Southeast Housing, LLC v. First NBC Bank et al
ORDER AND REASONS granting 3 MOTION to Stay pending resolution of administrative process. This matter is hereby stayed, and closed, for statistical purposes, for 90 days; the case will not be automatically reopened, but, rather, will be reopened upon proper motion filed by counsel. Signed by Judge Martin L.C. Feldman on 7/26/2017.(clc)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SOUTHEAST HOUSING, LLC
FIRST NBC BANK, ET AL.
ORDER AND REASONS
Before the Court is a motion to stay action pending exhaustion
Corporation, as Receiver for First NBC Bank, New Orleans, LA (FDICR). FDIC-R seeks a 180-day stay, or, alternatively, a 90-day stay.
For the reasons that follow, the motion is GRANTED, and this matter
is hereby stayed for 90 days.
The lawsuit arises out of an allegedly wrongful foreclosure.
On March 17, 2017, Southeast Housing, LLC filed a petition to annul
sheriff’s sale, tax sale, and for damages for wrongful seizure
against various defendants, including First NBC Bank in state
property in St. Tammany Parish known as Lots 28A and 28B of
purchased these lots, they were encumbered by a mortgage in favor
of Central Progressive Bank; the same mortgage also encumbered two
other lots in the subdivision.
In connection with Southeast’s purchase of Lots 28A and 28B,
Central Progressive provided payoff figures for partial releases
of the mortgage, and those amounts were paid to Central Progressive
in full at closing.
However, Lots 28A and 28B were not released
from the Central Progressive mortgage; Southeast was not aware
that the Central Progressive mortgage remained of record against
Lots 28A and 28B.
Unbeknown to Southeast, First NBC Bank, as successor by
acquisition to Central Progressive, filed a foreclosure action as
to all four lots described in the mortgage, including Lots 28A and
28B, on November 13, 2013.
First NBC Bank named as defendant only
the original mortgagor and failed to name Southeast, the owner of
record of Lots 28A and 28B, in the foreclosure action.
Southeast received notice of the suit, it alleges, it would have
challenged the foreclosure because the mortgage should have been
cancelled as to Lots 28A and 28B due to the 2008 payments, which
totaled nearly a half million dollars.
Lots 28A and 28B were
ultimately sold to First NBC Bank at the sheriff’s sale.
Southeast learned of the sale, it filed this lawsuit in state court
in St. Tammany Parish to challenge the validity of the sale and to
seek damages caused by the sale.
Once this litigation was filed in state court, counsel for
Southeast attempted to amicably resolve the wrongful foreclosure
with First NBC Bank.
Before that could be accomplished, however,
First NBC Bank was closed on April 28, 2017, its liquidation was
ordered commenced, and the FDIC-R was confirmed as receiver of
First NBC Bank.
Pursuant to the order confirming it as receiver,
FDIC-R is vested with title to all assets of First NBC Bank without
execution of any instruments of conveyance, assignments, transfer,
management and control of First NBC Bank.
On June 26, 2017, the
FDIC-R removed the lawsuit to this Court.
The FDIC-R now seeks
entry of an order staying this action as to all parties for 180
days to allow sufficient time for the FDIC-R to conduct, and for
all parties with potential claims against First NBC Bank to comply
alternatively, the FDIC-R seeks entry of an order staying this
action as to all parties for 90 days as required upon request
pursuant to 12 U.S.C. § 1821(d)(12)(B).
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 establishes
a claim administration and review procedure by which all claims
asserted against the assets of the failed institution must be
submitted to the FDIC-R for a determination of whether they will
be allowed or disallowed in the FDIC’s discretion.
12 U.S.C. §
The Act makes participation in the claims process
1994)(citations omitted)(“We note initially that [the Act] makes
regardless of whether the claims were filed before or after the
RTC was appointed receiver of the failed institution.”).
Id. (citations omitted).
jurisdiction over those claims.
Court must stay the lawsuit until the mandatory administrative
claims process has been exhausted.
at 956 (noting that the
Act “creates a ‘scheme under which courts will retain jurisdiction
over pending lawsuits -- suspending, rather than dismissing, the
suits -- subject to a stay of proceedings as may be appropriate to
permit exhaustion of the administrative review process as it
pertains to the underlying claims.”).
Section 1821(d)(12) of the Act provides that after the FDICR has been appointed receiver for a failed depository institution,
it may request a stay “in any judicial action or proceeding to
which such institution is or becomes a party.”
12 U.S.C. §
If requested, the stay is mandatory. Id. at §
1821(d)(12)(B)(“[u]pon receipt of a request by any conservator or
receiver pursuant to subparagraph (A) for a stay of any judicial
action or proceeding in any court with jurisdiction of such action
The receiver may request “a stay for a period not to
Id. at § 1821 (d)(12)(A)(ii).
It is undisputed that the plaintiff may seek redress from
this Court after the administrative process has been exhausted.
It is likewise undisputed that the FDIC-R’s timely request entitles
it to a mandatory stay of this action for 90 days.
Id. at § 1821
The parties quarrel, however, over whether the FDIC-
R is entitled to a longer stay of 180 days.
In support of its request for a 180-day stay, the FDIC-R
submits that the claims process should be allowed to proceed to
conclusion before this litigation proceeds.
The FDIC-R notes that
the Act provides that creditors have 90 days after publication of
notice to present their claims. 12 U.S.C. § 1821(d)(3)(B)(i). Once
the claims are presented by the claim bar date of August 2, 2017,
the FDIC has 180 days within which to consider the claim and notify
the claimant whether it has been allowed or disallowed.
Id. at §
It would create a procedural quandary if the Court
Southeast counters that the clear text of the Act calls for a stay
not longer than 90 days.
The Court agrees.
procedural quandary fails to persuade the Court to enlarge the
statutory stay period.
If Congress wanted to empower a receiver
to request a stay that coincides with the maximum time a receiver
has to consider claims and notify claimants of its decision (180
days), it could have so provided.
Instead, Congress clearly
provides that a “receiver may request a stay for a period not to
exceed...90 days, in the case of any receiver.”
Id. at § 1821
requests a 90-day stay, the FDIC-R’s motion to stay is hereby
GRANTED. This matter is hereby stayed, and closed, for statistical
purposes, for 90 days; the case will not be automatically reopened,
but, rather, will be reopened upon proper motion filed by counsel.
New Orleans, Louisiana, July 26, 2017.
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
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