Lowe et al v. FDIC as Receiver for NBRS Financial
Filing
39
MEMORANDUM OPINION. Signed by Judge Ellen L. Hollander on 7/2/2019. (krs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
DONALD J. LOWE, et al.,
Plaintiffs,
v.
Civil Action No. ELH-18-478
FEDERAL DEPOSIT INSURANCE
CORPORATION, AS RECEIVER
FOR NBRS FINANCIAL, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiffs Donald J. Lowe (“Mr. Lowe”), Joyce J. Lowe (“Ms. Lowe”), and Lowe Services,
Inc. (“Lowe Services”) (collectively, the “Lowes”) lodged a civil action against defendant Federal
Deposit Insurance Corporation (the “FDIC”) as Receiver for NBRS Financial (“NBRS”). ECF 1
(the “Complaint”). They incorporated by reference the Affidavit of Mr. Lowe. ECF 1-1. Plaintiffs
subsequently filed an Amended Complaint (ECF 12), again incorporating ECF 1-1, and naming
the FDIC as two defendants: the FDIC in its capacity as Receiver (“FDIC-Receiver”) and also in
its corporate capacity (“FDIC-Corporate”).1 Plaintiffs seek the release of a lien previously held
by NBRS on Mr. and Ms. Lowe’s residential property. Id. ¶ 5. They also seek damages pursuant
to 12 U.S.C. § 1819(a). ECF 12, ¶¶ 3, 6.
The FDIC-Receiver “in its corporate capacity as attorney-in-fact” for the FDIC, and “as
receiver for NBRS,” has moved to dismiss. ECF 29. It asserts lack of jurisdiction under Fed. R.
Civ. P. 12(b)(1) and (2) and failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). The motion
is supported by a memorandum (ECF 29-1) (collectively, the “Receiver Motion”) as well as several
1
Although the FDIC is one entity, the parties have treated them as though they are separate
entities. I shall adopt the format used by the parties.
exhibits. ECF 29-3; ECF 29-5 to ECF 29-11. FDIC-Corporate also moved to dismiss (ECF 30)
(the “Corporate Motion”), asserting lack of subject matter jurisdiction under Rule 12(b)(1) and
failure to state a claim under Rule 12(b)(6). Plaintiffs oppose the Receiver Motion (ECF 34) and
the Corporate Motion. ECF 37. Defendants have replied. ECF 36 (“Receiver Reply”); ECF 38
(“Corporate Reply”).
The motions are fully briefed and no hearing is necessary to resolve them. See Local
Rule 105.6. For the reasons that follow, I shall grant the motions.
I.
Factual and Procedural Background 2
Mr. Lowe is the president and secretary of Lowe Services. ECF 12, ¶ 1. Lowe Services
does business as Pioneer Outdoor Equipment, and as Pioneer Maintenance and Repair Service,
which contracts for home improvements, small engine repairs, and maintenance for commercial
and residential customers. ECF 1-1, ¶¶ 3-5. Lowe Services operated in a commercial building
located at 1226 South Philadelphia Boulevard in Aberdeen, Maryland (the “Commercial
Property”). Id. ¶ 6. Mr. and Ms. Lowe owned the property from November 1999 until 2013, when
the property went into foreclosure. Id. ¶ 8.
In 2004, Lowe Services allegedly entered a business relationship with NBRS, a bank with
branches in Cecil County and Harford County, Maryland. Id. ¶ 10. NBRS agreed to refinance an
outstanding mortgage on the Commercial Property; the amount of the mortgage was $400,000. Id.
¶ 12. It also provided Mr. Lowe with a $150,000 line of credit, which it increased to $350,000 in
June 2005. Id. ¶¶ 12-13.
2
Given the posture of the case, the Court must assume the truth of plaintiffs’ factual
allegations. E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir.
2011).
2
In 2009, Lowe Services began to struggle financially. Id. ¶ 15. To stay afloat, it allegedly
employed fewer people and liquidated certain inventory, including equipment. Id. ¶ 16. It also
accepted additional jobs in home improvement and commercial maintenance. ECF 1-1, ¶ 16.
Lowe Services also sought financial assistance from NBRS. Id. ¶ 17. In response, NBRS offered
to extend the maturity of the credit line. Id. In 2011, it also offered to roll the credit line into the
mortgage on the Commercial Property, increasing Lowe Services’ total debt to $755,000. Id.
