EMIII Holdings, LLC et al v. First NBC Bank, et al
Filing
19
ORDER AND REASONS GRANTING in part and DENYING in part 13 MOTION for Reconsideration of Remand Order, as set forth in document. The motion is GRANTED to the extent that the FDIC seeks to vacate the Court's 10/1/2020 12 Order remanding th e instant action to state court. The motion is DENIED to the extent that the FDIC seeks reconsideration under Federal Rule of Civil Procedure 59(e). IT IS FURTHER ORDERED that the Court's 10/1/2020 12 Order is VACATED to the extent that it rem anded the instant action, Case No. 17-cv-5367, to state court. The stay in this matter remains lifted pursuant to the 10/1/2020 12 Order. IT IS FURTHER ORDERED that the parties contact the Court's case manager by 2/12/2021, to set a date for a scheduling conference in this matter. Signed by Chief Judge Nannette Jolivette Brown on 1/28/2021.(jls)
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 1 of 18
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
EMIII HOLDINGS, LLC et al.
CIVIL ACTION
VERSUS
CASE NO. 17-5367
FIRST NBC BANK et al.
SECTION: “G”(2)
ORDER AND REASONS
In this litigation, Plaintiffs EMIII Holdings, LLC and Earl Myers Jr. (collectively,
“Plaintiffs”) bring suit against various defendants including First NBC Bank (“FNBC”) seeking
recovery and damages for, amongst other things, alleged torts and misrepresentations committed
against Plaintiffs by FNBC. 1 Following the commencement of the litigation, FNBC was closed
and the Federal Deposit Insurance Company (the “FDIC”) was confirmed as Receiver of FNBC. 2
FDIC moves the Court to reconsider the October 1, 2020 Order remanding this case to state court
(“Remand Order”).3 Plaintiffs oppose the instant motion.4 Having considered the motion, the
memoranda in support and in opposition, the record, and the applicable law, the Court grants the
motion in part and denies the motion in part.
1
Rec. Doc. 1-2.
2
Rec. Doc. 1, Exhibit B.
3
Rec. Doc. 13.
4
Rec. Doc. 14.
1
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 2 of 18
I. Background
On December 16, 2016, Plaintiffs filed a state court petition for damages against multiple
defendants, including FNBC, in the Civil District Court for the Parish of Orleans, State of
Louisiana, seeking to rescind Plaintiffs’ mortgage and seeking damages for conspiracy, fraud, and
misrepresentation. 5 Plaintiffs seek to recover damages for, amongst other things, alleged torts and
misrepresentations committed by FNBC.6
Plaintiffs allege that they were involved in construction work at various properties owned
by defendants. 7 Plaintiffs further allege that Defendant Terry Vinnet (“Vinnet”) “told [Plaintiff’s
son] Earl Myers, Jr. that Myers needed to get a relationship with a bank and that [Vinnet] could
help develop that.”8 According to Plaintiffs, Vinnett directed Plaintiffs to enter into a relationship
with FNBC. 9 Plaintiffs state that they signed a “multiple indebtedness mortgage” document
involving a “$650,000.00 loan” to Defendant D’andre Davis (“Davis”). 10 Plaintiffs also state that
they signed an “assignment of construction contract” for the construction of Davis’s property. 11
Plaintiffs allege that they were later informed that “substantially all of the $650,000.00 loan
to D’andre Davis ha[d] been withdrawn by persons unknown.” 12 Plaintiffs contend that they asked
5
Rec. Doc. 1-2.
6
See generally id.
7
Id. at 2–3.
8
Id. at 2.
9
Id. at 3.
10
Id. at 4.
11
Id.
12
Id.
2
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 3 of 18
FNBC to provide them with loan documents but that FNBC refused. Plaintiffs bring claims for
rescission of contract, fraud in the inducement, conspiracy, and damages. 13 Plaintiffs cite no state
or federal law in the petition.14 On January 30, 2017, FNBC filed an answer and affirmative
defenses. 15
On April 28, 2017, FNBC was closed and the FDIC was confirmed as Receiver of FNBC. 16
On May 30, 2017, the FDIC removed the case to this Court, asserting federal subject matter
jurisdiction pursuant to Title 12, United States Code, Section 1819. Section 1819 provides that “all
suits of a civil nature at common law or in equity to which the [FDIC], in any capacity, is a party
shall be deemed to arise under the laws of the United States.” 17 Section 1819 further provides that
the FDIC “may, without bond or security, remove any action, suit, or proceeding from a State court
to the appropriate United States district court before the end of the 90-day period beginning on the
date the action, suit, or proceeding is filed against the [FDIC] or the [FDIC] is substituted as a
party.” 18
On August 28, 2017, upon motion by the FDIC, the Court stayed and administratively
closed the instant action pending the parties’ exhaustion of their administrative remedies pursuant
to 12 U.S.C. § 1821(d)(12).19 The Court ordered that “the case shall be restored to the trial docket
13
Id. at 5–6.
