IN THE UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

FEDERAL DEPOSIT INSURANCE 

CORPORATION AS RECEIVER FOR 

BROADWAY BANK, 

Plaintiff, 

v. 

DEMETRIS GIANNOULIAS, GEORGE 

GIANNOULIAS, JAMES MCMAHON, 

SEAN CONLON, STEVEN DRY, DONNA 

ZAGORSKI, STEVEN BALOURDOS, 

GLORIA SGUROS and ANTHONY D’COSTA, 

Defendants. 

Case No. 12 Civ. 1665 

Judge John F. Grady 

Magistrate Judge Daniel Martin 

DEFENDANTS DEMETRIS GIANNOULIAS AND GEORGE GIANNOULIAS’S 

MEMORANDUM OF LAW IN OPPOSITION TO FDIC-R’S MOTION TO 

STRIKE THE GIANNOULIAS DEFENDANTS’ SIXTH AFFIRMATIVE DEFENSE

William L. Charron, Esq. 

Bryan T. Mohler, Esq. 

PRYOR CASHMAN LLP 

7 Times Square 

New York, New York 10036 

T: (212) 421-4100 

F: (212) 326-0806 

wcharron@pryorcashman.com 

bmohler@pryorcashman.com 

-andEric Y. Choi, Esq. 

NEAL, GERBER & EISENBERG LLP 

Two North LaSalle Street, Suite 1700 

Chicago Illinois 60602 

T: (312) 827-1053 

F: (312) 980-0736 

echoi@ngelaw.com

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Defendants Demetris Giannoulias and George Giannoulias (collectively, the 

“Giannoulias Defendants”) respectfully submit this memorandum of law in opposition to the 

supplemental motion to strike the Giannoulias Defendants’ Sixth Affirmative Defense by 

plaintiff Federal Deposit Insurance Corporation as Receiver for Broadway Bank (the “FDIC-R”). 

PRELIMINARY STATEMENT

The FDIC-R’s supplemental motion to strike should be denied because the FDIC-R 

obtained its receivership appointment of Broadway Bank (the “Bank”) unconstitutionally, and 

thus the FDIC-R lacks standing to have brought this suit. 

The FDIC-R obtained its receivership status over the Bank through a statutory 

appointment by the Illinois Department of Financial & Professional Regulation (the “IDFPR”). 

The IDFPR seized the Bank and appointed the FDIC-R as receiver pursuant to the Illinois 

Banking Act, 205 ILCS 5/1, et seq., and the Federal Deposit Insurance Act, 12 U.S.C. § 1821, et 

seq. Those statutes, however, uniquely failed to provide the Bank with any right of meaningful 

pre-deprivation or post-deprivation judicial review of the IDFPR’s seizure and receivership 

appointment, which is a constitutional requirement under the Due Process and Equal Protection 

Clauses of the Fourteenth Amendment. 

The FDIC-R concedes that some level of meaningful pre- or post-deprivation judicial 

review must have been available to the Bank in connection with the IDFPR’s decision to seize 

the Bank’s assets and to appoint the FDIC-R as receiver of those assets. The FDIC-R contends 

that the Bank enjoyed both pre- and post-deprivation judicial review, but the FDIC-R misstates 

its statutory authorities. 

The FDIC-R concocts its own term, “final agency action,” and asserts that certain preseizure activities by the IDFPR were “final agency actions” (at least as the FDIC-R has coined 

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 2 

that term) that were supposedly judicially reviewable at the time. The FDIC-R is incorrect, as 

explained below. 

Likewise, the FDIC-R’s reliance on the Federal Administrative Procedure Act, 5 U.S.C. 

§§ 500, et seq. (the “Federal APA”), as affording some opportunity for immediate postdeprivation judicial review in this case is misplaced because the FDIC-R obtained its 

receivership appointment from the IDFPR under Illinois state law. The Federal APA does not 

govern state agency decisions, and the FDIC-R points to no Illinois analog that would have 

similarly allowed immediate post-deprivation judicial review (and the Giannoulias Defendants 

are aware of none). 