NBRS also further secured the mortgage by recording a lien on Mr. and Ms. Lowe’s personal
residence in Churchville, Maryland. Id. ¶ 17.
In that same year, Mr. Lowe entered a contract to sell the Commercial Property. Id. ¶ 18.
However, the buyer withdrew from the sale in October 2012, just two months before closing. Id.
As a result, plaintiffs were unable to make rental payments on a biodiesel system that it leased
from Balboa Capital Corporation. Id. ¶¶ 14, 20. Moreover, plaintiffs were unable to make their
mortgage payments on the Commercial Property. Id. ¶ 20.
As a result, on August 26, 2013, NBRS initiated foreclosure proceedings. Id. ¶ 22. NBRS
also blocked Mr. Lowe’s access to the Commercial Property. Id. ¶¶ 23, 27. In addition, NBRS
seized the Lowes’ business records, equipment, and tools. Id. ¶ 24; see also id. ¶¶ 25-26 (listing
the seized tools and the seized physical and digital business records). In 2013, after Mr. Lowe
unsuccessfully attempted to negotiate a refinancing with NBRS, he filed for Chapter 13 bankruptcy
relief, thereby staying the foreclosure. Id. ¶ 32.
On October 17, 2014, NBRS was closed by the Maryland Office of the Commissioner of
Financial Regulation, and the FDIC was named as Receiver for NBRS. Id. ¶ 36. Plaintiffs allege
that the FDIC-Receiver assumed NBRS’s financial assets, including the Commercial Property and
the lien on Mr. and Ms. Lowe’s personal residence. Id. ¶ 37.
3
Mr. Lowe filed an administrative claim with the FDIC-Receiver on November 27, 2014,
seeking $30,000,000 for the financial losses suffered by his businesses. ECF 29-5; see also ECF
29-6. A month later, on December 29, 2014, the Lowes filed suit against the FDIC-Receiver in
this District. Lowe v. FDIC, JKB-14-4024 (D. Md. Dec. 29, 2014); see ECF 29-8. In a letter dated
January 23, 2015, the FDIC-Receiver requested additional documentation from Mr. Lowe to
substantiate his claim against the receivership. ECF 29-6. That letter provided that if the requested
documentation was not received by February 23, 2015, Mr. Lowe’s claim would be disallowed.
Id.
Mr. Lowe failed to provide the required documentation. Therefore, the FDIC-Receiver
disallowed his claim, by notice of July 20, 2015. ECF 29-7. The notice also advised Mr. Lowe
that he could challenge the disallowance in a lawsuit. Id. And, the FDIC-Receiver advised Mr.
Lowe that if, within 60 days of the notice, he did not file a lawsuit or continue any previously filed
lawsuit, the disallowance of his claim would be final, pursuant to 12 U.S.C. § 1821(d)(6)(B)(ii).
ECF 29-7 at 1.
Because plaintiffs had already filed a lawsuit against the FDIC-Receiver, they were
permitted to continue their suit, which was pending in this District before Judge James K. Bredar.
See ECF 29-11. However, plaintiffs did not serve that suit on the FDIC-Receiver. As a result, by
order of July 24, 2015, Judge Bredar directed plaintiffs to show cause as to why their suit should
not be dismissed for failure to prosecute. Id. On August 10, 2014, plaintiffs moved for leave to
amend their complaint. See Lowe, JKB-14-4024, ECF 15. Judge Bredar denied the motion on
August 14, 2015, and dismissed the case, without prejudice, under Fed. R. Civ. P. 41(b) and Local
Rule 103.8. ECF 29-9. From that time until plaintiffs filed the instant action on February 15,
4
2018, plaintiffs appear to have taken no further legal action in pursuit of their suit or the underlying
administrative claim
In June 2016, NBRS agreed to release its lien on Mr. and Ms. Lowe’s personal residence,
upon the sale of the Commercial Property. ECF 1-1, ¶ 33; see ECF 29-8, ¶¶ 139-40. This release
was entered in the Bankruptcy Court by a consent order dated June 8, 2016. ECF 1-1, ¶ 33. On
May 16, 2016, the FDIC-Receiver sold the Commercial Property at auction for $325,000.
ECF 1-1, ¶ 46. According to plaintiffs, the sale price was less than one-third of the Commercial
Property’s appraised value in 2011. Id. ¶¶ 19, 46.
