FDIC as Receiver for AmTrust Bank v. Fidelity National Title Insurance Company

Filing 56

ORDER Granting 38 Motion for Summary Judgment. Signed by Senior Judge James Lawrence King on 6/23/2017. (jw)

UNI
TED STATES DISTRI COURT
CT
SOUTH ERN DISTRI O F FLORI
CT
DA
M I M ID I I O N
A
V SI
CA SE N O .15244544LK

FEDERAL DEPO SI W SURANCE
T
CORPORATI AS M CEI
ON
VER
FOR AM TRUST BANK,
Pl ntf,
ai if
V.

FI
DELI NATI
TY
ONAL TI
TLE
I
NSUM NCE COM PAN Y,
a Fl i cor aton,
orda por i
Def nt
enda .
/

ORDER GR ANTI DEFENDANT' M OTION FO R SUM M A RY
NG
S
JUD G M EN T

THIS M ATTER comesbef et Cour upon t pari c os m otonsf
or he
t
he tes' r s i or

s mmayj
u r udgme ,b hsldonMa 8, 7. 38( fnda ' Moton) DE 39
nt ot e
y 201 DE De e nts i ;
( antf M oi , Cou t sa tonal c i r dt pa te Re po e ,
Pli ifs ton) The r ha ddii ly onsdee he ris' s ns s
each fl on M a 22,2017,t rRe i t e o, fl on M ay 30,201 a t r
ed
y
hei ples her t ed
7, nd hei
r pectve saement ofm at i f s.Upon r e (ft r d and ca ef
es i t t
s
eral act
eviw ) he ecor
r ul

c i rton,heCou t i t ts
onsdeai t
r fnds ha ummayj gme s dbegrntd i f vo of
r ud nt houl
ae na r
t D ef ndant
he
e
.

FACTUAL AND PRO CEDURAL BACKGR OUND
Thi cas arsesfom a i ur
s e i r
n ns ancediput bet
s e ween Pl ntf ,t Feder
ai if he
al

De il s a eCo porto (TDl ' a r c i rofAmTr s Ba a istte
post n ur nc r ain t C' s e eve
)
u t nk, nd t il
i ur r,Def ntFi iyN a i Til l ur nce Com pa l 2008,Def
ns e
enda
delt tonal te ns a
ny. n
endant
i ued Cl i Pr ecton Lete st Am Tr tBa w ih r pec t t o l
ss
osng ot i
tr o
us nk t es t o w oans

.

Pur uantt t Cl i Pr ec i Lete s,Def ndantagr t i m niy Am Tr t
s
o he osng ot ton tr
e
eed o nde f
us

Ba f a y ls e aii o o ( )t cosng a e tsf iu et c ywiht
nk or n o s s rsng ut f 1 he l i g n ' alr o ompl t he
ba k' cosng i tu tonso ( a fa o diho sybyt cosng a n i
n s l i nsr ci r 2) ny rud r s ne t
he l i ge t n
ha i t ba sf
ndlng he nk' undsordocum ent
s.DE 37- TheCl i Pr ec i Le t s
27.
osng ot ton ter

frhe pr vi t ta camsmus ber c ve byt i ur rS t nni t ( )
u t r o de ha ny li
t e ei d he ns e s hi ney 90
wi
daysf om t dae ofdicove ofs l 'DE 37r he t
s c/ uch oss.
'
27.
Rel nther t bank' cl i i t i pr de t tt cl i age
eva
e, he
s os ng nsructons ovi ha he os ng nt

mus ( )ae theba a t fcst tmi ta fc t ba sde iint ma t
t 1 lr t nk s o a t ha gh fe t he nk' cso o ke he
l s asf si catng t f
oan, uch act ndi i hat undsar bei conti e by s
e ng
rbutd
omeoneot rt
he han

t borowe , 2 no iyt bak i t r i r a o t beivet r i fa ulnt
he r r ( ) tf he rk f hee s e s n o le hee s r ud e
a tviy,a d,fs s pe t cosng i
ci t n i o, us nd he l i mmeditl ( )s pe t cl i i t r i
aey, 3 us nd he osng f he e s
knowl
edgeorr on t belevet ta down pa entm one i notfom t
eas o i ha ny
ym
y s
r he

boro rso f
r we ' wn undso abo fdegit ( o y a c p f
r na i f, 4) nl c e t undsfo a c z st t
r m c olnt ha

ha be ndicos dt t ba a ( )s pe t cosng a notf t ba i
ve e s l e o he nk, nd 5 us nd he l i nd iy he nk f

t e i know l
her s
edge t t pal i t t tansa i m ade a m at i m i s at entor
hat he - es o he r cton
t
eral s t em

dicove saf s
s r alehood bef e,durng,orafercl i DE 40- a 1or
i
t osng.
7 t 4.
I is M oton f Sum m a y J
nt
i or
r udgm ent Pl ntf FD I cont
, ai if
C
endst tD ef
ha
endant

wr uly denid t vald cl m sunde t Cl ng Pr ec i Leter f vi a i
ongf l
e wo i ai
r he osi
ot ton t s or olton
oft bnnk' cl i i t uctc l is cr m oton,D ef ndantcount r t
he
s osng ns r ims. n t oss i
e
e s hat

