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February 14, 1990

M. DANNY WALL, DIRECTOR, etc., et al., Defendants

Gordon Thompson, Jr., Chief United States District Judge.

The opinion of the court was delivered by: THOMPSON, JR.


 Plaintiffs' motion for a temporary restraining order came on for a closed hearing on January 26, 1990 at 11:00 a.m. Daniel H. Willick, Robert Steiner, and Christopher J. Healey appeared on behalf of plaintiffs. Robin Ball, Loretta Pitt, George Barnwell and Assistant United States Attorney John Neece appeared on behalf of defendant Federal Deposit Insurance Corporation. Aaron B. Kahn appeared on behalf of defendant M. Danny Wall, Director, Office of Thrift Supervision. Having reviewed the pleadings, exhibits, declarations, and arguments in favor of and in opposition to the motion, the court hereby denies the motion and orders that the seal on the file be lifted.


 On November 30, 1988, the FHLBB sent a forbearance letter to the Board of Directors of Flagship. In pertinent part it stated:

Section 563.313 (Regulatory Capital Requirement) of the Rules and Regulations for FSLIC Insured Institutions ("Insurance Regulations") provides no exceptions in the case of acquisitions which permit the exclusion of scheduled items of an institution in computing the regulatory capital requirements of this section. However, because this acquisition was instituted for supervisory reasons, the FSLIC will forbear, for a period not to exceed five years following the date of consummation of the acquisition ("Effective Date"), from exercising its authority under Section 563.13 of the Insurance Regulations, for any failure of the surviving institution, New Flagship, to meet the regulatory capital requirements of Section 563.13, provided that New Flagship's level of regulatory capital to total liabilities is no less than 2.0 percent during the first year. This percentage floor will increase by.50 percent for years two through five until it reaches 4.0 percent upon expiration of the Assistance Agreement, at the conclusion of year five, after which New Flagship shall be in compliance with the minimum capital requirement . . .
. . . For a period of five years following the Effective Date, the Board will consider New Flagship to be in compliance with the regulatory capital requirement of Section 563.13 of the Insurance Regulations, to the extent of the forbearance received in Item 1, for purposes of reviewing applications and/or filings for permission or notice to conduct business pursuant to the following referenced regulations; provided that the Supervisory Agent of the Federal Home Loan Bank of San Francisco ("Supervisory Agent") shall retain the authority to rescind all or any of a portion of this forbearance if he/she determines that the resulting practice(s) is unsafe or unsound or otherwise actually or potentially detrimental to New Flagship.

 In August of 1989 Congress passed the Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA", PL 101-73, August 9, 1989). This comprehensive legislation was the prescription by Congress for what was widely regarded as a savings and loan "crisis." The legislation established new capital requirements for the thrift industry, and reorganized the regulatory bodies responsible for the nation's savings and loan associations. FIRREA abolished the FHLBB and created the Office of Thrift Supervision ("OTS"), which took over many of the functions of the FHLBB.

 The parties dispute what communications took place between OTS and Flagship from August, 1989 until December, 1989. The evidence establishes that in December, 1989 and January, 1990, Flagship received two "directives" from OTS. In these directives OTS instructed Flagship to meet the capital requirements of FIRREA, and informed Flagship that the forbearance agreement was no longer applicable when calculating compliance with the relevant regulations. OTS requested that Flagship obtain prior approval for certain types of transactions.

 On January 17, 1990 plaintiffs filed a complaint for temporary restraining order, preliminary injunction, permanent injunction, and declaratory relief. The court held an initial hearing on plaintiffs' request for a temporary restraining order on January 19, 1990. At the conclusion of the hearing, the court ordered that the matter be set for further hearing on January 26, 1990. The file was sealed pending further order of the court.


 This court has subject matter jurisdiction to render judgment upon plaintiffs' claims against the OTS and the FDIC as a result of statutory waivers of sovereign immunity. The court has jurisdiction to hear a claim against the FDIC pursuant to 12 U.S.C.A. § 1819(a) (Fourth). Woodbridge Plaza v. Bank of Irvine, 815 F.2d 538 (9th Cir. 1987).

 The court finds that it has subject matter jurisdiction over plaintiffs' claim against the OTS because of the alternative waiver of sovereign immunity as to the Director of OTS found in FIRREA: ". . . the Director [of OTS] shall be subject to suits (other than suits on claims for money damages) by any Federal savings association or director or officer thereof with respect to any matter under this section . . . in the United States district court for the judicial district in which the savings association's ...

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