Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-10-05245/USCOURTS-caDC-10-05245-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 5, 2011 Decided June 24, 2011

No. 10-5245

AMERICAN NATIONAL INSURANCE COMPANY AND AMERICAN

NATIONAL PROPERTY AND CASUALTY COMPANY,

APPELLANTS

FARM FAMILY LIFE INSURANCE COMPANY AND FARM FAMILY

CASUALTY INSURANCE COMPANY,

APPELLANTS

NATIONAL WESTERN LIFE INSURANCE COMPANY,

APPELLANT

v.

FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER

FOR WASHINGTON MUTUAL BANK, HENDERSON, NEVADA, ET

AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:09-cv-01743)

Gregory Stuart Smith argued the cause for appellants. With

him on the briefs were Andrew J. Mytelka and James M.

Roquemore.

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Joseph Brooks, Counsel, Federal Deposit Insurance

Corporation, argued the cause for appellee Federal Deposit

Insurance Corporation, As Receiver For Washington Mutual

Bank. With him on the brief were Colleen J. Boles, Assistant

General Counsel, Lawrence H. Richmond, Senior Counsel, and

John J. Clarke Jr. R. Craig Lawrence, Assistant U.S. Attorney,

entered an appearance.

Robert A. Sacks argued the cause for appellees JPMorgan

Chase & Co., et al. On the brief were Bruce E. Clark and Stacey

R. Friedman.

Before: SENTELLE, Chief Judge, TATEL, Circuit Judge, and

RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge: Bondholders of the failed

Washington Mutual Bank allege that JPMorgan Chase, through

a series of improper acts, pressured the federal government to

seize Washington Mutual Bank and then sell to it the bank’s

most valuable assets, without any accompanying liabilities, for

a drastically undervalued price. The bondholders asserted three

Texas state law claims in Texas state court, but, after the Federal

Deposit Insurance Corporation intervened in the lawsuit, the

case was removed to federal district court. Finding that 12

U.S.C. § 1821(d)(13)(D)(ii) jurisdictionally barred appellants

from obtaining judicial review of their claims because they had

not exhausted their administrative remedies under the Financial

Institutions Reform, Recovery and Enforcement Act of 1989, the

district court dismissed appellants’ complaint. Because we hold

that appellants’ suit falls outside the scope of the jurisdictional

bar of § 1821(d)(13)(D), we reverse the decision of the district

court and remand for further proceedings. 

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I. 

On review of a district court’s dismissal of a complaint for

lack of subject matter jurisdiction, we make legal determinations

de novo. Nat’l Air Traffic Controllers Ass’n, AFL-CIO v. Fed.

Serv. Impasses Panel, 606 F.3d 780, 786 (D.C. Cir. 2010); see

FED. R. CIV. P. 12(b)(1). We assume the truth of all material

factual allegations in the complaint and “construe the complaint

liberally, granting plaintiff the benefit of all inferences that can

be derived from the facts alleged,” Thomas v. Principi, 394 F.3d

970, 972 (D.C. Cir. 2005) (quoting Barr v. Clinton, 370 F.3d

1196, 1199 (D.C. Cir. 2004)); see also Talenti v. Clinton, 102

F.3d 573, 574–75 (D.C. Cir. 1996), and upon such facts

determine jurisdictional questions. Applying that standard to the

complaint before us, we assume the following facts:

Prior to September 2008, Washington Mutual Bank

(“WMB”), a wholly owned subsidiary of Washington Mutual,

Inc. (“WMI”), was the nation’s largest savings and loan

association. Compl. ¶ 33. However, on September 25, 2008,

the Office of Thrift Supervision (“OTS”) seized WMB and

placed it in receivership with the Federal Deposit Insurance

Corporation (“FDIC”). Id. ¶ 64. On the same day, the FDIC

signed a purchase and assumption agreement with JPMorgan

Chase & Co. and its wholly owned subsidiary JPMorgan Chase

Bank (collectively, “JPMC”), in which it agreed to sell to JPMC

for $1.9 billion “the most valuable assets of [WMB] without any

of [its] liabilities,” including its obligations to unsecured debt

holders and litigation risk. Id. ¶ 67. WMB’s bond contracts

remained with the FDIC-as-receiver, which now cannot meet its

obligations under the contracts. Id. ¶ 71. Left without its

“primary income-producing asset,” WMI, which filed for

bankruptcy immediately following the sale of WMB’s assets to

JPMC, became similarly unable to service its bond contracts,

and its common stock was rendered worthless. Id. ¶ 70.

