Valley Nat. Bank v. Lavecchia
| Decision Date | 13 August 1999 |
| Docket Number | No. CIV. A. 99-1222.,CIV. A. 99-1222. |
| Citation | 59 F.Supp.2d 432 |
| Parties | VALLEY NATIONAL BANK, and Wayne Title, Inc., Plaintiffs, v. Jaynee LAVECCHIA, in her official capacity as Commissioner of the New Jersey Department of Banking and Insurance, Defendant. |
| Court | U.S. District Court — District of New Jersey |
Ronald D. Coleman, Marc D. Crowley, Benjamin E. Haglund, Thomas R. Hower, Pitney, Hardin, Kipp & Szuch, Florham Park, NJ, for plaintiffs Valley National Bank and Wayne Title Inc. Peter Verniero, Atty. Gen. of NJ, Thomas M. Hunt, Deputy Atty. Gen. of New Jersey, R.J. Hughes, Trenton, NJ, for Defendant Jaynee La Vecchia, in her capacity as Commissioner of the Dept. of Banking and Insurance.
F. Thomas Eck IV, Washington, DC, for Amicus Curiae Office of the Comptroller of the Currency.
Plaintiff Valley National Bank ("Valley") owns all of the shares of plaintiff Wayne Title, Inc. ("Wayne"). Valley acquired Wayne to allow it to sell insurance products. Defendant Jaynee LaVecchia ("the Commissioner") is the Commissioner of the New Jersey Department of banking and Insurance ("the Department").
Valley has opened a branch in Riverdale, New Jersey, a town with a population of 2,370 people, and Wayne Title will also be located in Riverdale. Wayne Title has entered into an employment agreement with a licensed insurance producer to sell title insurance. On November 5, 1998, Valley applied to the Office of the Comptroller of the Currency ("OCC") to establish Wayne Title as an operating subsidiary to sell title insurance and other insurance from Valley's branch in Riverdale. The OCC advised Valley that it would await the grant of an insurance license from the Department before acting on Valley's application.
On November 10, 1998, Valley applied to the Department for Wayne Title to be licensed as an insurance provider for the purposes of selling title insurance. The application was returned to Valley, rejected for technical reasons. On December 16, 1998, Valley resubmitted its application to the Department. During its communications with Valley, the Department informed Valley that it would reject the application because it regards Wayne as a "bank, trust company, bank and trust company or other lending institution, mortgage service, mortgage brokerage or mortgage guaranty company" for purposes of N.J.S.A. 17:46B-30.1 (), and that it would enforce this statute against Valley and Wayne.
The plaintiffs filed a complaint in this Court on March 19, 1999, for a declaration that N.J.S.A. 17:46B-30.1 is preempted by Article VI, Clause 2, of the United States Constitution ("the Supremacy Clause") and by 12 U.S.C. § 92 ("Section 92"). The complaint also seeks to permanently enjoin the Commissioner from enforcing N.J.S.A. 17:46B-30.1 to the extent it is preempted by Section 92, and to permanently enjoin the Commissioner from otherwise restricting or interfering with the rights granted to Valley under Section 92. On April 22, 1999, the Commissioner, by letter, denied to Valley a license based on N.J.S.A. 17:46B-30.1. On April 30, 1999 Valley opened a branch in Riverdale, New Jersey. On May 4, 1999, Valley filed a motion for summary judgment on its request for declaratory and injunctive relief.
Summary judgment is appropriate where the moving party establishes that "there is no genuine issue of fact and that [it] is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A factual dispute between the parties will not defeat a motion for summary judgment unless it is both genuine and material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the nonmovant and it is material if, under the substantive law, it would affect the outcome of the suit. See id. at 248, 106 S.Ct. 2505. The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden of proof. See Celotex v. Catrett, 477 U.S. 317, 318, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The party opposing a motion for summary judgement must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. See Sound Ship Building Corp. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir.1976), cert. denied, 429 U.S. 860, 97 S.Ct. 161, 50 L.Ed.2d 137 (1976). At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In doing so, the court must construe the facts and inferences in the light most favorable to the non-moving party. See Wahl v. Rexnord, Inc. 624 F.2d 1169, 1181 (3d Cir.1980).
