Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca11-13-15058/USCOURTS-ca11-13-15058-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 13-15058

________________________

D.C. Docket No. 9:12-cv-80533-DMM

FEDERAL DEPOSIT INSURANCE CORPORATION,

Plaintiff–Appellee,

versus

FIRST AMERICAN TITLE INSURANCE COMPANY,

Defendant–Appellant.

________________________

Appeal from the United States District Court

for the Southern District of Florida

________________________

(April 28, 2015)

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 1 of 27
2

Before ED CARNES, Chief Judge, RESTANI,

∗ Judge, and MERRYDAY,**

District Judge.

PER CURIAM: 

Amid the surge of bank failures during the notorious financial turbulence of 

2008–2009, the Federal Deposit Insurance Company, serving as receiver, acquired 

scores of failed banks. Through a standard “Purchase and Assumption 

Agreement,” the FDIC promptly sold to a successor bank a failed bank’s working 

assets (for example, cash, securities, loans, real estate, furnishings, and equipment) 

and liabilities (for example, customer deposits and loans from the Federal Reserve 

Bank). But the purchase agreement reserves to the FDIC an array of rights to sue 

(for example, the right to sue an officer, director, shareholder, attorney, accountant, 

or “any other Person”) for an actionable event that occurred before the bank failed. 

In other words, the successor bank bought from the FDIC the opportunities and 

credit risks of banking, which is the bank’s primary business, but not the 

exigencies of the failed bank’s litigation, which is not the bank’s primary business.

In this action, the FDIC sues a title insurer for a loss attributable to a 

mortgage fraud perpetrated against the failed bank, which served as the lender in 

two real estate closings that occurred before the bank’s failure. The title insurer’s 

 ∗ Honorable Jane A. Restani, United States Court of International Trade Judge, sitting by 

designation.

** Honorable Steven D. Merryday, United States District Judge for the Middle District of Florida, 

sitting by designation.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 2 of 27
3

principal claim is that the purchase agreement conveys to the successor bank —

rather than reserves to the FDIC — the right to sue for the loss. After a bench trial, 

the district court in a detailed and careful opinion (1) correctly construed the 

purchase agreement to reserve to the FDIC the right to sue the title insurer and 

(2) correctly resolved the title insurer’s remaining defenses.

1. Background

In 2007, Nathaniel Ray agreed to acquire — under false pretenses — two 

loans, each secured by a mortgage, to purchase two residential condominium units. 

Acting for the sellers of the units, Craig Turturo, whose testimony the district court

explicitly found “not credible,” agreed to provide the money for Ray’s down 

payments. Craig Turturo enlisted Frank Turturo Jr., his brother, to appraise the

units; Craig Turturo’s father, Frank Turturo Sr., invited his client U.S. Mortgage 

Bankers to serve as the broker. Working for U.S. Mortgage Bankers was 

Christopher Albert, who is the son of Kamel and Elizabeth Albert (the sellers of 

one unit) and the brother of Brian Albert (the seller of the other unit).

U.S. Mortgage Bankers introduced BankUnited, F.S.B., (Old Bank) to Ray, 

who in his applications for the loans materially exaggerated his income. Unaware 

of Ray’s falsification, Old Bank accepted the application and extended the two 

loans to Ray. First American Title Insurance Company insured the title to each 

unit.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 3 of 27
4

As an independent sales representative for Property Transfer Services, Inc., 

Frank Turturo Sr. recommended to First American that Property Transfer serve as 

the closing agent. Accepting Frank Turturo Sr.’s recommendation, First American 

designated Property Transfer as the closing agent and issued two “closing 

protection letters,” by which First American agreed to reimburse Old Bank for any 

“actual loss” “arising out of” any prospective “failure” or “dishonesty” by Property 

Transfer in serving as the closing agent. Old Bank specifically instructed Property 

Transfer to ensure during each of the two closings that Ray use only his money for 

the down payment.

Although Property Transfer certified that Ray paid each down payment with 

only his money, Ray provided no money for the down payment at either closing, 

each of which Property Transfer nonetheless completed. After the closings, 

Masterhost, Inc. — an entity with no discernible connection to Ray — wired 

money to Property Transfer for each down payment. Masterhost was owned by 

Christopher Albert (the son of the sellers of one unit and the brother of the seller of 

the other unit). On the day of each closing, Craig Turturo presented to Ray the key 

to each unit. Six months later, Ray defaulted on each loan.

