Dobbins et al v. FDIC et al

Filing 30

ORDER denying 27 plaintiffs' motion to remand to state court...see order for specifics. Signed by Honorable Joe Heaton on 06/05/2014. (lam)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
KENT DOUGLAS DOBBINS, et al.,
Plaintiffs,
v.
LARRY DOBBINS, Individually and
as Trustee for the K.D. Dobbins Trust
dated January 29, 1992, et al.,
Defendants.

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NO. CIV-14-0257-HE

ORDER
Plaintiffs Kent Douglas Dobbins, Jeremy Scott Doak, Holly Lynn Doak, Sandra
Dobbins, and Kent Douglas Dobbins, Jr., each as a beneficiary of the K.D. Dobbins Trust
dated January 29, 1992 (“the Trust”), filed this action in state court against Larry Dobbins,
as Trustee for the Trust, The Bank of Union, and various other defendants. Plaintiffs allege
state law claims for breach of trust, fraud, and negligence arising out of allegedly improper
transactions made by Larry Dobbins, as trustee of the trust, for his own benefit. Plaintiffs
further allege that The Bank of Union negligently or knowingly allowed Larry Dobbins to
enter into the improper transactions, with the remaining defendants either receiving trust
property or otherwise benefitting from the transactions. Their petition seeks actual and
punitive damages from all defendants, an order voiding the transactions, and other equitable
relief.
On January 24, 2014, the Federal Deposit Insurance Corporation (“FDIC”) was
appointed the receiver for The Bank of Union, and later removed the case to this court. The
court then stayed the case for 90 days, pending exhaustion of statutorily-mandated

administrative remedies, as to all aspects of the case other than plaintiffs’ pending motion to
remand. That motion is now at issue.
DISCUSSION
Plaintiffs have moved to remand the case to state court for lack of subject matter
jurisdiction. They argue that because this case involves only matters of state law, it falls
within a narrow statutory exception to federal jurisdiction over cases brought against the
FDIC. The FDIC counters that federal jurisdiction is proper under federal law, as the case
does not fall within the exception.
The FDIC has broad, though not unlimited, authority to remove cases against it to
federal court. “Under 12 U.S.C. § 1819(b)(2)(A), all civil suits to which FDIC is a party,
with narrow exception, are deemed to arise under the laws of the United States.” Donald D.
Snyder & Son, Inc. v. FDIC, 791 F. Supp. 335, 336 (D.N.H. 1992). “As such, pursuant to
12 U.S.C. § 1819(b)(2)(B), FDIC may remove to federal court any such case filed in state
court—again, subject to narrow exception.” Id. The “narrow exception” is contained in 12
U.S.C. § 1819(b)(2)(D), which provides:
(D) State actions
Except as provided in subparagraph (E), any action—
(i) to which the [FDIC], in the [FDIC’s] capacity as receiver of a State insured
depository institution by the exclusive appointment by State authorities, is a
party other than as a plaintiff;
(ii) which involves only the preclosing rights against the State insured
depository institution, or obligations owing to, depositors, creditors, or
stockholders by the State insured depository institution; and
(iii) in which only the interpretation of the law of such State is necessary, shall
not be deemed to arise under the laws of the United States.

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“The language of (D) . . . makes clear that it applies only when all three of the listed
conditions are met.” Capizzi v. FDIC, 937 F.2d 8, 9 (1st Cir. 1991). “[S]ection 1819
establishes a rebuttable presumption that the FDIC may properly remove any case in which
it is a party, and that federal jurisdiction is proper unless the opposing party can prove that
the three exceptions in section 1819(b)(2)(D) are applicable.” Reding v. FDIC, 942 F.2d
1254, 1258 (8th Cir. 1991). The FDIC admits that the first two conditions are met, so only
an analysis of the “state law” condition is necessary.
Even if all claims in a case are based exclusively on violations of state law, the “state
law” condition is not satisfied if the FDIC raises a colorable defense grounded in federal law.
See, e.g., id. at 1258 (“To uphold the presumption of federal jurisdiction, the district court
need find only that the FDIC's claimed federal defense presents a colorable issue for decision
and is not meritless.”). This is an exception to the well-pleaded complaint rule, as the
removed petition need not initially show the existence of a federal question. Diaz v. McAllen
State Bank, 975 F.2d 1145, 1149 (5th Cir. 1992). In other words, if the FDIC raises a
legitimate defense based on federal law, the case requires more than interpretation of state
law, and federal jurisdiction is proper.
The FDIC raises two federal defenses. It argues that plaintiffs have requested punitive
damages, and such damages are not an available remedy against it. See Prof'l Asset Mgmt.,
Inc. v. Penn Square Bank, N.A., 566 F. Supp. 134, 136 (W.D. Okla. 1983). It also argues
that injunctive relief is limited against it under federal law. For instance, it asserts that
plaintiffs request a constructive trust, which is not available against it. See Hanson v. FDIC,
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113 F.3d 866, 871 (8th Cir. 1997); 12 U.S.C. § 1821(j) (“Except as provided in this section,
no court may take any action, except at the request of the Board of Directors by regulation
or order, to restrain or affect the exercise of powers or functions of the [FDIC] as a
conservator or a receiver.”).
While the majority of the cases discussing colorable federal defenses raised by the
FDIC involved an analysis of the D’Oench, Duhme doctrine, a defense not raised in this case,
at least one Circuit has held that the FDIC may have a colorable federal defense against
punitive damages. See Diaz, 975 F.2d at 1150. Plaintiffs state in their response that they are
not requesting punitive damages against the FDIC, [Doc. #27, pg. 9]. However, the language
of the petition indicates otherwise. See [Doc. #1-5, pg. 16] (requesting “[j]udgment against
the Defendants for actual and punitive damages . . . .”). And even if plaintiffs no longer wish
to pursue punitive damages against the FDIC, amendment of their petition or claims now
cannot be used to force remand. See Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484, 1488
(10th Cir. 1991). The court concludes that the FDIC has raised colorable federal defenses
and that remand is therefore unwarranted.
For the reasons stated, plaintiffs’ motion to remand [Doc. #27] is DENIED.
IT IS SO ORDERED.
Dated this 5th day of June, 2014.

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