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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1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO 2 3 BEVERLYN D. FIOLA-ESQUILIN, et al., 4 Plaintiffs, 5 v. 6 FEDERAL DEPOSIT INSURANCE 7 CORPORATION, as receiver for Doral Bank, 8 Defendant. Civil No. 15-1912 (GAG) 9 10 OPINION AND ORDER 11 Presently before the Court is the defendant Federal Deposit Insurance Corporation’s 12 motion for summary judgment for lack of subject-matter jurisdiction on the third-party 13 complaint filed by plaintiff Beverlyn D. Fiola-Esquilin. (Docket No. 10). The FDIC’s motion 14 is unopposed. Upon review, the FDIC’s motion for summary judgment is GRANTED. 15 I. 16 Fiola-Esquilin filed a third-party general unsecured claim against Doral Bank in state 17 court in August, 2014. (Docket No. 17-1). While the action was still pending, the Commissioner 18 of Financial Institutions of the Commonwealth of Puerto Rico closed Doral and the FDIC was 19 appointed as Doral’s receiver on February 27, 2015. Id. Subsequently, the FDIC published 20 notice to all of Doral’s creditors that the bank had been placed in receivership with the FDIC, 21 and advised that any claims related to Doral liability must be asserted against the FDIC by June 22 4, 2015. (Docket No. 10-1 at ¶1). On that day, Fiola-Esquilin filed a claim with the FDIC. Id. 23 at ¶2. Nevertheless, on July 10, the FDIC disallowed the claim and notified Fiola-Esquilin. 24 Relevant Factual and Procedural Background Civil No. 15-1912 (GAG) 1 (Docket No. 10-3). According to the Notice of Disallowance of Claim, Fiola-Esquilin failed to 2 respond a request for additional information or provide any documentation to support the claim. 3 Id. 4 The FDIC removed the case to the District Court of Puerto Rico on July 9, 2015 under 5 the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”), 12 6 U.S.C. § 1819(b)(2)(B). (Docket No. 1). More than seven months later, the FDIC filed an 7 informative motion stating that Fiola-Esquilin had failed to take any actions to continue the 8 claim or seek administrative review within sixty days of the Notice of Disallowance, thus 9 depriving the Court of subject-matter jurisdiction under FIRREA. (Docket No. 8). For that 10 reason, the FDIC filed a motion for summary judgment for lack of subject-matter jurisdiction 11 on March 22, 2016. (Docket No. 10). The Court ordered Fiola-Esquilin to respond on or before 12 April 8, 2016, but Fiola-Esquilin failed to do so. Id. 13 II. 14 As courts of limited jurisdiction, federal courts must resolve questions related to their 15 subject-matter jurisdiction before addressing the merits of a case. Destek Grp. v. State of N.H. 16 Pub. Utils. Comm’n, 318 F.3d 32, 38 (1st Cir. 2003). The party asserting federal jurisdiction 17 has the burden of proving its existence. Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir. 1998). 18 If the Court concludes at any time that it lacks the statutory or constitutional power to adjudicate 19 the case, it must dismiss the action, even if a party does not challenge it. Arbaugh v. Y&H 20 Corp., 546 U.S. 500, 514 (2006). Standard of Review 21 Federal Rule of Civil Procedure 12(b)(1) offers the appropriate mechanism for 22 challenging a court’s subject-matter jurisdiction. Valentín v. Hosp. Bella Vista, 254 F.3d 358, 23 362 (1st Cir. 2001). Nevertheless, when a party raises the issue of subject-matter jurisdiction in 24 2 Civil No. 15-1912 (GAG) 1 a motion for summary judgment, “the Court can still consider the motion, but as a motion to 2 dismiss.” Rivera Sanchez v. MARS, Inc., 30 F. Supp. 2d 187, 190 (D.P.R. 1998); see also FDIC 3 v. Perez, 225 F. Supp. 3d 104, 105 (D.P.R. 2016) (“FDIC’s argument is purely jurisdictional. 