During the financial turmoil of 2009, the Office of Thrift Supervision of the 

United States Department of the Treasury closed Old Bank and established the 

Federal Deposit Insurance Corporation as Old Bank’s receiver. In May 2009, 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 4 of 27
5

employing the FDIC’s typical “Purchase and Assumption Agreement,” the FDIC 

conveyed the bulk of Old Bank’s assets to BankUnited (New Bank). Entitled 

“Purchase of Assets,” Article III of the purchase agreement states in Section 3.1:

Assets Purchased by Assuming Bank. With the exception of 

certain assets expressly excluded in Sections 3.5 and 3.6, the 

Assuming Bank hereby purchases from the Receiver, and the 

Receiver hereby sells, assigns, transfers, conveys, and delivers 

to the Assuming Bank, all right, title, and interest of the 

Receiver in and to all of the assets (real, personal and mixed, 

wherever located and however acquired) of the Failed Bank 

whether or not reflected on the books of the Failed Bank as of 

Bank Closing.

Section 3.5 exempts from the FDIC’s sale to New Bank several categories of 

assets:

Assets Not Purchased by Assuming Bank. The Assuming Bank 

does not purchase, acquire or assume, or (except as otherwise 

expressly provided in this Agreement) obtain an option to 

purchase, acquire or assume under this Agreement:

(a) . . .

(b) any interest, right, action, claim, or judgment against

(i) any officer, director, employee, accountant, attorney, 

or any other Person employed or retained by the Failed 

Bank or any Subsidiary of the Failed Bank on or prior 

to Bank Closing arising out of any act or omission of 

such Person in such capacity, (ii) any underwriter of 

financial institution bonds, banker’s blanket bonds or 

any other insurance policy of the Failed Bank, (iii) any 

shareholder or holding company of the Failed Bank, or 

(iv) any other Person whose action or inaction may be 

related to any loss (exclusive of any loss resulting from 

such Person’s failure to pay on a Loan made by the 

Failed Bank) incurred by the Failed Bank; provided, 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 5 of 27
6

that for the purposes hereof, the acts, omissions or other 

events giving rise to any such claim shall have occurred 

on or before Bank Closing, regardless of when any such 

claim is discovered and regardless of whether any such 

claim is made with respect to a financial institution 

bond, banker’s blanket bond, or any other insurance 

policy of the Failed Bank in force as of Bank 

Closing . . . .

Before failing, Old Bank began a foreclosure action against each of Ray’s 

two units. After gaining clear title to each unit, New Bank sold each unit. For one

unit, the principal balance was $278,904.90, the unpaid interest was $38,917.70, 

and the other unpaid expenses were $19,589.80. New Bank received $71,361.74 

from the sale. For the other unit, the principal balance was $278,904.90, the 

unpaid interest was $25,468.15, and the other unpaid expenses were $3,774.31. 

New Bank received $72,762.29 from the sale.

In March 2012, the FDIC served Property Transfer an administrative 

subpoena for documents pertinent to the closing of each of Old Bank’s loans to 

Ray. In April 2012, Property Transfer sent responsive documents to the FDIC. 

Eight days after receiving the documents, the FDIC submitted to First American a 

written notice of the FDIC’s claims under the closing protection letters. In May 

2012, the FDIC sued First American under the closing protection letters for breach 

of contract (Counts V and VIII) to recover the “actual loss” that “arose out of”

Property Transfer’s “failure” and “dishonesty.” Also, the FDIC sued Property 

Transfer for breach of contract (Counts I and V), for breach of fiduciary duty 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 6 of 27
7

(Counts II and VI), and for negligent misrepresentation (Counts III and VII). 

Property Transfer settled; First American did not.

After a bench trial of the FDIC’s claims against First American, the district 

court entered judgment for the FDIC and against First American on each count 

alleging breach of contract. On appeal, First American presents four issues:

1. Whether the district court erred in concluding that the 

FDIC could assert breach-of-contract claims against First 

American based on the closing protection letters that once 

belonged to BankUnited, F.S.B., (Old Bank) when the FDIC, as 

Old Bank’s receiver, sold all of Old Bank’s assets — including 

the closing protection letters — to Bank United, N.A., (New 

Bank).

2. Whether the district court erred in construing the closing 

protection letter notice provision — expressly requiring notice 

to First American within 90 days of discovery of a “loss” — to 

require notice only after discovery that the loss might support a 

closing protection letter claim, and in allowing the FDIC to 

recover despite sending notice more than two years after its 

actual loss.

3. Whether the FDIC proved at trial that its actual loss arose 

from the conduct of the title agent when, as a result of the 

closings, Old Bank received first-priority liens on both 

properties, successfully foreclosed on both properties, and 

could have sought a deficiency judgment against the borrower.

