The opinion of the court was delivered by: GEORGE H. REVERCOMB
This is the third action before this District Court since late-1989 in which thrift institutions have sought equitable and declaratory relief from federal thrift regulators' efforts to apply stricter accounting treatment in calculating the plaintiff thrifts' minimum capitalization requirements.
Plaintiffs in all three suits have charged inter alia that the defendants abrogated contractual obligations made by their predecessor bodies, the Federal Home Loan Bank Board (FHLBB) and Federal Savings & Loan Insurance Corporation (FSLIC), to afford the plaintiffs a more lenient accounting treatment in consideration of plaintiffs' agreement to take over failing and/or failed thrift institutions, the massive liabilities of which were imperiling the thrift insurance fund. The stricter accounting treatment, which the defendants maintain was mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), had the effect of placing the plaintiffs in each case out of compliance with capitalization rules.
In addition to contract breach, the plaintiffs have made takings, due process, and promissory estoppel claims.
In each of the three cases, the defendants have moved for dismissal on grounds that the District Court lacks subject matter jurisdiction
over what are, at root, claims of contract breach involving amounts exceeding $ 10,000 and of an uncompensated taking: the Tucker Act, 28 U.S.C. 1491, and the "Little" Tucker Act, 1346(a)(2), vest exclusive jurisdiction over such claims in the United States Claims Court. This Court has considered the matter at hand and finds no significant distinction between it and the two predecessor cases, both of which were dismissed on subject matter jurisdiction grounds. Accordingly, this Court also dismisses based on the sound reasoning of the earlier cases and on the additional reasons stated below.
In reviewing a motion to dismiss, plaintiff's factual allegations are presumed to be true, and inferences are to be drawn in favor of the plaintiff. Ramirez de Arellano v. Weinberger, 240 App. D.C. 363, 745 F.2d 1500, 1506 (D.C. Cir. 1984) Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974).
The thrift industry crisis that underlies this dispute has been described elsewhere and need not be repeated here.
One victim of that crisis, Central Savings and Loan Association of California, was acquired by plaintiff Coast Federal Savings Bank on April 10, 1987, as part of a supervisory merger arranged in conjunction with the FSLIC and the FHLBB. Complaint para. 28-29. As part of an "Assistance Agreement" with Coast, FSLIC contributed $ 298.3 Million to Coast which was to be counted as a permanent credit to Coast's capital base for all regulatory purposes. Para. 42, 45. Coast alleges that the FHLBB endorsed this accounting treatment and, at the closing of the acquisition, issued to Coast a "forebearance letter" in which it agreed to this treatment and to refrain for five years from enforcing regulatory capital deficiencies arising from specified items, including Central's liabilities and net worth deficiency. Para. 47-48. This provision of the agreement was an essential inducement to Coast in acquiring Central. Para. 54. Para. 65. Coast alleges that OTS's regulations left it struggling to maintain adequate capitalization and caused it to fall out of compliance with capital standards as of December 31, 1990. Para. 69-70. "As a result, Coast brought this action to vindicate its contractual and constitutional rights and to enjoin any regulatory actions with respect to Coast that are inconsistent with defendants' contractual obligations to Coast. [Para.] 79-85." Opposition at 6.
Four months after the acquisition, on August 9, 1989, FIRREA became law. Para. 57. Three month later, on November 8, 1989, defendant Office of Thrift Supervision (OTS), which was created by FIRREA to replace the FHLBB, published minimum capital regulations pursuant to the new law that became effective by year's end. Para. 62. Coast contends that, while FIRREA does not so require, OTS's new regulations excluded or severely restricted regulatory capital credits such as those promised to Coast from inclusion in capital for purposes of meeting the stricter capital standards.
Coast contends that this Court has subject matter jurisdiction over this action under FIRREA pursuant to 12 U.S.C. 1464(d)(1)(A), which provides that "the Director [of OTS] shall be subject to suit (other than suits on claims for money damages) . . . in the United States District Court for the District of Columbia," and pursuant to 12 U.S.C. 1819, which grants defendant Federal Deposit Insurance Corporation (FDIC), the successor to the FSLIC, the power "to sue and be sued, and complain and defend, in any court of law or equity, State or Federal" (emphasis added). Complaint at para. 7. Coast also finds jurisdiction in this Court under 5 U.S.C. 702, the "Right of Review" provision of the Administrative Procedures Act, and under 28 U.S.C. 2201 and 2202, the Declaratory Judgment Act, as well as under 28 U.S.C. 1331 and Sections 209 & 301 of FIRREA. Id. Discussion
A. Suit Against the United States
As Judge Royce Lamberth pointed out in Olympic Federal Savings and Loan Association v. Director, Office of Thrift Supervision, No. 90-0482, slip op. at 9 (D.D.C. Sept. 6, 1990), this Court may exercise jurisdiction over a claim against the United States only if there has been both a clear waiver of sovereign immunity and a grant of subject matter jurisdiction. In Olympic, and in a similar suit against the OTS for equitable and declaratory relief, Northeast Savings, F.A. v. Director, Office of Thrift Supervision, No. 89-2388, slip. op. (D.D.C. July 16, 1991) (Judge Joyce Hens Green), the plaintiff thrift institutions admitted that their suits, however styled, were actually suits against the federal sovereign under the standards set forth in Dugan v. Rank, 372 U.S. 609, 10 L. Ed. 2d 15, 83 S. Ct. 999 (1963). Olympic, supra, at 11; Northeast, supra, at 8.
The general rule is that a suit is against the sovereign if "the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration," . . . or if the effect of the judgment would be "to restrain the Government from acting, or compel it to act."
372 U.S. at 620 (citations omitted). Motion to Dismiss at 23. To be sure, the defendants are correct that the relief the plaintiff seeks -- an injunction barring application of OTS's stricter accounting regulations to plaintiff -- could only operate to "interfere with the public administration" of FIRREA and "restrain the Government from acting, or compel it to act." Id. In FIRREA, Congress charged the Director of OTS to promulgate, in response to a nationwide crisis, new regulations prescribing stricter capital standards for all thrift institutions. See Olympic, supra, at 4; Northeast, supra, at 4. Moreover, as the Court of Appeals for the Fourth Circuit stated in interpreting Dugan, "a suit against a federal official for acts performed within his official capacity . . . amounts to an action against the sovereign." Portsmouth Redev. & Housing Auth. v. Pierce, 706 F.2d 471, 473 (4th Cir. 1983).
It is also noteworthy that, like the plaintiffs in Olympic, supra, plaintiffs here argue that "the defendants seek to drain their own statutory waivers of sovereign immunity of any meaning, without offering any explanation as to Congress' purpose in including the 'sue and be sued' and 'subject to suit' language in FIRREA."