Castleberry v. Goldome Credit Corp.

• Decision Date: 09 May 2005
• Docket Number: No. 03-11720.,03-11720.
• Citation: 408 F.3d 773
• Parties: William CASTLEBERRY, Gladdean Castleberry, Plaintiffs-Appellants, v. GOLDOME CREDIT CORPORATION, Defendant-Cross-Defendant-Appellee, Daiwa Finance Corporation, Defendant-Cross-Claimant-Appellee, Daiwa Mortgage Acceptance Corporation, Daiwa America Corporation, Daiwa Securities America, Inc., et al., Defendants-Appellees, Ryland Mortgage Company, Advanta Mortgage Corp., USA, Defendants, Federal Deposit Insurance Corporation, in its individual corporate capacity and in its capacity as receiver of Goldome FSB, Cross-Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

408 F.3d 773

William CASTLEBERRY, Gladdean Castleberry, Plaintiffs-Appellants, v. GOLDOME CREDIT CORPORATION, Defendant-Cross-Defendant-Appellee, Daiwa Finance Corporation, Defendant-Cross-Claimant-Appellee, Daiwa Mortgage Acceptance Corporation, Daiwa America Corporation, Daiwa Securities America, Inc., et al., Defendants-Appellees, Ryland Mortgage Company, Advanta Mortgage Corp., USA, Defendants,

Federal Deposit Insurance Corporation, in its individual corporate capacity and in its capacity as receiver of Goldome FSB, Cross-Defendant-Appellee.

No. 03-11720.

United States Court of Appeals, Eleventh Circuit.

May 9, 2005.

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George C. Douglas, Jr., Law Offices of George C. Douglas, Jr., Birmingham, AL, Clark Carpenter, Wooten, Thornton, Carpenter, O'Brien & Lazenby, Talladega, AL, for Plaintiffs-Appellants.

Thomas Edward Walker, Johnstone, Barton, Proctor, Swedlaw & Naff, Anne P. Wheeler, William D. Jones, III, Johnstone, Barton, Proctor & Powell, LLP, Birmingham, AL, William H. Hardie, Jr., Johnstone, Adams, Bailey, Gordon & Harris, Mobile, AL, Ashley Doherty, FDIC-App. Lit. Unit, Washington, DC, Robert A. Huffaker, Rushton, Stakely, Johnston & Garrett, P.C., James N. Walter, Jr., Montgomery, AL, for Appellees.

Appeal from the United States District Court for the Middle District of Alabama.

Before BIRCH, KRAVITCH and GIBSON^*, Circuit Judges.

BIRCH, Circuit Judge:

This appeal requires us to address federal subject matter jurisdiction under 12 U.S.C. § 1819(b)(2). Following the removal of their class action lawsuit to federal district court by Cross-defendants-appellees Federal Deposit Insurance Corporation-Corporate ("FDIC-Corporate") and Federal Deposit Insurance Corporation-Receiver ("FDIC-Receiver"), Plaintiffs-appellants William and Gladdean Castleberry ("Castleberrys") moved to remand the case back to Alabama state court. The district court denied the Castleberrys's motion to remand and ultimately granted summary judgment in favor of Defendants-appellees Goldome Credit Corporation ("Goldome") and Daiwa Finance Corporation.¹ We AFFIRM.

I. BACKGROUND

This appeal arises from the purchase of a home by the Castleberrys from Masterbuilt Homes, Inc. ("Masterbuilt"). On 4 September 1988, the Castleberrys entered into an "Installment Sales Contract and Security Agreement" with Masterbuilt for the construction and finance of a home on property owned by the Castleberrys in Talladega County, Alabama. The agreement indicated that the purchase price for the home was $58,500 and that the purchase would be financed by a loan from Masterbuilt. Pursuant to the agreement, the Castleberrys executed a note which outlined a 20-year loan with an 11 percent annual percentage rate ("APR"). This arrangement required the Castleberrys to pay Masterbuilt $603.81 per month for 240 months. After the construction was completed by Masterbuilt and approved by the Castleberrys in November 1988, Masterbuilt assigned its ownership in the note to Goldome,² to whom the Castleberrys began making monthly payments.

At that time, Goldome was a wholly-owned subsidiary of Goldome Secondary Markets, Inc., which in turn was a wholly-owned subsidiary of Goldome Federal Savings Bank ("Goldome Bank"), a New York state-chartered bank. On 31 May 1991, as a result of the failure of Goldome Bank, the New York Superintendent of Banks took possession of Goldome Bank and placed it in receivership under FDIC-Receiver. Pursuant to this role, FDIC-Receiver arranged for the liquidation of Goldome Bank assets, which included selling the portfolio of retail credit obligations containing the Castleberrys's note to Daiwa in 1993.