Therefore, through either an intended or unintended gap in the relevant statutes, there was 

no avenue for meaningful pre- or post-deprivation judicial review of the IDFPR’s seizure and 

receivership appointment in this case. As such, the FDIC-R’s receivership status is a 

constitutional nullity as a matter of both “due process” and “equal protection,” which negates the 

FDIC-R’s standing to have sued the Giannoulias Defendants (or anyone else) in the name of the 

“Bank.” The FDIC-R’s motion to strike the Giannoulias Defendants’ Sixth Affirmative Defense 

should be denied.1

 

1

 The FDIC-R oddly states that it need address only “due process,” not “equal protection,” 

because supposedly “there is no equal protection component” to the Giannoulias Defendants’ 

Sixth Affirmative Defense. (FDIC-R’s 12/18/13 Br. at 3 n.2.) That is incorrect. The 

Giannoulias Defendants’ Sixth Affirmative Defense plainly states, inter alia: “Those statutes, 

however, failed to provide the Bank with any right of pre-deprivation or post-deprivation judicial 

review, which is a constitutional requirement under the Due Process Clause and the Equal 

Protection Clause of the Fourteenth Amendment to the U.S. Constitution.” 

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RELEVANT ALLEGATIONS & STATUTORY PROVISIONS

1. Relevant Allegations Within The FDIC-R’s Second Amended Complaint

The FDIC-R’s Second Amended Complaint (“SAC”) alleges that, “[o]n April 23, 2010, 

the Illinois Department of Financial and Professional Regulation (‘IDFPR’) closed Broadway 

[Bank] and appointed the FDIC as Receiver.” (SAC at ¶ 5.) The Second Amended Complaint 

further alleges that “Broadway was a state-chartered, nonmember bank established by the IDFPR 

and insured by the FDIC.” (Id. at ¶ 7.) 

2. Relevant Statutory Provisions Authorizing And 

Providing For Judicial Review Of Receivership Appointments

a. Relevant Provisions Of The Federal Deposit Insurance Act 

The Federal Deposit Insurance Act, 12 U.S.C. § 1821, et seq. (the “FDI Act”), provides 

that the FDIC-R may accept receivership appointments made by appropriate State supervisory 

authorities (such as the IDFPR). Id. at §§ 1821(c)(1) & (c)(3)(A). 

The FDI Act also provides that the FDIC may appoint itself as receiver of an insured 

bank under certain circumstances, id. at § 1821(c)(4); that an “appropriate Federal banking 

agency . . . after consultation with the appropriate State supervisor” may appoint the FDIC-R as 

receiver of an insured bank under certain circumstances, id. at § 1821(c)(9); and that the board of 

directors of the FDIC, “after consultation with the appropriate Federal banking agency and the 

appropriate State supervisor (if any),” may appoint the FDIC-R as receiver of an insured bank 

under certain circumstances, id. at § 1821(c)(10). 

These alternative possible forms of receivership appointment are relevant to the “judicial 

review” provisions of the FDI Act, as discussed below. Nevertheless, the FDIC-R alleges that its 

receivership of Broadway Bank is based upon an appointment made and requested solely by the 

IDFPR. (SAC at ¶ 5.) 

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 4 

The FDI Act provides for direct post-deprivation “Judicial review” of appointments of 

the FDIC-R as receiver only in connection with appointments made pursuant to §§ 1821(c)(4), 

(c)(9) and (c)(10) (described above). Specifically, 12 U.S.C. § 1821(c)(7) provides: 

If the Corporation [FDIC] is appointed (including the appointment of the 

Corporation as receiver by the Board of Directors) as conservator or receiver of a 

depository institution under paragraph (4), (9), or (10), the depository institution 

may, not later than 30 days thereafter, bring an action in the United States district 

court for the judicial district in which the home office of such depository 

institution is located, or in the United States District Court for the District of 

Columbia, for an order requiring the Corporation to be removed as conservator or 

receiver (regardless of how such appointment was made), and the court shall, 

upon the merits, dismiss such action or direct the Corporation to be removed as 

the conservator or receiver. 

Id. (emphasis supplied). 

