MTB Enterprises, Inc. et al v. ADC Venture 2011-2, LLC
Filing
18
MEMORANDUM DECISION AND ORDER granting 13 Defendant's Motion to Dismiss. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
MTB ENTERPRISES, INC., a Utah
corporation and MICHAEL T. BILANZICH,
an individual and HAIRWARE USA, INC., a
Utah corporation,
Case No. 1:12-cv-00331-S-EJL
MEMORANDUM DECISION AND
ORDER
Plaintiffs,
vs.
ADC VENTURE 2011-2, LLC, a Delaware
limited liability company, as successor to
ANB Financial, N.A. and the Federal Deposit
Insurance Corporation,
Defendant.
Before the Court in the above entitled matter is the Defendant’s Motion to Dismiss
pursuant to Rule 12(b)(6). The parties have filed their responsive briefing and the matter
is ripe for the Court’s review. Having fully reviewed the record herein, the Court finds
that the facts and legal arguments are adequately presented in the briefs and record.
Accordingly, in the interest of avoiding further delay, and because the Court conclusively
finds that the decisional process would not be significantly aided by oral argument, the
Motion shall be decided on the record before this Court without oral argument.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs MTB Enterprises, Inc. (“MTB”), Michael T. Bilanzich, and Hairwire
USA, Inc. (collectively “Plaintiffs”), brought this diversity action against Defendant ADC
Venture 2011-2, LLC (“ADC”) raising claims for breach of contract, reformation,
declaratory judgment, injunctive relief, and successor liability. (Dkt. 1.) The claims relate
MEMORANDUM DECISION AND ORDER- 1
to a series of agreements entered into between MTB and an entity called ANB Financial,
N.A. (“ANB”) on September 24, 2007. At that time, those parties entered into the
Construction Loan Agreement whereby ANB agreed to loan up to Seventeen Million
Dollars to MTB to develop property in Kuna, Idaho. (Dkt. 1.) The terms of the agreement
called for the execution of a Line of Credit Agreement which provided that the loan
would be disbursed to MTB in the form of a line-of-credit over time and that the entire
amount of the loan was obligatory such that ANB could not refuse to allow MTB to draw
on the line-of-credit up to the maximum amount of the loan absent certain conditions. The
loan was due and payable on September 24, 2008. To date, MTB has drawn Eleven
Million Dollars out on the loan. Although Six Million Dollars remains available on the
loan, MTB alleges it has not been allowed to make further draws on the loan contrary to
the terms of the loan agreements. (Dkt. 1.) As a result, MTB alleges it has been unable to
continue to develop, improve, and ensure the viability of the real estate development
project it has undertaken in Kuna, Idaho. (Dkt. 1.)
On May 9, 2008, prior to the September 2008 due date of the Construction Loan
Agreement, the Office of the Comptroller of the Currency (“OCC”) closed ANB and the
Federal Deposit Insurance Corporation (“FDIC”) was appointed as Receiver for ANB. In
December of 2011, the FDIC entered into an Asset Contribution Agreement with the
Defendant ADC. The Asset Contribution Agreement separated certain of ANB’s assets
and liabilities. The FDIC retained the liabilities and certain assets were transferred to
ADC. (Dkt 13 at Ex. 2.) One of the assets transferred to ADC was the Construction Loan
Agreement with MTB.
MEMORANDUM DECISION AND ORDER- 2
On June 28, 2012, MTB filed this action against the Defendant ADC alleging that,
as ANB’s successor, ADC was on notice of the breaches and assumed the obligations of
ANB and the FDIC when it purchased the agreements at issue. (Dkt. 1.) ADC has filed
the instant Motion to Dismiss arguing it did not assume liability for the conduct of ANB
or the FDIC when it purchased certain assets and liabilities from those entities. (Dkt. 13.)
STANDARD OF LAW
A motion to dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(6)
tests the sufficiency of a party’s claim for relief. When considering such a motion, the
Court’s inquiry is whether the allegations in a pleading are sufficient under applicable
pleading standards. Federal Rule of Civil Procedure 8(a) sets forth minimum pleading
rules, requiring only a “short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2).
A motion to dismiss will only be granted if the complaint fails to allege “enough
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged. The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted). Although
“we must take all of the factual allegations in the complaint as true, we are not bound to
accept as true a legal conclusion couched as a factual allegation.” Id. at 1949-50; see also
Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
MEMORANDUM DECISION AND ORDER- 3
Therefore, “conclusory allegations of law and unwarranted inferences are insufficient to
defeat a motion to dismiss for failure to state a claim.” Caviness v. Horizon Comm.
