In re U.S. Ins. Group, LLC

• Decision Date: 09 September 2010
• Docket Number: Adversary No. 09-1174,Bankruptcy No. 09-12487
• Parties: In re U.S. INSURANCE GROUP, LLC, Debtor. Richard P. Jahn, Jr., Plaintiff v. Bedford Consulting Group, LLC; Charles J. Antonucci, Sr.; and The Park Avenue Bank, by the Federal Deposit Insurance Corporation, Receiver for The Park Avenue Bank, Defendants.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee

441 B.R. 294

In re U.S. INSURANCE GROUP, LLC, Debtor.Richard P. Jahn, Jr., Plaintiff

v.Bedford Consulting Group, LLC; Charles J. Antonucci, Sr.; and The Park Avenue Bank, by the Federal Deposit Insurance Corporation, Receiver for The Park Avenue Bank, Defendants.

Bankruptcy No. 09-12487.

Adversary No. 09-1174.

United States Bankruptcy Court, E.D. Tennessee.

Sept. 9, 2010.

David L. Moss, James A. Fields, Fields & Moss, P.C., Chattanooga, TN, for Plaintiff.

Gregory C. Logue, Woolf, McClane, Bright, Allen & Carpenter, Knoxville, TN, for Defendants.

Charles J. Antonucci, Sr., Fishkill, NY, pro se.

MEMORANDUM

JOHN C. COOK, Bankruptcy Judge.

This proceeding is before the court on a motion to dismiss filed by the Federal Deposit Insurance Corporation ("FDIC") in its capacity as receiver for The Park Avenue Bank. The FDIC argues that the claims review provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") preclude this court from acquiring jurisdiction over the trustee's avoidance claims against the FDIC as receiver for bank. The trustee, relying on the relation back doctrine embodied in Federal Rule of Civil Procedure 15(c), argues that this court can continue to hear the case.

I

The record reflects that, on April 22, 2009, the debtor U.S. Insurance Group, LLC, filed a petition under chapter 11 of the Bankruptcy Code. The case was converted to chapter 7 on June 18, 2009, and Richard P. Jahn, Jr. was appointed the chapter 7 trustee.

The trustee initiated this adversary proceeding on November 3, 2009, by filing a complaint against defendant Bedford Consulting Group, LLC. The complaint alleges that the debtor made three wire transfers totaling $6.5 million to Bedford Consulting Group without receiving any value in return. Consequently, the complaint seeks to avoid and recover each transfer as a fraudulent transfer pursuant to 11 U.S.C. §§ 548(a)(1) and 550.

On May 3, 2010, the trustee moved to amend the complaint. The court granted the motion on May 27, 2010, and the amended complaint was filed the next day. The amended complaint carries forward the allegations of the original complaint, but also adds two new defendants: Charles J. Antonucci, Sr., and The Park Avenue Bank through its receiver, the FDIC.

According to the amended complaint, Antonucci owned a controlling interest in Bedford Consulting Group and he was also President, CEO, and a director of The Park Avenue Bank at the times of the transfers. The complaint alleges that Bedford Consulting Group and Antonucci, through "false and misleading representations," obtained authority over the debtor's account at the bank and used that authority to effectuate transfers from the debtor to Bedford Consulting Group. Once Bedford Consulting Group had possession, those funds were further transferred to Antonucci's personal account and then transferred back to The Park Avenue Bank under the guise of a "capital contribution."

Between the filing of the original and amended complaints, the New York State Banking Department closed The Park Avenue Bank and the FDIC was appointed receiver. In compliance with FIRREA, the trustee filed a claim against the bank with the FDIC, but that claim was disallowed on June 17, 2010. Following that disallowance, the FDIC, in its capacity as receiver, filed a motion to dismiss the trustee's suit against The Park Avenue Bank, arguing that this court has no subject matter jurisdiction to hear the trustee's action against the FDIC as receiver for the bank. Rather, the FDIC argues that the trustee's only option under FIRREA is to file a lawsuit against the FDIC as receiver for the bank in federal court, either in the district of the bank's principal place of business, which would be in New York, orin the district court in the District of Columbia. The trustee contests the motion to dismiss but has also filed suit in the District of Columbia in an effort to obtain judicial review in the event this court agrees with the FDIC and grants the motion to dismiss.

