Bank Of America National Association

• Decision Date: 26 April 2010
• Docket Number: 09-14844.,No. 09-14739,09-14739
• Citation: 604 F.3d 1239
• Parties: BANK OF AMERICA NATIONAL ASSOCIATION, Plaintiff-Appellee,v.COLONIAL BANK, et al., Defendants,Federal Deposit Insurance Corporation, Defendant-Appellant.In Re: FDIC, Petitioner.
• Court: U.S. Court of Appeals — Eleventh Circuit

604 F.3d 1239

BANK OF AMERICA NATIONAL ASSOCIATION, Plaintiff-Appellee,v. COLONIAL BANK, et al., Defendants,Federal Deposit Insurance Corporation, Defendant-Appellant.In Re: FDIC, Petitioner.

Nos. 09-14739, 09-14844.

United States Court of Appeals Eleventh Circuit.

April 26, 2010.

J. Scott Watson, FDIC, Arlington, VA, Jose I. Rojas, Rojas Law Firm, LLP, Miami, FL, for FDIC.

Martin Leonard Steinberg, Patricia Acosta, Jamie Zysk Isani, Hunton & Williams, LLP, Miami, FL, Frank E. Emory, Jr., Patrick L. Robson, James D. Humphries, IV, Hunton & Williams, Charlotte, NC, for Bank of America Nat. Ass'n.

Appeals from the United States District Court for the Southern District of Florida.

Before O'CONNOR,^* Associate Justice Retired, and CARNES and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge:

This case arises from the collapse of Colonial Bank (“Colonial”), the fifth-largest bank failure in the near 77-year history of the Federal Deposit Insurance Corporation (“FDIC”). Bank of America, N.A. (“Bank of America”), brought this action against Colonial, alleging it wrongfully refused to return thousands of mortgage loans and their proceeds, valued in excess of $1 billion, to which Bank of America had legal title. On August 13, 2009, the district court entered a temporary restraining order (“TRO”) against Colonial, prohibiting the bank from taking any action with respect to the disputed assets. The next day, the FDIC was appointed as receiver for Colonial, and was promptly substituted as defendant in this case. Thereafter, the district court converted the TRO into a preliminary injunction against the FDIC, rejecting the FDIC's arguments that the district court lacked jurisdiction to enjoin the FDIC as receiver and that Bank of America must first exhaust the administrative claims process prior to seeking a judicial remedy. The FDIC filed both a timely appeal of the district court's preliminary injunction order and a petition for a writ of mandamus to dissolve the district court's preliminary injunction. We consolidated the two actions and expedited this appeal.

Our inquiry in this case is limited to the threshold question of subject matter jurisdiction. The FDIC argues that the anti-injunction provision of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”), 12 U.S.C. § 1821(j), deprived the district court of jurisdiction to enjoin the FDIC because the preliminary injunction unlawfully restrained the FDIC's exercise of its receivership powers and functions. Because we conclude that the FDIC's proposed actions with respect to the loans and loan proceeds at issue fall squarely within its statutory receivership powers and functions, we hold that 12 U.S.C. § 1821(j) stripped the district court of its jurisdiction to enter the preliminary injunction. Accordingly, we vacate the district court's order and remand with instructions to dismiss Bank of America's motion for a preliminary injunction for lack of jurisdiction.

I. FACTS AND PROCEDURAL HISTORY

The loans and loan proceeds at issue in this case originated from a series of June 2008 agreements between LaSalle Bank N.A. (“LaSalle”), Ocala Funding, LLC (“Ocala”), and Taylor, Bean & Whitaker Mortgage Corp. (“Taylor Bean”). LaSalle, representing certain secured parties as their custodian and collateral agent, provided capital for Ocala to purchase various mortgage notes originated and serviced by Taylor Bean for the benefit of the secured parties. Bank of America, as LaSalle's successor-in-interest, became the trustee and collateral agent for the secured parties and perfected its security interest by taking possession of the loans and loan documents.

From June to August 2009, Bank of America then issued a series of Transmittal Letters to Colonial, which provided notice of its security interest in the loans and established that Bank of America would deliver the loans to Colonial and in return Colonial would hold the loans in trust and serve as custodian, agent, and bailee for and on behalf of the secured parties. Under the agreement, Colonial was also obligated to facilitate the sale of the loans to Freddie Mac. Upon Colonial's receipt of the loans, it had fifteen days either to remit sale proceeds or return unsold loans to Bank of America. Freddie Mac, in connection with its purchase of more than 6,000 of these loans, delivered over $1 billion in loan proceeds to Colonial.

