Lexon Insurance Company, Inc. v. Federal Deposit Insurance Corporation

Filing 80

ORDER AND REASONS: IT IS ORDERED that defendant FDIC-C's 70 Motion to dismiss for lack of subject matter jurisdiction is GRANTED, as set forth in document. Signed by Judge Ivan L.R. Lemelle on 2/28/2020. (jls)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
LEXON INSURANCE COMPANY, INC.,

CIVIL ACTION

VERSUS

NO. 18-4245

FEDERAL DEPOSIT INSURANCE CORP.,
AS RECEIVER FOR FIRST NBC BANK

SECTION “B”(1)

ORDER & REASONS
Before the Court are, defendant United States of America’s
(“FDIC-C”)

“Motion

to

Dismiss

for

Lack

of

Subject

Matter

Jurisdiction” (Rec. Doc. 70), plaintiff Lexon Insurance Company,
Inc.’s (“Lexon”) “Plaintiff’s Memorandum in Opposition to Motion
to Dismiss for Lack of Subject-Matter Jurisdiction” (Rec. Doc.
73), and defendant FDIC-C’s “Reply Memorandum in Support of
Motion to Dismiss for Lack of Subject-Matter Jurisdiction” (Rec.
Doc. 78). Accordingly,
IT IS ORDERED that defendant FDIC-C’s Motion to dismiss for
lack of subject matter jurisdiction (Rec. Doc. 70) is GRANTED.
FACTS AND PROCEDURAL HISTORY
The facts giving rise to defendant FDIC-C’s 1 current motion
are further detailed in this Court’s Order and Reasons regarding
1 “The roles of the FDIC-C and
v. F.D.I.C., 870 F. Supp. 417,
and FDIC-Receiver are distinct
F.D.I.C., the 5th Circuit held

FDIC-R are distinct. See Credit Life Ins. Co.
421 (D. N.H. Oct. 18, 1993) (“FDIC-Corporate
entities.”) In Hartford Casualty Ins. Co. v.
“under the dual capacities doctrine, the FDIC1

defendant’s first motion to dismiss for failure to state a claim.
See Rec. Doc. 34; see also Rec Doc. 21.
In March of 2016, plaintiff Lexon, as surety, executed eight
Bonds (“the Bonds”) on behalf of non-party Linder Oil that
secured

offshore

Department

of

mineral

Interior,

leases
Bureau

with

of

the

Ocean

United

Energy

States

Management

(“BOEM”). Rec. Doc. 43 at ¶ 10. As a condition of executing the
Bonds, Lexon required Linder to post collateral to secure Lexon’s
financial interest in the event that a claim was made under the
Bonds. Id. at ¶ 11.

On March 24, 2016, First NBC Bank (“First

NBC”) issued two standby letters of credit (“SLOCs”) relating to
the Bonds issued by plaintiff Lexon. Id. at ¶ 11-12. The SLOCs,
by

their

own

terms,

expired

on

March

24,

2017,

but

would

automatically renew for a one-year period unless First NBC gave
plaintiff Lexon 60-days written notice of nonrenewal. Id. at ¶
14.
In late 2015, early 2016, prior to First NBC’s closing and
receivership, the FDIC-C and the Louisiana Office of Financial
Institutions (“LOFI”) began an examination of First NBC, which
uncovered “First NBC’s declining financial health.” Id. at ¶ 16.
On November 10, 2016, as a result of the examination, the FDIC,
C may not be held liable for acts committed by the FDIC-R, i.e., the FDIC
acting in one capacity is not subject to defenses or claims based on its acts
in other capacities.” Hartford Cas. Ins. Co. v. F.D.I.C., 21 F.3d 696, 706
(5th Cir. 1994). The current motion concerns actions allegedly taken by the
FDIC in their Corporate, pre-receivership capacity.
2

