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HORVATH v. FDIC

August 31, 1998

JOHN P. HORVATH
v.
FEDERAL DEPOSIT INSURANCE CORPORATION



The opinion of the court was delivered by: JOYNER

MEMORANDUM AND ORDER

 JOYNER, J.

 August 31, 1998

 Plaintiff John P. Horvath has filed this civil action and motion for temporary restraining order and preliminary injunction to enjoin the Federal Deposit Insurance Corporation ("FDIC") from prohibiting one James L. Leuthe from further participation in the banking industry without the prior written consent of the FDIC and other relevant federal regulatory agencies. This case is presently before this Court for disposition of Plaintiff's motion for TRO/preliminary injunction, the FDIC's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1), (4), (5) and (6) and the motion of Stephen M. Alinikoff to intervene in the case. For the reasons which follow, the motion to dismiss shall be granted, the motion for preliminary injunction shall be denied and the motion for intervention shall be denied as moot.

 Factual Background

 The instant action is an outgrowth of a case which was previously before this Court wherein James Leuthe, a former director and institution-affiliated party of the First Lehigh Bank of Walnutport, Pennsylvania, sought to have the FDIC's administrative enforcement proceedings which were then underway against him declared null and void. On September 8, 1997, we granted the motions of the Office of Financial Institution Adjudication ("OFIA"), the FDIC, Office of the Comptroller of the Currency ("OCC"), Office of Thrift Supervision ("OTS"), the Federal Reserve Board ("FRB") and the National Credit Union Administration ("NCUA") to dismiss that action on the grounds that the district courts have only limited jurisdiction to: (1) issue injunctions setting aside, limiting or suspending the enforcement, operation or effectiveness of a temporary cease-and-desist order pending completion of the administrative enforcement proceedings; and (2) issue orders enforcing any effective and outstanding order issued under 12 U.S.C. §§ 1818 or 1831 o or 1831p-1 on application of any of the appropriate Federal banking agencies. See : 12 U.S.C. § 1818(c)(2), (i)(1). *fn1"

 In this case, Plaintiff Horvath avers that since August 3, 1994, he has been a shareholder of First Lehigh Corporation, the holding company which owns all of the issued and outstanding shares of First Lehigh Bank, and that he purchased 1,000 shares of Senior Preferred Stock in reliance on a prospectus approved by the FDIC. *fn2" (Pl's Complaint, Ps1, 15, 27). That prospectus referred to an Order entered pursuant to a stipulation of the parties resolving certain litigation with the Pennsylvania Department of Banking in the Commonwealth Court and provided, in relevant part:

 
Management Changes. The Pennsylvania Order also imposed the following management changes: (i) James L. Leuthe was required to resign as an officer and director of the Bank and not be involved in the day-to-day operations of the Bank, although Mr. Leuthe was permitted to remain as a member of the Board of Directors of the company and Chairman of the Company; (ii) the Board of Directors of the Bank was ordered to elect a new president to the Bank and increase and maintain the number of directors of the Bank to a minimum of six directors, subject to prior approval of such persons by the Department and the FDIC; and (iii) the Bank is required to retain qualified management and notify the Secretary of Banking of Pennsylvania of any resignations or terminations of any directors or senior executive officers of the Bank. Mr. Leuthe may be elected to the Board of Directors of the Bank at the conclusion of the earlier to occur of: (a) March 31, 1995; or (b) the achievement of the Performance Objectives of the Bank, provided that the Bank has complied with the terms of the Order.

 Plaintiff avers that he "...will suffer irreparable damage, injury and harm if the FDIC is allowed, in separate regulatory proceedings brought against James Leuthe, to bar and preclude him from the banking business for life." (Pl's Complaint, P9). This allegation is based upon plaintiff's apparent belief "...that only Mr. Leuthe could attract the necessary financing to ensure FLC's and FLB's success. Indeed, the only reason investors would risk their funds by purchasing FLC's Preferred stock was their confidence that James Leuthe would be able to revitalize FLC and FLB and thus make their investment profitable." (Pl's Complaint, P18).

 Discussion

 The FDIC contends that this lawsuit should be dismissed for lack of subject matter jurisdiction, insufficiency of process and service of process, failure to state a claim upon which relief can be granted and because plaintiff lacks standing to obtain the injunctive relief sought. Since we find that there is no subject matter jurisdiction, we do not reach defendant's other arguments. Moreover, in the absence of jurisdiction to act, an injunction cannot issue and hence plaintiff's motion for preliminary injunction/temporary restraining order must be denied.

 A. Standards Governing Rule 12(b)(1) Motions.

 Under Fed.R.Civ.P. 12(b)(1), a party may file a motion to dismiss for lack of subject matter jurisdiction. A district court can grant a Rule 12(b)(1) motion based on the legal insufficiency of the claim but dismissal is proper only when the claim appears to be immaterial and made solely for the purpose of obtaining jurisdiction or is wholly insubstantial or frivolous. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1408-09 (3rd Cir. 1991). See Also : Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 666, 94 S. Ct. 772, 776, 39 L. Ed. 2d 73 (1974). Unlike a motion to dismiss for failure to state a claim in which the plaintiff is entitled to have all reasonable inferences drawn in his favor, when jurisdiction is challenged under Rule 12(b)(1), the burden is on the plaintiff to prove that jurisdiction exists and the courts are not limited in their review to the allegations of the complaint. Doe v. William Shapiro, Esquire, P.C., 852 F. Supp. 1246, 1249 (E.D.Pa. 1994).

 Similarly, any evidence may be reviewed and any factual disputes resolved regarding the allegations giving rise to jurisdiction as it is for the Court to resolve all factual disputes involving the existence of jurisdiction. Sitkoff v. BMW of North America, Inc., 846 F. Supp. 380, 383 (E.D.Pa. 1994). In contrast, if the attack to jurisdiction is facial, that is, to the allegations of jurisdiction stated in the complaint, the factual allegations of the complaint are presumed to be true and the complaint is reviewed to ensure that each element necessary for jurisdiction is present. Id. If jurisdiction is based on a federal question, the pleader claiming federal jurisdiction simply must show that the federal claim is not frivolous. Radeschi v. Commonwealth of Pennsylvania, 846 F. Supp. 416, 419 (W.D.Pa. 1993), citing Bartholomew v. Librandi, 737 F. Supp. 22 (E.D.Pa.), aff'd, 919 F.2d 133 (3rd Cir. 1990). Only if it appears to a certainty that the pleader will not be able to assert a ...


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