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FDIC v. CORNING S&L ASSN.

September 29, 1988

FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, PLAINTIFF
v.
CORNING SAVINGS & LOAN ASSOCIATION, DEFENDANT


Elsijane T. Roy, United States District Judge.


The opinion of the court was delivered by: ROY

ELSIJANE T. ROY, UNITED STATES DISTRICT JUDGE.

 Before the Court is the plaintiff's Motion to Dismiss the Counterclaims on the grounds that the Court lacks subject matter jurisdiction over the counterclaims and the counterclaims fail to state a claim upon which relief can be granted. Defendant has responded, and the matter is ripe for determination.

 The plaintiff asserts three major grounds in support of the motion: (1) Absent a waiver of sovereign immunity, this Court lacks jurisdiction over the counterclaims; (2) the counterclaims fail to state a cause of action against the FDIC in its corporate capacity to the extent they allege acts or omissions of the insolvent bank because the FDIC is not liable for acts of the bank or its officers; and (3) in Count II, to the extent it alleges acts or omissions of the FDIC in its corporate capacity, must be dismissed for lack of subject matter jurisdiction pursuant to the requirements of and exceptions to the federal tort claims act.

 A brief recitation of the facts as set out in the pleadings is necessary. According to the allegations in the complaint, on or about June 15, 1984, the Bank Commissioner of the State of Arkansas determined that the Corning Bank ("Bank") was insolvent. The Commissioner ordered the Bank closed, took possession of its assets and affairs and tendered to the FDIC the appointment as Receiver of the Bank. The FDIC accepted appointment as Receiver of the Bank and purchased from the Receiver certain assets and interests of the Bank. It is alleged that the assets at issue in this case were among those assets purchased.

 As of June 15, 1984, the Bank maintained three certificates of deposit and a passbook account with defendant Corning Savings and Loan Association ("Association"). On March 28, 1986 the defendant charged against the above accounts the sum of $ 366,009.88.

 Plaintiff FDIC contends that the action of the defendant constituted misappropriation and conversion of the FDIC's funds and seeks damages as a result thereof.

 Defendant, in its answer, denies that the action constituted misappropriation and conversion, and states that at the time the Bank was declared insolvent, the CD's and passbook account were subject to a possessory and statutory lien in favor of defendant to secure an indebtedness owed defendant by the Bank arising out of its agreement to repurchase certain participations in loans originated by the Bank. Defendant also denies that FDIC had any ownership in such funds other than as receiver of the Corning Bank. In its First Amended Counterclaim, defendant asserts that "These claims are asserted by way of setoff and recoupment only."

 Defendant states that prior to the insolvency of the Bank, the Bank sold to the defendant participations in loans which it made to four corporations. The participations were purchased by defendant pursuant to an agreement with the Bank that defendant's participation therein would be for a limited period of time at the end of which the Bank would repurchase defendant's participation in such loan by paying to defendant the amount paid by defendant to the Bank as consideration for the purchase of such participations together with interest thereon at the agreed upon rate. According to the defendant, the repurchase dates, pursuant to the agreement of the Bank, of defendant's participation in all of these loans, were at various dates most of which were prior to liquidation of the Bank. Because the Bank failed to honor its agreement to repurchase from defendant the participations in the aforesaid loans, the defendant asserted its lien over the accounts to secure payment to defendant of the Bank's agreement to repurchase the aforesaid loan participations and on May 24, 1984, advised the Bank that such accounts would be held until all debts owed defendant were paid. On March 28, 1986, defendant transferred the funds to its own account.

 Defendant, in Count I of its counterclaim and first amended counterclaim, contends that it is entitled to recover all sums which it paid to the Bank in connection with defendant's purchase of the loan participations because of material misrepresentations and material omissions by officers of the Bank. Defendant contends that it was induced to purchase the loan participations and is entitled to rescission "of all moneys paid by it, together with interest thereon, which amount was, as of March 28, 1986, $ 366,509.88."

 In Count II of the counterclaim, defendant contends that Corning Bank and FDIC have negligently failed to protect the collateral and have negligently failed to proceed to realize upon the collateral. Because of such negligence, defendant contends that the collateral has greatly diminished in value and the defendant has been damaged in the amount of its investment.

 It is axiomatic that the United States may not be sued for money damages except as it has consented to be sued. United States v. Sherwood, 312 U.S. 584, 586, 85 L. Ed. 1058, 61 S. Ct. 767 (1941); Melo v. United States, 505 F.2d 1026, 1028 (8th Cir. 1974). Counterclaims can be maintained only when the government has waived its immunity from suit on that claim. Fed.R.Civ.P. 13(d). See, e.g., EEOC v. First National Bank of Jackson, 614 F.2d 1004, 1007 (5th Cir. 1980), cert. denied, 450 U.S. 917, 67 L. Ed. 2d 342, 101 S. Ct. 1361 (1981); United States v. Lockheed L-188 Aircraft, 656 F.2d 390, 393 (9th Cir. 1979); United States v. Drinkwater, 434 F. Supp. 457, 460 (E.D. Va. 1977).

 The United States may waive sovereign immunity by statute, such as the Federal Tort Claims Act. Additionally, when the United States files suit, it waives sovereign immunity as to compulsory counterclaims, such as those in recoupment. FDIC v. Citizens Bank and Trust Co., 592 F.2d 364, 373 (7th Cir. 1979), cert. denied, 444 U.S. 829, 62 L. Ed. 2d 37, 100 S. Ct. 56 (1979).

 Recoupment is the right of the defendant to have the plaintiff's monetary claim reduced by reason of some claim the defendant has against the plaintiff arising out of the very contract giving rise to the plaintiff's claim. First National Bank of Louisville v. Master Auto Service Corp., 693 F.2d 308, 310, n.1 (4th Cir. 1982), citing 6 C. Wright & A. Miller, Federal Practice and Procedure, Civil ยง 1401 (1971 and Supp. 1982). In Frederick v. United States, 386 F.2d 481, 488 (5th Cir. 1967), the Court laid out the requirements for a claim of recoupment. The claim must (1) arise from the same transaction ...


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