14
See generally id.
15
Rec. Doc. 1-6.
16
Rec. Doc. 1, Exhibit B.
17
U.S.C. § 1819(b)(2)(A).
18
U.S.C. § 1819(b)(2)(B).
19
Rec. Doc. 4.
3
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 4 of 18
upon motion of a party at the expiration of 180 days from [August 28, 2017].” 20
On August 10, 2020, Plaintiffs filed a “Motion to Lift Stay and to Remand,” seeking to
remand the case to state court pursuant to the state law exception to the FDIC removal statute, 12
U.S.C. § 1819(b). 21 On August 19, 2020, the FDIC filed a limited opposition to the motion in
which it did not address Plaintiffs’ legal arguments in support of remand. 22 The August 26, 2020
submission date for the motion to remand passed and the Court did not receive any additional
briefing from the FDIC. 23 Accordingly, on October 1, 2020, the Court issued an order granting the
motion to lift the stay and remanding the case to state court.24 The Court found that it does not
have subject matter jurisdiction over this matter because it falls under the jurisdictional exception
to the FDIC removal statute, 12 U.S.C. § 1819(b), for state law actions. 25
On October 26, 2020, the FDIC filed the instant “Motion for Reconsideration of Remand
Order.”26 Plaintiffs filed an opposition to the instant motion on November 11, 2020.27 On
November 18, 2020, with leave of Court, the FDIC filed a reply to the opposition filed by
Plaintiffs.28
20
Id. at 3.
Rec. Doc. 9. The Court notes that Plaintiffs’ “Motion to Lift Stay and to Remand” was filed outside of
the 180-day time period specified by the Court in its August 28, 2017 Order staying this case.
21
22
Rec. Doc. 11.
Additionally, on August 19, 2020, the Court sent an email to all counsel of record, instructing the FDIC to
keep the court informed on the status of motion to dismiss. The Court did not receive any updates from the FDIC.
23
24
Rec. Doc. 12.
25
Id. at 10.
26
Rec. Doc. 13.
27
Rec. Doc. 14.
28
Rec. Doc. 15.
4
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 5 of 18
II. Parties’ Arguments
A.
The FDIC’s Arguments in Favor of the Motion for Reconsideration
The FDIC argues that the Court should reconsider its Remand Order pursuant to Federal
Rule of Civil Procedure 59(e).29 The FDIC does not argue that the Court should reconsider the
portion of the Remand Order that lifted the stay in this case; rather, the FDIC’s arguments pertain
solely to the Court’s decision to remand this case to state court. 30
In the Remand Order, the Court found that remand was proper because the state law
exception to the FDIC removal statute set forth at 12 U.S.C. § 1819(b)(2)(D) was satisfied. 31 The
FDIC argues that the Remand Order was based on a “manifest error of law” because this case
involves issues of federal law and therefore does not fall within the state law exception to the FDIC
removal statute. 32 The FDIC contends that it did not previously address the argument regarding
the state law exception to the FDIC removal statute because Plaintiffs’ motion to remand was
“expressly based on the premise that the [FDIC] had already been dismissed from this case.” 33 The
FDIC asserts that “these facts justify the Court now considering the [FDIC]’s argument on this
issue.” 34
Specifically, the FDIC argues that the instant action “involve[s] numerous colorable issues
29
Rec. Doc. 13-1 at 7.
30
See Rec. Doc. 13-1.
31
Rec. Doc. 12 at 10.
32
Rec. Doc. 13-1 at 7–8.
33
Id. at 8.
34
Id.
