Roosevelt Cayman Asset Company v. Rivera-Molina et al

Filing 12

MEMORANDUM AND ORDER: Granting 10 "FDIC-R's Motion to Dismiss Counter Plaintiffs Claims with Prejudice for Failure to Exhaust Mandatory Administrative Claims Process." The case is remanded to the San Juan Part of the Puerto Rico Court of First Instance. Judgment shall be entered accordingly. Signed by Judge Pedro A. Delgado-Hernandez on 2/16/2016. (DJP)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ROOSEVELT CAYMAN ASSET
COMPANY,
Plaintiff,
v.
RAFAEL OSCAR RIVERA-MOLINA, et
al.,

CIVIL NO. 15-1713 (PAD)

Defendants.
v.
FEDERAL DEPOSIT INSURANCE
CORPORATION
Counter Defendant

MEMORANDUM AND ORDER
On July 4 2013, Doral Bank (“Doral”) initiated this action against Rafael Rivera and
Jeannine Cintron (“defendants/counter claimants”) for collection of monies and foreclosure in the
San Juan Part of the Puerto Rico Court of First Instance (Docket No. 1). On November 23 2013,
defendants answered the complaint and included a counterclaim against Doral Bank, claiming
damages in the amount of $150,000.00. Id. At some point thereafter, the state court authorized
Roosevelt Cayman Asset Company’s (“Roosevelt”) request to be substituted as plaintiff. On
February 27 2015, while the action was still pending, Doral was closed by the Office of the
Commissioner of Financial Institutions of the Commonwealth of Puerto Rico and the FDIC was
appointed Doral’s receiver. Id. On May 28, 2015, the FDIC-R removed the action to this court
pursuant to 12 U.S.C. § 1819(b)(2)(B) and 28 U.S.C. § 1442(a)(1). Id.

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Before the court is the “FDIC-R’s Motion to Dismiss Counter Plaintiffs’ Claims with
Prejudice for Failure to Exhaust Mandatory Administrative Claims Process” (Docket No. 10). The
court ordered the plaintiffs to respond to the motion not later than January 29, 2016 (Docket No.
11). To date, they have not done so. For the reasons below, the FDIC-R’s motion is GRANTED,
and the counterclaim DISMISSED.
I. STANDARD OF REVIEW
Pursuant to Fed.R.Civ.P. 12(b)(1), a party may seek dismissal of an action for lack of
subject matter jurisdiction. When a district court considers a Rule 12(b)(1) motion, it must credit
the plaintiff’s well-pled factual allegations and draw all reasonable inferences in the plaintiff’s
favor. See, Merlonghi v. United States, 620 F.3d 50, 54 (1st Cir. 2010)(citing Valentin v. Hosp.
Bella Vista, 254 F.3d 358, 363 (1st Cir. 2001). If it appears to the court at any time that subject
matter jurisdiction is lacking, it must dismiss the action. Fed.R.Civ.P. 12(h)(3); McCulloch v.
Vélez, 364 F.3d 1, 5 (1st Cir. 2004).
A case is properly dismissed for lack of subject matter jurisdiction when the court lacks
the statutory or constitutional power to adjudicate it. Nowak v. Ironworkers Local 6 Pension Fund,
81 F.3d 1182, 1187 (2d Cir. 1996); Prestige Capital Corp. v. Pipeliners of Puerto Rico, Inc., 849
F.Supp.2d 240 (D.P.R. 2012). The court may consider extrinsic materials in the process of
evaluating a motion to dismiss under Rule 12(b)(1). Dynamic Image Technologies, Inc. v. U.S.,
221 F.3d 34, 37 (1st Cir. 2000).
II. DISCUSSION
A. FIRREA
The Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”) provides
that when the FDIC is acting as a conservator or receiver, it succeeds the insured depository

