APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
Before Seitz, Chief Judge, and Aldisert and Rosenn, Circuit Judges.
On June 14, 1976, the New Jersey Commissioner of Banking closed the doors and seized the assets of the First State Bank of Hudson County (the "Bank"), a commercial institution chartered under the laws of New Jersey, whose deposits were insured by the Federal Deposit Insurance Corporation ("FDIC"). Alleging that in the course of a bank examination the FDIC had discovered that the Bank's president was engaging in serious criminal violations involving the misapplication of bank funds but that the FDIC had negligently failed to report such discovery to the Bank, the Bank brought an action against the United States to recover damages pursuant to the Federal Tort Claims Act, 28 U.S.C. §§ 2671 et seq. (1976). Because we believe the FDIC, under the circumstances of this case, owed no duty to warn the Bank, we affirm the judgment for the defendant.
The Bank began business in December 1969. In September 1970, Edward P. Dooley ("Dooley"), whose subsequent misconduct would contribute to the Bank's downfall, became president. In the autumn of 1971, the Bank applied for approval to open a new branch and this application occasioned a routine investigation by the FDIC. That investigation, which the FDIC began in February 1972, uncovered some questionable operations by the Bank.
In a report to the Bank, sent on June 1, 1972, the FDIC observed a "failure on the part of the active management to adhere to banking principles and related laws and regulations." The FDIC noted that a large portion of the Bank's loans were in arrears, that the Bank maintained insufficient credit information, that loans exceeded statutory lending limits and were improperly concentrated in a few borrowers, and that the Bank was lax in its internal controls. The FDIC urged "that effective action be taken to improve the unsatisfactory conditions noted." The report further detailed violations of New Jersey's banking statutes and FDIC regulations and urged that effective action be taken as quickly as possible. Replying by letter to the FDIC on June 20, the Bank declared that it was taking steps to correct these problems. According to the Bank's complaint in the instant suit, this reply went to the FDIC over the signature of the secretary of the board of directors but had actually been prepared by Dooley. As the complaint alleges, the reply "contained willfully false information and deliberately concealed material facts known at the time only to Dooley."
The FDIC allegedly undertook a further investigation on July 11, 1972, without the Bank's knowledge, to verify the paydowns reported by the Bank in its letter of June 20. The examiner, Thomas J. Spillane ("Spillane"), is asserted to have made a second examination on September 11 and 12. While conducting these examinations, Spillane allegedly discovered that Dooley, in violation of law, was giving the FDIC false statements about the Bank's operations. He did not inform the bank of this discovery. On October 20, 1972, the Bank sent a second letter to the FDIC, which again affirmed that it was reforming its practices, but which the Bank asserts in its complaint contained willfully false information and deliberately concealed facts. The FDIC acknowledged this letter and requested further information. The Bank replied with another letter dated October 30, 1972, which it also characterizes as containing willfully false statements and misleading information.*fn1
On July 19, 1973, after the FDIC had evidently informed the Bank more specifically about its president's misdeeds, the Bank summarily dismissed Dooley. Dooley later pleaded guilty to charges that he had misapplied funds of a bank insured by the FDIC. 18 U.S.C. §§ 2, 371 & 656 (1976). As the Bank alleges, it first learned in February 1976 that Spillane had discovered Dooley's misapplication of funds in July 1972 and that the FDIC had not immediately shared its knowledge with the Bank. Having first exhausted its administrative remedies, the Bank then filed a complaint against the United States, in which it asserted a cause of action under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-80 (1976).
The Bank sought to recover from the United States for damages caused by Dooley between July 11, 1972, and July 19, 1973 when Dooley was discharged. The Bank contended that the FDIC had breached a duty to inform it of Dooley's misapplication of funds. Although the Bank argued that Spillane had actual knowledge of Dooley's crime, it alternatively pleaded that Spillane had failed to discover the malfeasance, and thus had violated the standard of due care. After the filing of this complaint, the Banking Commissioner of New Jersey seized the Bank's business and assets, which are now being liquidated. With the approval of the Superior Court of New Jersey, the Commissioner allowed the management of the Bank to prosecute this suit.
The United States moved to dismiss the complaint under Fed.R.Civ.P. 12(b)(1) & (6) for lack of jurisdiction over the subject matter and for failure to state a claim, asserting the following reasons:
(1) The alleged negligence did not constitute a breach of any duty owed to the plaintiff;
(2) The plaintiff's claim is excepted by the Federal Tort Claims Act because it arises from the exercise or performance of a discretionary function and an alleged misrepresentation, 28 U.S.C. § 2680(a) and (h); and
(3) The claim was not presented in writing to FDIC within two years after it accrued and it is therefore ...