Biaggi & Biaggi, P.S.C. v. Federal Deposit Insurance Corporation (FDIC-R), No. 3:2010cv01671 - Document 136 (D.P.R. 2018)
Court Description: OPINION AND ORDER granting 128 Motion to Dismiss for Lack of Jurisdiction. Judgment shall be entered accordingly. Signed by Judge Juan M. Perez-Gimenez on 08/16/2018. (NNR)
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Biaggi & Biaggi, P.S.C. v. Federal Deposit Insurance Corporation (FDIC-R) Doc. 136 IN TH E U N ITED S TATES D ISTRICT COU RT FOR TH E D ISTRICT OF PU ERTO RICO BIAGGI & BIAGGI, P.S.C., Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR WESTERNBANK OF PUERTO RICO, Civil No. 10 -1671 (PG) Defendant. OPIN ION AN D ORD ER Pending before the court is Defen dant Federal Deposit Insurance Corporation’s (“FDIC” or “Defendant”) Motion to Dism iss for Lack of Subject Matter J urisdiction (Docket No. 128 ), Plaintiff Biaggi & Biaggi, P.S.C.’s (“Biaggi” or “Plaintiff”) Opposition thereto (Docket No. 129), and the FDIC’s Reply (Docket No. 130 ). Biaggi’s Opposition includes a Motion for Reconsideration, where Biaggi asks the court to reconsider the J uly 6, 20 18 Order granting the FDIC’s Motion for Sanctions (Docket No. 126). On August 10 , 20 18, the FDIC filed a Response in Opposition (Docket No. 134). However, for the reasons discussed below, the court need not reach the Motion for Reconsideration or the argum ents raised in the FDIC’s Response. I. BACKGROU N D On Septem ber 9, 20 0 9, Biaggi filed suit against Westernbank in the Court of First Instance of the Com m onwealth of Puerto Rico, Mayagüez Part, seeking to collect paym ent of certain invoices for notarial fees and expenses in the am ount of $ 40 1,0 67.92. On April 12, 20 10 , Biaggi filed an am ended com plaint increasing the am ount requested to $ 619,626.45. On April Dockets.Justia.com Civil No. 10 -1671 (PG) 30 , 20 10 , the Com m issioner of Financial Institutions of the Com m onwealth of Puerto Rico closed Westernbank and appointed the FDIC as receiver. The FDIC then rem oved the state court action to this court. See Docket No. 1. A d m i n i s t r a t i v e C l a i m s R e v i e w P r o c e s s u n d e r “FI R R E A ” 1 Sim ultaneously, the FDIC set the wheels of FIRREA’s m andatory claim s review process in m otion. The FDIC thus established a claim s bar date, and advised Biaggi to file any claim s before that deadline. Biaggi tim ely subm itted two proof of claim s. In the first, Biaggi claim ed $ 619,626.45 in notarial fees and expenses, for services rendered by the firm between May of 20 0 1 to Novem ber of 20 0 7; in the second, $ 50 ,320 .0 6 in notarial fees and expenses, for services rendered by the firm from 1999 to 20 0 0 . As part of the adm inistrative review process, the FDIC requested that Biaggi provide all inform ation and docum entary evidence to substantiate its claim s. Biaggi com plied. In the following m onth or so, the FDIC disallowed the claim s an d so notified Biaggi. Biaggi proceeded to litigate the existing suit, as allowed under FIRREA’s § 18 21(d)(6)(B)(ii). To date, Biaggi seeks paym ent of $ 619,626.45 in notarial fees and expenses, plus interest. R e le v a n t P r o c e d u r a l Ev e n t s Under Puerto Rico law, a three-year statute of lim itations governs collection claim s for paym ent of attorney and notarial fees. See P.R. LAWS ANN. tit. 31, § 5297. Since Biaggi’s claim stem m ed from alleged notarial services perform ed from 20 0 1 until 20 0 7, the FDIC m oved for sum m ary judgm ent arguing that the claim was tim e-barred. See Docket No. 19. Biaggi never opposed the FDIC’s sum m ary judgm ent m otion. Subsequently, Magistrate J udge J usto Arenas 1 “FIRREA” is short for the Financial Institutions Reform , Recovery, and Enforcem ent Act of 1989. 