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BIASE v. KAPLAN

May 9, 1994

NICOLA BIASE, Plaintiff,
v.
LAWRENCE O. KAPLAN, ANGELO A. VIGNA, V. GERARD COMIZIO, EUGENE M. SCHWARTZ, JOHN C. GRIFFIN, ELLEN B. KULKA, TARA L. FRENCH and the OFFICE OF THRIFT SUPERVISION, Defendants.



The opinion of the court was delivered by: LECHNER

 LECHNER, District Judge

 This is an action brought by pro se plaintiff Nicola Biase ("Biase") against the Office of Thrift Supervision (the "OTS") and Lawrence O. Kaplan ("Kaplan"), Angelo A. Vigna ("Vigna"), V. Gerard Comizio ("Comizio"), Eugene M. Schwartz ("Schwartz"), John C. Griffin ("Griffin"), Ellen B. Kulka ("Kulka") and Tara L. French ("French") (collectively, the "Individual Defendants"), all current or former employees of OTS. Biase alleges OTS and the Individual Defendants violated 42 U.S.C. § 1985 and his rights under the First and Fifth Amendments. Jurisdiction is alleged pursuant to 28 U.S.C. §§ 1331 and 1367(a).

 Currently before the court are the motions of OTS and the Individual Defendants to dismiss the action. OTS moves for dismissal of the action under Fed.R.Civ.P. 12(b)(1) and 12(b)(6) (the "OTS Motion"). The Individual Defendants move for dismissal under Fed.R.Civ.P. 12(b)(1), 12(b)(5) and 12(b)(6) (the "Individual Defendants' Motion"). *fn1" For the reasons stated below, both the OTS Motion and the Individual Defendants' Motion are granted and the action is dismissed.

 Facts

 On 5 November 1993, Biase filed a complaint (the "Complaint") against the OTS, Kaplan, Vigna and Comizio, seeking $ 500,000,000.00 in damages, "together with the interest thereon [and] the costs and disbursements of the action." Complaint ad damnum clause, PP 1-6. On 11 January 1994, Biase filed an amended complaint (the "Amended Complaint"), adding Schwartz, Griffin, Kulka and French as defendants.

 According to the Amended Complaint, Biase is a resident of the state of New Jersey. See Amended Complaint, P 3. The Amended Complaint alleges the Individual Defendants were, "at all relevant times," employees of the OTS located in Washington, D.C. and the state of New Jersey. *fn2" Id., PP 4-9. The Amended Complaint alleges the Individual Defendants "did engage in a conspiracy with [each other] in order to deprive [Biase] of constitutional and civil rights." Id.

 According to the Amended Complaint, in 1990, Biase purchased 9.4% of the shares in Polifly Financial Corporation ("PFC"). Id., P 11. Biase identifies PFC as "a New Jersey savings and loan corporation." Id. According to the Amended Complaint, the "chief asset" of PFC at that time was Polifly Savings and Loan ("PSL"). Id. PSL was a "troubled savings and loan association operating under Consent Agreement." *fn3" Id. At the time Biase purchased shares of PFC stock, he requested and received two seats on PFC's board of directors (the "Board"). Id.

 Upon being appointed to the Board, Biase "recommended that [PFC's] management focus [its] attention upon drastically reducing operating expenses, including but not limited to reducing excessive executive compensation." Id., P 12. Biase "also questioned OTS's own actions regarding PSL by suggesting that its hand picked directors and officers were incompetent and/or indifferent to [the] survival of [PSL]." Id., P 13. Biase alleges his actions alienated OTS, which "refused to address . . . Biase's concerns about its actions regarding PSL." Id., PP 14-15.

 According to the Amended Complaint, Biase, "frustrated in his attempts to get the Board . . . and OTS to take the necessary steps to save PSL," resigned from the Board on 28 January 1992. Id., P 16. Upon his resignation, Biase "announced that he would exercise his rights as a shareholder and appeal to his fellow shareholders." Id.