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Again assuming the truth of the allegations in the

complaint, the dramatic fall of WMB and WMI (collectively,

“Washington Mutual”) was engineered by JPMC. JPMC

engaged in an elaborate scheme designed to “improperly and

illegally take advantage of the financial difficulties of [WMI]”

and “strip away valuable assets of Washington Mutual without

properly compensating the company or its stakeholders.” Id. ¶¶

20, 30. To carry out this scheme, JPMC first “strategically

plac[ed] key personnel [at Washington Mutual] to gather

information regarding Washington Mutual’s strategic business

decisions and financial health,” id. ¶ 25, and “misus[ed] access

to government regulators to gain non-public information” about

Washington Mutual, id. ¶ 32. Further, when Washington

Mutual sought to sell itself, JPMC “misrepresented to

Washington Mutual that it would negotiate in good faith for the

purchase of the company” and engaged in sham negotiations

with Washington Mutual to gain access to Washington Mutual’s

confidential financial information. Id. ¶¶ 53–54. Then, despite

signing a confidentiality agreement with Washington Mutual,

JPMC leaked harmful information to news media, government

regulators, and investors, in an effort to “distort the market and

regulatory perception of Washington Mutual’s financial health,”

id. ¶¶ 46, 54, 58. 

JPMC also applied direct pressure on the FDIC to effectuate

its scheme: It “exerted improper influence over government

regulators to prematurely seize Washington Mutual . . . and to

sell assets of Washington Mutual without an adequate or fair

bidding process,” id. ¶ 32. Indeed, prior to the seizure of WMB,

JPMC had already negotiated an agreement with the FDIC that,

anticipating the seizure of WMB, set forth the requirements for

a bid to purchase assets of WMB-in-receivership and provided

for the transfer of WMB’s valuable assets by the FDIC-asreceiver to JPMC, at a large profit to JPMC. Id. ¶¶ 47, 58, 62. 

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JPMC used its inside knowledge of Washington Mutual to

create a bid for WMB that would be profitable to JPMC. Id.

¶ 58. When, just prior to the seizure of WMB, the FDIC sought

official bids for WMB, JPMC submitted its prearranged bid, id.

¶¶ 58, 62–63, and the FDIC accepted it, id. ¶ 64. In quick

succession, OTS then seized WMB and JPMC signed a purchase

and sale agreement with the FDIC for the below-market sale of

WMB’s “cherry-picked” assets, stripped of liabilities. Id. ¶¶ 43,

64, 67.

On February 16, 2009, several insurance companies that

hold bonds of WMB and bonds and stocks of WMI filed suit

against JPMC in the District Court of Texas, Galveston County,

alleging that JPMC’s execution of its scheme had injured the

value of their stocks and bonds. The insurance companies

asserted three Texas state law claims: tortious interference with

existing contract, id. ¶¶ 88–93, breach of confidentiality

agreement, id. ¶¶ 94–99, and unjust enrichment, id. ¶¶ 100–03. 

After JPMC filed its answer, the FDIC intervened in the

lawsuit and thereby became a party to the action. See TEX. R.

CIV. P. 60 (“Any party may intervene by filing a pleading,

subject to being stricken out by the court for sufficient cause on

the motion of any party.”). The FDIC then removed the action

to the U.S. District Court for the Southern District of Texas, see

12 U.S.C. § 1819(b)(2)(A) (“[A]ll 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.”); 28 U.S.C. § 1331 (“The district courts shall have

original jurisdiction of all civil actions arising under the

Constitution, laws, or treaties of the United States.”), and

successfully moved for a transfer of venue to the U.S. District

Court for the District of Columbia. 