2 Civil No. 10 -1671 (PG) issued a Report and Recom m endation siding with the FDIC and recom m ending dism issal of the case. See Docket No. 23. Then, on May 5, 20 11, Biaggi filed an “Opposition to Report and Recom m en dation and Opposition to Motion for Sum m ary J udgm ent” (“Opposition to R&R”) (Docket No. 29). To avoid dism issal, Biaggi restyled its claim as one arising under a “depositum ” agreem ent. To be precise, Biaggi argued that: this case is not properly one of a collection of notarial fees and expen ses as the FDIC believes. Although it is true that the claim asserted had its origin in notarial services and expenses that were rendered or paid by Biaggi & Biaggi, this is not an action to collect the fees and expenses of a notary. Said fees and expen ses were already paid by the bank’s clients through deduction from the proceed of the loans. Instead, this is an action to collect from a bank funds that were held by Westernbank to be rem itted to Biaggi & Biaggi. That relationship entailed either an agency or a depositum contract pursuant to the laws of Puerto Rico. Id. at 6-7. In the Opinion and Order from J uly 11, 20 11, this court noted Biaggi’s change of tune and indicated “this is the first tim e that Biaggi has advanced such a claim and neither the com plaint nor the am ended com plaint m entioned the existen ce of an agency or depositum contract.” (Docket No. 34 at 8 ). Now the FDIC m oves for dism issal under Rule 12(b)(1), arguing that Biaggi’s failure to exhaust adm inistrative rem edies on the depositum contract theory or claim deprives the court of subject m atter jurisdiction. See Docket No. 128 . II. STAN D ARD OF REVIEW Under Federal Rule of Civil Procedure 12(b)(1), a defendant m ay seek dism issal of an action for lack of subject m atter jurisdiction. Rule 12(b)(1) is a “large um brella, overspreading a variety of different types of challenges to subject-m atter jurisdiction.” Valentín v. Hosp. Bella Vista, 254 F.3d 358, 362– 363 (1st Cir. 20 0 1). 3 Civil No. 10 -1671 (PG) In any case, m otions to dism iss brought under Rule 12(b)(1) and 12(b)(6) are subject to the sam e standard of review. See Negrón– Gaztam bide v. Hernández– Torres, 35 F.3d 25, 27 (1st Cir. 1994). “When a district court considers a Rule 12(b)(1) m otion, it m ust credit the plaintiff's wellpled factual allegations an d draw all reasonable inferences in the plaintiff's favor.” Merlonghi v. United States, 620 F.3d 50 , 54 (1st Cir. 20 10 ) (citing Hosp. Bella Vista, 254 F.3d at 363); see also De Leon v. Vornado Montehiedra Acquisition L.P., 166 F. Supp. 3d 171, 173 (D.P.R. 20 16) (quoting Aversa v. United States, 99 F.3d 120 0 , 1210 (1st Cir. 1996)) (courts m ay also consider whatever eviden ce has been subm itted, including depositions and exhibits). Moreover, if the m otion to dism iss is based on the failure to exhaust adm in istrative rem edies, the court m ay resolve factual disputes, as long as they do not entail adjudication on the m erits and the parties have had an opportunity to develop the record. See Bryant v. Rich, 530 F.3d 1368 , 1376 (11th Cir. 20 0 8) (em phasis added). “As courts of lim ited jurisdiction, federal courts have the duty to construe their jurisdiction al grants narrowly.” De Leon, 166 F. Supp. 3d at 173 (citing Destek Grp. v. State of N.H. Pub. Utils. Com m 'n., 318 F.3d 32, 38 (1st Cir. 20 0 3)). “A case is properly dism issed for lack of subject m atter jurisdiction when the court lacks statutory or constitutional power to adjudicate the case.” Prestige Capital Corp. v. Pipelin ers of Puerto Rico, Inc., 849 F. Supp. 2d 240 , 247 (D.P.R. 20 12) (citing Hom e Builders Ass'n of Mississippi, Inc. v. City of Madison, Miss., 143 F.3d 10 0 6, 10 10 (5th Cir. 1998)). Federal subject m atter jurisdiction cann ot be presum ed and the party invoking it has the burden of dem onstrating its existence. See Fabrica de Muebles J .J . Alvarez, Incorporado v. Inversiones Mendoza, Inc., 682 F.3d 26, 32 (1st Cir. 20 12). 