The opinion of the court was delivered by: Ellen Segal Huvelle, United States District Judge
Plaintiffs allege that defendant FDIC, acting as receiver for a failed bank ("FDIC-R"), wrongfully reclassified millions of dollars by sweeping funds out of their insured accounts on the day that bank failed. The effect of this reclassification was to deny several plaintiffs full insurance payments from co-defendant FDIC, acting in its corporate capacity as insurer of deposit accounts ("FDIC-C"), and to withhold preferred status from plaintiffs' claims against the bank. Now before the Court are cross-motions for summary judgment, as well as defendants' motions to dismiss. Because the Court finds that the receiver exceeded its lawful authority, the Court grants plaintiffs' motions for summary judgment against FDIC-R and against FDIC-C with respect to the four plaintiffs still owed deposit insurance by FDIC-C.
On the afternoon of June 26, 2002, the Connecticut Bank of Commerce ("CBC") was closed by order of the Connecticut Superior Court, and the FDIC accepted appointment as the bank's receiver. Within hours, FDIC personnel arrived at each of CBC's branches, convened the bank staff, and informed them that the bank had been closed, directing them to close out the day's activities. After all pending transaction items had been processed, late that evening the bank's computers calculated the final balance in the customers' accounts. Thereafter, at the FDIC's direction, CBC Information Technology staff initiated a computer process that "swept" approximately $20.2 million from plaintiffs'*fn1 insured DDA*fn2 accounts into uninsured International Banking Facility ("IBF") accounts.*fn3 Because both types of accounts existed at CBC, the sweep was strictly a bookkeeping transaction; no funds ever left the bank. Such sweeps were a nightly routine for CBC. But on the evening of the FDIC's appointment as CBC's receiver, the sweeps diverged in a critical manner from the norm: FDIC staff directed CBC to manually override the computer program that routinely swept funds back a few hours later from the IBF accounts into the plaintiffs' DDA accounts. Therefore, when the FDIC made its deposit insurance calculations and categorized claims for the purpose of determining which funds would constitute preferred claims against the receivership, most of plaintiffs' assets, because of the FDIC-ordered "half-sweep," remained in the uninsured and non-preferred (Class 3) IBF accounts.*fn4 The net effect of the sweep was to eliminate any realistic prospect that plaintiffs would recover any part of the swept funds,*fn5 which instead have accrued to the FDIC and other preferred claimants.
II. Procedural Background
The crux of this lawsuit hinges on whether the FDIC acted properly in reclassifying plaintiffs' insured and preferred DDA funds as uninsured and non-preferred IBF funds. Plaintiffs -- twenty-five foreign bank or corporate account holders at CBC -- have filed a six-count amended complaint against the FDIC in its corporate capacity, which insures bank deposits, and in its capacity as receiver of CBC. Cf. FDIC v. Ernst & Young LLP, 374 F.3d 579, 581 (7th Cir. 2004) (describing the FDIC's different roles in each capacity). The parties have stipulated to the voluntary dismissal of two counts. Of those that remain, Count I alleges that FDIC-R's sweep*fn6 of plaintiffs' funds and its subsequent failure to issue preferred Class 2 receivership certificates, as well as FDIC-C's failure in four cases to pay full deposit insurance on plaintiffs' CBC assets, violated the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. §§ 1811 et seq. Count II alleges that the FDIC in its dual capacities was unjustly enriched. Count III alleges that FDIC-R breached a fiduciary duty owed to plaintiffs. Finally, Count IV alleges that plaintiffs are entitled to the imposition of a constructive trust against the FDIC in its dual capacities.*fn7 With respect to the counts that remain (Counts I and III), plaintiffs seek relief in several alternative forms, including the reclassification of the swept funds as deposits and the corresponding issuance of Class 2 receivership certificates by FDIC-R; the payment by FDIC-R of all accrued distributions plaintiffs would have received as Class 2 creditors, as well as any unpaid insurance proceeds from FDIC-C up to the $100,000 cap, plus interest; and the return to plaintiffs of all swept funds, plus interest.*fn8
FDIC-R has moved for summary judgment or, in the alternative, for dismissal. FDIC-R argues that plaintiffs entered into contracts with CBC for the establishment of IBFs, and that the reclassification of plaintiffs' funds on the evening of the bank's closing was in conformance with those contracts. FDIC-R maintains that each plaintiff held only one account, not two, and that that account was an IBF, not a DDA. FDIC-R grounds its argument on Federal Reserve regulations and FDIC statutes and regulations, as well as on the International Account Opening Documentation ("IAOD") each plaintiff completed with CBC or its predecessor. FDIC-R maintains that, regardless of how plaintiffs' accounts functioned, they must be treated as an IBF. Alternatively, FDIC-R argues that, even if plaintiffs had two accounts, FDIC-R had authority to reclassify plaintiffs' DDA funds as IBF holdings in the process of operating CBC and "winding up" the bank's affairs.