5
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 6 of 18
of federal law” and that “the state law exception does not apply.” 35 First, the FDIC avers that
Plaintiffs did not follow the administrative claims process set forth in 12 U.S.C. § 1821(d)(6)
because Plaintiffs did not take action within 60 days of receiving notice that the FDIC was
disallowing Plaintiffs’ administrative claim on November 29, 2018. 36 The FDIC contends that
Plaintiffs’ alleged failure to comply with the administrative claims process raises an issue of
federal law.37
Second, the FDIC contends that “other federal law defenses to Plaintiff’s claims . . . are
clear from the claims asserted in this case.” 38 In particular, the FDIC argues that it will raise the
“anti-injunction statute” set forth at 12 U.S.C. § 1821(j), the federal D’Oench, Duhme doctrine,
the “maximum liability statute” set forth at 12 U.S.C. § 1821(i), and the statutory bar on punitive
damages against the FDIC set forth at 12 U.S.C. § 1825(b)(3). 39 The FDIC asserts that since it
plans to assert federal defenses “to the extent that the [FDIC] remains a party,” this action
“involves the application of federal law” and “the state law exception is not satisfied.”40
B.
Plaintiffs’ Arguments in Opposition to the Motion for Reconsideration
In opposition, Plaintiffs argue that reconsideration is not appropriate here for two reasons. 41
First, Plaintiffs contend that the FDIC “admittedly knew that Plaintiffs’ claim against the First
35
Id.
36
Id. at 9–10.
37
Id.
38
Id. at 10.
39
Id. at 10–14.
40
Id. at 11, 14.
41
Rec. Doc. 14.
6
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 7 of 18
NBC Bank had gone through claim review process and the [FDIC] had [] denied the Plaintiffs’
claim.” 42 Plaintiffs argue that “[a]ll reasons for reconsideration were available to the [FDIC], and
the [FDIC] cannot justify its failure to present evidence or arguments.”43
Second, Plaintiffs assert that they will suffer “unfair prejudice” if the Remand Order is
reconsidered because of pending litigation involving the parties and a Sheriff’s auction of
Plaintiffs’ properties scheduled for January 7, 2021. 44 Plaintiffs aver that further staying the
proceedings will result in ongoing prejudice to Plaintiffs.45 For these reasons, Plaintiffs ask the
Court to deny the FDIC’s motion for reconsideration. 46
C.
The FDIC’s Arguments in Further Support of the Motion for Reconsideration
In reply, the FDIC argues that it is proper for the Court to consider the issues it raises in
the motion for reconsideration for three reasons. 47 First the FDIC contends that the Remand Order
was based on a “manifest error of law” because this action requires the determination of “at least
seven colorable issues of federal law.”48
Second, the FDIC avers that it was justified in its failure “to point out these federal law
issues earlier because the Plaintiffs never raised the ‘state law exception’ in their Motion to
Remand, and the [FDIC] relied on the Plaintiffs’ representations that they did not intend to pursue
42
Id. at 10.
43
Id.
44
Id. at 11–12.
45
Id.
46
Id. at 12.
47
Rec. Doc. 18.
48
Id. at 2–3.
7
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 8 of 18
claims against the [FDIC] and sought remand only to litigate against ‘the remaining defendants.’”49
Third, the FDIC contends that Plaintiffs will not be prejudiced by reconsideration because:
(1) the FDIC does not object to lifting the stay in this action, and (2) the past delay in this action
“is the direct result of Plaintiffs’ own actions.”50 For these reasons, the FDIC argues that
reconsideration of this Court’s Remand Order is appropriate. 51
III. Legal Standard
A.
Jurisdiction to Review a Remand Order
In general, “an order remanding a case to the State court from which it was removed is not
reviewable on appeal or otherwise.”52 Accordingly, Fifth Circuit precedent dictates that in general,
a “federal court is completely divested of jurisdiction once it mails a certified copy of the [remand]
order to the clerk of the state court.”53 “The FDIC, however, is specifically exempt from this
prohibition by 12 U.S.C. § 1819(b)(2)(C), which provides that ‘[t]he [FDIC] may appeal any order
of remand entered by any United States district court.’”54 Accordingly, the Court has jurisdiction
to review the Remand Order upon motion by the FDIC.
B.
Legal Standard for Reconsideration
Although the Fifth Circuit has noted that the Federal Rules “do not recognize a ‘motion for
49
Id. at 2.
50
Id. at 6–7.
51
Id. at 7.
52
28 U.S.C. § 1447(d).
53
Browning v. Navarro, 743 F.2d 1069, 1078 (5th Cir. 1984) (internal citation omitted).