4 Civil No. 10 -1671 (PG) III. D ISCU SSION A. FIRREA Fram e w o rk Where, as here, the FDIC acts as receiver, it “succeeds to all the rights, titles, powers, privileges, an d assets of the insured depository institution.” Maldonado– Torres v. F.D.I.C. ex rel. R– G Prem ier Bank, 839 F. Supp. 2d 511, 515 (D.P.R. 20 12) (alteration in original) (citing 12 U.S.C. § 18 21(d)(2)(A)(i)). “FIRREA establishes a m andatory claim s process, which m ust be exhausted by every claim ant seeking paym en t from the assets of the affected institution.” Id. (citing 12 U.S.C. § 1821(d)(13)(D)) (alteration in original). That process was “designed to create an efficient adm inistrative protocol for processing claim s again st failed banks.” Fed. Deposit Ins. Corp. for Doral Bank v. Pedreira-Perez, Civil No. 15-2590 (FAB), 20 18 WL 338850 9, at *2 (D.P.R. J uly 11, 20 18) (quoting Marquis v. FDIC, 965 F.2d 1148, 1154 (1st Cir. 1992)). Like several other circuits, the First Circuit Court of Appeals has held that com pliance with and exhaustion of FIRREA’s adm inistrative rem edies is m andatory. See, e.g., Proal v. J PMorgan Chase Bank, N.A., 641 F. App'x 9, 10 (1st Cir. 20 16); Marquis, 956 F.2d at 1151 (stating that the claim s review process is “m andatory for all parties asserting claim s against failed institutions, regardless of whether lawsuits to enforce these claim s were initiated prior to the appointm ent of a receiver”). 2 FIRREA’s claim review process requires the FDIC to “publish notice that the failed institution’s creditors m ust file [proof of] claim s with the FDIC by a specified date, which m ust be at least ninety days after publication of the notice.” Acosta-Ram irez v. Banco Popular de Puerto Rico, 712 F.3d 14, 19 (1st Cir. 20 13) (citing 12 U.S.C. § 1821(d)(3)(B)(i)). See also 12 U.S.C 2 Although not relevant here, an exception to the adm inistrative claim requirem ent is reserved for claim ants that do not receive notice of the appointm ent of the receiver in tim e to file their claim s before the claim s bar date. See, e.g., FDIC v. Estrada Colon, 848 F. Supp. 2d 20 6, 210 (D.P.R. 20 12); but see Lozada v. FDIC, Civil No. 10 -1644 (J AG), 20 11 WL 2199369, at * 1 (D.P.R. J un e 6, 20 11) (stating that the exception does not apply to claim ants who are aware of the appointm ent of a receiver but do not receive notice of the filing deadline). 5 Civil No. 10 -1671 (PG) § 18 21(d)(3)(C) (setting forth notice-m ailing requirem ent with respect to creditors that appear on the depository institution’s books). The deadline to file proof of claim s is also known as the claim s bar date. If a tim ely claim is filed, then the FDIC has 18 0 days to approve or disallow it. See Acosta-Ram irez, 712 F.3d at 19 (citing 12 U.S.C. § 1821(d)(5)(A)(i)). “Claim ants then have sixty days from the date of the disallowance or from the expiration of the 18 0 -day adm inistrative decision deadline to seek judicial review in an appropriate federal district court (or to seek adm in istrative review).” Id. (citing 12 U.S.C. § 1821(d)(6)(A)). After the sixty-day judicial or adm inistrative review deadlin e expires, the FDIC’s disallowance becom es final and “claim ant[s] shall have no further rights or rem edies with respect to such claim .” Id. at n.8 (citing 12 U.S.C. § 1821(d)(6)(B)). As relevant here, FIRREA curbs district courts’ jurisdiction over claim s or actions where the plaintiffs fail to com ply with the adm in istrative claim s review process explained above. See 12 U.S.C. § 18 21(d)(13)(D). Specifically, the statute provides that: Except as otherwise provided in this subsection, no court shall have jurisdiction over— (i) any claim or action for paym ent from , or any action seeking a determ ination of rights with respect to, the assets of any depository institution for which the [FDIC] has been appointed receiver, including assets which the [FDIC] m ay acquire itself as such receiver; or (ii) any claim relating to any act or om ission of such institution or the [FDIC] as receiver. 12 U.S.C. § 1821(d)(13)(D). “In other words, failure to file a claim prior to the bar date, or otherwise exhaust FIRREA’s statutory claim s process, strips courts of the power to hear the claim .” Fed. Deposit Ins. Corp. v. Caban-Muniz, 216 F. Supp. 3d 255, 258 (D.P.R. 20 16) (citing Dem elo v. U.S. Bank Nat. Ass'n, 727 F.3d 117, 122 (1st Cir. 20 13)). In such cases, courts should dism iss the claim s with prejudice. See Fed. Deposit Ins. Corp. for Doral Bank v. Pedreira-Perez, 6 Civil No. 10 -1671 (PG) Civil No. 15-2590 (FAB), 20 18 WL 338850 9, at *3 (citing, am ong others, FDIC v. Negron-Ocasio, Civil No. 15-1888 (PAD), 20 16 WL 3920 173 (D.P.R. J uly 18, 20 16); Estrada-Colon, 8 48 