Hurry v. Fed. Deposit Ins. Corp.

JUSTINE HURRY, Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Defendant.

Civil Action No. 18-2435 (RDM)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

May 31, 2020

MEMORANDUM OPINION AND ORDER

The Change in Bank Control Act of 1978 ("CBCA"), 12 U.S.C. § 1817(j), prohibits a person from acquiring a controlling interest in a bank unless the relevant federal banking agency has been given sixty days prior written notice. Subject to certain limited extensions, after an agency receives a CBCA notice, it has sixty days to investigate, inter alia, the proposed acquirer's "competence, experience, integrity, and financial ability," 12 U.S.C. § 1817(j)(2)(B)(i); id. § 1817(j)(1), and it may disapprove the proposed acquisition if, among other things, the "acquiring person neglects, fails, or refuses to furnish the [agency] all the information [it] require[s]," id. §1817(j)(7)(E). Plaintiff Justine Hurry alleges that the period for disapproval with respect to a notice she submitted in November 2017 has long since passed, but the Federal Deposit Insurance Corporation ("FDIC") has unlawfully withheld its final determination. Dkt. 1. She asserts a single count under the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., and 12 U.S.C. § 1817(j), for "agency action unlawfully withheld or unreasonably delayed." 5 U.S.C. § 706(1). As for relief, she requests that the Court (1) declare that the agency "has unreasonably delayed rendering a decision concerning [her] Notice of Change in Control;" (2) declare "that the FDIC's failure to disapprove the transaction in accordance with its procedures and applicable law enables [her] to proceed with the transaction;" and (3) issue "an injunction compelling the FDIC to take action promptly with respect to [her] Notice of Change in Control, confirming that the transaction may proceed or stating its purported basis for disapproving the transaction." Dkt. 1 at 21 (Prayer for Relief).

The FDIC moves to dismiss Hurry's complaint as moot, arguing that it has acted on the notice and thus "agency actions" have not been "unlawfully withheld." Dkt. 14. According to the FDIC, although it has neither disapproved the transaction nor allowed the statutory clock to run out, thereby permitting the transaction to proceed, it has taken a final agency action—it closed Hurry's application pursuant to 12 C.F.R. § 303.11(e) on the ground that Hurry had "failed to furnish [the agency] with all the information needed to complete a review of her competence, experience, integrity, and financial ability pursuant to 12 U.S.C. § 1817(j)." Dkt. 1-14 at 2. In the FDIC's view, that determination constituted "final agency action" and, thus, there is no need—or basis—for the Court to order that the agency act on Hurry's notice. Dkt. 14 at 5-6. The FDIC also moves to dismiss for failure to prosecute because Hurry failed to comply with the Court-issued deadlines for her to amend her complaint and to move for summary judgment. Id. at 7-9.

For the reasons explained below, the Court will DENY the FDIC's motion to dismiss without prejudice.

I. BACKGROUND

A. The Change in Bank Control Act of 1978

Under the Change in Bank Control Act of 1978, Pub. L. No. 95-630, 92 Stat. 3683 (codified as amended at 12 U.S.C. §1817(j)), a person (either acting individually or in concertwith others) may not "acquire control of any insured depository institution" unless "the appropriate Federal banking agency," here, the FDIC, "has been given sixty days' prior written notice of [the] proposed acquisition and within that time period the agency has not issued a notice disapproving the proposed acquisition," 12 U.S.C. 1817(j)(1). A notice filed under the CBCA must contain, among other things, information about the "identity, personal history, business background, and experience of each person" acquiring the bank, "including [her] material business activities and affiliations during the past five years," id. § 1817(j)(6)(A).

Upon receiving a notice, the CBCA requires the FDIC to investigate "the competence, experience, integrity, and financial ability of" the applicant and to "make an independent determination of the accuracy and completeness of [the] information" the applicant submitted. Id. § 1817(j)(2)(B). After conducting its investigation, the FDIC "may disapprove any proposed acquisition" for several statutorily enumerated reasons, including, as relevant here, because the applicant "neglect[ed], fail[ed], or refuse[ed] to furnish the [agency] all the information [it] required." Id. § 1817(j)(7)(E). Any notice of disapproval must be issued within sixty days after the FDIC has received the notice of proposed acquisition, see id. § 1817(j)(1), although the FDIC may, in its discretion, extend the "period for disapproval" an "additional 30 days," id. After the initial extended 90-day period, the FDIC may extend the "period for disapproval" again, but only "2 additional times not for more than 45 days each," and only if: (1) the agency determines that "any acquiring party has not furnished all the information required" by the statute; (2) in the agency's judgment, "any material information submitted is substantially inaccurate;" (3) the "agency has been unable to complete the investigation . . . because of any delay caused by, or the inadequate cooperation of, [the] acquiring party;" or (4) "the agency determines that more time is needed" to investigate or analyze certain aspects of the application. Id.