4. Whether the district court erred in awarding more than 

$500,000 in damages by accepting a calculation methodology 

based on losses incurred by a third party without regard to the 

loss actually incurred by the FDIC, and by improperly applying 

Florida’s collateral source rule to ignore the FDIC’s insurance 

recovery. 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 7 of 27
8

2. Standard of review

To the extent that First American challenges a finding of fact by the district 

court, review is for clear error. Jones v. United Space Alliance, L.L.C., 494 F.3d 

1306, 1309 (11th Cir. 2007). To the extent that First American challenges a 

finding of law by the district court, review is de novo. Jones, 494 F.3d at 1309. 

When calculating damages, the district court interpreted the meaning of “actual 

loss” in the closing protection letters. Because the interpretation is an issue of law, 

review of the district court’s calculation of damages is de novo. Golden Door 

Jewelry Creations, Inc. v. Lloyds Underwriters Non-Marine Ass’n, 117 F.3d 

1328, 1339 (11th Cir. 1997).

First American challenges the district court’s interpretation of the purchase 

agreement, through which the FDIC sold Old Bank’s assets to New Bank. The 

district court found the purchase agreement unambiguous and assessed the 

agreement’s “plain meaning.” Similarly, First American advocates a “plain and 

unambiguous reading” of the purchase agreement. A district court’s interpretation 

of an unambiguous contract presents a question of law, and review is de novo. 

United Ben. Life Ins. Co. v. U.S. Life Ins. Co., 36 F.3d 1063, 1065 (11th Cir. 1994). 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 8 of 27
9

3. Right to assert a breach-of-contract claim

First American argues that, because the FDIC sold Old Bank’s assets, 

including the closing protection letters, to New Bank and because the FDIC no 

longer “owns” the closing protection letters, the district court erred in concluding 

that the FDIC could assert a breach-of-contract claim against First American under 

the closing protection letters. Interpretation of the purchase agreement, by which 

the FDIC sold Old Bank’s assets to New Bank, determines whether the FDIC sold 

or retained the right to assert a breach-of-contract claim against First American 

under the closing protection letters.

In the first sentence of Section 3.1 of the purchase agreement, the FDIC 

“sells, assigns, transfers, conveys, and delivers” to New Bank “all right . . . in and 

to all of the assets.” However, Section 3.1 expressly excludes from the 

conveyance the assets specified in Sections 3.5 and 3.6.1

 Schedule 3.2 of the 

purchase agreement defines as an asset all “Loans,” and Article I defines “Loans” 

as “all . . . claims . . . arising under or based upon Credit Documents.” Article I 

defines “Credit Documents” as “the agreements, instruments, certificates or other 

documents at any time evidencing or otherwise relating to, governing or executed 

in connection with or as security for, a Loan.” Because the closing protection 

letters “relate to” and “were executed in connection with” the two loans that Old 

 1 Neither a party nor the district court finds Section 3.6 pertinent to this action.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 9 of 27
10

Bank extended to Ray, the closing protection letters are “Credit Documents.” 

Therefore, a claim “arising under or based upon” a closing protection letter is a 

“Loan.” 

The FDIC sold to New Bank the right to assert a claim “arising under or 

based upon” the closing protection letters, unless the right is expressly retained by 

Section 3.5 of the purchase agreement. The pertinent sections of the purchase 

agreement are Sections 3.5(b)(i), (b)(ii), and (b)(iv). Section 3.5(b) is not 

constructed with reference to the reservation of claims and rights arising from 

specified assets; Section 3.5(b) is constructed with reference to the reservation of 

claims and rights against certain specified parties. Section 3.5(b)(i) states: 

The Assuming Bank does not purchase . . . (b) any interest, 

right, action, claim, or judgment against (i) any officer, director, 

employee, accountant, attorney, or any other Person employed 

or retained by the Failed Bank or any Subsidiary of the Failed 

Bank on or prior to Bank Closing arising out of any act or 

omission of such Person in such capacity . . . .

