Court Opinion

ID: 181342
Source: CourtListenerOpinion
Date Created: 2010-12-17 20:53:20+00
Date Added: 2024-06-11T17:25:55.022677
License: Public Domain

NOT PRECEDENTIAL

                          UNITED STATES COURT OF APPEALS
                               FOR THE THIRD CIRCUIT
                                    ____________

                                         No. 10-1568
                                        ____________

                                   LOUIS A. DENAPLES,
                                                  Appellant
                                             v.

                    OFFICE OF THE COMPTROLLER OF THE CURRENCY
                                        ____________

                       On Appeal from the United States District Court
                           for the Middle District of Pennsylvania
                                   (D.C. No. 09-cv-01802)
                       District Judge: Honorable Thomas I. Vanaskie
                                       ____________

                         Submitted Under Third Circuit LAR 34.1(a)
                                    December 16, 2010

          Before: JORDAN, HARDIMAN and VAN ANTWERPEN, Circuit Judges.

                                  (Filed: December 17, 2010)
                                         ____________

                                 OPINION OF THE COURT
                                      ____________

HARDIMAN, Circuit Judge.

          Louis A. DeNaples appeals a District Court order dismissing his claim for lack of

subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). We will

affirm.
                                              I

       Because we write for the parties, we recount only those facts necessary to our

decision. DeNaples is a member of the Board of Directors of First National Community

Bank (FNCB), which operates in various locations in northeastern Pennsylvania.

DeNaples joined the Board in 1972 and has been its Chairman since 1988. FNCB is a

federally chartered bank and, as such, is subject to regulation by the Office of the

Comptroller of Currency (OCC) pursuant to the National Bank Act of 1864. See 12

U.S.C. § 1 et seq.

       In January 2008, the District Attorney for Dauphin County, Pennsylvania brought

criminal perjury charges against DeNaples, following his testimony before the

Pennsylvania Gaming Control Board regarding a gaming license for Mount Airy Casino.

Shortly after he was charged, DeNaples took a leave of absence from FNCB. Thereafter,

the OCC issued a Notice of Suspension pursuant to 12 U.S.C. § 1818(g)(1), which

formally prohibited DeNaples from being involved with FNCB or any other FDIC-

insured bank.

       While he and the District Attorney negotiated a resolution to the perjury charges,

DeNaples maintained that he would not accept a “pretrial diversion,” because such an

agreement would require him to resign from the Board of FNCB. See 12 U.S.C. § 1829

(stating that any person who enters into a “pretrial diversion or similar program” in

connection with a crime involving dishonesty is prohibited from, inter alia, holding a

                                              2
position as a director of an FDIC insured depository institutions without prior approval

from the FDIC). In April 2009, DeNaples and the District Attorney signed a Withdrawal

Agreement, in which the District Attorney agreed to withdraw the perjury charges in

exchange for various concessions from DeNaples.

       Two days after DeNaples executed the Withdrawal Agreement, he received a letter

from the OCC stating that the agency “ha[d] become aware of [DeNaples‟s] pretrial

diversion agreement.” App. 72. Because the agreement was “based on a crime that

involves dishonesty or a breach of trust,” DeNaples was “subject to the prohibitions set

forth in 12 U.S.C. §[] 1829.” Id. The letter also informed DeNaples that he “would be

subject” to “fines not exceeding $1,000,000 . . . [per] day . . . and/or a term of

imprisonment of not more than five years” for a knowing violation of § 1829. Id. The

OCC posted its determination on its website as a § 1829 enforcement action.1

       In June 2009, DeNaples‟s counsel wrote a letter to the OCC challenging the

agency‟s determination that the Withdrawal Agreement constituted a “pretrial diversion

or similar agreement.” This letter included an opinion from a Pennsylvania criminal

defense lawyer stating that the Withdrawal Agreement “was not, in any manner

whatsoever, . . . [a] pretrial diversion under State Law.” Id. at 76. The OCC responded to

DeNaples‟s challenge with a second letter reaffirming its conclusion that the Withdrawal

       1
        Section 1829 is a criminal statute enforceable by the Department of Justice. The
OCC is, however, authorized by § 1818 to remove an individual it finds to be in violation
                                              3
Agreement constituted a “pretrial diversion or similar program” under § 1829. The letter

concluded that “pursuant to 12 U.S.C. § 1829 . . . [DeNaples] is permanently prohibited

from continuing service at the Bank or any other federally insured depository institution.”

