Biaggi v. Fed. Deposit Ins. Corp., Civil No. 10-1671 (PG)
| Decision Date | 16 August 2018 |
| Docket Number | Civil No. 10-1671 (PG) |
| Parties | BIAGGI & BIAGGI, P.S.C., Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR WESTERNBANK OF PUERTO RICO, Defendant. |
| Court | U.S. District Court — District of Puerto Rico |
Pending before the court is Defendant Federal Deposit Insurance Corporation's ("FDIC" or "Defendant") Motion to Dismiss for Lack of Subject Matter Jurisdiction (Docket No. 128), Plaintiff Biaggi & Biaggi, P.S.C.'s ("Biaggi" or "Plaintiff") Opposition thereto (Docket No. 129), and the FDIC's Reply (Docket No. 130).
Biaggi's Opposition includes a Motion for Reconsideration, where Biaggi asks the court to reconsider the July 6, 2018 Order granting the FDIC's Motion for Sanctions (Docket No. 126). On August 10, 2018, the FDIC filed a Response in Opposition (Docket No. 134). However, for the reasons discussed below, the court need not reach the Motion for Reconsideration or the arguments raised in the FDIC's Response.
On September 9, 2009, Biaggi filed suit against Westernbank in the Court of First Instance of the Commonwealth of Puerto Rico, Mayagüez Part, seeking to collect payment of certain invoices for notarial fees and expenses in the amount of $401,067.92. On April 12, 2010, Biaggi filed an amended complaint increasing the amount requested to $619,626.45. On April 30, 2010, the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico closed Westernbank and appointed the FDIC as receiver. The FDIC then removed the state court action to this court. See Docket No. 1.
Administrative Claims Review Process under "FIRREA"1
Simultaneously, the FDIC set the wheels of FIRREA's mandatory claims review process in motion. The FDIC thus established a claims bar date, and advised Biaggi to file any claims before that deadline. Biaggi timely submitted two proof of claims. In the first, Biaggi claimed $619,626.45 in notarial fees and expenses, for services rendered by the firm between May of 2001 to November of 2007; in the second, $50,320.06 in notarial fees and expenses, for services rendered by the firm from 1999 to 2000. As part of the administrative review process, the FDIC requested that Biaggi provide all information and documentary evidence to substantiate its claims. Biaggi complied. In the following month or so, the FDIC disallowed the claims and so notified Biaggi. Biaggi proceeded to litigate the existing suit, as allowed under FIRREA's § 1821(d)(6)(B)(ii). To date, Biaggi seeks payment of $619,626.45 in notarial fees and expenses, plus interest.
Under Puerto Rico law, a three-year statute of limitations governs collection claims for payment of attorney and notarial fees. See P.R. LAWS ANN. tit. 31, § 5297. Since Biaggi's claim stemmed from alleged notarial services performed from 2001 until 2007, the FDIC moved for summary judgment arguing that the claim was time-barred. See Docket No. 19. Biaggi never opposed the FDIC's summary judgment motion. Subsequently, Magistrate Judge Justo Arenasissued a Report and Recommendation siding with the FDIC and recommending dismissal of the case. See Docket No. 23. Then, on May 5, 2011, Biaggi filed an "Opposition to Report and Recommendation and Opposition to Motion for Summary Judgment" ("Opposition to R&R") (Docket No. 29). To avoid dismissal, Biaggi restyled its claim as one arising under a "depositum" agreement. To be precise, Biaggi argued that:
this case is not properly one of a collection of notarial fees and expenses as the FDIC believes. Although it is true that the claim asserted had its origin in notarial services and expenses that were rendered or paid by Biaggi & Biaggi, this is not an action to collect the fees and expenses of a notary. Said fees and expenses were already paid by the bank's clients through deduction from the proceed of the loans. Instead, this is an action to collect from a bank funds that were held by Westernbank to be remitted to Biaggi & Biaggi. That relationship entailed either an agency or a depositum contract pursuant to the laws of Puerto Rico.
In the Opinion and Order from July 11, 2011, this court noted Biaggi's change of tune and indicated "this is the first time that Biaggi has advanced such a claim and neither the complaint nor the amended complaint mentioned the existence of an agency or depositum contract." (Docket No. 34 at 8). Now the FDIC moves for dismissal under Rule 12(b)(1), arguing that Biaggi's failure to exhaust administrative remedies on the depositum contract theory or claim deprives the court of subject matter jurisdiction. See Docket No. 128.
