Branch v. United States

29 Fed. Cl. 606, 1993 U.S. Claims LEXIS 175, 1993 WL 417584
CourtUnited States Court of Federal Claims
DecidedOctober 20, 1993
DocketNo. 93-133C
StatusPublished
Cited by13 cases

This text of 29 Fed. Cl. 606 (Branch v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Branch v. United States, 29 Fed. Cl. 606, 1993 U.S. Claims LEXIS 175, 1993 WL 417584 (uscfc 1993).

Opinion

ORDER

NETTESHEIM, Judge.

This case comes before the court on defendant’s motion under RCFC 12(b)(1) to dismiss for lack of subject matter jurisdiction. Defendant claims that the court lacks jurisdiction over plaintiff’s complaint pursuant to 28 U.S.C. § 1500 (1988), which precludes the Court of Federal Claims from having jurisdiction over any claim based on the same operative facts as a suit filed in another federal court. Plaintiff has opposed and argument is deemed unnecessary.

FACTS

The following facts are undisputed, unless otherwise noted. Dr. Ben Branch (“plaintiff”) is the Chapter 7 Trustee of the Estate of the Bank of New England Corporation (“BNEC”). Plaintiff brings this claim derivatively on behalf of Maine National Bank (“MNB”), a wholly owned subsidiary of BNEC.

Prior to bankruptcy, BNEC was a bank holding company which owned three subsidiary banks: Bank of New England, N.A. (“BNE”); Maine National Bank; and Connecticut Bank and Trust Company, N.A. (“CBT”). In the late 1980’s, MNB and CBT maintained healthy account balances and were considered to be in good financial health.

This was not the case with their sister bank, BNE. From 1986 BNE suffered financial problems as a result of management problems and a risky loan portfolio. BNE’s credit rating and asset quality deteriorated until the bank was effectively insolvent by the summer of 1989. Regulatory agencies such as the Federal Deposit Insurance Corporation (“FDIC”), the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve (“Board of Governors”) and the Federal Reserve Bank of Boston (referred to as “the regulators” unless discussed individually) became increasingly involved in managing BNE’s affairs. From September of 1989, the regulators played a substantial role in managing BNE’s operations and supervising its business transactions. Despite BNE’s grave problems, the bank was allowed to stay open while attempts were made to stabilize the bank by transferring substantial assets to it from BNE’s parent company, BNEC.

These efforts were unsuccessful. On January 3, 1991, BNEC’s management met with the OCC in Washington and told them that BNE’s capital accounts were exhausted. Newspapers reported on January 4 and 5, 1991, that the expected losses for the fourth quarter of 1990 for the parent company, BNEC, exceeded $450 million as a result of BNE’s problems, and that BNEC was in grave financial trouble. This news created a crisis of confidence among depositors and started a run on accounts at BNE and CBT.

On January 6, 1991, the OCC declared all of BNEC and its three subsidiary banks to be insolvent and appointed the Federal Deposit Insurance Corporation (the “FDIC”) as their receiver. On January 7, 1991, BNEC filed for bankruptcy. This bankruptcy is credited as being one of the largest bank holding company failures in American history.

When BNEC’s bankruptcy was announced January 6, 1991, MNB was closed and the FDIC was appointed as receiver. That same day the FDIC issued a notice of Assessment of Liability against MNB under the cross guarantee provision of the Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”). Under FIRREA, 12 U.S.C. § 1815(e) (Supp. IV 1992), an insured bank in a commonly-owned system is liable to reimburse the FDIC for any loss at a sister bank.1 The [608]*608notice requested that MNB immediately pay the whole of the $1,015,900,000.00 shortfall in the FDIC’s deposit insurance fund caused by BNEC’s insolvency. MNB could not comply and filed for bankruptcy under Chapter 7 of the United States Bankruptcy Code. This bankruptcy is currently pending in the United States Bankruptcy Court for the District of Massachusetts.

Plaintiff has challenged the regulator’s actions before, during, and after BNEC’s bankruptcy in several lawsuits. In each of these suits plaintiff claims that Government actions wrongfully deprived BNEC’s shareholders of valuable assets.2

On January 13, 1992, plaintiff filed three actions which subsequently have been consolidated and are currently pending in the United States District Court for the District of Massachusetts. Branch v. FDIC, et al., Nos. 92-10091-Y, 92-10807-Y, 92-10904-Y (D.Mass., filed Jan. 13,1992). The complaints seek to recover BNEC assets that were alleged to have been fraudulently transferred to its subsidiary banks prior to BNEC’s bankruptcy.

Defendants in the action are the FDIC as receiver for the three failed banks, MNB, BNE, and CBT; and the Fleet Banks, which purchased most of the failed banks’ assets and liabilities. Upon MNB’s, BNE’s, and CBT’s closure, the FDIC was named receiver for each of them and took possession of the BNEC assets that were transferred to those banks.

The suits that followed seek to recover BNEC’s assets from the BNE, CBT, and MNB receiverships; from the Bridge Bank receiverships, which continued the operation of the banks until they were sold; and from the Fleet Banks. Plaintiff sued the FDIC as receiver of BNE, CBT, and MNB, along with the successor Fleet Banks, in federal court in Massachusetts, Connecticut, and Maine. The Connecticut and Maine suits were transferred to and consolidated with the Massachusetts action. A fourth claim was brought by plaintiff against the receiverships of the three Bridge Banks. This claim was filed subsequent to the other three suits because of the requirements of FIRREA. It was originally filed in the District of Columbia and then transferred to and consolidated with the suits in Massachusetts.

The four consolidated lawsuits make no claim relating to the assessment. The action refers specifically to the assessment only once in the complaint; paragraph 48(c) alleges that, “to force the closure of MNB, the FDIC demanded payment by MNB of $1 billion (the FDIC’s then estimated loss as receiver for BNE) under an improper claim of authority allegedly granted to the FDIC under 12 U.S.C. § 1815(c).”

DISCUSSION

If a suit based on the same claim has been filed in another court, 28 U.S.C. § 1500 prohibits the Court of Federal Claims from having jurisdiction over an action on the same claim. The “same claim” has been interpreted as a claim sharing a common core of operative facts as the suit filed in this court. UNR Indus., Inc. v. United States, 962 F.2d 1013 (Fed. Cir.1992) (en banc), aff'd sub nom. Keene Corp. v. United States, — U.S.—, 113 S.Ct. 2035, 124 L.Ed.2d 118 (1993). This policy relieves the Government from defending the same case in two courts at the same time. Dwyer v. United States, 7 Cl.Ct. 565, 567 (1985).

In determining whether a suit is actually based on the “same claim”, this court examines the operative facts, necessarily considering governmental conduct challenged in each case, rather than theories of law presented. Johns-Manville Corp. v. United States,

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Bluebook (online)
29 Fed. Cl. 606, 1993 U.S. Claims LEXIS 175, 1993 WL 417584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/branch-v-united-states-uscfc-1993.