Brothers Petroleum, LLC v. Wagners Chef, LLC et al

Filing 9

ORDER & REASONS. It is ORDERED that Defendant's Motion to Stay (Rec. Doc. 3 ) is GRANTED for 180-days from the filing of Brothers Petroleum's administrative claim or until the FDIC denies Brothers Petroleum's claims for administrative relief, whichever occurs first. Signed by Judge Carl Barbier. (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

BROTHERS PETROLEUM, LLC

CIVIL ACTION

VERSUS

No.: 17-6713

WAGNERS CHEF, LLC, ET
AL.

SECTION: “J”(1)

ORDER & REASONS
Before the Court is a Motion to Stay Action (Rec. Doc. 3)
filed by the Federal Deposit Insurance Corporation (“FDIC”), as
receiver for First NBC Bank, and an opposition (Rec. Doc. 5) filed
by

Plaintiff,

Brothers

Petroleum,

LLC

(“Brothers

Petroleum”).

Having considered the motion and legal memoranda, the record, and
the applicable law, the Court finds that the motion should be
GRANTED.
FACTS AND PROCEDURAL BACKGROUND
This

litigation

Brothers

Petroleum,

Wagners

Chef,

LLC

arises
a

from

motor

fuel

(“Wagners

a

contract

dispute

distributor,

Chef”),

the

and

between

Defendant

operator

of

a

gasoline/convenience store located on 4301 Louisa Street, New
Orleans, Louisiana (the “Property”). (Rec. Doc. 3-3 at 3.)
Contract

between

Brother

Petroleum

and

Wagners

Chef

The
(the

“Contract”) allegedly provides that Brothers Petroleum has the

exclusive right to sell Exxon branded motor fuel at the Store. 1
(Rec. Doc. 3-3 at 3.)
In

July

2014,

Wagners

Chef

filed

suit

against

Brothers

Petroleum in state court seeking a declaration that Wagners Chef
was not bound by the Contract. (Rec. Doc. 3-3 at 3).

On November

7, 2015, the Louisiana Fourth Circuit Court of Appeals declared
the Contract was binding on Wagners Chef.

In May 2016, Brothers

obtained a judgment finding Wagners Chef in breach of the Contract
and ordering specific performance by Wagners Chef. (Rec. Doc. 3-3
at 3,4.) Nonetheless, Brothers Petroleum claims that Wagners Chef
continuously refused to abide by the Contract.
Wagners Chef leased the Property from owner Wagner World, LLC
(“Wagner

World”)

convenience

during

store/gas

the

time

station.

The

Wagners
lease

Chef

operated

allegedly

the

“extended

through February, 2022 with a seven (7) year option to purchase
thereafter.” However, on July 8, 2016, Wagners Chef cancelled its
lease. (Rec. Doc. 5 at 3.)

Brothers Petroleum alleges that the

lease was Wagners Chef’s “single most valuable asset” because it
operated its business from the Property, its operational licenses
and permits relied on the lease, and the lease contained an option
to purchase.

1

The Contract was originally between Brothers Petroleum and B-Xpress Louisa,
LLC. However, “through a subsequent ratification of the Contract in June 2013,”
Wagners Chef allegedly became party to the Contract “as successor-in-interest
to B-Xpress at the Store.” (Rec. Doc. 3-3 at 3.)

2

On

the

same

day

as

the

lease

cancellation,

Jadallah

Enterprises, LLC (“Jadallah Enterprises”), purchased the Property
from Wagner World and then leased it to Ahmed 1, LLC (“Ahmed 1”).
First

NBC

Bank

(“First

NBC”)

allegedly

provided

a

multiple

indebtedness mortgage to fund Jadallah Enterprise’s purchase of
the Property and Ahmed 1 executed an assignment of rents in favor
of First NBC as security. Jadallad Saed is allegedly the sole owner
of Wagners Chef, Ahmed 1, and Jadallah Enterprises.
On November 15, 2016, Wagners Chef allegedly advised Brothers
Petroleum that it sold all of its assets to Empire Express, LLC
(“Empire

Express”).

