Albright v. F.D.I.C., 93-1683
| Decision Date | 01 April 1994 |
| Docket Number | No. 93-1683,93-1683 |
| Citation | 1994 WL 109047,21 F.3d 419 |
| Parties | NOTICE: First Circuit Local Rule 36.2(b)6 states unpublished opinions may be cited only in related cases. Laurence ALBRIGHT, ET AL., Plaintiffs, Appellants, v. FEDERAL DEPOSIT INSURANCE CORPORATION, ETC., ET AL., Defendants, Appellees. |
| Court | U.S. Court of Appeals — First Circuit |
Appeal from the United States District Court for the District of New Hampshire [Hon. Joseph A. DiClerico, Jr., U.S. District Judge ]
Michael E. Chubrich, with whom Eldredge, Chubrich & Harrigan was on brief for appellants.
Gregory E. Gore, with whom Ann S. DuRoss and Robert D. McGillicuddy were on brief for appellees.
Before Cyr, Circuit Judge, Aldrich, Senior Circuit Judge, and Stahl, Circuit Judge.
Plaintiffs-appellants, one hundred-sixty charter members of a defunct health club, challenge a district court decision granting summary judgment to defendants-appellees, various entities that later acquired interests in the real property upon which the health club facility was located. Finding no error, we affirm.
In 1987, Amoskeag Bank ("the Bank") loaned $7.5 million to Greenleaf Investment Group ("the Developer") to construct a commercial condominium and health club facility (the "Property") in Portsmouth, New Hampshire. The note was secured by a first mortgage on the Property. After the Developer completed construction in 1988, it "leased" the health club facility to a corporation called Greenleaf Sports and Fitness Club, Inc. ("the Health Club"), which sold long-term charter health club memberships to appellants, at prices ranging from $2500 to $3500. 1 In April 1990, the Developer defaulted on the note. 2 The Bank later exercised its power of sale under the first mortgage, and the Property was acquired by appellee A.B. Club Holdings ("ABCH"), the Bank's wholly-owned subsidiary.
The Health Club vacated the leased premises five months after the Developer's default, but the Bank and ABCH continued to operate a health club facility on the premises, with appellee Club Sports International ("CSI") as its managing entity. During a six-month transitional period following the Health Club's closure, appellants were permitted to use the health club facilities under the terms of their alleged Health Club contracts. In February 1991, however, CSI informed appellants that they must pay higher fees, equaling fifty percent of the fee for new club members.
Appellants promptly filed a three-count complaint in New Hampshire Superior Court against, inter alia, the Bank, ABCH, and CSI. Count 1 sought a judicial declaration that appellants held a "unique contractual property right" by virtue of their charter club memberships, and that appellees were either the Developer's successors-in-interest or its third-party beneficiaries, and therefore were contractually obligated to honor the charter membership contracts, see Cyr v. B. Offen & Co., 501 F.2d 1145, 1152 (1st Cir. 1974) (). Count 2 sought the imposition of a constructive trust upon all charter membership fees still held by appellees, on the ground that the Bank had been aware from the outset that the Developer used $200,000 of appellants' charter membership fees to repay its construction loan, in violation of the Developer's contractual promise to appellants to segregate their fees in a trust fund. Finally, Count 3 sought compensatory damages (or a refund of all membership fees) and/or treble damages for appellees' unfair and deceptive trade practices in willful violation of the New Hampshire Consumer Protection Act ("NHCPA"), see N.H. Rev. Stat. Ann Secs. 358-A:2, 358-A:10 (1993). The Bank's motion to dismiss counts 1 and 3 for failure to state a claim was denied by the superior court. 3
In October 1991, the Bank was declared insolvent and the Federal Deposit Insurance Corporation ("FDIC"), as receiver, removed the case to federal district court. See 12 U.S.C. Sec. 1819(b)(2)(B) (1993). Appellants promptly moved for remand to the state court, arguing that resolution of the suit would require "only the interpretation of the law of [New Hampshire]." Id. Sec. 1819(b)(2)(D)(iii). FDIC opposed remand, citing its intention to rely on various federal-law defenses, including the unenforceability of the alleged club membership contracts under D'Oench Duhme & Co. v. FDIC, 315 U.S. 447 (1942), as codified at 12 U.S.C. Sec. 1823(e), and FDIC's immunity from suit for compensatory damage claims under the NHCPA, cf. Timberland Design, Inc. v. First Serv. Bank for Sav., 932 F.2d 46, 50 (1st Cir. 1991) (), and from "punitive" treble damage awards under the NHCPA, see, e.g., FDIC v. Claycomb, 945 F.2d 853, 861 (5th Cir. 1991), cert. denied, 112 S. Ct. 2301 (1992). While the remand motion awaited decision, FDIC filed its motion for summary judgment.
