Barnes v. Harris et al

Filing 23

MEMORANDUM DECISION denying 7 Motion to Remand to State Court. Signed by Judge Ted Stewart on 01/15/2013. (asp)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

J. CANUTE BARNES, W. KING BARNES,
and ROBERT V. JONES, derivatively on
behalf of all similarly situated shareholders of
BARNES BANCORPORATION,
Plaintiffs,

MEMORANDUM DECISION AND
ORDER DENYING PLAINTIFFS’
MOTION TO REMAND

vs.

CURTIS H. HARRIS, NED H. GILES,
DAVID N. BARNES, ROBERT L.
THURGOOD, JERRY W. STEVENSON,
MICHAEL D. PAVICH, GARY M.
WRIGHT, DOUGLAS STANGER, and
BARNES BANCORPORATION, a nominal
defendant,

Case No. 2:12-CV-1010 TS

Defendants.

This matter is before the Court on Plaintiffs’ Motion to Remand. For the reasons
discussed below, the Court will deny Plaintiffs’ Motion.
I. BACKGROUND
Plaintiffs brought this action as a shareholder derivative suit against certain officers and
members of the board of directors of Barnes Bancorporation, alleging a breach of fiduciary duty.
1

Nominal Defendant Barnes Bancorporation (“the Company”) is a registered bank holding
company whose primary asset is its subsidiary, Barnes Banking Company (“the Bank”). The
officers and directors of the Company who are named as Defendants are also officers and
directors of the Bank.
On January, 15, 2010, the Bank was closed by the Utah Department of Financial
Institutions and the Federal Deposit Insurance Corporation was appointed as receiver (“FDICReceiver”) for the Bank. Plaintiffs originally filed their complaint on January 12, 2012, in Utah
state court. On April 3, 2012, the FDIC filed a motion to intervene as a Plaintiff, claiming that:
“(a) Plaintiff asserts derivative claims which belong exclusively to FDIC-Receiver; (b) numerous
factual and legal determinations that must be made in this case are potentially binding in any
ensuing case filed by FDIC-Receiver against Defendants; and (c) this case imperils the interests
of others holding valid claims against Barnes Banking Company, on whose behalf FDICReceiver is empowered to act.”1
On October 29, 2012, the state court granted the FDIC-Receiver’s Motion to Intervene.2
On the following day, the FDIC-Receiver removed the case to this Court.3
II. DISCUSSION
Plaintiffs allege that this Court does not have subject matter jurisdiction over this matter
and therefore must remand the case back to state court. Although there is no diversity

1

Docket No. 2-16, at 1-2.

2

Docket No. 2-35, at 2.

3

Docket No. 2.
2

jurisdiction in this case and the dispute arises under state law, under the Financial Institution
Reform, Recovery and Enforcement Act (the “Act”), “all suits of a civil nature at common law or
in equity to which the [FDIC], in any capacity, is a party shall be deemed to arise under the laws
of the United States.”4 Furthermore, under the Act, “the [FDIC] may, without bond or security,
remove any action, suit, or proceeding from a state court to the appropriate United States district
court before the end of the 90-day period beginning on the date . . . the [FDIC] is substituted as a
party.”5
Plaintiffs argue that the provisions of the Act granting this Court jurisdiction and
allowing the FDIC-Receiver to remove the case to this Court do not apply because the FDICReceiver is not a party. Plaintiffs do not ask the Court to reconsider the state court’s order
granting the FDIC-Receiver’s motion to intervene.6 Instead, Plaintiffs allege that since the FDICReceiver has not yet filed an answer or complaint, the FDIC-Receiver is therefore not a party to
the case. However, Plaintiffs do not cite any legal authority for their premise that an intervenor is
not a party until it files an answer or complaint.
Instead, Plaintiffs direct the Court’s attention to Village of Oakwood v. State Bank &
Trust Co.7 In Village of Oakwood, the FDIC filed a motion to intervene with an Ohio state court,
but then removed the case to federal court before the state court ruled on the motion to

4

12 U.S.C. § 1819(b)(2)(A) (emphasis added).

5

12 U.S.C. § 1819(b)(2)(B).

6

Docket No. 14, at 3.
481 F.3d 364 (6th Cir. 2007).

7

3

intervene.8 The federal court then granted the motion to intervene.9 The Sixth Circuit overturned
the district court, holding that the district court was “putting the intervention cart before the
jurisdiction horse” because the state court had not granted the motion to intervene.10 The mere
fact that the FDIC had filed a motion to intervene was not sufficient to create jurisdiction for the
federal court to grant the motion to intervene and proceed with the case.11
Village of Oakwood is not applicable here, where the state court granted the FDICReceiver’s motion to intervene as a Plaintiff. Once the FDIC-Receiver was allowed to intervene,
it became a party to this action, and this Court gained jurisdiction pursuant to 12 U.S.C. §
1819(b)(2)(A). Therefore, this case’s subsequent removal pursuant to 12 U.S.C. § 1819(b)(2)(B)
was proper.
III. CONCLUSION
It is therefore
ORDERED that Plaintiffs’ Motion for Remand (Docket No. 7) is DENIED.
DATED January 15, 2013.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge
Id. at 366.

8

Id.

9

Id. at 368-69.

10

See id. at 369 n.3.

11

4