Bruneau v. F.D.I.C. ( 1992 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________________
No. 92-3256
_____________________________
JAQUELINE B. BRUNEAU,
Plaintiff-Appellant,
Cross-Appellees,
versus
FEDERAL DEPOSIT INSURANCE CORPORATION,
As Receiver for Bankers Trust, N/A., ET AL.,
Defendant-Appellees.
ROB A. HARDESTY, ROBERT L. KAREM,
RAYMOND A. LAPINO, SR., and MYRON E. MOOREHEAD,
Defendants-Appellees,
Cross-Appellants.
_________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________________________________
(November 12, 1992)
Before KING, DAVIS, and WIENER, Circuit Judges.
PER CURIAM:
In this appeal from the district court's grant of summary
judgment in favor of Defendant-Appellee Federal Deposit Insurance
Corporation (FDIC), Plaintiff-Appellant Jacqueline B. Bruneau
asserts that the district court misapplied the law of constructive
trust, the holding in Downriver Community Federal Credit Union v.
Penn Square Bank,1 and the D'Oench, Duhme doctrine.2 As we find the
district court's decision to be free of reversible error, we
affirm.
I
FACTS AND PROCEDURAL HISTORY
In early December 1988, Bruneau opened three accounts at
Bankers Trust of Louisiana (Bankers Trust) and made deposits into
all three totalling of $223,125.76. Bruneau asserts that an
employee of the bank represented that the three accounts would be
insured up to $100,000 each by the FDIC, and that Bruneau thus
believed that all of her money was insured.3 For purposes of this
review, we assume the truth of those representations by Bruneau.
In early March 1989, the Comptroller of Currency declared
Bankers Trust insolvent and terminated its existence as a national
banking association.4 The Comptroller appointed the FDIC as
receiver of Bankers Trust.
Bruneau filed a claim for recovery of her deposits with the
FDIC. The FDIC paid Bruneau $100,000 and issued her a Receivers
1
879 F.2d 754 (10th Cir. 1989), cert. denied, 493 U.S. 1070(1990).
2
See D'Oench, Duhme & Co. v. Federal Deposit Ins. Co., 315
U.S. 447, 460 (1942).
3
This was clearly incorrect. 12 C.F.R. § 330.5 (1989)
provides: "Funds owned by natural persons and deposited in one
or more deposit accounts in his or her own name shall be added
together and insured up to $100,000 in the aggregate."
4
See 12 U.S.C. § 191 (1988).
2
Certificate for the additional $123,473.53, entitling her to a
ratable distribution along with other uninsured depositors and
general creditors. Since obtaining the Receivers Certificate,
Bruneau has received a number of payments from the FDIC. When the
district court rendered its decision in the instant case, these
payments totaled $59,817.82. The FDIC asserts that four more
payments))totaling $12,936.26))were made after the court's last
calculation date and were thus not included in the $59,817.82
amount.
Unhappy with her share of the proceeds of the bank
distribution under the National Banking Act, Bruneau sued the FDIC
and several former officers and employees of the bank (Hardesty et
al.), who she alleged made the misrepresentations to her. Bruneau
claimed that the FDIC, by its predecessors, had breached its
fiduciary duty to her, had violated Louisiana statutory law, had
committed "concerted tort action" with some of the employees of the
bank, and had effectively created a constructive trust in her
favor.
The district court granted summary judgment in favor of the
FDIC. The court reasoned that the Bruneau's constructive trust
theory did not constitute a viable claim for a number of reasons.
One of those reasons was that the claims were barred by the
D'Oench, Duhme doctrine. The court held that Bruneau's other
claims were barred by the D'Oench, Duhme doctrine and § 1823(e) of
FIRREA.5 Bruneau timely appealed.
5
12 U.S.C. § 1823.
3
II
ANALYSIS
A. Bruneau's Claims
1. Effect of D'Oench, Duhme
The district court relied on several theories in rejecting all
of Bruneau's claims. One of the theories properly espoused by the
district court here is that Bruneau's claims are barred by the
D'Oench, Duhme doctrine. The district court found correctly that
all of the claims are based on bank personnel's misrepresentations
and fraudulent acts, all of which, for purposes of this appeal, we
assume to have occurred. Under D'Oench, Duhme and its statutory
counterpart, a claimant against the FDIC must produce evidence that
the agreement made with the bank meets all of the FIRREA
requirements.6 As the district court found, none of these
requirements were met by Bruneau. The agreement was not in
6
The relevant portion of FIRREA provides:
No agreement which tends to diminish or defeat the
interest of the Corporation in any asset acquired by it
under this section or section 11 [12 U.S.C.S. § 1821],
either as a security for a loan or by purchase or as a
receiver of any insured depository institution, shall
be valid against the Corporation unless such
agreement))
(1) is in writing,
(2) was executed by the depository institution and
any person claiming an adverse interest
thereunder, including the obligor,
contemporaneously with the acquisition of the
asset by the depository institution,
(3) was approved by the board of directors of the
depository institution or its loan committee, . .
