Federal Deposit Insurance Corporation v. Colony Corporate Centre, LLC et al
Filing
85
ORDER denying 64 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Unassigned Judge on 3/7/2012. (JD)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
SOUTH CRE VENTURE 2010-2, LLC,
as Receiver for Hillcrest Bank Florida,
Plaintiff,
v.
Case No. 2:10-cv-774-FtM-SPC
COLONY CORPORATE CENTRE, LLC,
ET AL.,
Defendants.
_________________________________/
ORDER
This cause comes before the Court on Defendants Colony Corporate Centre, LLC and
Joseph D’Jamoos’ Motion to Dismiss for Lack of Subject Matter Jurisdiction. (Doc. No. 64).
Plaintiff opposes this motion. (Doc. No. 69). As explained below, the motion is denied.
This lawsuit was originally filed by the Federal Deposit Insurance Corporation (“FDIC”),
as Receiver for Hillcrest Bank Florida, to: (1) foreclose a mortgage on real property, (2) recover
on a promissory note, (3) foreclose on a security interest in personal property, (4) enforce a
collateral assignment of contracts, leases, rents, and profits, and (5) recover for breach of an
unconditional personal guaranty. The basis for this Court’s jurisdiction was 12 U.S.C.
§ 1819(b)(2)(A), which provides the general rule1 that civil lawsuits in which the FDIC, “in any
capacity, is a party shall be deemed to arise under the laws of the United States.” Section
1819(b)(1) also provides that the FDIC, in any capacity, shall be considered an agency of the
United States for purposes of subject matter jurisdiction under 28 U.S.C. § 1345 (which provides
1
Exceptions to the general rule exist, but they do not apply in this case.
the districts courts with subject matter jurisdiction over civil actions brought by agencies of the
United States).
Thereafter, the FDIC moved to substitute South CRE Venture 2010-2, LLC (“South
CRE”) as Plaintiff-Receiver for Hillcrest Bank Florida. This Court granted the motion to
substitute.
Now pending before the Court is Defendants Colony Corporate Centre, LLC and Joseph
D’Jamoos’ Motion to Dismiss for Lack of Subject Matter Jurisdiction. In this motion, these
defendants argue that because the FDIC is no longer a party in this case, this Court no longer has
subject matter jurisdiction over the case.
South CRE opposes the motion, arguing that the FDIC is a member of South CRE, and as
such, the FDIC retains an interest in this action that supports this Court’s subject matter
jurisdiction.2 This argument makes logical sense, given that the FDIC has an interest in this
litigation due to its membership in South CRE and given that “when Congress enacted FIRREA
[the Financial Institutions Reform, Recovery, and Enforcement Act and amended § 1819], it
intended to give the FDIC in any capacity broad access to federal courts.” See RES-GA Four,
2
“Due to the well-documented volume of bank failures in the past few years and the
overwhelming cost of corresponding recovery efforts, the FDIC recently has endeavored to
lessen the financial burden on taxpayers by entering into joint ventures with private sector asset
management companies. These transactions are structured in such a way that the FDIC maintains
a majority equity interest in a failed bank's assets, while it transfers day-to-day management
responsibility to expert private sector professionals who also have a financial interest in the
assets and share in the costs and risks associated with ownership.” See RES-GA Four, LLC v.
Avalon Builders of Ga. LLC, 2012 WL 13544, at *1 n.2 (M.D. Ga. Jan. 4, 2012). In this case,
South CRE states that it is a limited liability company that is comprised of two members: the
FDIC and HRC SVC South 2010, LLC. Further information about South CRE can be found on
the FDIC’s website. See, e.g., http://www.fdic.gov/buying/historical/structured/south_cre_10_2/
Amended_Restated_LLC_Agreement_3.pdf.