On 17 January 1995, the Castleberrys filed a class action lawsuit against Goldome in Alabama state court and alleged fraud, conspiracy to defraud, suppression, and the charging of excessive finance rates by Goldome in connection with the agreement the Castleberrys negotiated with Masterbuilt. The Castleberrys alleged that Masterbuilt operated as Goldome's agent and that Goldome instructed Masterbuilt to inflate the purchase price of their house to disguise certain finance fees and rates. According to the Castleberrys, Goldome and Masterbuilt had previously agreed upon a discount rate at which Goldome would purchase sales contracts financed by Masterbuilt and that Goldome instructed Masterbuilt how to increase quoted purchase prices to cover the discount. These price increases were allegedly applied only to customers who, like the Castleberrys, were purchasing houses on credit; these increases allegedly would not have been applied if a customer opted to pay cash. Because the alleged discount agreement between Masterbuilt and Goldome was not disclosed to credit customers but rather disguised in an increase in the purchase price of the home, the Castleberrys maintained that they were defrauded. Moreover, because increasing the purchase price resulted in a lower APR, the Castleberrys alleged that the true finance rate of the Masterbuilt loan exceeded the rate allowed under Alabama law. In the case of the Castleberrys, they alleged that the quoted purchase price of their home included $6,998 in hidden finance fees and that the true cash price was $51,502, which made the true interest rate on their loan 12.98 percent, in contrast to the 11 percent APR disclosed in the loan agreement. R9-243 at 7.

On 19 April 1995, the Castleberrys amended their complaint to add Daiwa and other defendants to the litigation. The action was subsequently certified as a class action. On 2 December 1996, without obtaining leave from the state court, Daiwa filed a cross-claim against Goldome and joined FDIC-Corporate and FDIC-Receiver as defendants. Daiwa claimed that these three entities had an obligation to indemnify Daiwa for any liability from the class claims arising out of the debt obligations portfolio it purchased from Goldome. On 9 December 1996, FDIC-Corporate and FDIC-Receiver³ removed the action to federal district court pursuant to 12 U.S.C. § 1819(b)(2)(B). The Castleberrys then filed a motion to remand and argued that removal by FDIC-Corporate and FDIC-Receiver was untimely, improper pursuant to 12 U.S.C. § 1819(b)(2)(D), or ineffectual because Daiwa had not properly joined them as parties pursuant to Alabama law. The district court denied the motion to remand and found that it had subject matter jurisdiction.

Subsequently, following discovery, Goldome moved for summary judgment. To support their claims, the Castleberrys offered to prove the arrangement between Goldome and Masterbuilt through the deposition testimony of George Hicks, a prospective dealer for Goldome. Although Hicks admitted that he never participated in any transaction for Goldome, he testified as to his understanding of Goldome's practices based on letters and rate charts he received from Goldome when he was contemplating acting as a dealer who sold loan contracts to Goldome. He testified that his understanding was that Goldome would instruct a builder to charge an inflated cash price for a home to cover the amount of the discount at which Goldome would subsequently purchase the loan. The district court found that Hicks derived this understanding from a 3 November 1988 letter sent to Hicks by Goldome which read:

Our builder program is designed so that the builder is always paying a discount to provide us with the required yield at the time of purchase. In other words, the A.P.R. disclosed to the customer is always less than our required yield and the builder must buy down the rate. Of course this discount is disclosed up front to the builder and shows on the commitment letter.

R9-243 at 11-12. Hicks also produced rate charts sent to him by Goldome that instructed builders on increasing purchase prices to cover discounts. While the district court found that Hicks did have sufficient firsthand knowledge under Federal Rules of Evidence 602 and 701 to testify as to Goldome's financing practices, it concluded that his testimony alone was insufficient to stave off summary judgment. The district court noted that Hicks's lack of personal experience in selling a loan contract to Goldome undercut the relevance of his testimony. In addition, because the Goldome materials referenced by Hicks were sent to him three weeks after the Castleberrys entered into their agreement with Masterbuilt, the district court found that these documents did not raise a reasonable inference that Masterbuilt had employed the practices outlined in the materials when negotiating with the Castleberrys. Moreover, the district court found that neither Hicks's testimony nor any other evidence offered by the Castleberrys proved that they would have paid less if they paid for their house in cash. Furthermore, the district court found that Masterbuilt was not the agent of Goldome and that Goldome did not ratify any fraud that may have been committed by Masterbuilt. For these reasons, the district court granted summary judgment in favor of Goldome on the Castleberrys's fraud and conspiracy claims. The district court likewise granted summary judgment on the suppression and excessive finance charge claims because it found that neither Goldome nor Masterbuilt had a duty to disclose that the Castleberrys's loan contract could be sold at a discount. Accordingly, on 31 May 2001, the district court entered summary judgment in favor of Goldome against the Castleberrys on all of their claims.

On appeal, Goldome, FDIC-Corporate, and FDIC-Receiver argue that our court lacks subject matter jurisdiction because the Castleberrys failed to timely file notice of appeal.⁴ For their part, the Castleberrys argue that the district court lacked subject matter jurisdiction following removal and erred by denying their motion to remand. Finally, assuming the district court had jurisdiction, the Castleberrys argue that its grant of summary judgment was improper. We will address each...