R-G Premier Bank of Puerto Rico in receivership by the Federal Deposit Insurance Corporation (FDIC-R) v. Empresas Cerromonte Corp. et al

Filing 138

ORDER adopting Report and Recommendation re 83 Report and Recommendation. Signed by Judge Juan M Perez-Gimenez on 5/22/2013. (VCC)

UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF PUERTO RICO
FEDERAL DEPOSIT INSURANCE, CORP.,
Plaintiff,
v.

CIVIL NO. 10-1623 (PG)

EMPRESAS CERROMONTE CORP. et. al.,
Defendant.

O R D E R
Before the Court is the Magistrate Judge’s Report and Recommendation
regarding the Federal Deposit Insurance Corporation’s (“FDIC”)1 motion to
dismiss the Counterclaims filed by defendants Empresas Cerromonte Corp.,
and

Jesús

Gabriel

Castillo

Ortiz

(hereinafter

the

“Cerromonte

defendants”)(Docket No. 3-1) and Emérito Estrada Rivera-Isuzu de Puerto
Rico, Digno Emérito Estrada Rivera, his spouse Edith Delia Colón Feliciano
and their Conjugal Partnership (hereinafter the “Estrada” defendants)
(Docket No. 3-2).
The FDIC moved to dismiss both counterclaims claiming that the court
lacks jurisdiction due to defendants’ failure to exhaust administrative
remedies under the Financial Institutions Reform, Recovery and Enforcement
Act (“FIRREA”), Docket No. 27.
Defendants opposed the motion. Docket Nos. 31, 40. Plaintiff filed a
reply to the Estrada defendant’s opposition, followed by a sur-reply filed
by the Cerromonte defendants. Docket Nos. 43, 57. After plaintiff filed its
motion to dismiss, the Cerromonte defendants filed a “motion requesting
limited renewal of stay, proper notice of administrative proceedings, and
1

The FDIC was appointed receiver of R-G Premier Bank.

CIV. NO. 10-1623(PG)

Page 2

new claims bar date, or in the alternative continue the action before this
court.” Docket No. 37. The motion asks the court to stay the proceedings
and allow Castillo and Cerromonte to exhaust administrative remedies in
order to continue the present action. In that sense, the motion basically
serves as an additional opposition to plaintiffs’ motion to dismiss the
counterclaims.
Having reviewed the Magistrate’s Report and Recommendation, Docket No.
83, as well as defendants’ objections thereto, Docket Nos. 90 and 93, the
applicable law, and the record of the case, for the reasons set forth
below, the Report and Recommendation is APPROVED AND ADOPTED.
Following the issuance of a Report and Recommendation, the Court
reviews de novo the matters delimited by timely and appropriately specific
objections.

See 28 U.S.C. § 636(b) (2004), Fed. R. Civ. P. 72(b) (2004),

and Local Rule 72(d) (2004); see also Borden v. Secretary of Health & Human
Servs., 836 F.2d 4, 6 (1st Cir. 1987) (“Appellant was entitled to a de novo
review by the district court of the [Magistrate’s] recommendations to which
he objected, however he was not entitled to a de novo review of an argument
never raised.”) (citation omitted); Phinney v. Wentworth Douglas Hosp., 199
F.3d 1, 3-4 (1st Cir. 1999).

An objection is timely if filed within ten

days of receipt of the Magistrate Judge’s Report and Recommendation.

See

28 U.S.C. § 636(b), Fed. R. Civ. P. 72(b), and Local Rule 72(d). The Court
thereafter “may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate.” Id. The Court
accordingly reviews defendants’ objections de novo.
The Cerromonte defendants timely submitted several objections; to wit,
that proper notice of the bar date to file administrative proceedings never
took place and that they were not given sufficient time to file a claim
with the advice of counsel. Docket No. 90 at pages 3 and 9.

CIV. NO. 10-1623(PG)

Page 3

The Estrada defendants also filed objections to the Report and
Recommendation, specifically, that the FDIC’s notice to codefendants was
misleading and/or deficient. See, Docket No. 93 at page 2.
The Court will begin its analysis by addressing the Cerromonte
defendants’ objections. Firstly, the Cerromonte defendants assert that
administrative exhaustion is not required in cases involving claims brought
to Federal Court as continuing actions and cite Aliberti v. First Meridian
Group, 795 F.Supp. 42 (D. Me. 1992) for that proposition.
While the Aliberti case was pending, the Court of Appeals for the
First Circuit issued a decision in Serge Marquis v. Federal Deposit
Insurance Corp., 965 F.2d 1148 (1st Cir. 1992), where it found that federal
courts retained subject matter jurisdiction over actions pending against
financial institutions to permit exhaustion of the administrative review
process. Following the ruling of Serge Marquis, the Aliberti court
concluded that the presumption under which it was operating, namely , that
Ҥ1821(d)(13)(D) automatically divests the Court of jurisdiction over
claims and counterclaims against a bank filed prior to the creation of the
receivership of the FDIC” was “faulty.” See, Aliberti, 795 F.Supp 42 at
page. 44 (citations omitted). In short, the Aliberti court determined that
once removal jurisdiction has properly attached the court should suspend,
rather than dismiss, the suit subject to a stay to permit exhaustion of the
administrative process. Accordingly, the court placed the case on the
suspense docket to allow the parties to exhaust administrative remedies.
Defendants’ reliance on Aliberti is misplaced as the facts of the
present case are distinguishable from those in Aliberti in a way that makes
the ruling inefficacious. In the case at hand the parties were given a
chance to exhaust administrative remedies which was not the case in
Aliberti. That is to say, on July 21, 2010, the FDIC sent notices to the