Section 3.5(b)(i) exempts from the sale of assets a right or a claim against any 

“Person employed or retained” by Old Bank. Webster’s Third New International 

Dictionary 743 (1993) defines “employ” as “to use or engage the services of” (as 

in “to employ the services of a gardener”). Also, Webster’s at 1938 defines

“retain” as “to keep in pay or in one’s service” (as in “to retain the services of a 

gardener”). In other words, Section 3.5(b)(i) broadly exempts from the sale of 

assets a claim against a person who was paid by Old Bank and who rendered to 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 10 of 27
11

Old Bank a service that resulted in a right or claim. This understanding of 

Section 3.5(b)(i) comports comfortably with the list of named “Persons” — any

“officer, director, employee, accountant, attorney, or any other Person” — a list 

that encompasses persons both corporate and non-corporate, both employee and 

independent contractor, both titled and untitled, and both professional and nonprofessional. Use of the encompassing phrase “any other Person” belies any 

suggested narrowness in the clause and confirms that the rendering of a service that 

can result in a claim, not the mode of the person’s compensation or the nature of 

the person’s duty, is the attribute common to those on the list in Section 3.5(b)(i). 

First American falls within the broad scope of Section 3.5(b)(i).

The next provision in the purchase agreement is Section 3.5(b)(ii), which

states:

The Assuming Bank does not purchase . . . (b) any interest, 

right, action, claim, or judgment against . . . (ii) any underwriter 

of financial institution bonds, banker’s blanket bonds or any 

other insurance policy of the Failed Bank . . . .

Section 3.5(b)(ii) exempts from the sale of assets a right or claim against “any 

underwriter of . . . [an] insurance policy of” Old Bank. Because First American is 

an underwriter of Old Bank’s title insurance, Section 3.5(b)(ii) exempts from the 

sale of assets — and reserves to the FDIC — a right against First American. 

Further, the FDIC retained the right to assert a breach-of-contract claim against 

First American under either a title insurance policy or a closing protection letter 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 11 of 27
12

because a title insurer, by definition, can issue either a title insurance policy or a 

closing protection letter or both. (Section 627.786, Florida Statutes, explicitly 

allows a title insurer to issue a closing protection letter.) By reserving to the FDIC 

the right to assert a claim against First American, Section 3.5(b)(ii) reserves a 

claim under either the title insurance policies or the closing protection letters or 

both.

Section 3.5(b)(iv)2 states:

The Assuming Bank does not purchase . . . (b) any interest, 

right, action, claim, or judgment against . . . (iv) any other 

Person whose action or inaction may be related to any loss 

(exclusive of any loss resulting from such Person’s failure to 

pay on a Loan made by the Failed Bank) incurred by the Failed 

Bank . . . .

Section 3.5(b)(iv) exempts from the sale of assets a right or claim against “any 

other Person whose action or inaction may be related to any loss . . . incurred by” 

Old Bank or its assigns. First American is a “Person” as defined in Article I of the 

purchase agreement. By issuing the closing protection letters, First American

agreed to reimburse Old Bank or its assigns for “actual loss” “arising out of” 

Property Transfer’s “failure” or “dishonesty.” Both First American’s “action” in 

issuing the closing protection letters and First American’s “inaction” in not 

reimbursing the FDIC are “related to” the loss “incurred by” the FDIC. Even if 

 2 In the “Opinion and Order,” the district court inadvertently mislabels Section 3.5(b)(iv) as 

“Section 3.5(b)(iii).”

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 12 of 27
13

Sections 3.5(b)(i) and (b)(ii) were inapplicable, Section 3.5(b)(iv), a contractual 

“catch-all,” exempts from the sale the right to assert a claim against First 

American. 

First American argues that under this construction of Sections 3.5(b)(i), 

(b)(ii), and (b)(iv) the FDIC retains both title insurance policies and closing 

protection letters, the retention of which is contrary to the parties’ stipulation that 

the FDIC sold the title insurance policies to New Bank. But First American 

fundamentally misreads the agreement. 

Section 3.1 accomplishes the agreed sale by identifying the assets sold, 

including the claims sold. Also, Section 3.1 expressly and unconditionally defers 

to Section 3.5 by selling assets “[w]ith the exception of certain assets expressly 

excluded in Sections 3.5 and 3.6.” Finally, Section 3.5 reserves claims to the FDIC 

by identifying certain persons against whom the FDIC retained “any interest, right, 

action, claim, or judgment,” provided that the events “giving rise to” the “interest, 

right, action, claim, or judgment” occurred before Old Bank failed. In other words, 

Section 3.5 carves out of Section 3.1 claims against identified persons arising from 

a temporally limited set of events and, as a result, all claims are sold except those

claims. Under the express terms of the purchase agreement, the claim, or the right 

to sue, is a legal interest distinct from the document under which the right arises. 