Section 92 provides that:
In addition to the powers now vested by law in national banking associations organized under the laws of the United States and any such association located and doing business in any place the population of which does not exceed five thousand inhabitants ... may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as the agent for any fire, life or other insurance company authorized by the authorities of the State in which said bank is located to do business in said State, by soliciting and selling insurance....
12 U.S.C. § 92. Acting pursuant to this Congressional authorization, the OCC has promulgated 12 C.F.R. § 7.1001, which instructs that:
Pursuant to 12 U.S.C. § 92, a national bank may act as an agent for any fire, life or other insurance company in any place the population of which does not exceed 5,000 inhabitants. This provision is applicable to any office of a national bank when the office is located in a community having a population of less than 5,000, even though the principal office of such bank is located in a community whose population exceeds 5,000.
On the other hand, N.J.S.A. 17:46B-30.1 declares that in New Jersey:
No bank, trust company, bank and trust company or other lending institution, mortgage service, mortgage brokerage or mortgage guaranty company or any service company of or for any lending institution or any officer or employee of the foregoing shall be licensed as or permitted to act as an insurance producer for a title insurance company....
The defendant contends that this Court lacks subject matter jurisdiction over this action. The plaintiffs assert the Court's jurisdiction under 28 U.S.C.A. § 1331 and 28 U.S.C. § 2201. Section 1331 provides that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Section 2201 provides that "In a case or controversy within its jurisdiction ... any court of the United States, ... may declare the rights and other legal relations of any interested party seeking such a declaration, whether or not further relief is or could be sought."
The defendant argues that the declaratory judgment provisions of § 2201 are not a basis, alone, for federal court jurisdiction over a matter. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672, 70 S.Ct. 876, 879, 94 L.Ed. 1194 (1950); Public Service Comm'n v. Wycoff, 344 U.S. 237, 248, 73 S.Ct. 236, 242-43, 97 L.Ed. 291 (1952). The defendant also posits that an assertion of federal preemption is not, alone, a basis for subject matter jurisdiction under 28 U.S.C. § 1331 because it does not automatically create a federal question. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Fleet Bank v. Burke, 160 F.3d 883 (2d Cir.1998); Glass Molders, Pottery, Plastics, and Allied Workers Int'l Union, AFL-CIO v. Wickes, 707 F.Supp. 174 (D.N.J.1989).
The cases relied on by defendant are those where either the plaintiff filed a state law claim in state court and the defendant attempted to remove the cause to federal court based on a preemption argument, or where the plaintiff attempted to bring what was essentially a state law claim in federal court under the assumption that the defendant would invoke a federal law or right as a defense. Such removal has been denied because of the "well-pleaded complaint" rule: a complaint invoking federal question jurisdiction must assert the federal question as part of the plaintiff's claim. Fleet Bank, 160 F.3d at 885-86. Under the rule, a plaintiff is master of his complaint and may avoid federal jurisdiction by exclusive reliance on state law. A defendant cannot force the plaintiff into federal court based on a preemption argument.1
A party can invoke federal court jurisdiction when it seeks "injunctive relief to prevent state officials from interfering with a federal right." Fleet, supra. at 888; see also Ex parte Young, 209 U.S. 123, 160-62, 28 S.Ct. 441, 52 L.Ed. 714 (1908). "It is beyond dispute that federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights ... [a] plaintiff who seeks injunctive relief from state regulation, on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail, thus presents a federal question which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve." Shaw v. Delta Air Lines, Inc. 463 U.S. 85, 96 n. 14, 103 S.Ct. 2890, 2899 n. 14, 77 L.Ed.2d 490 (1983); see also Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199-200, 41 S.Ct. 243, 65 L.Ed. 577 (1921); Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 153, 29 S.Ct. 42, 53...
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