Vial v. First Commerce Corp.

• Decision Date: 19 May 1983
• Docket Number: 83-2021,Civ. A. No. 83-1908,83-2261.
• Citation: 564 F. Supp. 650
• Parties: Stephen R. VIAL v. FIRST COMMERCE CORPORATION, First National Bank of Commerce, New Orleans Bancshares, Inc., and Bank of New Orleans and Trust Company. Stephen R. VIAL v. C.T. CONOVER Comptroller of the Currency, and First Commerce Corporation, First National Bank of Commerce, New Orleans Bancshares, Inc., and Bank of New Orleans and Trust Company, Intervenor-Defendants. Stephen R. VIAL v. Hunter O. WAGNER, Jr., Commissioner of Financial Institutions of Louisiana, and First Commerce Corporation, First National Bank of Commerce, New Orleans Bancshares, Inc. and Bank of New Orleans and Trust Company, Intervenor-Defendants.
• Court: U.S. District Court — Eastern District of Louisiana

564 F. Supp. 650

Stephen R. VIAL v. FIRST COMMERCE CORPORATION, First National Bank of Commerce, New Orleans Bancshares, Inc., and Bank of New Orleans and Trust Company.

Stephen R. VIAL v. C.T. CONOVER Comptroller of the Currency, and First Commerce Corporation, First National Bank of Commerce, New Orleans Bancshares, Inc., and Bank of New Orleans and Trust Company, Intervenor-Defendants.

Stephen R. VIAL v. Hunter O. WAGNER, Jr., Commissioner of Financial Institutions of Louisiana, and First Commerce Corporation, First National Bank of Commerce, New Orleans Bancshares, Inc. and Bank of New Orleans and Trust Company, Intervenor-Defendants.

Civ. A. Nos. 83-1908, 83-2021, 83-2261.

United States District Court, E.D. Louisiana.

May 19, 1983.

COPYRIGHT MATERIAL OMITTED

Louis R. Koerner, Jr., New Orleans, La., for plaintiff.

Charles W. Lane, III, Herschel L. Abbott, Jr., Howard E. Sinor, Jr., New Orleans, La., for First Commerce Corp. and First Nat. Bank of Commerce.

Robert E. Barkley, Jr., Louis Y. Fishman, Frances R. White, III, New Orleans, La., for New Orleans Bancshares and The Bank of New Orleans and Trust Co.

Eugene J. Metzger, Michael E. Friedlander, Samuel S. Jones, Jr., Washington, D.C., for First Commerce Corp., First Nat. Bank of Commerce, New Orleans Bancshares and The Bank of New Orleans and Trust Co.

Charles H. McEnerney, Jr., Donald N. Lamson, Washington, D.C., Ruth Morris Force, New Orleans, La., for C.T. Conover, Comptroller of the Currency.

William J. Guste, Jr., Atty. Gen., Louis Jones, Maureen J. Feran, Asst. Attys. Gen., New Orleans, La., for Hunter O. Wagner, Jr., Com'r of Financial Institutions of Louisiana.

ORDER

CHARLES SCHWARTZ, Jr., District Judge.

This matter came on for hearing before the Court on May 17, 1983, on the following motions of the plaintiff: (1) a motion for summary judgment against the Comptroller of the Currency in Civil Action 83-2021, contending that the Louisiana Bank Holding Company statute, LSA-R.S. 6:1001 et seq., prohibits the proposed merger, or in the alternative, for abstention in favor of a determination by the Louisiana state courts on any important but unsettled issues of Louisiana law; (2) a motion for preliminary injunction under 5 U.S.C. § 701 et seq. against C.T. Conover in Civil Action 83-2021, based on, and only on, the contention that the procedures followed by the Comptroller in approving the merger were improper; (3) a motion for preliminary injunction and a writ of mandamus to the Commissioner of Financial Institutions in Civil Action 83-2261, based on his failure to take action to order the merging parties to cease and desist from the allegedly illegal merger; and (4) a motion for a sixty-day stay of all three actions, within which to present his claims that the merger violates the Bank Holding Company Act to the Federal Reserve Board. In addition, at the hearing, the Court raised the issue of whether the automatic stay provision of the Bank Merger Act would be applicable in the instant case, and if so, whether the stay should be lifted.

After the presentation of evidence and oral argument on these motions, the Court took the matter under submission. Before setting forth the Court's rulings, and the bases thereof, a complete history of the case and the proposed merger is in order.

On or about November 9, 1982, defendants First Commerce Corporation ("FCC") and New Orleans Bancshares, Inc. ("NOBS") entered into an Agreement and Plan of Reorganization ("the Agreement"), whereby the Bank of New Orleans and Trust Company ("BNO"), a state-chartered bank, would be merged into First National Bank of Commerce ("FNBC"), a national bank, with FNBC being the surviving institution.