LOFI, and First NBC entered into a Consent Order (“the Consent
Order”). Id. at ¶ 18. 2
As pertains to the instant issue before the court, the
Consent Order states in pertinent part:
(a) While this ORDER is in effect, the Bank [First NBC]
shall not extend, directly or indirectly, any additional
credit to or for the benefit of any borrower whose
existing credit has been classified Loss by the FDIC or
the State as the result of its examination of the Bank,
either in whole or in part, and is uncollected, or to
any borrower who is already obligated in any manner to
the Bank on any extension of credit, including any
portion thereof, that has been charged off the books of
the Bank and remains uncollected.
(b) While this ORDER is in effect, the Bank [First NBC]
shall not extend, directly or indirectly, any additional
credit to or for the benefit of any borrower whose
extension of credit is classified Doubtful and/or
Substandard by the FDIC or the State as the result of
its examination of the Bank, either in whole or in part,
and is uncollected, unless the Bank's Board has signed
a detailed written statement giving reasons why failure
to extend such credit would be detrimental to the best
interests of the Bank.
Id. Exhibit C, Consent Order, at p. 8, ¶ 4(a),(b). During the
effectiveness of the Consent Order, FDIC personnel were present
on-site at First NBC “from early 2016 until First NBC’s failure.”
Id. at ¶ 21. It is alleged in the complaint that the FDIC
personnel “would have actively participated in such meetings and
controlled, directly or indirectly, decisions about the day-today management and affairs of First NBC.” Id.

The Consent Order is attached in its entirety to plaintiff’s amended
complaint (Rec. Doc. 43) as exhibit C.

2

3

After the Consent Order came into effect, First NBC failed
to send the required notice of nonrenewal regarding the SLOCs
before 60-day deadline, resulting in an extension of the SLOCs
through March of 2018. Id. at ¶ 26. Plaintiff Lexon alleges that
renewal of the SLOCs “caused Lexon to lose its right to the
collateral for the Bonds and its opportunity to mitigate any
losses, costs, and expenses incurred under the Bonds.” Id. at ¶
28. Plaintiff asserts that once defendant FDIC entered into the
Consent Order, “[1] the FDIC ha[d] a duty to mandate First NBC’s
observance and compliance with all of its terms and conditions,
including a duty to prohibit First NBC from extending additional
credit to Linder” and “negligently allowed First NBC to extend
the term of the SLOCs.” Id. at ¶ 25.
On April 25, 2018, Plaintiff filed a four-count complaint
against defendant the FDIC-R, seeking “damages of $9,985,500.00
resulting

from

the

FDIC’s

failure

to

honor,

and

improper

repudiation of, [the] two [SLOCs] issued by [First NBC].” Rec.
Doc. 1. Defendant moved to dismiss all claims for failure to
state a claim on July 2, 2018. See Rec. Doc. 21 at 1.

That

motion was subsequently granted by this court, in favor of
defendant. See Rec. Doc. 34. An order was issued on September 7,
2018, dismissing Lexon’s claim without prejudice to Lexon’s
right to bring an amended complaint within forty (40) days from
the order. Id. at 6-7.
4

Thereafter, on January 18, 2019, Lexon filed an amended
five-count

complaint

against

the

FDIC-C

and

FDIC-R,

again

seeking damages of $9,985,500.00. See Rec. Doc. 43. Defendant
FDIC then filed a motion to dismiss under FRCP 12(b)(6), which
was subsequently granted by this Court as to all claims against
defendant FDIC-R. See Rec. Doc. 79.
The current matter pertains only to the single remaining
cause of action asserted by plaintiff Lexon against defendant
United States of America, based on pre-receivership oversight
activity by the FDIC-C, pursuant to the Federal Tort Claims Act
(“FTCA”). Plaintiff brings their claim against the United States
as a defendant on behalf of the FDIC in their pre-receivership
corporate

capacity

(“FDIC-C”).

Defendant

moves

to

dismiss

plaintiff’s claim against the FDIC-C arising under the FTCA, for
lack of subject matter jurisdiction. Rec. Doc. 70 at 1.
LAW AND ANALYSIS
Rules 12(b)(1) and 12(h)(3) of the Federal Rules of Civil
Procedure

govern

dismissals

for

lack

of

subject

matter

jurisdiction. “A case is properly dismissed for lack of subject
matter

jurisdiction

when

the

court

lacks

the

statutory

or

constitutional power to adjudicate the case. Home Builders Ass'n
of Miss., Inc. v. City of Madison, 143 F.3d 1006 (5th Cir.1998).
A motion to dismiss under Rule 12(b)(1) requires that the Court
only examine whether it has jurisdiction to hear the case; it does
5

not call for intrusion into the merits of the claim. Bell v. Hood,
327 U.S. 678, 682 (1946). Once the court determines that there is
a lack of subject matter jurisdiction, dismissal is appropriate.
A. Federal tort Claims Act (“FTCA”)
The United States is immune from suit except where expressly
provided by Congress. Under the Federal Tort Claims Act (“FTCA”),
suits against the United States are authorized “for injury or loss
of property, or personal injury or death caused by negligent or
wrongful act or omission of any employee of the Government while
acting