4 As such, the motion is properly considered under Rule 12(b)(1) of the Federal Rules.”). 5 Rule 12(b)(1) serves as a “large umbrella, overspreading a variety of different types of 6 challenges to subject-matter jurisdiction.” Id. at 362-63. A motion to dismiss brought under 7 Rule 12(b)(1) is subject to a similar standard of review as one brought under Rule 12(b)(6). 8 Boada v. Autoridad de Carreteras y Transportación, 680 F. Supp. 2d 382, 384 (D.P.R. 2010) 9 (citing Negrón-Gaztambide v. Hernández-Torres, 35 F.3d 25, 27 (1st Cir. 1994)). The district 10 court must credit the plaintiff’s well-pled factual allegations and draw all reasonable inferences 11 in the plaintiff’s favor. Merlonghi v. United States, 620 F.3d 50, 54 (1st Cir. 2010) (citing Hosp. 12 Bella Vista, 254 F.3d at 363). However, the Court’s inquiry is not necessarily limited to the 13 parties’ pleadings, and may include evidence presented in the case. Aversa v. United States, 99 14 F.3d 1200, 1210 (1st Cir. 1996). 15 16 17 III. Discussion A. The Administrative Claims Review Process of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 18 FIRREA governs, among other areas, the FDIC’s powers and duties when acting as the 19 receiver of a failed financial institution. Marquis v. Fed. Depository Ins. Corp., 965 F.2d 1148, 20 1151 (1st Cir. 1992); 12 U.S.C. § 1821(d). As receiver, the FDIC succeeds to all of the rights 21 of the depository institution under receivership. § 1821(d)(2)(A). FIRREA seeks to facilitate 22 the process by which insolvent financial institutions are rehabilitated or liquidated. Acosta- 23 Ramírez v. Banco Popular de P.R., 712 F.3d 14, 18 (1st Cir. 2013). Consistent with this purpose, 24 3 Civil No. 15-1912 (GAG) 1 FIRREA requires all parties with claims against the assets of an insolvent financial institution, 2 or with claims arising out of the institution’s acts or omissions, to participate in the statute’s 3 administrative claims review process. § 1821(d); see Marquis, 965 F.2d at 1151. 4 Under FIRREA, after being appointed receiver of an insolvent financial institution, the 5 FDIC shall “promptly publish a notice to the depository institution’s creditors to present their 6 claims, together with proof, to the receiver by a date specified in the notice.” § 1821(d)(3)(B). 7 The notice must be published at least ninety days prior to the date specified in the notice and 8 republished twice, with a month between each publication. Id. Moreover, the FDIC must also 9 mail similar notices to those creditors that appear on the depository institution’s books at the 10 time of publication of the notice. § 1821(d)(3)(C). If a claimant’s name and address do not 11 appear on the institution’s books, the FDIC shall mail a notice within thirty days after 12 discovering the name and address of the claimant. Id. Nevertheless, “[f]ailure to mail the notice 13 . . . will not exempt the claimant from exhausting the administrative process. The statute does 14 not provide a waiver or exception if the notice is not mailed.” Maldonado-Vaillant v. FDIC, 15 No. 10-1700, 2011 WL 1545429, at *2 (D.P.R. Apr. 25, 2011). 16 According to the First Circuit, the bar date must be at least ninety days after the 17 publication of the notice and all claims filed after that are time-barred. Commonwealth Of 18 Massachusetts v. FDIC, 102 F.3d 615, 624 (1st Cir. 1996) (citations omitted). If a claim is filed, 19 the FDIC has 180 days to determine whether it will be allowed or disallowed. 