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Before the District Court for the District of Columbia, the

FDIC and JPMC both filed motions to dismiss, and plaintiffs

filed a motion to remand to Texas state court. Prior to

disposition of these motions, plaintiffs voluntarily dismissed

with prejudice all claims premised upon harm to their WMI

bonds or stock. As a result, four original plaintiffs lost their

stake in the suit, and all remaining claims alleged damage solely

to WMB bonds. 

On April 13, 2010, the district court issued a Memorandum

Opinion and Order granting the FDIC and JPMC’s motions to

dismiss and denying plaintiffs’ motion to remand, holding that

it lacked jurisdiction over plaintiffs’ suit. Am. Nat’l. Ins. Co. v.

JPMorgan Chase & Co., 705 F. Supp. 2d 17 (D.D.C. 2010). 

Plaintiffs timely moved to alter or amend the judgment and

requested leave to file an amended complaint. The district court

denied their motion on July 19, 2010. Plaintiffs appeal the

district court’s April 13, 2010, and July 19, 2010, orders.

II.

The district court held that the Financial Institutions

Reform, Recovery and Enforcement Act of 1989 (“FIRREA” or

“the Act”) barred it from exercising jurisdiction to hear

appellants’ claims. It held that because appellants’ injuries

depended on the FDIC’s sale of Washington Mutual’s assets to

JPMC, § 1821(d)(13)(D)(ii) of FIRREA required it to dismiss

appellants’ complaint. Id. at 21. 

Passed to “enable the FDIC . . . to expeditiously wind up the

affairs of literally hundreds of failed financial institutions

throughout the country,” Freeman v. FDIC, 56 F.3d 1394, 1398

(D.C. Cir. 1995), FIRREA creates an administrative claims

process for banks in receivership with the FDIC. 12 U.S.C.

§ 1821(d)(3)–(13). The Act requires the FDIC to give notice to

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the failed bank’s creditors to file claims against the bank,

§ 1821(d)(3)(b), and authorizes the FDIC to receive and then

disallow or allow and pay such claims, § 1821(d)(5), (10). 

FIRREA allows claimants either to obtain administrative

review, followed by judicial review, of “any [disallowed] claim

against a depository institution for which the [FDIC] is

receiver,” or to file suit for de novo consideration of the

disallowed claim in a district court. § 1821(d)(6)–(7). It also

prevents a court from exercising jurisdiction, “[e]xcept as

otherwise provided” in the Act, over:

(i) any claim or action for payment from, or any action

seeking a determination of rights with respect to, the assets

of any depository institution for which the [FDIC] has been

appointed receiver, including assets which the [FDIC] may

acquire from itself as such receiver; or

(ii) any claim relating to any act or omission of such

institution or the [FDIC] as receiver.

§ 1821(d)(13)(D).

Noting that § 1821(d)(6) is “[t]he only clause of the

subsection that ‘otherwise provide[s]’ jurisdiction,” Auction Co.

of Am. v. FDIC, 141 F.3d 1198, 1200 (D.C. Cir. 1998), we have

described § 1821(d)(6) and § 1821(d)(13)(D) as setting forth a

“standard exhaustion requirement,” id. Section 1821(d)(6)(A)

“routes claims through an administrative review process, and

[§ 1821](d)(13)(D) withholds judicial review unless and until

claims are so routed.” Id.; see also Freeman, 56 F.3d at 1400

(“Section 1821(d)(13)(D) thus acts as a jurisdictional bar to

claims or actions by parties who have not exhausted their

§ 1821(d) administrative remedies.”).

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The question we must answer, the same as that addressed by

the district court, is whether § 1821(d)(13)(D) applies to and

bars the suit brought by appellants. The FDIC and JPMC argue

that subsection (ii) of § 1821(d)(13)(D) bars appellants’ claims,

in the absence of administrative exhaustion under § 1821(d)(6),

because they “relat[e] to” an act of the FDIC-as-receiver: the

FDIC’s sale of Washington Mutual’s assets to JPMC. 

Alternatively, they contend that subsection (i) of the same

provision withholds jurisdiction without administrative

exhaustion because appellants’ claims are “for payment from, or

. . . seek[] a determination of rights with respect to, the assets”

of Washington Mutual.