within

the

scope

of

his

office

or

employment,

under

circumstances where the United States, if a private person, would
be liable to the claimant in accordance with the law of the place
where the act or omission occurred.” 28 U.S.C. § 2672. Johnson v.
Sawyer, 4 F.3d 369 (5th Cir. 1993) (“To recover under the FTCA,
[plaintiff] must have been able to succeed against the [federal]
government in a state law tort cause of action.” (emphasis in
original)). The FTCA also provides that the United States will be
liable in tort “in the same manner and to the same extent as a
private individual under like circumstances.” 28 U.S.C. § 2674.
Id.

(citing

Artez

v.

United

States,

604

F.2d

417,

427

(5th

Cir.1979)). “[L]aw of the place,” as the phrase is used in 28
U.S.C. § 1346(b), “refers exclusively to state law.” Brown v.
United States, 653 F.2d 196, 201 (5th Cir. 1981).
B. Louisiana Civil Code Article 2315
6

The place of the act or omission in this case is Louisiana
and its law should apply. Plaintiff brings its claim pursuant to
Louisiana Civil Code Article 2315 (“Article 2315”), which states
in pertinent part: “Every act whatever of man that causes damage
to another obliges him by whose fault it happened to repair it.”
LA. CIV. CODE art. 2315. Article 2315 requires courts to undergo
a “duty-risk analysis” to determine tort liability for general
negligence. Alford v. Anadarko E&P Onshore LLC, No. 13-5457,
2015 WL 471596, at *11 (E.D. La. Feb. 4, 2015).
In Louisiana, under the duty-risk analysis, a plaintiff
must show five elements:
(1) the defendant had a duty to conform his conduct to
a specific standard of care . . . ; (2) the defendant's
conduct failed to conform to the appropriate standard
of care . . . ; (3) the defendant's substandard conduct
was a cause-in-fact of the plaintiff's injuries . .
.(4) the defendant's substandard conduct was a legal
cause of the plaintiff's injuries . . . and (5) actual
damages . . .
Id.
The

threshold

issue

for

determining

liability

in

a

negligence action is “whether the defendant owed the plaintiff
a duty, and whether a duty is owed is a question of law.” Hanks
v. Entergy Corp., 2006-477, p. 21 (La. 12/18/2006); 944 So. 2d
564, 579; See also Carroll v. Am. Empire Surplus Lines Ins. Co.,
289 F. Supp. 3d 767 (E.D. La. Dec. 21, 2017) (“whether the
defendant owed the plaintiff a duty is a threshold issue in any
7

negligence action.”). The Eastern District has held, “[u]nder a
duty-risk analysis, absent a defendant owing a duty to the
plaintiff, there can be no actionable negligence and therefore
no liability.” Alford, No. 13-5457, 2015 WL 471596, at *11
(citing Lemann v. Essen Lane Daquiries, Inc., 2005-1095, at p.
7 (La. 3/10/06); 923 So. 2d 627, 633).
Defendant

contends

this

Court

lacks

subject

matter

jurisdiction over plaintiff’s claim against them pursuant to the
FTCA because there is “no tort duty that applies to an analogous
private person acting as the FDIC-C in like circumstances under
Louisiana Law.” Rec. Doc. 70-2 at 4. Plaintiff counters that the
FDIC-C owed a duty of care to plaintiff Lexon once it entered
into the Consent Order and “took control” of First NBC, to
exercise ordinary care in complying with the mandatory terms and
conditions of the Consent Order to “prevent forseeable injury to
stakeholders like Lexon. Rec. Doc. 73 at 6.
Initially, defendant notes a long-standing history of a
“no-duty” rule in the federal precedent surrounding this issue.
Courts in the Fifth Circuit, applying federal law, have regularly
held that the FDIC, and similar federal banking regulators, owe
no duty to a bank that is currently under their supervision, nor
do they assume a duty by undertaking said banking institution’s

