United States Court of Appeals, District of Columbia Circuit
Lynn Feldman, as Chapter 7 Trustee of the Estates of Image Masters, Inc., OPFM, Inc., d/b/a Personal Financial Management, Inc., Mortgage Assistance Professionals, Inc., Mortgage Assistance Professionals, Inc. II, Discovered Treasurers, Inc., and DIVIDIT, Inc., Appellant
Federal Deposit Insurance Corporation, as Receiver for both Indymac Bank, FSB and Washington Mutual Bank, Appellee
October 16, 2017
from the United States District Court for the District of
Columbia (No. 1:09-cv-02152)
M. DeVito argued the cause and filed the briefs for
Michelle Ognibene, Counsel, Federal Deposit Insurance
Corporation, argued the cause for appellee FDIC. With her on
the brief were Colleen J. Boles, Assistant General Counsel,
and Kathryn R. Norcross, Senior Counsel.
Before: Rogers and Tatel, Circuit Judges, and Edwards, Senior
ROGERS, CIRCUIT JUDGE.
an appeal from the dismissal of a complaint for lack of
subject matter jurisdiction pursuant to Federal Rule of Civil
Procedure 12(b)(1). For the following reasons, we reverse.
Financial Institution Reform, Recovery, and Enforcement Act
("FIRREA") governs the disposition by the Federal
Deposit Insurance Corporation ("FDIC") of claims
against failed banks for which it is acting as receiver. As
to any creditor "shown on the [bank's] books"
or "upon discovery of the name and address of a claimant
not appearing, " the FDIC is required to mail notice of
the deadline - the "bar date" - for filing claims.
12 U.S.C. § 1821(d)(3)(C). Late-filed claims are allowed
where "the claimant did not receive notice of the
appointment of the receiver in time to file such claim before
such date" and "such claim is filed in time to
permit payment of such claim." 12 U.S.C. §
1821(d)(5)(C)(ii). The administrative claims process is a
prerequisite to judicial review. Id., §
Feldman, a Chapter 7 bankruptcy trustee, has attempted to
recover around twelve million dollars in allegedly fraudulent
transfers made as part of a "Ponzi" scheme in
Pennsylvania from 1988 to 2007. When the scheme collapsed on
September 18, 2007, the six businesses owned by the architect
of the scheme filed petitions for voluntary bankruptcy under
Chapter 7, 11 U.S.C. § 701 et seq., in the Eastern
District of Pennsylvania. Washington Mutual was one of the
banks that had extended mortgages to customers of these
businesses, and upon its failure, the FDIC became receiver on
September 25, 2008. See 12 U.S.C. § 1821(c).
The FDIC set December 30, 2008, as the bar date for claims to
be filed and published notice of the receivership and the bar
date in the Wall Street Journal on October 1 and 31,
October 8, 2008, Feldman sent a letter to David Schneider,
president of Washington Mutual Home Loans Inc., to advise of
her authority as Trustee to pursue avoidance in bankruptcy of
transfers of around $12 million by the six debtors, under
sections 544, 547, 548, and 550 and state law, unless the
transfers were subject to exceptions or defenses. She
requested a response within 20 days of proof of any exception
or defense. In the absence of receiving such information, a
check for $12, 034, 717.15 should be made payable to her as
Trustee. Absent a timely response, Feldman further advised
she "may have no alternative but to file a complaint
with the Bankruptcy Court." The letter showed copies to
Ms. Susan R. Taylor, Registered Agent for Washington Mutual
Bank, and Lawrence J. Kotler, Esquire, an attorney with Duane
Morris LLP, Feldman's attorney.
August 3, 2009, Feldman filed a proof of claim with the FDIC.
Upon the FDIC's disallowance of her claim as untimely,
Feldman filed a complaint in the federal district court here
on November 16, 2009. Before responsive pleadings were due,
the district court granted her request for a stay to permit
her to litigate related matters against other banks in
Pennsylvania. Upon resolution of the Pennsylvania litigation,
the district court granted her request to lift the stay, and
on June 30, 2016, Feldman filed an amended complaint. The
complaint described the Ponzi scheme and a series of money
transfers to Washington Mutual that the bank allegedly knew
or should have known were fraudulent. Compl. ¶¶ 9,
49, 51, 53. Of significance here, the complaint alleged that
because her October 8 letter to David Schneider had advised
Washington Mutual and the FDIC of her claim, she was entitled
under FIRREA to receive, and had not received, mailed notice
of the bar date. Compl. ¶ 54. The other relevant
allegations were that she filed a proof of claim with the
FDIC on August 3, 2009, and the FDIC notified her by letter
of September 18, 2009, that her claim would be disallowed as
untimely. Compl. ¶¶ 55, 56.
FDIC moved to dismiss the amended complaint pursuant to
Federal Rules of Civil Procedure 9(b), 12(b)(1), 12(b)(6),
12(b)(7), and 19. It argued that the district court lacked
subject matter jurisdiction because Feldman had filed her
claim after the bar date and had failed to allege a lack of
notice to invoke FIRREA's late-filed claims exception.
The FDIC stated it had closed Washington Mutual on September
25, 2008, and mailed notice to all creditors appearing on its
book and records; neither Feldman's nor the debtors'
names appeared in Washington Mutual records. Stating further
that it had published notice of the bar date in newspapers of
general circulation in October and December 2008, the FDIC
argued that publication notice was sufficient to give Feldman
"at minimum constructive notice." FDIC Motion
to Dismiss at 10-11 (Sept. 30, 2016). Washington Mutual
was, the FDIC asserted, "the largest bank failure in
U.S. history, " id. at 12, and at the very
least Feldman was on inquiry notice of the receivership and
administrative claims process.
opposed the motion to dismiss on various grounds, of which
two are pertinent here. First, she pointed out the FDIC's
position that the district court lacked subject matter
jurisdiction "strips all meaning from subsection
1821(d)(5)(C)(ii), which permits consideration of any claim
filed . . . after the [bar] date specified in the notice
published under paragraph (3)(B)(i)." Pl.'s Mem.
in Opp'n to Def.'s Mot. to Dismiss the Am. Cmplt and
Strike Jury Demand at 5 (Oct. 3, 2016). She cited
federal appellate court decisions suggesting that the failure
to file a timely claim would not strip the court of
jurisdiction and result in dismissal with prejudice, but
rather the appropriate disposition is to dismiss the
complaint so a claim may be administratively exhausted.
Id. at 6-7 (citing Village of Oakwood v. State
Bank & Trust Co., 539 F.3d 373, 385 (6th Cir. 2008);
McCarthy v. FDIC, 348 F.3d 1075, 1081 (9th Cir.
2003); Carlyle Towers Condo. Ass'n, Inc. v.
FDIC, 170 F.3d 301, 309 (2d Cir. 1999)). Second, she
argued that her lack of notice of the receivership was
evident from her October 8, 2008 letter because as an