Plaintiffs oppose saying IRS not party to case

In response to a civil suit filed against it by a group of its depositors, Bank of Guam in Federated States of Micronesia filed to dismiss the suit stating among other reasons Plaintiffs’ failure to enjoin United States Internal Revenue Service as party to the suit.

 A group of FSM citizen and resident depositors with Bank of Guam sued the bank in March alleging breach of contract, breach of fiduciary duty and fraud among others for withholding and returning checks issued to them by the United States Internal Revenue Service as part of the US Cares Act stimulus package.

In its suit to dismiss the case, the Bank argued that the US IRS is a “necessary and indispensable” party that must be enjoined.  The suit argues that since the Plaintiffs demand that the payments that were issued by US Treasury be returned to them and credited to their accounts, a “relief against the bank that would directly adversely affect the interest of the United States…along with the validity of those department own laws…the United States is an indispensable party that is required for a just adjudication.”

Furthermore, it argued, “the Bank cannot adequately represent and protect the interests of the United States nor its Department of Treasury and the IRS in the validity of their own laws” and therefore it said that “the bank is not the proper party defendant” and the Plaintiffs claims must be dismissed.

Furthermore it claims that the FSM citizens in the complaint who received payments from IRS are not eligible to receive the stimulus payment under the CARES Act based on IRS information on its website and other published information.

The suit asserts that the court should not grant the request to have the bank return their deposits as it would be in violation of CARES Act and IRS guidelines.  In addition, the funds have been returned to IRS and the Plaintiffs should contact IRS directly for the return of payments.

Plaintiffs (FSM group) filed opposition to the Defendant (Bank of Guam) dismissal suit this week.  

In their suit, they claimed that the United States and its Internal Revenue Service are not necessary party to the suit.  “No funds were ever deposited with the United States.”  The “sole role that the United States had in this situation was to issue payments to the Plaintiffs. 

The Plaintiffs could have deposited those payments into any bank or negotiated them with any merchant.  However, they elected to deposit the payments with Bank of Guam.”

The Plaintiffs cites Bank of FSM v.  Asugar case which ruled that (money deposited in a bank account is a debt that the bank owes to the depositor – the bank is obligated to repay the money to the depositor, either on demand or at a fixed time).

The case, argued the Plaintiffs, is “simply about how the Bank of Guam handled and dispersed funds that were deposited with it by its customers”.

The Plaintiffs alleged that the bank acted upon request from IRS to intercept funds that may have been sent out erroneously sent out to bank’s depositors and bank acted on the request.

The bank’s action is compared to a merchant asking the bank to take money from the depositor’s account because the merchant believes that the depositor may have been undercharged for goods received or unlawfully taken merchant’s property.

Nothing on the face of the instruments showed error or fraud, rather they were bona fide checks issued by US Treasury directly to each individual.  If US IRS found out it send payments in error, it still does not give the bank authority to disperse funds to anyone other than depositor, stated the Plaintiffs’ suit.

The Plaintiffs opposed dismissal and contend that trial must proceed.

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