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Kelly v. Federal Deposit Insurance Corp.

United States District Court, E.D. Louisiana

December 18, 2019

RUSSELL KELLY
v.
FEDERAL DEPOSIT INSURANCE CORPORATION

         SECTION L (2)

          ORDER & REASONS

          ELDON E. FALLON, U.S. DISTRICT COURT JUDGE

         Before the Court is Defendant FDIC's Motion to Dismiss for Lack of Subject Matter Jurisdiction. R. Doc. 26. The Motion is unopposed in the record, but Plaintiff did record his opposition during oral argument on Wednesday, December 18, 2019. Having considered the parties' arguments and the relevant law, the Court now rules as follows.

         I. BACKGROUND

         On August 14, 2014, Plaintiff Russell Kelly filed a “Petition for Damages, Predatory Lending, and Racial Discrimination” against First NBC Bank in the Civil District Court for the Parish of Orleans, seeking damages for alleged torts and misrepresentations by First NBC. On September 3, 2014, the parties filed a joint motion to dismiss, and the matter was dismissed with prejudice. R. Doc. 9-4. Later, on April 28, 2017, First NBC was declared insolvent and FDIC-R was appointed as Receiver of First NBC, succeeding to all rights, titles, powers and privileges of First NBC.

         Over a year later, Plaintiff Russell Kelly filed two Motions: (1) on October 26, 2018, he filed a “Motion to Enforce Settlement, ” and (2) on November 9, 2018, he filed an “Amended Motion to Enforce Settlement Agreement, Change of Possession of Property Restraining Order and Transfer of Deed, ” in which he sought a temporary restraining order against First NBC. R. Doc. 9-7. FDIC-R removed the action to this Court on November 29, 2018. R. Doc. 1.

         On January 17, 2019, Kelly filed a motion for a temporary restraining order and preliminary injunction, seeking relief from eviction from a home located at 6060 Cartier Avenue. R. Doc. 5. Kelly had owned that property from 2007 until he lost it to FDIC-R through foreclosure. On December 6, 2017, Gaea Development, LLC purchased the property from FDIC-R at auction. The property was sold subject to a lease between Kelly and FDIC-R, which had expired on November 30, 2018. The Court denied Kelly's motion for a temporary restraining order and preliminary injunction during a hearing on January 22, 2019. R. Doc. 8.

         On March 7, 2019, this case was stayed pending exhaustion of administrative remedies pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. R. Doc. 12. On April 17, 2019, Plaintiff Kelly filed a Motion to Lift Stay, R. Doc. 18, and Motion for Return of Plaintiff's $1, 500 Damage Deposit, R. Doc. 19. Intervenor Gaea Development, LLC filed an opposition to the Motion for Return of Plaintiff's $1, 500 Damage Deposit. R. Doc. 20. Because the 180-day stay period expired on September 7, 2019 and nothing new had been filed in this matter, the Court scheduled a status conference to check in with the parties. R. Doc. 21. At the September 26, 2019 telephone status conference, counsel representing FDIC-R and Gaea Development, LLC participated, but Plaintiff did not, even though Plaintiff was given timely notice of the conference. R. Doc. 23. During the status conference, the Court instructed FDIC-R to file a motion to dismiss in this matter. R. Doc. 23.