The district court later rejected a magistrate-judge's recommendation that the case be remanded to state court for lack of subject matter jurisdiction pursuant to 12 U.S.C. Sec. 1819(b)(2)(D)(iii), 4 and granted FDIC's motion for summary judgment on the two remaining counts in appellants' complaint. Appellants appeal from the summary judgment order, and from the district court order denying their motions for reconsideration.
Appellants argue that FIRREA Sec. 1819(b)(2)(D)(iii) ousts the district court of jurisdiction because their complaint alleged one dispositive state-law claim unaffected by any federal defense advanced by FDIC. Specifically, drawing on an oblique mention in Count I that their charter memberships confer a "unique contractual property right," appellants now argue that these memberships are roughly akin to mechanic's liens under New Hampshire law.
We have held that FDIC may not invoke the D'Oench Duhme defense to avoid certain state-law liens which attach to a failed bank's assets prior to FDIC's appointment as receiver. See Bateman v. FDIC, 970 F.2d 924, 927 (1st Cir. 1992) (). In Capizzi v. FDIC, 937 F.2d 8 (1st Cir. 1991), however, we held that FIRREA Sec. 1819(b)(2)(D)(iii) embodies a deliberate congressional abrogation of the "well-pleaded complaint" rule, see Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10 (1983) (), which in other contexts permits a district court to invoke its nondiversity removal jurisdiction only if the complaint alone, without reference to the character of any anticipated defense under federal law, discloses that the state-law claim implicates a substantial federal question. Capizzi, 937 F.2d at 11 () (emphasis added); see Diaz v. McAllen State Bank, 975 F.2d 1145, 1149 (5th Cir. 1992); Reding v. FDIC, 942 F.2d 1254, 1258 (8th Cir. 1991); Lazuka v. FDIC, 931 F.2d 1530, 1535 (11th Cir. 1991). Thus, FIRREA Sec. 1819(b)(2)(D)(iii) directs the district court "to consider the case as a whole-complaint and likely defenses"-and "to gauge [the] ... likely significance " of those defenses. Capizzi, 937 F.2d at 10, 11 (emphasis added); see Diaz, 975 F.2d at 1149-50 () (emphasis added).
The district court relied on several reasoned grounds for its ruling disallowing appellants' motion for remand. We affirm on a singularly sufficient ground. The complaint asserts several alternative claims for relief. Even if their so-called property-right or "mechanic's lien" claim were sound on the merits, and further, assuming it were found invulnerable to the D'Oench Duhme defense by reason of the Bateman exception, appellants also asserted willful violations of the NHCPA for which treble damages might be recoverable because of appellees' interim refusal to permit them to use the health club facilities under the terms of their original membership contracts. In turn, the treble-damages demand under the NHCPA would implicate FDIC's two federal defenses to any NHCPA recovery. See Timberland Design, 932 F.2d at 50; Claycomb, 945 F.2d at 861. On the other hand, if appellants' "mechanic's lien" claim were found nonmeritorious, the court would be required to rule on their claim for compensatory damages for breach of their membership contracts, based on appellees' alleged liability as the contractual successors of the Developer or the Health Club. In the latter event, the court would be required to rule on the D'Oench Duhme defense.
Finally, even at the preliminary jurisdictional stage, FDIC's various federal defenses, see supra p. 4, and particularly its D'Oench Duhme defense, were more than colorable. See Bateman, 970 F.2d at 926-27 (). Even as late as summary judgment, for example, appellants had yet to produce a copy of the charter membership contract, let alone a copy of the construction loan agreement, although the former document presumably was within their control, and the existence and whereabouts of both documents form the crux of their alleged contract, "equitable lien," and NHCPA claims. Moreover, given appellees' allegations that the Health Club was a corporate entity distinct from the Developer, and never directly contracted with the Bank in any capacity, FDIC's claim that no written "agreement" appeared in the Bank's records on the date of FDIC's appointment is far from frivolous. The district court correctly denied the motion for remand.
A summary judgment ruling is reviewed de...
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