. and
(4) has been, continuously, from the time of its
execution, an official record of the depository
institution.
12 U.S.C.S. § 1823(e) (Supp. 1992).
4
writing; it was not executed by the depository institution
contemporaneously with the acquisition of the asset; it did not
have the required approval of bank executives; and it was not
continuously held as an official bank record.
Bruneau asserts in her brief to this court that "D'Oench,
Duhme is not apposite. Ms. Bruneau is not basing her claim for
recovery on the ground of a secret or side agreement, but rather on
the ground that this transaction never could occur because the bank
was prohibited from taking funds, thereby making this transaction
void from the beginning."7 Bruneau badly mischaracterizes her
position. Her entire case rests on the theory that the officers of
the bank committed a fraud by allowing her to deposit money when
they knew the bank was insolvent. The D'Oench, Duhme doctrine and
§ 1823(e) are directly implicated by a fraud accusation. Without
meeting the requirements of either, Bruneau's claims are barred.
2. Hopeless Insolvency
Bruneau's other argument involves the hopelessly outdated
"hopeless insolvency" doctrine, which was recently discussed in
dicta of the Tenth Circuit in the Downriver decision.8 The
district court's opinion ably explains the effect of the hopeless
insolvency doctrine, the dicta in the Downriver decision, and
7
We, like the district court before us, will ignore the
gaping hole in Bruneau's logic that if there was no deposit
("th[e] transaction never could occur"), the FDIC would be
responsible for nothing because its liability is triggered only
by deposits.
8
879 F.2d at 761-63.
5
everything else relative to this essentially frivolous ground of
appeal. We refuse to expend any more judicial resources trying to
convince counsel that this turn-of-the-century doctrine has long
since ceased to have any contextual relevance in light of the
banking reforms that have occurred in this country during the past
sixty years.
B. The Cross-Appeal of Hardesty et al.
After the dismissing the FDIC with prejudice, the district
court turned to the state law claims that had been filed by Bruneau
against Hardesty et al. As to these claims, the court stated:
The remaining claims are for "intentional
misrepresentation" (First Claim), "negligent
misrepresentation" (Second Claim), "breach of fiduciary
duty" (Fourth Claim), "violation of Louisiana Revised
Statutes" (Fifth Claim), [and] "concerted tort action"
(Sixth Claim). Each is based in Louisiana law, albeit as
to the fifth claim, some of the defendants have filed a
motion based on preemption of state law.
The court then held that it was without subject matter jurisdiction
and declined to exercise pendant jurisdiction over the remaining
parties. It then dismissed Bruneau's claims against Hardesty et
al. without prejudice.
Seeking to change the dismissal from one without prejudice to
one with prejudice, Hardesty et al. assert on appeal that the
district court erred in dismissing their claims for lack of subject
matter jurisdiction. They ground their appeal on the theory that
the Louisiana statute involved in Bruneau's charge of "violation of
6
Louisiana Revised Statutes"9 is preempted by federal banking law
and that the preemption in and of itself supports federal question
jurisdiction. Alternatively, they argue that the district court
should have addressed the state law claims under its pendant
jurisdiction. We dismiss out-of-hand the assertion that the
district court abused its discretion in not exercising pendant
jurisdiction over the state law claims.
It is clear from the opinion of the district court that it
dismissed Bruneau's claims against Hardesty et al. without
considering the claim of federal question jurisdiction arising from
the preemption of state law. This refusal to consider the claim
does not place the issue beyond our review, however, as the
preemption question is a matter of law that we would review de novo
if it had been fully considered by the district court.
Federal preemption most often appears as a defense to a
plaintiff's claim. Thus, the "federal issue does not appear on the
face of the plaintiff's complaint."10 Consequently, "a preemption
defense cannot be the basis of the original federal jurisdiction."11
As noted by the Seventh Circuit, the Supreme Court has
fashioned a narrow exception to this rule. The preemption defense
can "be the basis of the original federal jurisdiction" when
9
LA. REV. STAT. ANN. § 6:419 (West 1986 & Supp. 1992).
