Feldman v. Fed. Deposit Ins. Corp.

• Decision Date: 12 January 2018
• Docket Number: No. 17-5009,17-5009
• Citation: 879 F.3d 347
• Parties: Lynn FELDMAN, as Chapter 7 Trustee of the Estates of Image Masters, Inc., OPFM, Inc., d/b/a Personal Financial Management, Inc., Mortgage Assistance Professionals, Inc., Mortgage Assistance Professionals, Inc. II, Discovered Treasurers, Inc., and Dividit, Inc., Appellant v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for both Indymac Bank, FSB and Washington Mutual Bank, Appellee
• Court: U.S. Court of Appeals — District of Columbia Circuit

879 F.3d 347

Lynn FELDMAN, as Chapter 7 Trustee of the Estates of Image Masters, Inc., OPFM, Inc., d/b/a Personal Financial Management, Inc., Mortgage Assistance Professionals, Inc., Mortgage Assistance Professionals, Inc. II, Discovered Treasurers, Inc., and Dividit, Inc., Appellant

v.FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for both Indymac Bank, FSB and Washington Mutual Bank, Appellee

No. 17-5009

United States Court of Appeals, District of Columbia Circuit.

Argued October 16, 2017

Decided January 12, 2018

David M. DeVito, Philadelphia, PA, argued the cause and filed the briefs for appellant.

Michelle Ognibene, Counsel, Federal Deposit Insurance Corporation, argued the cause for appellee FDIC. With her on the brief were Colleen J. Boles, Assistant General Counsel, and Kathryn R. Norcross, Senior Counsel.

Before: Rogers and Tatel, Circuit Judges, and Edwards, Senior Circuit Judge.

Rogers, Circuit Judge:

This is an appeal from the dismissal of a complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). For the following reasons, we reverse.

I.

The Financial Institution Reform, Recovery, and Enforcement Act ("FIRREA") governs the disposition by the Federal Deposit Insurance Corporation ("FDIC") of claims against failed banks for which it is acting as receiver. As to any creditor "shown on the [bank's] books" or "upon discovery of the name and address of a claimant not appearing," the FDIC is required to mail notice of the deadline—the "bar date"—for filing claims. 12 U.S.C. § 1821(d)(3)(C). Late-filed claims are allowed where "the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date" and "such claim is filed in time to permit payment of such claim." 12 U.S.C. § 1821(d)(5)(C)(ii). The administrative claims process is a prerequisite to judicial review. Id. , § 1821(d)(6),(13)(D).

Lynn Feldman, a Chapter 7 bankruptcy trustee, has attempted to recover around twelve million dollars in allegedly fraudulent transfers made as part of a "Ponzi" scheme in Pennsylvania from 1988 to 2007. When the scheme collapsed on September 18, 2007, the six businesses owned by the architect of the scheme filed petitions for voluntary bankruptcy under Chapter 7, 11 U.S.C. § 701 et seq., in the Eastern District of Pennsylvania. Washington Mutual was one of the banks that had extended mortgages to customers of these businesses, and upon its failure, the FDIC became receiver on September 25, 2008. See 12 U.S.C. § 1821(c). The FDIC set December 30, 2008, as the bar date for claims to be filed and published notice of the receivership and the bar date in the Wall Street Journal on October 1 and 31, 2008.

On October 8, 2008, Feldman sent a letter to David Schneider, president of Washington Mutual Home Loans Inc., to advise of her authority as Trustee to pursue avoidance in bankruptcy of transfers of around $12 million by the six debtors, under sections 544, 547, 548, and 550 and state law, unless the transfers were subject to exceptions or defenses. She requested a response within 20 days of proof of any exception or defense. In the absence of receiving such information, a check for $12,034,717.15 should be made payable to her as Trustee. Absent a timely response, Feldman further advised she "may have no alternative but to file a complaint with the Bankruptcy Court." The letter showed copies to Ms. Susan R. Taylor, Registered Agent for Washington Mutual Bank, and Lawrence J. Kotler, Esquire, an attorney with Duane Morris LLP, Feldman's attorney.

On August 3, 2009, Feldman filed a proof of claim with the FDIC. Upon the FDIC's disallowance of her claim as untimely, Feldman filed a complaint in the federal district court here on November 16, 2009. Before responsive pleadings were due, the district court granted her request for a stay to permit her to litigate related matters against other banks in Pennsylvania. Upon resolution of the Pennsylvania litigation, the district court granted her request to lift the stay, and on June 30, 2016, Feldman filed an amended complaint. The complaint described the Ponzi scheme and a series of money transfers to Washington Mutual that the bank allegedly knew or should have known were fraudulent. Compl. ¶¶ 9, 49, 51, 53. Of significance here, the complaint alleged that because her October 8 letter to David Schneider had advised Washington Mutual and the FDIC of her claim, she was entitled under FIRREA to receive, and had not received, mailed notice of the bar date. Compl. ¶ 54. The other relevant allegations were that she filed a proof of claim with the FDIC on August 3, 2009, and the FDIC notified her by letter of September 18, 2009, that her claim would be disallowed as untimely. Compl. ¶¶ 55, 56.