CIV. NO. 10-1623(PG)

Page 4

Cerromonte defendants and the Castillo defendants indicating that they had
until August 4, 2010 to file a claim. See, Docket No. 27, Exhibits 1
through 5. The District Court did not “automatically” dismiss the action
pending exhaustion of the administrative process. In fact, the reason why
the administrative procedure did not run its courts was because defendants
failed to comply with the requisites before the claims bar date.
The Cerromonte defendants do not dispute that they did not file the
Proof of Claim Forms within the time allowed. Their argument is that the
FDIC mixed up the addresses of José Clemente González, former attorney for
Cerromonte in a case before the Puerto Rico Court of First Instance, with
his counsel in the instant action, Edelmiro Salas González. See, Docket No.
90 at page 5. Therefore, they claim that the FDIC notification to its
counsel was defective and thus dismissal was appropriate because failure to
exhaust administrative remedies amounts to deprivation of property without
due process of law under the Constitution of the United States of America.
The notice requirements set forth in FIRREA provide, in pertinent part,
that “ [t]he receiver, in any case involving the liquidation or winding up of
the affairs of a closed depositary institution, shall...mail a notice similar
to the one published under subparagraph (B)(I) at the time of such publication
to any creditor shown on the institution’s books (I) at the creditor’s last
address appearing in such books; or (ii) upon discovery of the name and address
of a claimant not appearing on the institution’s books within 30 days after the
discovery of such name and address.” 12 USC sec. 1821 (d)(3)(B).

After examining the notifications sent to Cerromonte, the Court is
convinced that the FDIC complied with the notification requirements set
forth in FIRREA. The record reveals that the FDIC mailed the following
notices to these addresses:

CIV. NO. 10-1623(PG)

Page 5

(1) Empresas Cerromonte c/o Edelmiro Salas at PO Box 1887, Mayaguez, PR
00681;
(2) Empresas Cerromonte c/o José Clemente González at 1072 Calle 17, Urb.
Villa Nevarez, San Juan, PR 00927.
(3) Empresas Cerromonte at PO Box 680, Corozal, PR 00783
(4) Jesús G. Castillo c/o José Clemente González Ortiz, 1072 Calle 17, Urb.
Villa Nevarez, San Juan, PR 00927.
The Cerromonte defendants adduce that “with the possible exception of
the one addressed to the corporate address of Cerromonte,” all the other
notifications were defective. See Docket No. 90 at page 5. Yet all that is
needed to comply with the requirements of FIRREA is to mail a notice at the
creditor’s last address appearing in the institution’s books. FIRREA does
not require that the attorneys of the creditor be notified.
Furthermore, FIRREA does not provide a waiver or exception of the
mandatory administrative claims process in the event that the notice is not
sent. In Maldonado-Vaillant et al. v. FDIC, 2011 US Dist. LEXIS 44480, Civil
Case No. 10-1700 (JAG), the Court noted that “[f]ailure to mail the notice, […],
will not exempt the claimant from exhausting the administrative process. The
statute does not provide a waiver or exception if the notice is not mailed.”
Maldonado-Vaillant, 2011 US Dist. LEXIS 44480 *2 (citing Freeman v. FDIC, 56
F.3d 1394, 312 U.S. App. D.C. 324 (D.C. Cir. 1995)).
The only exception to the requirement of exhaustion of remedies is where
the claimant does not receive notice of the appointment of the receiver in time
to file his claim. RTC Mortg. Trust 1994-N2 v. Haith, 133 F.3d 574 (8th Cir.
1998), (citing Tri-State Hotels, Inc. v. FDIC, 79 F.3d 707, 716 (8th Cir. 1996)).
The exception, however, does not apply to claimants who do not receive notice
of the filing deadline but are aware of the appointment of a receiver either

CIV. NO. 10-1623(PG)

Page 6

through personal knowledge or through a representative. Reierson v. RTC, 16 F.3d
889. 891-92 (8th Cir. 1994).
In their objection, the Estrada defendants claim that they disagree with
the Magistrate’s determination that the FDIC’s “misleading and/or deficient
notice

has

no

bearing

on

the

outcome

because

they

actually

filed

an

administrative claim.” See Docket No. 93 at pages 1-2. Their argument, however,
falls flat in light of the preceding discussion. We agree with the Magistrate’s
determination that the Estrada defendants received notice with sufficient time
to file a claim because they were able to file such a claim prior to the bar
claim date. Their filing of the claim also proves that they were clearly aware
of the appointment of the receiver.
Likewise, as the Report and Recommendation states, the Cerromonte
defendants had notice of the appointment of the receiver at least as early as
July 7, 2010 when the case was removed to this court. Docket No. 57 at ¶2. As
such, this Court agrees with the Magistrate’s pronouncement that both the
Cerromonte defendants and the Estrada defendants received notices that are
sufficient under FIRREA.

WHEREFORE, in light of the foregoing, the Magistrate Judge’s Report
and Recommendation is APPROVED AND ADOPTED, and defendants’ objections
OVERRULED. An Order shall be entered granting the FDIC’s motion to dismiss
all defendants’ counterclaims (Docket No. 27) and denying Cerromonte and
Castillo’s “Motion requesting limited renewal of stay, proper notice of
administrative proceedings and new claims bar date, or in the alternative
continue the action before this court” (Docket No. 37).

CIV. NO. 10-1623(PG)

Page 7

IT IS SO ORDERED.
In San Juan, Puerto Rico, May 22, 2013.
S/ JUAN M. PÉREZ-GIMÉNEZ
JUAN M. PÉREZ-GIMÉNEZ
UNITED STATES DISTRICT JUDGE