Dernis v. Federal Deposit Insurance Corporation, as Receiver for Premier Bank et al

Filing 10

MOTION by Plaintiff Federal Deposit Insurance Corporation, as Receiver for Premier Bank to stay proceedings pending exhaustion of statutorily mandated administrative remedies and memorandum in support (Attachments: # 1 Exhibit A)(Abrams, Andrew)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GEORGE D. DERNIS, as an individual,

)
)
Plaintiff,
)
)
v.
)
)
FEDERAL DEPOSIT INSURANCE
)
CORPORATION, AS RECEIVER FOR
)
PREMIER BANK, DR. ZULFIKAR ESMAIL, )
SHAMIM ESMAIL, ALIYA HUSSAINI,
)
ALIYA HUSSAINI 2006 IRREVOCABLE
)
TRUST, KASSIM ESMAIL, KASSIM
)
ESMAIL 2006 IRREVOCABLE TRUST,
)
AMYNA ESMAIL, AMYNA ESMAIL 2006
)
IRREVOCABLE TRUST,
)
)
Defendants.
)

Case No. 12 cv 2856
Judge Gary Feinerman
Magistrate Judge Maria Valdez

MOTION OF THE FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER
TO STAY PROCEEDINGS PENDING EXHAUSTION OF STATUTORILY
MANDATED ADMINISTRATIVE REMEDIES AND MEMORANDUM IN SUPPORT
The Federal Deposit Insurance Corporation, as Receiver for Premier Bank (“FDIC-R”),
pursuant to 12 U.S.C. § 1821(d)(3)-(8) and (13), hereby moves this Court to stay certain portions
of these proceedings pending exhaustion of statutorily mandated administrative remedies. In
further support, the FDIC-R states:
1.

On March 23, 2012, Premier Bank (“Premier”) was closed by the Illinois

Department of Financial and Professional Regulation, Division of Banking, and the FDIC was
appointed as Receiver thereof.

True and correct copies of the Illinois Department of

Financial and Professional Regulation notice and the FDIC’s acceptance of appointment as
Receiver pursuant to 12 U.S.C. § 1821(c)(3)(A) are attached hereto as Exhibit A. Also, on March
23, 2012, the FDIC accepted the appointment as Receiver.

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2.

The claims in the above-captioned matter asserted by the plaintiff George D.

Dernis (“Plaintiff”) against Premier constitute potential liabilities of the FDIC-R. A true and
correct copy of Plaintiff’s Complaint against Premier is attached to the Notice of Removal
previously filed with this Court (Docket No. 3). In Count I, Plaintiff seeks a declaration against
the rights of Premier (now FDIC-R) to enforce a mortgage and note; in Count II, Plaintiff alleges
fraud against Premier; in Count III, Plaintiff alleges negligent misrepresentation against Premier;
in Count IV, Plaintiff alleges that Premier engaged in a conspiracy to commit fraud; in Count V,
Plaintiff alleges violation of the Illinois Consumer Fraud and Deceptive Business Practices Act
against Premier; and in Count VI, Plaintiff alleges unjust enrichment against Premier. In Counts
II, III, IV and VI, other defendants are also named.
3.

The FDIC-R has succeeded to all rights, titles, and powers and privileges of Premier,

pursuant to 12 U.S.C. § 1821 (c)(3)(A).
4.

As will be demonstrated herein, this case must be stayed pending

Plaintiff’s participation in the FDIC’s administrative review process with respect to its claims
Premier’s receivership estate because administrative

against

review

is

a

mandatory

jurisdictional prerequisite for seeking relief with this Court.
THE ADMINISTRATIVE REVIEW PROCESS
5.

Congress set forth the rights and duties that govern the receivership of a failed

institution in the Financial Institutions, Reform, Recovery and Enforcement Act of 1989 (the
“Act”) Pub. L. No. 101-73, § 183 et seq.
6.

The Act establishes, at 12 U.S.C. § 1821(d)(3)-(13), a claim procedure for all

claims asserted against the assets of the failed institution, regardless as to whether lawsuits
enforcing those claims were initiated prior to the appointment of a receiver. See Marquis v.
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FDIC, 965 F.2d 1148 (1st Cir. 1992).
7.

All creditors having claims against Premier must first present them to the FDIC

for an administrative determination of whether they should be paid.

