Lindley v. Fed. Deposit Ins. Corp.

• Decision Date: 16 August 2013
• Docket Number: 12–12359.,12–12299,12–12290,12–12292,12–12297,Nos. 12–12015,s. 12–12015
• Citation: 733 F.3d 1043
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: Stephanie LINDLEY, Plaintiff–Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of the business and property of Darby Bank & Trust Company, et al., Drayprop, LLC, et al., Defendants–Appellees. Robert M. Osborne, Jr., Donna Osborne, et al., Plaintiffs–Appellants–Cross–Appellees, v. Federal Deposit Insurance Corporation As receiver of the business and property of Darby Bank & Trust Company, et al., Defendants–Appellees, Drayprop, LLC, Draypark, LLC, et al., Defendants–Appellees Cross–Appellants. Don Reinke, Restore Savannah Development, LLC, Plaintiffs–Appellants Cross Appellees, v. Darby Bank & Trust Co., et al., Defendants–Appellees Cross Appellees, Drayprop, LLC, Draypark, LLC, et al., Defendants–Appellees Cross Appellants. Jim Hunt, trading as the Hunt Club Clothiers, Plaintiff–Appellant Cross Appellee, v. Federal Deposit Insurance Corporation, as Receiver of the business and property of Darby Bank & Trust Company, et al., Defendants Cross Appellees, Drayprop, LLC, Michael Brown, et al., Defendants–Appellees Cross Appellants. Warren Lokey, Plaintiff–Appellant Cross Appellee, v. Federal Deposit Insurance Corporation, As receiver of the business and property of Darby Bank & Trust Co., Defendant–Appellee, Drayprop, LLC, Draypark, LLC, et al., Defendants–Appellees–Cross Appellants. Harris Baking Company, formerly known as Regency Baking Company, Plaintiff–Appellant Cross Appellee, v. Darby Bank & Trust Co., et al., Defendants–Appellees–Cross Appellee, Drayprop, LLC, Michael Brown, et al., Defendants–Appellees–Cross Appellants.

733 F.3d 1043

Stephanie LINDLEY, Plaintiff–Appellant,

v.FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of the business and property of Darby Bank & Trust Company, et al., Drayprop, LLC, et al., Defendants–Appellees.

Robert M. Osborne, Jr., Donna Osborne, et al., Plaintiffs–Appellants–Cross–Appellees,

v.Federal Deposit Insurance Corporation As receiver of the business and property of Darby Bank & Trust Company, et al., Defendants–Appellees,Drayprop, LLC, Draypark, LLC, et al., Defendants–Appellees Cross–Appellants.

Don Reinke, Restore Savannah Development, LLC, Plaintiffs–Appellants Cross Appellees,

v.Darby Bank & Trust Co., et al., Defendants–Appellees Cross Appellees,Drayprop, LLC, Draypark, LLC, et al., Defendants–Appellees Cross Appellants.

Jim Hunt, trading as the Hunt Club Clothiers, Plaintiff–Appellant Cross Appellee,

v.Federal Deposit Insurance Corporation, as Receiver of the business and property of Darby Bank & Trust Company, et al., Defendants Cross Appellees,Drayprop, LLC, Michael Brown, et al., Defendants–Appellees Cross Appellants.

Warren Lokey, Plaintiff–Appellant Cross Appellee,

v.Federal Deposit Insurance Corporation, As receiver of the business and property of Darby Bank & Trust Co., Defendant–Appellee,Drayprop, LLC, Draypark, LLC, et al., Defendants–Appellees–Cross Appellants.

Harris Baking Company, formerly known as Regency Baking Company, Plaintiff–Appellant Cross Appellee,

v.Darby Bank & Trust Co., et al., Defendants–Appellees–Cross Appellee,Drayprop, LLC, Michael Brown, et al., Defendants–Appellees–Cross Appellants.

Nos. 12–12015, 12–12290, 12–12292, 12–12297, 12–12299, 12–12359.

United States Court of Appeals,Eleventh Circuit.

Aug. 16, 2013.

Brent J. Savage, Ashleigh Ruth Madison, Karl Christian Zipperer, Savage Turner Pinckney & Madison, Savannah, GA, for Plaintiff–Appellant.

Nicholas John Laybourn, Kirby Clarice Mason, Hunter MacLean, Savannah, GA, for Defendants–Appellees Cross Appellants.

James Christopher Fox, II, Thompson Hine, LLP, Atlanta, GA, J. Scott Watson, Federal Deposit Insurance Corporation, Arlington, VA, for Defendant–Appellee.

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

Before MARTIN and FAY, Circuit Judges, and GOLDBERG,^* Judge.

MARTIN, Circuit Judge:

This is a consolidated appeal of six orders from the Southern District of Georgia denying motions for remand to state court, granting summary judgment to the FDIC on federal claims, and refusing to exercise supplementary jurisdiction over remaining state law claims against other defendants. After careful review, and having had the benefit of oral argument, we affirm the District Court's denial of remand and award of summary judgment to the FDIC. However, we reverse the District Court's dismissal of the remaining claims against the non-FDIC defendants.

I. BACKGROUND AND PROCEDURAL HISTORY

The original plaintiffs in this action are various parties (Tenants) that independently leased or purchased floor space in the Drayton Tower building in Savannah, Georgia.¹ When funding for renovation of Drayton Tower dried up, the Tenants each brought their own lawsuit against Darby Bank & Trust (Darby Bank) ² and various real estate developers and contractors—including cross-appellants Drayprop LLC, Draypark LLC, Michael Brown, Reuben Croll, and Marley Management, Inc. (collectively, the Drayprop Defendants) ³—in the State Court of Chatham County, Georgia. These actions alleged negligent misrepresentation, fraud, breach of contract, and breach of warranty. In November 2010, the Georgia Department of Banking and Finance closed Darby Bank, took possession of it, and appointed the FDIC as receiver.

