Punzalan v. F.D.I.C.

• Decision Date: 06 July 2009
• Docket Number: No. EP-09-CV-87-PRM.,EP-09-CV-87-PRM.
• Citation: 633 F.Supp.2d 406
• Parties: Angelita PUNZALAN et al., Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION and JP Morgan Chase Bank, N.A., Defendants.
• Court: U.S. District Court — Western District of Texas

633 F.Supp.2d 406

Angelita PUNZALAN et al., Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION and JP Morgan Chase Bank, N.A., Defendants.

No. EP-09-CV-87-PRM.

United States District Court, W.D. Texas, El Paso Division.

July 6, 2009.

COPYRIGHT MATERIAL OMITTED

James B. Wilcox, Jr., James B. Wilcox, Jr., LLC, Washington, DC, Victor M. Firth, Firth Johnston Martinez, El Paso, TX, for Plaintiffs.

David A. Super, Elysa M. Dishman, Richard P. Sobiecki, Samuel J. Waldon, Baker Botts LLP, Washington, DC, John R. Jones, Bickerstaff Heath Delgado Acosta LLP, Austin, TX, Alejandro Acosta, Jr., Bickerstaff Heath Delgado Acosta LLP, El Paso, TX, for Defendants.

ORDER GRANTING DEFENDANT FDIC's MOTION TO DISMISS

PHILIP R. MARTINEZ, District Judge.

On this day, the Court considered Defendant Federal Deposit Insurance Corporation's (FDIC) "Opposed Motion to Dismiss for Lack of Subject Matter Jurisdiction," filed on April 14, 2009; the Punzalans' "Opposition to Defendant FDIC/Receiver's Motion to Dismiss for Lack of Subject Matter Jurisdiction," filed on April 27, 2009; and FDIC's "Reply in Support of its Motion to Dismiss for Lack of Subject Matter Jurisdiction," filed on May 11, 2009, in the above-captioned cause. After due consideration, the Court is of the opinion that the motion should be granted and that the Punzalans' cause of action against FDIC should be dismissed.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Punzalans' lawsuit in Texas state court

On April 2, 2003, the Punzalans filed a lawsuit for wrongful foreclosure on behalf of themselves and unnamed plaintiffs against HomeSide and HomeSide Lending Delaware, LLC in County Court at Law Number Five in El Paso, Texas. Pls.' Orig. Class Action Pet. ¶ 32. In the suit, the Punzalans alleged: (1) that HomeSide's foreclosure procedures violated TEX. PROP. CODE § 51.002(d), resulting in the unlawful foreclosure of their home; and (2) that as a consequence of this allegedly unlawful foreclosure, HomeSide unjustly enriched itself. Pls.' First Am. Compl. ¶¶ 31-34, ¶¶ 35-37. Washington Mutual Bank (Washington Mutual) answered the Punzalans' complaint, identifying itself as the legal successor to HomeSide, and thus the proper defendant in the Punzalans' lawsuit. Pls.' First Am. Compl. ¶ 2. On May 2, 2008, following a protracted discovery dispute, the state trial court denied the Punzalans' motion for class certification, and the Punzalans subsequently appealed that denial to the Court of Appeals for the Eighth District of Texas, on June 17, 2008. Pls.' Opp'n 2.

B. FDIC's appointment as receiver and Chase Bank's purchase of Washington Mutual

On September 25, 2008, during the pendency of the Punzalans' appeal, the Office of Thrift Supervision (OTS)—acting pursuant to its authority under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)—closed Washington Mutual and appointed FDIC as its Receiver.¹ OTS Order No. 2008-36; 12 U.S.C. § 1821(c) (2006) (providing for the appointment of FDIC as Receiver of a failed depository institution). Contemporaneous with the appointment of FDIC as Receiver, J.P Morgan Chase Bank, National Association (Chase Bank) entered into a contract entitled "Purchase and Assumption Agreement" (the P & A Agreement) with FDIC. Def.'s Mot. to Dismiss Ex. E. Under Section 2.5 of the P & A Agreement, Chase Bank purchased Washington Mutual on the condition that FDIC remain responsible for any "Borrower Claims" against Washington Mutual "related in any way to any loan or commitment to lend made by [Washington Mutual] prior to failure . . . or otherwise arising in connection with the Washington Mutual's lending or loan purchase activities[.]" Def.'s Mot. to Dismiss, Ex. E. In exchange, pursuant to Section 2.1 of the P & A Agreement, Chase Bank promised to assume responsibility for all other liabilities, specifically including "all mortgage servicing rights and obligations of [Washington Mutual]." Pl.'s Opp'n 4 (quoting Def.'s Mot. to Dismiss Ex. E).