         II. PRESENT MOTION

         Pursuant to the Court's instruction at the September 26, 2019 status conference, FDIC-R has filed a motion to dismiss the claims of Plaintiff for lack of subject matter jurisdiction. R. Doc. 26 at 1. Specifically, FDIC-R argues the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) sets forth a mandatory administrative procedure that requires all claims involving the assets of a failed depository institution (like First NBC) to be submitted to the receiver (in this case, FDIC-R) for review and approval. R. Doc. 26 at 1 (citing 12 U.S.C. § 1821(d)(3)-(5)). Moreover, FIRREA requires that claims must be submitted on or before the claims bar date set by the FDIC-R and any claim not filed by the bar date must be disallowed by FDIC-R as untimely. R. Doc. 26 at 1 (citing 12 U.S.C. § 1821(d)(5)(C)(i)). Additionally, if FDIC-R disallows a claim, then the claimant must seek judicial relief within 60 days of the disallowance; otherwise, the “disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.” R. Doc. 26 at 1-2 (quoting 12 U.S.C. § 1821(d)(6)). FDIC-R argues that because Plaintiff failed to timely submit his proofs of claim and failed to timely recommence judicial proceedings in accordance with FIRREA, he cannot seek judicial relief. R. Doc. 26 at 2. Moreover, even if Plaintiff had complied with the administrative review process, FIRREA would still divest the Court of subject matter jurisdiction over Plaintiff's claims for injunctive relief against FDIC-R and for rescission of the sale of property sold by FDIC-R as part of its receivership. R. Doc. 26 at 2 (citing 12 U.S.C. § 1821(j)). FDIC-R thus contends Plaintiff's claims must be dismissed with prejudice for lack of subject matter jurisdiction. R. Doc. 26 at 2.

         Plaintiff did not timely file an opposition to this Motion. Plaintiff did appear in-court for oral argument and explained the series of events leading up to the alleged settlement he reached with First NBC. Plaintiff also contends he met with representatives of FDIC-R and submitted his claims to them in June 2017 and in subsequent meetings, but has provided no evidence to substantiate these claims. In fact, although Plaintiff states that his emails regarding these meetings with FDIC-R representatives are on the record, the Court only has a record of several emails between Plaintiff and First NBC representatives prior to First NBC being declared insolvent in April 2017. See R. Doc. 1-4. Moreover, even if Plaintiff did timely submit his claims to FDIC-R, he does not explain why he did not timely recommence judicial proceedings in accordance with FIRREA. Finally, even if Plaintiff did comply with the administrative review process, Plaintiff does not explain how the Court has subject matter jurisdiction over his claims for injunctive relief against FDIC-R and for rescission of the sale of property sold by FDIC-R pursuant to 12 U.S.C. § 1821(j).

         III. LAW AND ANALYSIS

         FIRREA sets forth the rights and duties that govern the receivership of a failed depository institution. See 12 U.S.C. § 1821(d). Through FIRREA, Congress established a claim administration and review process by which all claims asserted against the assets of the failed institution must be submitted to FDIC-R, which has sole discretion to determine whether the claims will be allowed or disallowed. 12 U.S.C. § 1821(d)(3)-(5); see also Meliezer v. Resolution Tr. Co., 952 F.2d 879, 881 (5th Cir. 1992) (“To assure that [FDIC-R] could deal expeditiously with failed depository institutions, Congress created a new claims determination procedure by which the creditors of a failed institution may be required to first present their claims to the Receiver for administrative consideration before pursuing a judicial remedy.”). “The primary purpose of FIRREA's exhaustion scheme” is to allow FDIC-R “to perform its statutory function of promptly determining claims so as to quickly and efficiently resolve claims against a failed institution without resorting to litigation.” Meliezer, 952 F.2d at 883 (quoting Rosa v. Resolution Tr. Corp., 938 F.2d 383, 396 (3d Cir. 1991)).

         Pursuant to FIRREA's administrative claims process, the receiver (in this case, FDIC-R) “promptly publishes a notice to the depository institution's creditors to present their claims, together with proof, to the receiver by a date specified in the notice which shall not be less than 90 days after the publication of such notices . . . .” 12 U.S.C. § 1821(d)(3)(B)(i). Notice must also be mailed to any creditor shown on the failed institution's books, but this requirement does not apply to anyone who is not so listed at the time of FDIC-R's appointment. 12 U.S.C. § 1821(d)(3)(C); Jill Corp. v. Resolution Tr. Corp. for C. Savings & Loan Ass'n, F.A., Civ.A. No. 91-1566, 1991 WL 148589, at *3 (E.D. La. July 29, 1991) (holding that “§ 1821(d)(3)(C) [was] not applicable to plaintiff” because it “was not listed as a creditor on [the failed] institution's books at the time of the [receiver's] appointment”). FIRREA requires that claimants submit all of their claims ...


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