Federal Deposit Insurance Corporation as Receiver for Frontier Bank v. Clementz et al

Filing 54

ORDER granting in part and denying in part 38 Defendant's Motion to take judicial notice of 42 Exhibits, by Judge Marsha J. Pechman.(MD)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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FEDERAL DEPOSIT INSURANCE
CORPORATION AS RECEIVER FOR
FRONTIER BANK,

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Plaintiff,

CASE NO. C13-737 MJP
ORDER GRANTING IN PART AND
DENYING IN PART MOTION FOR
JUDICIAL NOTICE

v.

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MICHAEL J. CLEMENTZ, et al.,

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Defendants.

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This motion comes before the Court on Defendant‟s request for the Court to take judicial

18 notice of 42 Exhibits. (Dkt. No. 38.) The Court reviewed the request, Plaintiff‟s response (Dkt.
19 No. 44), Defendants‟ reply (Dk. No. 48), the Complaint, and all related documents. The Court
20 GRANTS in part and DENIES in part the request, as specified below.
Background

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Plaintiff Federal Deposit Insurance Corporation (“FDIC”) filed its Complaint in this

23 Court seeking to recover damages from Defendants, former officers of Frontier Bank, in its
24 capacity as Receiver for Frontier Bank (“Frontier”). (Dkt. No. 1 at 2.) FDIC alleges Defendants
ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 1

1 breached their fiduciary duty to Frontier and were negligent and grossly negligent by, among
2 other things, approving several loans between March 2007 and April 2008. (Id.) Defendants filed
3 a motion to dismiss the Complaint for failure to state a claim pursuant to Fed. R. Civ. P.
4 12(b)(6). (Dkt. No. 32.) With that motion, Defendants filed the request for the Court to take
5 judicial notice at issue here. (Dkt. No. 38.)
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Analysis

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Generally, a district court may not consider material beyond the pleadings in considering

8 a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Lee v. City of
9 Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). In deciding whether a Complaint states a
10 plausible claim for relief, the Court may consider the Complaint, “documents incorporated into
11 the complaint by reference, and matters of which a court may take judicial notice. Tellabs, Inc. v.
12 Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
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Defendants ask the Court to take judicial notice of documents falling into four categories: (1)

14 documents incorporated by reference into the FDIC‟s Complaint; (2) Frontier‟s filings with the
15 U.S. Securities and Exchange Commission (“SEC”); (3) records and reports of administrative
16 bodies; and (4) newspaper articles or other publically available materials demonstrating facts not
17 subject to reasonable dispute. (Dkt. No. 38 at 2.) Each category is discussed below, with the
18 Court‟s ruling on each exhibit for which judicial notice is requested.
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I.

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Under the “incorporation by reference” doctrine, a court may consider the full content of

Documents Incorporated by Reference

21 documents “incorporated by reference into a complaint if the plaintiff refers extensively to the
22 document or the document forms the basis of the plaintiff‟s claim.” United States v. Ritchie, 342
23 F.3d 903, 908 (9th Cir. 2003). Documents not physically attached to the complaint may be
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ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 2

1 considered only if (1) their authenticity is not contested and (2) the complaint necessarily relies
2 on them. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994).
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Document

4 13 2008 Loan Policy

Notice
Yes

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14 2007 Loan Policy

Yes

16 11/28/07 DLC Mins.

No

Reasoning
Breach of the loan policy is central to Plaintiff‟s claims
and is referenced in the Complaint. (Dkt. No. 1 at 2.)
The authenticity of the document is not disputed.
Same as above.

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8 17 LLC E Memo

Yes

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10 18 3/14/07 DLC Mins.

No

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19 Neighborhood Data

No

20 IH High Street (I)
Memo

Yes

21 5/9/07 DLC Mins.

