Wallis v. IndyMac Fed. Bank

• Decision Date: 08 June 2010
• Docket Number: Case No. C09-5500-BHS
• Citation: 717 F.Supp.2d 1195
• Parties: Kathi M. WALLIS, Plaintiff, v. INDYMAC FEDERAL BANK; Wells Fargo Bank; Regional Trustee Services Corporation; and John Doe, Defendants.
• Court: U.S. District Court — Western District of Washington

717 F.Supp.2d 1195

Kathi M. WALLIS, Plaintiff,

v.INDYMAC FEDERAL BANK; Wells Fargo Bank; Regional Trustee Services Corporation; and John Doe, Defendants.

Case No. C09-5500-BHS.

United States District Court,

W.D. Washington,

at Tacoma.

June 8, 2010.

Kathi M. Wallis, Gig Harbor, WA, pro se.

David A. Weibel, Bishop White Marshall & Weibel, PS, Douglas Lowell Davies, Davies Law Group, Seattle, WA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS AND FOR SUMMARY JUDGMENT

BENJAMIN H. SETTLE, District Judge.

This matter comes before the Court on Defendant Federal Deposit Insurance Company's ("FDIC") unopposed motion to dismiss or, alternatively, for summary judgment (Dkt. 11) and Defendant Wells Fargo Bank's ("Wells Fargo") unopposed motion for summary judgment (Dkt. 14). The Court has considered the pleadings filed in support of the respective motions and the remainder of the file and hereby grants the motions for the reasons discussed herein.

I. PROCEDURAL HISTORY

On March 19, 2009, Wallis filed her complaint against the above-captioned Defendants. Dkt. 1 at 7. On August 14, 2009, the matter was removed to federal court. Id. at 1. On March 23, 2010, FDIC filed its motion to dismiss or, in the alternative, for summary judgment on behalf of Defendant IndyMac Federal Bank ("IndyMac"). Dkt. 11. On March 24, 2010, Wells Fargo filed its summary judgment motion. Dkt. 14. Wallis did not timely respond to either motion. On May 5, 2010, FDIC filed its reply brief on behalf of IndyMac. Dkt. 15. On May 10, 2010, Wells Fargo filed its reply brief. Dkt. 16. On May 24, 2010, Wallis filed her response to the summary judgment motions. Dkt. 20. On May 27, Wallis also filed a response to the FDIC's motion to dismiss or alternatively for summary judgment (Dkt. 11). Dkt. 23 (Although Wallis styled this pleading as a "reply," it was a response in opposition to a motion to dismiss).

To date, Wallis' pleadings in opposition have been deficient, in that she has not filed any affidavits or documents in support of her responses. Accordingly, on May 26, 2010, the Court noticed Wallis to this effect pursuant to Rand v. Rowland, 154 F.3d 952 (9th Cir.1998). Dkt. 22 ¹ (ordering Wallis to file a properly supported response and informing her that failure to do so may result in dismissal). Wallis did not file a response. On June 7, 2010, the Court struck the pretrial conference and issued a minute order informing the parties that this matter would be resolved on summary judgment. Dkt. 24.

II. FACTUAL BACKGROUND

This matter involves a challenge to the foreclosure on Wallis' home. See Complaint;see also Declaration of David A. Weibel (Weibel Decl.), Ex. D (notice of trustee's sale). On February 6, 2007, Wallis entered into and subsequently defaulted upon a loan agreement for $577,000. Id., Ex. A; see also, e.g., Ex. C. On November 25, 2008, the deed of trust for this loan was assigned to IndyMac, recorded on December 5, 2008. Id., Ex. B (assignment of deed of trust). Also on November 25, 2008, IndyMac initiated a nonjudicial foreclosure of the Wallis property, recorded on December 5, 2008. On December 24, 2009, Wallis was noticed that the trustee's sale of her home would occur on March 27, 2009. Id., Ex. D.

IndyMac failed as a bank. See Ex. F at 1. FDIC was appointed the receiver for IndyMac on July 11, 2008. Dkt. 1 ¶ 1 (notice of removal). By letter dated July 22, 2009, the FDIC informed Wallis that they had closed IndyMac and taken it into receivership. Ex. F at 1 (informing Wallis of the steps to take if she had a claim against the failed IndyMac). The Board of Directors for the FDIC determined that the IndyMac receivership held "insufficient assets ... to satisfy deposit liabilities in full, [therefore,] there will be no distributions on claims in the general liability class (or any lower priority classes) ...." Id., Ex. N at 3.² The FDIC published this worthlessness determination in the federal register. Id., Ex. O at 2. Because Wallis fell into a class of unsecured creditors that would not receive a distribution on claims, the FDIC informed Wallis of this fact by letter dated January 14, 2010. Id., Ex. I at 2.