Pl ntf i ba r fom as e tngt pr entac i becaus Pl ntf scl m sunder
ai if s red r
s ri he es
ton
e ai if ai
t Cl i Pr ecton Lete s w e e untm el The Cour w iladdr st
he os ng ot i
tr r
i y.
t l
es he

cic sa
r um tncess r
uroundi each cl m i mr
ng
ai n n.
A .The Fr
audul Loans
ent
1. The Siva Loan
l

W ih r pec t t tr tl
t es t o he i s oan,Pl ntf aleges t t cl i i t i w er
ai i f l
hat he os ng nsructons e

vi at when t cl i agentf l t colec t down pa entf t borower
ol ed
he osng
aied o l t he
ym
rom he r
prort t di bur em e oft l n.
i o he s s nt he oa

On Nove r1 2008, hec osng a nta pr ve a$1 298.3 m orga
mbe 8,
t l i ge p o d
47, 5
t ge
l t Giele Siva,and t 1 wasdibur ed t t pr rt s l t sa e da
oan o s l l
he 0=
s s o he ope y eler he m
y.

DE 40- 1. ne da on No m b r1 t s le wie $1 1 t a c mpa
1 The xt y,
ve e 9, he e lr r d 06, 25 o o ny
caled N ew Lie l portand Expor . E 40-1 N ew Lie t w r e t ee checkst a
l
f m
tD
6.
f hen ot hr
o

man na e UrasAssswhi t al t $73, 69,and addii l wr ea$10,
m d i
i
ch ot ed o
689.
tonaly ot
000
c
heck t Siva.D E 40- 40-1 Lat t day,A s i pur has a cas e s c
o l
17,
6. er hat
s s c ed
hi r' heck on

be l o Sivaf rt a untr q rd f t downpa nt( 68 69) Thi
haf f l o he mo e uie or he
yme $73, 9. . s

s m chec whih wasis t daysahert l wasdibur ed, w asuli a el
ha
k, c
s ued wo
he oan
s s
tm t y
t s ceofSiva' down paym e .Ther or i i undiput t t f ng oft
he our
l s
nt
ef e, t s
s ed hat he undi
he
down paymentwasar ul ofa fa e sr buyers he ebet
es t
r udulnt taw
c m
ween t s l and
he eler
Siva.1
l

Siva de a t on t l n afermaki onl t pa ent . DE 40- DE 37l
f uled
he oa t
ng y wo ym s
26;
1 at8.On Jul 1 2009,Am 'r tBa i tat a f ecl ur acton agai tSiva.
7
y 3,
r us nk nii ed or os e i
ns l
D E 3722.

A yearl er i Nove ber2009,t Siva l wasr ered t t bank'
at , n
m
he l oan
ef r o he
s
qualt contolde rmentf audii pur uantt t ba ssa d pr
iy
r
pa t
or
tng s
o he nk' t ndar ocedur f
e or
e l de a t D E 37-1 On M ar 2,2010,t a t concl
ary f uls.
6.
ch
he udior
uded t t e w as
hat her

mir p e e ai byt bo r we ba e onfndi t t( )t p opet wa va a
se r s ntton he ro r s d i ngs ha 1 he r ry s c nt
eve t
n hough t bor ow erls ed i asherpr m a y r i nce, ( t borowe ' l ns
he r
it t
i r es de
2) he r rs oa

cont ned sgni
ai
i scantgitf
f undsfom ext
r
ended f iy m ember , ( )t gf f
am l
s 3 he it unds
cont ned i i l t s a handw rtng,alhough pur t y f om dif re
ai
dentcal eter nd
ii
t
por edl r
f e nt

fmiyme r,( t i tntl npur tdl c ti daS f'fom a u l,bu
a l mbe s 4) he nsa oa pore y onane s t'r n nce t
gi
i tgaton r
nvesi i eveald t t Suncl 'donorwasi f ctnotr a edt t bor ower
e hat he ç e'
n a
elt o he r
,

a ( )t bo r rha muli er sde e i as t ro oftme( ro
nd 5 he rowe d tpl e i nc s n hor pe id i unde ne
ye r . 3 1 a 8.
a ) DE 7- 7 t

1A sr buye i aperon who obti al n wihou i entt ownorocc i i or rt fciiaeafa e
taw
rs
s
ans oa t t nt o
upy t n de o a ltt r udulnt
tans tonf aprnci buyerwhocoul ot r s n pa tci t i t ta aci , SeeSTRAW M AN, ACK'
r aci or i pal
d hewie ot ri pae n he r ns ton
BL
S

L DITONAR ( t e 2 0 )
AW C I Y 9h d. 0 9.

