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January 10, 1992



The opinion of the court was delivered by: GERHARD A. GESELL


This matter is before the Court on defendant's Motion to Dismiss or, in the Alternative, for Summary Judgment, plaintiffs' opposition thereto, and defendant's reply. The briefs are supported by documents and declarations. There are no material facts in dispute. The Court has federal question and declaratory judgment jurisdiction.


 Plaintiff, North American Fund Management Corporation ("Noramtrust"), acting as fiduciary for two sisters, Berta Maria Bremond ("Bremond") and Jeannette Bremond-Piquet ("Bremond-Piquet"), purchased a Certificate of Deposit ("CD") in 1985 from Vernon Savings and Loan ("Vernon") of Vernon, Texas, with funds received pursuant to a revocable testamentary trust established by and on behalf of the two sisters as grantors and trustees for six named beneficiaries. The CD was rolled over every three months until 1987, when Vernon was placed in receivership because it became insolvent. Vernon was insured by the Federal Savings and Loan Insurance Corporation ("FSLIC").

 In April 1989, FSLIC determined that only $ 100,000 of the account, which then amounted to $ 188,701.73, was insured. See Letter of Andrew J. Pantos to Susan Lill (April 3, 1989) (attached as Ex. D to Dec. of Richard Bogue). FSLIC made that determination after it had conducted a full inquiry into the facts and received, among other things, two sworn declarations. In the first declaration, dated March 6, 1988, both Bremond and Bremond-Piquet affirmed that Bremond had contributed 100 percent of the funds deposited in the testamentary trust account invested at Vernon. In the second declaration, executed eight months later on November 1, 1988, the sisters indicated that each of them had contributed 100 percent of the fund.

 FSLIC, acting on the basis of the first declaration, concluded that, at the time of deposit, the funds were owned by Bremond alone, and that, therefore, because none of the trust beneficiaries was her spouse, child or grandchild, only $ 100,000 was insured under the pertinent FSLIC regulation. See 12 C.F.R. § 564.4 (1989). That regulation provided in relevant part as follows:

 (b) If the named beneficiary of such account is other than the owner's spouse, child or grandchild, the funds in such account shall be added to any individual accounts of such owner and insured up to $ 100,000 in the aggregate.

 Thereafter, acting on a request for reconsideration, the Federal Deposit Insurance Corporation ("FDIC") *fn1" affirmed by final decision on September 18, 1989 (attached as Ex. F to Def. Memo.). Thus, the $ 88,701.73 in the account in excess of the $ 100,000 federal insurance limit remained uninsured. All named trustees and beneficiaries brought suit in this Court in a complaint filed September 6, 1991.

 Standard of Review

 Before turning to the merits, it is necessary to resolve a dispute between the parties as to the appropriate standard of review. Plaintiffs seek a trial de novo or an independent determination by the Court based on the full record. FDIC contends that the arbitrary-capricious standard of the Administrative Procedure Act controls.

 In Coit Independence Joint Venture v. Federal Savings and Loan Insurance Corporation, 489 U.S. 561, 103 L. Ed. 2d 602, 109 S. Ct. 1361 (1989), the Supreme Court held that FSLIC did not have authority to adjudicate state law claims brought against institutions for which FSLIC had been appointed receiver, and that, therefore, de novo review was appropriate in such cases. However, the decision did not resolve the issue presented by this case of FSLIC's authority over claims against it as insurer, rather than receiver. Cf. Godwin v. FSLIC, 806 F.2d 1290, 1291 n.1 (5th Cir. 1987) (distinguishing the two roles of FSLIC). Here the Court is reviewing the action of a federal agency dispensing federal benefits under a federal insurance plan established and operated according to federal statutes and regulations. Under these circumstances, the Court's authority is limited. FDIC's action may be set aside only if it is arbitrary, capricious, an abuse of discretion or contrary to law. See 5 U.S.C. § 706. The Court thus rejects plaintiffs reliance on Coit and follows the Fifth Circuit's analysis in Hymel v. Federal Deposit Ins. Corp., 925 F.2d 881, 882-83 (5th Cir. 1991).


 The FDIC acted reasonably and in full compliance with the governing statute and regulations in concluding that Bremond alone owned the funds deposited, as both sisters ...

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