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Tugana v. Federal Deposit Insurance Corp.

United States District Court, C.D. Illinois, Rock Island Division

May 12, 2017

THE FEDERAL DEPOSIT INSURANCE CORPORATION, an Agent of the United States of America, Defendant.



         Before the Court is Defendant Federal Deposit Insurance Corporation's (“the FDIC”) motion to dismiss Plaintiffs' claims, ECF No. 8. For the following reasons, the motion is GRANTED.


         Plaintiffs Tugana and Weaver owned shares of River Valley Bancorp (“River Valley”), a holding company that owned both Valley Bank Illinois (“VBI”) and Valley Bank Fort Lauderdale, Florida. During the period relevant to Plaintiffs' claims, Larry Henson was President and CEO of River Valley, and also of VBI. Henson had been convicted of a crime in 1995.[2] Subsequently, Henson was forced to resign from all his positions, and as a result in part of decisions he took while CEO, VBI failed and was placed in receivership. The value of Tugana's and Weaver's shares dropped as a result. An FDIC Material Loss Review later determined that “VBI failed primarily because of lax oversight by its Board and a dominant CEO that [sic] implemented a risky business strategy.” Loss Review i, Compl. Ex. 7, ECF No. 1. The FDIC also determined that it “should have taken stronger supervisory action . . . when it was apparent that prior supervisory efforts to address the CEO's risky business decisions and the bank's deteriorating financial condition were unsuccessful.” Id. at I-10.

         On November 19, 2015, Tugana submitted a damages claim to the FDIC pursuant to the Federal Tort Claims Act (“FTCA”), 28 U.S.C. §§ 2671-2680, alleging that his property interest in River Valley had been harmed by the FDIC's breach of fiduciary duty and negligence in allowing Henson, a “convicted criminal, ” to serve as the CEO of VBI, and in failing to remove him from that position. Tugana Claim 1, Compl. Ex. 1, ECF No. 1. On November 21, 2015, Weaver submitted a similar claim. Weaver Claim 1, Compl. Ex. 3, ECF No. 1. On May 19, 2016, the FDIC denied Tugana's and Weaver's claims. Tugana Denial, Compl. Ex. 5, ECF No 1; Weaver Denial, Compl. Ex. 6, ECF No. 1.

         Weaver and Tugana filed suit on October 21, 2016, alleging in more detail the same two FTCA claims. Compl. 4-8. They named, as the sole defendant, “THE FEDERAL DEPOSIT INSURANCE CORPORATION, an Agent of the United States of America.” Id. at 1. The Clerk affixed a seal with his signature to the summons, ECF No. 2, and on November 3, 2016, Plaintiffs returned a process server's affidavit indicating that on October 31, 2016, she had delivered the summons, complaint, and exhibits to one Barbara Williams, a “legal assistant and authorized agent” of the FDIC, at 1776 F St. NW, Washington, DC 20429. Drum Aff., ECF No. 3. On February 3, 2017, Plaintiffs filed a notice indicating that they had mailed copies of the summons and complaint to the office of the United States Attorney General and to the United States Attorney's Office for the Central District of Illinois. Feb. 7, 2017 Not. Service, ECF No. 4. Plaintiffs attached certified mail receipts indicating that the Attorney General received the documents on January 31, 2017, and the United States Attorney on January 30, 2017. Receipts, Id. Ex. 1, ECF No. 4. On February 7, 2017, the Court entered a Text Order explaining that Plaintiffs had not fully complied with the requirements for service of process upon an agency of the United States, and that the person they claimed to have served did not appear to be authorized by the FDIC to receive process. Subsequently, service was effected, see Feb. 14, 2017 Not. Service, ECF No. 6; and counsel for the FDIC entered his appearance, FDIC Not. Appearance, ECF No. 7.

         The motion to dismiss was filed on March 17, 2017, and is ripe for ruling.


         I. Legal Standard on a Motion to Dismiss for Lack of Subject Matter Jurisdiction

         A party may move for a district court to dismiss claims over which the court lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). In ruling on such a motion, “the district court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff.” Evers v. Astrue, 536 F.3d 651, 656 (7th Cir. 2008). Whereas on a motion to dismiss for failure to state a claim, a court may not look beyond the allegations of a complaint, in ruling on a motion to dismiss for lack of subject matter jurisdiction, courts may look beyond those allegations to other evidence that has been submitted, or to judicially noticeable facts, in order to assure themselves that jurisdiction exists. Id. at 656-57. When a defendant challenges the existence of subject matter jurisdiction as a factual matter, the burden of proving jurisdiction rests with the plaintiff. Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009).

         II. Analysis

         The FDIC moves to dismiss Plaintiffs' claims on several grounds, the first of which is that, pursuant to Rule 12(b)(1), the Court lacks subject matter jurisdiction because the FDIC is not subject to suit in its own name, and Plaintiffs failed to name the correct party-the United States of America-in their Complaint. The FDIC further argues that Plaintiffs should not be permitted to amend their Complaint to name the United States of America. Mem. Supp. Mot. Dismiss 1, ECF No. 9. Plaintiffs respond that they did name the United States of America in their Complaint, Resp. Mot. Dismiss 1, ECF No. 11, and that if the Court decides they did not, they should be permitted to amend their Complaint, id. at 1-2. Because the FDIC succeeds on its first argument, which is dispositive of all claims, the Court will not discuss the other arguments the FDIC offers in support of its motion.

         The FDIC is correct that the United States is the only proper party to an FTCA claim. Absent a waiver, the sovereign immunity of the federal government and its agencies is absolute, and shields them from suit. Loeffler v. Frank, 486 U.S. 549, 554 (1988). The FTCA extends a limited waiver of this immunity for certain tort claims, but only as to the United States itself. See Jackson v. Kotter, 541 F.3d 688, 693 (7th Cir. 2008) (“The only proper defendant in an FTCA action is the United States.”). This is so notwithstanding the statutory authorization of certain agencies, including the FDIC, 12 U.S.C. § 1819, to sue and be sued in their own name. 28 U.S.C. § 2679(a) (“The authority of any federal agency to sue and be sued in its own name shall not be construed to authorize suits against such federal agency on claims which are cognizable under section 1346(b) of this title, and the remedies provided by this title in such cases shall be exclusive.”); see 28 U.S.C. § 1346(b) (securing to federal district courts exclusive jurisdiction over injury and loss claims against the United States). Thus, a federal district court lacks subject matter jurisdiction over an FTCA claim not made against the United States, but against some other party. See Galvin v. Occupational Safety & Health Admin., 860 F.2d 181, 183 (5th Cir. 1988). (“[A]n FTCA claim against a federal agency or employee as opposed to the United States itself must be dismissed for want of jurisdiction.”).

         Plaintiffs assert that “in the caption of this complaint the United States of America was specifically named as a defendant[.]” Resp. Mot. Dismiss 1. This claim is simply false; the Complaint lists only the FDIC as a defendant. Describing the FDIC as an agent of the United States does not make the United States a defendant. See Hughes v. United States, 701 F.2d 56, 58 (7th Cir. 1982) (“Under the [FTCA], a governmental agency cannot be sued in its own name; the action must be brought against the United States. Government ...

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