Development, Corp. v. Federal Deposit Insurance Corporation et al

Filing 9

MEMORANDUM AND ORDER re 8 Motion to Dismiss for Lack of Jurisdiction. The FDIC-R's motion to dismiss Lacies Development Corp.'s complaint is GRANTED. The complaint is dismissed with prejudice. Judgment shall be entered accordingly. Signed by Judge Francisco A. Besosa on 11/05/2018. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

LACIES DEVELOPMENT CORP.,
Plaintiff,
v.

Civil No. 15-1610 (FAB)

FEDERAL DEPOSIT INSURANCE
CORPORATION, as receiver for
DORAL BANK,
Defendant.

MEMORANDUM AND ORDER
BESOSA, District Judge.
Defendant Federal Deposit Insurance Corporation, as receiver
for Doral Bank (“Doral”) (“FDIC-R”) moves to dismiss plaintiff
Lacies Development Corporation (“Lacies”)’s complaint pursuant to
Federal Rule of Civil Procedure Rule 12(b)(1) (“Rule 12(b)(1)”).
(Docket No. 8.)

For the reasons set forth below, the Court GRANTS

the FDIC-R’s motion to dismiss the complaint with prejudice.
(Docket No. 8.)
I.

Background
In October 2013, Lacies commenced a civil action in the Puerto

Rico Court of First Instance, Caguas Division, against Doral and
other defendants.

(Docket No. 6, Ex. 1 at pp. 1 and 4.)

While

the action was pending, the Office of the Commissioner of Financial
Institutions

closed

Doral

and

appointed

the

FDIC

as

Doral’s

Civil No. 15-1610 (FAB)

2

receiver on February 27, 2015.

(Docket No. 1 at p. 1.)

FDIC-R

“succeeded to all of Doral’s rights, titles, powers, privileges,
assets, and liabilities, including Doral’s interests and status as
a party in this pending action.”

Id. at pp. 1-2 (citing 12 U.S.C.

§ 1821(d)); see O’Melveny & Myers v. FDIC, 512 U.S. 79, 86 (1994)
(holding that pursuant to the language of 12 U.S.C. § 1821(d)(2)(A)
the FDIC “steps into the shoes” of a failed institution).
On May 1, 2015, the FDIC-R notified Lacies that proofs of
claim for consideration were to be submitted to it no later than
June 4, 2015.

(Docket No. 8, Ex. 1 at p. 5.)

the action to this Court on May 20, 2015.

The FDIC-R removed
(Docket No. 1.)

On

June 8, 2015, the Court stayed the case “until September 8, 2015
or for 60 days after the disallowance of claims, whichever date
[came] first,” in order “[t]o allow the parties to exhaust the
administrative

remedies

allowed

by

the

Financial

Reform, Recovery and Enforcement Act (FIRREA).”

Institutions

(Docket No. 5.)

On August 16, 2018, the FDIC-R moved to dismiss Lacies’
complaint for lack of subject matter jurisdiction pursuant to
Rule 12(b)(1).

(Docket No. 8 at p. 1.)

According to the FDIC-R,

“the plaintiff[] did not file a Proof of Claim by the bar date and
. . . over three (3) years have passed since the removal was filed,
without the plaintiff[] having filed a claim.”
Lacies did not oppose the FDIC-R’s motion.

Id. at p. 3.

Civil No. 15-1610 (FAB)
II.

3

Legal Standard
A party may move to dismiss an action for lack of subject-

matter jurisdiction.

See Fed. R. Civ. P. 12(b)(1).

Subject-

matter jurisdiction is properly invoked when a plaintiff asserts
a colorable claim “arising under” the United States Constitution
or federal law.

28 U.S.C. § 1331; Arbaugh v. Y&H Corp., 546 U.S.

500, 513 (2006) (internal citation omitted).

“Generally, a claim

arises under federal law within the meaning of section 1331 if a
federal cause of action emerges from the face of a well-pleaded
complaint.”

Viqueira v. First Bank, 140 F.3d 12, 17 (1st Cir.

