Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

STERLING NATL. BANK & TRUST CO. v. TELTRONICS SERV

UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK


May 7, 1979

STERLING NATIONAL BANK & TRUST COMPANY OF NEW YORK, Plaintiff,
v.
TELTRONICS SERVICES, INC. and the United States of America, Defendants

The opinion of the court was delivered by: CANNELLA

MEMORANDUM AND ORDER

Upon the motion of the Court, this complaint is dismissed for want of subject matter jurisdiction.

 By order to show cause, plaintiff commenced a proceeding seeking a preliminary injunction against the United States and the defendant Teltronics, Inc. ("Teltronics"). The Court conducted a hearing on this application on April 20, 1979. On its own motion, the Court raised the issue of subject matter jurisdiction, and agreed to allow the parties time to brief the issue. The Court now makes the following findings of fact and conclusions of law.

 FACTS

 On July 19, 1976, plaintiff Sterling National Bank and Trust Company ("Sterling"), a national banking association with its principal place of business in New York, established a line of credit for the defendant Teltronics, a New York corporation. As collateral for the repayment of all loans pursuant to that credit, Teltronics assigned to Sterling all of its then existing or thereafter acquired accounts receivable on sales of merchandise and services.

 In early March 1979, Sterling became concerned about Teltronics' ability to repay, and began to take steps to protect its interests. On March 8, Sterling made demand upon Teltronics for outstanding loans, and immediately set off the balances of accounts Teltronics had maintained at Sterling. After the setoff, the total amount owing was approximately $ 700,000. On March 9, Sterling advised Teltronics to forward to it all receipts on the assigned receivables.

 Upon a review of the schedule of assigned receivables, Sterling learned that one of the accounts, listed as "Floyd Bennett Field," represented contract number GS-02S-29880 with the General Services Administration ("GSA"), an agency of the United States. The amount owing on this account was listed as approximately $ 300,000. Sterling thereupon forwarded to GSA four "Notices of Assignment" and a photocopy of the instrument of assignment, in an attempt to comply with GSA regulations relating to assignments of claims under Government contracts. *fn1" On March 22, GSA informed Sterling that it would not approve the assignment, for three reasons: (1) the instrument of assignment did not refer to a specific contract number; (2) Teltronics corporate seal was not affixed to the instrument; and (3) the assignment antedated the contract, which was dated May 1, 1978.

 By letter dated April 3, 1979, Sterling responded, insisting upon the validity of the assignment and resubmitting the instrument and four copies of the notice. By letter dated April 4, GSA reiterated its position that Sterling had not complied with Government requirements. On April 6, Sterling forwarded additional documentation, the Government indicated that it would not change its position, and Sterling commenced the instant action against Teltronics and the United States seeking injunctive relief. Specifically, Sterling asks this Court to enjoin the Government from paying any monies to Teltronics under GSA contract number GS-02S-29880, and to enjoin Teltronics from demanding or receiving such payments. Furthermore, Sterling seeks an order directing Teltronics

 

to execute and to deliver to plaintiff immediately all documents necessary in order for plaintiff to obtain payment directly from the United States of America all sums due to Teltronics Services, Inc. on account of aforesaid contract.

 DISCUSSION

 Sterling attempts to base jurisdiction over the Government on the Assignment of Claims Act, *fn2" the Declaratory Judgments Act, *fn3" chapter 7 of the Administrative Procedure Act, *fn4" and 28 U.S.C. § 1331(a). *fn5" As to the defendant Teltronics, Sterling concedes that the only possible jurisdictional basis is the doctrine of pendent jurisdiction. *fn6"

 No independent basis of jurisdiction is provided by either the Declaratory Judgments Act, See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 70 S. Ct. 876, 94 L. Ed. 1194 (1950), or the Administrative Procedure Act ("APA"), See Califano v. Sanders, 430 U.S. 99, 107, 97 S. Ct. 980, 51 L. Ed. 2d 192 (1977). Nor does the Assignment of Claims Act contain a grant of jurisdiction, whether express or implied. Thus the only possible basis for jurisdiction is general federal question jurisdiction under 28 U.S.C. § 1331.

 The problem with attempting to base jurisdiction over the Government in this case on section 1331, however, is that the Government asserts the defense of sovereign immunity. Absent a waiver of immunity, a suit against the sovereign "is not maintainable because of the absence of subject matter jurisdiction." Estate of Watson v. Blumenthal, 586 F.2d 925, 929 (2d Cir. 1978) (citing Larson v. Domestic Foreign Commerce Corp., 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949)). The plaintiff admits that section 1331 is not a waiver of immunity, but argues that since this suit essentially seeks review of agency action, *fn7" the waiver of sovereign immunity embodied in the 1976 amendments to the Administrative Procedure Act *fn8" applies. The Second Circuit, however, has very recently rejected precisely this argument.

 In Estate of Watson v. Blumenthal, supra, an estate and its executrices brought an action in federal district court "against the Secretary of the Treasury and the Commissioner of the Bureau of Public Debt seeking declaratory relief and an order directing the Government to redeem (certain Government bonds known as "Flower Bonds') at par and apply them with accrued interest in satisfaction of estate taxes due." 586 F.2d at 928. The Second Circuit held that the action, although for injunctive and declaratory relief, was one "essentially . . . "founded upon a contract' and hence a matter exclusively for the Court of Claims." Id. at 929 (quoting the Tucker Act). *fn9" The Court did not end there, however, but proceeded to consider the implications of the 1976 amendments to the APA and section 1331, *fn10" concluding that:

 

The law applicable to this case after the amendments thus can be summarized as follows: there is no subject matter jurisdiction under the APA because the Act itself is not a grant of jurisdiction, Califano v. Sanders, 430 U.S. at 99, 97 S. Ct. 980, 51 L. Ed. 2d 192, and the amendments also do not provide for jurisdiction but only make it clear that sovereign immunity will not be a defense in actions in which jurisdiction does exist; there is also no jurisdiction under § 1331 because of sovereign immunity, a defense that the amendments did not affect. Just as prior to the amendments to § 1331 the absence of a jurisdictional amount under the APA did not negate the requirement of a minimum amount in controversy in actions under § 1331, now the waiver of sovereign immunity under the APA does not affect the limitation of the sovereign immunity defense on jurisdiction under § 1331.

 

Alternatively, we note that whatever the effect on the defense of sovereign immunity under § 1331, the amendments did not affect the further limitation on § 1331 jurisdiction imposed by the Tucker Act's grant to the Court of Claims of exclusive jurisdiction in cases founded upon contracts, including those that involve federal laws or regulations.

 Id. at 932. This Court cannot improve on the clarity of these words, and their applicability to the instant case does not require paraphrasing. That Sterling's complaint, though characterized as seeking an injunction, is "essentially founded upon a contract" is underscored by the opening statement of Sterling's counsel at the hearing on the motion for a preliminary injunction:

 

The sole purpose in bringing this action and the preliminary injunction is to obtain directly from the United States moneys due on the contract entered into between GSA and Teltronics, which moneys were assigned by Teltronics to Sterling National Bank as collateral security for certain loans and other financial accommodations.

 Transcript of Proceedings at 5 (April 20, 1979). Since the underlying contract claim is for approximately $ 300,000, this Court lacks Tucker Act jurisdiction.

 CONCLUSION

 For the foregoing reasons, the claims against the Government are dismissed. The state law claims against Teltronics, allegedly pendent, are dismissed as well. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966).

 Accordingly, the Clerk of the Court is directed to enter a Judgment dismissing the complaint in its entirety for lack of subject matter jurisdiction.

 SO ORDERED.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.