II.

The relevant portions of FIRREA that govern the dispute raised by the FDIC's motion to dismiss are as follows. 12 U.S.C. § 1821(d)(13)(D) provides:

Except as otherwise provided in this subsection, no court shall have jurisdiction over—

(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution for which the Corporation has been appointed receiver, including assets which the Corporation may acquire from itself as such receiver; or

(ii) any claim relating to any act or omission of such institution or the Corporation as receiver.

Rather, claimants must file their claims with the FDIC. 12 U.S.C. § 1821(d)(5). Nevertheless, if a claim is disallowed, the claimant may seek district court review under § 1821(d)(6)(A), which provides, in relevant part:

[T]he claimant may ... file suit on such claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district in which the depository institution's principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim).

Because the trustee had filed his original avoidance action against defendant Bedford Consulting Group before the FDIC was appointed receiver for The Park Avenue Bank, the trustee contends that, by adding defendants Antonucci and the FDIC, as receiver for the bank, it is merely continuing an action commenced before the appointment of the FDIC as receiver, which is permitted by the language of § 1821(d)(6)(A). The FDIC asserts that no action was commenced against The Park Avenue Bank before the FDIC was appointed receiver and therefore § 1821(d)(6)(A) limits the districts in which the trustee may bring suit against the FDIC to the district in which the bank has its principal place of business or the district court for the District of Columbia. Ultimately, the question here turns on when the action was "commenced" against the bank through its receiver, the FDIC. If the trustee's suit was commenced pre-receivership, this court has jurisdiction to "continue" hearing this case. On the other hand, if the commencement did not occur until after the FDIC's receivership began, then § 1821(d)(6)(A) restricts subject matter jurisdiction to the relevant district court in New York or the District Court for the District of Columbia.

"A civil action is commenced by filing a complaint with the court." Fed.R.Civ.P. 3. The FDIC argues that the case was "commenced" no earlier than the filing of the amended complaint that first added the FDIC, as receiver for the bank, as a defendant. The trustee responds that its amended complaint should be construed to relate back to the date of the original filing, thereby rendering the claim a pre-receivership one.

Federal Rule of Civil Procedure 15(c), made applicable in bankruptcy adversary proceedings by Federal Rule of Bankruptcy Procedure 7015, provides for the relation back of amendments. Where theamendment involves the change of a party, Rule 15(c)(1)(C) applies and provides:

An amendment to a pleading relates back to the date of the original pleading when:

....

(C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and the complaint, the party to be brought in by amendment:

(i) received such notice of the action that it will not be prejudiced in defending on the merits; and

(ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party's identity.

Although Rule 15(c) is primarily directed at statute of limitations issues, it has been applied in the FIRREA context. See Carney v. Resolution Trust Corp., 19 F.3d 950, 954 (5th Cir.1994) (applying relation back doctrine in the context of § 1821(d)(13)(D)). In asserting that Rule 15(c) relation back should apply here, the trustee primarily relies on Global Crossing Estate Representative v. Alta Partners Holdings LDC (In re Global Crossing, Ltd.), 385 B.R. 52 (Bankr.S.D.N.Y.2008), an opinion that permitted application of the relation-back doctrine to added parties in an avoidance action.

The court in Global Crossing adopted a view that the phrase "mistake concerning the proper party's identity" should be given a broad construction. In so holding, the court rejected the view that "only a 'misnomer or misidentification' of an existing party can constitute a 'mistake concerning the identity of the proper party' under Rule 15(c)." Id. at...