On December4,2009,AmTr tBa f l a w e i o t r ver hi of
us nk aied nd nt nt he ecei s p
Pl ntf FDI Pl ntf FDI se ng i o t s
ai if C. ai if C, tppi nt he hoesofAmr us,contnued t
rr t
i
o
pur ue f ecl ur oft Siva pr r y,a a Fi J
s or os e he l . ope t nd
nal udgm entofFor os ew as
ecl ur

ent ed agai tSiva on Decem be 9,201 DE 37- On Aprl15,201 t
er
ns l
r
3.
23.
i
4, he
pr t wass d t at r pary ata Gnanci l t Pl ntf . DE 37- DE 40- .
opery
ol o hid t
al oss o ai ifz
25;
1
N ot ihs a ng t r uls oft M ar h 2010 a tver f ng t bor ow er s
w t t ndi he es t
he
c
udi iyi he r
'
m ir es nt i a t l i r dur ng t A pr l2014 s e oft f l ed
s epr e aton nd he oss ncur ed i he
i
al
he brec os

pr t Pl ntf di notr
opery, ai if d
eportacl m f l st t Def
ai or os o he endanti ur ra t stm e.
ns e t hi i
l t Pl ntf cl m st i di notdi coveris l suntlJ
nsead, ai if ai hat t d
s
t os
i anua. 2015, w hen i
l
y
t
r ved r ds oft l pur uantt a adm i sr i s
ecei
ecor
he oan s
o n
nit atve ubpoena.Speci l , as
fcaly

pa tofal gesc e i tgai ofdef uled l ns on Decem be 20,201 Pl ntf
r
ar
al nvesi ton
a t oa ,
r
4, ai if
us isadm i sra i s
ed t
nit tve ubpoe powe t s ve as
na
r o er
ubpoenaducest
ecum t Ba of
o nk
Amercat obt n t ba r dsoft Sival DE 40- Therecor wer
i o ai he nk ecor
he l oan.
33,
ds e
pr
oduced t Pl nt f on J
o ai if
anua y 13,2015.D E 40- A ferr vi i t s
r
34. t e ew ng he ubpoenaed
docum ent ,on J nua y 20,2015,Pl ntf s a cl m l t t D ef
s
a r
ai if ent ai eter o
endant f
s or

cove ageoft l as at wih t Sivata acton. 40- Thecl m was
r
he oss soci ed t he l r ns i DE 37.
ai
deni
ed,

2TheSivapr rywass dt at r pa t f $1 ,000,whih i welbeow t unpai $283, 56prncpal
l ope t
ol o hid ry or 40
c s l l he
d
555. i i
bal eoft eI DE 37- DE 40anc
h oan.
25;
28.

2. The de Souza Loan

W ih r pectt t s cond l n,Pl ntf aleges t tt cl ng i tuctons
t es
o he e
oa
ai if l
ha he osi ns r i
w e e vi a ed becaus t cl i agentappr
r ol t
e he osng
oved di bur em entoft l n even
s s
he oa
t
hough t dow n paym entcont ned fundst w er nott bor ow er' .
he
ai
hat e
he r
s

On Se e r 1 20 t c osn a nta ove a $1 720 m o t ge l a
pt mbe 9, 08, he l i g ge ppr d
96,
rga o n
t Cl l a de Souza,a t 1 am ountw asdi bur ed t t pr rt s l .D E 40o atdi
nd he 0%
s s o he ope y eler
21. A n HU D - f m 3com pl ed by D ef
et
endant s a oved tte com pany f s y
' ppr
il
al el
I or

i cat t t$62, 78 wascoleced i cas fom de Souza asa down paymentt
ndi ed ha
202.
l t n h r
o
s ur t l
ec e he oan.D E 40- H ow ever t r d i cat t de Souza' account
6.
, he ecor ndi es hat
s
bal nce a t tm e oft s e wasnots sci ntt m ake t r r dow n paym e .
a
t he i
he al
uf e o
he equied
nt
I t
nsead,i vi a i oft cl ng i t tons,t cl i a
n ol ton he osi nsruc i
he osng gentaccept t dow n
ed he
paym entf
undsf om Am ercan Fi nci Sol i LLC,a com pany i ved i a
r
i
na al utons,
nvol
n
f audul s r buye s m e.DE 40- DE 40- at7r
ent taw
r che
23;
25
8.
Prort r ei ng notce ofde Souza' m ir es aton,A m Tr tB a s d
i o ec vi
i
s s epr ent i
us nk ol

