Fiola-Esquilin v Federal Deposit Insurance Corp, et al

Filing 19

ORDER: Granting 10 motion for summary judgment. Signed by Judge Gustavo A. Gelpi on 12/1/17. (PJH)

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

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BEVERLYN D. FIOLA-ESQUILIN, et al.,

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Plaintiffs,

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v.

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FEDERAL DEPOSIT INSURANCE

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CORPORATION, as receiver for Doral Bank,

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Defendant.

Civil No. 15-1912 (GAG)

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OPINION AND ORDER

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Presently before the Court is the defendant Federal Deposit Insurance Corporation’s

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motion for summary judgment for lack of subject-matter jurisdiction on the third-party

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complaint filed by plaintiff Beverlyn D. Fiola-Esquilin. (Docket No. 10). The FDIC’s motion

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is unopposed. Upon review, the FDIC’s motion for summary judgment is GRANTED.

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I.

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Fiola-Esquilin filed a third-party general unsecured claim against Doral Bank in state

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court in August, 2014. (Docket No. 17-1). While the action was still pending, the Commissioner

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of Financial Institutions of the Commonwealth of Puerto Rico closed Doral and the FDIC was

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appointed as Doral’s receiver on February 27, 2015. Id. Subsequently, the FDIC published

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notice to all of Doral’s creditors that the bank had been placed in receivership with the FDIC,

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and advised that any claims related to Doral liability must be asserted against the FDIC by June

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4, 2015. (Docket No. 10-1 at ¶1). On that day, Fiola-Esquilin filed a claim with the FDIC. Id.

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at ¶2. Nevertheless, on July 10, the FDIC disallowed the claim and notified Fiola-Esquilin.

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Relevant Factual and Procedural Background

Civil No. 15-1912 (GAG)
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(Docket No. 10-3). According to the Notice of Disallowance of Claim, Fiola-Esquilin failed to

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respond a request for additional information or provide any documentation to support the claim.

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Id.

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The FDIC removed the case to the District Court of Puerto Rico on July 9, 2015 under

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the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”), 12

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U.S.C. § 1819(b)(2)(B). (Docket No. 1). More than seven months later, the FDIC filed an

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informative motion stating that Fiola-Esquilin had failed to take any actions to continue the

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claim or seek administrative review within sixty days of the Notice of Disallowance, thus

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depriving the Court of subject-matter jurisdiction under FIRREA. (Docket No. 8). For that

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reason, the FDIC filed a motion for summary judgment for lack of subject-matter jurisdiction

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on March 22, 2016. (Docket No. 10). The Court ordered Fiola-Esquilin to respond on or before

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April 8, 2016, but Fiola-Esquilin failed to do so. Id.

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II.

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As courts of limited jurisdiction, federal courts must resolve questions related to their

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subject-matter jurisdiction before addressing the merits of a case. Destek Grp. v. State of N.H.

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Pub. Utils. Comm’n, 318 F.3d 32, 38 (1st Cir. 2003). The party asserting federal jurisdiction

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has the burden of proving its existence. Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir. 1998).

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If the Court concludes at any time that it lacks the statutory or constitutional power to adjudicate

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the case, it must dismiss the action, even if a party does not challenge it. Arbaugh v. Y&H

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Corp., 546 U.S. 500, 514 (2006).

Standard of Review

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Federal Rule of Civil Procedure 12(b)(1) offers the appropriate mechanism for

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challenging a court’s subject-matter jurisdiction. Valentín v. Hosp. Bella Vista, 254 F.3d 358,

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362 (1st Cir. 2001). Nevertheless, when a party raises the issue of subject-matter jurisdiction in

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Civil No. 15-1912 (GAG)
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a motion for summary judgment, “the Court can still consider the motion, but as a motion to

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dismiss.” Rivera Sanchez v. MARS, Inc., 30 F. Supp. 2d 187, 190 (D.P.R. 1998); see also FDIC

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v. Perez, 225 F. Supp. 3d 104, 105 (D.P.R. 2016) (“FDIC’s argument is purely jurisdictional.

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As such, the motion is properly considered under Rule 12(b)(1) of the Federal Rules.”).

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Rule 12(b)(1) serves as a “large umbrella, overspreading a variety of different types of

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challenges to subject-matter jurisdiction.” Id. at 362-63. A motion to dismiss brought under

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Rule 12(b)(1) is subject to a similar standard of review as one brought under Rule 12(b)(6).

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Boada v. Autoridad de Carreteras y Transportación, 680 F. Supp. 2d 382, 384 (D.P.R. 2010)

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(citing Negrón-Gaztambide v. Hernández-Torres, 35 F.3d 25, 27 (1st Cir. 1994)). The district

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court must credit the plaintiff’s well-pled factual allegations and draw all reasonable inferences

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in the plaintiff’s favor. Merlonghi v. United States, 620 F.3d 50, 54 (1st Cir. 2010) (citing Hosp.

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Bella Vista, 254 F.3d at 363). However, the Court’s inquiry is not necessarily limited to the

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parties’ pleadings, and may include evidence presented in the case. Aversa v. United States, 99

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F.3d 1200, 1210 (1st Cir. 1996).

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III.

Discussion
A. The Administrative Claims Review Process of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989

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FIRREA governs, among other areas, the FDIC’s powers and duties when acting as the

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receiver of a failed financial institution. Marquis v. Fed. Depository Ins. Corp., 965 F.2d 1148,

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1151 (1st Cir. 1992); 12 U.S.C. § 1821(d). As receiver, the FDIC succeeds to all of the rights

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of the depository institution under receivership. § 1821(d)(2)(A). FIRREA seeks to facilitate

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the process by which insolvent financial institutions are rehabilitated or liquidated. Acosta-

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Ramírez v. Banco Popular de P.R., 712 F.3d 14, 18 (1st Cir. 2013). Consistent with this purpose,

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Civil No. 15-1912 (GAG)
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FIRREA requires all parties with claims against the assets of an insolvent financial institution,

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or with claims arising out of the institution’s acts or omissions, to participate in the statute’s

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administrative claims review process. § 1821(d); see Marquis, 965 F.2d at 1151.