Thus, some claims arising from a title insurance policy are sold and some are not, 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 13 of 27
14

depending on whether the person against whom the claim is asserted is an 

identified person and on whether the claim arose from events that occurred before 

Old Bank failed. The fact that the FDIC sold Old Bank’s title insurance policies to 

New Bank under Section 3.1 has no bearing on whether the FDIC retained certain 

title insurance policy claims against certain persons identified in Section 3.5.

In sum, the purchase agreement reserves to the FDIC the right to assert a 

breach-of-contract claim against First American under a closing protection letter. 

Under Section 3.5(b) of that agreement, the FDIC retains certain claims against 

certain specified parties, and First American is one of those parties. We need not 

determine whether the closing protection letters themselves were expressly 

reserved to the FDIC because, under the terms of the purchase agreement, the right 

to sue was reserved. That is all that matters.3

Finally, in arguing on appeal that New Bank, not the FDIC, is the proper 

plaintiff, First American objects:

The end result could well be double liability for an opposing 

party. After all, what is to stop New Bank from bringing its 

own [closing-protection-letter] claims against First American 

on these same [closing protection letters]? New Bank could 

simply contend that the Purchase Agreement did convey the 

[closing protection letters], and First American could do 

nothing to challenge it, forcing First American to indemnify 

two different parties for the same loss. 

 3 For the same reasons, we need not determine whether a closing protection letter is severable 

from, or “tethered to” (as First American claims), a title insurance policy.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 14 of 27
15

First American’s objection to the prospect of “double liability” serves to focus 

helpfully on a reliable and convenient remedy for First American’s perceived 

dilemma. Rule 19(a)(1), Federal Rules of Civil Procedure, states:

(a) Persons Required to Be Joined if Feasible.

(1) Required Party. A person who is subject to service of 

process and whose joinder will not deprive the court 

of subject-matter jurisdiction must be joined as a party 

if:

(A) . . .

(B) that person claims an interest relating to the 

subject of the action and is so situated that 

disposing of the action in the person’s absence 

may:

(i) . . .

(ii) leave an existing party subject to a 

substantial risk of incurring double, 

multiple, or otherwise inconsistent 

obligations because of the interest.

If during the pleading stage of this action First American had sought relief 

under Rule 19(a) and had alleged that New Bank claimed an interest in the “subject 

of the action,” New Bank would have been required to appear as a party and either 

confirm or deny the alleged interest. If New Bank had confirmed the alleged 

interest, New Bank would have remained a party, and the district court would have 

determined the validity of New Bank’s alleged interest. If New Bank had denied 

or disclaimed the alleged interest, New Bank would have no claim. In either 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 15 of 27
16

instance, the real party in interest is determined, and First American is safe from 

the threat of double liability. 

Rule 19(a) anticipates the need, at the instance of a party in doubt, to 

determine the proper plaintiff with clarity and finality. (Of course, a counterclaim 

that joins New Bank and seeks a declaratory judgment effects the same, simple, 

salutary result for First American.) First American chose to forbear the Rule 19(a)

remedy, chose to preserve and persist in the claim that the FDIC is the wrong 

plaintiff, and chose to preserve and persist in the argument about the risk of double 

liability. After choosing to forbear the readily available remedy, First American 

cannot complain about New Bank’s absence. 

4. Timely notice

Although the closing protection letters require First American to reimburse

Old Bank or its assigns for “actual loss” “arising out of” Property Transfer’s 

“failure” and “dishonesty,” the closing protection letters exonerate First American 

from liability “unless notice of loss in writing is received by [First American] 

within ninety (90) days from the date of discovery of such loss.” First American 

argues that the district court erred in construing this notice provision to permit 

notice within ninety days after the FDIC’s discovery of facts that reveal a claim 

against First American under the closing protection letters. 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 16 of 27
17

The notice provision in the closing protection letters conforms precisely to 

Rule 69O-186.010, Florida Administrative Code. FDIC v. Stewart Title Guaranty

Co., No. 4:12-cv-10062-JLK, 2013 WL 1891307, at *4 (S.D. Fla. May 6, 2013) 

(King, J.), persuasively explains:

A plain reading of the [rule] might be that the only discovery an 

insured need make before the 90 day clock starts is that a 

financial loss occurred. However, such an interpretation would 

disregard the need for the knowledge that such loss could 

potentially be a covered loss. It would be absurd, for example, 

to interpret the [closing protection letter] to require the insured 

to send notice of claim every time it lost money on a mortgage 

transaction. Like any insurance policy, the Florida [closing 

protection letter] includes coverage guidelines for what is, and 

by implication, is not, a covered loss.

