Federal Deposit Insurance Corporation v. Lindamood et al
Filing
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MEMORANDUM AND ORDER denying 50 Motion to Dismiss filed by defendant Brant McCoy, special administrator for the Estate of Nicholas Pflumm. Signed by District Judge John W. Lungstrum on 08/04/2015. (ses)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
FEDERAL DEPOSIT INSURANCE
CORPORATION, as receiver for
The First National Bank of Olathe,
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)
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Plaintiff,
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v.
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MATTHEW DEAN LINDAMOOD, et al.,
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Defendants.
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_______________________________________)
Case No. 14-2396-JWL
MEMORANDUM AND ORDER
This matter comes before the Court on the motion to dismiss filed by defendant
Brant McCoy, special administrator for the Estate of Nicholas Pflumm (Doc. # 50). For
the reasons set forth below, the Court denies the motion to dismiss.
I.
Background
On August 12, 2011, plaintiff FDIC was appointed receiver for The First National
Bank of Olathe. On August 8, 2014, plaintiff filed the present suit, in which plaintiff
asserts state-law tort claims on behalf of the bank against the bank’s former officers and
directors. Plaintiff’s claims are based on defendants’ approval of certain loans in 2007
and 2008, although plaintiff alleges that the claims did not accrue more than two years
prior to the receivership. By orders of the Court, plaintiff’s deadline for service under
Fed. R. Civ. P. 4(m) was extended to June 12, 2015.
One of the individual defendants, Nicholas Pflumm, died on May 12, 2013. An
estate for the decedent was opened in Kansas probate court, notice was provided to
creditors, including plaintiff, and the estate was closed on April 21, 2014, without any
claim having been filed by plaintiff. On February 11, 2015, plaintiff filed a petition in
the Kansas state court to reopen the estate and for appointment of a special administrator
for the estate. Plaintiff asserted in that petition that it did not seek any recovery of estate
assets, but that it intended only to recover against the decedent’s liability insurance. The
former executor of the estate opposed the petition, but on March 27, 2015, the state court
granted the petition, reopened the estate, and appointed Mr. McCoy as special
administrator for purposes of this litigation by plaintiff. The state court subsequently
denied the executor’s motion for reconsideration.
On March 30, 2015, plaintiff filed a motion to amend its complaint to substitute
McCoy, as representative of the estate, for the decedent as defendant in this action. On
May 12, 2015, the Magistrate Judge granted the motion to amend. In so doing, the
Magistrate Judge declined to rule on defendant McCoy’s argument based on the statute
of limitations, although the Magistrate Judge indicated that defendant could raise such
argument in a motion to dismiss once he was properly made a party to the case. On May
14, 2015, plaintiff filed its amended complaint naming Mr. McCoy as a defendant, and
service of process was obtained on that defendant on May 20, 2015. Defendant McCoy
subsequently filed the instant motion to dismiss, by which he argues that plaintiff’s
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claims against him as special administrator are time-barred.
II.
Analysis
The parties agree that, under the Financial Institutions Reform, Recovery, and
Enforcement Act (FIRREA), the statute of limitations for plaintiff’s claims expired at the
latest on August 12, 2014, three years after plaintiff’s appointment as receiver for the
bank. See 18 U.S.C. § 1821(d)(14). Plaintiff filed its complaint on August 8, 2014, but
it did not file a complaint naming Mr. McCoy as defendant until May 14, 2015. Thus,
plaintiff’s claims against this defendant are timely only if the amended complaint relates
back to the date of the original complaint for purposes of applying the statute of
limitations. Rule 15(c)(1) provides that an amendment relates back when:
(A)
the law that provides the applicable statute of limitations allows
relation back;
(B)
the amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out—or attempted to be set
out—in the original pleading; or
(C)
the amendment changes the party or the naming of the party against
whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if,
within the period provided by Rule 4(m) for serving the summons
and complaint, the party to be brought in by amendment:
(i)
received such notice of the action that it will not be
prejudiced in defending on the merits; and
(ii)
knew or should have known that the action would have been
brought against it, but for a mistake concerning the proper
party’s identity.
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See Fed. R. Civ. P. 15(c)(1).
Because plaintiff has changed a party here, satisfaction of Rule 15(c)(1)(C) is
required for relation back of the amended complaint with respect to the new party, Mr.
McCoy. The first requirement—compliance also with Rule 15(c)(1)(B)—is satisfied
because, in merely substituting the party defendant, the amendment did not alter the
claims of the original complaint. The remaining requirements have also been satisfied
because plaintiff filed and served the amended complaint on Mr. McCoy before the Rule
4(m) service deadline expired.1
Thus, by that deadline, the new party—the
representative of the estate—had received notice of the action and had been informed
that the suit was mistakenly filed against the decedent.