1998) (internal citations omitted).
In considering a Rule 12(b)(1) motion, the Court “must credit
the

plaintiff’s

well-pled

factual

allegations

reasonable inferences in the plaintiff’s favor.”

and

draw

all

Merlonghi v.

U.S., 620 F.3d 50, 54 (1st Cir. 2010) (internal citations omitted).
Federal courts are courts of limited jurisdiction, Destek Grp. v.
State of N.H. Pub. Utils. Comm’n, 318 F.3d 32, 38 (1st Cir. 2003),
and a court “ha[s] the duty to construe [its] jurisdictional grants
narrowly.”

Fina Air, Inc. v. United States, 555 F. Supp. 2d 321,

323 (D.P.R. 2008) (Besosa, J.) (internal citations omitted).

The

party asserting jurisdiction carries the burden of showing the
existence of federal jurisdiction.
(internal citations omitted).

Viqueira, 140 F.3d at 16

Civil No. 15-1610 (FAB)

4

III. FIRREA Review Process
FIRREA sets forth a statutory claims process “designed to
create an efficient administrative protocol for processing claims
against failed banks.”
Cir. 1992).

Marquis v. FDIC, 965 F.2d 1148, 1154 (1st

Pursuant to the review process, the FDIC is required

“to publish notice that the failed institution’s creditors must
file claims with the FDIC by a specified date, which must be at
least ninety days after publication of the notice.” Acosta-Ramírez
v. Banco Popular de P.R., 712 F.3d 14, 19 (1st Cir. 2013) (citing
12 U.S.C. § 1821(d)(3)(B)(i)); FDIC v. Kane, 148 F.3d 36, 38 (1st
Cir. 1998).
If a timely claim is filed, the FDIC must decide whether to
approve or disallow the claim within 180 days.

Acosta-Ramírez,

712 F.3d at 19 (citing § 1821(d)(5)(A)(i)); Simon v. FDIC, 48 F.
3d 53, 56 (1st Cir. 1995).

“Claimants then have sixty days from

the date of disallowance or from the expiration of the 180–day
administrative decision deadline to seek judicial review in an
appropriate federal district court (or to seek administrative
review).”

Acosta-Ramírez,

§ 1821(d)(6)(A)).

Once

712

the

F.3d

at

sixty-day

19

(citing

period

12

expires,

U.S.C.
“such

disallowance shall be final, and the claimant shall have no further
rights or remedies with respect to such claim.”
12 U.S.C. § 1821(d)(6)(B)).

Id. at n.8 (citing

Civil No. 15-1610 (FAB)

5

FIRREA restricts “the jurisdiction of courts [from] hear[ing]
certain claims where the plaintiff has not complied with the
statutory claims process” in 12 U.S.C. § 1821 (“section 1821”).
Acosta-Ramírez, 712 F.3d at 19.

Section 1821(d)(13)(D) provides

that:
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 [FDIC] has been
appointed receiver, including assets which the
[FDIC] may acquire from itself as such receiver;
or

(ii)

any claim relating to any act or omission of such
institution or the [FDIC] as receiver.

12 U.S.C. § 1821(d)(13)(D) (emphasis added).

“[T]he failure . . .

to comply with the sixty-day requirement to seek judicial review
of the denial of [] administrative claims also deprives courts of
jurisdiction.”

Acosta-Ramírez, 712 F.3d at 20.

Consequently,

“[c]ompliance with and exhaustion of the administrative procedure
is mandatory.”

FDIC v. Sánchez-Castro, No. 15-1954, 2016 WL

4257336, at *2 (D.P.R. 2016) (García-Gregory, J.) (citing Marquis,
965 F.2d at 1151).

If a claimant fails to comply with the review

process, no court has subject-matter jurisdiction to hear the case.
See, e.g., Simon v. FDIC, 48 F.3d 53, 56 (1st Cir. 1995) (“Section
1821(d)(13)(D)(i) bars all claims against the assets of a failed

Civil No. 15-1610 (FAB)

6

financial institution which have not been presented under the
administrative claims review process (‘ACRP’) . . . [f]ailure to
comply

with

the

ACRP

deprives

the

courts

of

subject

matter

jurisdiction over any claim to assets of the failed financial
institution.”); Wujick v. Dale & Dale, Inc., 43 F.3d 790 (3rd Cir.
1994)

(“Since

the

state

court

also

lacked

subject

matter

jurisdiction for the same reason, a remand by the district court
would be a vacuous act.

