760 F.3d 1056 (9th Cir. 2014), 12-15368, Rundgren v. Washington Mutual Bank, FA

Docket Nº:12-15368
Citation:760 F.3d 1056
Opinion Judge:IKUTA, Circuit Judge:
Party Name:TODD RUNDGREN; MICHELE C. RUNDGREN, individually and as Trustees respectively of the Todd Rundgren Revocable Trust, dated November 1, 2005 and the Michele C. Rundgren Revocable Trust, dated October 6, 2005, Plaintiffs-Appellants, v. WASHINGTON MUTUAL BANK, FA, a Federal Savings Bank; JPMORGAN CHASE BANK NA, a Delaware corporation; DOES, 1-30, Defen
Attorney:Gary Victor Dubin (argued) and Frederick John Arensmeyer, Dubin Law Offices, Honolulu, Hawaii, for Plaintiffs-Appellants. Paul D. Alston (argued) and Tina L. Colman, Alston Hunt Floyd & Ing, Honolulu, Hawaii; Jeffrey H. K. Sia, Diane W. Wong, and David A. Gruebner, Ayabe, Chong, Nishimoto, Sia & ...
Judge Panel:Before: William A. Fletcher, Sandra S. Ikuta, and Andrew D. Hurwitz, Circuit Judges. Opinion by Judge Ikuta.
Case Date:July 29, 2014
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1056

760 F.3d 1056 (9th Cir. 2014)

TODD RUNDGREN; MICHELE C. RUNDGREN, individually and as Trustees respectively of the Todd Rundgren Revocable Trust, dated November 1, 2005 and the Michele C. Rundgren Revocable Trust, dated October 6, 2005, Plaintiffs-Appellants,

v.

WASHINGTON MUTUAL BANK, FA, a Federal Savings Bank; JPMORGAN CHASE BANK NA, a Delaware corporation; DOES, 1-30, Defendants-Appellees

No. 12-15368

United States Court of Appeals, Ninth Circuit

July 29, 2014

Argued and Submitted, Honolulu, Hawaii: June 10, 2014.

Petition for certiorari filed at, 10/27/2014

Page 1057

Appeal from the United States District Court for the District of Hawaii. D.C. No. 1:09-cv-00495-JMS-KSC. J. Michael Seabright, District Judge, Presiding.

FIRREA

The panel affirmed the district court's dismissal of Todd and Michele Rundgren's claims against JPMorgan Chase Bank, in a case arising out of allegedly fraudulent acts by Washington Mutual Bank, which was placed into the receivership of the Federal Deposit Insurance Company.

The FDIC transferred certain WaMu assets, including the Rundgrens' mortgage, to Chase. The panel held that because WaMu was placed into the receivership of the FDIC and the Rundgrens failed to exhaust the administrative remedies provided by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as required by 12 U.S.C. § 1821(d)(13)(D), the district court correctly determined it lacked jurisdiction to hear the Rundgrens' claims. The panel concluded that the claims in the Rundgrens' complaint are " claims" for purposes of § 1821(d)(13)(D) and that their claims " relate to any act or omission" of WaMu.

Gary Victor Dubin (argued) and Frederick John Arensmeyer, Dubin Law Offices, Honolulu, Hawaii, for Plaintiffs-Appellants.

Paul D. Alston (argued) and Tina L. Colman, Alston Hunt Floyd & Ing, Honolulu, Hawaii; Jeffrey H. K. Sia, Diane W. Wong, and David A. Gruebner, Ayabe, Chong, Nishimoto, Sia & Nakamura, Honolulu, Hawaii for Defendant-Appellee JPMorgan Chase Bank.

Before: William A. Fletcher, Sandra S. Ikuta, and Andrew D. Hurwitz, Circuit Judges. Opinion by Judge Ikuta.

OPINION

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IKUTA, Circuit Judge:

This appeal requires us to consider whether the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73, 103 Stat. 183, stripped the district court of jurisdiction over Todd and Michele Rundgren's claims arising out of allegedly fraudulent acts by Washington Mutual Bank (WaMu). Because WaMu was placed into the receivership of the Federal Deposit Insurance Corporation (FDIC), and the Rundgrens failed to exhaust the administrative remedies provided by FIRREA, the district court correctly determined it lacked authority to hear the Rundgrens' claims. See 12 U.S.C. § 1821(d)(13)(D).

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I

In considering this facial challenge to the district court's subject matter jurisdiction, we assume the veracity of the Rundgrens' allegations. See Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). In early 2005, the Rundgrens obtained a loan secured by a mortgage in favor of Countrywide Home Loans, Inc, on their property in Kilauea, Hawaii. Three years later, the Rundgrens refinanced their mortgage with WaMu for around $3,000,000. According to the Rundgrens, the loan refinancing was tainted by WaMu's numerous fraudulent acts. For example, the Rundgrens allege that WaMu falsified the loan application, highly exaggerated the Rundgrens' income and assets without their knowledge, misled the Rundgrens as to the terms of the note, secured a false appraisal, and rushed them through the signing process, among other things.

WaMu was later seized by the Office of Thrift Supervision and placed into the receivership of the FDIC. The FDIC then transferred certain WaMu assets, including the Rundgrens' mortgage, to defendant JPMorgan Chase Bank, N.A. (Chase) under a Purchase and Assumption Agreement. Pursuant to this agreement, the FDIC retained most liabilities associated with those assets.1

After Chase determined that the Rundgrens were in default on their loan, Chase accelerated the payments secured by the mortgage and notified the Rundgrens that a non-judicial foreclosure sale would occur on August 26, 2009. In response, the Rundgrens sent Chase a letter stating that " they each hereby timely exercise their right to cancel said referenced loan transaction and mortgage and promissory note" based on allegations that Chase and WaMu violated state and federal law.

The Rundgrens then sued Chase and WaMu in Hawaii state court. In their complaint, the Rundgrens alleged that WaMu defrauded them and breached its fiduciary duty during the refinancing negotiation. The Rundgrens sought, among other things: a declaratory judgment that the loan transaction was void and unenforceable and that Chase could not proceed with its nonjudicial foreclosure action; rescission of the loan and treble damages under state law; injunctive relief preventing Chase from attempting to foreclose on the property or " further damage their finances" ; statutory damages under the federal Truth in Lending Act (TILA), 15 U.S.C. § § 1601-1667f, and other state and federal consumer protection acts; and punitive damages.

Chase then removed the action to federal court. The district court dismissed the case against Chase for lack of jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure because the Rundgrens had failed to exhaust their claims with the FDIC prior to bringing suit, as required by 12 U.S.C. § 1821(d)(13)(D). In the alternative, the court held that the Rundgrens failed to state a claim under

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Federal Rule of Civil Procedure 12(b)(6). This appeal followed.

II

We review de novo the district court's dismissal of a claim for lack of subject matter jurisdiction. Campbell v. Redding Med. Ctr., 421 F.3d 817, 820 (9th Cir. 2005). In determining whether the Rundgrens' action against Chase is barred by the jurisdiction-stripping provisions of FIRREA, we first consider the Act's purpose and structure.

Congress enacted FIRREA " in an effort to prevent the collapse of the [savings and loan] industry" in the late 1980s. Wash. Mut. Inc. v. United States, 636 F.3d 1207, 1211 (9th Cir. 2011). In order " to enable the federal government to respond swiftly and effectively to the declining financial condition of the nation's banks and savings institutions," FIRREA granted " the FDIC, as...

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