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Under FIRREA, after being appointed receiver of an insolvent financial institution, the

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FDIC shall “promptly publish a notice to the depository institution’s creditors to present their

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claims, together with proof, to the receiver by a date specified in the notice.” § 1821(d)(3)(B).

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The notice must be published at least ninety days prior to the date specified in the notice and

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republished twice, with a month between each publication. Id. Moreover, the FDIC must also

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mail similar notices to those creditors that appear on the depository institution’s books at the

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time of publication of the notice. § 1821(d)(3)(C). If a claimant’s name and address do not

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appear on the institution’s books, the FDIC shall mail a notice within thirty days after

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discovering the name and address of the claimant. Id. Nevertheless, “[f]ailure to mail the notice

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. . . will not exempt the claimant from exhausting the administrative process. The statute does

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not provide a waiver or exception if the notice is not mailed.” Maldonado-Vaillant v. FDIC,

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No. 10-1700, 2011 WL 1545429, at *2 (D.P.R. Apr. 25, 2011).

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According to the First Circuit, the bar date must be at least ninety days after the

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publication of the notice and all claims filed after that are time-barred. Commonwealth Of

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Massachusetts v. FDIC, 102 F.3d 615, 624 (1st Cir. 1996) (citations omitted). If a claim is filed,

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the FDIC has 180 days to determine whether it will be allowed or disallowed.

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§ 1821(d)(5)(A)(i). Subsequently, a claimant has sixty days after any notice of disallowance to

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seek administrative or judicial review of the determination by filing a claim or continuing an

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action which was commenced prior to the receiver’s appointment. § 1821(d)(6)(A)(ii); Reyes

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v. FDIC, No. 10-1660, 2011 WL 2604762 at *2 (D.P.R. Jun. 30, 2011). “To ‘continue’ an action

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Civil No. 15-1912 (GAG)
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requires some affirmative act by the claimant.” Id. at *3 (citing Lakeshore Realty Nominee

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Trust v. FDIC, No. 91-55-B, 1994 WL 262913 at *1-2 (D.N.H. May 25, 1994); First Union

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Nat’l Bank of Florida v. Royal Trust Tower, Ltd., 827 F. Supp. 1564, 1567-68 (S.D. Fla. 1993)).

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Put simply: (1) the FDIC must file notice, (2) the claimant must file a claim with FDIC within

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90 days of notice, (3) the FDIC must allow or disallow the claim within 180 days, and (4) if the

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claim is disallowed, the claimant must seek administrative or judicial review, or continue a prior

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action, within 60 days.

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If a claimant fails to exercise its rights before the end of the sixty-day period, “the claim

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shall be deemed to be disallowed . . . such disallowance shall be final, and the claimant shall

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have no further rights or remedies with respect to such claim.” 12 U.S.C. § 1821(d)(6)(B). This

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disallowance deprives the court of subject-matter jurisdiction. Reyes, No. 10-1660, 2011 WL

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2604762 at *3 (citing 12 U.S.C. § 1821(d)(13)(D)).

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B. The Claims Against Doral

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The FDIC became Doral Bank’s receiver in February 2015, and thus succeeded to all

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the rights of Doral under receivership. (Docket No. 1). After being appointed as receiver, the

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FDIC promptly published a notice to creditors to present their claims, together with proof, to

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the FDIC by June 4, 2015. (Docket No. 10-1 at ¶1). The first notice was published at least ninety

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days prior to the deadline, and republished twice, with a month between each publication, as

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required by the statute. Id. Although the FDIC has not shown if it mailed the notice to Fiola-

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Esquilin, this failure does not exempt Fiola-Esquilin from exhausting the administrative

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process. Moreover, Fiola-Esquilin complied with the deadline and filed a complaint with the

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FDIC. Id. at ¶2. “Such timely compliance demonstrates that defendants had sufficient notice.”

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FDIC v. Estrada-Colon, 848 F. Supp. 2d 206, 211 (D.P.R. 2012).

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Civil No. 15-1912 (GAG)
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On July 10, 2015, the FDIC issued a Notice of Disallowance of Claim to Fiola-Esquilin.

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(Docket No. 10-3). The notice mailed to Fiola-Esquilin included the FDIC’s reasons for its

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determination and warned of the consequences of not acting within sixty days. Id. Based on this

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disallowance, Fiola-Esquilin had sixty days to start a new action or “continue” with the claim

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that she filed prior to the FDIC’s appointment as Doral’s receiver. 12 U.S.C.§ 1821(d)(6). The

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sixty-day period expired on September 8, 2015. During that time frame, Fiola-Esquilin failed

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to submit any documentation to the FDIC, file a new lawsuit, or take any affirmative action

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before this Court to continue the case. (Docket No. 8). Thus, given that Fiola-Esquilin failed to

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exhaust the mandatory process prescribed by FIRREA, the Court finds that it lacks subject-

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matter jurisdiction to address the case’s merits and GRANTS the FDIC’s motion for summary

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judgment.

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IV.

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For the foregoing reasons, the Court GRANTS the FDIC’s motion for summary

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Conclusion

judgment at Docket No. 10. Fiola-Esquilin’s claim is DISMISSED WITH PREJUDICE.

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SO ORDERED.

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In San Juan, Puerto Rico this 30th day of November, 2017.

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/s/ Gustavo A. Gelpí
GUSTAVO A. GELPI
United States District Judge

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