Under Federal Rule of Civil Procedure 12(b)(1), a defendant may seek dismissal of an action for lack of subject matter jurisdiction. Rule 12(b)(1) is a "large umbrella, overspreading a variety of different types of challenges to subject-matter jurisdiction." Valentín v. Hosp. Bella Vista, 254 F.3d 358, 362-363 (1st Cir. 2001).In any case, motions to dismiss brought under Rule 12(b)(1) and 12(b)(6) are subject to the same standard of review. See Negrón-Gaztambide v. Hernández-Torres, 35 F.3d 25, 27 (1st Cir. 1994). "When a district court considers a Rule 12(b)(1) motion, it must credit the plaintiff's well-pled factual allegations and draw all reasonable inferences in the plaintiff's favor." Merlonghi v. United States, 620 F.3d 50, 54 (1st Cir. 2010) (citing Hosp. Bella Vista, 254 F.3d at 363); see also De Leon v. Vornado Montehiedra Acquisition L.P., 166 F. Supp. 3d 171, 173 (D.P.R. 2016) (quoting Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996)) (courts may also consider whatever evidence has been submitted, including depositions and exhibits). Moreover, if the motion to dismiss is based on the failure to exhaust administrative remedies, the court may resolve factual disputes, as long as they do not entail adjudication on the merits and the parties have had an opportunity to develop the record. See Bryant v. Rich, 530 F.3d 1368, 1376 (11th Cir. 2008) (emphasis added).
"As courts of limited jurisdiction, federal courts have the duty to construe their jurisdictional grants narrowly." De Leon, 166 F. Supp. 3d at 173 (citing Destek Grp. v. State of N.H. Pub. Utils. Comm'n., 318 F.3d 32, 38 (1st Cir. 2003)). "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks statutory or constitutional power to adjudicate the case." Prestige Capital Corp. v. Pipeliners of Puerto Rico, Inc., 849 F. Supp. 2d 240, 247 (D.P.R. 2012) (citing Home Builders Ass'n of Mississippi, Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998)). Federal subject matter jurisdiction cannot be presumed and the party invoking it has the burden of demonstrating its existence. See Fabrica de Muebles J.J. Alvarez, Incorporado v. Inversiones Mendoza, Inc., 682 F.3d 26, 32 (1st Cir. 2012).
Where, as here, the FDIC acts as receiver, it "succeeds to all the rights, titles, powers, privileges, and assets of the insured depository institution." Maldonado-Torres v. F.D.I.C. ex rel. R-G Premier Bank, 839 F. Supp. 2d 511, 515 (D.P.R. 2012) (alteration in original) (citing 12 U.S.C. § 1821(d)(2)(A)(i)). "FIRREA establishes a mandatory claims process, which must be exhausted by every claimant seeking payment from the assets of the affected institution." Id. (citing 12 U.S.C. § 1821(d)(13)(D)) (alteration in original). That process was "designed to create an efficient administrative protocol for processing claims against failed banks." Fed. Deposit Ins. Corp. for Doral Bank v. Pedreira-Perez, Civil No. 15-2590 (FAB), 2018 WL 3388509, at *2 (D.P.R. July 11, 2018) (quoting Marquis v. FDIC, 965 F.2d 1148, 1154 (1st Cir. 1992)). Like several other circuits, the First Circuit Court of Appeals has held that compliance with and exhaustion of FIRREA's administrative remedies is mandatory. See, e.g., Proal v. JPMorgan Chase Bank, N.A., 641 F. App'x 9, 10 (1st Cir. 2016); Marquis, 956 F.2d at 1151 ().2
FIRREA's claim review process requires the FDIC to "publish notice that the failed institution's creditors must file [proof of] claims with the FDIC by a specified date, which must be at least ninety days after publication of the notice." Acosta-Ramirez v. Banco Popular de Puerto Rico, 712 F.3d 14, 19 (1st Cir. 2013) (citing 12 U.S.C. § 1821(d)(3)(B)(i)). See also 12 U.S.C§ 1821(d)(3)(C) (). The deadline to file proof of claims is also known as the claims bar date. If a timely claim is filed, then the FDIC has 180 days to approve or disallow it. See Acosta-Ramirez, 712 F.3d at 19 (citing 12 U.S.C. § 1821(d)(5)(A)(i)).
"Claimants then have sixty days from the date of the disallowance or from the expiration of the 180-day administrative decision deadline to seek judicial review in an appropriate federal district court (or to seek administrative review)." Id. (citing 12 U.S.C. § 1821(d)(6)(A)). After the sixty-day judicial or administrative review deadline expires, the FDIC's disallowance becomes final and "claimant[s] shall have no further rights or remedies with respect to such claim." Id. at n.8 (citing 12 U.S.C. § 1821(d)(6)(B)).
As relevant here, FIRREA curbs district courts' jurisdiction over claims or actions where the plaintiffs fail to comply with the administrative claims review process explained above. See 12 U.S.C. § 1821(d)(13)(D). Specifically, the statute provides that:
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