Learning Cent., Inc., 590 F.3d 806, 811-12 (9th Cir. 2010) (citation omitted).
DISCUSSION
1.
Nature of the Motion
The parties dispute whether this Motion is properly considered as one under Rule
12(b)(6) or if it should be converted to a Motion for Summary Judgement under Rule 56.
In ruling on the Motion, ADC argues, the Court can and should take judicial notice of 1)
documents held on the FDIC’s public website, 2) orders and filings in other state and
federal courts, and 3) the contract documents extensively referenced by MTB. (Dkt. 13 at
2.) MTB counters that ADC effectively seeks summary judgment in this Motion which is
premature given that no discovery has yet taken place and there are genuine issues of
material fact as to the meaning and intent of the parties’ in the agreements. (Dkt. 16 at 34, 10.)
Generally, the Court may not consider any material beyond the pleadings in ruling
on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See Branch v.
Tunnell, 14 F.3d 449, 453 (9th Cir. 1994). If materials outside the pleadings are
considered, the motion is converted to a motion for summary judgment governed by
Federal Rule of Civil Procedure 56. See Jacobsen v. AEG Capital Corp., 50 F.3d 1493,
1496 (9th Cir. 1995). There are, however, times when documents other than the pleadings
can be considered without converting a motion to dismiss into a motion for summary
judgment. See Branch, 14 F.3d at 453. “[D]ocuments whose contents are alleged in a
MEMORANDUM DECISION AND ORDER- 4
complaint and whose authenticity no party questions, but which are not physically
attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to
dismiss.” Id.
Here, the Court has reviewed the documents supplied by ADC and finds it
appropriate to consider the Asset Contribution Agreement, Line of Credit Agreement, and
the Construction Loan Agreement. (Dkt. 13, Ex. 2, 11, 12.) Neither party appears to
dispute the authenticity of the documents and both parties have referred to and relied
upon these documents in arguing their positions on the Motion to Dismiss. (Dkt. 13, 16,
17); see also Branch, 14 F.3d at 453. Accordingly, the Court will consider the same in
deciding this Motion.
As to the documents found on the FDIC public website, Federal Rule of Evidence
201 allows for the Court to take judicial notice of a fact that is not subject to reasonable
dispute where, as here, the fact “can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). The
Agreement of Definitions, Asset Contribution Agreement, Amended and Restated LLC
Operating Agreement, and Private Owner Interest Sale and Assignment Agreement are all
found on the FDIC’s public website and the authenticity of the documents has not been
disputed. (Dkt. 13, Ex. 1, 2, 3, 4); see Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442
F.3d 741, 746 n. 6 (9th Cir. 2006) and Allen v. United Financial Mortg. Corp., 660
F.Supp.2d 1089, 1093 (N.D. Cal. 2009) (proper to take judicial notice of a purchase and
assumption agreement that is a matter of public record when deciding a motion to
dismiss). As such, the Court finds it appropriate to consider these documents on this
MEMORANDUM DECISION AND ORDER- 5
Motion to Dismiss without requiring that the Motion be converted to one for summary
judgment.
Based on the foregoing, Court will consider the Motion as one for dismissal
pursuant to Rule 12(b)(6) under the standard of law stated above.
2.
Successor Liability of ADC
ADC argues the Complaint fails to assert any basis upon which relief may be
granted because ADC is not liable as a successor as MTB has alleged. (Dkt. 13 at 1.)
MTB counters that ADC assumed the obligations and liabilities of the FDIC and ANB
when it purchased the loan in question. (Dkt. 16 at 6.) The principal point of contention
between the parties is the language of the Asset Contribution Agreement and the related
documents defining the terms therein.