We disagree. First, subsection (ii) of § 1821(d)(13)(D) bars

only claims that relate to an act or omission of the failed bank or

the FDIC-as-receiver, and appellants’ suit is simply not a

“claim” under FIRREA. In FIRREA, the word “claim” is a

term-of-art that refers only to claims that are resolvable through

the FIRREA administrative process, and the only claims that are

resolvable through the administrative process are claims against

a depository institution for which the FDIC is receiver. Because

appellants’ suit is against a third-party bank for its own

wrongdoing, not against the depository institution for which the

FDIC is receiver (i.e., Washington Mutual), their suit is not a

claim within the meaning of the Act and thus is not barred by

subsection (ii). 

Second, although subsection (i) of § 1821(d)(13)(D) reaches

more broadly than (ii), encompassing not just “claims” but also

“action[s] for payment from, or . . . seeking a determination of

rights with respect to, the assets of any depository institution for

which the [FDIC] has been appointed receiver,” its plain

language excludes the suit brought by appellants. Appellants’

suit seeks relief from JPMC for its own conduct; the mere fact

that JPMC now owns assets that Washington Mutual once

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owned does not render this suit one against or seeking a

determination of rights with respect to those assets. See Rosa v.

Resolution Trust Corp., 938 F.2d 383, 394 (3d Cir. 1991)

(holding that claims for damages against assuming bank for its

own acts did not fall within jurisdictional bar of subsection (i)

because “they seek neither payment from nor a determination of

rights with respect to the assets of [the bank-in-receivership]”

but from the assuming bank).

An examination of FIRREA as a whole demonstrates that

“claim” is a term-of-art that encompasses only demands that are

resolvable through the administrative process set out by

FIRREA. The Act creates a comprehensive administrative

mechanism simply for the processing and resolution of “claims.” 

Indeed, it builds the components of the administrative

mechanism by defining how “claims” are to be treated at each

stage of the administrative process. For example, after

establishing the “[a]uthority of [the FDIC-as-receiver] to

determine claims,” § 1821(d)(3), and the FDIC’s “[r]ulemaking

authority relating to determination of claims,” § 1821(d)(4),

FIRREA sets forth the “[p]rocedures for determination of

claims,” § 1821(d)(5), the requirements for “agency review or

judicial determination of claims,” § 1821(d)(6), the content of

administrative “[r]eview of claims,” § 1821(d)(7), the

availability of “[e]xpedited determination of claims,”

§ 1821(d)(8), the exclusion of certain “[a]greement[s] as

[forming the] basis of claim[s],” § 1821(d)(9), and the authority

of the FDIC to make “[p]ayment of claims,” § 1821(d)(10). It

borders on tautology, therefore, that “claims” are necessarily

demands that come within the scope of FIRREA’s

administrative process. Stated another way, demands

unresolvable through the process are not “claims,” as the term

is used in the Act. See Homeland Stores, Inc. v. Resolution

Trust Corp., 17 F.3d 1269, 1274 (10th Cir. 1994) (“As a

practical matter of statutory construction, . . . we proceed on the

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assumption that Congress intended the ‘claims’ barred

by § 1821(d)(13)(D) to parallel those contemplated under

FIRREA’s administrative claims process laid out in the greater

part of § 1821(d).”); Rosa, 938 F.2d at 394 (“Whatever its

breadth, we do not believe that clause (ii) [of § 1821(d)(13)(D)]

encompasses claims that are not susceptible of resolution

through the claims procedure.”).

Several factors convince us that only claims against

depository institutions for which the FDIC has been appointed

receiver can be processed by the administrative system set forth

in FIRREA. First, § 1821(d)(5)(A)(i), entitled “Procedures for

determination of claims: Determination period: In general,”

provides that “[b]efore the end of the 180-day period beginning

on the date any claim against a depository institution is filed

with the [FDIC] as receiver, the [FDIC] shall determine whether

to allow or disallow the claim” (emphasis added). FIRREA does

not contain any other deadline for FDIC action for other types

of claims. No other kinds of claims are ever specified in the

provisions setting forth the administrative claims process. 

