Interface Kanner, LLC v. Jpmorgan Chase Bank, N.A.

• Decision Date: 10 January 2013
• Docket Number: No. 11–13579.,11–13579.
• Parties: INTERFACE KANNER, LLC, Plaintiff–Counter–Defendant–Appellant, v. JPMORGAN CHASE BANK, N.A., Defendant–Cross–Defendant–Appellee, National Association, Defendant–Appellee, Federal Deposit Insurance Corporation as Receiver for Washington Mutual Bank, Intervenor–Cross Claimant–Counter Claimant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

704 F.3d 927

INTERFACE KANNER, LLC, Plaintiff–Counter–Defendant–Appellant,

v.JPMORGAN CHASE BANK, N.A., Defendant–Cross–Defendant–Appellee,National Association, Defendant–Appellee,Federal Deposit Insurance Corporation as Receiver for Washington Mutual Bank, Intervenor–Cross Claimant–Counter Claimant–Appellee.

No. 11–13579.

United States Court of Appeals,Eleventh Circuit.

Jan. 10, 2013.

Roy Kemp Kasling, Kasling, Hemphill, Dolezal & Atwell, LLP, Austin, TX, Charles Leroy Pickett, Jr., Richard Alan Jarolem, Casey, Ciklin, Lubitz, Martens & O'Connell, West Palm Beach, FL, for Plaintiff–Counter–Defendant–Appellant.

Joseph Brooks, Federal Deposit Insurance Corporation (FDIC), Appellate Litig. Unit, Arlington, VA, Dora Faye Kaufman, Liebler, Gonzalez & Portuondo, PA, Miami, FL, for Intervenor–Cross Claimant–Counter Claimant–Appellee.

Christopher J.M. Collings, Morgan, Lewis & Bockius, LLP, Miami, FL, Kathleen M. Waters, Morgan, Lewis & Bockius, LLP, Los Angeles, CA, for Defendants–Appellees.

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

Before DUBINA, Chief Judge, and PRYOR and ANDERSON, Circuit Judges.

DUBINA, Chief Judge:

Appellant Interface Kanner, LLC (“Interface”) appeals two district court orders that collectively granted Appellee JPMorgan Chase Bank, N.A.'s (“JPMorgan”) motion for summary judgment, denied Interface's motion for summary judgment, and granted Appellee Intervenor Federal Deposit Insurance Corporation's (the “FDIC”) request for declaratory relief. In its order granting summary judgment, the district court found that Interface lacked standing to assert a breach of lease claim against JPMorgan. The district court also declared that the FDIC owes no damages to Interface. For the reasons that follow, we vacate the judgment of the district court and remand with instructions to dismiss for lack of subject matter jurisdiction.

I.

On April 15, 2008, Interface, as lessor, and Washington Mutual Bank (“WaMu”), as lessee, entered into a lease agreement (the “Lease”) involving a parcel of vacant real property located in Martin County, Florida. The Lease obligated Interface to obtain necessary permits, approvals, and utilities for the property and construct a bank on the premises. Thereafter, WaMu would use the property as a bank branch location.

On September 25, 2008, prior to performance, WaMu closed as a “failed bank” and entered receivership under the direction of the FDIC. Consequently, under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), Pub.L. No. 101–73, § 212 (codified as amended by 12 U.S.C. § 1821(c)), all of WaMu's assets transferred to the FDIC. On the same day that WaMu failed, the FDIC exercised powers afforded by FIRREA and entered a Purchase and Assumption Agreement (“P & A Agreement”) with JPMorgan. The P & A Agreement set forth the terms and conditions of the transfer of WaMu's assets and liabilities to JPMorgan. The P & A Agreement provided the following language with respect to the rights of non-parties:

13.5 Successors. All terms and conditions of this Agreement shall be binding on the successors and assigns of the Receiver, the Corporation and [JPMorgan]. Except as otherwise specifically provided in this Agreement, nothing expressed or referred to in this Agreement is intended or shall be construed to give any Person other than the Receiver, the Corporation and [JPMorgan] any legal or equitable right, remedy or claim under or with respect to this Agreement or any provisions contained herein, it being the intention of the parties hereto that this Agreement, the obligations and statements of responsibilities hereunder, and all other conditions and provisions hereof are for the sole and exclusive benefit of the Receiver, the Corporation and [JPMorgan] and for the benefit of no other person.

[R. 37–3 at 45.]

Under the P & A Agreement, JPMorgan acquired some, but not all, of the assets and liabilities which passed from WaMu to the FDIC. While the P & A Agreement provides JPMorgan the option to accept or reject “Bank Premises” leases, it does not include a similar allowance for “Other Real Estate” leases. ¹ Interface argues that JPMorgan assumed the Lease automatically under the P & A Agreement as “Other Real Estate,” while JPMorgan and the FDIC argue that JPMorgan had 90 days to accept or reject the Lease as a “Bank Premises.”

