Bank of Am., N. A. v. Fed. Deposit Ins. Corp.

• Decision Date: 10 December 2012
• Docket Number: Civil Action No. 10–CV–1681 (BJR).
• Citation: 908 F.Supp.2d 60
• Parties: BANK OF AMERICA, N. A., As Indenture Trustee, Custodian, and Collateral Agent for Ocala Funding, LLC, Plaintiff and Counterclaim Defendant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as the Receiver for Colonial Bank, and in its capacity as the Receiver for Platinum Community Bank, Defendant and Counterclaim Plaintiff.
• Court: U.S. District Court — District of Columbia

908 F.Supp.2d 60

BANK OF AMERICA, N. A., As Indenture Trustee, Custodian, and Collateral Agent for Ocala Funding, LLC, Plaintiff and Counterclaim Defendant,

v.FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as the Receiver for Colonial Bank, and in its capacity as the Receiver for Platinum Community Bank, Defendant and Counterclaim Plaintiff.

Civil Action No. 10–CV–1681 (BJR).

United States District Court, District of Columbia.

Dec. 10, 2012.

Frank E. Emory, Jr., Patrick L. Robson, Hunton & Williams LLP, Charlotte, NC, Alissa Branham, Gregory D. Phillips, Marc T.G. Dworsky, Michael J. O'Sullivan, Richard C. St. John, Munger, Tolles & Olson, LLP, Los Angeles, CA, Bonnie K. Arthur, Hunton & Williams LLP, Washington, DC, Joseph J. Saltarelli, Michael B. Kruse, Hunton & Williams LLP, New York, NY, Kristin Linsley Myles, Sarala V. Nagala, Munger, Tolles & Olson LLP, San Francisco, CA, for Plaintiff and Counterclaim Defendant.

Athanasios Basdekis, Michael L. Murphy, Benjamin L. Bailey, Christopher S. Morris, Bailey & Glasser, LLP, Charleston, WV, for Defendant and Counterclaim Plaintiff.

MEMORANDUM OPINION ON CROSS MOTIONS TO DISMISS

BARBARA JACOBS ROTHSTEIN, District Judge.

+---------------------------------------------------+
                ¦I. ¦INTRODUCTION                              ¦68  ¦
                +---+------------------------------------------+----¦
                ¦   ¦                                          ¦    ¦
                +---+------------------------------------------+----¦
                ¦II.¦SUMMARY OF THE CASE                       ¦69  ¦
                +---------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦A.  ¦Overview of TBW's Operation                               ¦69     ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦B.  ¦Factual Background Common to All Claims                   ¦70     ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦D.  ¦Factual Allegations Specific to BOA's Claims Against the  ¦72     ¦
                ¦    ¦    ¦FDIC                                                      ¦       ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦E.  ¦Factual Allegations Specific to the FDIC's Counterclaims  ¦74     ¦
                ¦    ¦    ¦Against BOA                                               ¦       ¦
                +----------------------------------------------------------------------------+
                

+-------------------------------------------------------------------+
                ¦    ¦                                                       ¦      ¦
                +----+-------------------------------------------------------+------¦
                ¦III.¦PROCEDURAL HISTORY                                     ¦75    ¦
                +----+-------------------------------------------------------+------¦
                ¦    ¦                                                       ¦      ¦
                +----+-------------------------------------------------------+------¦
                ¦IV. ¦DISCUSSION                                             ¦76    ¦
                +-------------------------------------------------------------------+
                

+------------------------------------------------------------------+
                ¦    ¦A. ¦Standards of Review                               ¦76    ¦
                +----+---+--------------------------------------------------+------¦
                ¦    ¦B. ¦The FDIC's Motion to Dismiss the Amended Complaint¦77    ¦
                +------------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦1. ¦Whether This Court Has Subject Matter Jurisdiction    ¦78     ¦
                ¦    ¦    ¦   ¦over BOA's Claims                                     ¦       ¦
                +----------------------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦   ¦a. ¦Whether BOA Exhausted the Administrative Remedies ¦78     ¦
                ¦    ¦    ¦   ¦   ¦under FIRREA on behalf of Ocala                   ¦       ¦
                +----+----+---+---+--------------------------------------------------+-------¦
                ¦    ¦    ¦   ¦b. ¦Whether BOA Has Standing to Bring Claims on Behalf¦83     ¦
                ¦    ¦    ¦   ¦   ¦of DB and BNP                                     ¦       ¦
                +----------------------------------------------------------------------------+
                