Both parties point to Section 2.2 of the Asset Contribution Agreement which
states:
Liabilities Assumed by the Company. The Company (i) hereby assumes as
of the Cut-Off Date the Obligations, and agrees to perform and pay the
Obligations when due and (ii) in addition to and without limitation of clause
(i), shall indemnify and hold harmless the Transferor from and against all
costs and expenses (including attorneys’ fees and litigation and similar
costs, and other out-of-pocket expenses, actually incurred in investigating,
defending, asserting or preparing the defense of any Action), judgments,
awards, fines, amounts paid in settlement or penalties incurred by the
Transferor (at any time after the Cut-Off Date) arising out of, resulting from
or otherwise in connection with any Assumed Closing Date Asset
Litigation. Without limitation of the preceding sentence, the Company shall
make such payments to the Transferor as shall be necessary to give effect,
as between the Company and the Transferor, to the assumption of the
Obligations as of the Cut-Off Date (as if this Agreement had been executed
and delivered at, and the “Obligations” determined (for purposes of this
sentence) as of, the Cut-Off Date (and the Closing Date and the Cut-Off
Date were the same date)), including reimbursing the Transferor for any
payments made by the Transferor between the Cut-Off date and the Closing
MEMORANDUM DECISION AND ORDER- 6
Date in respect of the Obligations (as so determined). If there arises any
question as to whether a Liability arising or becoming due or payable
pursuant to or in accordance with any Transferred Contract was, in
accordance with the FDIC Legal Powers legally binding on and valid
against the Receiver, the Transferor’s determination in this regard shall be
conclusive and binding on the Company.
(Dkt. 13-4, Ex. 2 at 8.) As used in this document, “the Company” is ADC and “the
Transferor” is the FDIC. The “the Cut-Off Date” is specified as November 4, 2011. The
parties’ differ in regards to their readings of the definitions and applications of the terms
“Obligations” and “Excluded Liability” as is used in the documents.
ADC maintains that the definition of “Obligations” as used in Section 2.2
specifically excludes any “Excluded Liability,” which is defined as any claim for
damages or other remedies that occurred before the Cut-Off Date. (Dkt. 16 at 1113 and
Dkt. 17 at 8-9.) MTB counters that the term “Obligations” and Section 2.9 of the
document, when taken together, indicate that ADC has agreed to assume the liabilities of
the MTB loan. (Dkt. 16 at 8.) MTB further contends that neither of those sections refer to
“Excluded Liabilities” as ADC has argued. (Dkt. 16 at 8.)
The Agreement of Definitions includes the following definition of “Obligations”
as it is used in the Asset Contribution Agreement:
“Obligations” means all of the following (in each case, whether existing or
accrued (or due, overdue or not due) as of, or incurred, imposed or arising
on or after, the Cut-Off Date and/or the Closing Date):
(a)
all Liabilities (including any Liability to make an extension of credit
(or other advance)) of the Receiver under any Transferred Contract,
in each case to the extent the same are, in accordance with the FDIC
Legal Powers (interpreted as set forth in the last sentence of Section
2.2 of the Contribution Agreement), legally binding on and valid
against the Receiver;
...
MEMORANDUM DECISION AND ORDER- 7
in each case (for (a) through (d) inclusive) excluding, however, any
Excluded Liability (disregarding for this purpose clause (c) of the definition
of the term “Excluded Liabilities”). It is understood and agreed that any
Liability of any Failed Bank or the Receiver that has been discharged or
otherwise extinguished (whether by operation of Law, by settlement or
payment (including payment by issuance of a receivership certificate), by
contract or otherwise) prior to, on or as of a specified date does not
constitute a Liability of the Receiver as of such specified date, provided, for
the avoidance of doubt, that this sentence does not limit or qualify, and is
subject to, clause (c) of the preceding sentence or the indemnity set forth in
clause (ii) of the first sentence of Section 2.2 of the Contribution
Agreement.
(Dkt. 13-3, Ex. 1 at 36-37.) The Agreement of Definitions then defines “Excluded
Liabilities to be:
“Excluded Liabilities” means:
(a)
...
(c)
solely with respect to clause (a) of the definition of the term
“Obligations”, all Liabilities of any Failed Bank and/or the Receiver
under any Transferred Contract for damages or other remedies (at
law or in equity), to the extent (and only to the extent) attributable to
an act or omission or circumstance that occurred or existed prior to
the Cut-Off Date and that constituted a breach by any Failed Bank
and/or the receiver under such Transferred Contract, or a tort, willful
misconduct, fraud or a violation of Law by any failed Bank and/or
the Receiver; provided, however, that, this clause(a) does not
exclude from clause (a) of the definition of the term “Obligations”
any Liability of the Receiver under any Transferred Contract that is
overdue (but solely excludes any Liability of any Failed Bank and/or
the Receiver for damages or other remedies (at law or in equity) for
any breach of any such Liability occurring prior to the Cut-Off
Date);
all Liabilities of any Failed Bank or the Receiver as of the Closing
Date other than the Obligations.
(Dkt. 13-2, Ex. 1 at 22.)