In August 2017, Mr. Lowe was notified that the auction sale of the Commercial Property
did not satisfy his debt and that he owed $172,396.31 on the debt to “Republic Credit One, L.P.,
Republic Credit Corporation, General Partner,” which had allegedly purchased his debt from the
FDIC-Receiver. Id. ¶ 43. Further, Mr. Lowe states that NBRS’s lien on his home has not been
removed and has impeded his ability to obtain refinancing. Id. ¶ 50.
Plaintiffs allege that NBRS and later FDIC-Receiver failed to sell the Lowes’ equipment
and business tools. Id. ¶¶ 44, 49. Instead, they allegedly left the equipment and tools unattended
for two years, resulting in their theft. Id. ¶ 44.
Additionally, plaintiffs allege that on multiple occasions Mr. Lowe requested that NBRS
and FDIC return the leased biodiesel system, which was located on the Commercial Property. Id.
¶¶ 27-28, 40, 45. Both entities refused to allow him to remove the biodiesel system. Id.
Additionally, Scarpulla Enterprises Inc., which had purchased the Commercial Property at auction,
also refused to allow Mr. Lowe to retrieve the system. Id. ¶¶ 47-48. As a result, he has been unable
to retrieve it. Id. ¶ 51.
5
Plaintiffs seek over $1.5 million dollars in damages from the FDIC. ECF 12, ¶ 3. They
claim that the FDIC seized tools, equipment, and records, resulting in damages totaling $463,250.
Id. Further, plaintiffs allege that the FDIC is responsible for the “shortfall in sale price” of the
Commercial Property, resulting in damages totaling $975,000. Id. Moreover, plaintiffs seek
$275,000 in damages for FDIC’s alleged failure to take “all efforts to return a biodiesel system to
either Balboa Capital” or the Lowes. Id.
II.
Standard of Review
As noted, both FDIC-Receiver and FDIC-Corporate have moved to dismiss under
Rule 12(b)(1) for lack of subject matter jurisdiction and Rule 12(b)(6) for failure to state a claim.3
A.
Rule 12(b)(1)
Under Rule 12(b)(1), the plaintiff bears the burden of proving, by a preponderance of
evidence, the existence of subject matter jurisdiction. See Demetres v. East West Const., Inc., 776
F.3d 271, 272 (4th Cir. 2015); see also The Piney Run Preservation Ass’n v. Cty. Comm’rs of
Carroll Cty., Md., 523 F.3d 453, 459 (4th Cir. 2008); Evans v. B.F. Perkins Co., 166 F.3d 642, 647
(4th Cir. 1999).
A challenge to subject matter jurisdiction under Rule 12(b)(1) may proceed “in one of two
ways”: either a facial challenge, asserting that the allegations pleaded in the complaint are
insufficient to establish subject matter jurisdiction, or a factual challenge, asserting “‘that the
jurisdictional allegations of the complaint [are] not true.’” Kerns v. United States, 585 F.3d 187,
192 (4th Cir. 2009) (citation omitted); accord Durden v. United States, 736 F.3d 296, 300 (4th Cir.
2013). In a facial challenge, “the facts alleged in the complaint are taken as true, and the motion
3
In light of my disposition, I need not address FDIC-Receiver’s motion under Rule
12(b)(2).
6
must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction.”
Kerns, 585 F.3d at 192. On the other hand, in a factual challenge, “the district court is entitled to
decide disputed issues of fact with respect to subject matter jurisdiction.” Id. In that circumstance,
the court “may regard the pleadings as mere evidence on the issue and may consider evidence
outside the pleadings without converting the proceeding to one for summary judgment.” Velasco
v. Gov't of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004); see also United States ex rel. Vuyyuru v.
Jadhav, 555 F.3d 337, 347-48 (4th Cir. 2009); Evans, 166 F.3d at 647. Both the FDIC-Receiver
and the FDIC-Corporate raise a facial challenge to the Court’s subject matter jurisdiction, based
on the four corners of the Amended Complaint.
B.
Rule 12(b)(6)
A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss
under Rule 12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmty.
Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393, 408 (4th
Cir. 2010), aff’d sub nom., McBurney v. Young, 569 U.S. 221 (2013); Edwards v. City of
Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an assertion by
a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of
law “to state a claim upon which relief can be granted.”
