaintiff, v. UNITED STATES of America, Defendant.

No. 73 CV 516-W-4.

United States District Court, W. D. Missouri, W. D.

December 16, 1976.

COPYRIGHT MATERIAL OMITTED

David K. Hardy and Logan J. Wilson, Shook, Hardy & Bacon, Kansas City, Mo., for plaintiff.

Vernon A. Poschel, Asst. U. S. Dist. Atty., Kansas City, Mo., for defendant.

MEMORANDUM AND ORDER

ELMO B. HUNTER, District Judge.

This is a civil action brought under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2671 et seq. Plaintiff alleges that by reason of a prior perfected security interest in accounts receivable from Medicaid of Mission East, Inc., plaintiff was entitled to receive certain checks from the Missouri Department of Public Health and Welfare made payable to Mission East, Inc. and to apply the proceeds therefrom to the payment of certain promissory notes from Mission East, Inc. Plaintiff further alleges that on or about March 25, 1971, and thereafter, defendant appropriated and converted those checks and the proceeds therefrom, that Mission East, Inc. defaulted in its payment of the promissory notes, and that defendant has failed and refused to return either the Medicaid checks or the proceeds therefrom to plaintiff despite plaintiff's demands therefore.

Defendant contends that this action should be dismissed on the basis of lack of jurisdiction for the reasons that plaintiff has failed to state a claim cognizable under the Federal Tort Claims Act, that plaintiff's claim has been barred by the statute of limitations, and that the exception to the Tort Claims Act for actions involving claims of interference of contract rights applies to plaintiff's claim. In addition, defendant asserts that plaintiff did not have a superior security interest in the Medicaid accounts receivable at issue herein, and that defendant is not liable for conversion because the contested Medicaid checks were taken by a court-appointed receiver or in accordance with the court decree entered after plaintiff intervened in the receivership proceedings and from which plaintiff did not appeal.

The relevant facts are as follows. On May 19, 1966, Recon Corporation executed a promissory note and Deed of Trust securing the payment of the promissory note to the Bronx Savings Bank. The real property with which the Deed of Trust was concerned was known as the Jon Lynne Town-house, Kansas City, Missouri; the Deed of Trust contained an assignment of all rents, profits and income of the mortgaged property to the Bronx Savings Bank, but permitted Recon Corporation to collect rents, profits and income from the property for use in accordance with the FHA Regulatory Agreement between Bronx Savings Bank, Recon Corporation, and the Federal Housing Commission, which was recorded on May 19, 1966. A financing statement, reflecting the security interest of the Bronx Savings Bank in the real property, was filed in the Office of the Secretary of State of Missouri on May 26, 1966, and with the Recorder of Deeds of Jackson County, Missouri, on June 13, 1966. Neither the Bronx Savings Bank nor defendant have filed a continuation statement or other document extending the effective period for which their perfected security interest in the personal property of Mission East, Inc., applied.

On November 15, 1967, defendant insured the payment of the aforesaid promissory note and Deed of Trust by Recon Corporation to the Bronx Savings Bank pursuant to the terms of the National Housing Act, 12 U.S.C. §§ 1701 et seq. On May 18, 1970, Recon Corporation conveyed all the assets of the nursing home known as the Jon Lynne Townhouse, including all real property and furnishings, equipment and supplies, and all other personal property located on the premises to Mission East, Inc. As consideration for this conveyance, Mission East, Inc., assumed Recon Corporation's obligations under the note and Deed of Trust held by the Bronx Savings Bank and the conditions imposed under the Regulatory Agreement.

On and between May 26, 1970, and February 19, 1971, Mission East, Inc., executed and delivered to plaintiff a series of promissory notes for moneys received from plaintiff which Mission East, Inc., was to use and which it did use to meet its operating expenses and to make necessary repairs to the nursing home. To secure payment of the promissory notes, Mission East, Inc., assigned to plaintiff its accounts receivable from Medicaid, which were made in the form of periodic payments to Mission East from the Missouri Division of Welfare.¹ Subsequently, the Missouri Division of Welfare disbursed accounts receivable from Medicaid directly to plaintiff.