Subsequently,

Empire

Express

allegedly

subleased the Property to Ahmed 1.
On December 21, 2016, Brothers Petroleum filed a revocatory
action in state court seeking to negate Wagners Chef’s lease
cancellation, the sale of the Property to Jadallah Enterprises,
the lease to Ahmed 1, and the sale of Wagners Chef’s assets to
Empire Express. Brothers Petroleum alleges that the cancellation
of the lease and the transfers of the Property caused or increased
the

insolvency

of

Wagners

Chef

to

the

detriment

of

Brothers

Petroleum. (Rec. Doc. 3-3 at 7.) Further, Brothers Petroleum claims
that it is entitled to a judgment “annulling” both the multiple
indebtedness mortgage and the assignment of rents because First
NBC knew or should have known that these transactions would cause
Wagners Chef to breach its Contract with Brothers Petroleum and
3

increase the insolvency of Wagners Chef. (Rec. Doc. 3-3 at 9.)
Brothers Petroleum also seeks damages from unfair trade practices,
or alternatively, unjust enrichment against various Defendants,
including First NBC. 2
On April 28, 2017, First NBC was declared insolvent and the
FDIC was appointed as receiver of First NBC. The FDIC removed this
case from state court on May 30, 2017. On July 17, 2017, the FDIC
moved for a stay of these proceedings until it can complete its
administrative review. (Rec. Doc. 3-1 at 1.)
PARTIES’ ARGUMENTS
The FDIC argues that Brothers Petroleum must first exhaust
its administrative remedies before proceeding in the instant case.
(Rec. Doc. 3-1 at 3.) Because the administrative process can take
180 days or more, the FDIC requests a stay for 180 days. (Rec.
Doc. 3-1 at 5.) However, alternatively, the FDIC states that it is
legally entitled to at least a 90-day stay pursuant to 12 U.S.C.
§ 1821(d)(12)(B). Brothers Petroleum argues that the delay should
be held to the minimum amount of 90 days pursuant to 12 U.S.C. §
1821(d)(12)(B).
DISCUSSION
The Financial Institutions Reform, Recovery and Enforcement
Act

of

1989

("FIRREA")

establishes

2

a

comprehensive

scheme

Brothers Petroleum named Wagners Chef, Jadallah Enterprises, Ahmed 1, Empire
Express, Wagner World, LLC, and First NBC as Defendants in its complaint.

4

authorizing

the

FDIC

to

act

as

the

receiver

for

a

failed

institution. The FDIC, as the receiver, succeeds to all rights,
titles, powers, and privileges of the failed institution. See
O’Melveny & Meyers v. FDIC, 512 U.S. 79, 86 (1994) (citing 12
U.S.C. § 1821(d)(2)(A)(i)).
FIRREA also creates a mandatory administrative procedure for
claims asserted against an institution in receivership.

For pre-

receivership claims (i.e., claims that were filed before the
appointment of a receiver), the Fifth Circuit has held that the
FDIC may opt either to continue the judicial proceeding or to
follow the administrative process by moving for a stay within 90
days of its appointment. Whatley v. Resolution Tr. Corp., 32 F.3d
905, 908-09 (5th Cir. 1994).

For the administrative route, the

FDIC “must notify potential claimants of the bar date – that date
after which claims against the failed institution are prohibited.”
Guidry v. Resolution Tr. Corp., 790 F. Supp. 651, 652 (E.D. La.
1992) (citing 12 U.S.C. § 1821(d)(3)).

Upon receiving notice from

the FDIC, claimants have 90 days to present their claims against
the institution. 12 U.S.C. § 1821(d)(3)(B)(i).

Once a claim has

been presented, the FDIC has 180 days to notify the claimant of
its decision to allow or disallow the claim. Id. § 1821(d)(5)(A).
A claimant may continue a pre-receivership litigation proceeding
within 60 days of the earlier of: (1) the expiration of the 180-

5

day period, or (2) the date of any notice of disallowance of the
claim. Id. § 1821(d)(6).
Here, Brothers Petroleum had already commenced litigation
against First NBC when the FDIC was appointed the receiver of First
NBC. The FDIC has elected to follow the administrative process set
out

by

FIRREA

by

moving

for

a

stay

within

90

days

of

its

appointment. Therefore, Brothers Petroleum must first exhaust its
administrative

remedies

before

proceeding

in

this

Court.

