                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-19-2003

USA v. Leuthe
Precedential or Non-Precedential: Non-Precedential

Docket 02-1938




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Recommended Citation
"USA v. Leuthe" (2003). 2003 Decisions. Paper 796.
http://digitalcommons.law.villanova.edu/thirdcircuit_2003/796


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                                                      NOT PRECEDENTIAL

       THE UNITED STATES COURT OF APPEALS
              FOR THE THIRD CIRCUIT

                      ___________

                      No. 02-1938
                      ___________


            UNITED STATES OF AMERICA

                            vs.

                   JAMES L. LEUTHE

                                  Appellant.

                      ___________


ON APPEAL FROM THE UNITED STATES DISTRICT COURT
   FOR THE EASTERN DISTRICT OF PENNSYLVANIA

              (D.C. Criminal No. 01-cr-00203)
       District Judge: The Honorable Jay C. Waldman

                      ___________

         Submitted Under Third Circuit LAR 34.1(a)
                    December 16, 2002


  BEFORE: NYGAARD, ALITO, and McKEE, Circuit Judges.




                 (Filed: February 19, 2003)

                      ___________
                                      OPINION OF THE COURT
                                           ___________

NYGAARD, Circuit Judge,

         The United States sued James L. Leuthe for $250,000 in civil penalties assessed by

the FDIC against him. Leuthe served as Chairman of the Board of First Lehigh Bank from

1983 until 1993, and is the controlling shareholder of First Lehigh Corporation, the owner

of the Bank. In 1987, the FDIC found that the Bank had committed violations of applicable

law and regulations, particularly those designed to prevent insider abuse. To remedy these

violations, the FDIC and the Bank’s directors entered into a series of consent cease and

desist orders.

         The FDIC then initiated proceedings to terminate the Bank’s deposit insurance

status. The parties entered into a settlement that provided the Bank with some capital,

required Leuthe to resign as a director, placed Leuthe’s stock in a voting trust, and

terminated Leuthe’s involvement in the Bank for two years beginning in 1993. In 1995, an

Administrative Law Judge decided that Leuthe should pay a penalty of $250,000 and be

prohibited from participating in the affairs of an insured depository institution. The FDIC’s

Board of Directors adopted the ALJ’s recommendation. One of the allegations made by

Leuthe in the administrative proceedings was that the FDIC had conspired with the

Pennsylvania Department of Banking (“DOB”) to seize the Bank and drive Leuthe out of

business. The Court of Appeals for the D.C. Circuit specifically rejected the conspiracy

claim.



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        When Leuthe still refused to pay, the FDIC referred the matter for collection to the

Office of the U.S. Attorney pursuant to 12 U.S.C. § 1818(i). Leuthe answered with

affirmative defenses and counterclaims in set-off and recoupment under 42 U.S.C. § 1983

and the Federal Tort Claims Act. He based both the affirmative defenses and the

counterclaims on the alleged FDIC/DOB conspiracy to put him out of business.

        The District Court struck the affirmative defenses because they were barred by the

doctrine of collateral estoppel (issue preclusion), and because they would violate 12 U.S.C.

§ 1818(i). It then dismissed the counterclaims, and granted summary judgment in favor of

the Government for the penalty.

        We conclude that the District Court properly applied 12 U.S.C. § 1818(i), which

generally provides two independent bars to relitigation of matters at issue in proceedings,

and barred the defenses and counterclaims in recoupment because they arose out of the

same transaction or occurrence as the one at issue in the proceeding before the FDIC.

Contrary to the position that Leuthe took in the District Court, he now argues that §1818(i)

does not apply to his affirmative defenses and counterclaims. Leuthe’s reasoning is that the

adjudication of his conspiracy claim would not involve consideration of matters related to

the merits of the enforcement action leading to assessment of the penalty. First, the

District Court correctly concluded that issue preclusion barred the counterclaims. And

second, even if Leuthe’s rationale is correct, then these affirmative defenses and

counterclaims are barred by various defenses, including the statute of limitations and the

failure to file an administrative claim under the Federal Tort Claims Act. We will affirm.

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