The FDI Act provides for no right of judicial review if the FDIC-R accepts a receivership 

appointment from an appropriate State supervisor, such as the IDFPR, pursuant to 12 U.S.C. §§ 

1821(c)(1) and (c)(3). 

b. Relevant Provisions Of The Illinois Banking Act

Section 58 of the Illinois Banking Act, entitled “Appointment of receiver; court 

proceeding,” provides: 

If the Commissioner [of the IDFPR] determines (which determination may be 

made at the time, or any time subsequent to his taking possession and control of a 

bank and its assets) that no practical possibility exists to reorganize the bank after 

reasonable efforts have been made and that it should be liquidated through 

receivership, he shall appoint a receiver and require of him such bond and security 

as the Commissioner deems proper, and the Commissioner, represented by the 

Attorney General, shall, if the Federal Deposit Insurance Corporation is not acting 

as receiver, file a complaint for the dissolution or winding up of the affairs of such 

bank in the circuit court of the county where such bank is located. 

205 ILCS 5/58(a). This provision gives the IDFPR authority to appoint bank receivers, including 

but not limited to appointing the FDIC-R to be the receiver of state chartered and federally 

insured banks. 

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 5 

Section 60 of the Illinois Banking Act provides that the FDIC-R “shall derive its powers 

and perform its duties pursuant to the Federal Deposit Insurance Act and regulations 

promulgated thereunder, ....” Id. at 5/60. As discussed above, the FDI Act provides no right of 

judicial review when the FDIC-R accepts an appointment by a State authority. 

Section 67 of the Illinois Banking Act, entitled “Judicial review,” provides: 

Whenever the Commissioner [of the IDFPR] shall have taken possession and 

control of a state bank and its assets for the purpose of examination, 

reorganization or liquidation through receivership, or whenever the Commissioner 

shall have appointed a receiver for a bank, other than the Federal Deposit 

Insurance Corporation, and filed a complaint for the dissolution or for the 

winding up of the affairs of a bank, and the bank denies the grounds for such 

actions, it may at any time within ten days apply to the Circuit Court of Sangamon 

County, Illinois, to enjoin further proceedings in the premises; and such court 

shall cite the Commissioner to show cause why further proceedings should not be 

enjoined, and if the court shall find that such grounds do not exist, the court shall 

make an order enjoining the Commissioner and any receiver acting under his 

direction from all further proceedings on account of such alleged grounds, .... 

Id. at 5/67 (emphasis supplied). 

Therefore, as with the FDI Act, the Illinois Banking Act provides for no right of judicial 

review when the IDFPR appoints the FDIC-R as the receiver of a state chartered and federally 

insured bank, as was the situation with Broadway Bank. If the IDFPR appoints anyone else as a 

receiver, then direct judicial review is available. 

Taken together, the relevant federal and state statutes governing the FDIC-R’s 

appointment as receiver of Broadway Bank provided the Bank with no right of direct predeprivation or post-deprivation judicial review of that appointment. 

 

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ARGUMENT

I. THE ABSENCE OF ANY STATUTORY RIGHT FOR THE BANK 

TO HAVE SOUGHT DIRECT JUDICIAL REVIEW OF THE FDIC-R’S 

APPOINTMENT AS RECEIVER VIOLATES THE DUE PROCESS 

CLAUSE OF THE FOURTEENTH AMENDMENT TO THE CONSTITUTION

The Fourteenth Amendment to the U.S. Constitution provides, in relevant part, that no 

State shall “deprive any person of life, liberty, or property, without due process of law; nor deny 

to any person within its jurisdiction the equal protection of the laws.” U.S. Const. amend. 

XIV(1). This amendment governs the rights of corporations as well as natural persons. E.g., 

Pembina Consol. Silver Mining & Milling Co. v. Pennsylvania, 125 U.S. 181, 189 (1888). 

The right of meaningful judicial review over State actions that deprive persons of their 

property is a fundamental and basic tenet of “due process.” E.g., Mathews v. Eldridge, 424 U.S. 