t d Sou noet t Fe r HomeLoa M orga Cor ai (ç e eM a ' .
he e za t o he deal
n t ge porton t ddi c'
Fr
)
DE 37- D E 37- D e Souza (ef uled aferf lng t m ake a si e pa enton t
2;
3.
la t
t aii o
ngl ym
he
l D E 37oan.
3.
On A ugus 11 2009,Fr e M ac s A m Tn1 tBank a r pur has dem and
t ,
eddi
ent
s
e c e
a an accom panyi l t r w he ei Fr e M ac i or ed A m Tr tt tde Souza
nd
ng ete ,
r n eddi
nf m
us ha
3An HUD-If m 'i t unior s teme sae
or ls he f m etl nt ttmentma e by t RealEsaeSeteme Pr edu esAc i
ndatd he
tt tl nt oc r
tn

alta a i i vi l by fder l i ur d ba .'FD/ v.Ator ys'Til I s.Fun4 /7.No.1 23599lr ns ctons nvol ng oans e aly ns e nks' C
)
l
t ne
te n
?c,
2CI 2 4WL43 4 70 a * ( . Fa S p. , 01)( et, .(in 1 U. C. 2 01e s q .
V, 01
8 2 , t 2 SD. l. e t3 2 4 S i J) ct g 2 S. j 6 t e j
z
i
6

had m i r pr ent he ac
s e es ed r counti or a i N am el Fre e M ac ver fed t tde
nf m ton.
y, ddi
ii ha

So a' a c untonl c nt i d $ a t tm eofc osng f li f rs r oft
uz s c o
y o ane 307 t he i
l i , a lng a ho t he
$6 202. r q r d asdown p yme . 37- DE 3 4. Fr ddi M a lte
2, 78 e uie
a nt DE 6;
7- The e e c e tr
f t verfed t tt s als iy numbe lsed by de Souzaw asf s
urher i
ha he oci ecurt
r it
ale.
Ac di y,Fr ddi M ac concl
cor ngl e e
uded t t qualt oft l w asnotacceptbl
hat he
iy he oan
a e
a dem anded t A m Tr tBank r chas i.D E 37- The r chas w as
nd
hat
us
epur e t
4.
epur e
a oved by A m Tr ton Sept ber 17,2009.D E 37ppr
us
em
6.

O n Fe uar 2,2009,A m - us Bank com m enced f ecl ur pr
br y
fr t
or os e oceedi
ngs
agai tde Souza.DE 37- M ea hie,asw e know ,A m Tr tBank f l and w as
ns
9. nw l
us
aied
pl
aced i o t r ver hi ofPl ntf FD I i D ece ber2009.A Fi J
nt he ecei s p
ai if C n
m
nal udgm entof
For os e w asent ed on A ugus 22,201 D E 37-1 The de Souza pr t w as
ecl ur
er
t
3.
0.
opery
l t rsol t a t r pary a a fL
a e d o hid t t nanci l t Pl ntf on A pr l22,201 D E 37-1 4
al oss o ai if
i
4.
2.

A lhough Pl ntf had bee al t t t bor ow er' m i r pr nt account
t
ai if
n ered o he r
s s e ese ed
i f m a i i Se e ber20095a had experenced a l f om t pr t s e i
n or ton n pt m
nd
i
oss r he opery al n
A prl201 Pl ntf f l t r
i
4, ai if aied o eporta cl m t t D ef
ai o he endanti ur att stm e. s i
ns er hi i A t
had done w ih t Siva l
t he l oan,Pl ntf us is adm i sr i s
ai if ed t
nit atve ubpoena pow ert
o

obt n t de Souza ba r ds fom Sa
ai he
nk ecor r
badel U nied B a on Ja r 20,2015,D E
l t
nk
nua y
4Th pr rywa s d f $65:000,whih wa frs tofdeSouza' unpai $1 720prnci lbalnce DE 37e opet s ol or
c s a hor
s
d 96,
i pa a .
1 DE 40- .
2;
31
5Th Die t ofFr ud a Cl m sa t M orga Re r Law Gr , whi i tgatsl nson be foft
e r cor
a nd ai t he
t ge cove y
oup
ch nvesi e oa
hal he
Pl ntf, nfr d t t r r s de nd wasmai ai a Amlr s Bankasabu nes r or a f t r
ai if co ime hat he epu cha e ma
nt ned t -u t
si s ec d, nd urhe
c imedt tt ba wasa r t tt borowe ' ac ountsaeme swe eno ac r t whe i rcei t
onfr
ha he nk
wa e ha he r rs c
t t nt r t cu ae n t e ved he
r pur s de a i 2009. E 37- a l
e cha e m nd n
D
5 t 6.
7

40- The r dsw er pr
35.
ecor
e oduced t Pl ntf on Febr y 2,2015.D E 40- Fi l
o ai if
uar
36. naly,
on Febr y 1 2015,Pl ntf s nta cl m l t rt D ef
uar 2,
ai i f e
ai ete o
enda f t l s as oci ed
nt or he os s at
w ih t de Souza l
t he
oan.D E 40- The cl m w as deni
38,
ai
ed.
B. The Ins antLaw s t
t
ui

Pl ntfssl t i t s tagai tDef nt f br
ai if ed he nsant ui
ns
enda s or each ofcontacton
r
D ecem ber3,2015.Bef e t C our ar t par i 'cr sm otons f Sum m a y
or he
t e he tes os
i
or
r