F. Supp. 2d at 212-13; FDIC v. Estrada-Rivera, 8 13 F. Supp. 2d 256, 269-79 (D.P.R. 20 11)). B. Th e D is m is s al D e bate The FDIC raises several key points in support of its dism issal request (Docket No. 128 at 4-7 and 16). First, that Biaggi neither specified a depositum contract theory or claim adm in istratively nor alleged one in the original or am ended com plaint. Second, that when Plaintiff articulated the theory at issue in the Opposition to the R&R filed on May 5, 20 11 (Docket No. 29), it had already subm itted and com pleted FIRREA’s claim s review process. Third, that the record contains several adm issions from Biaggi that confirm so. As previously noted, the court long ago found that neither the com plaint nor am ended com plaint filed by Biaggi m entioned the existence of an agency or depositum contract, but rather, that Biaggi first advanced such claim or theory in the Opposition to the R&R (Docket No. 34 at 8 ). Shortly thereafter, Biaggi agreed with the court and stated: [T]he court is absolutely correct that the argum ent that defendant’s obligation is one of agency or bailee was first raised by the undersigned in the opposition to the m otion for a sum m ary judgm ent. Docket No. 35 at 3 ¶ 5 (a). Recently, Biaggi said that “[ s ] a id s tate m e n t is s till co rre ct s in ce th e u n d e rs ign e d [ atto rn e y] d id n o t file o r p articip ate d in th e p ro ce e d in gs in lo cal co u rt.” Docket No. 129 at 9 (em phasis added). However, it is well settled that “the neglect, of an attorney acting within the scope of his or her authority is attributable to the client.” Rivera-Velazquez v. Hartford Steam Boiler Inspection & Ins. Co., 750 F.3d 1, 6 (1st Cir. 20 14) (quoting Nansam ba v. N. Shore 7 Civil No. 10 -1671 (PG) Med. Ctr., In c., 727 F.3d 33, 38 (1st Cir. 20 13)). In other words, attorneys act for their clients and parties are accountable for the acts or om issions of their counsel. See Skrabec v. Town of N. Attleboro, 878 F.3d 5, 9 n. 2 (1st Cir. 20 17) (citing Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 50 7 U.S. 380 (1993)); Nansam ba, 727 F.3d at 38. Accordingly, the court shall not turn a blind eye to the facts or the record on account of a form er counsel’s oversights. In this regard, the court finds Biaggi’s latest excuse in support of its effort to avoid dism issal unavailing. Now, Biaggi also posits that “[a]lthough the am ended com plaint did not expressly m ention a bailm ent or depositum contract, it did state sufficient facts to reach that legal conclusion.” Docket No. 129 at 9. Biaggi further argues that insofar as the am ended com plaint was attached to the proof of claim filed with the FDIC, it exhausted FIRREA’s adm inistrative rem edies with respect to the contract or theory in question. 3 The court disagrees. Even after an expansive reading of Biaggi’s am ended com plaint, the court finds that it did not set forth allegations referring to a depositum contract claim . See Am . Com plaint (Docket No. 7-1 at 36-40 ). It sim ply did not contain sufficient well-pleaded facts to allow the court (or the FDIC) to infer Plaintiff’s newly concocted theory of recovery. 4 Merely attaching the am en ded 3 The court notes that Biaggi, despite having the burden to dem onstrate the existence of subject m atter jurisdiction , did not cite or discuss a single case or legal authority in support of its argum ents. This pales in com parison to the panoply of on-point cases and reasoned analysis offered by the FDIC in the m otion to dism iss and the reply. The problem for Biaggi is that “[j]udges are not m indreaders. Consequently, a litigant has an obligation to spell out its argum ents squarely and distinctly, or else forever hold its peace.” Echevarría v. AstraZeneca Pharm aceutical LP, 856 F.3d 119, 139 (1st Cir. 20 17) (quotin g Un ited States v. Zan nino, 895 F.2d 1, 17 (1st Cir. 1990 )). This includes “highlighting the relevan t facts and analyzing on-point authority.” Rodriguez v. Mun. of San J uan , 659 F.3d 168 , 175 (1st Cir. 20 11) (citation om itted). The upshot is that “issues adverted to in a perfunctory m an ner, unaccom pan ied by som e effort at developed argum entation , are deem ed waived.” Zan nino, 895 F.2d at 17. 