No

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17 22 IH High Street (II)
Memo
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Yes

19 23 LLC D(I) Loan
Memo
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Yes

21 24 5/23/07 DLC
Minutes
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25 LLC D(I) Appraisal

No

No

The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 40-44) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
The vague reference to an “appraisal” is not a clear
reference to the document Defendants seek to have
incorporated in the Complaint and is not central to the
Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 33-37) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 33-37) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 38-40) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
A negative reference is not a reference. Defendants
attempt to bring a document in they allege is contrary
to the Plaintiff‟s assertion in its Complaint. This is not

ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 3

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permissible.

2 27 GMP Loan Memo

Yes

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4 28 6/6/07 DLC Minutes

No

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29 Borrowers A-C
Loan Memo

Yes

30 10/22/07 ELC
Minutes

No

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9 31 Borrower D (I) Loan
Memo
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Yes

11 32 11/7/07 DLC
Minutes
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33 LLC D (II) Loan
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Memo

No

Yes

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34 Borrower D (II)
Loan Memo

Yes

35 2/13/08 DLC
Minutes

No

18 36 Borrower D (III)
Loan Memo
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Yes

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20 37 3/26/08 DLC
Minutes
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38 LLC A (I) Loan
Memo

No

Yes

The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 30-33) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the few references to the
minutes are not enough to support judicial notice. The
meeting minutes are not central to the Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 16-19) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 23-25) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 40-42) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 26-28) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 28-30) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 19-21) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.

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ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 4

1 39 LLC A (II) Loan
Memo
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Yes

3 40 4/9/08 DLC Minutes

No

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41 Q107 Real Estats
Report
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No

The Complaint extensively references the contents of
the loan memo (Dkt. No. 1 at 21-22) and Plaintiff does
not dispute the document‟s authenticity. The contents
of the memo are central to Plaintiff‟s claims.
The fact of the meeting and the very few references to
the minutes are not enough to support judicial notice.
The meeting minutes are not central to the Complaint.
While Plaintiff references Real Estats documents in its
Complaint it does not refer to any specific document
and there is no document centrally relied upon by
Plaintiff.

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II.

Judicial Notice

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Pursuant to Federal Rule of Evidence 201(b), courts may only take judicial notice of
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adjudicative facts not subject to reasonable dispute, because they are either “generally known
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within the trial court‟s territorial jurisdiction” or are “capable of accurate and ready
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determination by resort to sources whose accuracy cannot be reasonably questioned.” Ritchie,
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342 F.3d at 908-09.
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Plaintiff contends a court should not take judicial notice when there is no indication plaintiffs
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intentionally omitted material facts to disguise a deficiency in their claims, citing In re Immune
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Response Sec. Litig., 375 F. Supp. 2d 983, 995 (S.D. Cal. 2005). (Dkt. No. 44 at 3.) However,
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this is not the standard Immune Response applies; the “intentionally omitted material” language
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is dicta offered as further support for the decision not to take judicial notice of documents of
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disputed authenticity. In re Immune Response, 375 F. Supp. 2d at 996. The case Immune
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Response references, Parrino v. FHP, Inc., uses the “intentionally omitted material” language to
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articulate the underlying policy concern of the incorporated by reference rule. 146 F.3d 699, 70521
06 (9th Cir. 1998). In evaluating whether judicial notice of adjudicative facts is appropriate, the
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Court will not look to Plaintiff‟s motivation but to the nature of the documents themselves. See,
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ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 5

1 e.g. Palmason v. Weyerhaeuser Co., 2013 U.S. Dist. LEXIS 60161, *4-5 (W.D. Wash. Apr. 26,
2 2013).
A. Frontier‟s SEC filings

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Defendants ask the Court to take judicial notice of Exhibits 1, 2, and 11, because they are

5 documents Frontier was required to file with the SEC. (Dkt. No. 28 at 4.) A Court may take
6 judicial notice of public documents filed with the SEC. In re Wash Mut., 259 F.R.D. 490, 495
7 (W.D. Wash. 2009). Because judicial notice of SEC filings is typical, the court will take judicial
8 notice of Exhibits 1, 2, and 11. The Court will notice truth of the statements made in the filings
9 to the extent it takes notice they were the actual statements provided to the SEC. See, City of
10 Royal Oak Ret. Sys. v. Juniper Networks, 880 F. Supp. 2d 1045, 1059 (N. D. Cal. 2012).
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B. Records and Reports of Administrative Bodies
A Court may take judicial notice of “some public records, including the reports and records