J
udgm ent I is M oton,D ef ntprm ar l ar
.n t
i
enda
i iy gues t t cl m sw er untm el
hat he ai
e i y
undert 90- y notce pr si l r pons Pl ntf concedest i w asaw ar of
he da
i
ovi on. n es
e, ai if
hat t
e
t bor ower' f audul conductyear pri t flng t cl m ,butas er st tt
he r
sr
ent
s or o i he ai
s t ha he

90- y notcepe i di notbegi t nm untli di
da
i
r od d
no
i t scover t ough t s
ed, hr
he ubpoe
naed
docum ent ,t t cl i agent w e e per onaly i ved i t f aud.The m a t
s hat he os ng
s r
s l nvol
n he r
ter
hasbee f l bref m aki t m otonsr pe f t sCourtsr ew .
n uly i ed,
ng he
i
i or hi
' evi
LEG A L STAN D A RD

S
s
summa yj
r udgme i l pr praewhe et pla ngsa s pori
nt sp o it
r he e di nd up tng
m a eral es a i h t tt r i no ge ne i s as t any m a er alf tand t tt
t i s t bls ha he e s
nui s ue o
t i ac
ha he

movi pa t i e tte t j
ng ry s n ild o udgme asamatroflw. Ceotx Cor v Catet477
nt
te a ' l e
'
p. . r t,

U. 31 3 ( 98 ; d. Ci P. ( ) Su r j me Sspr ry r gade
S. 7, 22 1 6) Fe R. v. 56 a . mmay udg nts opel e r d
i
notas a dif ed pr
s avor
ocedur s t ut butr he asan i egr par oft Fe al
al hor c ,
at r
nt al t he der

Rulsa awhol,whih aede i dt s c et j t s e r a i xpe i
e s
e c r sgne o e ur he us, pe dyl) nd ne nsve
deemi tonofe r a to 'Pac v. pobi co, F.d 1 75 1 4( 1h Ci.
tr nai
vey cin. e Ca an 283 3 2 , 28 1 t r
'
8

200 ) Summayj dg nti a opraeunls t r i age neis offc f r
2.
r u me s ppr it e s he e s nui s ue a t o
tilAge v. re , 6F. x 8 8 ( 1h Ci. ) SForf cua is st be
ra. e Po tr 21 App' 37, 40 1 t r 2007 .t' a t l sue o

c ie e g nui ,he mus ha ara ba i i t r c d. M iev Jef s Cï
onsd rd e ne t y t ve e l ss n he e or ' z . feron /
'
y
Bd.o c, F. 739, 2 ( 1h Ci.1 .n op ig amo i f rs
fEdu .93 3d
74 1 t r 996) l posn
ton o umma y
r

j gme ,henonmovi pa t S ts s ci fcst s po tt tt r i a
ud ntt
ng ry l
mus how pe fc a t o up r ha hee s
ge ui diputm And r onv Li ryLob y, nc, U. 242,2 ( 986 .
n ne s e' e s . be t b I .477 S.
'
48 1 ) The
nonm ovi pa t m ay notr y on t pl ngs butr herm us de ons r e a
ng r y
el
he eadi ,
at
t m
tat
genui i s f t i tt ough af i vis deposii ,i er ogat y ans er and
ne s ue or r al lr
fda t ,
tons nt r or
w s,
adm i si .Cel e 477 U . a 323- The exi t
s ons
ot x,
S. t
24.
s ence ofa çm er s ntla' of
ç e ci il '

evi
dence i s
n uppor oft nonm ovi pary' pos ton i i ufi ent t e m us be
t he
ng t s ii s ns fci ; her
t
evi
dence on w hi t snderoff coul r
ch he
act
d easonabl tnd f t m ovi pary. atl
y l or he
ng t N '

Ca .Co v Pik ns 58 F. x 8 8 41( 1hCi. 4)( tng Wale v.
s . . c e , 2 App' 39, 40- 1 t r 201 quo i
kr

Dar y, 1F. 1 15 (.t Ci.1 )
b 91 2d 573, 77 11h r 990).
D ISC U SSI N
O

Bas on t r d e dence,t e i no di put t t cl m s a i i under
ed
he ecor vi
her s
s e hat he ai r s ng

t Cl i Pr tcinLetr wees j c t almiai pe i unde whihPlitf
he osng oe to tes r ub e t o i tton rod
r c anif
wasrquie rpor ls e t t De e nti u e t t nni t ( da fom t
e r d e t o s s o he fnda ns r r t hi ney 90) ys r he
wi
dat ofdi
e
scover ofsuch l s' D E 37- Thi 90- pe i s vesasa ibrght
y
os .'
27. s day r od er
d i

lne'me ni ta a prj iet tPlitf ma ha s fr douti oft
i , a ng h t ny eudc ha an if y ve ufee sde he
'
lmia i pe i i ir l va . C v Ator ys' teI . ni I . No.1 2
i t ton rod s re e nt FDI . t ne Til ns Fu nc ,
2- 35999