Defendant argues that plaintiff’s failure to name the estate’s representative as the
proper defendant in the original complaint was not the type of “mistake” contemplated
by Rule 15(c)(1)(C)(ii), but the Court rejects that argument. Defendant has not provided
any authority to suggest that the rule may not be satisfied in this circumstance, and in
fact, courts have deemed the naming of a decedent to constitute a “mistake” under this
rule. See, e.g., Loudenslager v. Teeple, 466 F.2d 249, 250-51 (3d Cir. 1972); American
High-Income Trust v. Alliedsignal, 329 F. Supp. 2d 534, 546-47 (S.D.N.Y. 2004). Suing
a decedent without the capacity to be sued served no purpose for plaintiff. See Anderson
1
The notice period of the rule includes any additional time from extensions
ordered by the Court pursuant to Rule 4(m). See Fed. R. Civ. P. 15 adv. cmtee. note
(1991).
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v. Deere & Co., 852 F.2d 1244, 1248 (10th Cir. 1988) (plaintiff sued wrong parties
because of a “mistake” for purposes of Rule 15(c) where there was nothing to indicate
that the plaintiffs were making a strategic or tactical choice). Thus, the Court concludes
that there was the requisite “mistake” here.
The Court also rejects defendant’s assertion of prejudice. See Fed. R. Civ. P.
15(c)(1)(C)(i). Defendant argues that he did not receive notice until after the statute of
limitations had run, but the rule only requires notice within the service time, which might
extend beyond the running of the statute of limitations. Defendant also argues that the
state probate court had no authority to reopen the estate in these circumstances, but the
Court disagrees, for the reasons set forth below. Moreover, the state court did reopen the
estate, which permitted plaintiff to pursue its claims against this defendant, and there is
no basis for this Court somehow to undo that action by the state court. Defendant has
not identified any prejudice to his ability to defend plaintiff’s claims that may be
attributed to plaintiff’s delay in naming the proper party defendant.
Accordingly, the Court concludes that the requirements of Rule 15(c) have been
satisfied here, which allows for plaintiff’s amended complaint to relate back to the date
of the filing of the original complaint. Because plaintiff’s claims against defendant are
deemed filed as of August 8, 2014, the Court rejects defendant’s argument that plaintiff’s
claims are untimely under FIRREA’s three-year statute of limitations.2
2
Defendant has expressly reserved for a later stage the possible argument that
(continued...)
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Defendant nonetheless argues that plaintiff’s claims against him as administrator
are barred by operation of the Kansas non-claim statute, K.S.A. § 59-2239. “K.S.A. 592239 imposes a special statute of limitations governing such claims against a decedent’s
estate, and it operates as a complete bar to all demands against a decedent’s estate that
are not timely filed.” See Nelson v. Nelson, 288 Kan. 570, 591 (2009). Subsection (1)
of that statute provides that demands against a decedent’s estate shall be barred from
payment unless they are presented within certain time periods triggered by notice to
creditors. See K.S.A. § 59-2239(1). Plaintiff did not present any demand against the
estate in compliance with subsection (1). Subsection (2) provides in relevant part as
follows:
Nothing in this section shall affect or prevent the enforcement of a claim
arising out of tort against the personal representative of a decedent within
the period of the statute of limitations provided for an action on such
claim. For the purpose of enforcing such claims, the estate of the decedent
may be opened or reopened, a special administrator appointed, and suit
filed against the administrator within the period of the statute of
limitations for such action. Any recovery by the claimant in such action
shall not affect the distribution of the assets of the estate of the decedent
unless a claim was filed in the district court within the time allowed for
filing of claims against the estate under subsection (1) . . . .
See id. § 59-2239(2). Defendant does not dispute that subsection (2) permits a claim
asserted only against a decedent’s liability insurance, as such a claim would not affect
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(...continued)
plaintiff’s claims are untimely because they were already time-barred at the time of
plaintiff’s appointment as receiver, and the Court agrees that its rejection of defendant’s
present limitations arguments does not preclude defendant’s later assertion of that
alternative basis for dismissal.
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the distribution of any estate assets. See Kannaday v. Ball, 44 Kan. App. 2d 65, 69-71
(2010). Thus, the Court determines whether plaintiff has satisfied any requirements of
subsection (2).
The Court first rejects plaintiff’s argument that it need not comply with the three
requirements of having the estate reopened, securing the appointment of a special
administrator, and filing suit against the administrator within the statute of limitations.
Plaintiff argues that subsection (2)’s use of the permissive word “may” makes those steps
discretionary and not mandatory. The Court concludes, however, under a plain reading
of the statute, that the discretionary choice indicated by the word “may” is whether or
not to seek enforcement of a claim. Once a party chooses that path, it must then comply
with the procedures set forth for enforcing a claim. That interpretation is supported by
the use of the word “and” in the provision of those procedures—if the statute were
merely suggesting possible discretionary actions, it would likely state that one action, a
second action, or a third action could be taken. Thus, all three steps listed in the rule are
mandatory.
The Court also rejects defendant’s argument that each of the three steps must be
performed “within the period of the statute of limitations for such action.” Defendant
has provided no authority to support that interpretation, and the Court concludes that the
only reasonable interpretation of subsection (2) is that the quoted phrase (which is not
set off by a comma or otherwise placed within the statute to indicate a broader
application) modifies only the third requirement that suit be filed against the
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administrator.