On December 5, 2008, FDIC filed a pair of motions in the Court of Appeals for the Eighth District of Texas, requesting that it be substituted for Washington Mutual as defendant, and for a stay of the Punzalans' appeal for ninety days as required by FIRREA. FDIC Receiver's Motion to Substitute Itself for WAMU, Punzalan, No.2003-1308 (Tex.App.-El Paso, filed Dec. 5, 2008); See 12 U.S.C. § 1821(d)(12) (requiring courts to grant a ninety-day stay upon FDIC's request, of any pending litigation against a failed bank for which FDIC has been appointed receiver). The Court of Appeals substituted FDIC and stayed the appeal in an order dated January 14, 2009. Def.'s Mot. to Dismiss Ex. G.

C. FDIC's attempt to comply with FIRREA's notice requirements

On December 18, 2008, while the Court of Appeals considered FDIC's motions for stay and substitution, FDIC attempted to mail individual notice of FIRREA's administrative-claims procedure to the Punzalans.² Def.'s Mot. to Dismiss 2 Ex. B. In that notice, FDIC advised the Punzalans that they had to submit their claims against Washington Mutual to FDIC for administrative review by March 18, 2009, the "claims bar date." Id. Additionally, FDIC published and re-published similar notice in various newspapers of wide distribution, as required by FIRREA. (Id. at 5, Ex. A, attach. 2-3); see 12 U.S.C. § 1821(d)(3)(B) (requiring publication notice).

The Punzalans never filed an administrative claim with FDIC.

D. FDIC's removal to federal court and its motion to dismiss

On March 9, 2009, after obtaining the stay of the Punzalans' appeal in state court, FDIC removed the case to federal court. Docket No. 1. On April 14, 2009, FDIC filed a motion to dismiss for lack of subject-matter jurisdiction pursuant to FED.R.CIV.P. 12(b)(1). Def.'s Mot. to Dismiss 1.

In its motion, FDIC "requests that the Court dismiss Plaintiffs' action for lack of subject matter jurisdiction because Plaintiffs have failed to exhaust the mandatory administrative claims process set forth in 12 U.S.C. §§ 1821(d)(3) through (13)." Id. In response, the Punzalans first argue that their particular claim is one assumed by Chase Bank under Section 2.1 of the P & A Agreement because their loan was one that was "serviced," and not owned by Washington Mutual.³ Alternatively, the Punzalans argue that, even if Washington Mutual did own the Punzalans' loan and FDIC thus assumed their claim under Section 2.5 of the P & A Agreement, FDIC may not subject their claim to FIRREA's administrative-claims procedure because FDIC mailed the Punzalans' notice to the wrong address, failing to satisfy FIREA's mailing requirements. Pls.' Opp'n 8-9; see 12 U.S.C. § 1821(d)(3)(C) (requiring FDIC to mail notice to known claimants and creditors).

II. LEGAL STANDARD

Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, a party may challenge a federal court's subjectmatter jurisdiction. FED.R.CIV.P. 12(b)(1). Federal courts are courts of limited jurisdiction, and therefore have power to adjudicate claims only when jurisdiction is conferred by statute or the Constitution. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Stockman v. Fed. Election Comm'n, 138 F.3d 144, 151 (5th Cir.1998). A court properly dismisses a case for lack of subject-matter jurisdiction when it lacks the statutory or constitutional power to adjudicate the case. Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir.1998). Because "[t]he burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction," once a defendant files its motion to dismiss for lack of subject-matter jurisdiction, "the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist." Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001) (citing in part Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir.1980)); Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.2001).

The Fifth Circuit has recognized two types of challenges to a court's subject-matter jurisdiction under Rule 12(b)(1): "facial attacks" and "factual attacks." Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir.1981) (citing Menchaca, 613 F.2d at 511). A "facial attack" occurs when a defendant files a Rule 12(b)(1) motion unaccompanied by supporting evidence. Id. In that instance, "the trial court is required merely to look to the sufficiency of the allegations in the complaint because they are presumed to be true." Id. In contrast, "if a defendant makes a `factual attack' upon the court's subject matter jurisdiction over the lawsuit, the defendant submits affidavits, testimony or other evidentiary materials." Id. In the event of a factual attack, "a plaintiff is also required to submit facts through some evidentiary method and has the burden of proving by a preponderance of the evidence that the trial court does have subject matter jurisdiction." Id. "In short, no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Williamson v. Tucker, 645 F.2d 404, 413 (1981) (quoting Mortensen v. First Fed. Savs. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977)) (internal quotations omitted). "This means that the district court is not limited to an inquiry into undisputed facts. It may hear conflicting written and oral evidence and decide for itself the factual issues which determine jurisdiction." Id.

"The district court consequently has the power to dismiss for lack of subject-matter jurisdiction on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Id.; accord Den Norske Stats Oljeselskap As v. HeereMac V.O.F., 241 F.3d...