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FDIC v. MANATT

March 15, 1989

FEDERAL DEPOSIT INSURANCE CORPORATION, in its Corporate Capacity, PLAINTIFF
v.
SAM L. MANATT, JR., et al., DEFENDANTS



The opinion of the court was delivered by: HOWARD, JR.

 GEORGE HOWARD, JR., UNITED STATES DISTRICT JUDGE

 On June 15, 1984, the Bank Commissioner of the State of Arkansas determined that Corning Bank ("Bank") was insolvent, ordered the Bank closed, and tendered the Bank's assets and affairs to the Federal Deposit Insurance Corporation ("FDIC") as Receiver pursuant to Ark. Stat. Ann. §§ 67-601 et seq. (now A.C.A. 23-33-101 et seq.) and 12 U.S.C. § 1821(e). On the same date, pursuant to 12 U.S.C. § 1823(c)(2)(A), the FDIC in its corporate capacity purchased from the Receiver certain assets and interests of the Bank, including those claims of the Bank against the officers and directors.

 On October 31, 1986, the FDIC in its corporate capacity filed this action against various officers and directors of the Bank, alleging breach of duty and negligence in discharging their responsibilities for operating and managing the Bank, including allegations of imprudent extensions of credit and miscellaneous payments to the officers and directors, their relatives and businesses. The FDIC, as assignee of the claims of the Bank, seeks judgment in an amount yet undetermined representing losses on loans and expenses which impaired the Bank's assets and ultimately brought the Bank to a condition of insolvency.

 Plaintiff filed its amended complaint on January 11, 1988. On January 28, 1988, separate defendant Ben Williams, Jr. ("Williams") filed his amended answer and counterclaim. According to his counterclaim, Williams alleges that the FDIC negligently supervised the Bank's operations, was negligent in liquidating the Bank's assets and made false representations. Williams seeks a setoff of any judgment against him and further seeks punitive damages for the alleged misrepresentations. In his amended answer, Williams raises the affirmative defenses of statute of limitations, release and accord and satisfaction.

 Plaintiff has filed a motion to dismiss the counterclaim and a motion to strike the affirmative defenses. In addition, there are a number of other motions, some concerning the entry of default judgments and service on defendant Sam Manatt, Jr., which are pending. The Court has reviewed the arguments of the parties and the applicable law and rules as follows:

 1. Williams' Motion for Default Judgment

 Williams has filed a motion for default judgment on his counterclaim. Williams filed his counterclaim on January 28, 1988, and he argues that plaintiff was in default for failing to file a timely response.

 FDIC moved to dismiss the counterclaim on March 29, 1988. FDIC claims that it received the counterclaim on January 29, 1988, and that its motion to dismiss was timely.

 FDIC, as a federal agency, has sixty days to respond to the counterclaim. F.R.Civ.P. 12(a); Rauscher Pierce Refsnes, Inc. v. FDIC, 789 F.2d 313 (5th Cir. 1986). FDIC's motion filed within sixty days of service is timely. Accordingly, the motion for default judgment is denied.

 2. Motion to Dismiss Counterclaim

 Plaintiff argues that the Court lacks subject matter jurisdiction over Williams' counterclaim in that he failed to bring his claim against the United States as a party defendant, that the claim is barred by the exceptions of the Federal Tort Claims Act ("FTCA"), and that the counterclaim is not compulsory under F.R.Civ.P. 13(a). Williams argues that the FDIC has waived its sovereign immunity by virtue of the "sue and be sued" clause (12 U.S.C. § 1819), and that his claim is in contract, not tort, so that the FTCA exceptions do not operate to bar it.

 The arguments raised by Williams have been raised in similar cases. In those situations, the courts have not been reluctant to dismiss counterclaims by bank officers and directors who alleged virtually the same claims as alleged here. For a number of reasons, the counterclaim must be dismissed.

 Williams argues that sovereign immunity is waived by virtue of the "sue and be sued" clause. The "sue and be sued" clause does not open the door for tort suits against the FDIC. FDIC v. Blackburn, 109 F.R.D. 66, 75 n. 2 (E.D. Tenn. 1985). Williams' reliance on Franchise Tax Board of California v. United States Postal Service, 467 U.S. 512, 81 L. Ed. 2d 446, 104 S. Ct. 2549 (1984), is misplaced. In that case, the Supreme Court construed the "sue and be sued" clause of 39 U.S.C. § 401(1) concerning the U.S. Postal Service, in evaluating the responsibility of the Postal Service to withhold portions of its employees' salaries to pay delinquent taxes owed a state government. It is not authority for construing 12 U.S.C. § 1819 as a general waiver of sovereign immunity.

 Williams also argues that his claims do not come under the FTCA. He argues that his counterclaim is not a tort, but a contract, so that the exceptions of the FTCA do not apply. He further argues that the counterclaim is compulsory, so that sovereign immunity is waived.

 
47. Ben Williams, Jr., in his capacity as board member of the Corning Bank and for his counterclaim . . . states that the FDIC was negligent in its supervision of the Corning Bank during the period of time that the FDIC issued its cease and desist order and the closing of the Corning Bank, and thereafter the FDIC was negligent in the liquidation of the assets of the Corning Bank. ...

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