Thus, because the estate was reopened and defendant was appointed special
administrator, compliance with subsection (2) in this case turns on whether plaintiff filed
suit against the administrator “within the period of the statute of limitations for such
action.”3
Defendant argues that the language of the statute requires plaintiff to have filed
its amended complaint by August 12, 2014, when the FIRREA statute of limitations ran,
without regard to any relation back under Rule 15(c).
Defendant relies on an
unpublished memorandum decision of the Kansas Court of Appeals, McKeithen v. Mims,
No. 70,867, 1995 Kan. App. Unpub. LEXIS 840 (Mar. 17, 1995). In McKeithen, the
court rejected the plaintiff’s argument that this requirement of subsection (2) could be
3
Plaintiff argues that defendant is collaterally estopped from relitigating this issue
in light of the state court’s orders. As defendant notes, however, the state court did not
rule specifically on the timeliness of plaintiff’s claims. The state court did state in its
order that “ all three procedural requirements of K.S.A. 59-2239(2) are met,” but it did
not attempt to interpret the statute, and it is unclear from the orders whether the state
court conditioned its statement on a finding of relation-back—an issue that the state
court expressly reserved for this Court. Nor have the parties addressed whether the state
court’s orders naming a special administrator constitute a final judgment, as required for
the application of collateral estoppel. See Valley Improvement Ass’n, Inc. v. United
States Fid. & Guar. Corp., 129 F.3d 1108, 1120 (10th Cir. 1997) (final judgment is
required for issue preclusion); In re Application of Fleet, 293 Kan. 768, 777-78 (2012)
(same); see also Kincaid v. Sturdevant, 437 F. Supp. 2d 1219, 1223-24 (D. Kan. 2006)
(Lungstrum, J.) (in light of similarity of Kansas and federal law on collateral estoppel,
court need not decide which law applies to assertion of preclusion based on state court
proceedings). In light of the Court’s conclusion that plaintiff’s claims are not barred by
the Kansas non-claim statute, the Court need not decide whether collateral estoppel
applies here.
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satisfied by a petition that related back under Kansas Rule 15(c), K.S.A. § 60-215(c).
See id. at *10-12. The court based that ruling on the fact that while Rule 15(c) referred
at that time to “the period provided by law for commencing the action” (which period,
under Kansas law, included service time), subsection (2) did not use that phrase but
instead referred to the “period of the statute of limitations.” See id.
The Court rejects the reasoning of McKeithen, which, as an unpublished
memorandum opinion, does not constitute binding precedent. See Kan. S. Ct. Rule
7.04(g)(2)(A). First, because amendment of a complaint involves a matter of procedure,
the Court applies federal law; thus, the terms of federal Rule 15(c) would take
precedence here even if subsection 59-2239(2) prohibited the use of relation back for
satisfaction of its requirement. See Morel v. DaimlerChrysler AG, 565 F.3d 20, 23-26
(1st Cir. 2009) (federal Rule 15(c) applies over more-restrictive state relation-back rules;
citing cases). Second, subsection (2) does not by its terms prohibit the use of relation
back. It is true, as noted by the court in McKeithen, that subsection (2) uses different
language than that used in Rule 15(c) (state or federal), but that difference is easily
explained, as the rules are referring to two different things. Rule 15(c) provides a time
period during which notice must be provided to the new defendant, and the time for
service of the original complaint was chosen for that deadline. That deadline may or
may not fall outside the time of the applicable statute of limitations, but relation back
allows the amended complaint to be timely if the notice and other requirements are met.
Subsection (2) does not contain any notice requirement, but rather allows for the
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enforcement of certain claims if they are timely filed. Thus, the reference to the statute
of limitations in subsection (2) is understandable, and the use of language that does not
mirror Rule 15(c) is not significant in interpreting the statute. The Court therefore does
not believe that the holding of McKeithen rests on a sound basis.
Accordingly, the Court interprets subsection (2) not to forbid the application of
relation back in determining whether its limitations requirement is satisfied. That
interpretation is consistent with Kansas cases that did not involve compliance with
subsection (2), but in which courts have allowed the substitution of a decedent’s estate
to relate back to the date of original filing. See Vorhees v. Baltazar, 283 Kan. 389, 398406 (2007); Hinds v. Estate of Huston, 31 Kan. App. 2d 478, 479-82 (2003).
As noted above, plaintiff’s amended complaint, by which plaintiff asserts claims
against defendant administrator, relates back under Rule 15(c) to the date of the original
complaint, which falls within the applicable three-year statute of limitations under
FIRREA. Thus, subsection (2)’s requirement that suit be filed within the period of the
applicable statute of limitations is satisfied here, and plaintiff’s claim is therefore not
barred by the Kansas non-claim statute. Accordingly, the Court denies defendant’s
motion to dismiss plaintiff’s claims against him as untimely.
IT IS THEREFORE ORDERED BY THE COURT THAT the motion to dismiss
filed by defendant Brant McCoy, special administrator for the Estate of Nicholas
Pflumm, (Doc. # 50) is hereby denied.
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IT IS SO ORDERED.
Dated this 4th day of August, 2015, in Kansas City, Kansas.
s/ John W. Lungstrum
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John W. Lungstrum
United States District Judge
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