Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_09-cv-08175/USCOURTS-azd-3_09-cv-08175-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 12:1819 Default of Promissory Note

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

F & N Enterprises, dba Northern Arizona

Sign and Graphics, Inc., an Arizona

Corporation, 

Plaintiff, 

vs.

Federal Deposit Insurance Corporation as

Receiver for First State Bank, an Arizona

corporation, 

Defendant. 

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No. CV 09-8175 PCT-JAT

ORDER

Pending before the Court is Defendant Federal Deposit Insurance Corporation’s

(“FDIC”) Motion for Summary Judgment (Doc. # 15). For the reasons that follow, the Court

grants the FDIC’s motion.

I. Background

The material facts are not in dispute. In 2007, Plaintiff designed, manufactured, and

installed certain signs for First State Bank. After First State Bank refused to pay for

Plaintiff’s work, Plaintiff filed a lawsuit against First State Bank. Plaintiff’s lawsuit was

subjected to compulsory arbitration, which in October 2009 resulted in an award in Plaintiff’s

favor.

In September 2009, the Superintendent of the Arizona Department of Financial

Institutions closed First State Bank. Also during September 2009, the Maricopa County

Case 3:09-cv-08175-JAT Document 20 Filed 06/02/10 Page 1 of 4
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Superior Court appointed the FDIC as receiver for First State Bank. In October 2009,

Plaintiff filed a proof of claim with the FDIC for the arbitration award in the amount of

$25,816.62. In December 2009, the FDIC issued a Receiver’s Certificate to Plaintiff for the

full amount of the claim. Plaintiff disputes that the Receiver’s Certificate constitutes

payment for the arbitration award.

II. Analysis

Summary judgment is appropriate when “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to summary

judgment as a matter of law.” FED.R.CIV. P. 56(c). Thus, summary judgment is mandated,

“against a party who fails to make a showing sufficient to establish the existence of an

element essential to that party’s case, and on which that party will bear the burden of proof

at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

FDIC argues that the issuing of the Receivership Certificate to Plaintiff in the full

amount of the arbitration award satisfies Plaintiff’s claim. In response, Plaintiff argues that

the Receivership Certificate is only a formal record of the claim, and that Plaintiff has not

“received one penny of the $25,816.62 owed to it.” (Doc. # 17 at p. 4.) Based upon the

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), 12

U.S.C. § 1821 et seq., and the Ninth Circuit Court of Appeal’s interpretation of FIRREA, the

Court agrees with the FDIC.

It is undisputed that the FDIC has issued a Receivership Certificate to Plaintiff for the

full amount of the arbitration award. The only issue is whether the Receivership Certificate

constitutes payment such that Plaintiff’s claim is satisfied.

In 1989, in response to the nation’s banking crisis, Congress enacted FIRREA. “The

statute ‘allows the FDIC to act as receiver or conservator of a failed institution for the

protection of depositors and creditors,’ establishing a scheme for dealing with claims against

the failed institution.” Battista v. Fed. Deposit Ins. Corp., 195 F.3d 1113, 1116 (9th Cir.

1999) (quoting Sharpe v. Fed. Deposit Ins. Corp., 126 F.3d 1147, 1154 (9th Cir. 1997)).

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Section 1821(d) outlines the powers and duties of the FDIC as receiver. The FDIC is

authorized to determine and pay claims in accordance with section 1821(d) against the

financial institution placed into receivership. In Resolution Trust Corp. v. Titan Financial

Corp., the Ninth Circuit addressed the precise issue of whether the FDIC could issue a

receivership certificate to pay creditors in lieu of a cash payment: “FIRREA does not indicate

whether a failed institution or its receiver may use a Certificate of Award to pay creditors.

We hold that it may.” 36 F.3d 891, 892 (9th Cir. 1994). See also Id. at 893 (“We hold that

[Defendant] is entitled only to a Certificate of Award, not ‘cash or its equivalent.’

Accordingly, the RTC, as receiver, may pay Sellan’s attorney’s fees on appeal in the form

of a Certificate of Award . . . .”). The Ninth Circuit then affirmed its holding in Resolution

Trust Corp., by stating that “[t]here is no question that the FDIC may pay creditors with

receiver’s certificates instead of with cash.” Battista v. F.D.I. C., 195 F.3d 1113, 1116 (9th

Cir. 1999) (citing Resolution Trust Corp., 36 F.3d at 892).

In response, Plaintiff cites only FDIC v. Grillo, 788 F.Supp. 641 (D. N.H. 1992) for

the proposition that it may continue this action through the court process. Grillo does not

address whether a receiver’s certificate constitutes payment in full. Rather, Grillo deals with

an issue of subject matter jurisdiction not presently at issue in this action. As such, Grillo

is inapposite.

Given the Ninth Circuit’s guidance on this issue, the Court finds that the Receivership

Certificate constitutes payment in full under FIRREA such that Plaintiff’s claim is satisfied.

Under FIRREA and Ninth Circuit precedent, Plaintiff is not entitled to a cash payment.

Although the Court recognizes the resulting harshness that is likely to follow from such a

ruling, this Court is not at liberty to deviate from the dictates of Congress and the Ninth

Circuit.

Plaintiff also argues that the Receivership Certificate itself does not state that it

constitutes payment in full. Whether the Receivership Certificate states that payment has

occurred does not alter the legal effect of such a certificate. Once the FDIC issued the

Receivership Certificate, Plaintiff’s claim became paid in full.

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Accordingly,

IT IS ORDERED that Defendant Federal Deposit Insurance Corporation’s Motion

for Summary Judgment (Doc. # 15) is granted.

IT IS FURTHER ORDERED that the Clerk of the Court shall enter judgment in

favor of Defendant and against Plaintiff, with Plaintiff to take nothing.

IT IS FURTHER ORDERED that the Clerk of the Court shall close this case.

DATED this 2nd day of June, 2010.

Case 3:09-cv-08175-JAT Document 20 Filed 06/02/10 Page 4 of 4