MEMORANDUM DECISION AND ORDER- 8
The Court has reviewed the plain language of the documents at issue here and
finds the language to be unambiguous.1 Section 2.2 of the Asset Contribution Agreement
defines the liabilities assumed by ADC as being those “Obligations” that arose as of the
Cut-Off Date. Although MTB is correct that Section 2.2 does not refer to “Excluded
Liabilities” (Dkt. 16 at 8), the term is incorporated by virtue of the definition of
“Obligations” which is referred to repeatedly in Section 2.2. (Dkt. 13-4, Ex. 2 at 3.)
“Obligations” is defined to not include “Excluded Liabilities” which are those liabilities
attributable to an act or omission or circumstance that occurred or existed prior to the
Cut-Off Date.
Upon this reading, the Court finds ADC did not assume liabilities for acts by either
ANB or the FDIC prior to November 4, 2011. The acts giving rise to the claims raised in
the Complaint here occurred prior to the November 4, 2011 Cut-Off Date. (Dkt. 1.) The
loan at issue commenced on September 24, 2007 and provided that MTB would have one
year to access the funds in the form of a line of credit up to Seventeen Million Dollars.
(Dkt. 1.) Thus, the acts complained of constituting a breach for failing to fund MTB’s
draws on the line of credit for a full year had to have occurred before September 24,
2008; prior to the November 4, 2011 Cut-Off Date. Thus, the Court finds that ADC is not
a successor to the liabilities as alleged by MTB. Because MTB’s claims are based upon
the existence of such successor liability, the Court finds the absence of the same
1
The Asset Contribution Agreement in this case is governed by New York law. (Dkt. 13-4, Ex. 2 at
¶ 8.2.) Under New York law, “[a] written agreement that is complete, clear, and unambiguous on its face
must be enforced so as to give effect to the meaning of its terms and the reasonable expectations of the
parties, and the court should determine the intent of the parties from within the four corners of the
contract without looking to extrinsic evidence to create ambiguities.” Kimso Apartments, LLC v. Gandhi,
___ N.Y.S.2d ___, 104 A.D.3d 742 (N.Y. 2013) (citations omitted).
MEMORANDUM DECISION AND ORDER- 9
necessitates granting the Motion to Dismiss. Furthermore, contrary to MTB’s argument,
the Court finds further discovery or inquiry into the intent of the parties is not necessary.
ADC argues that MTB does not have standing to bring claims against ADC to
enforce its interpretation of the Asset Contribution Agreement. (DKt. 17 at 6.) The Court
agrees. In GECCMC, the Ninth Circuit determined that the plaintiff there could not seek
recovery under the agreement entered into between the FDIC and the failed bank
institution because it was not a third party beneficiary. GECCMC 2005-C1 Plummer
Street Office Ltd. Partnership v. JPMorgan Chase Bank, Nat. Ass’n, 671 F.3d 1027,
1035-36 (9th Cir. 2012) (citations omitted). Disallowing third parties to sue is in line with
FIRREA's mandate to “preserve and conserve the assets and property of [the Failed
Bank],” 12 U.S.C. § 1821(d)(2)(B)(iv), by not opening the door to suits from any number
of third parties who might claim a benefit from the Agreement's terms. See National
Union Fire Ins. Co. of Pittsburgh, Pa. v. City Sav., F.S.B., 28 F.3d 376, 388 (3d Cir.1994)
(“One of the important goals of FIRREA is to enable the receiver to efficiently determine
creditors' claims and preserve assets of the failed institution without being burdened by
complex and costly litigation.”); see also Astra USA, Inc., 131 S.Ct. at 1349
(“Recognizing the [alleged third-party beneficiary's] right to proceed in court could
spawn a multitude of dispersed and uncoordinated lawsuits”).
Under federal common law, “only a party to a contract or an intended third-party
beneficiary may sue to enforce the terms of a contract or obtain an appropriate remedy for
breach.” See GECCMC, 671 F.3d at 1033 (citation omitted). “To prove intended
beneficiary status, the third party must show that the contract reflects the express or
MEMORANDUM DECISION AND ORDER- 10
implied intention of the parties to the contract to benefit the third party.” Id. (quotations
and citation omitted).
“Demonstrating third-party beneficiary status in the context of a government
contract is a comparatively difficult task.” County of Santa Clara, 588 F.3d at 1244.
“Parties that benefit from a government contract are generally assumed to be incidental
beneficiaries,” rather than intended beneficiaries, and so “may not enforce the contract
absent a clear intent to the contrary.” Id. (citation omitted).