On March 19, 2009, Wallis brought suit against the above-captioned Defendants by filing her complaint, apparently in an effort to enjoin the foreclosure action against her property located at "13816-65th Ave. NW, Gig Harbor, WA 98332, tax parcel No. 012224-206-4...." Complaint at 7. In Wallis' complaint she asserted concern over whether the entity foreclosing on her property had legitimate possession of the original note, which bore the name of the person owing the money. Id. at 8. Wallis further alleged that she believed the "original loan violated the Truth in Lending Act" (TILA). These are the extent of the allegations made by Wallis, which are not supported by any documentation other than the complaint and pleadings in opposition to summary judgment. See generally Complaint. Additionally, Wallis complained about removal to federal court in her latest deficient response (Dkt. 23); however, she does not assert any grounds on which removal was improper.

III. DISCUSSION

A. Local Rule 7(b)(2)

When a party "fails to file papers in opposition to a motion, such failure may be considered by the court as an admission that the motion has merit. Local Rule 7(b)(2). When the opposing party is proceeding pro se, as is the case here, some additional latitude is afforded to the pro se litigant.

Therefore, because Wallis is proceeding pro se, the Court carefully considered the basis on which Wells Fargo and the FDIC support their motions and whether such bases are meritorious.

B. The FDIC's Motion to Dismiss

1. Subject Matter Jurisdiction under 12(b)(1)

The FDIC moves the Court to dismiss Wallis' claim underFederal Rule of Civil Procedure 12(b)(1), which provides that a court may dismiss a claim for "lack of jurisdiction over the subject matter[.]" Fed.R.Civ.P. 12(b)(1). The FDIC argues that Wallis did not exhaust the claims process as set forth in 12 U.S.C. § 1821(d)(3)-(13). Congress granted the FDIC authority to act as receiver for failed banks and, when acting as such, tasked it with managing the failed banks' assets and its distributions to legitimate depositors and creditors. See 12 U.S.C. §§ 1821(d)(2)(A)(ii); 1821(d)(2)(B) & (E); see also Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101-73, 103 Stat. 183 ("FIRREA").

Under FIRREA, Congress established a means for the processing of claims, including those like Wallis'. See 12 U.S.C. § 1821(d)(3)-(13). This section requires all claims to be submitted to the FDIC within 90 days of the FDIC's mailing of a claims form. 12 U.S.C. § 1821(d)(3)(B). The FDIC will have 180 days to review and resolve such a claim without resorting to litigation. See 12 U.S.C. § 1821(d)(5)(A)(i). During this mandatory claims process, the courts do not have jurisdiction over such claims. See McCarthy v. FDIC, 348 F.3d 1075, 1077 (9th Cir.2003) (noting that jurisdiction by courts may be asserted over such claims "after the administrative claims process has been completed").

Here, it does not appear from the record that Wallis ever instituted the mandatory claims process, even though she was notified of the need to do so by the FDIC on July 22, 2009. As a result, Wallis failed to exhaust her remedies under the mandatory administrative claims process. Accordingly, the Court lacks subject matter jurisdiction to hear this matter and dismisses the case with prejudice.

2. Prudential Mootness

Two varieties of mootness exist: Article III mootness and prudential mootness. Under Article III, section 2 of the United States Constitution, federal courts have jurisdiction to adjudicate only actual "Cases" or "Controversies." U.S. CONST., art. III, § 2, cl. 1. "[A]n actual controversy must be extant at all stages of review, not merely at the time the complaint is filed." Seven Words LLC v. Network Solutions, 260 F.3d 1089, 1095 (9th Cir.2001) (quoting Arizonans for Official English v. Arizona, 520 U.S. 43, 67, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997)); see also Cook Inlet Treaty Tribes v. Shalala, 166 F.3d 986, 989 (9th Cir.1999) ("The twin pillars of standing and 'case or controversy' go to the heart of Article III jurisdiction. The corollary to these principles is that federal courts have no jurisdiction to hear a case that is moot, that is, where no actual or live controversy exists"); Rosetti v. Shalala, 12 F.3d 1216, 1223 (3rd Cir.1994) ("Article III does not permit federal courts to decide moot cases").

"On the other hand, prudential mootness, '[t]he cousin of the mootness doctrine, in its strict Article III sense, is a melange of doctrines relating to the court's discretion in matters of remedy and judicial administration.' " Ali v. Cangemi, 419 F.3d 722, 724 (8th Cir.2005) (en banc) (quoting Chamber of Commerce v. United States Dep't of Energy, 627 F.2d 289, 291 (D.C.Cir.1980)). "Even if a court has jurisdiction under Article III to decide a case, prudential concerns may militate against the use of judicial power, i.e., the court 'should treat [the case] as moot for prudential reasons.' " Cangemi, 419 F.3d at 724 (quoting United States v. (Under Seal), 757 F.2d 600, 603 (4th Cir.1985)).

"Under the doctrine of prudential mootness, there are circumstances under which a controversy, not constitutionallymoot, is so 'attenuated that considerations of prudence and comity for coordinate branches of government counsel the court to stay its hand, and to withhold relief it has the power to grant.' " Fletcher v. United States, 116 F.3d 1315, 1321 (10th Cir.1997) (quoting Chamber of Commerce, 627 F.2d at 291). "Where it is so unlikely that the court's grant of [remedy] will actually relieve the injury, the doctrine of prudential mootness-a facet of equity-comes into play. This concept is concerned, not with the court's power under Article III to provide relief, but with the court's discretion in...