Rather, § 1821(d)(6), which establishes the availability of

“agency review or judicial determination of claims,” similarly

governs only “claim[s] against a depository institution for which

the [FDIC] is receiver,” and subsequent claims process

provisions refer simply to “claims.” Furthermore, FIRREA

authorizes the FDIC to allow and pay claims, see

§ 1821(d)(3)(A), (5)(B), (10)(A)–(B), and requires the FDIC to

distribute “amounts realized from the liquidation or other

resolution of any insured depository institution” in payment of

claims, see § 1821(d)(11)(A). That such relief would be

categorically inappropriate in cases not against a depository

institution for which the FDIC is receiver strengthens our

conviction that FIRREA’s administrative claims process is

available only to claims against depository institutions.

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The FDIC and JPMC argue that the jurisdictional bar of

§ 1821(d)(13)(D) demonstrates that claims other than those

against a depository institution can go through the administrative

claims process. They claim that the broad language used in that

subsection demonstrates that the claims process was intended to

be more widely available. To be sure, we have construed

§ 1821(d)(6)’s “claim against a depository institution” language

broadly in light of §§ 1821(d)(13)(D)(i) and (ii). See Freeman

v. FDIC, 56 F.3d 1394, 1400–01 (D.C. Cir. 1995); OPEIU,

Local 2 v. FDIC, 962 F.2d 63, 67 (D.C. Cir. 1992). Indeed, to

have done otherwise would mean either ignoring Congress’s use

of such broad language in § 1821(d)(13)(D) or transforming

FIRREA from an administrative exhaustion scheme into a grant

of immunity, “a result troubling from a constitutional

perspective and certainly not the goal of FIRREA,” Auction Co.

v. FDIC, 141 F.3d 1198, 1200 (D.C. Cir. 1998); see also id.

(“Congress did not intend FIRREA’s claims process to

immunize the receiver, but rather wanted to require exhaustion

of the receivership claims before going to court.” (quoting

Hudson United Bank v. Chase Manhattan Bank of Conn., 43

F.3d 843, 848–49 (3d Cir. 1994))). We, however, have only

construed the claims process broadly where either the failed

depository institution or the FDIC-as-receiver might be held

legally responsible to pay or otherwise resolve the asserted

claim. Where, as here, neither the failed depository institution 

nor the FDIC-as-receiver bears any legal responsibility for

claimant’s injuries, the claims process offers only a pointless

bureaucratic exercise. See supra 10–11. And we doubt

Congress intended to force claimants into a process incapable of

resolving their claims. 

The FDIC and JPMC also assert that the principle

motivating the Sixth Circuit’s decision in Village of Oakwood v.

State Bank & Trust Co., 539 F.3d 373 (6th Cir. 2008), bars this

lawsuit. In Village of Oakwood, depositors of a failed bank sued

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another bank (the “assuming bank”) that had purchased various

assets and liabilities of the failed bank from the FDIC-asreceiver. 539 F.3d at 376. Although plaintiffs in that case

named only the assuming bank as a defendant in the action, their

complaint alleged that the FDIC, not the assuming bank, had

breached its fiduciary duty. Id. One of the four claims asserted

against the third-party bank was aiding and abetting the FDIC’s

breach of its fiduciary duty. Id. Holding that plaintiffs’ claims

fell within the jurisdictional bar of FIRREA, the court of appeals

explained that “permit[ting] claimants to avoid [the] provisions

of [§ 1821](d)(6) and [§ 1821](d)(13) by bringing claims against

the assuming bank . . . would encourage the very litigation that

FIRREA aimed to avoid.” Id. at 386 (quoting Brady Dev. Co.

v. Resolution Trust Corp., 14 F.3d 998, 1002–03 (4th Cir. 1994))

(alterations in original). In other words, the court of appeals

rightly noted that plaintiffs cannot circumvent FIRREA’s

jurisdictional bar by drafting their complaint strategically. 

Where a claim is functionally, albeit not formally, against a

depository institution for which the FDIC is receiver, it is a

“claim” within the meaning of FIRREA’s administrative claims

process. Thus because the Village of Oakwood plaintiffs’ suit

was functionally a claim against the FDIC-as-receiver, which is

a claim against the depository institution for which the FDIC is

receiver, see O’Melveny & Myers v. FDIC, 512 U.S. 79, 86

(1994) (“[T]he FDIC as receiver steps into the shoes of the

failed [bank]”) (internal quotations marks omitted);

§ 1821(d)(2)(A) (“[T]he [FDIC] shall, . . . by operation of law,

succeed to all rights, titles, powers, and privileges of the insured

depository institution.”), the court of appeals correctly held the

action jurisdictionally barred.

