-JMA Sharma v. Federal Deposit Insurance Corporation et al, No. 3:2010cv00133 - Document 8 (S.D. Cal. 2011)
Court Description: ORDER Granting (Doc. 5 ) Defendant's Motion to Dismiss and Dismissing Action Without Prejudice. The FDIC's motion to dismiss is Granted. The complaint is Dismissed Without Prejudice. Signed by Judge M. James Lorenz on 1/3/2011. (All non-registered users served via U.S. Mail Service) (srm)
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-JMA Sharma v. Federal Deposit Insurance Corporation et al Doc. 8 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 SATANAND SHARMA et al., 11 Plaintiffs, 12 v. 13 FEDERAL DEPOSIT INSURANCE 14 CORPORATION, 15 Defendant. _________________________________ ) ) ) ) ) ) ) ) ) ) ) Civil No. 10cv133-L(JMA) ORDER GRANTING DEFENDANT’S MOTION TO DISMISS AND DISMISSING ACTION WITHOUT PREJUDICE 16 17 Plaintiffs filed this action pursuant to the Administrative Procedure Act, 5 U.S.C. § 501 et 18 seq. (“APA”) to obtain an order directing the Federal Deposit Insurance Corporation (“FDIC”) 19 to enforce against third parties injunctions obtained in unrelated litigation. The FDIC filed a 20 motion to dismiss, which Plaintiffs did not oppose. For the reasons which follow, the FDIC’s 21 motion is GRANTED. 22 “If an opposing party fails to file papers in the manner required by Civil Local Rule 23 7.1(e)(2), that failure may constitute a consent to the granting of a motion or other request for 24 ruling by the court.” Civ. Loc. R. 7.1(f)(3). “Failure to follow a district court’s local rules is a 25 proper ground for dismissal.” Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 1995) (dismissal of a 26 pro se prisoner’s complaint pursuant to local rule for failure to file an opposition to a motion to 27 dismiss). 28 “Before dismissing the action, the district court is required to weigh several factors: (1) 09cv2813 Dockets.Justia.com 1 the public's interest in expeditious resolution of litigation; (2) the court's need to manage its 2 docket; (3) the risk of prejudice to the defendants; (4) the public policy favoring disposition of 3 cases on their merits; and (5) the availability of less drastic sanctions.” Id. (internal quotation 4 marks and citations omitted). The court is mindful that “[p]ublic policy favors disposition of 5 cases on the merits,” which weighs against dismissal. Pagtalunan v. Galaza, 291 F.3d 639, 643 6 (9th Cir. 2002). Nevertheless, dismissal is appropriate in cases where other factors support it. 7 See, e.g., id. at 643; Yourish v. Cal. Amplifier, 191 F.3d 983, 990, 992 (9th Cir. 1999). “The 8 public’s interest in expeditious resolution of litigation always favors dismissal.” Yourish, 191 9 F.3d at 990. Furthermore, “[i]t is incumbent upon the Court to manage its docket without being 10 subject to routine noncompliance of litigants such as” Plaintiffs in this case. See Pagtalunan, 11 291 F.3d at 642. This factor therefore also favors dismissal. Next, “the risk of prejudice to the 12 defendant is related to plaintiff’s reason for defaulting in failing to timely” comply with the due 13 dates established by local rules. See Yourish, 191 F.3d at 991. Plaintiffs have not taken any 14 action in this case since filing the complaint and proof of service of summons, and they have 15 offered no excuse for their lack of activity and the resulting delay. “Unnecessary delay 16 inherently increases the risk that witnesses’ memories will fade and evidence will become stale.” 17 Pagtalunan, 291 F.3d at 643. The prejudice factor, supported by unexplained and lengthy delay, 18 also favors dismissal in this case. Less drastic sanctions short of outright dismissal - such as a 19 formal reprimand, imposition of costs or attorney fees, or an adjudication of the motion without 20 the benefit of plaintiffs' arguments in opposition are available. However, Plaintiffs have not 21 presented any argument why they should receive the benefit of the lesser sanctions in light of 22 their complete failure to prosecute this case. Accordingly, this factor is neutral at best. Based on 23 the foregoing, FDIC’s motion to dismiss is GRANTED. The complaint is DISMISSED 24 WITHOUT PREJUDICE pursuant to Civil Local Rule 7.1(f)(3) and Federal Rule of Civil 25 Procedure 41(b) for failure to oppose the motion. 