8

supervision. 3 However, the “no-duty rule” is mere lagniappe when
determining the central issue in this matter; namely, whether
the State law of Louisiana would impose a duty on the FDIC-C to
uphold the terms of the Consent Order.
Louisiana recognizes no private tort duty that is analogous
to the regulatory functions performed by the FDIC. Defendant
contends that there is no analogous private tort duty that would
be applicable to the FDIC-C because, “no private party provides
the exact sort of banking oversight the FDIC-C performs.” Rec.
Doc. 70-2 at 7. Defendant further avers that “the Supreme Court
has instructed lower courts to consider Good Samaritan liability
that could arise if a private party did undertake an analogous
function under state law.” Id. (citing United States v. Olson,
546 U.S. 43, 45-47 (2005). Plaintiff counters that Louisiana
“has adopted a broader and more flexible view of assumed duties
of ordinary care than described in Section 324A [stating the
test for Good Samaritan liability]” and “while ‘Good Samaritan’
liability is a species of assumed duty recognized under Louisiana

3 Fed. Sav. & Loan Ins. Corp. v. Shelton, 789 F. Supp. 1367, 1369 (M.D. La.
1992) (“It is clear that the FDIC owes no duty to manage a bank or to bring
to the attention of its officers and directors any wrongdoing during its
regulatory activities.”)(emphasis added); see also FSLIC v. Derbes, No. 862764, 1986 WL 432, at *2, n.1 (E.D. La. Nov. 13, 1986)(citing First State
Bank of Hudson County v. United States, 599 F.2d 558, 562-63 (3rd Cir. 1979);
Harmsen v. Smith, 586 F.2d 156, 158 (9th Cir. 1978))(holding that a federal
regulatory institution, similar to the FDIC “does not, by merely undertaking
regulation and supervision of financial institutions, assume a duty to one
who is injured by the unlawful practices of a regulated institution.”).

9

law, it does not limit the general rule . . .” Rec. Doc. 73 at
9. This Court disagrees with plaintiff’s contentions.
In Olson, the Supreme Court of the United States noted that
the FTCA makes the United States liable “‘in the same manner and
to

the

same

extent

circumstances.’”

as

a

private

546

Olson,

U.S.

individual
at

46

under

like

(emphasis

in

original)(quoting 28 U.S.C. § 2674). The Supreme Court held that
the term “like circumstances” does not constrict a court’s
analysis to the “same circumstances, but requires it to look
further afield.” Id. at 46. The decision then instructs lower
courts to apply Good Samaritan analogies when deciphering the
FTCA. Id. As an example, the Court opined: “Private individuals,
who

do

not

operate

relationship

with

lighthouses,

third

parties

nonetheless
that

is

may

similar

create
to

a

the

relationship between a lighthouse operator and a ship dependent
on the lighthouse’s beacon. Id. (citing Indian Towing Co. v.
United States, 350 U.S. 61, 64-65 (1955).
Louisiana

has

adopted

the

standard

liability from the RESTATEMENT (SECOND)

OF

for

Good

Samaritan

TORTS § 324A (1965). Bujol

v. Entergy Servs., Inc., 2003-0492, pp. 14-15 (La. 5/25/04); 922
So. 2d 1113, 1128-29; see also Hebert v. Rapides Par. Police
Jury, 2006-2001, pp. 9-10 (La. 4/11/07); 974 So. 2d 635, 64344; Section 324A states:

10

One who undertakes, gratuitously or for consideration,
to render services to another which he should
recognize as necessary for the protection of a third
person or his things, is subject to liability to the
third person for physical harm resulting from his
failure to exercise reasonable care to protect his
undertaking, if (a) his failure to exercise reasonable
care increases the risk of such harm, or (b) he has
undertaken to perform a duty owed by the other to the
third person, or (c) the harm is suffered because of
reliance of the other or the third person upon the
undertaking.
RESTATEMENT (SECOND)

OF

TORTS § 324A (1965)(emphasis added).

Defendant contends that plaintiff Lexon cannot establish
liability under the Good Samaritan doctrine because: (1) Lexon’s
amended complaint does not allege physical harm; (2) Lexon does
not allege that their risk was increased by executing the Consent
Order; and (3) the terms of the Consent Order do not impose a
duty on the FDIC-C to approve or deny additional credit. Rec.
Doc. 70-2 at 7, 8, 9.
In opposition, plaintiff cites two cases that purportedly
stand for the proposition that defendant FDIC-C assumed a duty
to abide by the terms of the Consent Order to plaintiff Lexon by
entering into the Consent Order. Id. at 8. This Court declines
plaintiff’s invitation to find that defendant FDIC-C assumed or
owed a duty of care to plaintiff Lexon, the surety for a borrower
of a banking institution under regulation by the FDIC-C.
First, Plaintiff cites Holthaus v. Cameron Brown Co., where
a plaintiff borrower sued a defendant lender for failing to
11