The suit appellants press, however, is clearly

distinguishable from that in Village of Oakwood. As just

described, in Village of Oakwood the wrongdoing alleged was

perpetrated by the FDIC-as-receiver, which the assuming bank

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allegedly aided and abetted. Here, in contrast, appellants allege

that JPMC, not the FDIC-as-receiver or Washington Mutual,

itself committed the tortious acts for which they claim relief. 

Although the complaint alleges that the FDIC engaged in

conduct without which JPMC’s tortious acts would not have

caused injury to appellants, that actions by the FDIC form one

link in the causal chain connecting JPMC’s wrongdoing with

appellants’ injuries is insufficient to transform the complaint

into one against the FDIC. 

The FDIC and JPMC maintain that this case resembles

Village of Oakwood because appellants’ complaint is similarly

premised upon wrongdoing by the FDIC: They argue that the

complaint alleges an agreement between JPMC and the FDIC to

commit the torts alleged. However, even if a suit against only

a third party that alleged a conspiracy between the FDIC and the

third party to commit the acts forming the basis of the claim

were properly characterized as a suit against a depository

institution—a question we do not reach—that is not the case

here. Although appellants’ complaint may be susceptible to the

interpretation urged by the FDIC and JPMC, the procedural

posture of this case requires us to construe the complaint

liberally, in the light most favorable to appellants. Thomas v.

Principi, 394 F.3d 970, 972 (D.C. Cir. 2005). Doing so, we read

the complaint to allege that JPMC alone committed the

wrongdoing for which appellants sue and find no agreement

between JPMC and the FDIC.

We therefore hold that § 1821(d)(13)(D) does not withdraw

jurisdiction from the judiciary to entertain appellants’ lawsuit

because their complaint neither asserts a “claim” under FIRREA

nor constitutes an action for payment from, or seeking a

determination with respect to, the assets of a depository

institution for which the FDIC is receiver. 

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III.

The FDIC and JPMC argue that we should uphold the

district court’s dismissal of appellants’ complaint on an

alternative jurisdictional ground. They contend that appellants

lacked standing to bring their claims because the claims are for

generalized harm to Washington Mutual and thus belong to the

FDIC-as-receiver. See 12 U.S.C. § 1821(d)(2)(A) (“The [FDIC]

shall, as conservator or receiver, and by operation of law,

succeed to all rights, titles, powers, and privileges of the insured

depository institution, and of any stockholder, member,

accountholder, depositor, officer, or director of such institution

with respect to the institution and the assets of the institution.”). 

Perhaps it is true that if either the exclusive right to bring

appellants’ claims or the right to preclude appellants from

bringing those claims rested with Washington Mutual, that right

was passed to the FDIC-as-receiver by operation of

§ 1821(d)(2)(A) and appellants may not assert those claims here. 

However, the question whether Washington Mutual had any

such right was not decided by the district court. This question

is complex and involves several layers of inquiry: Are the

“rights, titles, powers, and privileges” inherited by the FDIC-asreceiver from Washington Mutual determined exclusively by

reference to state law or does federal law play a role? If we

should look to state law, which state’s law governs the claims

asserted in this case? What is the substance of the applicable

body of law? And, most basically, is the ownership of the

claims presented below a jurisdictional question, as the FDIC

and JPMC suggest, or is it a question of whether appellants have

a cause of action? We need not answer these knotty questions

and instead remand to the district court to consider them in the

first instance. 

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Because we conclude that § 1821(d)(13)(D) did not bar the

district court from hearing appellants’ suit and remand to the

district court for further proceedings, we do not reach

appellants’ alternative arguments regarding the availability of

subject matter jurisdiction or appellants’ contention that the

district court erred in denying its motion to alter or amend the

judgment and for leave to file an amended complaint. 

IV.

For the reasons set forth above, we reverse the order of the

district court and remand for proceedings consistent with this

opinion.

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