Lacap et al v. Hillsborough Mortgage Co., LLC et al

Filing 11

ORDER Granting 6 Motion to Dismiss signed by Judge Oliver W. Wanger on 07/13/2011. Proposed Order due by 7/25/2011. Flores, E)

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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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GERALD LACAP and GRACE MESDE
LACAP

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Plaintiff,
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v.
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HILLSBOROUGH MORTGAGE CO., LLC; )
FEDERAL DEPOSIT INSURANCE
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CORPORATION in its capacity as
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Receiver of AMTRUST BANK; and
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DOES 1 through 50, inclusive,
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Defendant.
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_______________________________ )

1:11-cv-00266-OWW
ORDER RE: DEFENDANT’S
MOTION TO DISMISS (Doc 6)

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I. INTRODUCTION
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Plaintiffs Gerald Lacap and Grace Mesde Lacap (“Plaintiffs”)
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filed suit against Hillsborough Mortgage Co., LLC
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(“Hillsborough”) and Amtrust Bank, a division of NYCB Mortgage
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Co., LLC (“AmTrust”).

First Amended Complaint, Doc. 1-2 (“FAC”).

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The Federal Deposit Insurance Corporation, in its capacity as
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Receiver (“FDIC-R”), was substituted by order of the state court
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in the place of AmTrust.

The FDIC-R timely removed this case to

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the federal court.

The FAC alleges misrepresentation, promises

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made without intent to perform, and violations of California
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Business and Professions Code § 17200 by Hillsborough and
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AmTrust.

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the Trustee’s Sale of Plaintiffs’ property and any documents

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recorded against the Plaintiffs’ fee simple title as a result of

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the Trustee’s Sale, rescission of the written agreement, and

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damages.

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FAC at ¶¶ 42-67.

Plaintiffs seek a judgment voiding

FAC at ¶¶ 68-70.

Before the Court for decision is Defendant FDIC-R’s motion

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to dismiss for lack of subject matter jurisdiction (Doc. 6, filed

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May. 18, 2011) pursuant to Federal Rules of Civil Procedure

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12(b)(1).

Defendant argues that because the Plaintiffs did not

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exhaust their administrative remedies as required by 12 U.S.C. §§

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1821, et seq., no court has the jurisdiction to hear plaintiffs’

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claims.

Plaintiffs have not filed an opposition.

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II.

BACKGROUND

Plaintiffs’ claims arise out of two loans from Hillsborough

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and AmTrust, used by Plaintiffs to purchase a home located at

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3211 West Ceres Street, Visalia, California (“Subject Property”).

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FAC at ¶ 21.

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mortgages made to Plaintiffs were recorded on April 28, 2006.

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Doc. 6-1.

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rates automatically adjusted so as to require monthly payments

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exceeding Plaintiffs’ means to pay.

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default resulted in a Notice of Default and the recording of a

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Trustee’s Deed on August 18, 2009 that transferred title to the

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Subject Property to AmTrust.

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transferred the property to the Federal National Mortgage

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Association on November 19, 2009.

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Two deeds of trust securing the two adjustable rate

The Plaintiffs later defaulted on the loans when the

FAC at ¶¶ 21-41.

Doc. 6-1.

This

AmTrust later

Doc. 6-1.

The following month, the Department of the Treasury declared
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AmTrust insolvent and appointed the FDIC-R to act as AmTrust’s

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Receiver.

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assets, and some of its liabilities, to New York Community Bank,

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contingent liabilities remained with AmTrust and were subject to

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the administration of the Receiver.

Though the FDIC-R then transferred all of AmTrust’s

Doc. 6-1.

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Plaintiffs’ first claim alleges that Hillsborough and

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Amtrust engaged in intentional misrepresentation by making

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statements informing Plaintiffs they were receiving a fixed rate

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mortgage, while in fact setting up an adjustable rate mortgage.

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FAC at ¶¶ 42-48.

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further engaged in misrepresentation by assuring Plaintiffs that

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they would work with Plaintiffs to modify their mortgage when

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they never had any intention of doing so.

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Plaintiffs allege that Hillsborough and AmTrust

FAC at ¶ 44.

The second claim alleges that Hillsborough and AmTrust made

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promises without intent to perform by promising a fixed rate

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mortgage while knowingly setting up an adjustable rate mortgage

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and by later promising to restructure the mortgage solely to keep

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Plaintiffs from fully discovering the deceit.

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FAC at ¶¶ 49-53.

The third, and final, claim alleges that Hillsborough and

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AmTrust violated California Business & Profession Code § 17200,

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et seq., and California Financial Code § 22302 by engaging in the

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above mentioned actions and by entering into an unconscionable

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contract with Plaintiffs.

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FAC at ¶¶ 54-64.

After learning of Plaintiffs’ claims, the FDIC-R sent

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Plaintiffs, in care of their attorney of record, Gary Lane,

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written notice explaining the mandatory procedures for asserting

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a claim against the Receiver (“Claims Notice”) on December 7,

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2010.

Declaration of Nicholas J. Howard, Doc. 6-2, (“Howard
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Decl.”) at ¶ 4.