+---------------------------------------------------------------------------+
                ¦    ¦    ¦   ¦   ¦i. ¦Whether DB and BNP Have Article III Standing ¦83     ¦
                +----+----+---+---+---+---------------------------------------------+-------¦
                ¦    ¦    ¦   ¦   ¦ii.¦Whether BOA Can Pursue the Claims on Behalf  ¦85     ¦
                ¦    ¦    ¦   ¦   ¦   ¦of DB and BNP                                ¦       ¦
                +---------------------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦   ¦c. ¦Whether Counts IX, X, and XI Have Been            ¦86     ¦
                ¦    ¦    ¦   ¦   ¦Administratively Exhausted under FIRREA           ¦       ¦
                +----------------------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦2. ¦Whether the Amended Complaint States a Claim for      ¦86     ¦
                ¦    ¦    ¦   ¦Fraudulent Transfer                                   ¦       ¦
                +----+----+---+------------------------------------------------------+-------¦
                ¦    ¦    ¦3. ¦Whether the Amended Complaint Pleads Fraud with       ¦90     ¦
                ¦    ¦    ¦   ¦theRequisite Specificity                              ¦       ¦
                +----------------------------------------------------------------------------+
                

+---------------------------------------------------------------+
                ¦    ¦C. ¦BOA's Motion to Dismiss the FDIC's Counterclaims¦91   ¦
                +---------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦1. ¦Whether the Counterclaims are Barred by the           ¦93     ¦
                ¦    ¦    ¦   ¦Exculpatory Clauses                                   ¦       ¦
                +----+----+---+------------------------------------------------------+-------¦
                ¦    ¦    ¦2. ¦Whether the Counterclaims State a Claim for Breach of ¦96     ¦
                ¦    ¦    ¦   ¦the Custodial Agreement                               ¦       ¦
                +----------------------------------------------------------------------------+
                

+-----------------------------------------------------+
                ¦   ¦   ¦  ¦a.¦Counterclaim 1                    ¦96  ¦
                +---+---+--+--+----------------------------------+----¦
                ¦   ¦   ¦  ¦b.¦Counterclaim 2                    ¦97  ¦
                +---+---+--+--+----------------------------------+----¦
                ¦   ¦   ¦  ¦c.¦Counterclaim 3                    ¦98  ¦
                +---+---+--+--+----------------------------------+----¦
                ¦   ¦   ¦  ¦d.¦Counterclaim 4                    ¦98  ¦
                +---+---+--+--+----------------------------------+----¦
                ¦   ¦   ¦  ¦e.¦Counterclaim 5                    ¦99  ¦
                +-----------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦3. ¦Whether the Breach of Bailment Counterclaims Fail as a¦100    ¦
                ¦    ¦    ¦   ¦Matter of Law                                         ¦       ¦
                +----------------------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦   ¦a. ¦Whether the Bailee Letters Are Enforceable        ¦101    ¦
                ¦    ¦    ¦   ¦   ¦Contracts between Colonial and BOA                ¦       ¦
                +----+----+---+---+--------------------------------------------------+-------¦
                ¦    ¦    ¦   ¦b. ¦Whether the Breach of Bailment Counterclaims State¦106    ¦
                ¦    ¦    ¦   ¦   ¦a Claim for Relief                                ¦       ¦
                +----------------------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦4. ¦Whether the Tort Counterclaims Fail As a Matter of Law¦107    ¦
                +----------------------------------------------------------------------------+
                

+----------------------------------------------------------------------------+
                ¦    ¦    ¦   ¦a. ¦Whether the Economic Loss Doctrine Bars the Tort  ¦107    ¦
                ¦    ¦    ¦   ¦   ¦Claims                                            ¦       ¦
                +----+----+---+---+--------------------------------------------------+-------¦
                ¦    ¦    ¦   ¦b. ¦Whether the Custodial Agreement Limits BOA's Tort ¦108    ¦
                ¦    ¦    ¦   ¦   ¦Liability                                         ¦       ¦
                +----------------------------------------------------------------------------+
                

+-----------------------------------+
                ¦  ¦                            ¦   ¦
                +--+----------------------------+---¦
                ¦V.¦CONCLUSION                  ¦108¦
                +-----------------------------------+
                

I. INTRODUCTION

Before the Court are two motions to dismiss. First, Defendant and Counterclaimant Federal Deposit Insurance Corporation (the “FDIC”), in its capacity as the Receiver for both Colonial Bank (“Colonial”) and Platinum Community Bank (“Platinum”), moves to dismiss the First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6). (Dkt. No. 26.). Second, Plaintiff and Counterclaim–Defendant Bank of America, N.A., (“BOA”) moves to dismiss the FDIC's Counterclaims pursuant to Rule 12(b)(6). (Dkt. No. 36.). Having considered the parties' arguments, pleadings, and the relevant case law, the court is fully advised. For the reasons set forth below:

IT IS HEREBY ORDERED that each motion is GRANTED in part and DENIED in part.

II. SUMMARY OF THE CASE

This dispute is the result of a multi-billion dollar fraudulent scheme that left the financial sector reeling. The scheme was orchestrated by Lee Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corp. (“TBW”), with the aid of several bank employees from Colonial and Platinum.¹ It stemmed from TBW's loan origination business, which started...