On February 23, 1971, Mission East, Inc., being in default on the promissory note held by the Bronx Savings Bank, the Bronx Savings Bank assigned its interest in the Deed of Trust to defendant United States of America in consideration of receipt of the balance of the principal remaining due under the promissory note. On March 19, 1971, this Court, in the case of United States v. Recon Corp., et al., Case No. 19210-4, granted the prayer of the United States for an appointment of a receiver and directed Walter V. Coburn to take immediate possession of all mortgaged property and to protect, preserve, manage and control that property until further Order of the Court. After March 23, 1971, when plaintiff notified the Missouri Division of Welfare of the appointment of a receiver, until September 17, 1971, the Missouri Division of Welfare disbursed Mission East, Inc.'s accounts receivable from Medicaid to the court-appointed receiver in an amount in excess of plaintiff's prayer in this action.

On August 10, 1971, the Substitute Trustee, acting on behalf of defendant United States under the Deed of Trust assigned to it by the Bronx Savings Bank, sold the real property to defendant for the sum of $914,000. On August 10, 1971, the Substitute Trustee, acting on behalf of defendant, received a bid of $126,000 from the Secretary of Housing and Urban Development for all the personal property belonging to, and located in and on the premises of, the Jon Lynne Townhouse.

On August 11, 1971, plaintiff voluntarily entered its appearance before this Court in the Recon Corporation receivership proceedings, and the Court entered an Order temporarily directing Coburn to collect, preserve and maintain all accounts receivable of Mission East, Inc., and to expend none of them. On August 16, 1971, this Court entered an Order permitting Coburn to expend all necessary funds for medicine, foods, supplies and other emergency items at the nursing home. On September 17, 1971, this Court terminated the operating duties of Coburn as receiver for defendant and ordered Coburn to turn over to defendant all accounts receivable received after that date. From September 30, 1971, to November 29, 1971, the Missouri Division of Welfare continued to mail Mission East, Inc.'s accounts receivable from Medicaid to Coburn, in an amount in excess of plaintiff's prayer in this action.

On May 1, 1973, after oral conversations regarding plaintiff's claim against defendant arising out of the foregoing facts, the president of plaintiff mailed a letter to defendant, demanding the sum of $10,497.02. On June 25, 1973, defendant made a written response to plaintiff's claim, informing plaintiff of defendant's decision to disallow the claim to the accounts receivable from Medicaid of Mission East, Inc., and stating that the FHA Regulatory Agreement provided defendant with a lien prior to plaintiff's on the rents and profits of Mission East, Inc.

Plaintiff contends that the acts of defendant in asserting its superior right to the accounts receivable in its prayer for appointment of a receiver, in acquiring and disposing of the Medicaid checks which were expended for the benefit of defendant in the actual operation of the nursing home, in transferring the Medicaid receivables when it sold to itself the personal property of the nursing home on August 10, 1971, and in refusing to reimburse plaintiff for the amount demanded, amount to a tortious conversion cognizable under the Federal Tort Claims Act.

Although other of defendant's assertions may be meritorious as well, this Court is of the opinion that it lacks jurisdiction in this case. It is well settled that the United States, as sovereign, is immune from suit unless it has consented to be sued. United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941); Iowa Public Service Co. v. Iowa State Commerce Comm., 407 F.2d 916, 920 (8th Cir. 1969), cert. denied 396 U.S. 826, 90 S.Ct. 71, 24 L.Ed.2d 77. A corollary to the immunity doctrine is the rule that the United States may define the conditions under which actions are permitted against it. Honda v. Clark, 386 U.S. 484, 501, 87 S.Ct. 1188, 18 L.Ed.2d 244 (1967); Peterson v. United States, 428 F.2d 368, 369 (8th Cir. 1970). Two conditions imposed by the United States on suits under the Federal Tort Claims Act are a two-year statute of limitations and a requirement that claims first be presented to and finally denied by the appropriate federal agency. 28 U.S.C. §§ 2401(b) and 2675(a).

As a part of the Government's consent to suit, the statute of limitations cannot be waived, so that a claim filed after the running of the statute is beyond the jurisdiction of the Court. Wolak v. United States, 366 F.Supp. 1106, 1110 (D.Conn. 1973); Crown Coat Front Co. v. United States, 363 F.2d 407 (2d Cir. 1966), rev'd on other grounds, 386 U.S. 503, 87 S.Ct. 1177, 18 L.Ed.2d 256. It is the duty of the Court to consider the statute of limitations with respect to claims against the United States even when it has not been put in issue by the Government. 366 F.Supp. at 1110. The applicable statute of limitations herein, 28 U.S.C. § 2401(b), provides:

A tort claim against the United States shall be forever barred unless it is presented in writing to the appropriate

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