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FED. DEPOSIT INS. CORP. v. STATE OF N.Y.

United States District Court, Southern District of New York


March 13, 1990

FEDERAL DEPOSIT INSURANCE CORP., PLAINTIFF,
v.
STATE OF NEW YORK AND CITY OF NEW YORK, DEFENDANTS.

The opinion of the court was delivered by: Sprizzo, District Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff Federal Deposit Insurance Corporation ("FDIC") brings this motion to reargue the Court's decision that its claims are barred by the Tax Injunction Act, that the Eleventh Amendment bars its claims against the State of New York, and that it lacks standing to bring this action. See Federal Deposit Insurance Corp. v. State of New York, 718 F. Supp. 191 (S.D.N.Y. 1989).*fn1 FDIC's motion to reargue is based principally upon a provision of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101-73, § 209, 103 Stat. 183, 216 (1989), which amended the provisions of the Federal Deposit Insurance Act, 12 U.S.C. § 1811 et seq. (1988), to provide that the FDIC "in any capacity, shall be an agency of the United States for purposes of section 1345 of title 28, United States Code, without regard to whether the Corporation commenced the action."*fn2 12 U.S.C.A. § 1819(b)(1) (1989). The FDIC argues that this statute makes the FDIC a federal instrumentality for purposes of the Tax Injunction Act and the Eleventh Amendment. For the reasons that follow the Court rejects these arguments and adheres to its original opinion.

DISCUSSION

The Tax Injunction Act

The Tax Injunction Act, 28 U.S.C. § 1341 (1982), serves to prevent a federal court from interfering with the collection of state taxes where there is an appropriate method of resolving disputes between a taxpayer and the state in the state courts. There is, however, an exception to that law where the party subject to the state tax is a federal instrumentality. See Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 470, 96 S.Ct. 1634, 1639, 48 L.Ed.2d 96 (1976).

The FDIC contends that its status as an agency of the federal government for purposes of a jurisdictional statute excepts it from the Tax Injunction Act. However, the FDIC has been made a federal agency only for purposes of 28 U.S.C. § 1345, which vests subject matter jurisdiction over cases involving federal agencies in the district courts. That statute expressly provides that such jusrisdiction is subject to exceptions created by Congress. Id.; see Federal Savings & Loan Ins. Corp. v. Ticktin, ___ U.S. ___, 109 S.Ct. 1626, 1628, 104 L.Ed.2d 73 (1989). Moreover, there is no indication in the Federal Deposit Insurance Act that Congress intended to exempt the FDIC from the Tax Injunction Act or intended anything more than a limited grant of "federal agency" status to the FDIC.

Nor does Moe, supra, support the FDIC's position. In that case, the Supreme Court held that 28 U.S.C. § 1362 (1982)*fn3 was intended to allow the Indian tribes a right to sue in federal court that was at least as broad as that of the United States when it sued as the tribes' trustee. See 425 U.S. 474-75, 96 S.Ct. at 1641-42. Therefore, when the Indian tribes sued on their own behalf, they were essentially in the same position as the United States and were not barred by the Tax Injunction Act. See id.; see also Oneida Indian Nation of New York v. New York, 691 F.2d 1070, 1079-80 (2d Cir. 1982) (applying Moe in Eleventh Amendment context), cert. denied, 474 U.S. 823, 106 S.Ct. 78, 88 L.Ed.2d 64 (1985). The reasoning of that case has no application to the FDIC which, as the Court noted in its original opinion, is an "entity quite separate from the United States." Federal Deposit Ins. Corp., supra, 718 F. Supp. at 194-95.

Moreover, the jurisdictional statute in that case, 28 U.S.C. § 1362, did not contain the limitation on jurisdiction, noted above, set forth in 28 U.S.C. § 1345. The Court therefore adheres to its original conclusion that the FDIC may not avail itself of the federal instrumentality exception to the Tax Injunction Act.

The Eleventh Amendment

  Plaintiff further argues that the amendment to the Federal
Deposit Insurance Act also makes it the United States for
purposes of the Eleventh Amendment. See United States v.
Mississippi, 380 U.S. 128, 140, 85 S.Ct. 808, 814, 13 L.Ed.2d
717 (1965) (suit by the United States against a state not
barred by the Eleventh Amendment). The FDIC contends that in
light of this statute, it is now analogous to the Federal
Savings and Loan Insurance Corporation ("FSLIC"). See Federal
Savings & Loan Ins. Corp. v. Director of Revenue, 650 F. Supp. 1217,
1221 (N.D.Ill. 1986) (FSLIC is a United States for
purposes of the Eleventh Amendment). That case, however,
assuming that it is correct, involved a statutory grant of
federal agency status that was far broader than the statute
here. 12 U.S.C. § 1730(k)(1)(A) (1988) provides that,
notwithstanding any other provision of law, the FSLIC "shall be
deemed to be an agency of the United States within the meaning
of section 451 of Title 28."*fn4 In addition, 12 U.S.C. § 1725(c)
  Page 29
(1988) states that the FSLIC "shall be an instrumentality of
the United States . . ."

The grant of authority to the FDIC, on the other hand, is much more limited. The statute detailing its corporate powers omits any statement that it is an instrumentality of the United States. Compare 12 U.S.C.A. § 1819(a) (1989) (FDIC) with 12 U.S.C. § 1725(c) (1988) (FSLIC). Moreover, as noted above, Congress made the FDIC an agency of the United States for purposes of a jurisdictional statute only. The FSLIC, on the other hand, is an agency of the United States within the general definition of the word "agency." Accordingly, the Court concludes that Congress specifically limited the FDIC's status as an "agency" of the United States and therefore adheres to its original holding that the Supreme Court's ruling in Smith v. Reeves, 178 U.S. 436, 449, 20 S.Ct. 919, 924, 44 L.Ed. 1140 (1900), that federal corporations are barred from bringing suits against the state by the Eleventh Amendment, prevents the FDIC from maintaining this action against the state of New York.*fn5

CONCLUSION

For the reasons stated above, plaintiff's motion for reargument of the Court's prior decision that this Court lacks subject matter jurisdiction is denied. The original Opinion and Order stands as reported and the above-captioned action shall remain closed. The Clerk shall enter judgment accordingly.

It is SO ORDERED.


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