 The Amended Complaint alleges that, on or about 29 February 1992, Biase "made a request for a special shareholders meeting [(the "Shareholders Meeting")] in a letter to the secretary of PFC." Id., P 17. Biase alleges the purpose of the Shareholders Meeting "was to discuss and vote on the following proposals:"

 
(i) remove the president and chief executive officer of [PFC]; (ii) decrease the operating expense of [PFC]; (iii) limit compensation paid to the executives of [PFC]; (iv) change the location of [PFC's] headquarters; (v) commence legal action on behalf of [PSL] against the United States and certain United States Government agencies for breach of contract and restitution damages in an amount not less than $ 11,730[,]583.

 Id.

 The Amended Complaint alleges that, in response to his request for the Shareholders Meeting, OTS and the Individual Defendants "conspired to enter a campaign of retaliation and harassment against . . . Biase with a view of depriving him of his rights as a shareholder of PFC as well as guarantees of freedom of association and expression, due process and equal protection of the laws." Id., P 18.

 Biase alleges that, "subsequent to his request [for the Shareholders Meeting] Biase was . . . the target of two separate investigations by OTS [(the "OTS Investigations")]." Id., P 19. Biase alleges the OTS Investigations were "groundless, retaliating in bad faith and were conducted with the sole purpose of preventing Biase [from] informing his fellow shareholders of misconduct on the part of officials of OTS and officers and directors of PFC and PSL." Id.

 Biase alleges that, in connection with the OTS Investigations, the OTS issued "certain subpoenas" (the "OTS Subpoenas") "for the sole purpose of harassing . . . Blase and not as part of any justifiable investigation." *fn4" Id., P 21. Biase alleges that, "as a result of this campaign of harassment, . . . [he] was unable to appeal to his fellow shareholders." Id., P 22. Biase further alleges that, as a "direct consequence" of the OTS Investigations, PSL "failed and was taken over by the Resolution Trust Corporation" ("RTC") on or about 20 November 1992. Id., P 23.

 The first count of the Amended Complaint ("Count I") alleges the actions of OTS and the Individual Defendants deprived Biase of his rights to freedom of expression and association, in violation of the First Amendment. Id., P 25. The Amended Complaint seeks $ 100,000,000.00 for the deprivation alleged in Count I. Id., ad damnum clause, P 1.

 The second count of the Amended Complaint ("Count II") alleges the actions of OTS and the Individual Defendants deprived Biase of his right to due process of law, in violation of the Fifth Amendment. Amended Complaint, P 26. The Amended Complaint seeks $ 100,000,000.00 in damages for the deprivation alleged in Count II. Id., ad damnum clause, P 2.

 The third count of the Amended Complaint ("Count III") alleges the actions of OTS and the Individual Defendants deprived Biase of his right to equal protection of the law, in violation of the Fourteenth Amendment. Amended Complaint, P 27. The Amended Complaint seeks $ 100,000,000.00 in damages for the deprivation alleged in Count III. Id., ad damnum clause, P 3.

 The fourth count of the Amended Complaint ("Count IV") alleges the actions of OTS and the Individual Defendants violated 42 U.S.C. § 1985. Amended Complaint, P 29. The Amended Complaint seeks $ 100,000,000.00 in damages for this violation. Id., ad damnum clause, P 4.

 The fifth count of the Amended Complaint ("Count V") alleges the actions of OTS and the Individual Defendants constituted "abuse of process." Amended Complaint, P 30. Count V, like the other counts in the Amended Complaint, seeks $ 100,000,000.00 in damages. *fn5" Id., ad damnum clause, P 5.

 The OTS Motion was filed 7 March 1994. The Individual Defendants' Motion followed on 9 March 1994.