2
LLC v. Avalon Builders of Ga. LLC, 2012 WL 13544, at *4 (M.D. Ga. Jan. 4, 2012). As further
explained by the court in See RES-GA Four, LLC:
Significantly, § 1819(b)(1) does not require the FDIC to be a “party” in its own
name. Rather, the FDIC “in any capacity” can invoke subject matter jurisdiction
pursuant to 28 U.S.C. § 1345 without regard to whether it is a “party.” Here, the
FDIC in its capacity as a majority member of the owner of the Plaintiff has
commenced this action. The Plaintiff is seeking to fulfill the FDIC's mandate to
collect assets of troubled banks. Thus, it seems logical to conclude that this Court
has subject matter jurisdiction pursuant to 12 U.S.C. § 1819(b)(1) and 28 U.S.C. §
1345.
This interpretation is consistent with the scheme and intent of § 1819(b). The preFIRREA version of § 1819 required the FDIC to be [a] “party.” Congress
broadened that to include situations in which the FDIC was involved in the
litigation “in any capacity.” Of course, when Congress enacted FIRREA, it likely
was not contemplating that the FDIC would employ the mechanism that it is now
using to collect assets of failed banks. However, given the purpose of FIRREA, it
seems logical to conclude that Congress would not have intended that the FDIC in
the capacity in which it is operating in this case would be barred from federal
court.
Id. at *5.
This Court notes, however, that the court in RES-GA Four, LLC declined to finally
decide the issue of whether the FDIC’s membership in the plaintiff-limited liability company
was sufficient to confer subject matter jurisdiction under§ 1819, because an alternate ground for
subject matter jurisdiction existed in that case. See id. Likewise, this Court need not decide the
issue of whether the FDIC’s membership in the plaintiff-limited liability company is sufficient to
confer subject matter jurisdiction under§ 1819, because an alternate ground for subject matter
jurisdiction exists.
Specifically, as pointed out by South CRE, when the FDIC brought this lawsuit, the
Court had subject matter jurisdiction over this case, pursuant to § 1819. The fact that a new
plaintiff has been substituted in place of the FDIC does not divest this Court of subject matter
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jurisdiction. See Federal Savings & Loan Ins. Corp. v. Griffin, 935 F.2d 691, 696 (5th Cir.
1991); F.D.I.C. v. Four Star Holding Co., 178 F.3d 97, 101 (2d Cir. 1999); Casey v. F.D.I.C.,
583 F.3d 586, 591 (8th Cir. 2009); Adair v. Lease Partners, Inc., 587 F.3d 238, 244-45 (5th Cir.
2009); F.D.I.C. v. Mudd, 704 F. Supp.2d 822, 826 (N.D. Ill. 2010). As explained by the Griffin
court:
The policy reasons for insuring federal jurisdiction over cases involving the
actions of failed thrifts continue when the FDIC is voluntarily dismissed as a
party and the owner of the failed thrift's assets remains. A transferee from . . .
[the] FDIC, as successor of [the FDIC’s] interests, is still entitled to the protection
of federal courts . . . . In sum, federal jurisdiction is proper in this case because
according to . . . amended § 1819, the case arises under federal law.
Griffin, 935 F.2d at 696. Additionally, as noted by the Four Star Holding Co. court, the
existence of subject matter jurisdiction normally depends on the facts as they exist when the
complaint is filed, and if jurisdiction existed at that time, it will not be divested by subsequent
events. See Four Star Holding Co., 178 F.3d at 100 (citations omitted). Thus, this Court
continues to have subject matter jurisdiction over this case, despite the fact that South CRE has
been substituted as the plaintiff in place of the FDIC.
Accordingly, it is ORDERED AND ADJUDGED that Defendants Colony Corporate
Centre, LLC and Joseph D’Jamoos’ Motion to Dismiss for Lack of Subject Matter Jurisdiction
(Doc. No. 64) is DENIED.
DONE AND ORDERED at Tampa, Florida, this 7th day of March, 2012.
Copies to:
Counsel of Record
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