See

Carney v. Resolution Tr. Corp., 19 F.3d 950, 955 (5th Cir. 1994)
(“FIRREA makes participation in the administrative claim review
process mandatory.”) This does not mean that the Court is deprived
of subject matter jurisdiction over the matter; rather, the case
is suspended until the FDIC concludes its administrative review.
See Whatley v. Resolution Tr. Corp., 32 F.3d 905, 907 (5th Cir.
1994) (“Because subject matter jurisdiction is tested as of the
time of the filing of the complaint, district courts presiding
over actions properly filed prior to the appointment of a receiver
continue to be vested with jurisdiction.”)
The FDIC requests a stay of 180 days to allow the parties the
opportunity

to

exhaust

the

administrative

process.

Brothers

Petroleum argues that the stay should be limited to 90 days because
that is the time period that FIRREA specifically prescribes. 12
U.S.C. § 1821(d)(12)(A)(ii) (The FDIC may request a stay for a

6

period “not to exceed . . . 90 days . . . in any judicial action
or proceeding to which such institution is or becomes a party.”)
In a previous decision from this district, the Court held
that FIRREA implicitly authorizes and requires a pre-receivership
case be stayed until the administrative review process is finished.
Guidry v. Resolution Tr. Corp., 790 F. Supp. 651, 652 (E.D. La.
1992).

“By

requiring

the

plaintiffs

to

exhaust

their

administrative remedies, the Court allows the [FDIC] to perform
its statutory function of promptly determining claims so as to
quickly

and

institution
(citation

efficiently
without

omitted).

“[c]oncurrent

resolve

resorting

to

Otherwise,

judicial

and

claims

against

litigation.”
it

would

administrative

Id.

a

failed

at

655–56

potentially
review

of

allow
pre-

receivership cases,” which “would completely undermine the need
and efficacy of the administrative process.” Id.; see also Whatley,
32 F.3d at 909 (“[C]ongressional goals of efficiency and expediency
would be prejudiced if administrative and judicial processes were
allowed to proceed simultaneously.”)
Other courts have similarly concluded that FIRREA cannot be
read to prohibit district courts from granting stays longer than
90 days. See e.g. Zaremba Grp., LLC v. FDIC, 10-11245, 2010 WL
3805190, at *3 (E.D. Mich. Sept. 23, 2010) (holding that a 180day stay may be granted to exhaust the administrative claim process
and effectuate the purpose of FIRREA); Marquis v. FDIC., 965 F.2d
7

1148, 1155 (1st Cir. 1992) (permitting district courts to hold
litigation in abeyance for 180 days for the same reasons); Glover
v. Washington Mut. Bank, F.A., 08-990, 2009 WL 798832, at *6 (W.D.
Pa. Mar. 20, 2009) (granting a stay of 180 days and concluding
that FIRREA cannot be read to contemplate concurrent judicial and
administrative review); Tuxedo Beach Club v. City Federal Savings
Bank, 737 F. Supp. 18, 19 (D.C.N.J. 1990) (holding that Congress
intended the availability of a 180-day stay despite the fact that
FIRREA does not expressly provide for one); Coston v. Gold Coast
Graphics,

Inc.,

(concluding

that

782

F.

Supp.

Congress

1532,

intended

1536
to

(S.D.

stay

Fla.

1992)

pre-receivership

actions until the claimants have complied with the administrative
review process).
In the present suit, Brothers Petroleum states that it has
already initiated the FIRREA administrative review process with
the FDIC. In order to effectuate the purpose of FIRREA and in the
interest of judicial economy, the Court finds that this litigation
should be stayed until the FDIC completes its administrative review
of Brothers Petroleum’s claims.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Stay (Rec.
Doc. 3) is GRANTED for 180-days from the filing of Brothers
Petroleum’s administrative claim or until the FDIC denies Brothers
8

Petroleum’s claims for administrative relief, whichever occurs
first.
New Orleans, Louisiana this 30th day of August, 2017.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

9