This clear intent standard is not met merely by a contract’s “explicit reference to a
third party” or even a showing that the contract “operates to the [third parties'] benefit and
was entered into with [them] ‘in mind.’” Orff v. United States, 358 F.3d 1137, 1145, 1147
(9th Cir. 2004). Instead, the Court must examine the “precise language of the contract for
a ‘clear intent’ to rebut the presumption that the [third parties] are merely incidental
beneficiaries.” Id. at 1147 n. 5; see also Kremen v. Cohen, 337 F.3d 1024, 1029 (9th Cir.
2003) (explaining that a “more stringent test applies” to government contracts). The Court
applies these principles to the contract in this case as follows.
In interpreting the contract terms here, the Court notes that the Asset Contribution
Agreement in this case is governed by New York law. (Dkt. 13-4, Ex. 2 at ¶ 8.2.) Under
New York law, “[a] written agreement that is complete, clear, and unambiguous on its
face must be enforced so as to give effect to the meaning of its terms and the reasonable
expectations of the parties, and the court should determine the intent of the parties from
within the four corners of the contract without looking to extrinsic evidence to create
ambiguities.” Kimso Apartments, LLC v. Gandhi, ___ N.Y.S.2d ___, 104 A.D.3d 742
MEMORANDUM DECISION AND ORDER- 11
(N.Y. 2013) (citations omitted). “Whether a contract is ambiguous is a question of law
and extrinsic evidence may not be considered unless the document itself is ambiguous.”
Consedine v. Portville Cent. School Dist., 907 N.E.2d 684, 689 (N.Y. Ct. App. 2009)
(internal quotation marks and citations omitted). Federal law applies the same principles
of contract interpretation. See Pierce Cnty. Hotel Emp. & Restaurant Emp. Health Trust
v. Elks Lodge, 827 F.2d 1324, 1327 (9th Cir. 1987) (“Extrinsic evidence is inadmissible
to contradict a clear contract term, but if a term is ambiguous, its interpretation depends
on the parties' intent at the time of the contract's execution, in light of earlier negotiations,
later conduct, related agreements, and industrywide custom[.]”) (internal citations
omitted). Again, the Court finds the contract here to be unambiguous.
It is clear from the unambiguous terms of the Asset Contribution Agreement that
ADC did not assume any of the liabilities that existed prior to the Cut-Off Date. Thus, the
claims in the Complaint against ADC do not state a claim for relief. The relief MTB seeks
here may exist against the FDIC as found in 12 U.S.C. § 1821. When the FDIC entered
into the receivership for ANB, it succeeded ANB to “all rights, titles, powers, and
privileges” of ANB. 12 U.S.C. § 1821(d)(2)(A)(i). As receiver, the FDIC “shall pay all
valid obligations of the insured depository institution [ANB].” 12 U.S.C. § 1821(d)(2)(H).
Essentially, the FDIC as receiver “stepped into the shoes” of ANB, obtaining the rights
“of the insured depository institution” that existed prior to receivership. O'Melveny &
Myers v. FDIC, 512 U.S. 79, 86 (1994) (internal citation omitted). This Court, however,
makes no determination concerning any possible relief against the FDIC in this Order.
MEMORANDUM DECISION AND ORDER- 12
3.
Legality of FDIC’s Transfer of Assets to ADC
MTB has also challenged that the FDIC cannot “transfer an asset to an entity it
owns and escape liabilities that might run with that asset simply because it has executed
an agreement between itself and the entity it owns saying that no such liability has been
assumed.” (Dkt. 16 at 2, 5.) ADC counters that the transaction between it and the FDIC
was proper in this case because it was governed by the Financial Institution Reform,
Recovery, and Enforcement Act (“FIRREA”), which authorized the FDIC to separate
ANB’s assets from its liabilities and then transfer those liabilities to another financial
institution – namely ADC. (Dkt. 17 at 4.)
The parties both cite to West Park Assocs. v. Butterfield Sav. & Loan Ass'n, 60
F.3d 1452, 1459 (9th Cir. 1995) in their briefing. Each side argues the case supports its
respective position concerning whether or not the FDIC had the power to separate the
assets and liabilities of ANB, retain the liabilities, and then transfer ANB’s assets to ADC
clear of any liabilities. (Dkt. 13 at 9) (Dkt. 16 at 5) (Dkt. 17 at 4-5.) In West Park, the
Ninth Circuit upheld an assumption agreement where the FDIC, acting as receiver for a
failed bank, transferred all liabilities except for any claims by the failed bank’s
shareholders. Id. at 1458. In rejecting the shareholders’ claims against the assuming bank,
the Ninth Circuit held that a finding in favor of the shareholders would undermine the
statutory power of the FDIC. Id. at 1459. Using this reasoning here, this Court concludes
that the Agreement between FDIC and ADC in this case is valid and enforceable.