54
F.D.I.C. v. Loyd, 955 F.2d 316, 319 (5th Cir. 1992).
8
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 9 of 18
reconsideration’ in haec verba,” 55 it has consistently recognized that such a motion may challenge
a judgment or order under Federal Rules of Civil Procedure 54(b), 59(e), or 60(b).56 Federal Rule
of Civil Procedure 59(e) allows courts to alter or amend its judgments after entry upon motion by
a party no later than 28 days following entry of the judgment. 57 The Court has “considerable
discretion” in deciding whether to grant a motion for reconsideration, but must “strike the proper
balance between two competing imperatives: (1) finality and (2) the need to render just decisions
on the basis of all the facts.”58 The Court’s discretion is further bounded by the Fifth Circuit’s
instruction that reconsideration is “an extraordinary remedy that should be used sparingly,”59 with
relief being warranted only when the basis for relief is “clearly establish[ed].”60 Courts in the
Eastern District of Louisiana have generally considered four factors in deciding motions for
reconsideration under the Rule 59(e) standard:
(1)
the motion is necessary to correct a manifest error of law or fact upon which
the judgment is based;
(2)
the movant presents newly discovered or previously unavailable evidence;
(3)
the motion is necessary in order to prevent manifest injustice; or
(4)
the motion is justified by an intervening change in controlling law.61
55
Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 173 (5th Cir. 1990).
Id. (Rules 59 and 60); Castrillo v. Am. Home Mortg. Servicing, Inc., No. 09-4369, 2010 WL 1424398, at
*3–4 (E.D. La. Apr. 5, 2010) (Vance, J.) (Rule 54).
56
57
Fed. R. Civ. P. 59(e).
58
Edward H. Bohlin Co., Inc. v. Banning Co., Inc., 6 F.3d 350, 355 (5th Cir. 1993).
59
Templet v. Hydrochem, Inc., 367 F.3d 473, 479 (5th Cir. 2004).
60
Schiller v. Physicians Res. Grp, Inc., 342 F.3d 563, 567 (5th Cir. 2003); Castrillo, 2010 WL 1424398, at
61
See, e.g., Castrillo, 2010 WL 1424398, at *4 (citations omitted).
*3.
9
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 10 of 18
Rule 60(b)(1) allows relief from a judgment or order for “mistake, inadvertence . . . or
excusable neglect.” 62 “The Supreme Court has explained that the determination of what sorts of
neglect will be considered excusable is ‘an equitable one, taking account of all relevant
circumstances surrounding the party’s omission.’”63 Fifth Circuit precedent dictates that relief will
be afforded only in “unique circumstances” 64 and “[g]ross carelessness is not enough. Ignorance
of the rules is not enough, nor is ignorance of the law.” 65 Whether or not to grant relief pursuant
to Rule 60(b)(1) is left to the sound discretion of the district court.66
A motion for reconsideration, “‘[is] not the proper vehicle for rehashing evidence, legal
theories, or arguments . . . .’” 67 Instead, such motions “serve the narrow purpose of allowing a
party to correct manifest errors of law or fact or to present newly discovered evidence.”68 “It is
well settled that motions for reconsideration should not be used . . . to re-urge matters that have
already been advanced by a party.”69 When there exists no independent reason for reconsideration
other than mere disagreement with a prior order, reconsideration is a waste of judicial time and
62
Fed. R. Civ. P. 60(b)(1).
Trevino v. City of Fort Worth, 944 F.3d 567, 571 (5th Cir. 2019) (quoting Pioneer Inv. Servs. Co. v.
Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993)).
63
64
Wilson v. Atwood Group, 725 F. 2d 255, 257–58 (5th Cir.) (en banc), cert. dism'd, 468 U.S. 1222 (1984).
65
Pryor v. U.S. Postal Serv., 769 F.2d 281, 287 (5th Cir. 1985) (citing 11 Wright & Miller, Federal Practice
and Procedure § 2858 at 170 (footnotes omitted)).
66
See Am. Totalisator Co., Inc. v. Fair Grounds Corp., 3 F.3d 810, 815 (5th Cir.1993).
67
Id. (quoting Templet, 367 F.3d at 478-79).
68
See Waltman v. Int’l Paper Co., 875 F.2d 468, 473 (5th Cir. 1989) (citation and internal quotation marks
omitted).
