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FSLIC v. SMITH

June 27, 1989

FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, as Receiver for FirstSouth, F.A., PLAINTIFF,
v.
W. ROBERT SMITH, DEFENDANT, COUNTERPLAINTIFF AND THIRD PARTY PLAINTIFF v. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, as Receiver for FirstSouth, F.A.; et al., THIRD PARTY DEFENDANTS



The opinion of the court was delivered by: EISELE

 GARNETT THOMAS EISELE, CHIEF UNITED STATES DISTRICT JUDGE

 Plaintiff Federal Savings and Loan Insurance Corp. ("FSLIC"), receiver for FirstSouth, F.A., brought this action to collect a note allegedly due FirstSouth from defendant W. Robert Smith. Mr. Smith has filed claims against several others, including the United States of America, challenging their conduct in connection with the execution of the note. The United States has moved to dismiss Mr. Smith's action against it for lack of subject matter jurisdiction in this Court and for failure to state a claim upon which relief can be granted.

 FSLIC claims that Mr. Smith owes FirstSouth $ 494,125.00 plus interest pursuant to a note attached to its complaint. Complaint, para. 7. Mr. Smith admits signing the note, but denies that there exists a valid debt between himself and FirstSouth. Answer, para. 3, 7. Furthermore, Mr. Smith alleges that he was fraudulently induced to sign the note. Specifically, he claims that two individuals who were stockholders in FirstSouth approached him and persuaded him to purchase FirstSouth stock, with the purchase financed by the proceeds of the note on which FSLIC now sues. Answer, para. 8. Mr. Smith also says that, unbeknownst to him, FirstSouth was an institution on the verge of collapse and the stock sale to him constituted a scheme to defraud in violation of federal and state law. Id.

 Mr. Smith's Third-Party Complaint is based on the same factual allegations as the fraud affirmative defense, summarized above. Third-Party Complaint, para. 18-27, 32, 34. The relevant averments for our purposes here are in paragraphs 28 through 31. Mr. Smith alleges that the FSLIC recognized that FirstSouth was having difficulties and that FSLIC became increasingly involved in FirstSouth's day-to-day operations. Para. 28. Ultimately, it is alleged, FSLIC decided that FirstSouth's largest stockholders should divest themselves of sufficient stock to bring FirstSouth into compliance with applicable regulations. Para. 29. FSLIC enforced its desires by threatening to institute cease and desist proceedings. Id. FSLIC asserted a right to specifically approve the sales which occurred. Id. The key paragraph in the Third-Party Complaint is number 30, echoed in paragraphs 40 and 41. These key averments are as follows:

 
By requiring that FirstSouth's large shareholders divest themselves of their stock, the FSLIC substituted its judgment for the judgment of the FirstSouth Board of Directors. Furthermore, as a consequence of these demands and its insistence on approval of stock sales transactions, the FSLIC assumed a duty that it did not otherwise have to purchasers and potential purchasers of First South stock to assure that such sales of stock would comply with applicable state and federal securities laws.

 The United States has moved to dismiss this action on the grounds that this Court lacks jurisdiction over the subject matter, Fed.R.Civ.P. 12(b)(1), and that the complaint fails to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6). The jurisdictional challenge asserts that the Third Party Complaint does not contain a sufficient statement of the grounds upon which the court's jurisdiction depends, Fed.R.Civ.P. 8(a)(1). The assertion that no claim is stated is evaluated under the standard of Conley v. Gibson, 355 U.S. 41, 45-6, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957): "in appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Both grounds for dismissal rest on the United States' sovereign immunity and Mr. Smith's asserted failure to show that he may overcome that immunity.

 FEDERAL TORT CLAIMS ACT

 1. Relevant Provisions.

 The United States has sovereign immunity. Consequently, it can only be sued to the extent it has consented to be held liable, and only in the manner established by law. United States v. Sherwood, 312 U.S. 584, 586, 85 L. Ed. 1058, 61 S. Ct. 767 (1941). Plaintiff can only pursue a tort claim against the United States pursuant to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. ยงยง 1346(b), 2671 et seq. *fn1"

 
The United States shall be liable, respecting the provisions of this title relating to tort claims, in the same manner and to the same extent as a private individual under like circumstances. . . .

 A plaintiff must usually exhaust an administrative procedure before pressing his claim against the United States:

 
An action shall not be instituted upon a claim against the United States for money damages for injury or loss of property . . . caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, unless the claimant shall have first presented the claim to the appropriate Federal agency and his claim shall have been finally denied by the agency in writing and sent by certified or registered mail. . . . The provisions of this subsection shall not apply to such claims as may be asserted under the Federal Rules of Civil Procedure by third party complaint, cross-claim, or counterclaim.

 The Government relies upon two of the exceptions to the FTCA's waiver of sovereign immunity. Section 2680 provides in pertinent part that:

 
The provisions of this chapter and section 1346(b) of this title shall not apply to:
 
(a) Any claim . . . based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, ...

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