Within 90 days of executing the P & A Agreement, JPMorgan gave the FDIC and Interface notice that it would not assume the Lease. Following JPMorgan's election, the FDIC continued to treat the Lease as a retained liability. Pursuant to 12 U.S.C. § 1821(e)(1)(B), the FDIC, as receiver, is provided discretion to “disaffirm or repudiate any ... lease ... which ... [it] determines to be burdensome.” On March 23, 2009, the FDIC provided Interface written notice that it elected to exercise this statutory right and disaffirm the Lease.

Thereafter, neither the FDIC nor JPMorgan made any payments under the Lease. Thus, on December 23, 2009, Interface provided JPMorgan with a default notice. JPMorgan did not cure this alleged default, resulting in Interface filing this lawsuit against JPMorgan in the Southern District of Florida asserting one count of breach/repudiation and/or abandonment of the Lease. The FDIC intervened and asserted both a counterclaim and cross-claim for declaratory relief. Specifically, the FDIC sought a declaration that (1) the FDIC did not sell, transfer or assign the Lease to JPMorgan, (2) the FDIC timely repudiated the Lease, and (3) Interface failed to file a timely claim with the FDIC and is not entitled to damages. Subsequently, Interface, JPMorgan, and the FDIC all filed cross-motions for summary judgment.

Initially, the district court granted JPMorgan's motion for summary judgment, denied Interface's motion for summary judgment, and instructed the FDIC to notify the court within three days as to whether any issues remained to be litigated regarding its counterclaim and cross-claim. The district court reasoned in its initial order that to assert a breach of lease claim against JPMorgan, Interface must establish the existence of an enforceable contract between Interface and JPMorgan. Further, because Interface and JPMorgan did not enter a contract with each other, the only way that Interface could establish the right to bring suit for breach of lease was through the P & A Agreement. The district court determined, however, that Interface could not enforce the P & A Agreement because it is neither a party to nor an intended third-party beneficiary of the P & A Agreement.

Interface appealed the initial district court order. This court dismissed Interface's appeal sua sponte, however, because the order did not dispose of all claims against all parties. Following dismissal of the premature appeal, the district court issued a second order pertaining to the FDIC's request for declaratory relief and Interface's post-summary judgment motions for a new trial and reconsideration. In its second order, the district court denied both of Interface's post-summary judgment motions and granted declaratory relief to the FDIC. This timely appeal followed.

Interface contends that the district court erred and that it has standing to maintain the current action because (1) it is an intended third-party beneficiary to the P & A Agreement and (2) it is in privity of estate with JPMorgan. Interface also argues that the district court erred in granting declaratory relief to the FDIC.

II.

We review standing determinations de novo. Elend v. Basham, 471 F.3d 1199, 1204 (11th Cir.2006). “We review a summary judgment ruling de novo, viewing the materials presented and drawing all factual inferences in a light most favorable to the non-moving party.” Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir.2005).

III.

A. Interface's Standing to Sue

The district court granted JPMorgan's summary judgment motion on the grounds that Interface is not an intended third-party beneficiary to the P & A Agreement under Florida law. We hold that Interface cannot enforce the P & A Agreement under federal common law because it is not an intended third-party beneficiary of that contract. Consequently, the district court lacked subject matter jurisdiction over Interface's claim against JPMorgan, and the judgment of the district court is vacated. See Nat'l Parks Conservation Ass'n v. Norton, 324 F.3d 1229, 1240 (11th Cir.2003) (“[A]lthough we agree with the [district] court's conclusions regarding justiciability of these claims, ... we vacate its order of summary judgment and remand to the district court with instructions to dismiss these claims pursuant to Fed.R.Civ.P. 12(h)(3).”).

1. Applicable Law

The district court applied Florida law in determining that Interface is not an intended third-party beneficiary to the P & A Agreement because “[t]he question of whether, for standing purposes, a non-party to a contract has a legally enforceable right is a matter of state law.” AT&T Mobility, LLC v. Nat'l Ass'n for Stock Car Auto Racing, Inc., 494 F.3d 1356, 1360 (11th Cir.2007). While this is true, the P & A Agreement includes a choice-of-law provision which provides that federal law controls:

13.4 Governing Law. This agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the federal law of the United States of America, and in the absence of controlling federal law, in accordance with the laws of the state in which the main office of the failed bank is located.

[R. 37–3 at 35.]

In diversity cases, the choice-of-law rules of the forum state determine what law governs, American Family Life Assurance Co. of Columbus, Georgia v. United States Fire Co., 885 F.2d 826, 830 (11th Cir.1989), and under Florida law, courts “enforce choice-of-law provisions unless the law of the chosen forum contravenes strong public policy.” Maxcess, Inc. v. Lucent Technologies, Inc., 433...