“Congress enacted FIRREA in response to the savings and loan crisis of the late
1980s. FIRREA provides for the prompt and efficient resolution of the assets and
MEMORANDUM DECISION AND ORDER- 13
liabilities of failed banks. Under FIRREA, all assets of the failed bank are transferred to
the FDIC as receiver. The FDIC has extensive power and discretion to manage the affairs
of the failed bank, including the authority to repudiate any contract or lease that it deems
burdensome and an impediment to the orderly administration of the failed bank's
business.” GECCMC, 671 F.3d at 1030 (citations omitted); see also 12 U.S.C. §
1821(e)(1)(B), (C) (FIRREA providing giving the FDIC the authority to “disaffirm or
repudiate any contract or lease.... (B) the performance of which the conservator or
receiver, in the conservator's or receiver's discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the conservator or receiver determines, in
the conservator's or receiver's discretion, will promote the orderly administration of the
institution's affairs.”); and 12 U.S.C. § 1821(d)(2)(G) (authorizing FDIC to transfer assets
and liabilities as a receiver of a failed bank).
“One of FIRREA’s core purposes is ‘[t]o provide funds from public and private
sources to deal expeditiously with failed depository institutions.’” GECCMC, 671 F.3d at
1035 (citing FIRREA § 101(8)). The FDIC’s receivership powers under FIRREA include
the ability to transfer or retain any liability of the failed bank as well as to disaffirm or
repudiate any lease that the FDIC determines is burdensome. See 12 U.S.C. §
1821(d)(2)(G), (e). FIRREA’s statutory scheme thus contemplates the FDIC's sweeping
authority to manage the affairs of a failed bank to further the purpose of expeditious
resolution of the failed bank's affairs. See McCarthy v. FDIC, 348 F.3d 1075, 1079 (9th
Cir.2003).
MEMORANDUM DECISION AND ORDER- 14
Based on the foregoing authorities, the Court finds the FDIC acted within its
authority under FIRREA in transferring certain assets and liabilities to ADC in the Asset
Contribution Agreement and retaining certain liabilities. See 12 U.S.C. §§
1821(d)(A)-(B), (G) (The FDIC as Receiver succeeds to “all rights, titles, powers and
privileges of” the failed bank, and has power to transfer assets and liabilities through
assumption agreements.); Hilton v. Wash. Mut. Bank, No. C 09–1191 SI, 2009 WL
3485953, at *2 (N.D. Cal. Oct. 28, 2009).
The receivership gave the FDIC the “power to take all actions necessary to resolve
the problems posed by a financial institution in default.” Sahni v. American Diversified
Partners, 83 F.3d 1054, 1058 (9th Cir. 1996). This means that the FDIC has the authority
to transfer and, at its discretion, may “transfer any asset or liability of the institution in
default ... without any approval, assignment, or consent with respect to such transfer.” 12
U.S.C. § 1821(d)(2)(G)(i)(II). The FDIC may also choose not to transfer a liability. West
Park, 60 F.3d at 1458. In West Park, the court concluded that the purpose of the
agreement was to “limit [the transferor's] liability for the latent claims of unknown
magnitude of shareholders.” Id. Because the FDIC assumed the obligations of the failed
bank and also expressly limited liability when it transferred the failed bank’s assets, “any
claims ... must be brought against FDIC-receiver and not against [the transferor].” Id. So
too here, when ANB went into receivership under FIRREA, the FDIC receiver, and not a
subsequent purchaser of assets such as ADC, was the successor to ANB’s liabilities
unless the agreement expressly designates otherwise. See Payne v. Security Sav. & Loan
MEMORANDUM DECISION AND ORDER- 15
Assn., F.A., 924 F.2d 109, 111 (7th Cir. 1991). This Court finds the FDIC’s transfer of
assets to ADC was proper.
ORDER
NOW THEREFORE IT IS HEREBY ORDERED that Defendant’s Motion to
Dismiss (Dkt. 13) is GRANTED. This case is HEREBY DISMISSED IN ITS
ENTIRETY.
DATED: May 1, 2013
Honorable Edward J. Lodge
U. S. District Judge
MEMORANDUM DECISION AND ORDER- 16
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