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January 2, 1996


The opinion of the court was delivered by: MOTLEY

 The instant case, filed as a class action, arises out of events connected to the conversion of Carver Federal Savings Bank (Carver) from mutual to stock ownership. The complaint alleges that defendants -- Carver, its Board of Directors, and agents -- committed several fraudulent acts in violation of the securities laws during the sale of Carver stock resulting from this conversion.

 The Office of Thrift Supervision (OTS), the federal agency that oversees federally insured savings institutions like Carver, approved the instant conversion. The OTS's authorizing statute provides that challenges to a decision of the director of the OTS, including the decision to approve the type of conversion at issue here, must be brought by a party aggrieved by the decision in the court of appeals in the circuit in which the party has a principle office, or in the Court of Appeals for the District of Columbia Circuit. 12 U.S.C. § 1467a(j) (1994). Defendants argue that plaintiff, in effect, challenges the conversion's approval by the OTS and the court of appeals has primary jurisdiction over such an action. Accordingly, defendants ask this court to dismiss the instant matter for want of subject matter jurisdiction.

 In opposition, plaintiff argues that allegations concerning fraud such as those involved in the instant case are generally recognized as arising outside the scope of OTS review and thus lying beyond the reach of the primary jurisdiction of the court of appeals.

 As described below, however, plaintiff cannot show that the complaint is directed solely at defendants' alleged fraud; rather, it is a thinly veiled collateral attack on OTS actions. Accordingly, plaintiff may not proceed in this court and the instant action must be dismissed.


 The named representative of the plaintiff class in this action, Robert L. Dougherty (hereinafter "plaintiff"), purchased 15,000 shares of Carver stock at a total price of $ 150,000.00. (Complaint at P 6; Def. Mem. at 6.), *fn1" through Carver's OTS-approved conversion from mutual to stock ownership.

 Defendant Carver Federal Savings Bank ("Carver") is a federally chartered savings bank. (Complaint at P 10.) As such, it is regulated by the OTS and its conversion from mutual to stock ownership was subject to OTS approval. See e.g., 12 U.S.C. §§ 1464(i)(1) and 1464(i)(2)(A) (1994). *fn2" Defendant Capital Resources Group, Inc. ("CRG") provided appraisal services to Carver in connection with Carver's conversion. (Complaint at P 9.) Defendant Capital Resources, Inc. ("Capital Resources") was the "financial consultant and sales agent" for Carver with regard to the conversion. (Complaint at P 1.) *fn3" The individually named defendants, Richard T. Greene, M. Moran Weston, David R. Jones, Benjamin W. Watkins, Herman Johnson, Biswarup Mukherjee, Howard R. Dabney and Margaret R. Lewis (hereinafter the "Individual Defendants") were, at all relevant times, executive officers of Carver. (Complaint at P 10.)

  On June 21, 1994, *fn4" the Board of Directors of Carver unanimously adopted a Plan of Conversion (hereinafter "the Plan") pursuant to which Carver would be converted from a federal mutual savings bank to a federal capital stock savings bank. *fn5" (Complaint at P 24.) To effectuate the Plan, Carver retained Capital Resources as the underwriter for the conversion. *fn6" In early July, 1994, Carver filed an application with the OTS for permission to carry out the conversion. Carver's Plan, an appraisal prepared by CRG of the estimated pro forma market value of the common stock to be issued upon conversion, and a proposed Offering Circular were filed with the OTS. (Defs. Mem. at 3; Pollack Aff. Exhs. 1-4.)

 Under OTS regulations, a converting savings institution must issue and sell its capital stock at an aggregate price equal to the estimated pro forma market value of that stock. 12 C.F.R. § 563b.3(c)(1) (1995). Prior to the actual sale of the stock, an initial appraisal of the value of the converting institution must take place. Subsequent to this appraisal, an "estimated price range" or "valuation range" is set. This valuation range establishes a scope that may vary 15% from the initial appraisal's assessment of the value of the institution (both greater and less than this percentage). It is within this range that the ultimate value of the total stock offered must fall. See, e.g., 12 C.F.R. § 563b.7(c) (1995).

