Bank of Am., N. A. v. Fed. Deposit Ins. Corp., Civil Action No. 10–CV–1681 (BJR).
| Court | United States District Courts. United States District Court (Columbia) |
| Writing for the Court | BARBARA JACOBS ROTHSTEIN |
| Citation | 908 F.Supp.2d 60 |
| Docket Number | Civil Action No. 10–CV–1681 (BJR). |
| Decision Date | 10 December 2012 |
| 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. |
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.
[908 F.Supp.2d 67]
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.
BARBARA JACOBS ROTHSTEIN, District Judge.
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¦I. ¦INTRODUCTION ¦68 ¦
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¦ ¦ ¦ ¦
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¦II.¦SUMMARY OF THE CASE ¦69 ¦
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¦ ¦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 ¦ ¦
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¦ ¦ ¦ ¦
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¦III.¦PROCEDURAL HISTORY ¦75 ¦
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¦ ¦ ¦ ¦
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¦IV. ¦DISCUSSION ¦76 ¦
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¦ ¦A. ¦Standards of Review ¦76 ¦
+----+---+--------------------------------------------------+------¦
¦ ¦B. ¦The FDIC's Motion to Dismiss the Amended Complaint¦77 ¦
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¦ ¦ ¦1. ¦Whether This Court Has Subject Matter Jurisdiction ¦78 ¦
¦ ¦ ¦ ¦over BOA's Claims ¦ ¦
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¦ ¦ ¦ ¦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 ¦ ¦
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¦ ¦ ¦ ¦ ¦i. ¦Whether DB and BNP Have Article III Standing ¦83 ¦
+----+----+---+---+---+---------------------------------------------+-------¦
¦ ¦ ¦ ¦ ¦ii.¦Whether BOA Can Pursue the Claims on Behalf ¦85 ¦
¦ ¦ ¦ ¦ ¦ ¦of DB and BNP ¦ ¦
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¦ ¦ ¦ ¦c. ¦Whether Counts IX, X, and XI Have Been ¦86 ¦
¦ ¦ ¦ ¦ ¦Administratively Exhausted under FIRREA ¦ ¦
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¦ ¦ ¦2. ¦Whether the Amended Complaint States a Claim for ¦86 ¦
¦ ¦ ¦ ¦Fraudulent Transfer ¦ ¦
+----+----+---+------------------------------------------------------+-------¦
¦ ¦ ¦3. ¦Whether the Amended Complaint Pleads Fraud with ¦90 ¦
¦ ¦ ¦ ¦theRequisite Specificity ¦ ¦
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¦ ¦C. ¦BOA's Motion to Dismiss the FDIC's Counterclaims¦91 ¦
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¦ ¦ ¦1. ¦Whether the Counterclaims are Barred by the ¦93 ¦
¦ ¦ ¦ ¦Exculpatory Clauses ¦ ¦
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¦ ¦ ¦2. ¦Whether the Counterclaims State a Claim for Breach of ¦96 ¦
¦ ¦ ¦ ¦the Custodial Agreement ¦ ¦
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+-----------------------------------------------------+
¦ ¦ ¦ ¦a.¦Counterclaim 1 ¦96 ¦
+---+---+--+--+----------------------------------+----¦
¦ ¦ ¦ ¦b.¦Counterclaim 2 ¦97 ¦
+---+---+--+--+----------------------------------+----¦
¦ ¦ ¦ ¦c.¦Counterclaim 3 ¦98 ¦
+---+---+--+--+----------------------------------+----¦
¦ ¦ ¦ ¦d.¦Counterclaim 4 ¦98 ¦
+---+---+--+--+----------------------------------+----¦
¦ ¦ ¦ ¦e.¦Counterclaim 5 ¦99 ¦
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¦ ¦ ¦3. ¦Whether the Breach of Bailment Counterclaims Fail as a¦100 ¦
¦ ¦ ¦ ¦Matter of Law ¦ ¦
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¦ ¦ ¦ ¦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 ¦ ¦
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¦ ¦ ¦4. ¦Whether the Tort Counterclaims Fail As a Matter of Law¦107 ¦
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¦ ¦ ¦ ¦a. ¦Whether the Economic Loss Doctrine Bars the Tort ¦107 ¦
¦ ¦ ¦ ¦ ¦Claims ¦ ¦
+----+----+---+---+--------------------------------------------------+-------¦
¦ ¦ ¦ ¦b. ¦Whether the Custodial Agreement Limits BOA's Tort ¦108 ¦
¦ ¦ ¦ ¦ ¦Liability ¦ ¦
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¦ ¦ ¦ ¦
+--+----------------------------+---¦
¦V.¦CONCLUSION ¦108¦
+-----------------------------------+
[908 F.Supp.2d 68]
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,
[908 F.Supp.2d 69]
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.
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 with humble roots in 1982, but grew at a frenetic pace as the United States' housing bubble grew. When the housing market began to crumble, so did TBW's finances. In 2002, Farkas and his coconspirators hid TBW's financial decline through a complex scheme that evolved over several stages. Initially, they disguised overdrafts on TBW's bank accounts held at Colonial by “sweeping” funds from other accounts into the overdrawn accounts. As TBW's deficit grew to well over $100 million, Farkas and his co-conspirators initiated more sophisticated measures, including selling sham mortgage loans, multi-pledging collateral, and overstating the actual value of TBW's and its subsidiaries' assets. In the final stage of the scheme, Farkas and his coconspirators attempted to fraudulently obtain $553 million from the Troubled Asset Relief Program. The scheme was eventually uncovered in August 2009. Farkas is now serving a 30–year sentence after being convicted in April 2011 of 14 counts of conspiracy and bank, wire, and securities fraud. A handful of other executives from TBW and Colonial have also been sentenced to prison for their roles in the fraud.
TBW's loan origination business operated through a complex web of financial agreements between multiple financial institutions. When TBW collapsed, these institutions were left behind in the wreckage. Many of these institutions turned to the courts to determine liability for the multi-billion dollar losses caused by the fraud. This is one such case. In this case, BOA, acting in its capacity as...
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