 Discussion

 A. Standard of Review for Pro Se Submissions and Pleadings

 Pro se submissions "must be held to less stringent standards than formal pleadings drafted by lawyers." Estelle v. Gamble, 429 U.S. 97, 106, 50 L. Ed. 2d 251, 97 S. Ct. 285 (1976), reh'g denied, 429 U.S. 1066, 50 L. Ed. 2d 785, 97 S. Ct. 798 (1977) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)); see also Haines v. Kerner, 404 U.S. 519, 520, 30 L. Ed. 2d 652, 92 S. Ct. 594 reh'g denied, 405 U.S. 948, 30 L. Ed. 2d 819, 92 S. Ct. 963 (1972)); United States v. Day, 969 F.2d 39, 42 (3rd. Cir. 1992); Lewis v. Attorney Gen. of United States, 878 F.2d 714, 722 (3d Cir. 1989). When reviewing a pro se complaint in this context, a court must assume a plaintiff's factual allegations are true and construe his claims liberally. Neitzke v. Williams, 490 U.S. 319, 330 n.9, 104 L. Ed. 2d 338, 109 S. Ct. 1827 (1989); Haines, 404 U.S. at 520; Roman v. Jeffes, 904 F.2d 192, 197 (3d Cir. 1990).

 B. The OTS Motion

 As indicated, OTS moves to dismiss the Amended Complaint for lack of jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1), and for failure to state a claim upon which relief may be granted, pursuant to Fed.R.Civ.P. 12(b)(6).

 1. Standard of Review under Fed.R.Civ.P. 12(b)(1)

 A challenge to the court's subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) differs from an attack on the merits pursuant to Fed. R. Civ. P. 12(b)(6) or 56. Rule 12(b)(1) does not afford a plaintiff all the procedural safeguards provided by Rules 12(b)(6) and 56. Instead, Rule 12(b)(1) challenges a plaintiff's right to be heard in Federal court. Limited procedural safeguards exist depending on the type of Rule 12(b)(1) motion.

 There are two types of Rule 12(b)(1) motions, those which "attack the complaint on its face" and those which "attack the existence of subject matter jurisdiction in fact, quite apart from any pleading." Mortensen v. First Federal Sav. & Loan Ass'n., 549 F.2d 884, 891 (3d Cir. 1977); Frankford Hosp. v. Davis, 647 F. Supp. 1443, 1445 (E.D.Pa. 1986). The facial attack offers a safeguard to the plaintiff similar to a 12(b)(6) motion; the allegations of the complaint are considered to be true for the purposes of such a motion. Mortensen, 549 F.2d at 891.

 For a Rule 12(b)(1) motion addressing the existence of subject matter jurisdiction, no presumptive truthfulness attaches to a plaintiff's allegations. Id. Accordingly, unlike a Rule 12(b)(6) motion, consideration of a Rule 12(b)(1) jurisdiction-type motion need not be limited; conflicting written and oral evidence may be considered and a court may "decide for itself the factual issues which determine jurisdiction." Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897, 70 L. Ed. 2d 212, 102 S. Ct. 396 (1981). This type of a Rule 12(b)(1) motion need not be converted into a Rule 56 motion when extra-pleading materials are considered. Williamson, 645 F.2d at 416; Frankford Hosp., 647 F. Supp. at 1445; see also 5 C. Wright & A. Miller, Federal Practice and Procedure § 1366 at 676.

 Although motions pursuant to Rules 12(b)(1) and 12(b)(6) are distinct, often jurisdictional issues are intertwined with the merits of a case. "Where an attack on jurisdiction implicates the merits of a plaintiff's Federal cause of action, the district court's role in judging the facts may be more limited. . . ." Williamson, 645 F.2d at 413 n.6.

 
In other words, when the basis of jurisdiction is also an element in the plaintiff's Federal cause of action, a conservative approach to a 12(b)(1) motion to dismiss is warranted. Where the defendant's challenge to the court's jurisdiction is also a challenge to the existence of a Federal cause of action, the proper course of action for the district court (assuming that the plaintiff's Federal claim is not immaterial and made solely for the purpose of obtaining Federal jurisdiction and is not insubstantial and frivolous) is to find that jurisdiction exists and to deal with the objection as a direct attack on the merits of the plaintiff's case.

 Id. at 415 (citing Bell v. Hood, 327 U.S. 678, 682, 90 L. Ed. 939, 66 S. Ct. 773 (1946)). However, as further explained by Williamson, "a jurisdictional attack which does not implicate the merits of any Federal cause of action is not bound by [this] . . . standard." 645 F.2d at 415 n.9 (emphasis in original).

