would serve to alter the facial terms of a security or loan
document will generally be sufficient to 'tend to deceive' the
banking authorities and will not be valid as a defense against
the FDIC." FDIC v. Chuang, 690 F. Supp. 192, 198 (S.D.N Y
1988). Consequently, courts have invoked the D'Oench doctrine
to defeat prior oral agreements to repurchase loans. See Texas
Nat'l Bank of Lufkin v. FDIC, No. Mo-84-CA-17 (W.D.Tex. Feb.
14, 1985); First Nat'l Bank of Clarksville v. FDIC, No.
Mo-83-CA-130 (W.D.Tex. Dec. 19, 1985); Pittsburgh Nat'l Bank v.
FDIC, No. Mo-84-CA-54 (W.D.Tex. Nov. 6, 1984).
The D'Oench estoppel doctrine affords appropriate protections
to the FDIC in its capacity as receiver and, consonant with
this policy of protection, I am mindful of the argument that
"RICO [treble] damages 'are in fact penal. It would be plainly
unjust to permit such an award against the receiver for
innocent depositors and creditors alone would be punished, not
the putative wrongdoer.'" Beverly Hills Savings v. Highfield
Assoc., No. 87-CA-259, ___ WL ___ (D.N.M. Aug. 28, 1987),
quoting Summers v. FDIC, 592 F. Supp. 1240, 1243 (W.D.Okl.
1984). I am satisfied that plaintiff would be unable to state a
claim against the FDIC in its capacity as receiver for First
Inter-County, and, accordingly, the Amended Complaint against
FDIC, as receiver, is dismissed. See Reiter's Beer Dist. Inc.
v. Schmidt Brewing Co., 657 F. Supp. 136, 141 (E.D.N.Y. 1987); 5
Wright & Miller, Federal Practice & Procedure § 1357, at
Plaintiff requests leave to add the FDIC as a party in its
individual corporate capacity. The Court grants leave to
replead, but plaintiff is reminded that a tort action against
a federal agency is governed by the Federal Tort Claims Act.
28 U.S.C. § 2671 et seq.; Rauscher Pierce Refsnes, Inc. v.
FDIC, 789 F.2d 313, 315 (5th Cir. 1986). Accordingly, plaintiff
must first satisfy the jurisdictional prerequisites, including
exhaustion of all administrative remedies. 26 U.S.C. § 2675(a);
see O'Rourke v. Eastern Air Lines, Inc., 730 F.2d 842, 855 (2d
II. MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
All defendants — except the FDIC, Horovitz, Hurtig, Luis
Electrical, Rabuffo and Wolitzer — move to dismiss the common
law fraud claim for lack of subject matter jurisdiction.
Under the doctrine of pendent jurisdiction in a case
involving both federal and state law claims, a federal court
has jurisdiction over the whole case when a substantial
federal claim vests the court with subject matter
jurisdiction, and both claims derive from a "common nucleus of
operative facts." United Mine Workers v. Gibbs, 383 U.S. 715,
725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). Whether or not
pendent jurisdiction should be exercised is a matter committed
to the sound discretion of the district court. See Hagans v.
Lavine, 415 U.S. 528, 545, 94 S.Ct. 1372, 1383, 39 L.Ed.2d 577
(1974) (citing United Mine Workers v. Gibbs, 383 U.S. 715, 86
S.Ct. 1130, 16 L.Ed.2d 218 (1966)); Perez v. Ortiz,
849 F.2d 793, 798 (2d Cir. 1988); Federman v. Empire Fire & Marine Ins.
Co., 597 F.2d 798, 809 (2d Cir. 1979). Principal considerations
are judicial economy and fairness to litigants. Perez, 849 F.2d
at 798; Pride v. Community School Bd. of Brooklyn,
482 F.2d 257, 271-72 (2d Cir. 1973).
Courts will routinely retain pendent jurisdiction over state
law offenses that are predicate acts in a valid RICO claim.
See, e.g., H.J. Inc., 109 S.Ct. at 2897; 18 U.S.C. § 1961(1).
Because sufficient RICO allegations have been made against
defendants Horovitz, Hurtig, Luis Electrical, Rabuffo,
Roadworks, Caplan, Georgian and Penrose, it is entirely proper
to maintain pendent jurisdiction over the common law fraud
claims against these defendants.
However, when a plaintiff's RICO claim is the sole basis for
pendent jurisdiction over a predicate act, if the RICO claim
is dismissed, jurisdiction over the predicate act will
generally also collapse. Corcoran
v. American Plan Corp., 886 F.2d 16, 22 (2d Cir. 1989). Thus,
because the RICO claims against all the other defendants are
being dismissed it might be expected that the pendent state
claims for fraud should also be dismissed. The fact remains,
however, that the remaining defendants have state law claims
against them that arise out of the same facts involved in the
RICO claim and these defendants may well be "pendent parties"
over whom the Court may retain jurisdiction.
Pendent party jurisdiction is jurisdiction exercised "over
parties not named in any claim that is independently
cognizable by the federal court." Finley v. United States, ___
U.S. ___, 109 S.Ct. 2003, 2006, 104 L.Ed.2d 593 (1989). Because
pendent party jurisdiction involves joinder of a defendant
solely on the basis of state law claims "[t]he exercise of
jurisdiction over a 'pendent party' is subject to greater
constraints than the more common 'pendent claim' jurisdiction."
Bruce v. Martin, 724 F. Supp. 124, 127 (S.D.N.Y. 1989); see also
Aldinger v. Howard, 427 U.S. 1, 14-15, 96 S.Ct. 2413, 2420-21,
49 L.Ed.2d 276 (1976).
Before exercising pendent party jurisdiction, a federal
court must first be satisfied that the demands of Article III,
as stated in Gibbs, have been met, namely, that the entire
action before the Court comprises one constitutional "case."
Gibbs, 383 U.S. at 725, 86 S.Ct. at 1138. In Gibbs the Supreme
Court held that a federal court has the requisite power over a
pendent claim when the federal and pendent claims derive from a
"common nucleus of operative facts" and a plaintiff bringing
the action would ordinarily be expected to try them in one
judicial proceeding. Id.
Thus, as a threshold matter, I must determine whether the
Court has jurisdiction over plaintiff's state law claims. Upon
review of the record, I find that all issues, including the
state law claims, derive from a common nucleus of operative
facts. I also find that plaintiff may be expected to try these
claims in one judicial proceeding.
In addition, however, the Court must "pay 'careful attention
to the relevant statutory language' granting jurisdiction over
the federal claim." Bruce, 724 F. Supp. at 127 (citing Aldinger
v. Howard, 427 U.S. 1, 17, 96 S.Ct. 2413, 2421, 49 L.Ed.2d 276
(1976)). The purpose of this second hurdle is to ascertain
whether Congress has initially precluded the exercise of
pendent party jurisdiction. Id. at 128.
Pendent jurisdiction is implicated in a RICO case by the
definition of "racketeering activity" which includes:
any act or threat involving murder, kidnapping,
gambling, arson, robbery, bribery, extortion,
dealing in obscene matter, or dealing in narcotic
or other dangerous drugs, which is chargeable
under State law and punishable by imprisonment
for more than one year.
18 U.S.C. § 1961(1). Inclusion of state law offenses in the
definition of "racketeering activity" is clearly not a plenary
grant of jurisdiction.