Id. at 83. The letter instructed DeNaples to “take immediate steps to inform the Board of

Directors that he may no longer serve in any capacity as [a director] of the Bank, and

indicate that his absence is permanent, rather than temporary in nature.” Id.

       After receiving the OCC‟s second letter, DeNaples filed a complaint in the District

Court requesting, inter alia, a declaration that the Withdrawal Agreement did not

constitute a “pretrial diversion or similar program.” DeNaples argued that the letters

issued by the OCC constituted final agency action and, as such, were subject to review

under the Administrative Procedure Act (APA). See 5 U.S.C. § 704 (“[F]inal agency

action for which there is no other adequate remedy in a court [is] subject to judicial

review.”). But see 5 U.S.C. § 701(a) (stating that APA review is unavailable to the extent

that “statutes preclude judicial review”).

       More than two months after DeNaples filed his complaint, the OCC commenced a

separate cease-and-desist proceeding against him pursuant to 12 U.S.C. § 1818(b). The

agency‟s objective in initiating the proceeding was to remove DeNaples from his position

as Chairman of the Board of FNCB for his violation of § 1829. One day after

commencing the § 1818(b) proceeding, the OCC filed a Motion to Dismiss DeNaples‟s

of § 1829. In this case, because the OCC was not acting pursuant to its authority under §
                                              4
complaint, arguing that any resolution of the merits of DeNaples‟s claim by the District

Court would impermissibly “affect” the OCC‟s cease-and-desist proceeding in violation

of the jurisdictional bar in § 1818(i). See 12 U.S.C. § 1818(i)(1) (“[E]xcept as otherwise

provided in this section or under section 1831o or 1831p-1 of this title no court shall have

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.”). After oral argument, the District Court granted the OCC‟s

motion. This appeal followed.2

                                                 II

       We exercise plenary review over a District Court order dismissing a claim for lack

of subject matter jurisdiction. See Gould Elecs. Inc. v. United States, 220 F.3d 169, 176

(3d Cir. 2000) (citing Dresser Indus., Inc. v. Underwriters at Lloyds of London, 106 F.3d

494, 496 (3d Cir. 1997)).

                                                 III

       DeNaples argues that the OCC was not authorized to issue the letters purporting to

remove him under § 1829 and that judicial review of the OCC‟s actions does not

implicate the jurisdictional bar of § 1818(i).

       The District Court correctly rejected DeNaples‟s argument. Although DeNaples

1818, its purported enforcement action was not binding.
                                                 5
would have us review the enforcement letters in isolation from the OCC‟s pending

§1818(b) cease-and-desist proceeding, it would be improper to do so. The OCC‟s

enforcement letters constituted an agency determination that DeNaples‟s Withdrawal

Agreement was a “pretrial diversion or similar agreement” under § 1829. This question is

under formal consideration by the OCC in its ongoing § 1818(b) proceeding. The

congressional framework enacted in § 1818 is intended to allow agencies to conduct

formal reviews without interference from the federal courts. See 12 U.S.C.

§1818(i)(1)(“[E]xcept as otherwise provided in this section . . . no court shall have

jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice

or order under this section.”). The broad language of § 1818(i) has led the Supreme Court

to interpret its jurisdictional bar expansively. See Bd. of Governors of Fed. Reserve Sys.

v. MCorp Fin., Inc., 502 U.S. 32, 44 (1991) (holding that § 1818(i) provides “clear and

convincing evidence” of congressional intent to strip jurisdiction). Here, the OCC‟s

§1818(b) proceeding against DeNaples is authorized by the Federal Deposit Insurance

Act. If we were to adjudicate the validity of the OCC‟s enforcement letters, our decision

would impermissibly “affect” the OCC‟s pending § 1818(b) proceeding in violation of