26 In the alternative, the court considers the motion on the merits without the benefit of 27 Plaintiffs’ opposition. Plaintiffs allege that they borrowed money from Imperial Creditcorp, a 28 division of Imperial Bank, and secured the loan with a deed of trust. Subsequently, National 2 09cv2813 1 Enterprises, Inc. (“NEI”) purchased the debt from Imperial Creditcorp, a federally insured 2 institution. Because Plaintiffs did not pay the debt when due, NEI filed a collection action in 3 State court and obtained a judgment in 1997. NEI has attempted to collect on the judgment since 4 then. 5 Plaintiffs requested the FDIC to enforce two injunctions issued in unrelated litigation to 6 stop NEI from enforcing its judgment against Plaintiffs. In November 2000, the FDIC obtained 7 an injunctive order against Roque de la Fuente pursuant to 12 U.S.C. Section 1818(e), removing 8 him from the board of the First International Bank and precluding him from participating in any 9 conduct of the affairs of any federally insured depository institutions (“Injunctive Order”). 10 (Compl. at 6 & Ex. 3.) In the process of deciding whether to remove Mr. de la Fuente, the FDIC 11 concluded that NEI was controlled by him for purposes of Regulation O, which places limits on 12 loans to insiders. (Id. Ex. 3.) In another lawsuit, the FDIC, in its capacity as a receiver of an 13 insolvent federal savings bank, filed a cross-claim against NEI alleging that NEI purchased an 14 obligation owing to the failed institution by fraudulently representing that it was eligible to 15 acquire the obligation. (See Nat’l Enter., Inc. v. Joseph-Burnham P’ship et al., U.S. Dist. Ct. 16 S.D. Cal. case no. 97cv1185-B(LAB), docket no. 23 (Cross-Claim Against Nat’l Enter., Inc.).) 17 After a settlement conference, in 1998 the court entered an injunction permanently restraining 18 NEI and others from engaging in business with the FDIC, including a prohibition of purchasing 19 assets directly from the FDIC (“Stipulated Injunction”). (Id. docket no. 200, 201, 210 & 211; 20 see also Compl. at 7-8 & Ex. 4.) Because the FDIC declined Plaintiffs’ request to enforce the 21 two injunctive orders so as to preclude NEI from enforcing its judgment against Plaintiffs, they 22 filed the instant action pursuant to the APA. 23 The APA contains comprehensive provisions for judicial review of agency actions. 24 Heckler v. Chaney, 470 U.S. 821, 828 (1985) citing 5 U.S.C. §§ 701-706. A person “adversely 25 affected or aggrieved” by agency action is entitled to judicial review of the action, including 26 failure to act, as long as the action is a “final agency action for which there is no other adequate 27 remedy in court.” Id. citing 5 U.S.C. §§ 702 & 704. The APA applies “except to the extent that 28 [¶] (1) statutes preclude judicial review; or [¶] (2) agency action is committed to agency 3 09cv2813 1 discretion by law.” 5 U.S.C. § 701(a); Heckler, 470 U.S. at 828. The FDIC argues that these 2 exceptions preclude judicial review in this case. 3 The FDIC’s decision not to enforce the Injunctive Order is not reviewable pursuant to the 4 exception under 5 U.S.C. Section 701(a)(1). This exception “requires construction of the 5 substantive statute involved to determine whether Congress intended to preclude judicial review 6 of certain decisions.” Heckler, 470 U.S. at 828. The Injunctive Order was issued pursuant to 12 7 U.S.C. Section 1818(e). Section 1818 contains a provision which expressly precludes judicial 8 review of the FDIC’s decision not to enforce the injunction: 9 10 11 The appropriate Federal banking agency may in its discretion apply to the United States district court . . . for the enforcement of any effective and outstanding notice or order issued under this section . . ., and such courts shall have jurisdiction and power to order and require compliance herewith; but except as otherwise provided in this section . . . no court shall have jurisdiction to affect by injunction or otherwise the . . . enforcement of any notice or order under any such section . . .. 12 13 12 U.S.C. § 1818(i)(1) (emphasis added). Accordingly, because section 1818(i) precludes 14 judicial review of the FDIC’s decision not to enforce the Injunctive Order, review is also 15 precluded by 5 U.S.C. Section 701(a)(1).1 16 The FDIC’s decision not to enforce the Stipulated Injunction is not reviewable pursuant 17 to 5 U.S.C. Section 701(a)(2). An agency’s decision not to enforce “is a decision generally 18 committed to an agency’s absolute discretion.” Heckler, 470 U.S. at 831. Such decisions are 19 generally unsuitable for judicial review for many reasons: 20 21 22 23 24 First, an agency decision not to enforce often involves a complicated balancing of a number of factors which are peculiarly within its expertise. Thus, the agency must not only assess whether a violation has occurred, but whether agency resources are best spent on this violation or another, whether the agency is likely to succeed if it acts, whether the particular enforcement action requested best fits the agency's overall policies, and, indeed, whether the agency has enough resources to undertake the action at all. An agency generally cannot act against each technical violation of the statute it is charged with enforcing. The agency is far better equipped than the courts to deal with the many variables involved in the proper ordering of its priorities. 