FDIC-C argues that, because its role is limited to regulating depository institutions and insuring deposits, it has no power to afford plaintiffs relief by granting their receivership claims. Because FDIC-C has paid out in full insurance funds corresponding to the amounts FDIC-R determined were held by plaintiffs in insured accounts, FDIC-C argues that it must be granted summary judgment on the basis that it has satisfied its statutory obligation. Alternatively, FDIC-C maintains that the case against it must be dismissed because plaintiffs have failed to state a cause of action on which relief can be granted.
Plaintiffs cross-move for summary judgment. Against FDIC-C, four plaintiffs argue that FDIC-C remains liable to them for any further sum found to be an insured deposit, up to the $100,000 cap (Count I). As for FDIC-R, plaintiffs claim in Count I that their rights were fixed at the time of CBC's closing, and therefore, because no standing order justified the receiver's reclassification of plaintiffs' funds from DDA to IBF accounts, FDIC-R violated the FDI Act, including the NDPA. Plaintiffs claim that the IAOD provided for, and that CBC in fact established, multiple accounts, including separate insured, NDPA-preferred DDAs, as well as uninsured, non-preferred IBFs. In support of this position, plaintiffs note that FDIC-R treated plaintiffs as having separate accounts prior to this litigation, even going so far as to have FDIC-C pay out insurance up to the $100,000 cap on the non-swept funds that remained in plaintiffs' DDAs when CBC closed on June 26, 2002. Plaintiffs contend that having two linked accounts was permissible, and even if it can be argued that CBC mishandled plaintiffs' IBF accounts, the error was attributable to the CBC and not to the plaintiffs, and therefore the FDIC, as CBC's receiver, must assume responsibility for the bank's error. Plaintiffs argue that FDIC-R's reclassification of their DDA funds subverts the NDPA and violates the agency's own policies and public statements. Finally, plaintiffs maintain that FDIC-R breached its fiduciary duty to plaintiffs by wasting their assets, forcing plaintiffs to make a post-closing deposit in IBFs to which they did not consent, and engaging in improper self-dealing by benefitting FDIC-C, because the reclassification of plaintiffs' funds eliminated millions of dollars from the pool of Class 2 claims, thereby increasing the net take of the largest Class 2 claimant, FDIC-C acting as subrogee.*fn9 See 12 U.S.C. § 1821(g)(1).
The parties agree that plaintiffs have exhausted their administrative remedies by filing with the FDIC claims for the swept funds, which claims were disallowed insofar as they sought Class 2 depositor liability status, rather than Class 3 general creditor status. (FDIC-C's & FDIC-R's Joint Stmt.of Material Facts ["FDIC Joint Stmt."] ¶ 33.) Based on this representation, this Court has jurisdiction over plaintiffs' lawsuit pursuant to 12 U.S.C. § 1821(d)(6)(A).*fn10
This case turns on two inquiries. The first requires a determination of whether plaintiffs held two types of accounts at CBC, or just one type, an IBF. If the latter, then plaintiffs have suffered no wrong, for all they were entitled to from their uninsured IBF account was a Class 3 receivership certificate, which they have received.*fn11 But if the former proves correct, then the Court must proceed to the second question: did the receiver ...