12 U.S.C. § 1821(d)(3)-

(5); see also Maher v. Harris Trust and Savings Bank, 75 F.3d 1182 (7th Cir. 1995).

8.

Creditors have ninety (90) days to present their claims against the assets of the

failed institution upon receiving notice from the FDIC. 12 U.S.C. § 1821(d)(3)(B)(i). Once the
claim is presented, the FDIC has 180 days within which to consider the claim and notify the
claimant whether it has been allowed or disallowed. 12 U.S.C. § 1821(d)(5)(A)(i). When the
creditor has been notified of a receiver’s determination, or when the 180 day period has expired,
the creditor may either request administrative review, file suit on the claim, or continue an action
commenced before the appointment of a receiver in the federal district court where the failed
bank’s principal place of business is located. 12 U.S.C. § 1821(d)(6)(A).
9.

In this case, Plaintiff has filed a V e r i f i e d Complaint against Premier, for which

the FDIC is now Receiver. Hence, Plaintiff is seeking recovery from a failed institution that is
now under the FDIC’s receivership. See 12 U.S.C. § 1821(d)(12)(D). Therefore, Plaintiff’s
claims must be submitted to the FDIC for administrative review.
BASIS FOR STAY OF THE INSTANT CASE
10.

The Act requires mandatory compliance with the administrative claims review

process. Brown Leasing Co. v. FDIC, 833 F.Supp. 672 (N.D. Ill. 1993).
11.

Congress specifically deprived courts of subject matter jurisdiction over claims

not presented for administrative review. Specifically, the Act provides:
“Limitation on judicial review
Except as otherwise provided in this subsection, no court shall have
jurisdiction over –
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(i) any claim or action for payment from, or any action seeking a
determination of rights with respect to, the assets of any depository
institution for which the [FDIC] has been appointed receiver,
including assets which the [FDIC] may acquire from itself as such
receiver; or
(ii) any claim relating to any act or omission of such institution or
the [FDIC] as receiver. 12 U.S.C. § 1821(d)(13)(D).”
12.

Courts are empowered to stay pending litigation “to permit exhaustion of the

mandatory administrative claims review process.” Brown Leasing Co., 833 F.Supp. at 675
(quoting Marquis, 965 F.2d at 1151).
13.

Thus, the pending action against the FDIC must be stayed until Plaintiff’s claims

have been submitted to the FDIC for administrative review and either the FDIC has made a
determination to disallow the claim or the 180 day administrative review period has expired. See
12 U.S.C. § 1821(d)(5)(A)(i). See also FDIC v. Glynn, Nos. 91 C 3723, 91 C 3726, 1993 WL
413958, at *3-4 (N.D.Ill. Oct. 15, 1993).
14.

As Congress manifested intent to require mandatory compliance with the

administrative review process in the Act, it follows that Congress manifested an intent to require
a stay of all claims against a failed institution pending review of those claims by the FDIC. See
Brown Leasing Co., 833 F.Supp 672; Glynn, 1993 WL 413958, at *3-4.
CONCLUSION
15.

Because Plaintiff’s claims are against Premier, which is a failed institution under

the receivership of the FDIC, Plaintiff’s participation in the FDIC’s administrative review process
is mandated. Because the administrative review process is a prerequisite to seeking relief before
this Court, a stay of the instant case until Plaintiff exhausts its administrative remedies with the
FDIC-R is also mandated.
WHEREFORE, for the reasons stated above, the FDIC-R respectfully requests that

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this Court enter an Order staying this litigation for a period commencing on the date that the
Order is entered on the docket and ending on the earlier of 180 days from the date on which
Plaintiff files its claims with the FDIC-R or the date the FDIC-R disallows the claims, and for
such other and further relief, legal or equitable, this Court deems best.

Vilia M. Dedinas (ARDC No. 6191614)
Andrew J. Abrams (ARDC No. 6271836)
Jasmina Dj. Varvitsiotis (ARDC No.
6256929)
Boodell & Domanskis, LLC
205 N. Michigan Avenue, #4307
Chicago, Illinois 60601
Phone: [phone]
Fax: [phone]

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Respectfully submitted,
FEDERAL DEPOSIT INSURANCE
CORPORATION, AS RECEIVER FOR
PREMIER BANK
By: /s/ Andrew J. Abrams
One its attorneys

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