-SKO Lacap et al v. Hillsborough Mortgage Co., LLC et al, No. 1:2011cv00266 - Document 11 (E.D. Cal. 2011)
Court Description: ORDER Granting 6 Motion to Dismiss signed by Judge Oliver W. Wanger on 07/13/2011. Proposed Order due by 7/25/2011. Flores, E)
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-SKO Lacap et al v. Hillsborough Mortgage Co., LLC et al Doc. 11 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 9 10 11 12 13 14 15 GERALD LACAP and GRACE MESDE LACAP ) ) ) Plaintiff, ) ) v. ) ) HILLSBOROUGH MORTGAGE CO., LLC; ) FEDERAL DEPOSIT INSURANCE ) CORPORATION in its capacity as ) Receiver of AMTRUST BANK; and ) DOES 1 through 50, inclusive, ) ) Defendant. ) _______________________________ ) 1:11-cv-00266-OWW ORDER RE: DEFENDANT’S MOTION TO DISMISS (Doc 6) 16 17 I. INTRODUCTION 18 Plaintiffs Gerald Lacap and Grace Mesde Lacap (“Plaintiffs”) 19 filed suit against Hillsborough Mortgage Co., LLC 20 (“Hillsborough”) and Amtrust Bank, a division of NYCB Mortgage 21 Co., LLC (“AmTrust”). First Amended Complaint, Doc. 1-2 (“FAC”). 22 The Federal Deposit Insurance Corporation, in its capacity as 23 Receiver (“FDIC-R”), was substituted by order of the state court 24 in the place of AmTrust. The FDIC-R timely removed this case to 25 the federal court. The FAC alleges misrepresentation, promises 26 made without intent to perform, and violations of California 27 Business and Professions Code § 17200 by Hillsborough and 28 1 Dockets.Justia.com 1 AmTrust. 2 the Trustee’s Sale of Plaintiffs’ property and any documents 3 recorded against the Plaintiffs’ fee simple title as a result of 4 the Trustee’s Sale, rescission of the written agreement, and 5 damages. 6 FAC at ¶¶ 42-67. Plaintiffs seek a judgment voiding FAC at ¶¶ 68-70. Before the Court for decision is Defendant FDIC-R’s motion 7 to dismiss for lack of subject matter jurisdiction (Doc. 6, filed 8 May. 18, 2011) pursuant to Federal Rules of Civil Procedure 9 12(b)(1). Defendant argues that because the Plaintiffs did not 10 exhaust their administrative remedies as required by 12 U.S.C. §§ 11 1821, et seq., no court has the jurisdiction to hear plaintiffs’ 12 claims. Plaintiffs have not filed an opposition. 13 14 15 II. BACKGROUND Plaintiffs’ claims arise out of two loans from Hillsborough 16 and AmTrust, used by Plaintiffs to purchase a home located at 17 3211 West Ceres Street, Visalia, California (“Subject Property”). 18 FAC at ¶ 21. 19 mortgages made to Plaintiffs were recorded on April 28, 2006. 20 Doc. 6-1. 21 rates automatically adjusted so as to require monthly payments 22 exceeding Plaintiffs’ means to pay. 23 default resulted in a Notice of Default and the recording of a 24 Trustee’s Deed on August 18, 2009 that transferred title to the 25 Subject Property to AmTrust. 26 transferred the property to the Federal National Mortgage 27 Association on November 19, 2009. 28 Two deeds of trust securing the two adjustable rate The Plaintiffs later defaulted on the loans when the FAC at ¶¶ 21-41. Doc. 6-1. This AmTrust later Doc. 6-1. The following month, the Department of the Treasury declared 2 1 AmTrust insolvent and appointed the FDIC-R to act as AmTrust’s 2 Receiver. 3 assets, and some of its liabilities, to New York Community Bank, 4 contingent liabilities remained with AmTrust and were subject to 5 the administration of the Receiver. Though the FDIC-R then transferred all of AmTrust’s Doc. 6-1. 6 Plaintiffs’ first claim alleges that Hillsborough and 7 Amtrust engaged in intentional misrepresentation by making 8 statements informing Plaintiffs they were receiving a fixed rate 9 mortgage, while in fact setting up an adjustable rate mortgage. 10 FAC at ¶¶ 42-48. 11 further engaged in misrepresentation by assuring Plaintiffs that 12 they would work with Plaintiffs to modify their mortgage when 13 they never had any intention of doing so. 14 Plaintiffs allege that Hillsborough and AmTrust FAC at ¶ 44. The second claim alleges that Hillsborough and AmTrust made 15 promises without intent to perform by promising a fixed rate 16 mortgage while knowingly setting up an adjustable rate mortgage 17 and by later promising to restructure the mortgage solely to keep 18 Plaintiffs from fully discovering the deceit. 19 FAC at ¶¶ 49-53. The third, and final, claim alleges that Hillsborough and 20 AmTrust violated California Business & Profession Code § 17200, 21 et seq., and California Financial Code § 22302 by engaging in the 22 above mentioned actions and by entering into an unconscionable 23 contract with Plaintiffs. 24 FAC at ¶¶ 54-64. After learning of Plaintiffs’ claims, the FDIC-R sent 25 Plaintiffs, in care of their attorney of record, Gary Lane, 26 written notice explaining the mandatory procedures for asserting 27 a claim against the Receiver (“Claims Notice”) on December 7, 28 2010. Declaration of Nicholas J. Howard, Doc. 6-2, (“Howard 3 1 Decl.”) at ¶ 4. 2 established as the Claims Bar Date for the AmTrust Receivership, 3 because FDIC-R learned of Plaintiffs’ claims after this date had 4 passed, the FDIC-R allowed Plaintiffs until March 7, 2011 to 5 submit their proof of claim. 6 2011, Plaintiffs had not submitted any claims to the Receiver. 7 Howard Decl. at ¶ 12. 8 9 10 Though March 10, 2010 had initially been Howard Decl. at ¶ 9. III. A. As of May 1, ANALYSIS Standard of Review Federal Rule of Civil Procedure 12(b)(1) provides for 11 dismissal of an action for “lack of jurisdiction over the subject 12 matter.” 