We will therefore direct the district

court to dismiss the claims against RTC.”); Meliezer v. RTC, 952
F.2d

879,

882-883

1821(d)(13)(D)

(5th

clearly

Cir.

1992)

establishes

(holding
a

that

statutory

“section
exhaustion

requirement . . .” and because plaintiffs “failed to exhaust the
administrative remedies as directed by FIRREA; the district court
lacked subject matter jurisdiction over their claims.”); Bueford
v. RTC, 991 F.2d 481, 485 (8th Cir. 1993) (“Every court that has
considered

the

issue

has

found

exhaustion

of

FIRREA’s

administrative remedies to be a jurisdictional prerequisite to
suit in district court.”).
A court should dismiss claims with prejudice where claimants
fail to exhaust the review process.

See, e.g., FDIC v. Estrada-

Colón, 848 F. Supp. 2d 206, 212-13 (D.P.R. 2012) (Delgado-Colón,
J.); FDIC v. Estrada-Rivera, 813 F. Supp. 2d 265, 269-79 (D.P.R.
2011) (Gelpí, J.); FDIC v. Negrón-Ocasio, No. 15-1888, 2016 WL

Civil No. 15-1610 (FAB)

7

3920173 (D.P.R. July 18, 2016) (Delgado-Hernández, J.); FDIC v.
Navarro-López, No. 15-1914, 2016 WL 3461204 (D.P.R. June 21, 2016)
(Delgado-Hernández, J.).
IV.

Discussion
The FDIC-R argues that Lacies’ complaint should be dismissed

for failure to comply with the review process.
pp. 3-8.)

(Docket No. 8 at

The FDIC-R contends that compliance with section 1821’s

review process is a “prerequisite to subject matter jurisdiction,”
and “[a]s of the filing of this motion, in fact, no claim has been
received

from

disallowance.”

.

.

.

the

plaintiff[],

Id. at p. 5.

resulting

in

automatic

The FDIC-R concludes that because

the review process is mandatory, Lacies’ noncompliance warrants
dismissal of the complaint.

The Court agrees.

The FDIC satisfied its statutory duties to notify Lacies of
its receivership.

See 12 U.S.C. § 1821.

The FDIC assumed its

position as receiver to Doral on February 27, 2015 and sent
notification to Lacies on May 1, 2015, therefore complying with
the 90-day publishing requirement pursuant to § 1821(d)(3)(B)(i).
See Docket No. 8, Ex. 1 at p. 5; 12 U.S.C. § 1821(d)(3)(B)(i). 1
Lacies, however, failed to file a proof of claim.

“[A]ll

parties asserting claims against failed institutions” must comply

1

Lacies does not contest that the FDIC met the 90-day publishing requirement
pursuant to section 1821(d)(3)(B)(i).

Civil No. 15-1610 (FAB)
with the review process.

8
Marquis, 965 F.2d at 1151.

Because

Lacies did not file a proof of claim by June 4, 2015, it failed to
exhaust the mandatory review process. 2

Consequently, the Court

has no jurisdiction to hear Lacies’ complaint. See Acosta-Ramírez,
712 F.3d at 19.
V.

Conclusion
For the reasons set forth above, the FDIC-R’s motion to

dismiss Lacies’ complaint (Docket No. 8) is GRANTED. The complaint
is

dismissed

accordingly.

with

prejudice.

Judgment

shall

be

entered

Because the Commonwealth Court also lacked subject

matter jurisdiction for the reasons set forth in this Memorandum
and Order, a remand by this Court to the Commonwealth Court would
be a vacuous act.
IT IS SO ORDERED.
San Juan, Puerto Rico, November 5, 2018.

s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE

2

Lacies also does not contest its failure to file a proof of claim or exhaust
the review process.