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institution as to all of its rights, titles, powers, privileges and assets. See, Font-Llacer-de-Pueyo v.
F.D.I.C., 932 F.Supp.2d 265, 270 (D.P.R. 2013)(citing 12 U.S.C. § 1821(d)(2)(A)(i)).
Additionally, FIRREA establishes a mandatory administrative claims process, which must be
exhausted by every claimant seeking payment from the assets of the affected institution. See,
Maldonado-Torres v. F.D.I.C. ex rel. R-G Premier Bank, 839 F.Supp.2d 511, 515 (D.P.R.
2012)(citing 12 U.S.C. § 1821(d)(13)(D)). 1 The administrative claims process, set forth in 12
U.S.C. §§ 1821(d)(3)-(13), requires that all claims be submitted to the FDIC by a date established
by the receiver. Rodriguez v. F.D.I.C., No. 10-1656, 2011 WL 4529929, at *3 (D.P.R. September
27, 2011). Compliance with and exhaustion of the administrative procedure is mandatory. See,
Marquis v. F.D.I.C., 965 F.2d 1148, 1151 (1st Cir. 1992)(so stating).
With this background, on May 21, 2015, the FDIC mailed written claim notices to
defendants/counter claimants Rafael Rivera and Jeannine Cintron, informing them of the
mandatory procedures for asserting a claim against it. That same notice was also sent to their
attorney, Antonio Bauza-Torres (Docket No. 10, Exh. 1 at ¶ 4). Notice to potential creditors and
depositors of Doral was also published in two (2) different newspapers, on three (3) different dates,
namely, March 6, 2015, April 6, 2015, and May 5, 2015. Id. at ¶¶ 5-6. The notice informed that
the FDIC had established June 4, 2015, as the Claims Bar Date; included instructions on how to

1

Section 1821(d)(13)(D) states:
(D) Limitations 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
[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).

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complete the Proof of Claim Form; provided the address to which the document should be sent;
and forewarned that failure to file any such claim before the Claims Bar Date would result in the
final disallowance of the claim. Id. at ¶¶ 7-10.
Despite the foregoing, defendants/counter claimants failed to submit the corresponding
claims with the FDIC, such that they failed to comply with the administrative procedure as required
by 12 U.S.C. § 1821. Id. at ¶¶ 11-13. Being it so, it follows that the court lacks subject-matter
jurisdiction to entertain their claims against the FDIC. See, Simon v. F.D.I.C., 48 F.3d 53, 56 (1st
Cir. 1995)(holding that “[f]ailure to comply with the [administrative claims review process]
deprives the courts of subject matter jurisdiction over any claim to assets of the failed financial
institution”); see also, 12 U.S.C. § 1821(d)(13)(D).
B. Remand
Because all claims against the FDIC will be dismissed, the basis for removal jurisdiction
no longer exists. In these circumstances, remand is warranted. See e.g., Pena v. Puerto Rico, No.
11–2127, 2012 WL 2525601 (D.P.R. Jun. 29, 2012)(remanding case to state court after finding
that once the claims against FDIC have been dismissed, the court has only supplemental
jurisdiction over the action and thus has the discretion to remand the case, where FDIC’s interests
become moot); New Rock Asset Partners, L.P. v. Preferred Entity Advancements, Inc., 101 F.3d
1492, 1501 (3d Cir. 1996)(holding that FIRREA does not provide continuing original jurisdiction
once the FDIC is dismissed, but that a court may, in its discretion, continue to exercise
supplemental jurisdiction); Mill Investments, Inc. v. Brooks Woolen Co., 797 F.Supp. 49, 54
(D.Me. 1992)(holding that court retained only supplemental jurisdiction after FDIC assigned its
interest in the promissory note object of the litigation, and was no longer a party to the suit – while
the successor in interest to the mortgage remained – and thus, remanding the case to state court).

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III. CONCLUSION
In light of the foregoing, the FDIC’s motion is GRANTED, and defendants/counter
claimants’ counterclaim DISMISSED, and the case is remanded to the San Juan Part of the Puerto
Rico Court of First Instance. Judgment so reflecting shall be entered accordingly.
SO ORDERED.
In San Juan, Puerto Rico, this 16 day of February, 2016.
S/Pedro A. Delgado-Hernández
PEDRO A. DELGADO-HERNÁNDEZ
United States District Judge