13 the burden of proving the existence of the court’s subject matter 14 jurisdiction. 15 1996). 16 particular case unless the contrary affirmatively appears. 17 Atomic Co. V. United Nuclear Corp., 655 F.2d 968, 968-969 (9th 18 Cir. 1981). 19 Faced with a Rule 12(b)(1) motion, a plaintiff bears Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. A federal court is presumed to lack jurisdiction in a Gen. A challenge to subject matter jurisdiction may be facial or White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). 20 factual. 21 This is a facial challenge. 22 a facial attack, i.e., the defendant contends that the 23 allegations of jurisdiction contained in the complaint are 24 insufficient on their face to demonstrate the existence of 25 jurisdiction, the plaintiff is entitled to safeguards similar to 26 those applicable when a Rule 12(b)(6) motion is made.” 27 v. Sullivan, 719 F. Supp. 899, 903 (E.D.Cal. 1989), rev’d on 28 other grounds, 963 F.2d 229 (9th Cir. 1992). “If the challenge to jurisdiction is 4 Cervantez “The factual 1 allegations of the complaint are presumed to be true, and the 2 motion is granted only if the plaintiffs fail to allege an 3 element necessary for subject matter jurisdiction.” Id. 4 B. Subject Matter Jurisdiction 5 On May 18, 2011, Defendant FDIC-R moved to dismiss all the 6 claims against FDIC-R. 7 to exhaust administrative remedies through FDIC-R strips any 8 court of jurisdiction to hear Plaintiffs’ claims under the 9 Financial Institutions Reform, Recovery and Enforcement Act of 10 11 Defendants argue that Plaintiffs’ failure 1989, 12 U.S.C. § 1821 (“FIRREA”). “The statute grants the FDIC, as receiver, broad powers to 12 determine claims asserted against failed banks.” 13 Bank of New England, 986 F.2d 319, 320 (9th Cir. 1993). 14 administrative claims process set up by 12 U.S.C. §§ 1821(d)(3) 15 through (13) centralizes the initial consideration and resolution 16 of claims by requiring that all claims be submitted to the FDIC-R 17 by a set “Claims Bar Date” established by the Receiver. 18 administrative claims process is mandatory. 19 claimant exhausts this process, subsection 1821(d)(13)(D) bars 20 any court from asserting jurisdiction over claims against a 21 failed institution for which the FDIC has been appointed 22 Receiver: Henderson v. The This Unless and until a 23 (D) Limitation on judicial review 24 Except as otherwise provided in this subsection, no court 25 shall have jurisdiction over - 26 (i) any claim or action for payment from, or any action 27 seeking a determination of rights with respect to, the 28 assets of any depository institution for which the 5 1 Corporation has been appointed receiver, including assets 2 which the Corporation may acquire from itself as such 3 receiver; or 4 (ii) any claim relating to any act or omission of such 5 institution or the Corporation as receiver. 6 12 U.S.C. § 1821(d)(13)(D). 7 by subsection 1821(d) only for those claimants who have completed 8 the administrative claims process. 9 1821(d)(6)(A)(ii), (d)(7)(A), (d)(8)(c). 10 Jurisdiction is “otherwise provided” See 12 U.S.C. §§ “A claimant must therefore first complete the claims process 11 before seeking judicial review.” 12 (citing Abbott Bldg. Corp. V. United States, 951 F.2d 191, 194 13 n.3 (9th Cir. 1991) (“FIRREA did create a claims procedure, and 14 required its exhaustion.”)) 15 Henderson, 986 F.2d at 321 The Plaintiffs have not, and now cannot, satisfy the 16 exhaustion requirement. The FDIC-R set a Claims Bar Date of 17 March 10, 2010 for the AmTrust receivership, and allowed the 18 Plaintiffs until March 7, 2011 to submit their proof of claim and 19 other supporting documentation. This date passed with no 20 submissions of any claim from Plaintiffs. 21 Plaintiffs had actual notice of the Receivership and the 22 Claim Bar Date through the Claims Notice sent to them, in care of 23 their attorney, explaining the mandatory procedures for asserting 24 claims against the Receiver. Plaintiffs’ claims were susceptible 25 of resolution through the administrative claims procedure, as 26 subsection 1821(d)(3)-(4) grants the FDIC-R the authority to make 27 determinations regarding claims against the insolvent 28 corporation. Because the Plaintiffs did not submit a timely 6 1 Proof of Claim to the FDIC-R as required by statute, this court 2 lacks subject matter jurisdiction to hear any of Plaintiffs’ 3 claims. See Intercontinental Travel Marketing Inc. v. Federal 4 Deposit Insurance Corporation, 45 F.3d 1278, 1286 (9th Cir. 1994) 5 (holding that plaintiff-creditor’s failure to exhaust 6 administrative claims process by failing to file a claim before 7 the claims bar date stripped all courts of subject matter 8 jurisdiction over its claims). 9 10 IV. CONCLUSION For the reasons stated above, Defendant’s motion to dismiss 11 (Doc. 6) is GRANTED; and this case is DISMISSED WITH PREJUDICE. 12 Defendant shall submit a proposed order consistent with this 13 memorandum decision by writing five (5) days following electronic 14 service. 15 16 SO ORDERED 17 DATED: July 13, 2011 18 /s/ Oliver W. Wanger_________ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 7
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