319, 333 (1976) (“This Court consistently has held that some form of hearing is required before 

an individual is finally deprived of a property interest. The ‘right to be heard before being 

condemned to suffer grievous loss of any kind, even though it may not involve the stigma and 

hardships of a criminal conviction, is a principle basic to our society.’ The fundamental 

requirement of due process is the opportunity to be heard ‘at a meaningful time and in a 

meaningful manner.’”) (quotations and citations omitted). 

In the banking context specifically, it is settled that some level of meaningful pre- or 

post-deprivation judicial review must be available to a Bank when its assets are seized and a 

receivership imposed. Although courts have reasoned that pre-deprivation judicial review is 

unnecessary in view of the strong government interest in protecting the federal deposit insurance 

fund, courts have also reasoned that, given a bank owner’s right to protect its property from 

unwarranted seizures and to avoid being irreparably saddled with the stigma of having gone into 

receivership, meaningful post-deprivation judicial review must be available after regulators take 

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the extraordinary step of seizing a bank’s assets and instituting a receivership. See, e.g., Fahey v. 

Mallonee, 332 U.S. 245, 253-54 (1947) (“It is complained that these regulations provide for 

hearing after the conservator takes possession instead of before. This is a drastic procedure. But 

the delicate nature of the institution and the impossibility of preserving credit during an 

investigation has made it an almost invariable custom to apply supervisory authority in this 

summary manner. It is a heavy responsibility to be exercised with disinterestedness and restraint, 

but in the light of the history and customs of banking we cannot say it is unconstitutional.”); 

Woods v. Federal Home Loan Bank Bd., 826 F.2d 1400, 1411 (5th Cir. 1987) (agreeing that “the 

absence of pre-deprivation process heightens the need for post-deprivation procedures in this 

case [where bank receivership was challenged],” and finding that due process existed where bank 

had waived opportunity for formal administrative hearing, where bank had initiated its own suit 

three months before receiver was appointed, and where bank had ability to ask court to review 

administrative decision for arbitrary and capricious misconduct); Haralson v. Federal Home 

Loan Bank Bd., 837 F.2d 1123, 1126 (D.C. Cir. 1988) (“The statute provides a mechanism for 

review, albeit, one available only after the seizure of assets. However, the fact that judicial 

review is available only after the fact does not, in and of itself, render that review constitutionally 

inadequate.”); Fidelity Sav. & Loan Ass’n v. Federal Home Loan Bank Bd., 689 F.2d 803, 811, 

814 (9th Cir. 1982) (same); Franklin Sav. Ass’n v. Director, Office of Thrift Supervision, 934 

F.2d 1127, 1140 (10th Cir. 1991) (“[The bank] also objects to the lack of a prior hearing. [The 

statute] affords the association to which a conservator has been appointed the opportunity for 

judicial review of the appointment decision. The availability of this post-deprivation hearing 

precludes any due process violations.”) (citations omitted); see also FDIC v. American Bank 

Trust Shares, Inc. (ABTS), 558 F.2d 711, 715 (4th Cir. 1977) (“FDIC acquired title by reason of 

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its appointment as receiver of Bank and the subsequent sale of Bank’s assets, with state court 

approval, by itself, as receiver, to itself, as a corporation. The only grounds upon which its title 

may be defeated are a successful attack upon the validity of its appointment as receiver, ....”); 

Manning Sav. & Loan Ass’n v. Federal Sav. & Loan Ins. Corp., No. 83 C 757, 1983 U.S. Dist. 

LEXIS 13773, at *6 (N.D. Ill. Sept. 14, 1983) (“[W]e do not see any barrier to [the bank] 

asserting its constitutional claims as a basis for removal of the receiver ....”) (citation omitted).2

The FDIC-R does not contest that either pre- or post-deprivation judicial review must 

exist to satisfy the Due Process Clause. The FDIC-R instead insists that both kinds of judicial 

review were available in this case. The FDIC-R is mistaken. 

A. Because There Was No “Final Administrative Decision,” The 

FDIC-R Is Incorrect That Pre-Deprivation Judicial Review Was Available

As discussed above, neither the FDI Act nor the Illinois Banking Act provides for any

pre-deprivation or post-deprivation judicial review in the unique case where, as here, the IDFPR 

appoints the FDIC-R as receiver. 