10
Lister v. Stark, 890 F.2d 941, 943 (7th Cir. 1989), cert.
denied, 111 S. Ct. 579 (1990).
11
Id. (discussing jurisdiction sufficient to make removal
proper)(citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58,
63 (1987)); see Louisville & Nashville R.R. v. Mottley, 211 U.S.
149 (1908).
7
Congress has completely preempted a given area of state
law. This "complete preemption" exception permits
recharacterization of a plaintiff's state-law claim to a
federal claim . . . .12
Hardesty et al. thus assert that § 6:419 of the Louisiana Revised
Statutes has been preempted by federal banking regulations to the
point that the asserted violation of that statute is no more than
a federal claim masquerading as a state claim. We disagree.
In Metropolitan Life Ins. Co. v. Taylor,13 the Supreme Court
found that "ERISA's preemption provision is . . . so strong that
every claim for benefits under a covered plan is regarded as
arising under the laws of the United States."14 Similarly, "[i]t
has long been recognized that section 301 of the Labor Management
Relations Act, 29 U.S.C. § 185, has such preemptive force."15 To
determine whether the statute has such preemptive force, there must
be evidence of "'the clearly manifested intent of Congress'" that
such preemption occur.16
In the instant case, no evidence of congressional intent to
preempt the area of law so pervasively has been presented to this
court. Instead, Hardesty et al. have thoroughly convinced us that
a defense of preemption exists in this context. They point to a
case from the Eastern District of Louisiana involving the same bank
12
Id.13
481 U.S. at 63.
14
Trans World Airlines, Inc. v. Mattox, 897 F.2d 773, 787
(5th Cir.), cert. denied, 111 S. Ct. 308 (1990).
15
Id.16
Id. (quoting Taylor, 481 U.S. at 67).
8
failure and the same defendants as the instant case, in which they
successfully used preemption as a defense to similar claims.17
Hardesty et al. now assert that "[t]he precise issue now before the
court has already been resolved in favor of defendants/cross
appellants" in the Mortgage Market case. Clearly, Hardesty et al.
misapprehends the distinction between that which was decided in
Mortgage Market and that which they presently urge to us.
In Mortgage Market, the district court held that "federal law
pre-empts [sic] application of La.Rev.Stat. § 6:419 or state
fiduciary law which would hold Hardesty, et al [sic] liable for the
uninsured portion of [the plaintiff]'s certificate of deposit."18
As irrefutable a proposition of law as that may be, it is entirely
different from the present assertion by Hardesty et al. that
federal law is so strongly preemptive in this area of the law that
plaintiff's claim "is regarded as arising under the laws of the
United States."19 Hardesty et al. cites nothing to this court (and
our research reveals nothing) to indicate that Congress intended to
"treat a complaint raising [these matters] as 'necessarily federal
in character'"20 Simply put, Hardesty et al.'s demonstration that
the defense of preemption applies does not create a basis for
subject matter jurisdiction in the same manner as does "super-
17
Mortgage Mkt., Inc. v. Federal Deposit Ins. Corp., 780 F.
Supp. 406, 407-08 (E.D. La. 1991).
18
780 F. Supp. at 408.
19
Trans World Airlines, 897 F.2d at 787.
20
Id. (citing Taylor, 481 U.S. at 63-64).
9
preemption" of an ERISA provision or section 301 of the LMRA.
Hardesty et al. thus fail to convince us that such "super-
preemption" exists here.
Hardesty et al.'s claims may well have merit; they have merely
been asserted in the wrong place. The district court dismissed the
claims against Hardesty et al. without prejudice. Even though the
federal preemption cannot sustain federal subject matter
jurisdiction, it may be asserted in an effort to fend off any state
court claims against these defendants.
III
CONCLUSION
We are not impressed with Bruneau's assertions of error by the
district court. Unavoidably, the D'Oench, Duhme doctrine bars the
claims asserted by Bruneau against the FDIC. The district court's
analysis of the "hopeless insolvency" doctrine and the dicta found
in the Downriver decision to the instant case was correct. And the
district court did not abuse its discretion in refusing to exercise
pendant jurisdiction over the state law claims against Hardesty et
al. The district court's judgment is thus
AFFIRMED.
10