“lock-in” the interest rate on a loan after giving assurances
that it would. See Holthaus v. Cameron Brown Co., 491 So. 2d 443
(La. Ct. App. 1st. Cir. 1986). In Holthaus, Louisiana’s First
Circuit Court of Appeal held that the defendant had breached the
duty owed to the plaintiff by failing to “lock-in” an interest
rate for a loan at a 12.5% interest rate. Id. at 444. The court
stated that although the defendant had no general duty to provide
an interest rate of 12.5% to plaintiff, defendant’s assurance
that it would “lock-in” the interest rate caused defendant to
“assume[] a duty . . . to plaintiff, to use due care to do so.”
Id. (citing W. PROSSER, HANDBOOK

OF THE

LAW

OF

TORTS, at 345 (4th ed.

1971).
Holthaus

is

factually

distinct

from

the

current

case.

Defendant FDIC-C and plaintiff Lexon, unlike the plaintiff and
defendant

in

Holthaus,

did

not

have

a

lending

or

business

relationship. The lending relationship was between First NBC and
Linder Oil Company (“Linder”), while Lexon was merely a surety
for Linder, as agreed between those parties. The FDIC-C never
had an agreement with plaintiff Lexon and therefore could not
have assumed a duty, nor did it give assurances or promises to
Lexon in any way. Further, the crux of the Holthaus decision was
that plaintiff acted in reliance on the “locked-in” language
presented by the defendant. The court held that “the risk that
resulted was encompassed within the scope of protection of the
12

duty,

for

it

was

specifically

to

plaintiff

that

defendant

extended the assurance, and it was reasonably foreseeable that
plaintiff would rely on the strong, ‘locked-in’ language.” See
Holthaus, 491 So. 2d at 444 (citing Sibley v. Gifford Hill and
Co., Inc. 475 So. 2d 315, 319 (La. 1985). As stated above, there
were no assurances made by the FDIC-C to Lexon, rather there was
an agreement and lending relationship between First NBC and
Linder, which Lexon was not privy to. Lexon merely acted as
surety for Linder, who obtained SLOCs from First NBC to satisfy
the

collateral

requirement

for

their

separate

suretyship

agreement.
Plaintiff’s second case, Slaid v. Evergreen Indem., Ltd.,
is similarly misplaced. In Slaid, the purchaser of a mobile home
brought an action in negligence against the bank that sold and
inspected the mobile home for injuries sustained as the result
of a Christmas tree fire. Slaid v. Evergreen Indem., Ltd., 32,363
(La. Ct. App. 2d Cir. 1999); 745 So. 2d 793. The court noted
that the bank had “no legal duty to inspect the home for inherent
vices or defects prior to the sale, [but] once it undertook this
task through [the bank’s] inspection, it assumed a duty to
perform the inspection in a non-negligent manner.” Id. at p. 10;
799.
Defendant

further

notes

that

the

court

applied

Good

Samaritan liability to the facts of the case, without naming it
13

as such, when it cited the Second Restatement of Torts Section
324A. Id. at P. 7; 798. Further, Slaid analyzed the assumed duty
with respect to physical injuries sustained as a result of the
negligent inspection, namely the death and “disfiguring third
degree burns” of two persons trapped within the mobile home
resulting from a Christmas tree fire. Id. at p. 2; 795. The case
does not stand for the proposition that a regulatory body, such
as the FDIC-C, is in any way liable to a third-party surety, for
potential

economic

losses

resulting

from

the

renewal

of

a

standard letter of credit in defiance of a Consent Order.
Plaintiff has failed to show that defendant FDIC-C owes a
duty of care to plaintiff Lexon, and further fails to offer
support that there is an analogous tort duty applicable to the
FDIC-C under Good Samaritan liability, as instructed by the
Supreme Court of the United States. As it is clear that plaintiff
has

failed

to

show

that

this

Court

has

subject

matter

jurisdiction over this state court claim, pursuant to the FTCA,
this court finds no need to delve further into the merits of
this matter and discuss the discretionary function exception to
the FTCA.
New Orleans, Louisiana this 28th day of February, 2020.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE
14