Whether a complaint states a claim for relief is assessed by reference to the pleading
requirements of Fed. R. Civ. P. 8(a)(2). That rule provides that a complaint must contain a “short
and plain statement of the claim showing that the pleader is entitled to relief.” The purpose of the
rule is to provide the defendants with “fair notice” of the claims and the “grounds” for entitlement
to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).
To survive a motion under Fed. R. Civ. P. 12(b)(6), a complaint must contain facts
7
sufficient to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (citation omitted) (“Our decision in Twombly
expounded the pleading standard for ‘all civil actions’ . . . .”); see also Paradise Wire & Cable
Defined Benefit Pension Plan v. Weil, 2019 WL 1105179, at *3 (4th Cir. Mar. 11, 2019); Willner
v. Dimon, 849 F.3d 93, 112 (4th Cir. 2017). To be sure, a plaintiff need not include “detailed
factual allegations” in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. Moreover, federal
pleading rules “do not countenance dismissal of a complaint for imperfect statement of the legal
theory supporting the claim asserted.” Johnson v. City of Shelby, Miss., 574 U.S. ___, 135 S. Ct.
346, 346 (2014) (per curiam). But, mere “‘naked assertions’ of wrongdoing” are generally
insufficient to state a claim for relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009)
(citation omitted).
In other words, the rule demands more than bald accusations or mere speculation.
Twombly, 550 U.S. at 555; see Painter’s Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir.
2013). If a complaint provides no more than “labels and conclusions” or “a formulaic recitation
of the elements of a cause of action,” it is insufficient. Twombly, 550 U.S. at 555. “[A]n
unadorned, the-defendant-unlawfully-harmed-me accusation” does not state a plausible claim of
relief. Iqbal, 556 U.S. at 678. Rather, to satisfy the minimal requirements of Rule 8(a)(2), the
complaint must set forth “enough factual matter (taken as true) to suggest” a cognizable cause of
action, “even if . . . [the] actual proof of those facts is improbable and . . . recovery is very remote
and unlikely.” Twombly, 550 U.S. at 556 (internal quotation marks omitted).
In reviewing a Rule 12(b)(6) motion, a court “must accept as true all of the factual
allegations contained in the complaint” and must “draw all reasonable inferences [from those facts]
in favor of the plaintiff.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440
8
(4th Cir. 2011) (citations omitted); see Semenova v. MTA, 845 F.3d 564, 567 (4th Cir. 2017);
Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Kendall v. Balcerzak, 650
F.3d 515, 522 (4th Cir. 2011), cert. denied, 565 U.S. 943 (2011). But, a court is not required to
accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S. 265, 286 (1986);
Glassman v. Arlington Cty., 628 F.3d 140, 146 (4th Cir. 2010). “A court decides whether [the
pleading] standard is met by separating the legal conclusions from the factual allegations,
assuming the truth of only the factual allegations, and then determining whether those allegations
allow the court to reasonably infer” that the plaintiff is entitled to the legal remedy sought. A
Society Without a Name v. Virginia, 655 F.3d 342, 346 (4th. Cir. 2011), cert. denied, 566 U.S. 937
(2012).
Courts ordinarily do not “‘resolve contests surrounding the facts, the merits of a claim, or
the applicability of defenses’” through a Rule 12(b)(6) motion. Edwards, 178 F.3d at 243 (quoting
Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)). However, “in the relatively rare
circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint,
the defense may be reached by a motion to dismiss filed under Rule 12(b)(6).” Goodman v.
Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc); accord Pressley v. Tupperware Long
Term Disability Plan, 553 F.3d 334, 336 (4th Cir. 2009). Because Rule 12(b)(6) “is intended
[only] to test the legal adequacy of the complaint,” Richmond, Fredericksburg & Potomac R.R.
Co. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993), “[t]his principle only applies . . . if all facts necessary
to the affirmative defense ‘clearly appear[ ] on the face of the complaint.’” Goodman, 494 F.3d
at 464 (quoting Forst, 4 F.3d at 250) (emphasis added in Goodman ).