 A Federal court has broad power to decide whether it has jurisdiction to hear a case and may make factual findings which are decisive to the issue of jurisdiction. Id. at 413. The burden of demonstrating the existence of Federal jurisdiction is on the party seeking to invoke it. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir.), cert. denied, 501 U.S. 1222, 115 L. Ed. 2d 1007, 111 S. Ct. 2839, 1111 S. Ct. 2839, 115 L. Ed. 2d 1007 (1991); Mortensen, 549 F.2d at 891. In the instant case, the OTS Motion seeks dismissal of the Amended Complaint on the basis of OTS's asserted sovereign immunity. The OTS Motion neither attacks the Amended Complaint on its face nor addresses the merits of the Amended Complaint; it is an attack on subject matter jurisdiction per se.

 2. Sovereign Immunity

 "It is axiomatic that the United States may not be sued without its consent and that the existence of consent is a prerequisite for jurisdiction." United States v. Mitchell, 463 U.S. 206, 212, 77 L. Ed. 2d 580, 103 S. Ct. 2961 (1983); see Federal Deposit Insurance Corporation v. Meyer, U.S. , No. 92-741, slip op. at 3 (23 Feb. 1994); Loeffler v. Frank, 486 U.S. 549, 554, 100 L. Ed. 2d 549, 108 S. Ct. 1965 (1988). Moreover, "the terms of [the United States'] consent to be sued in any court define that court's jurisdiction to entertain the suit." United States v. Dalm, 494 U.S. 596, 608, 108 L. Ed. 2d 548, 110 S. Ct. 1361 (quoting United States v. Sherwood, 312 U.S. 584, 586, 85 L. Ed. 1058, 61 S. Ct. 767 (1941)), reh'g denied, 495 U.S. 941 (1990); see Meyer, slip op. at 3; Lehman v. Nakshian, 453 U.S. 156, 160, 69 L. Ed. 2d 548, 101 S. Ct. 2698 (1981). The conditional sovereign immunity of the United States extends to its branches and agencies, including the OTS. *fn6" See Franchise Tax Board v. United States Postal Service, 467 U.S. 512, 517-18, 81 L. Ed. 2d 446, 104 S. Ct. 2549 (1984); Security Savings Bank v. Director, Office of Thrift Supervision, 798 F. Supp. 1067, 1073-74 (D.N.J. 1992) (suit against OTS requires waiver of sovereign immunity); Carteret Savings Bank v. Office of Thrift Supervision, 762 F. Supp. 1159, 1167 (D.N.J. 1991) (same).

 The United States' consent to be sued must be express in order to constitute a waiver of sovereign immunity. See Library of Congress v. Shaw, 478 U.S. 310, 318, 92 L. Ed. 2d 250, 106 S. Ct. 2957 (1986); Block v. North Dakota, 461 U.S. 273, 280, 75 L. Ed. 2d 840, 103 S. Ct. 1811 (1983); United States v. New York Rayon Importing Co., 329 U.S. 654, 659, 91 L. Ed. 577, 67 S. Ct. 601 (1947). "There can be no consent by implication or by use of ambiguous language." Shaw, 478 U.S. at 318 (quoting New York Rayon Importing Co., 329 U.S. at 659); see United States v. Mitchell, 445 U.S. 535, 538, 63 L. Ed. 2d 607, 100 S. Ct. 1349 (1980) (waiver of sovereign immunity may not be found in the absence of "unequivocally expressed" Congressional intent). "In analyzing whether Congress has waived the immunity of the United States [or its agency], [a court] must construe waivers strictly in favor of the sovereign, and not enlarge the waiver 'beyond what the language requires.'" Shaw, 478 U.S. at 318 (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-86, 77 L. Ed. 2d 938, 103 S. Ct. 3274 (1983)).

 Congress has effected a narrow waiver of sovereign immunity with respect to suits against the OTS. Pursuant to 12 U.S.C. § 1464(d), which defines the regulatory authority of the OTS:

 
Except as otherwise provided, the Director [of the OTS] shall be subject to suit (other than suits on claims for money damages) by any Federal savings association or director or officer thereof with respect to any matter under this section or any other applicable law, or regulation thereunder, in the United States district court for the judicial district in which the savings association's ...

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