NBD Bank, N.A. v. Bennett

874 F. Supp. 924, 1994 U.S. Dist. LEXIS 19690, 1994 WL 744191
District Court, S.D. Indiana·Decided December 27, 1994·No. No. IP94-862-C·Published·Cited by 1 cases

Opinion

ORDER ON MOTION TO DISMISS

SHIELDS, United States Magistrate Judge.

This cause is before the court on the defendant’s Motion to Dismiss, the plaintiffs Brief in Opposition to Motion to Dismiss, and the defendant’s Reply Brief. The court, being duly advised, DENIES the defendant’s motion for the reasons set forth below.

BACKGROUND

This action arose out of the application of plaintiff, NBD Bank, N.A., (“NBD”) to the Indiana Commissioner of Insurance for a license to act as an insurance agent from its bank branch in Corydon, Indiana. The National Bank Act, 12 U.S.C. § 92 (“Section 92”), provides that a national bank located in a place with a population of no more than 5,000 may act as an insurance agent; Cory-don is such a place.

After an administrative hearing, the Commissioner granted NBD an insurance agent’s license. However, based on her interpretation of Section 92, the Commissioner geographically restricted that license, permitting NBD to sell insurance only “within the geographic boundaries of a town with a population of 5,000 or less in which it is located and doing business.” Final Order Granting Limited Insurance Agent License to NBD Bank, N.A., at 3.

NBD filed this action against defendant Donna Bennett, in her official capacity as Acting Indiana Commissioner of Insurance, seeking declaratory and injunctive relief pursuant to 28 U.S.C. § 2201 and 42 U.S.C. § 1983. Specifically, NBD seeks a declaration that the Commissioner’s interpretation of Section 92 is incorrect, in that it does not require a geographic restriction on NBD’s insurance agent license, and an injunction requiring the Commissioner to approve NBD’s application to act as an' insurance agent without the restriction.

DISCUSSION

The Commissioner’s motion to dismiss NBD’s complaint attacks this court’s jurisdiction on three independent grounds, each of which will be discussed separately below.

1. Younger Abstention

The Commissioner first argues that this court must abstain from deciding NBD’s claim under the doctrine of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). Abstention is proper, the Commissioner argues, because NBD is asking this court to “interfer[e] with an ongoing state administrative proceeding” which implicates “matters of important state interest.” Commissioner’s Brief at 9.

“[0]nly exceptional circumstances justify a federal court’s refusal to decide a case in deference to the States.” New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350, 368, 109 S.Ct. 2506, 2518, 105 L.Ed.2d 298 (1989). The Seventh Circuit recently examined the issue of Younger abstention and expressly determined that “ ‘Younger is confined to cases in which the federal plaintiff ha[s] engaged in conduct actually or arguably in violation of state law, thereby exposing himself to an enforcement proceeding in state court....’” Hinrichs v. Whitburn, 975 F.2d 1329, 1333 (7th Cir.1992) (quoting Alleghany Corp. v. Haase, 896 F.2d 1046, 1053 (7th Cir.1990), vacated as moot, 111 S.Ct. 1383). Such is not the case here; this case arises out of NBD’s compliance with Indiana’s requirement that all insurance [926]*926agents be licensed by the state. Therefore, under this clear Seventh Circuit precedent,1 Younger abstention is not appropriate in this case.

2. Eleventh Amendment

The Commissioner next argues that this court does not have jurisdiction over this case because it is a ‘“suit brought by a private party against a state without its consent,’” prohibited by the Eleventh Amendment. Commissioner’s Brief at 10 (quoting Ford Motor Co. v. Department of Treasury of State of Indiana, 323 U.S. 459, 464, 65 S.Ct. 347, 350, 89 L.Ed. 389 (1945)).

The Eleventh Amendment provides:

The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of any foreign state.

“Because of the Eleventh Amendment, States may not be sued in federal court unless they consent to it in unequivocal terms or unless Congress, pursuant to a valid exercise of power, unequivocally expresses its intent to abrogate the immunity.” Green v. Mansour, 474 U.S. 64, 68, 106 S.Ct. 423, 425-26, 88 L.Ed.2d 371 (1985) (citing Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 98, 104 S.Ct. 900, 906, 79 L.Ed.2d 67 (1984)). However, in Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), the Court recognized an exception to Eleventh Amendment immunity and held that “a suit challenging the constitutionality of a state official’s action in enforcing state law is not one against the State.” Id. (citing Young, 209 U.S. at 159-60, 28 S.Ct. at 454). In addition, the Court in Young held that “the Eleventh Amendment does not prevent federal courts from granting prospective in-junctive relief to prevent a continuing violation of federal law.” Id. (citing Young, 209 U.S. at 155-56, 159, 28 S.Ct. at 452, 454); see also Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., — U.S. —, —, 113 S.Ct. 684, 688, 121 L.Ed.2d 605 (1993).

This case falls under the exception carved by Young. NBD has brought this action against Donna D. Bennett, in her official capacity as Acting Commissioner of Insurance, alleging that she has violated federal law, Section 92, by imposing a geographic restriction on NBD’s insurance agent license. This violation, NBD alleges, has denied it a right and privilege secured by Section 92, and will continue to do so as long as the restriction remains. NBD seeks prospective injunctive relief from this court to prohibit the Commissioner from imposing the restriction; in other words, NBD seeks “prospective injunctive relief [against a state official] to prevent a continuing violation of federal law,” precisely the type of case to which the Young exception applies.

The Commissioner cites Moore v. State of Indiana, 999 F.2d 1125 (7th Cir.1993), in support of her argument that she is entitled to Eleventh Amendment immunity. Moore is not analogous, however. The plaintiff in Moore

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NBD Bank, N.A. v. Bennett, 874 F. Supp. 924, 1994 U.S. Dist. LEXIS 19690, 1994 WL 744191 (S.D. Ind. 1994).

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