“Generally, when a defendant moves to dismiss a complaint under Rule 12(b)(6), courts
are limited to considering the sufficiency of allegations set forth in the complaint and the
9
‘documents attached or incorporated into the complaint.’” Zak v. Chelsea Therapeutics Int’l, Ltd.,
780 F.3d 597, 606 (4th Cir. 2015) (quoting E.I. du Pont de Nemours & Co., 637 F.3d at 448). The
court “may not consider any documents that are outside of the complaint, or not expressly
incorporated therein . . . .” Clatterbuck v. City of Charlottesville, 08 F.3d 549, 557 (4th Cir. 2013);
see Bosiger v. U.S. Airways, Inc., 510 F.3d 442, 450 (4th Cir. 2007).
But, under limited circumstances, when resolving a Rule 12(b)(6) motion, a court may
consider documents beyond the complaint without converting the motion to dismiss to one for
summary judgment. Goldfarb v. Mayor & City Council of Baltimore, 791 F.3d 500, 508 (4th Cir.
2015). In particular, a court may properly consider documents that are “explicitly incorporated
into the complaint by reference and those attached to the complaint as exhibits.” Goines, 822 F.3d
at 166 (citation omitted); see also Six v. Generations Fed. Credit Union, 891 F.3d 508, 512 (4th
Cir. 2018); Anand v. Ocwen Loan Servicing, LLC, 754 F.3d 195, 198 (4th Cir. 2014); U.S. ex rel.
Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014); Am.
Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004), cert. denied, 543
U.S. 979 (2004); Phillips v. LCI Int’l Inc., 190 F.3d 609, 618 (4th Cir. 1999).
However, “before treating the contents of an attached or incorporated document as true,
the district court should consider the nature of the document and why the plaintiff attached it.”
Goines, 822 F.3d at 167 (citing N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d
449, 455 (7th Cir. 1998)). Of import here, “[w]hen the plaintiff attaches or incorporates a
document upon which his claim is based, or when the complaint otherwise shows that the plaintiff
has adopted the contents of the document, crediting the document over conflicting allegations in
the complaint is proper.” Goines, 822 F.3d at 167. Conversely, “where the plaintiff attaches or
10
incorporates a document for purposes other than the truthfulness of the document, it is
inappropriate to treat the contents of that document as true.” Id.
A court may also “consider a document submitted by the movant that [is] not attached to
or expressly incorporated in a complaint, so long as the document was integral to the complaint
and there is no dispute about the document’s authenticity.” Goines, 822 F.3d at 166 (citations
omitted); see also Woods v. City of Greensboro, 855 F.3d 639, 642 (4th Cir. 2017), cert. denied,
___ U.S. ___, 138 S. Ct. 558 (2017); Oberg, 745 F.3d at 136; Kensington Volunteer Fire Dep’t. v.
Montgomery Cty., 684 F.3d 462, 467 (4th Cir. 2012).
To be “integral,” a document must be one “that by its ‘very existence, and not the mere
information it contains, gives rise to the legal rights asserted.’” Chesapeake Bay Found., Inc. v.
Severstal Sparrows Point, LLC, 794 F. Supp. 2d 602, 611 (D. Md. 2011) (citation omitted)
(emphasis in original). See also Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an
exhibit to a pleading is a part of the pleading for all purposes.”).
In addition, “a court may properly take judicial notice of ‘matters of public record’ and
other information that, under Federal Rule of Evidence 201, constitute ‘adjudicative facts.’”
Goldfarb, 791 F.3d at 508; see also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308,
322 (2007); Katyle v. Penn Nat’l Gaming, Inc., 637 F.3d 462, 466 (4th Cir. 2011), cert. denied,
565 U.S. 825 (2011); Philips v. Pitt Cty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009).
Moreover, in the context of a motion to dismiss, “[a] court may take judicial notice of docket
entries, pleadings and papers in other cases without converting a motion to dismiss into a motion
for summary judgment.” Brown v. Ocwen Loan Servicing, LLC, PJM-14-3454, 2015 WL 5008763,
at *1 n. 3 (D. Md. Aug. 20, 2015), aff’d, 639 Fed. Appx. 200 (4th Cir. May 6, 2016); cf. Anderson
v. Fed. Deposit Ins. Corp., 918 F.2d 1139, 1141 n. 1 (4th Cir. 1990) (holding that a district court
11
may “properly take judicial notice of its own records”). However, “these facts [must be] construed
in the light most favorable” to the non-movant. Clatterbuck v. City of Charlottesville, 708 F.3d
549, 557 (4th Cir. 2013) (abrogated on other grounds by Reed v. Town of Gilbert, Ariz., 576 U.S.