Helena Labs. Corp. v. Alpha Sci. Corp., 483 F. Supp. 2d 538, 539 (E.D. Tex. 2007) (citing Browning v.
Navarro, 894 F.2d 99, 100 (5th Cir. 1990)).
69
10
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 11 of 18
resources and should not be granted.70
C.
Legal Standard for Removal of State Court Action by the FDIC
Pursuant to 28 U.S.C. § 1441(a), a defendant may remove a case to federal court if the
federal court would have original jurisdiction over the matter. 71 A federal district court has
“original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the
United States.” 72 The jurisdictional and removal provisions articulated in Title 12, United States
Code, Section 1819 bestow the FDIC with broad power to access the federal courts in actions to
which it is a party. 73 12 U.S.C. § 1819(b)(2), in pertinent part, reads as follows:
(A) In general
Except as provided in subparagraph (D), all suits of a civil nature at common law
or in equity to which the Corporation, in any capacity, is a party shall be deemed to
arise under the laws of the United States.
(B) Removal
Except as provided in subparagraph (D), the Corporation may, without bond or
security, remove any such action, suit, or proceeding from a state court to the
appropriate United States district court.74
12 U.S.C. § 1819(b)(2)(D) sets forth a narrow state law exception to the FDIC removal
statute by providing that an action shall not be deemed to arise under the laws of the United States
70
Livingston Downs Racing Ass’n v. Jefferson Downs Corp., 259 F. Supp. 2d 471, 481 (M.D. La. 2002). See
also Mata v. Schoch, 337 B.R. 138, 145 (S.D. Tex. 2005) (refusing reconsideration where no new evidence was
presented); FDIC v. Cage, 810 F. Supp. 745, 747 (S.D. Miss. 1993) (refusing reconsideration where the motion merely
disagreed with the court and did not demonstrate clear error of law or manifest injustice).
71
28 U.S.C. § 1441(a).
72
28 U.S.C. § 1331.
Matter of Meyerland Co., 960 F.2d 512, 514 (5th Cir. 1992) (internal citations omitted); see also
Carrollton–Farmers Branch Indep. Sch. Dist. v. Johnson & Cravens, 889 F.2d 571, 572 (5th Cir.1989).
73
74
12 U.S.C. §§ 1819(b)(2)(A)–(B).
11
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 12 of 18
if it is an action:
(i) to which the [FDIC], in the [FDIC]’s capacity as receiver of a State insured
depository institution by the exclusive appointment by State authorities, is a party
other than as a plaintiff;
(ii) which involves only the preclosing rights against the State insured depository
institution, or obligations owing to, depositors, creditors, or stockholders by the
State insured depository institution; and
(iii) in which only the interpretation of the law of such State is necessary. 75
The Fifth Circuit has held that the third prong is negated when a plaintiff asserts a federal law
claim or where the FDIC asserts a defense that “raises colorable issues of federal law.”76
IV. Analysis
A.
Whether Reconsideration is Appropriate under Federal Rule of Civil Procedure 59(e)
The FDIC argues that reconsideration under Rule 59(e) is appropriate because the Remand
Order is based on a “manifest error of law.” 77 The FDIC proceeds to raise—for the first time—
issues of federal law that it claims are “relevant to this action” to argue that the third prong of the
state law exception to the FDIC removal statute is negated. 78 In opposition, Plaintiffs argue that
the FDIC “cannot justify its failure to present evidence or arguments” until this stage in the
litigation.79
The Court agrees with Plaintiffs that the FDIC’s failure to raise relevant federal law issues
earlier is wholly unjustified. In Diaz v. McAllen State Bank, the Fifth Circuit held that to prevent
75
12 U.S.C. § 1819(b)(2)(D).
76
Diaz v. McAllen State Bank, 975 F.2d 1145, 1148–50 (5th Cir. 1992).
Rec. Doc. 13 at 1. The FDIC filed the instant motion for reconsideration within 28 days of the Court’s
October 1, 2020 Order. Accordingly, the motion was timely filed under Federal Rule of Civil Procedure 59(e).
77
78
Rec. Doc. 13-1 at 8–14.
79
Rec. Doc. 14 at 10.
