Opinion ID: 2373765
Heading Depth: 1
Heading Rank: 3

Heading: response to certified questions

Text: I. Because the plaintiffs no longer seek to nullify the Maine Savings Bank conversion, with its concomitant administrative procedures and regulatory approvals, [12] we need not address question one insofar as it requests instruction on the cognizability and viability of plaintiffs' statutory claims under the Maine Banking Code, the Maine Administrative Procedure Act, and Maine Business Corporation Act. Any pronouncement we make regarding plaintiffs' statutory claims would be purely advisory and not within our authority to render. See In re Richards, 223 A.2d 827, 829 (Me.1966). Plaintiffs' complaint, however, also asserts common law causes of action for breach of fiduciary duty, intentional and negligent misrepresentation, tortious conversion, unjust enrichment, and breach of contract. The District Court seeks instruction as to whether these common law claims are barred by the Superintendent's issuance of the certificate of conversion or by the plaintiffs' failure to obtain judicial review of the Superintendent's final action within the time limits imposed by the Administrative Procedure Act. See 5 M.R.S.A. § 11002. Although plaintiffs' common law claims are premised on their assertion that depositors in a mutual savings bank have a recognizable property interest in the mutual's net worth, see Lovell v. One Bancorp, 690 F.Supp. 1090, 1103 n. 24 (D.Me.1988), an interest we determine to be a mere contingency and not subject to vesting on conversion, see infra Section III, we nonetheless address this portion of question one. We instruct the District Court that the statutory and administrative scheme governing the conversion of a mutual savings bank to stock form has effectively displaced private rights of action relating to the conversion process. The issuance of the certificate of conversion and the failure to seek judicial review under the Administrative Procedure Act, therefore, serve to bar plaintiffs' common law claims for relief. A review of plaintiffs' common law claims makes quite clear that their attack is directed to the contents of the plan of conversion, the materials distributed to account holders regarding the conversion, and the particular method of conversion employed. The plaintiffs' common law claims are really a challenge to the Superintendent's approval of the conversion and the entire underlying conversion procedure. The statutory scheme contemplates that the Superintendent, exercising specified responsibilities, must find and insure that the interests of the depositors are equitably provided for in the plan, that the conversion will not adversely affect the stability of other institutions, and that all statutory and regulatory requirements governing conversions have been met. See 9-B M.R.S.A. §§ 252, 253, 344. The Superintendent's approval of the conversion and issuance of a certificate of conversion is conclusive evidence ... of the correctness of all proceedings relating to the conversion. 9-B M.R.S.A. § 343(4)(B). Judicial review of the Superintendent's decision shall be in accordance with the Maine Administrative Procedure Act. 9-B M.R.S.A. § 256; see 5 M.R.S.A. §§ 11001-11008. [13] It seems clear that the legislature intended section 256 to be the exclusive avenue for relief from the Superintendent's order of approval. It would certainly be anomalous to give the certificate of conversion conclusive effect absent judicial review of the Superintendent's action taken in accordance with the APA, but then to allow common law causes of action attacking the contents of the plan of conversion and the conversion process in general. Federal courts have consistently held that the administrative scheme governing conversions of federally-chartered institutions displaces private rights of action. These courts have refused to entertain damage claims collaterally challenging the terms of a conversion plan approved by banking regulators. Craft v. Florida Fed. Sav. & Loan Ass'n, 786 F.2d 1546, 1552 (11th Cir.1986); Harr v. Prudential Fed. Sav. & Loan Ass'n., 557 F.2d 751, 753 (10th Cir.1977) cert. denied 434 U.S. 1033, 98 S.Ct. 766, 54 L.Ed.2d 780 (1978); see also Federal Home Loan Bank Bd. v. Elliott, 386 F.2d 42, 53 (9th Cir.1967). In Harr, the Tenth Circuit Court of Appeals affirmed the dismissal of a complaint that challenged a mutual-to-stock conversion plan as a wrongful taking of depositors' interest and also attacked the proxy solicitation material utilized in the conversion. That court stated: [N]o matter how otherwise described, [plaintiffs' action] must in the first instance be a challenge to the approval by the Bank Board of the plan of conversion.... It is The Plan itself which is the real basis for the arguments advanced here by plaintiffs.... It is based on the consequences or impact of the plan on plaintiffs. .... The complaint is directed to matters which are part and parcel of the plan of conversion approved by the Board. The plan itself is complained of as being unfair and arbitrarily having converted plaintiffs' interest in the mutual association to a stock ownership.... This can be nothing more than an assertion that the plan is wrong and should not have gone into effect.... As the matter now stands, the approval of the Board must somehow be first set aside before the plaintiffs can proceed as they argue here.... It does not make much difference whether this is called an exhaustion of administrative remedies, or whether it is viewed as what in reality is a challenge to the Bank Board's decision.... The subject matter, the nature of plaintiffs' claim, and the arguments before this court demonstrate that the relief sought can only be afforded by a challenge to the Bank Board's action as the basic decision and authorization for the acts and consequences complained of. Anything else would be directed to derivative and secondary matters, and would, for all practical purposes, be a collateral attack on the decision. The statutory provisions are directed to this end and we hold that the remedy created is exclusive under these circumstances. Harr, 557 F.2d at 753-54. State courts, too, have dismissed similar complaints collaterally attacking a banking board's order of approval of a conversion. See, e.g., In re New York Sav. Bank Depositors Litig., 145 Misc.2d 620, 547 N.Y.S.2d 497, 500 (Sup.Ct.1989), aff'd 162 A.D.2d 251, 559 N.Y.S.2d 125 (1990). We come to a similar conclusion here. Plaintiffs' common law claims in effect challenge the plan of conversion and the Superintendent's final decision. [14] Section 256 provides that relief from the Superintendent's decision must be pursued in accordance with the Administrative Procedure Act. If no appeal is sought, the certificate of conversion is conclusive of the propriety of the conversion procedure. 9-B M.R.S.A. § 343(4)(B). Plaintiffs' assertion of common law claims in this matter amount to an improper collateral attack. The Banking Code and APA provide the exclusive remedy for alleged error in a mutual-to-stock conversion. [15] II. With regard to question two, it is clear that, at the time of the conversion here in question, depositors in a mutual savings bank had no statutory right to vote by mail or by proxy on the association's conversion to stock ownership. The applicable provisions regarding account holder approval set forth in 9-B M.R.S.A. § 344(3) (as amended by P.L.1981, ch. 553), expressly provided that any eligible account holders not present at the meeting in person were to be regarded as having affirmatively voted for the conversion, and were to be counted towards the two-thirds required for approval of the plan. Because plaintiffs no longer seek to nullify the conversion by challenging the conversion procedure, we need not go any further to decide if any right to vote by mail or proxy derives from some other source. III. Question Three lies at the heart of this case. In order to properly instruct the District Court on the question of whether depositors in a mutual savings bank have the enforceable right to a distribution of the association's net worth on conversion to stock form, we are required to examine the provisions of the Maine Banking Code and its legislative history, the Maine Savings Bank charter, and case law from this and other jurisdictions.