CI 201 M?z 4270, t* ( D. a Se . 201 ( iz J) Fu t r S n
V, 4 l 438
a 6 S. Fl. pt 3, 4) Set, .. rhe,t
a
i ur m us have di cover bot ac uall s and t f s gi ng rse t a pot ntal
ns ed
t
s
ed h t os
he act vi i o
e i

cl m i or t s a t 90 day cl k f notf ng t i ur oft cl m unde t
ai n der o t rt he
oc or iyi he ns er he ai
r he

( osngPr e tonLe tr. F D.. v St tTil Gu .Co.No.1 1 2Cl i otci te j' IC. . ewar te ar ,
'
2- 006 CV,

201 W L l 307, t* ( D. a M a 6,201 ( ng, ,. c nta is beor
3
891 a 6 S. Fl. y
3) Ki J) The e r l s ue f e
t Cour,t r or i whe herPl ntf s
he
t he ef e, s
t
ai i f ubm it iscl m s t D ef ndantw ihi t
ted t ai o
e
t n he
90- y notce pe i
da
i
r od.

I t i t ntcas Pl ntf ur t Cour t hol ast under i
n he ns a
e, ai if ges he
t o d, he
s gned di i
dn
F. .. v.St
D I C.
ewar Til G uar y Compan t t 90- y notce pe i di not
t te
ant
y hat he da
i
r od d
begi t r untli r ved t adm i s r i y s
n o un i t ecei
he
ni tatvel ubpoenaed bank doc ent .
um s
Speci l Pl ntf cont nds t t w ihoutknow l
fcaly, ai if
e
ha , t
edge t t cl i agent w er
hat he os ng
s e

i ved i t f aud,Pl ntf coul nothave know n t t l sw ascover
nvol n he r
ai if
d
hat he os
ed
beca et Cl ng Pr ecton Leter onl cover conductby t cl i age s,
us he osi
ot i
t s y
ed
he os ng nt
notby t bor ow er .Thi ,how e ,w as nott hol ng i St
he r
s
s
ver
he di n ewar .
t
I St
n ewart t onl f st t pl ntf sw er aw a e ofpr ort r vi t
, he y act hat he ai if
e
r
i o ecei ng he

s poe e d ume swee(1 t tt bo r r ha de a td,a ( t t
ub na d oc nt r ) ha he rowe s d fule nd 2) ha
f ecl ur pr
or os e oceedi had com m enced.N ot y,t e w er no f si St
ngs
abl her
e
act n ewartt
hat
w oul ha al t t pl ntf t pot ntalcl m cover pr ort is r ptoft
d ve ered he ai i f o e i ai
age i o t ecei
he
s
ubpoe
naed docum ent .A cc di y,t under i
s
or ngl he
s gned hel t w he t pl ntf
d hat re he ai if
had no pr oroppor uniy t be notced ofa pot ntalcl m ,t cl k di notbegi t
i
t t o
i
e i ai he oc d
n o
1
0

rm untlis r ptoft s
t
i t ecei
he ubpoena ba r ds.Such a hol ng doesnotpr ude
ed nk ecor
di
ecl
tte i ur s f om r ghtuly as er i a vi a i oft 90- y notce perod w he as
il ns er r
i f l s tng
ol ton he da
i
i
re,
her t pl ntf ha notce ofa pot i cl m f bef e r vi t s
e, he ai if d i
ental ai ar or ecei ng he ubpoenaed
r ds.l
ecor ndeed,t f t i t i t ntm ater a e cl l di tnguihabl f om t e i
he ac s n he ns a
t r eary si s e i
hos n
t St
he ewar cas
t e.
The C our lndst f t i FDIC v.Chi
t
he ac s n
cago 'il I
T te nsurance Company 1 F.
37

Su 3 1 ,1 ( D. a, 01 )( f mi R&R)( orno, .t bemo ea n
pp. d 331 332 S. Fl 2 5 afr ng
M e J) o
r ki
t t sm a t .Tha cas i ved t s e Pl ntf and notce pr si ast e
o hi ter
t e nvol
he am
ai if
i
ovi on hos
pr enty bef e t undersgned.A s i t i t cas t pa i ûl c os m otons
es l
or he
i
n he ns ant e, he rtes ed r s
i

f s
or ummayj gme , r i t prma yis wa whehe Pli iftmey fld
r ud nt wheen he i r sue s t r antf i l e
iscl m f l s wihi t gO- tm eperod.Ther t cl i i t tonswer
t ai or os es t n he ' day i
i
e, he osng nsruc i
e
vi at when t cl i age a
ol ed
he os ng nt ccept a down pa entw ih f
ed
ym
t undst w er not
hat e
t bor ow e s A sher t pl ntf ar
he r r' .
e, he ai if gued t ,alhough t bank w a pr ousl
hat t
he
s evi y
nott t tt bor ow erhad com m it f aud,pl ntf coul nothave know n t
iied ha he r
ted r
ai if
d
hat