Until the discovery of facts that reveal a claim, the insured cannot confirm

that a loss is a “covered” loss under a closing protection letter. Therefore, the 

closing protection letters require the FDIC to provide written notice within ninety 

days of discovering facts that reveal a claim. FDIC v. Attorneys’ Title Ins. Fund, 

Inc., No. 1:12-cv-23599-PAS, 2014 WL 4384270, at *5 (S.D. Fla. Sept. 3, 2014) 

(Seitz, J.) (“The phrase ‘the date of discovery of such loss’ includes not only the 

date of discovery of actual loss, but also when the indemnitee has knowledge of 

specific acts giving rise to a claim covered by the [closing protection letter].”); 

Stewart Title, 2013 WL 1891307, at *6 (“Therefore, the Court simply needs to 

determine whether the date at which discovery of both actual loss and the facts 

giving rise to potential coverage had taken place was within 90 days of the FDIC’s 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 17 of 27
18

January 10, 2012 claim letter.”); FDIC v. Attorneys’ Title Ins. Fund, Inc., No. 1:10-

cv-21197-PCH, Doc. 164 at 11 (S.D. Fla. May 17, 2011) (Huck, J.) (“So long as 

the FDIC or its predecessor IndyMac had knowledge of specific acts that may 

trigger [closing-protection-letter] coverage . . . , it ‘discovered’ an actual loss 

within the meaning of the [closing protection letter].”).

First American argues that, even if the district court correctly interpreted the 

closing protection letters, the FDIC failed to prove that First American received 

notice within ninety days after the FDIC’s discovering facts that revealed a claim 

under the closing protection letters. However, the district court found, “Before 

obtaining [the documents provided by Property Transfer in response to the FDIC’s 

administrative subpoena], the FDIC could not have discovered that the wire 

transfer did not come from Mr. Ray, but had come from Masterhost, and the other 

information regarding the mortgage fraud scheme.” 

Sean Newbold, the FDIC’s Rule 30(b)(6) witness, reviewed the Old Bank 

documents and reviewed responsive documents from Property Transfer. First 

American’s argument ignores the decisive distinction between, on one hand, 

Newbold’s admitted lack of first-hand knowledge of the history reported in the 

pertinent documents and, on the other hand, Newbold’s first-hand knowledge of 

the contents of the documents, that is, his first-hand knowledge of the disclosures 

the documents contain. Newbold’s testimony establishes the latter, not the former. 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 18 of 27
19

In other words, Newbold lacks first-hand knowledge of events at the closing of 

Ray’s unit purchases, but Newbold knows first-hand what Old Bank’s and 

Property Transfer’s documents report about events at the closing.

Based on his first-hand examination of the pertinent documents, Newbold 

determined that only Property Transfer’s documents, not Old Bank’s documents, 

contain a report of facts that reveal a claim under the closing protection letters. 

Therefore, Newbold testified that, until the FDIC received Property Transfer’s 

documents, the FDIC lacked knowledge of facts that reveal a claim.

The district court correctly determined from Newbold’s testimony, from the 

distinct alacrity with which the FDIC notified First American of a claim after 

receiving the subpoenaed documents, and from evidence of the other attendant 

circumstances that the FDIC proved that First American received notice within 

ninety days after discovering facts that revealed a claim under the closing 

protection letters. 

In effect, First American’s argument is no more than the familiar but futile 

demand for “proof of a negative,” a demand that is famously impossible to satisfy. 

The FDIC proved the source of information that alerted the FDIC to the claim 

against First American. Because the FDIC need not prove the negation of every 

other possible source of information about the claim, First American must

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 19 of 27
20

controvert the FDIC by proving an earlier source of information, a proof First 

American failed to deliver. 

5. Causation

First American argues (1) that “as a result of the closings, Old Bank received 

first-priority liens on both properties, successfully foreclosed on both properties, 

and could have sought a deficiency judgment against the borrower” and, therefore, 

(2) that the FDIC failed to prove at trial that the FDIC’s loss “arose from” the 

conduct of the title agent. The Supreme Court of Florida has defined “arising out 

of” in accord with its “plain meaning”:

The term “arising out of” is broader in meaning than the term 

“caused by” and means “originating from,” “having its origin 

in,” “growing out of,” “flowing from,” “incident to” or “having 

a connection with.” As we implied in [Race v. Nationwide 

Mutual Fire Insurance Co., 542 So. 2d 347, 351 (Fla. 1989)], 

this requires more than a mere coincidence between the conduct 

(or, in this case, the product) and the injury. It requires some 

causal connection, or relationship. But it does not require 

proximate cause.

Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 539–40 

(Fla. 2005) (citations omitted).

Several district courts have interpreted “arise out of” in Rule 69O-186.010 to 

require only a “causal connection” or a “minimal causal relationship.” See 

Attorney’s Title, 2014 WL 4384270, at *5 (“[A Florida closing protection letter]

merely require[s] that [an actual] loss ‘arise out of’ the agent’s misconduct, which 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 20 of 27
21

in Florida is only a ‘causal connection’ but not proximate cause.”); Brinker v.

Chicago Title Ins. Co., No. 8:10-cv-1199-T-27AEP, 2012 WL 1081211, at *10 

(M.D. Fla. Feb. 9, 2012) (Porcelli, M.J.) (“[A Florida] closing protection letter 

clearly provides that [the closing agent]’s alleged fraud or dishonesty must have 

had at least a minimal causal relationship to the Plaintiffs’ loss in order for 

Plaintiffs to recover under the indemnity contract.”), adopted by, 2012 WL 

1081182 (M.D. Fla. Mar. 30, 2012) (Whittemore, J.).

Property Transfer’s “failure” and “dishonesty” undoubtedly bore at least a 

“minimal causal relationship” to Old Bank’s “actual loss.” Although Property 

Transfer certified that Ray’s down payment was his money, Property Transfer 

accepted the down payment from Masterhost, an entity with no discernible

connection to Ray. (In fact, Masterhost was owned by Christopher Albert, the son 

of the sellers of one unit and the brother of the seller of the other unit.) As a result

of Property Transfer’s “failure” to follow Old Bank’s closing instructions, that is, 

as a result of Property Transfer’s “failure” and “dishonesty,” Old Bank funded two 

loans to an unqualified “straw buyer” who had no financial investment in the units 

and who in his applications for the loans materially exaggerated his income. 

Although Old Bank received a first-priority lien on each unit, Old Bank 

lacked the bargained-for benefit of an honest, diligent closing agent and a borrower 

both invested in the units and motivated to repay the loans. Also, although Old 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 21 of 27
22

Bank successfully foreclosed on each unit and could have elected to pursue 

deficiency judgments against Ray, an elective, alternative remedy serves to affect, 

at most, only the measure of damages, not to prove the lack of a minimal causal 

relation between a corrupt closing and a lender’s consequent loss. Undoubtedly, 

Old Bank’s “actual loss” has at least a “minimal causal relation” to Property 

Transfer’s “failure” and “dishonesty.”

6. Damages

Finally, First American argues that in awarding more than $500,000 in 

damages the district court erred (1) “by accepting a calculation methodology based 

on losses incurred by a third party without regard to the loss actually incurred by 

the FDIC” and (2) “by improperly applying Florida’s collateral source rule to 

ignore the FDIC’s insurance recovery.”

A. Loss incurred

The district court calculated the “actual loss” as “the outstanding loan 

balance less the sales proceeds of the collateral property.” First American argues 

that, because New Bank collected the sales proceeds of the collateral property, this 

calculation fails to distinguish the FDIC’s loss from New Bank’s loss. First 

American argues that the accurate calculation of damages is the loan balance less 

the book value that New Bank paid the FDIC for each loan. First American argues 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 22 of 27
23

that, because the FDIC cannot establish the book value for each loan, the district 

court should have denied recovery.

As the district court stated, “Under the reasonable certainty rule, recovery is 

denied only if the FDIC fails to establish damages to a reasonable degree of 

certainty.” See Nebula Glass Int’l, Inc. v. Reichhold, Inc., 454 F.3d 1203, 1212 

(11th Cir. 2006) (“Under the certainty rule, . . . recovery is denied where the fact of 

damages and the extent of damages cannot be established within a reasonable 

degree of certainty.”). Acknowledging the circumstances of a failing bank, the 

district court correctly reasoned that achieving “reasonable certainty” does not 

require a calculation of the book value of each loan:

The FDIC’s main responsibility when it becomes the receiver 

of a failing bank is to determine a cost-effective and efficient 

method of dealing with the bank’s assets and liabilities. As 

receiver, the FDIC attempts to ensure service continuity and 

that panicked depositors do not withdraw their funds from the 

bank. In the midst of a bank closing, to require the FDIC to 

provide a calculation of the book value of each loan in a failing 

bank’s portfolio as of the date of the transfer for fear that the 

FDIC would later discover a mortgage fraud scheme, or some 

other claim, would be impractical.