In early August 2009, with the news of Colonial's demise spreading, Bank of America requested that Colonial return the loans and loan proceeds. When Colonial refused, Bank of America presented Colonial with a Demand for Documents and Proceeds, which attempted to revoke the governing Transmittal Letters and terminate Colonial's rights to continued possession of the loans. Colonial again refused to comply with Bank of America's demand. On August 12, 2009, Bank of America filed its complaint in federal court, setting forth five causes of action-replevin, imposition of constructive trust, breach of bailee letters, unjust enrichment, and civil theft-and filed an accompanying motion for a TRO and preliminary injunction against Colonial.

On August 13, 2009, the district court granted Bank of America's motion, issued an ex parte TRO, and enjoined Colonial from selling, pledging, assigning, liquidating, encumbering, transferring, or otherwise disposing of all or any portion of the loans and loan proceeds related to the loans. The following day, the Alabama State Banking Department appointed the FDIC as receiver for Colonial, and the FDIC subsequently moved to be substituted for Colonial in this lawsuit. On August 21, 2009, the FDIC filed an emergency motion to dissolve the TRO, arguing that 12 U.S.C. § 1821(j) stripped the court of jurisdiction to restrain or affect the exercise of its powers or functions as receiver. In its motion, the FDIC asserted that Bank of America could pursue its claim through the administrative claims procedures set forth in FIRREA. See 12 U.S.C. § 1821(d)(3)-(13). In response, Bank of America argued that it was not a creditor subject to the claims administration process; that the loans never belonged to Colonial and were therefore not a part of the receivership estate; and, thus, that § 1821(j)'s jurisdictional bar did not apply.

The district court rejected the FDIC's jurisdictional challenge and converted the TRO into a preliminary injunction against the FDIC in a final order on September 8, 2009, determining that “assets possessed by, but not belonging to, the failed bank are outside the receivership estate, and the FDIC's attempts to dispose of these assets is therefore not protected by the jurisdiction-stripping provisions of FIRREA.” The district court reasoned that the FDIC's attempt to control such assets constituted an act beyond its receivership powers, and FIRREA's jurisdictional prohibitions do not “extend to situations in which the FDIC as receiver asserts authority beyond that granted to it as receiver.”

The FDIC filed timely notice of an appeal of the district court's preliminary injunction order on September 9, 2009. On September 15, 2009, the FDIC moved for a stay of this lawsuit pursuant to 12 U.S.C. § 1821(d)(12)(A)(ii) and (B), arguing that once the FDIC as receiver requests a stay of a judicial action, the plaintiff may only proceed with the action after exhausting the administrative remedies described in FIRREA. On October 19, 2009, the district court granted the stay due to the mandatory nature of FIRREA's stay provision but left the preliminary injunction against the FDIC intact. Bank of America delivered an administrative claim to the FDIC on November 19, 2009. This appeal and the FDIC's petition for a writ of mandamus ensued.¹

II. DISCUSSION

Although we review the district court's entry of a preliminary injunction under a deferential abuse-of-discretion standard, the legal conclusions upon which an injunction is based are subject to more exacting de novo review. Fla. State Conference of N.A.A.C.P. v. Browning, 522 F.3d 1153, 1166 (11th Cir.2008).

Section 1821(j) of FIRREA provides in relevant part:

no court may take any action ... to restrain or affect the exercise of powers or functions of the [FDIC] as a conservator or a receiver.

12 U.S.C. § 1821(j). This provision has been interpreted broadly to bar judicial intervention whenever the FDIC is acting in its capacity as a receiver or conservator, even if it violates its own procedures or behaves unlawfully in doing so. Bursik v. One Fourth St. N., Ltd., 84 F.3d 1395, 1397 (11th Cir.1996); Nat'l Trust for Historic Pres. v. FDIC, 995 F.2d 238, 240 (D.C.Cir.1993) vacated, 5 F.3d 567 (D.C.Cir.1993) reinstated in relevant part, 21 F.3d 469 (D.C.Cir.1994). See also

RPM Invs., Inc. v. Resolution Trust Corp., 75 F.3d 618, 620 n. 2 (11th Cir.1996) (“The ‘exceptions' to § 1821(j)'s jurisdictional bar are extremely limited.”). Therefore, our jurisdictional inquiry under § 1821(j) is quite narrow. First, we evaluate whether the FDIC's challenged actions constitute the exercise of a receivership power or function. See

RPM Invs., Inc., 75 F.3d at 620. If so, the FDIC is protected from all court action that would “restrain or affect” the exercise of those powers or functions pursuant to § 1821(j), and we proceed to the secondary inquiry of whether the district court's actions do in fact restrain or affect the FDIC as receiver. Id.

The district court found and Bank of America argues that the FDIC would exceed its statutory powers and functions as receiver by controlling and disposing of the loans and loan proceeds at issue. We disagree. Such actions fall squarely within the powers and functions granted to the FDIC by Congress in FIRREA. For example, § 1821(d)(2)(G) grants the receiver the power to “transfer any asset or liability of the institution in default (including assets and liabilities associated with any trust business) without any approval, assignment, or consent with respect to such...