12
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 13 of 18
remand, “the FDIC must assert a defense that raises colorable issues of federal law.” 80 In the
Remand Order, the Court reviewed every pleading filed by both FNBC and the FDIC and found
that nothing filed in this matter raised any indication of a federal law claim.81 The Court’s
conclusion that there was no “colorable issue of federal law” was thus correct in light of the record
before it. Accordingly, the Court finds that the Remand Order was not premised on a “manifest
error of law.” Therefore, the Court declines to reconsider the Remand Order under Federal Rule
of Civil Procedure 59(e).
Instead, as discussed below, the Court finds that the FDIC failed to make the argument that
it is attempting to make now. As a result, the Court considers the instant motion under Federal
Rule of Procedure 60(b)(1) for the FDIC's mistake in failing to make its dispositive argument. 82
B.
Whether Relief is Appropriate under Federal Rule of Civil Procedure 60(b)(1).
As discussed above, Rule 60(b)(1) allows relief from a judgment or order for “mistake,
inadvertence . . . or excusable neglect.” 83 Here, the FDIC admits that it “did not address” the state
law exception argument in its opposition brief to Plaintiffs’ motion to remand.84 The FDIC
contends that instead it “filed only a short response” to Plaintiffs’ motion to remand because it was
relying on statements indicating that Plaintiffs “understood (albeit incorrectly) that the FDIC-R
had been dismissed from this case.”85
80
975 F.2d at 1149.
81
Rec. Doc. 12 at 8.
82
Fed. R. Civ. P. 60(b).
83
Fed. R. Civ. P. 60(b)(1).
84
Rec. Doc. 13 at 3.
85
Red. Doc. 13-1 at 4–5.
13
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 14 of 18
The FDIC’s failure to properly brief an issue fundamental to its right of access to the federal
court system in response to Plaintiffs’ motion to remand is astonishing. The FDIC’s attempt to
argue that its failure to do so was justified because of Plaintiffs’ representations that the FDIC
would be dismissed from the lawsuit is similarly incomprehensible. A party to an action remains
a party until it is properly dismissed pursuant to Federal Rule of Civil Procedure 41. Similarly, a
party’s obligation to respond diligently to its adversary’s arguments continues until it is properly
dismissed. In addition, the Fifth Circuit has held that “a party has a duty of diligence to inquire
about the status of a case.” 86 As a sophisticated party well versed in the rules of play in federal
court, the FDIC’s failure to know definitively whether it was a party to this lawsuit and to brief a
dispositive argument is careless at best and reprehensible at worst.
Even more troubling is the FDIC’s assertion that Plaintiffs “did not argue that––with the
FDIC-R still a party––the case would not involve any issues of federal law or that the ‘state law
exception’ to 12 U.S.C. § 1819(b)(2)(D) would otherwise apply.” 87 The Court is not persuaded by
the FDIC’s suggestion that it was somehow caught off guard by the state law exception argument:
Plaintiffs’ motion to remand was squarely based on whether the state law exception to the federal
removal statute applies. 88 Regardless of whether Plaintiffs’ motion suggested that the FDIC was
already dismissed, or would be dismissed at some later point, the fact remains that the FDIC was—
and still is—a party to the instant action and must fully brief its arguments before this Court.
86
See also Pryor, 769 F.2d at 287.
87
Rec. Doc. 13 at 3.
88
See generally Rec. Doc. 9-4.
14
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 15 of 18
Although the Court is not inclined to grant relief under these circumstances, it nevertheless
does so here in light of the broad grant of federal jurisdiction bestowed upon the FDIC by Congress
in the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).89 FIRREA’s
provisions “expand, enhance and clarify enforcement powers of the financial institution regulatory
agencies.” 90 The jurisdictional and removal provisions articulated at 12 U.S.C. § 1819 bestow the
FDIC with broad power to gain access to the federal courts in actions to which it is a party. 91
In the Remand Order, the issue before the Court was whether or not removal by the FDIC
of this action was proper pursuant to 12 U.S.C. § 1819(b)(2). 92 The Court found that all three
prongs for the state law exception to the FDIC removal statute set forth at 12 U.S.C. §
1819(b)(2)(D) were met and therefore remanded the case to state court. 93 Now, the FDIC argues
that the third prong, which states that only cases “in which only the interpretation of the law of
such State is necessary” may satisfy the state law exception, is negated because this case implicates
“at least seven colorable issues of federal law.”94
In Diaz, the Fifth Circuit held that the third prong of the state law exception is negated
when a case requires the determination of “colorable, not frivolous” federal issues. 95 In addition,
the Fifth Circuit held that the third prong is negated where the FDIC asserts a defense that “raises
89
Matter of Meyerland Co., 960 F.2d at 514 (internal citations omitted).