20 § 1821(d)(5)(A)(i). Subsequently, a claimant has sixty days after any notice of disallowance to 21 seek administrative or judicial review of the determination by filing a claim or continuing an 22 action which was commenced prior to the receiver’s appointment. § 1821(d)(6)(A)(ii); Reyes 23 v. FDIC, No. 10-1660, 2011 WL 2604762 at *2 (D.P.R. Jun. 30, 2011). “To ‘continue’ an action 24 4 Civil No. 15-1912 (GAG) 1 requires some affirmative act by the claimant.” Id. at *3 (citing Lakeshore Realty Nominee 2 Trust v. FDIC, No. 91-55-B, 1994 WL 262913 at *1-2 (D.N.H. May 25, 1994); First Union 3 Nat’l Bank of Florida v. Royal Trust Tower, Ltd., 827 F. Supp. 1564, 1567-68 (S.D. Fla. 1993)). 4 Put simply: (1) the FDIC must file notice, (2) the claimant must file a claim with FDIC within 5 90 days of notice, (3) the FDIC must allow or disallow the claim within 180 days, and (4) if the 6 claim is disallowed, the claimant must seek administrative or judicial review, or continue a prior 7 action, within 60 days. 8 If a claimant fails to exercise its rights before the end of the sixty-day period, “the claim 9 shall be deemed to be disallowed . . . such disallowance shall be final, and the claimant shall 10 have no further rights or remedies with respect to such claim.” 12 U.S.C. § 1821(d)(6)(B). This 11 disallowance deprives the court of subject-matter jurisdiction. Reyes, No. 10-1660, 2011 WL 12 2604762 at *3 (citing 12 U.S.C. § 1821(d)(13)(D)). 13 B. The Claims Against Doral 14 The FDIC became Doral Bank’s receiver in February 2015, and thus succeeded to all 15 the rights of Doral under receivership. (Docket No. 1). After being appointed as receiver, the 16 FDIC promptly published a notice to creditors to present their claims, together with proof, to 17 the FDIC by June 4, 2015. (Docket No. 10-1 at ¶1). The first notice was published at least ninety 18 days prior to the deadline, and republished twice, with a month between each publication, as 19 required by the statute. Id. Although the FDIC has not shown if it mailed the notice to Fiola- 20 Esquilin, this failure does not exempt Fiola-Esquilin from exhausting the administrative 21 process. Moreover, Fiola-Esquilin complied with the deadline and filed a complaint with the 22 FDIC. Id. at ¶2. “Such timely compliance demonstrates that defendants had sufficient notice.” 23 FDIC v. Estrada-Colon, 848 F. Supp. 2d 206, 211 (D.P.R. 2012). 24 5 Civil No. 15-1912 (GAG) 1 On July 10, 2015, the FDIC issued a Notice of Disallowance of Claim to Fiola-Esquilin. 2 (Docket No. 10-3). The notice mailed to Fiola-Esquilin included the FDIC’s reasons for its 3 determination and warned of the consequences of not acting within sixty days. Id. Based on this 4 disallowance, Fiola-Esquilin had sixty days to start a new action or “continue” with the claim 5 that she filed prior to the FDIC’s appointment as Doral’s receiver. 12 U.S.C.§ 1821(d)(6). The 6 sixty-day period expired on September 8, 2015. During that time frame, Fiola-Esquilin failed 7 to submit any documentation to the FDIC, file a new lawsuit, or take any affirmative action 8 before this Court to continue the case. (Docket No. 8). Thus, given that Fiola-Esquilin failed to 9 exhaust the mandatory process prescribed by FIRREA, the Court finds that it lacks subject- 10 matter jurisdiction to address the case’s merits and GRANTS the FDIC’s motion for summary 11 judgment. 12 IV. 13 For the foregoing reasons, the Court GRANTS the FDIC’s motion for summary 14 Conclusion judgment at Docket No. 10. Fiola-Esquilin’s claim is DISMISSED WITH PREJUDICE. 15 SO ORDERED. 16 In San Juan, Puerto Rico this 30th day of November, 2017. 17 /s/ Gustavo A. Gelpí GUSTAVO A. GELPI United States District Judge 18 19 20 21 22 23 24 6

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