 CRG initially appraised the estimated pro forma market value of Carver's common stock at $ 17,500,000. In accordance with OTS regulations described above, the Offering Circular disclosed that the Carver valuation range was from $ 14,875,000.00 to $ 20,125,000.00. Because shares were to be offered at a price of $ 10 per share, Carver could issue between 1,487,500 and 2,012,500 shares. (Pollack Aff. Ex. 4 at 1, 6, 94.)

 Both the Plan and the Offering Circular provided that Carver's appraised value -- and the corresponding number of shares to be offered -- could change, however. On August 12, 1994, the OTS approved the application for conversion, including a clause providing for a possible increase in the number of shares to be offered to 2,314,375, should the appraised value of Carver increase. (Pollack Aff. Ex. 6.) On August 15, 1994, the OTS approved the materials to be used in connection with the conversion, including the Offering Circular which disclosed that Carver might sell up to 2,314,375 shares at $ 10 per share based on an improved appraisal. (Pollack Aff. Ex. 7.) On August 23, 1994, OTS published notice of its final action approving the transaction in the Federal Register. (Pollack Aff. Ex. 8.)

 On October 4, 1994, CRG submitted to the OTS an updated appraisal that increased the estimated pro forma market value of Carver by 15% to $ 20,125,000.00, resulting in a revised valuation range of $ 17,106,250.00 to $ 23,143,750.00. (Pollack Aff. Ex. 12.) That same day, the OTS approved this final appraisal and specifically authorized Carver to sell up to $ 23,143,750.00 worth of stock. (Pollack Aff. Ex. 13.) Armed with this approval, Carver issued the maximum permissible number of shares -- 2,314,375 -- at a price of $ 10.00 per share. (Complaint at P 57; Defs. Mem. at 7.) As of March 14, 1995, Carver stock was trading at $ 6.625 per share. (Complaint at P 27.)

 The complaint in the instant action was filed on April 5, 1995, alleging that defendants made material misrepresentations or omissions in the Offering Circular. First, while the Circular represents that the underlying appraisal was prepared by an independent appraiser, the complaint alleges that the defendants fraudulently failed to disclose that CRG's affiliate, Capital Resources, Inc., had a financial interest in the outcome of the conversion. Second, the Offering Circular represented that the initial appraisal was credible and reliable when, it is alleged, the appraisal was factually false and misleading. Third, although the Circular stated that the number of shares to be issued would not exceed 2,012,500 unless recent market and economic conditions warranted such an increase based on an updated appraisal, the number of shares issued was increased beyond this level despite allegedly worsening market and economic conditions. Based on these alleged misrepresentations and omissions, plaintiff contends that defendants violated Sections 12(2) and 15 of the Securities Act of 1933, 15 U.S.C. § § 77l(2), 77o (1994); Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a) (1994); Rule 10b-5 promulgated by the Securities and Exchange Commission ("SEC"), 17 C.F.R. § 240.10b-5 (1995); and the state common law doctrines prohibiting breach of fiduciary duty and breach of contract.

 By Motion dated July 17, 1995, Carver and the Individual Defendants filed a motion to dismiss the Complaint for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). Defendants CRG and Capital Resources filed a similar motion adopting the position of Carver and the Individual Defendants, but adding more detailed analysis of the OTS role in reviewing the independence of the appraiser in a conversion.



 A. Overview of Specialized Review Provisions of Agency Action.

 "It can hardly be doubted that Congress, acting within its constitutional powers, may prescribe the procedures and conditions under which, and the court in which, judicial review of administrative orders may be had." City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 336, 2 L. Ed. 2d 1345, 78 S. Ct. 1209 (1958). In many instances, Congress has vested the court of appeals with primary jurisdiction to review actions of federal agencies. *fn7" According to statute, a decision of the director of the OTS, like the approval of the ...

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