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June 30, 1983

PHILIP ZINMAN, Individually and on behalf of all others similarly situated

The opinion of the court was delivered by: SHAPIRO



 Plaintiff, owner of common stock of First Pennsylvania Corporation ("First Pennsy"), the holding company of the First Pennsylvania Bank, NA ("First Pennsylvania Bank" or "Bank"), instituted this action, individually and on behalf of a putative class of shareholders of all common stock to challenge the statutory authority of the Federal Deposit Insurance Corporation ("FDIC") in imposing certain conditions to a financial assistance package offered the First Pennsylvania Bank. *fn1"

 Plaintiff's amended complaint seeks declaratory and injunctive relief invalidating only certain terms of the assistance plan. It alleges inter alia that the conduct of FDIC in taking, retaining or exercising warrants is unauthorized by Section 13(c) of the Federal Deposit Insurance Act (the "Act"), 12 U.S.C. § 1823(c), and that issuance of these warrants to FDIC without pre-emptive rights to class members violates the provisions of the Act.

 Presently before the court is FDIC's motion for summary judgment. Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Although any doubt as to the existence of genuine issues of fact must be resolved against the moving party and any inferences to be drawn from the underlying facts must be viewed in the light most favorable to the non-moving party, "summary judgment is a useful procedure when there is no dispute about the critical facts and it serves to eliminate the expense and delay of unnecessary trials." Peterson v. Lehigh Valley District Council, United Brotherhood of Carpenters and Joiners, 676 F.2d 81, 84 (3d Cir. 1982). For the reasons set forth herein, the motion is granted.


 The facts in this case are not in dispute. In the spring of 1980, First Pennsylvania Bank encountered severe liquidity problems and formally requested financial assistance from the FDIC. Following a determination that the Bank was in danger of closing by the Comptroller of the Currency, the Bank's regulatory overseer, the FDIC Board of Directors found that the continued operation of the Bank was essential to the community and agreed to render assistance under Section 13(c) of the Act.

 After extensive negotiations with First Pennsy and First Pennsylvania Bank, the FDIC and a nationwide consortium of twenty-seven financial institutions offered an assistance package ("Assistance Plan" or "Plan") of $500 million in term loans: $325 million from the FDIC and $175 million from the private lending institutions. Under the credit agreement the loans had a five-year maturity. No interest was payable on the FDIC loan for the first year; for the remaining four years the interest rate was to be 125% of the average yield on the FDIC's investment portfolio. *fn2" In addition to the credit agreement there was a warrant agreement which required First Pennsy to issue 20 million warrants which might be exercised to acquire newly issued First Pennsy shares at $3.00 a share. *fn3" The warrants were granted to all the lenders according to their proportion of the total loan; the private lending institutions were to receive an aggregate of 7 million warrants and the FDIC was to receive 13 million warrants.

 As a condition to receiving FDIC assistance, certain restrictions affecting the future operation of First Pennsy and the Bank were to be implemented. All directors and principal officers would serve subject to FDIC approval and the FDIC would approve their compensation. The FDIC had to approve any payment of dividends as well as any other major policy decisions of the bank.

 A 28-page proxy statement setting forth a summary of the terms and conditions of the proposed Plan, including the credit and warrant agreements, was mailed to shareholders. It was accompanied by a transmittal letter of May 2, 1980 from George Butler, Chairman of First Pennsy's Board of Directors, that stated, in part:

 At a shareholders' meeting on May 28, 1980, the Assistance Plan was approved by 86% of those shares represented voting in favor, 4.9% voting in opposition and 9.1% not voting. *fn4" On May 29, 1980, 13 million of the warrants were issued to the FDIC.


 Defendant contends that plaintiff lacks standing to maintain this class action; this would be the case if the loss arises only indirectly from plaintiff's status as a shareholder. The contention is that this action can only be a derivative action on behalf of the corporation not an individual action on behalf of plaintiff and the class. The law on this issue has been succinctly stated:

"* * * If the injury is one to the plaintiff as a stockholder and to him individually, and not to the corporation, as where the action is based on a contract to which he is a party, or on a right belonging severally to him, or on a fraud affecting him directly, it is an individual action. On the other hand, if the wrong is primarily against the corporation, the redress for it must be sought by the corporation, except where a derivative action by a stockholder is allowable, and a stockholder cannot sue as an individual. The action is derivative, i.e., in the corporate right, if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock or property without any severance or distribution among individual holders, or if it seeks to recover assets for the corporation or to prevent the dissipation of its assets." 13 W. Fletcher, Corporations § 5911 (1970). See also J. Moore, Federal Practice P 23.1.16[1] (2d ed. 1969).

 In re Penn Central Securities Litigation, 347 F. Supp. 1324, 1326 (E.D.Pa.1972).

 The same allegations of fact may support either a derivative suit or a direct cause of action. Borak v. J.I. Case 317 F.2d 838 (7th Cir. 1963) aff'd, 377 U.S. 426, 84 S. Ct. 1555, 12 L. Ed. 2d 423 (1964). Here plaintiff's complaint has certain attributes of a derivative action. It is brought by a shareholder on behalf of a putative class of shareholders and at least one form of relief sought, cancellation of the 13 million warrants, would result in return of the warrants to the corporation rather than their distribution to the members of the class. But the characteristics of this action when viewed as a whole are those of a direct suit. Plaintiff's complaint alleges direct personal injury from the loss of control and potential dilution of share value if the warrants are exercised by the FDIC. Plaintiff does not contend that the corporation has been or will be injured. Nor does he allege that the corporate officers and directors mismanaged the business or misappropriated corporate funds. To the contrary, plaintiff concedes that the Assistance Plan was necessary to the continued financial viability of the Bank. And while these internal inconsistencies in plaintiff's case may cast doubt on its merits, this does not deny plaintiff the right to bring the action. The gravamen of Zinman's complaint alleges direct injury; plaintiff has standing to sue.

 Plaintiff's primary allegation is that the FDIC lacks statutory authority to acquire securities and consequently that the warrant agreement as a term and condition of the financial assistance plan is void as to the FDIC. *fn5" Congress created the FDIC in 1933 *fn6" in response to the financial chaos of the Great Depression. It was intended to "preserve solvency of insured banks and thus to keep open the channels of trade and commercial exchange." Weir v. United States, 92 F.2d 634, 636 (7th Cir.), cert. denied, 302 U.S. 761, 58 S. Ct. 368, 82 L. Ed. 590 (1937). See also, First State Bank of Hudson County v. United States, 599 F.2d 558 (3d Cir. 1979), cert. denied, 444 U.S. 1013, 62 L. Ed. 2d 642, 100 S. Ct. 662 (1980); Freeling v. FDIC, 221 F. Supp. 955 (W.D.Okla. 1962), aff'd, 326 F.2d 971 (10th Cir. 1963). Powers were conferred upon it, inter alia, "to make contracts," "to sue and be sued," "to act as receiver," and to exercise "all powers specifically granted by the provision of [the Act] and such incidental ...

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