The FDIC moved to dismiss the amended complaint pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1), 12(b)(6), 12(b)(7), and 19. It argued that the district court lacked subject matter jurisdiction because Feldman had filed her claim after the bar date and had failed to allege a lack of notice to invoke FIRREA's late-filed claims exception. The FDIC stated it had closed Washington Mutual on September 25, 2008, and mailed notice to all creditors appearing on its book and records; neither Feldman's nor the debtors' names appeared in Washington Mutual records. Stating further that it had published notice of the bar date in newspapers of general circulation in October and December 2008, the FDIC argued that publication notice was sufficient to give Feldman "at minimum constructive notice." FDIC Motion to Dismiss at 10–11 (Sept. 30, 2016). Washington Mutual was, the FDIC asserted, "the largest bank failure in U.S. history," id. at 12, and at the very least Feldman was on inquiry notice of the receivership and administrative claims process.

Feldman opposed the motion to dismiss on various grounds, of which two are pertinent here. First, she pointed out the FDIC's position that the district court lacked subject matter jurisdiction "strips all meaning from subsection 1821(d)(5)(C)(ii), which permits consideration of any claim filed ... after the [bar] date specified in the notice published under paragraph (3)(B)(i)." Pl.'s Mem. in Opp'n to Def.'s Mot. to Dismiss the Am. Cmplt and Strike Jury Demand at 5 (Oct. 3, 2016). She cited federal appellate court decisions suggesting that the failure to file a timely claim would not strip the court of jurisdiction and result in dismissal with prejudice, but rather the appropriate disposition is to dismiss the complaint so a claim may be administratively exhausted. Id. at 6–7 (citing Village of Oakwood v. State Bank & Trust Co. , 539 F.3d 373, 385 (6th Cir. 2008) ; McCarthy v. FDIC , 348 F.3d 1075, 1081 (9th Cir. 2003) ; Carlyle Towers Condo. Ass'n, Inc. v. FDIC , 170 F.3d 301, 309 (2d Cir. 1999) ). Second, she argued that her lack of notice of the receivership was evident from her October 8, 2008 letter because as an experienced bankruptcy trustee she would have filed the claim with the FDIC had she known of its appointment. Id . at 8. In reply, the FDIC continued to argue that Feldman's claim of lack of notice of the receivership could not be credited. See Reply to Pl.'s Opp'n , at 6 (Nov. 3, 2016).

The district court granted the motion to dismiss the amended complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Feldman v. FDIC , 568 B.R. 543 (D.C.C. 2016). It found that Feldman was not entitled to notice by mail because she was not a creditor shown on the institution's books when the FDIC became receiver, and her allegations did not show that the FDIC discovered she was a claimant. Id. at 548. It also found that her October 8 letter could not have put the FDIC on notice of her claim because it was sent to David Schneider when he was "no longer an executive with the bank" and after Washington Mutual "no longer existed." Id. at 548–49. And, having failed to allege either that she lacked actual knowledge of the receivership or the date she learned of it, the district court ruled that Feldman did not "carry her burden of demonstrating the factual predicates needed to invoke the late-filed claims exception," id . at 549. Further, the court concluded that Feldman received "adequate notice of the receivership by virtue of the FDIC's publications," id ., because Washington Mutual's failure was "the largest bank failure in U.S. history" and "widely publicized in 2008," placing Feldman "on inquiry notice of the receivership." Id . (internal quotations omitted). Alternatively, the district court ruled that her claim under the Bankruptcy Act would be barred because her untimely claim was insufficient to toll the statute of limitations. Id. at 550.

Feldman appeals the dismissal of her complaint, and our review is de novo , American Nat'l Ins. Co. v. FDIC , 642 F.3d 1137, 1139 (D.C. Cir. 2011).

II.

Where a motion to dismiss a complaint "present[s] a dispute over the factual basis of the court's subject matter jurisdiction ... the court may not deny the motion to dismiss merely by assuming the truth of the facts alleged by the plaintiff and disputed by the defendant." Phoenix Consulting v. Republic of Angola , 216 F.3d 36, 40 (D.C. Cir. 2000). "Instead, the court must go beyond the pleadings and resolve any disputed issues of fact the resolution of which is necessary to a ruling upon the motion to dismiss." Id. (citations omitted). Although "[t]he district court ‘retains considerable latitude in devising procedures it will follow to ferret out the facts pertinent to jurisdiction,’ ... it must give the plaintiff ‘ample opportunity to secure and present evidence relevant to the existence of jurisdiction.’ " Id . (quoting Prakash v. American University , 727 F.2d 1174, 1179–80 & nn. 36–37 (D.C. Cir. 1984) ); see Hurd v. Dist. of Columbia , 864 F.3d 671, 686–87 (D.C. Cir. 2017). More particularly, in viewing the FDIC's motion to dismiss as presenting a factual challenge...