Under the CBCA, the issuance of a notice of disapproval triggers an administrative and judicial appeals process. If the FDIC disapproves a proposed acquisition, "[w]ithin three days" of its "decision to disapprove," it must "notify the acquiring party in writing of the disapproval" and must "provide a statement of the basis for the disapproval." 12 U.S.C. § 1817(j)(3); see also 12 C.F.R. § 308.112(a)(2)(ii) (requiring that a notice of disapproval inform the applicant that "a hearing may be requested . . . within ten days"). "Within ten days of receipt of such notice of disapproval," the acquiring party may then "request an agency hearing on the proposed acquisition." 12 U.S.C. § 1817(j)(4). If the person's "proposed acquisition is disapproved after agency hearings," then the person "may obtain review by" the U.S. court of appeals in which the home office of the bank to be acquired is located or in the D.C. Circuit, which may set aside the agency's decision "if found to be arbitrary or capricious or if found to violate the procedures established by the [CBCA]." Id. § 1817(j)(5).

B. Factual and Procedural Background

For purposes of the pending motion to dismiss, the Court will assume the truth of the following facts, which are taken from Plaintiff's complaint and the documents attached to it. See Maybank v. Speer, 251 F. Supp. 3d 204, 205-06 (D.D.C. 2017); see also Indian River Cty. v. Rogoff, 254 F. Supp. 3d 15, 18 (D.D.C. 2017).

This action stems from Plaintiff Justine Hurry's efforts to acquire a "majority of the common shares" of "The Bank of Orrick, Missouri" (the "Bank"). Dkt. 1 at 2 (Compl. ¶ 1). On November 14, 2017, Hurry submitted a notice to the FDIC indicating that she intended to acquire control of the Bank. See id. (Compl. ¶ 2); Dkt. 15 at 7. The notice (also referred to by the parties as the "file" or "application") included an "Interagency Notice of Change in Control" form and an "Interagency Biographical and Financial Report." See, e.g., Dkt. 1-6 at 2; Dkt. 1-1at 2. Together, her submission provided the FDIC with information about her background and experience and relevant financial statements, and it disclosed the funds she planned on using to complete the acquisition. See Dkt. 1 at 6 (Compl. ¶ 19); see also Dkt. 1-1 (Hurry's Redacted Interagency Notice of Change in Control); Dkt. 1-2 (Hurry's Redacted Interagency Biographical and Financial Report).

After Hurry submitted her notice, the FDIC "sent [her] a response raising questions about the structure of the acquisition and whether the available funds were sufficient, the source of available funds, the extent of [] Hurry's role in the Bank, . . . and numerous other questions concerning business plans and financial projections for the Bank itself." Dkt. 1 at 7-8 (Compl. ¶ 22). In response, Hurry updated her forms, and, on December 21, 2017, she notified the FDIC by letter "how [her] updated application addressed the [agency's] questions." Id. at 8 (Compl. ¶ 23); Dkt. 1-3. On January 12, 2018, the FDIC notified Hurry that it was "returning [her] [updated] [n]otice" because it was "incomplete and insufficient for the FDIC's consideration." Dkt. 1-4 at 2. The letter also outlined the information Hurry's application should contain and cautioned her that the FDIC "may disapprove a [n]otice, if among other things, the acquirer neglects, fails, or refuses to furnish to the FDIC all information required by the FDIC." Id. This cycle then repeated itself several times over the following months: Hurry allegedly updated her application and submitted additional documentation, see Dkt. 1-6 at 2 (Mar. 23, 2018); Dkt. 1-7 at 2 (Mar. 30, 2018); Dkt. 1-9 at 2 (June 22, 2018); Dkt. 1-10 (July 2, 2018), but each time the FDIC deemed the response insufficient and requested additional information, see Dkt. 1-11 at 2 (discussing the back-and-forth).

In light of the parties' impasse, on July 24, 2018, the FDIC notified Hurry that it was "returning [her] filing as incomplete" because she "failed to furnish" information the agency hadrequested on "numerous occasions, both in writing and verbally." Dkt. 1-11 at 2. Hurry responded by requesting that the agency instead "make a final decision on [her] notice," stating that "the time for the FDIC to disapprove the notice" had "passed many months ago" and that the FDIC's failure to render a final decision deprived her of her statutory rights to an administrative appeal, and, ultimately, an appeal to a U.S. court of appeals. Dkt. 1-12 at 2-3. S...