____, 135 S. Ct. 2218 (2015), as recognized in Cahaly v. Larosa, 796 F.3d 399 (4th Cir. 2015)).
However, under Fed. R. Evid. 201, a court may take judicial notice of adjudicative facts only if
they are “not subject to reasonable dispute,” in that they are “(1) generally known within the
territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort
to sources whose accuracy cannot reasonably be questioned.”
As noted, plaintiffs have attached Mr. Lowe’s Affidavit (ECF 1-1) to the Complaint. In
their Amended Complaint, they explicitly incorporated the Affidavit by reference. See ECF 12,
¶ 4. Accordingly, I may consider the Affidavit. Goines, 822 F.3d at 166 (citation omitted).
The FDIC-Receiver submitted several administrative filings as exhibits to the ReceiverMotion. See ECF 29-3; ECF 29-5 to ECF 29-11. Specifically, defendant attached a Certificate of
Termination (ECF 29-3), a public filing stating that the FDIC’s receivership estate for NBRS
dissolved effective December 1, 2017. It also attached a copy of the Mr. Lowe’s administrative
claim with the FDIC-Receiver.
ECF 29-5.
And, it submitted its Request for Additional
Information regarding Mr. Lowe’s claim (ECF 29-6) and its subsequent Notice of Disallowance
of his claim. ECF 29-7.
In addition, the FDIC-Receiver attached multiple documents from plaintiffs’ 2014 suit
against the FDIC-Receiver. See Lowe v. FDIC, JKB-14-4024. These documents include plaintiffs’
complaint (ECF 29-8); an order of January 28, 2015 (ECF 29-10), directing plaintiffs to effect
service on the FDIC-Receiver; an order of July 24, 2015 (ECF 29-11), directing plaintiffs to show
12
cause as to why their suit should not be dismissed for failure to prosecute; and a memorandum
dated August 14, 2015 (ECF 29-9), dismissing plaintiffs’ suit.
Plaintiffs do not address whether the Court may consider the FDIC-Receiver’s exhibits.
These exhibits undergird the Amended Complaint insofar as it is implicitly predicated on
plaintiffs’ administrative claim with the FDIC. As discussed, infra, the Court has subject matter
jurisdiction over the suit against the FDIC-Receiver only if plaintiffs have complied with the
administrative process, pursuant to 12 U.S.C. § 1821. Further, plaintiffs do not dispute the
authenticity of the exhibits. Further, as the exhibits are public filings, the Court may take judicial
notice of them. Accordingly, at this juncture, I may consider all the aforementioned exhibits,
without converting the motions to ones for summary judgment.
III.
A.
Discussion
The Receiver Motion
The FDIC-Receiver argues that this Court no longer has subject matter jurisdiction over
plaintiffs’ claim because “a claim that is not brought in time for an FDIC receiver to make payment
is disallowed and that disallowance is final.”
ECF 29-1 at 7 (citing 12 U.S.C.
§ 1821(d)(5)(C)(ii)(II)). Plaintiffs have not responded to this contention. See ECF 34.
Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (“FIRREA”), codified in Title 12 of the United States Code, in response to the savings and
loan crisis of the 1980s. See Sharpe v. FDIC, 126 F.3d 1147, 1154 (9th Cir. 1997). “The statute’s
purpose was to ‘provide funds from public and private sources to deal expeditiously’ with faltering
and failed savings and loans in order to rebuild their financial foundations.” Brady Dev. Co. v.
Resolution Trust Corp., 14 F.3d 998, 1002-03 (4th Cir. 1994) (quoting Pub. L. No. 101–73, 103
13
Stat. 183, § 101). Under FIRREA, the FDIC may “act as receiver or conservator of a failed
institution for the protection of depositors and creditors.” Id.
In addition, “FIRREA provides an administrative scheme for adjudicating claims against
failed institutions for which the FDIC has become receiver.” F.D.I.C. v. Martini, HAR-94-1932,
1995 WL 168139, at *2 (D. Md. Apr. 5, 1995) (citing Brady Dev. Co., 14 F.3d at 1002). As the
receiver, the FDIC must “promptly publish a notice to the depository institution’s creditors to
present their claims . . . to the receiver by a date specified in the notice which shall be not less than
90 days after the publication of such notice.” Id. § 1821(d)(3)(B)(i). Section 1821(d)(5)(C)(i)
states: “[C]laims filed after the date specified in the notice . . . shall be disallowed and such
disallowance shall be final.” Id. However, this clause does not apply if the claimant did not receive
notice of the appointment of the receiver or “such claim is filed in time to permit payment of such
claim.” Id. § 1821(d)(5)(C)(ii).