Against Darby Bank (now the FDIC), the Tenants alleged fraud and negligent misrepresentation based on statements made about when funds would be made available for renovation of Drayton Tower. The Tenants point to a letter dated May 20, 2005, written by Darby Bank Vice President Salita Hill on bank letterhead, and addressed to the Drayton Tower Condominium Association (Hill Letter). Among other things, the Hill Letter says that “for the refurbishing of Drayton Towers.... Darby Bank & Trust Company will guarantee the availability of funds up to the amount of $1,500,000.00.” The Hill Letter was not countersigned by any party. Neither was it presented to, or approved by, Darby Bank's board of directors (or anybody else at Darby Bank, for that matter). The Tenants never confirmed the veracity of the Hill Letter with anyone at Darby Bank, nor did they enter into any formal agreements with Darby Bank. Instead, their “allegations against Darby Bank are predicated [solely] upon [the Hill Letter].”

Against the Drayprop Defendants, the Tenants alleged fraud and negligent misrepresentation based on statements about when renovations to Drayton Tower would be finished, and breach of contract based on the Drayprop Defendants' failure to finish the work by the dates promised.

After Darby Bank's failure, the FDIC was substituted as a party for Darby Bank in each of the Tenants' lawsuits. The FDIC then removed each case to the U.S. District Court under 12 U.S.C. § 1819(b)(2)(B). The Tenants each moved for remand, citing a limited exception to the FDIC's removal authority for cases in which “only the interpretation of the law of [the] State is necessary” to the disposition. 12 U.S.C. § 1819(b)(2)(D). The FDIC opposed the motions for remand, and moved for summary judgment in each case, arguing that beyond the state law issues presented, federal law compelled dismissal under §§ 1823(e) and 1821(d)(9)(A), and the D'Oench Doctrine.⁴See D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942).

In each case, the District Court agreed with the FDIC and, over the Tenants' objections, denied the motions for remand and dismissed all claims against the FDIC. Then, assuming that it lacked original jurisdiction over the Tenants' pendent state law claims against the Drayprop Defendants, the District Court declined to exercise supplemental jurisdiction under 28 U.S.C. § 1367(c)(3), and dismissed these claims as well. These appeals followed. After each serving individual notices of appeal, the Tenants filed a “Joint Motion to Consolidate Appeals,” which was granted. The Tenants' appeals are now consolidated “for all purposes.”

II. DISCUSSION

The Tenants raise two issues on appeal. First, they argue that the District Court was wrong to deny their motions for remand to Georgia state court on the ground that it lacked jurisdiction over their state law claims. Second, they say that even if the District Court had jurisdiction over their claims against the FDIC, it was wrong for a number of reasons when it granted the FDIC's motions for summary judgment. In their cross-appeal, the Drayprop Defendants raise a third issue. The Drayprop Defendants now argue that after granting summary judgment to the FDIC, the District Court should not have dismissed the pendent state law claims. They point to § 1819(b)(2)(A)—the FDIC jurisdictional statute—to say that the District Court “ha[d] original jurisdiction over [the remaining] state law claims against non-FDIC defendants [even] after the FDIC [was] dismissed from the case.”

We address each argument in turn. “We review de novo whether a district court had federal subject matter jurisdictionfollowing removal.” Castleberry v. Goldome Credit Corp., 408 F.3d 773, 780–81 (11th Cir.2005). We also review a District Court's grant of summary judgment de novo, considering the evidence in the light most favorable to the nonmoving party. Iberiabank v. Beneva 41–I, LLC, 701 F.3d 916, 921 (11th Cir.2012). “Summary judgment is appropriate when there is no genuine issue of material fact and the evidence compels judgment as a matter of law in favor of the moving party.” Id.;Fed.R.Civ.P. 56(a). Finally, we review questions of subject matter jurisdiction and statutory interpretation de novo. Holston Invs., Inc. B.V.I. v. LanLogistics Corp., 677 F.3d 1068, 1070 (11th Cir.2012) (“Whether a court has subject-matter jurisdiction to hear a matter is a question of law that we review de novo.”), cert. dismissed,––– U.S. ––––, 133 S.Ct. 499, 184 L.Ed.2d 335 (2012); Rine v. Imagitas, Inc., 590 F.3d 1215, 1222 (11th Cir.2009) (“The interpretation of a statute is a question of law subject to de novo review.”).⁵

A. THE DISTRICT COURT'S DENIAL OF THE TENANTS' REQUESTS FOR REMAND

The Tenants first argue that the District Court erred in denying their motions to remand because the District Court lacked jurisdiction over their claims. “Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). The corollary to this rule is that absent diversity of citizenship, the only basis for removal is “when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Id. A case that has been removed to federal court “shall be remanded” “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c); see also Gravitt v. Sw. Bell Tel. Co., 430 U.S. 723, 723–24, 97 S.Ct. 1439, 1440, 52 L.Ed.2d 1 (1977) (per curiam).

Here, however, statutes establishing jurisdiction for FDIC matters trump the general rules governing federal subject matter jurisdiction and removal. Indeed, “special provisions” define a federal court's jurisdiction to hear cases involving the FDIC. Castleberry, 408 F.3d at 781. First, “all suits of a civil nature at common law or in equity to which the [FDIC], in any capacity, is a party shall be deemed to arise under the laws of the United States.” 12 U.S.C. § 1819(b)(2)(A). Second, with one limited exception, “the [FDIC] may ... remove any action, suit, or proceeding from a State court to the appropriate United States district court.” Id. § 1819(b)(2...