FCC, a Louisiana business corporation is a one-bank holding company registered under the federal Bank Holding Company Act of 1956, as amended. FCC was organized in 1970 primarily for the purpose of holding all of the outstanding capital stock of FNBC. To date, except for dividends and interest on certain investments, FCC has not derived significant revenue from sources other than FNBC.

FNBC is a national bank chartered under the laws of the United States, domiciled in New Orleans, Louisiana. FNBC conducts a general banking business through its main office and thirteen branches in Orleans Parish, Louisiana. FNBC offers the services generally performed by depository institutions of similar size and character, including the maintenance of checking, savings and time deposit accounts, trust services, the sale of certificates of deposit, the providing of safe deposit boxes, the making of secured and unsecured individual and commercial installment and fixed term loans, and the granting of residential and commercial real estate loans.

NOBS was organized under Louisiana law in January, 1970 as a one-bank holding company. Substantially all of NOBS' business activities are conducted through BNO, its banking subsidiary, and BNO Leasing Corporation, a subsidiary of BNO.

BNO is a Louisiana banking association. BNO also offers the services generally performed by depository institutions of similar size and character. BNO's offices all are located in Orleans Parish; it also provides correspondent services for other banks located principally in Louisiana and southern Mississippi.

On December 28, 1982, the bank defendants filed an application to merge with the United States Comptroller of the Currency ("OCC") pursuant to the Bank Merger Act, 12 U.S.C. § 1828(c). The application was accepted for filing on January 4, 1983. The banks thereupon published notice of filing in a local newspaper of general circulation at required periodic intervals.

The OCC is charged with a broad range of bank regulatory responsibilities that involve supervision of national banks in the areas of chartering, branching, bank examinations, corporate structure, investments, conversions, liquidations, mergers, and capital adequacy, among others. As the principal regulator of the national banking system, the OCC is responsible for insuring the safety, soundness and competitiveness of that system as a whole, as well as the soundness and viability of individual national banks.

Upon receipt of the application from the defendant banks, the Comptroller's Office established a public file.

The public comment period on the instant merger application expired on March 2, 1983, twenty-one days following the last required notice by publication.

At the time the application was accepted for filing, the Comptroller requested competitive factor reports on the transaction from the Justice Department, the FDIC, and the Board of Governors of the Federal Reserve System. Receipt of the request was acknowledged by all three agencies on that same date, January 4, 1983.

Both the Federal Reserve and the Justice Department made reports on the application transaction. The FDIC did not. The Justice Department found the merger would not have a significantly adverse effect on competition. The Federal Reserve found the effect on competition to be "adverse," though not in violation of the federal antitrust laws.

On April 12, 1983, the OCC approved the merger, and subsequently issued a decision explaining its action. Following the approval, the OCC notified the Attorney General, pursuant to the requirements of 12 U.S.C. § 1828(c)(6). The Attorney General did not move to enjoin the merger within the thirty-day period provided by the statute. The merger is now scheduled to proceed on May 23, 1983.

Plaintiff Stephen R. Vial ("Vial") is an individual residing in Orleans Parish, Louisiana, suing only on his own behalf, and not on behalf of any class.

On December 30, 1982, and February 4, 1983, Louis R. Koerner, Jr. ("Koerner") counsel for plaintiff, submitted FOIA requests to the Comptroller of the Currency. In these requests, Koerner stated that he represented clients who desired to comment on the proposed merger. He also requested that he be notified of any opportunity to so comment. At that time Koerner did not represent Vial.

On January 18 and March 2, 1983, the Comptroller responded to Koerner's FOIA requests but was silent as to Koerner's request for notification of any comment period.

On March 17, 20, and 29, 1983, Koerner submitted written materials in opposition to the application, and on March 20 and April 15, 1983, he submitted written requests for a hearing.

On April 8, 1983, the Comptroller acknowledged receipt of Koerner's letters of March 17 and 20, 1983, with enclosures in opposition to the application, and advised Koerner that these would be considered even though the public comment period had ended, since the office had failed to inform him of the expiration date previously. The office did not respond to Koerner's request for a hearing.

Upon approval of the merger, Koerner was given notice of the OCC's action and a copy of the decision.

Prior to the OCC approval, by letters dated January 19 and February 4, 1983, Koerner also submitted FOIA requests to the Board of Governors of the Federal Reserve System ("the Fed."). In these requests, Koerner stated that he represented clients who desired to comment on the proposed merger, and asked that he be notified of any opportunity to so comment.

After previously notifying Koerner that a response would be forthcoming, the Fed., by letter dated March 10, 1983, informed Koerner that the merger at issue was subject to the jurisdiction of the OCC.

Similarly, by letter dated January 5, and February 14, 1983, the Fed. advised the bank defendants, in response to their inquiry, that an application for merger to the Fed. would not be required.

Also, prior to the approval, by letter dated March 20, 1983, Koerner contacted defendant Hunter O. Wagner, Jr. ("Wagner"), Commissioner of Financial Institutions of the State of Louisiana, with regard to the planned merger.

The issuance of approvals for proposed mergers of state banks and bank holding companies are matters which are subject...