After a claim is filed, the receiver has 180 days to allow or disallow the claim.
12 U.S.C. § 1821(d)(5)(A)(i). “After the receiver’s initial decision, or if the receiver makes no
decision within the 180-day period, a claimant may file a suit on the claim in one of two designated
federal courts, within 60 days of the earlier of (a) the end of the 180-day period in which the
receiver may determine the claim, or (b) the date of notice from the receiver that the claim has
been disallowed.” Tillman v. Resolution Trust Corp., 37 F.3d 1032, 1035 (4th Cir. 1994) (citing
12 U.S.C. § 1821(d)(6)(A)). However, instead of filing a new suit, a claimant “may continue a
previously filed action . . . if he had a suit pending against the savings and loan before the savings
and loan was placed into receivership.” Brady Dev. Co., 14 F.3d at 1003 (citing 12 U.S.C.
§ 1821(d)(6)(A)(ii)). If a plaintiff fails to pursue an administrative review or judicial determination
14
of its disallowed claim, the disallowed claim is final and the claimant has “no further rights or
remedies with respect to such claim.” 12 U.S.C. § 1821(d)(6)(B).
Normally, a failure to exhaust is not jurisdictional. Fort Bend Cty. v. Davis, ___ U.S. ____,
139 S. Ct. 1843, 1850 (2019). Courts “‘have more than occasionally [mis]used the term
jurisdictional’ to refer to nonjurisdictional prescriptions.” Id. at 1848 n. 4 (2019) (quoting
Scarborough v. Principi, 541 U.S. 401, 413 (2004) (internal quotation marks omitted)). And, in
recent years, the Supreme Court has cautioned against the “‘profligate use of the term.’” Davis,
139 S. Ct. at 1848 (quoting Sebelius v. Auburn Regional Med. Ctr., 568 U.S. 145, 153 (2013)).
Accordingly, the Court has reiterated: “‘If the Legislature clearly states that a [prescription]
count[s] as jurisdictional, then courts and litigants will be duly instructed and will not be left to
wrestle with the issue[;] [b]ut when Congress does not rank a [prescription] as jurisdictional, courts
should treat the restriction as nonjurisdictional in character.’” Id. at 1850 (quoting Arbaugh v. Y&H
Corp., 546 U.S. 500, 515-16 (2006)) (alterations in original).
In FIRREA, Congress clearly imposed “jurisdictional limits on the power of the federal
courts to review matters involving failed savings and loans” in order “to effectuate [Congress’s]
goals of managing claims in an expeditious and efficient manner through an administrative
process.” Brady Dev. Co., 14 F.3d at 1003. In relevant part, FIRREA expressly provides,
12 U.S.C. § 1821(d)(13)(D):
Limitation on judicial review
Except as otherwise provided in this subsection, no court shall have jurisdiction
over—
(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
Corporation has been appointed receiver, including assets which the Corporation
may acquire from itself as such receiver; or
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(ii) any claim relating to any act or omission of such institution or the Corporation
as receiver.
The Fourth Circuit has observed, Brady Dev. Co., 14 F.3d at 1003:
The precise jurisdictional limitations on the Article III courts mandated by FIRREA
are determined by reading section 1821(d)(13)(D) in conjunction with the statute’s
allowance of an action within sixty days of a claim being denied as provided for in
section 1821(d)(6)(A). Together these provisions mandate that the district court not
hear any claim until it has been rejected by the [Corporation] in its administrative
review or until the 180 day administrative review period has expired.
Notably, a party’s “failure to exhaust the administrative process” to settle claims under
FIRREA “deprives the district court of jurisdiction.” Id. at 1006; see also F.D.I.C. v. Abbott,
CCB-12-2111, 2013 WL 4924495, at *4-*5 (D. Md. Sept. 11, 2013) (dismissing counterclaims
that defendant had failed to exhaust through the FIRREA’s administrative procedure).
