Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 83 C 2997, Susan Getzendanner, Judge.
Wood, Jr., and Ripple, Circuit Judges, and Eschbach, Senior Circuit Judge.
ESCHBACH, Senior Circuit Judge.
This appeal requires us to interpret the statutory provision that governs the federal district courts' jurisdiction of cases in which the Federal Savings and Loan Insurance Corporation is a party, 12 U.S.C. § 1730(k)(1). The FSLIC, acting as receiver of a savings and loan, brought this suit under Illinois law against the directors of the institution alleging breach of their fiduciary duties. The defendants moved the court to dismiss the suit for lack of subject matter jurisdiction. The district court held that because part A of § 1730(k)(1) deems the FSLIC to be an agency of the United States, the court had jurisdiction to hear this suit under the general grant of jurisdiction of suits brought by agencies of the United States, 28 U.S.C. § 1345. The court, explicitly basing its ruling solely on Federal Savings and Loan Insurance Corporation v. Krueger, 435 F.2d 633 (7th Cir. 1970), held that the proviso in § 1730(k)(1) that denies federal jurisdiction of suits where the FSLIC, acting as a receiver, seeks to enforce the rights of the institution under state law was inapplicable because it applies only in cases that have been removed from state court. The district court certified the order for interlocutory appeal under 28 U.S.C. § 1929(b), finding that the viability of this holding of Krueger, in light of more recent authority, presented a controlling question of law as to which there was a substantial ground for difference of opinion. We will overrule the pertinent part of Krueger and hold that the scope of the proviso is not so limited. We will reverse and remand with instructions to dismiss for lack of subject matter jurisdiction.
Because this appeal involves only the subject matter jurisdiction of the district court, we limit our recitation of the facts accordingly. The Federal Savings and Loan Insurance Corporation ("FSLIC"), acting as receiver of Manning Savings and Loan Association ("Manning"), filed this suit against defendants, former directors of Manning, for breach of their fiduciary duties to Manning under Illinois law. Manning was a state-chartered, FSLIC-insured institution. The FSLIC alleges that the directors declared two illegal dividends.
The directors declared the first dividend on March 1, 1980. The Illinois Savings and Loan Commissioner later determined that the declaration was in violation of Illinois law because Manning's net worth was insufficient. The Commissioner ordered the directors to recover the dividend. The FSLIC issued a "Notice of Charges and Hearing" for failing to meet federal net worth requirements under 12 U.S.C. § 1726(b) and 12 C.F.R. § 563.16. The FSLIC also issued a cease-and-desist order that, as modified, prohibited Manning from paying further dividends on capital stock that were not in accordance with state law. The directors subsequently declared a stock dividend.
On February 3, 1983, the Federal Home Loan Bank Board appointed FSLIC receiver for Manning, acting under 12 U.S.C. § 1729(c)(1)(B). The FSLIC filed this suit in the United States District Court for the Northern District of Illinois, alleging that the directors breached their fiduciary duties in declaring the two dividends. Defendants moved to dismiss for lack of subject matter jurisdiction, on the basis of a jurisdiction limiting proviso in the jurisdictional statute relating to the FSLIC, 12 U.S.C. § 1730(k)(1). The district court denied the motion on the authority of two opinions of this court from 1970 and 1971 that held that the proviso applied only in cases that had been removed from state court. Because of the uncertainty of the continued viability of that holding, the district court subsequently granted defendants' motion to certify the order denying dismissal under 28 U.S.C. § 1292(b).*fn1 This court granted defendants permission to appeal.
At issue in this case is the statute that grants federal jurisdiction in cases involving the FSLIC, 12 U.S.C. § 1730(k)(1):
Notwithstanding any other provision of law, (A) the Corporation shall be deemed to be an agency of the United States within the meaning of section 451 of Title 28; (B) any civil action, suit, or proceeding to which the Corporation shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy; and (C) the Corporation may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States district court for the district and division embracing the pace where the same is pending by following any procedure for removal now or hereafter in effect: Provided, that any action, suit, or proceeding to which the Corporation is a party in its capacity as conservator, receiver, or other legal custodian of an insured State-chartered institution and which involves only the rights of obligations of investors, creditors, stockholders, and such institution under State law shall not be deemed to arise under the laws of the United States.
The ordinary meaning of the section would seem to be clear. To paraphrase, part A states that the FSLIC is deemed to be an agency of the United States; part B states that suits to which the FSLIC is a party are deemed to arise under the laws of the United States and that district courts have original jurisdiction of such suits; part C states that when such a suit is brought in state court, the FSLIC may remove it to federal court; and the final clause (the "proviso") excludes certain suits from the general rule stated in B. The statute on its face seems clearly to grant original jurisdiction in the district courts to all suits to which the FSLIC is a party, subject only to the exception in the proviso.
This court has, however, read the statute in a different way. Federal Savings and Loan Insurance Corporation v. Krueger, 435 F.2d 633, 636 (7th Cir. 1970). Today we reconsider and overrule the pertinent part of that opinion. In Krueger, we addressed the issue briefly. We held first that because part A deemed the FSLIC to be an agency, there was subject matter jurisdiction of the case under 28 U.S.C. § 1345, which grants jurisdiction to suits brought by agencies of the United States. We next addressed the effect of the jurisdiction limiting proviso, although the parties apparently did not address the issue:
It might be argued that the proviso contained in the latter portion of section 1730(k)(1) is applicable. We are of the view, however, that subsections (B) and (C) of section 1730(k)(1), including the proviso, relate solely to removal proceedings from state courts in actions wherein the corporation has been made a party. See Federal Savings and Loan Insurance Corp. v. Quinn, 419 F.2d 1014 (7th Cir. 1969).
The cited case, Quinn, had referred to section 1730(k)(1) as a "special removal statute." The section is clearly more than just a removal statute; it is also the statute that provides original jurisdiction for suits involving the FSLIC, whether indirectly through part A or directly under part B. Quinn did not ...