t ew asm iconduc by t cl ng age untla t i had r ved is
her
s
t he osi
nt i fer t
ecei t
adm i sr i y s
nit atvel ubpoenaed docum ent .The def
s
endantcount ed t Pl ntf onl
er hat ai i f y
nee be a ar off s gi ng rs t upot i cl m . The def
d
w e act vi i e o
ental ai
endantf t rar
urhe gued

t tt f l ngfcswees tce tt ae t hepli ift apotnta cli ( )t
ha he olowi a t r ufi in o lr t antf o
e il am: 1 he
bor ow erdef t w ihoutm aki a sngl paym ent ( t bo r we a t
r
auled t
ng i e
, 2) he
ro r nd he

bor ow er sator y notsed t bank t tt l w as f audul , ( )t r we e
r
' t ne
i
he
ha he oan
r
ent 3 he e r

i o itncesi t HUD- f ' ,a d ( t tt pr pe t wa f ecos dupo a
nc nsse i n he
1 ol n 4) ha he o ry s or l e
m
n nd
s d a a l t t pl ntf .
ol t oss o he ai if

A fercar ulr ew ofa Reportand Recom m endaton by M agi tat Judge
t
ef evi
i
sr e
J J.O ' lva as w el as1 t ough ana ys s oft l ,t H onor bl Judge
ohn
Suli n,
l , hor
l i
he aw he
a e

Fede co A,M or no uli at y concl d t Sheappr i e sa r appear t be
ri
e
tm el
ude hat s
t
oprat tnda d
so
one t ti st notcepr son w hen t l nderdi cover dact gi ng r s t
hat r gger he i
ovi i
he e
s
s f s vi i e o

potntalc e a e.'Chiago Til I s Co. 1 F.Su 3da 1 ( uotngStwa t
e i ov r g '' c
te n . , 37
pp. t 336 q i e r
Til Gu .Co.2 3W L 1 91 07) Ac o di y,J geM o e f undt tt fcs
te ar , 01
8 3 . c r ngl ud
r no o ha he a t
al tng t FD I t t bor ow er' f aud wer s fci t ti r di c
er i he
C o he r
sr
e uf ent o r gge s over ofa
y
pot i cl m undert 90- notce pr s on.J
ental ai
he day i
ovi i udge M or f he not t
eno urt r ed hat
t e i no is ent el entf t f l e t f l a cl i i tucton pr s on.'
her s dci er em
or he aiur o olow
osng ns r i
ovi i '

l a 1 38( otngAtor ys' tel s Fu l . 2 4W L 438 ,a * .n
d. t 3 qu i t ne Til n . n4 nc, 01
4270 t 7) l
ot w or ,a docum ents i a vi aton oft cl i i tuctonst i sa
her ds ny
how ng
ol i
he osng nsr i rgger

cl m ,r r es ofw het rt cl i a
ai ega dl s
he he os ng gentw as aw a e oft vi aton att tm e.
r
he ol i
he i
l J
d udgeM or f t r oned t t çpot i cl m ' s andar i f
eno urher eas
hat he d entil ai ' t
d s ounded on
s
ound polcy i t l ng a tte i a i ty;
i n he endi nd il nsur nce ndus r

The eaego polc r a onsf rt sr e l ma st to (ncudi
r r od iy e s o hi ul. n ny iuains i l ng
i t sc s ) itke ye r frlndest a q r s cscpr ofa
n hi a e ,t a s a s o e r o c uie pe i oof
cl i i t uc i vi aton.Thus i a l r' oblgaton t pr de
osng ns r ton ol i
, f ende s i i o ovi
notce t a tte i ur ofa cl m i onl t i ed when t l
i o il ns er
ai s y r gger
he enderhas
s sc pr ofan actl cl ng i t i 'i a i t tte
peci
oof
tal osi nsructon v ol ton, hen il
i ur sw oul r ai unaw a e ofpot ntalcl m s t r def i t
ns er
d em n
r
e i ai , he eby eatng he
pur e ofa cl i pr ec i l ter' tm el notce pr si W ihout
pos
os ng ot ton e t s i y i
ovi on. t
tm el notce,tte i ur s c m ott ke s e t i tgat t pot i
i y i il ns er ar
a t ps o nves i e he ental
1
2

cam aj btl is rr aemoes i dfrta ln esa y y a d
li
o ie n ues r r ut o h n e d r n qa n
t
e
m ii e t rpot i l s.The a oprat sandar t be appled,
tgat hei ental os
ppr i e t
do
l
t ef e,i w het rI
her or s
he ndyM ac a t FDI w er i poss s on off s
nd he
C
en
es i
act
gi ng rs t a pot i cl m undert Cl i Pr ecton Leter....
vi i e o
ental ai
he osng ot i
t
1 at 1
d. 336-37.