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established as the Claims Bar Date for the AmTrust Receivership,

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because FDIC-R learned of Plaintiffs’ claims after this date had

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passed, the FDIC-R allowed Plaintiffs until March 7, 2011 to

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submit their proof of claim.

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2011, Plaintiffs had not submitted any claims to the Receiver.

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Howard Decl. at ¶ 12.

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Though March 10, 2010 had initially been

Howard Decl. at ¶ 9.

III.
A.

As of May 1,

ANALYSIS

Standard of Review

Federal Rule of Civil Procedure 12(b)(1) provides for

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dismissal of an action for “lack of jurisdiction over the subject

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matter.”

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the burden of proving the existence of the court’s subject matter

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jurisdiction.

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1996).

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particular case unless the contrary affirmatively appears.

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Atomic Co. V. United Nuclear Corp., 655 F.2d 968, 968-969 (9th

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Cir. 1981).

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Faced with a Rule 12(b)(1) motion, a plaintiff bears

Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir.

A federal court is presumed to lack jurisdiction in a
Gen.

A challenge to subject matter jurisdiction may be facial or
White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).

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factual.

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This is a facial challenge.

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a facial attack, i.e., the defendant contends that the

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allegations of jurisdiction contained in the complaint are

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insufficient on their face to demonstrate the existence of

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jurisdiction, the plaintiff is entitled to safeguards similar to

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those applicable when a Rule 12(b)(6) motion is made.”

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v. Sullivan, 719 F. Supp. 899, 903 (E.D.Cal. 1989), rev’d on

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other grounds, 963 F.2d 229 (9th Cir. 1992).

“If the challenge to jurisdiction is

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Cervantez

“The factual

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allegations of the complaint are presumed to be true, and the

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motion is granted only if the plaintiffs fail to allege an

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element necessary for subject matter jurisdiction.”

Id.

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B.

Subject Matter Jurisdiction

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On May 18, 2011, Defendant FDIC-R moved to dismiss all the

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claims against FDIC-R.

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to exhaust administrative remedies through FDIC-R strips any

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court of jurisdiction to hear Plaintiffs’ claims under the

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Financial Institutions Reform, Recovery and Enforcement Act of

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Defendants argue that Plaintiffs’ failure

1989, 12 U.S.C. § 1821 (“FIRREA”).
“The statute grants the FDIC, as receiver, broad powers to

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determine claims asserted against failed banks.”

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Bank of New England, 986 F.2d 319, 320 (9th Cir. 1993).

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administrative claims process set up by 12 U.S.C. §§ 1821(d)(3)

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through (13) centralizes the initial consideration and resolution

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of claims by requiring that all claims be submitted to the FDIC-R

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by a set “Claims Bar Date” established by the Receiver.

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administrative claims process is mandatory.

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claimant exhausts this process, subsection 1821(d)(13)(D) bars

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any court from asserting jurisdiction over claims against a

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failed institution for which the FDIC has been appointed

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Receiver:

Henderson v.
The

This

Unless and until a

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(D) Limitation on judicial review

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Except as otherwise provided in this subsection, no court

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shall have jurisdiction over -

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(i) any claim or action for payment from, or any action

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seeking a determination of rights with respect to, the

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assets of any depository institution for which the
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Corporation has been appointed receiver, including assets

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which the Corporation may acquire from itself as such

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receiver; or

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(ii) any claim relating to any act or omission of such

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institution or the Corporation as receiver.

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12 U.S.C. § 1821(d)(13)(D).

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by subsection 1821(d) only for those claimants who have completed

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the administrative claims process.

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1821(d)(6)(A)(ii), (d)(7)(A), (d)(8)(c).

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Jurisdiction is “otherwise provided”

See 12 U.S.C. §§

“A claimant must therefore first complete the claims process

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before seeking judicial review.”

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(citing Abbott Bldg. Corp. V. United States, 951 F.2d 191, 194

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n.3 (9th Cir. 1991) (“FIRREA did create a claims procedure, and

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required its exhaustion.”))

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Henderson, 986 F.2d at 321

The Plaintiffs have not, and now cannot, satisfy the

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The FDIC-R set a Claims Bar Date of

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This date passed with no

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Plaintiffs had actual notice of the Receivership and the

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23 their attorney, explaining the mandatory procedures for asserting
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Plaintiffs’ claims were susceptible

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26 subsection 1821(d)(3)-(4) grants the FDIC-R the authority to make
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Because the Plaintiffs did not submit a timely
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1 Proof of Claim to the FDIC-R as required by statute, this court
2 lacks subject matter jurisdiction to hear any of Plaintiffs’
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See Intercontinental Travel Marketing Inc. v. Federal

4 Deposit Insurance Corporation, 45 F.3d 1278, 1286 (9th Cir. 1994)
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6 administrative claims process by failing to file a claim before
7 the claims bar date stripped all courts of subject matter
8 jurisdiction over its claims).
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IV. CONCLUSION
For the reasons stated above, Defendant’s motion to dismiss

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12 Defendant shall submit a proposed order consistent with this
13 memorandum decision by writing five (5) days following electronic
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16 SO ORDERED
17 DATED: July 13, 2011
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/s/ Oliver W. Wanger_________
Oliver W. Wanger
UNITED STATES DISTRICT JUDGE

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