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13 of administrative bodies.” Ritchie, 342 F.3d at 909. Defendants ask the Court to take judicial
14 notice of Exhibits 3, 4, 5, 6, 7, 8, 15 and 26 under this rule. Plaintiffs object to the Court taking
15 notice of Exhibits 4, 6, and 7, and object to the Court adopting the truth of the facts as stated in
16 Exhibits 3, 5, 8, 15, and 26. (Dkt. No. 44.) Each document is addressed below individually. For
17 those where judicial notice is appropriate, the Court will assume the truth of the facts published
18 insofar as the Court notes those were the facts as put forth by the entity producing the public
19 record. See, Cal. ex. rel. Lockyer v. Mirant Corp., 266 F. Supp. 2d 1046, 1053 (N.D. Cal. 2003).
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Document

Notice

Reasoning

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FDIC Material Loss
Report
Housing price data
from Federal
Reserve Bank

Yes

This is a report of an administrative body, the
authenticity of which Plaintiff does not dispute.
Lack of foundation, Defendants do not show whether
or how the housing price data presented from multiple
sources on housing price are comparable.

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No

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ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 6

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Federal Housing
Insurance Agency
Data (FHIA Data)
FHIA Data

No

FHIA Data

No

Financial Crisis
Inquiry Report

Yes

No

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4 7
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7 15 Comptroller
Handbook
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26 FDIC FAQ on
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Residential Lending
10 42 Frontier Bank
Articles of
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Incorporation

Yes

Yes

Yes

Lack of foundation, Defendants do not show whether
or how the housing price data presented from multiple
sources on housing price are comparable.
Lack of foundation, Defendants do not show whether
or how the housing price data presented from multiple
sources on housing price are comparable.
Lack of foundation, Defendants do not show whether
or how the housing price data presented from multiple
sources on housing price are comparable.
Plaintiff does not dispute the authenticity of the
document and the document may be relevant to the
motion to dismiss.
Plaintiff does not dispute the authenticity of the
document and the document may be relevant to the
motion to dismiss.
Plaintiff does not dispute the authenticity of the
document and the document may be relevant to the
motion to dismiss.
Plaintiff does not dispute the authenticity of the
document and the document may be relevant to the
motion to dismiss.

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C. Newspaper Articles or Publically Available Material
Defendants ask the Court to take judicial notice of several news articles, Exhibits 9, 10,
and 12. “Although the court may take judicial notice of news article[s] as evidence of „what was
in the public realm at the time,‟ it may not do so as evidence that „the contents of th[e] articles
[a]re in fact true.‟ Holland v. King County Adult Det., 2013 U.S. Dist. LEXIS 40629, *6 (W.D.
Wash. Mar. 21, 2013), citing Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d
954, 960 (9th Cir. 2010). The Court will take judicial notice of Exhibits 9, 10, and 12 as evidence
of what was in the public realm at the time.
Conclusion

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For the reasons discussed above, the Court will take judicial notice of, or consider
incorporated by reference, the following Exhibits: 1, 2, 3, 8, 9, 10, 11, 12, 13, 14, 15, 17, 20, 22,
23, 26, 27, 29, 31, 33, 34, 36, 38, 39, and 42.

ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 7

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The Court will not take judicial notice of or consider incorporated the following Exhibits:

2 4, 5, 6, 7, 16, 18, 19, 21, 24, 25, 28, 30, 32, 35, 37, 40 and 41.
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The clerk is ordered to provide copies of this order to all counsel.

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Dated this 28th

day of November, 2013.

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A

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Marsha J. Pechman
Chief United States District Judge

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ORDER GRANTING IN PART AND DENYING IN
PART MOTION FOR JUDICIAL NOTICE- 8