In their Amended Complaint, plaintiffs do not rely on their 2014 administrative claim with
the FDIC. See ECF 12. Nor do they claim that they filed a new administrative claim with the
FDIC. Id. Indeed, such an administrative claim would be time-barred. See 12 U.S.C.
§ 1821(d)(5)(C)(i). Therefore, plaintiffs have not exhausted the statutorily mandated
administrative process under § 1821(d)(6). Accordingly, the Court is deprived of subject matter
jurisdiction over plaintiffs’ suit against the FDIC-Receiver. Brady Dev. Co., 14 F.3d at 1003.
Nevertheless, even if the instant suit represents a challenge to the FDIC’s disallowance of
plaintiffs’ 2014 administrative claim, the suit fails. After the FDIC disallowed plaintiffs’ claim on
July 20, 2015, plaintiffs arguably continued their ongoing suit. However, after the suit’s dismissal,
without prejudice, on August 14, 2015, plaintiffs did not refile before the end of the 60-day period
on September 18, 2015. Moreover, plaintiffs did not file the instant suit until over two years after
the dismissal and two months after the dissolution of the FDIC’s receivership estate for NBRS.
As a result, plaintiffs’ suit is time-barred, in light of 12 U.S.C. § 1821(d)(6)(A)-(B) as well as the
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dissolution of the receivership. See Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257, 259
(1927) (“[D]issolution of a corporation . . . abates all litigation in which the corporation is
appearing. . . so that if the life of the corporation is to continue even only for litigating purposes it
is necessary that there should be some statutory authority for the prolongation.”); Asociacion de
Empleados del Area Canalera (ASEDAC) v. Panama Canal Comm’n, 453 F.3d 1309, 1313-14
(11th Cir. 2006) (dissolved government corporations are not subject to suit unless Congress
provides otherwise).
B.
The Corporate Motion
FDIC-Corporate maintains that the Court lacks subject matter jurisdiction over the
Amended Complaint, which FDIC-Corporate construes as alleging a tort or takings claim.
ECF 30 at 4. In their opposition, plaintiffs clarify that the Amended Complaint does not lodge a
tort or takings claim. ECF 37 at 1-2. They further clarify that “no state law provides the source of
[the FDIC’s] liability.” Id. at 2. Rather, they assert that they bring their suit under 12 U.S.C.
§ 1819(a), which states that the FDIC “shall have power . . . To sue and be sued, and complain and
defend by and through its own attorneys, in any court of law or equity, State or Federal.” In reply,
FDIC-Corporate maintains that plaintiffs fail to state a claim as § 1819(a) does not create a cause
of action. ECF 38 at 2 n. 2
Section 1819(b)(2)(A) establishes subject matter jurisdiction over suits to which the FDIC
is a party. It provides that, with exceptions not applicable here, “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.” Because plaintiffs have lodged a federal claim against the
FDIC, their suit arises under federal law, and the Court has jurisdiction over it. See 8 U.S.C.
§ 1331.
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Nevertheless, plaintiffs fail to state a claim. Plaintiffs rely on the FDIC’s “sue and be sued”
clause in 12 U.S.C. § 1819(a). However, a “sue and be sued” clause does not create a cause of
action. For example, in MB Fin. Group, Inc. v. U.S. Postal Serv., 545 F.3d 814, 819 (9th Cir.
2008), the Ninth Circuit recognized that the “sued and be sued” clause in the Postal Reorganization
Act of 1971 “does not create a cause of action” against the United States Postal Service. Indeed,
courts have typically construed such clauses as waivers of sovereign immunity. Id.; F.D.I.C. v.
Meyer, 510 U.S. 471, 481 (1994) (“[A]gencies ‘authorized to “sue and be sued” are presumed to
have fully waived immunity.’”) (quoting International Primate Protection League v.
Administrators of Tulane Ed. Fund, 500 U.S. 72, 86, n. 8 (1991)).
In Meyer, 510 U.S. at 480, the Supreme Court read the “sue and be sued” clause for the
FDIC’s statutory predecessor, the Federal Savings and Loan Insurance Corporation, as a waiver
of sovereign immunity. Therefore, § 1819(a) does not provide a legal basis for plaintiffs’ suit. Nor
have plaintiffs stated any other legal basis for their suit.
IV.
Conclusion
For the reasons stated above, I shall grant the Receiver Motion and the Corporate Motion.
An Order follows.
Date: July 2, 2019
/s/
Ellen L. Hollander
United States District Judge
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