Rather than calculating each loan’s book value, the FDIC establishes with 

reasonable certainty each loan’s principal balance, each loan’s unpaid expenses, 

and each unit’s sale price, information from which the FDIC can calculate the total 

loss to the FDIC.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 23 of 27
24

Further, the FDIC need not distinguish the FDIC’s loss from New Bank’s 

loss. Absent contrary evidence, a reasonable deduction from the attendant 

circumstances is that the purchase agreement, which excludes from the sale of 

assets the right to assert a claim under the closing protection letters, concomitantly 

excludes from the purchase price any anticipated amount that First American might 

pay based on the FDIC’s claims under the closing protection letters. 

The district court correctly concluded that the “actual loss” is “the 

outstanding loan balance less the sales proceeds of the collateral property” —

$265,550.72 for one unit and $235,421.07 for the other unit.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 24 of 27
25

B. Insurance recovery

First American argues that, based on “a misapplication of Florida’s collateral 

source rule,” which — First American asserts — applies only to a tort action, not 

to a contract action, the district court failed to account for the FDIC’s insurance 

benefits. However, the collateral source rule “appl[ies] . . . to causes of action in 

contract, as well as to actions in tort.” Citizens Prop. Ins. Corp. v. Hamilton, 

43 So. 3d 746, 751 (Fla. 1st DCA 2010) (Kahn, J.). Because the collateral source 

rule “prohibit[s] both the introduction of evidence of collateral insurance benefits 

received[] and the setoff of any collateral source benefits from the damage award,”

Citizens Prop., 43 So. 3d at 751, the district court correctly held that “the FDIC’s 

damages shall not be offset by the insurance benefits.”

7. Standing

In response to First American’s defense that under the purchase agreement 

the FDIC no longer “owns” the closing protection letters, the FDIC argues that 

First American enjoys no “standing” to contest the contracting parties’ 

interpretation of the purchase agreement. The district court agreed that, because 

First American was a stranger to the purchase agreement between the FDIC and 

New Bank, First American lacked “standing” to contest the contracting parties’ 

interpretation of the purchase agreement. The district court characterized the 

perceived defect in First American’s defense as “lack of standing” because of 

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 25 of 27
26

Interface Kanner, LLC v. JPMorgan Chase Bank, N.A., 704 F.3d 927 (11th Cir. 

2013), which holds that, if a plaintiff is not an intended third-party beneficiary of a 

contract, the plaintiff lacks “standing” to sue under the contract and that, 

consequently, the district court lacks subject matter jurisdiction.

But First American advances an interpretation of the purchase agreement not 

as a plaintiff in pursuit of a claim but as a defendant in defense against a claim. A 

defendant’s putative lack of “standing” to assert a defense presents no bar to a 

district court’s exercising subject matter jurisdiction. Therefore, whether First 

American can assert a defense under the purchase agreement is not an issue of 

“standing” in the same sense that the term “standing” is used in resolving a 

challenge to the plaintiff’s “standing” to maintain a claim. And the presence or 

absence of a defense is not a matter with a jurisdictional consequence.4

 4 In Excel Willowbrook, L.L.C. v. JP Morgan Chase Bank, N.A., 758 F.3d 592, 603–04 (5th Cir. 

2014), Judge Clement observes:

The FDIC argues that the Landlords lack standing because they cannot, as 

a non-third-party beneficiary to the contract, show that the properties were 

transferred to Chase. The Landlords have no such issue. To demonstrate 

standing, the Landlords need to show (1) “an injury in fact — an invasion 

of a legally protected interest which is (a) concrete and particularized, and 

(b) actual or imminent, not conjectural or hypothetical,” (2) “a causal 

connection between the injury and the conduct complained of,” and

(3) that it is “likely, as opposed to merely speculative, that the injury will 

be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 

504 U.S. 555, 560–61, 112 S. Ct. 2130, 119 L.Ed.2d 351 (1992) (internal 

citations and quotation marks omitted). The Landlords make that 

showing. They claim to have (1) suffered an injury (loss of rents), that 

was (2) causally connected to Chase’s conduct (not paying rents that were 

due), and (3) could be redressed by an award of unpaid rents.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 26 of 27
27

CONCLUSION

The judgment of the district court is AFFIRMED.

 

Similarly, in Interface Kanner, the assignment of a lease from WaMu to the FDIC to JPMorgan 

directly caused the landlord to lose rental income, and a money judgment against either the FDIC 

or JPMorgan would redress the loss.

USCA11 Case: 13-15058 Date Filed: 04/28/2015 Page: 27 of 27