25 26 1 Even if the APA provided for judicial review, it would be unavailing in this case. The Injunctive Order applies to Mr. de la Fuente, but Plaintiffs’ debt was acquired by NEI. (Cf. 27 Compl. at 6 & Ex. 3 with id. at 9.) Furthermore, the Injunctive order enjoins participation in institution.” (Id. at 28 conduct of the affairs of any “insured depository “insured depository 6.) When NEI purchased the obligation, it belonged to NEI rather than an institution.” 4 09cv2813 1 2 Id. at 831-32. Furthermore, when review is requested of an agency’s failure to act, judicial 3 review would often lack the necessary focus: 4 5 6 [W]hen an agency refuses to act it generally does not exercise its coercive power over an individual's liberty or property rights, and thus does not infringe upon areas that courts often are called upon to protect. Similarly, when an agency does act to enforce, that action itself provides a focus for judicial review, inasmuch as the agency must have exercised its power in some manner. The action at least can be reviewed to determine whether the agency exceeded its statutory powers. 7 8 Id. at 832 (emphasis in original). For these reasons, an agency’s decision not to take 9 enforcement action is presumed immune from judicial review under section 701(a)(2). Id. The 10 FDIC’s decision not to enforce the Stipulated Injunction as requested by Plaintiffs is therefore 11 presumptively excluded from review under the APA. 12 “[T]he presumption may be rebutted where the substantive statute has provided guidelines 13 for the agency to follow in exercising its enforcement powers.” Id. at 832-33 (footnote omitted). 14 “Congress may limit an agency's exercise of enforcement power if it wishes, either by setting 15 substantive priorities, or by otherwise circumscribing an agency's power to discriminate among 16 issues or cases it will pursue.” Id. at 833. If the Congress 17 18 19 has indicated an intent to circumscribe agency enforcement discretion, and has provided meaningful standards for defining the limits of that discretion, there is “law to apply” under § 701(a)(2), and courts may require that the agency follow that law; if it has not, then an agency refusal to institute proceedings is a decision “committed to agency discretion by law” within the meaning of that section. 20 Id. at 834-35. Plaintiffs have not pointed to any statute circumscribing the FDIC’s enforcement 21 discretion. To the contrary, upon review of the pertinent statutes, it appears that they do not 22 place any limitation on the FDIC’s exercise of its enforcement authority as it applies in the 23 context of this case. See 12 U.S.C. § 1811 et seq. Because FDIC’s authority to enforce the 24 Stipulated Injunction is entirely discretionary, it is not subject to review under the APA. See 25 Heckler, 470 U.S. at 837-38.2 26 2 Even if judicial review were available, it be unavailing. The Stipulated 27 Injunction precludes NEI from certain dealings directlywouldthe FDIC. (Compl. Ex. 4.) To the with their claim on NEI’s current debt collection 28 extent Plaintiffs baseand do not directly involve the FDIC. To theactivities, the activities areon directed at Plaintiffs extent the claim is based 5 09cv2813 1 For the foregoing reasons, the FDIC’s motion to dismiss is granted on the alternative 2 ground that its decision not to enforce the injunction is excepted from review under the APA. 3 IT IS SO ORDERED. 4 5 DATED: January 3, 2011 6 M. James Lorenz United States District Court Judge 7 COPY TO: 8 HON. JAN M. ADLER 9 UNITED STATES MAGISTRATE JUDGE 10 ALL PARTIES/COUNSEL 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 FDIC directly 27 NEI’s purchase of the obligation, the obligation was not purchased from thepurchased the but from an FDIC-insured institution. (Compl. at 9.) Moreover, NEI allegedly 28 obligation in 1996 (id.), whereas the Stipulated Injunction was not issued until 1998 (Id. at 7 & Ex. 4). 6 09cv2813
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