Ther or i adoptng t S e i cl m ' sandar t hascons s enty bee
ef e, n
i he ç ntal ai ' t
pot
d hat
it l
n

us dbydititc r j ge i t SouhenDitito Flrd t Cour fndst t
e
src ou tud s n he t r src f o ia,he
t i ha
Pl ntf wasalrt t f t whih gavers t apot i cl m prort isr ptof
ai if
e ed o ac s c
ie o
ental ai i o t ecei
t s
he ubpoenaed docum e s See,e. ,Chi
nt .
g.
cago Til l .Co. 1 F.Supp.3d at 1
te hs
, 37
335;
St
ewar Til Guar.Co2013 W ' 1891
t te
L
307,at#5;F. .. v.Ator ys'Til I
D IC
t ne
te ns.

Fu No 11 -CV-211 -PCH, E.1 a 1 ( D. a M a 1 ,2011 ( c J)
nd, :0
97
D. 64 t 1 S. Fl. y 7
) Hu k, ..
W ih r pectt t Siva l Pl ntf w asal t t)f sgi ng r se t a pot ntal
t es
o he l oan, ai if
ered ( act vi i o
e i
cl m be nni i N ove ber2009 w he Pl ntf spr
ai
gi ng n
m
n ai if edecess r ved t audi
or ecei he
t
r s t verf ng t t pr r y w asvacant s had m uli e s tt m r i nces
e uls iyi hat he ope t
, he
tpl hor er es de
,
s pi ousgi tf
us ci
f unds had bee us and herls ed em pl sw er nonexit . A st
n ed,
it
oyer
e
s ent
o
t de Souza l n,Pl ntf had notce ofa pot i l s i A ugus 2009 when
he
oa
ai if
i
ental os n
t
Fr e M ac s t r
eddi
ent he epur hase de and ve iyi t t bor ow erhad
c
m
r f ng hat he r
m i r es ed he as et and di notha enough m oney i heraccountt m ake t
s epr ent
r s s
d
ve
n
o
he
down paym ent
,
O fcour e,i i note
s ts
nough t Pl ntf be aw ar ofa pot ntalcl m . st
hat ai if
e
e i ai A he
under i
s gned hel i St
d n ewart t notce perod i t i ed onl w hen Pl ntf has
, he i
i s r gger
y
ai if
di cove ed bot a pot i cl m and isact l s H er a t ver l es ,
s
r
h
ental ai
t ual os es. e, t he y at t
1
3

Pl ntf becam e aw ar ofis aduall s w he t f ecl ed pr rtesw er sol i
ai if
e t
os es
n he or os
ope i
e dn
Aprl201 f pur hase am ount t twer f bel t bor ow er out t ng l
i
4 or c
s ha
e ar ow he r
s' s andi oan
bal
ances Y et Pl ntf di nots i iscl m f t l es as oci t w ih t Siva
. , ai if d
ubm t t ai or he oss
s a ed t he l
l untlJ
oan i anuar 1 2015,nordi i s i a cl m f t de Souza l n untl
y 3,
d t ubm t ai or he
oa
i

Febr y 1 20l Cl l bot dat f louti oft contact 90- notce
uar 2, 5. eary, h es al sde he
r ual day i
pe i
r od.
A ccor ngl afercar ùlconsder i oft 1 i t s dit i ,t Cour
di y, t
ef
i aton he aw n hi sr ct he
t

fndst tPli ipscamswe euntmey, nds
i ha antf li
r i l a umma yj dgme tmus b a r d
r u
n
t e wade
if
n avoroft D ef
he endant .
s
C O N CLU SIO N

I i O R D ER ED ,A DJUD G ED ,and D ECR EED t D ef
ts
hat endant sM oton f
'
i or

S
ummay J me t( 38) le, n t s mei, r b GRANTED.ti f t r
r udg n DE ,7 a d he a s he e y
I s urhe
O R DER ED ,A DJUD G E D ,and D EC R EED t Pl ntf Cr sM oton f
hat ai i ps os
i or

Su r J me ( 39 , a d t s mei, r byDENI
mma y udg nt DE ) be, n he a s he e
ED.
By se at Or r,t Courts lent rFi J
par e de he
hal e nal udgm enton be fofD ef ndant
hal
e
a agai tPl ntf s.
nd
ns ai i f

1
4

D O N E and O R D ER ED i Cham ber att J esLaw r nce K i Fede al
n
s he am
e
ng
r
J tce Buidi a U nied St es Courhous i M i i Fl i t s231 da of
us i
l ng nd
t
at
t e n am , or da, hi - y
d
J
une,201
7.

%

AM ES LA W REN CE K I G
N
UNI
TED STA TES D I
STRI
C
GE
SO U TH ERN D I
STRI O F F ORI A
CT
D

Cc:

A l couns ofr d
1
el ecor

1
5