Id. (citing H.R.Rep. No. 101–54(I), 101st Cong., 1st Sess. 291, 311, reprinted in 1989 U.S. Code Cong.
& Admin.News 86, 107).
90
91
Id.; see also Carrollton–Farmers Branch Indep. Sch. Dist, 889 F.2d at 572.
92
See Rec. Doc. 12.
93
Id.
94
Id. at 2–3.
95
975 F.2d at 1149.
15
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 16 of 18
colorable issues of federal law.”96 In Diaz, the Fifth Circuit vacated a remand order issued by the
district court pursuant to the state law exception, finding that the FDIC had raised colorable issues
of federal law by asserting a non-meritless defense under the D’Oench, Duhme doctrine, which
generally provides that agreements cannot be enforced against the FDIC unless they are in
writing.97
Like in Diaz, the FDIC argues in the instant case that it will assert a defense under the
D’Oench, Duhme doctrine. 98 In Diaz, the Fifth Circuit found that the D’Oench, Duhme doctrine
defense raised by the FDIC presented a colorable federal law issue because the plaintiff’s claims
were based on primarily oral representations. 99 Similarly, Plaintiffs’ claims in the instant action
rely on several oral representations made by the individual defendants.100 Accordingly, the Court
finds that the FDIC may have a colorable defense under the federal D’Oench, Duhme doctrine.
The FDIC also asserts that it will raise several other federal law defenses. 101 Following
guidance from the Fifth Circuit, the Court does not express an opinion on the merits of those
defenses; rather, the Court finds that the instant action requires the determination of colorable
96
Id.
97
Id. at 1150.
98
Rec. Doc. 13-1 at 10–11.
99
Diaz, 975 F.2d at 1150.
100
See Rec. Doc. 1-2. For example, Plaintiffs allege that FNBC did not provide them with loan documents
even when asked by Plaintiffs after Plaintiffs were informed that “substantially all of the $650,000.00 loan to
D’andre Davis ha[d] been withdrawn by persons unknown.” Id. at 4.
101
Rec. Doc. 13-1 at 11.
16
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 17 of 18
issues of federal law. 102 Accordingly, the Court finds that the third prong of the state law exception
is negated and removal was proper.
Plaintiffs argue that they will suffer “unfair prejudice” if the Remand Order is
reconsidered. 103 Although Plaintiffs’ arguments appear to pertain only to the portion of the
Remand Order that lifted the stay in this case, the Court acknowledges that Plaintiffs may suffer
some prejudice from returning this case to federal court. The Court, however, will not deny federal
jurisdiction despite the FDIC’s poor briefing of this issue. Therefore, the Court finds that relief is
proper pursuant to Rule 60(b)(1).
V. Conclusion
For the reasons set forth above,
IT IS HEREBY ORDERED that the Federal Deposit Insurance Company’s “Motion for
Reconsideration of Remand Order” 104 is GRANTED in part and DENIED in part. The motion is
GRANTED to the extent that the FDIC seeks to vacate the Court’s October 1, 2020 Order
remanding the instant action to state court. The motion is DENIED to the extent that the FDIC
seeks reconsideration under Federal Rule of Civil Procedure 59(e). The Court finds that relief is
appropriate under Federal Rule of Civil Procedure 60(b)(1). The Court warns the FDIC and its
counsel that, in the future, the Court will not consider any of the FDIC's arguments if they are not
properly raised at the appropriate time.
102
See Diaz, 975 F.2d at 1150.
103
Id. at 11–12.
104
Rec. Doc. 13.
17
Case 2:17-cv-05367-NJB-JCW Document 19 Filed 01/28/21 Page 18 of 18
IT IS FURTHER ORDERED that the Court’s October 1, 2020 Order is VACATED to
the extent that it remanded the instant action, Case No. 17-cv-5367, to state court. 105 The stay in
this matter remains lifted pursuant to the October 1, 2020 Order. 106
IT IS FURTHER ORDERED that the parties contact the Court’s case manager by
February 12, 2021, to set a date for a scheduling conference in this matter.
NEW ORLEANS, LOUISIANA, this 28th day of January, 2021.
______
________________________________
NANNETTE JOLIVETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT
105
Rec. Doc. 12.
106
Id.
18
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?