4 According to the Civil Code of Puerto Rico, “[a] depositum is constituted from the tim e a person receives a thing belonging to another with the obligation of keeping and return in g it.” P.R. LAWS ANN . tit. 31, § 4621. See J ewelers Mut. Ins. Co. v. N. Barquet, Inc., 410 F.3d 2, 12 (1st Cir. 20 0 5) (discussing elem ents of a depositum contract under Puerto Rico law and m ention ing several contexts in which such contracts can arise). As the parties m ay recall, the court previously determ ined that there was a depositum contract between Biaggi and Western ban k, and thus, dism issal of Biaggi’s interest claim was inappropriate. See Docket No. 38 at 7. 8 Civil No. 10 -1671 (PG) com plaint to the adm inistrative proof of claim could not have given, and did not give the FDIC fair notice of the legal theory on which Plaintiff now seeks relief. For this reason, Biaggi did not exhaust adm inistrative rem edies on the depositum contract claim or theory, and thus, the court lacks jurisdiction to consider it. See Font-Llacer-de-Pueyo v. FDIC, 932 F. Supp. 2d 265, 269– 70 (D.P.R. 20 13) (finding that form er em ployee of failed bank for which the FDIC was appointed receiver failed to exhaust FIRREA’s adm inistrative rem edies with respect to retaliation claim under Puerto Rico law, where proof of claim described claim as one of “discrim ination in em ploym ent due to age,” and did not m ention or allege retaliation); Colem an v. FDIC, 826 F. Supp. 31, 32 (D. Mass. 1993) (dism issing new claim s and legal theories asserted in am en ded com plaint that had not been presented first to the FDIC through FIRREA’s adm inistrative claim s process); Hibyan v. FDIC, 812 F. Supp. 271, 275 (D. Me. 1993) (dism issing claim s based on one contractual provision where plaintiff had presented another contractual provision to the FDIC as basis for claim ); see also Winkal Managem ent, LLC v. FDIC, 288 F. Supp. 3d 33 (D.D.C. 20 17) (dism issing claim s based on theories of unjust enrichm ent and prom issory estoppel and fin ding that plaintiff could not sidestep FIRREA’s statutory lim itations by raising alternative contract claim s); Westberg v. FDIC, 926 F. Supp. 2d 61, 70 – 71 (D.D.C. 20 13), aff'd, 741 F.3d 130 1 (D.C. Cir. 20 14) (quoting BHC Interim Funding II, L.P. v. FDIC, 8 51 F. Supp. 2d 131, 138, n. 4 (D.D.C. 20 12)) (citing cases) (“Where a FIRREA com plaint alleges entirely new legal theories that are different than those reflected in the adm inistrative proof of claim , the Court is without subject m atter jurisdiction to consider the new causes of action.”); J ahn v. FDIC, 828 F. Supp. 2d 30 5, 317 (D.D.C. 20 11) (dism issing claim s for civil conspiracy and conversion where only a fraudulent transfer claim was subm itted to the FDIC as part of claim s review process). Nevertheless, upon analyzing the allegations in Biaggi’s am ended com plaint, the court now concludes that the elem ents of a depositum contract were not plead. 9 Civil No. 10 -1671 (PG) It is pellucid that Biaggi m ade a strategic decision to press a depositum contract theory or claim in order to avoid dism issal of the collection claim on statute of lim itations grounds. But since the depositum contract claim was not adm inistratively exhausted, this strategy fails as well. Biaggi, grasping at straws when all other avenues of relief have been closed, “cannot now disavow [its] earlier decision an d attem pt to change horses m idstream in hopes of finding a swifter steed.” Genereux v. Raytheon Co., 754 F.3d 51, 59 (1st Cir. 20 14). IV. CON CLU SION For the reasons explained above, the court finds that it lacks subject m atter jurisdiction over Biaggi’s purported depositum contract claim . The FDIC’s m otion to dism iss under Rule 12(b)(1) (Docket No. 128) is thus GRAN TED , and the case is hereby D ISMISSED W ITH PREJU D ICE. J udgment shall be entered accordingly. IT IS SO ORD ERED In San J uan, Puerto Rico, August 16, 20 18. S/ J UAN M. PÉREZ-GIMÉNEZ JU AN M. PEREZ-GIMEN EZ SEN IOR U .S. D ISTRICT JU D GE 10
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