Forgot your password?
Please enter your email & we will send your password to you:
My Account:
Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
2003 LC CASE SUMMARIES 2003 U.S. Dist. LEXIS 8185 (D. Or.) [U.S.A.]
Topic:Bank Solvency; Bank Regulation; Safety and Soundness; Financial Institutions Supervisory Act of 1966 (FISA)
Type of Lawsuit: Applicant sued Bank Regulator to prevent it from ordering Beneficiary to draw on LC.
Parties:
Plaintiff/Applicant/Holding Company- Spiegel Holdings, Inc. (Counsel: William L. Larkins, Jr. and Julie R. Vacura of Larkins Vacura, LLP)
Defendant/Bank Regulator- Office of the Comptroller of the Currency of the United States (OCC) and John D. Hawke, Jr., Comptroller of the Currency (Counsel: L. Robert Griffin, Horace G. Sneed, Frederick G. Petrick of the Office of the Comptroller of the Currency)
Defendant/Beneficiary/Bank- First Consumers National Bank (FCNB) (Counsel: David G. Hosenpud and Leah C. Lively of Lane Powell Spears Lubersky LLP)
Defendant/Issuer- Deutsche Bank (Counsel: Rob Kazami of Deutsche Bank, Legal Department)
Defendant- Federal Deposit Insurance Corporation (FDIC) (Counsel: Thomas L. Holzman of Federal Deposit Insurance Corporation)
Underlying Transaction: The conditional continuation of Beneficiary's banking operations.
LC: Standby LC for US$78 million. Silent as to governing rules.
Decision: The U.S. District Court for the District of Oregon, King, J., granted Bank Regulator's motion to dismiss for lack of subject matter jurisdiction and dismissed complaint.
Rationale: Based on applicable regulations, the court has jurisdiction to order compliance with Regulatory Agency's orders, but not to enjoin, review, modify, suspend, or terminate an order of Regulatory Agency.
Article
Factual Summary: Bank, a wholly-owned subsidiary of Holding Company, issued credit cards and purchased credit card receivables as part of its banking operations. Concerned about Bank's ability to pay for receivables if credit cards were terminated, Bank Regulator required that Holding Company obtain an LC payable to Bank in the event that the credit cards were terminated. Accordingly, Holding Company/Applicant caused an LC to be issued payable to Bank/Beneficiary.
Subsequently, Bank/Beneficiary drew US$14 million under the LC. Citing concerns of future fraud or violation of the terms of the LC, Applicant sought injunction prohibiting Bank Regulator or its assigns from requesting or ordering draws on the LC.
The Court granted Bank Regulator's Motion to Dismiss for Lack of Subject Matter Jurisdiction pursuant to 12 U.S.C. §1818(I)(1)(#18), the Financial Institutions Supervisory Act of 1966 (FISA).
Legal Analysis:
1. Bank Solvency; Bank Regulation; Safety and Soundness; Financial Institutions Supervisory Act of 1966 (FISA): Bank Regulator contended that the court "lack[ed] subject matter jurisdiction to compel [Bank Regulator] to act in a particular manner regarding its enforcement of the Consent order and its supervision of [Bank/Beneficiary]," according to the Financial Institutions Supervisory Act of 1966 (FISA). The act denies U.S. district courts "'jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under any such section, or to review, modify, suspend, terminate, or set aside any such notice or order.'" The court agreed that it did not have jurisdiction over Bank Regulator or its supervision of Bank/ Beneficiary, and accordingly dismissed the complaint.
[JEB/fkd]
COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.