§1818(i)(1).3

       2
        The District Court exercised jurisdiction pursuant to 28 U.S.C. § 1331, 5 U.S.C.
§§ 701-706, and 28 U.S.C. §§ 2201-2202. We have appellate jurisdiction under 28
U.S.C. § 1291.
      3
        DeNaples argues that judicial review of whether the OCC lacked authority to
remove him pursuant to § 1829 would not “affect” the agency‟s pending cease-and-desist
                                             6
       DeNaples offers several reasons why the jurisdictional bar of § 1818(i) is

inapplicable. First, he claims that § 1818(i)(1) is only intended to protect agency

proceedings that are not yet final. Consequently, he insists that § 1818(i)(1) should not

apply to his purported removal pursuant to § 1829, which he believes constituted final

agency action. This argument fails to recognize the OCC‟s consistent position that the

letters purporting to remove DeNaples pursuant to § 1829 have no binding force.

Although the District Court concluded that the letters “bear the hallmarks of „final agency

action,‟” the Court also repeatedly noted that the letters lacked any statutory basis of

authority. DeNaples v. Office of Comptroller of Currency, No. 3:CV-09-1802, 2010 WL

457134, at *5 (M.D. Pa. Feb. 4, 2010). DeNaples cannot simultaneously argue both that

the letters were issued without authority, and therefore are not final, and that judicial

review of their merits is appropriate under § 1818(i)(1).

       DeNaples also argues that § 1818(i) is inapplicable because the OCC did not

proceeding within the meaning of § 1818(i). It is unclear how this affects our analysis,
however. Throughout this litigation, the OCC has maintained that the enforcement letters
were not binding upon DeNaples. In response to the District Court‟s query whether there
was any pending agency action that “would preclude Mr. DeNaples . . . from assuming
his position on the Board of Directors,” the OCC responded: “if he were to assume his
position, he would not be in violation of the letters, you can‟t violate the letters. If we
wanted to remove him, we would have to take some other temporary action or simply
wait until we resolved it through the 1818(b) proceeding.” App. 34-35. Thus, there is no
agency action prohibiting DeNaples from returning to FNCB, although he may be subject
to an enforcement action by the Department of Justice should he choose to return.
DeNaples‟s attempt to have us insulate him from any liability pending the resolution of
the OCC‟s cease-and-desist proceeding would be tantamount to a determination, contrary
to § 1818(i), that he is not in violation of § 1829.
                                              7
commence its cease-and-desist proceeding until after he filed a complaint in the District

Court. The District Court correctly rejected this argument as well. The jurisdictional bar

set forth in § 1818(i)(1) is not limited to judicial determinations that would “affect”

agency proceedings outstanding at the time that the action is commenced. Rather,

§1818(i)(1) imposes an expansive prohibition, stripping federal courts of jurisdiction

whenever a determination could affect an agency decision. See Hindes v. Fed. Deposit

Insur. Corp., 137 F.3d 148, 164 (3d Cir. 1998) (holding that § 1818(i), by its own terms,

“is not restricted to precluding judicial review which would interfere with an ongoing

administrative proceeding”); see also Groos Nat’l Bank v. Comptroller of Currency, 573

F.2d 889, 895 (5th Cir. 1978) (“The bank and Manges requested an injunction as well as a

declaratory judgment in their favor [prior to the initiation of the administrative

proceeding]; section 1818(i) in terms removes the court‟s jurisdiction to issue an

injunction affecting the regulatory agency‟s notice or order, except as provided in section

1818 proceedings and review.”). Consequently, the fact that the OCC‟s cease-and-desist

proceeding was commenced after DeNaples filed his complaint does not relieve us from

the jurisdictional bar of § 1818(i).4

                                             IV

       For the foregoing reasons, we will affirm the judgment of the District Court.

       4
        We note that DeNaples will have access to judicial review of the OCC‟s order
under 12 U.S.C. § 1818(h)(2) after the conclusion of the agency‟s cease-and-desist
proceeding.
                                              8