Impliedly conceding the point, the FDIC-R looks instead to the “Notice of Intent to Take 

Possession and Control” that the IDFPR sent to the Bank in February 2010, pursuant to Section 

51 of the Illinois Banking Act (the “Section 51 Notice”). The FDIC-R contends that the Section 

51 Notice constituted a so-called “final agency action” – a term made up by the FDIC-R without 

reference to statute – which, the FDIC-R further contends, was “subject to judicial review 

pursuant to the Illinois Administrative Procedures Act” according to Section 48(10) of the 

 

2

 The FDIC-R engages in a lengthy discussion as to why pre-deprivation judicial review is not 

constitutionally mandated. (FDIC-R’s 12/18/13 Br. at 4-6.) The Giannoulias Defendants do not 

disagree. Nevertheless, if no pre-deprivation judicial review exists, then there must be postdeprivation judicial review. The FDIC-R does not (and cannot) contend otherwise. 

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Illinois Banking Act, 205 ILCS 5/48(10). (FDIC-R’s 12/18/13 Br. at 4.) The FDIC-R’s 

contentions are fallacious. 

Section 48(10) of the Illinois Banking Act provides that “[a]ll final administrative 

decisions of the Commissioner hereunder shall be subject to judicial review pursuant to the 

provisions of the [Illinois] Administrative Review Law[, 735 ILCS 5/3-101, et seq.].” 205 ILCS 

5/48(10) (emphasis supplied). There is no mention of a so-called “final agency action.” The 

IDFPR’s Section 51 Notice to the Bank was not a “final administrative decision.” 

An “administrative decision” is defined by the Illinois Administrative Review Law to 

mean: “any decision, order or determination of any administrative agency rendered in a 

particular case, which affects the legal rights, duties or privileges of parties and which terminates 

the proceedings before the administrative agency.” 735 ILCS 5/3-101 (emphasis supplied). 

The Illinois courts have long interpreted this statutory definition to require: (a) an 

“application” triggering an administrative review; and (b) “some definitive action with regard to 

the application” that is transmitted to the applicant. E.g., Sola v. Roselle Police Pension Bd., 794 

N.E.2d 1055, 1058 (Ill. Ct. App. 2003); Fields v. Schaumburg Firefighters’ Pension Bd., 889 

N.E.2d 1167, 1173 (Ill. Ct. App. 2008); Rutka v. Board of Trustees of the Cicero Police Pension 

Fund, 939 N.E.2d 600, 603 (Ill. Ct. App. 2010). 

Moreover, in the specific context of action taken by the IDFPR, it has been found that 

“[t]he words in the Administrative Review Act ‘for review of decisions which terminate 

proceedings’ contemplate an administrative process which presents an issue for hearing and 

disposition by an impartial trial agency.” Roosevelt-Wabash Currency Exchange, Inc. v. IDFPR, 

364 N.E.2d 449, 453 (Ill. Ct. App. 1977). 

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The Section 51 Notice sent to the Bank was not sent in response to any “application” by 

the Bank. Nor was the Section 51 Notice a “definitive action.” To the contrary, the Section 51 

Notice was, by its own terms, merely a notice of “Intent.” Furthermore, the Section 51 Notice 

was issued pursuant to a statute that expressly provides for the Commissioner’s discretionary 

right not to “take possession and control of the bank and its assets ... for the purpose of 

examination, reorganization or liquidation through receivership” following the deadline provided, 

and/or to “extend the time period prescribed in that notice for such period as the Commissioner 

deems appropriate.” 205 ILCS 5/51(a)(5) & (b). Likewise, the Section 51 Notice is expressly 

conditional and contemplates the possibility of the Bank meeting certain subjective standards, 

which would have to be later analyzed. (See Exhibit A to FDIC-R’s 12/18/13 Mot. to Strike.) 

The FDIC-R claims that the Section 51 Notice gave the Bank “notice and an opportunity 

to cure.” (FDIC-R’s 12/18/13 Br. at 4.) Again, the FDIC-R offers these terms of its own making; 

they are not the terms of any applicable statute. Moreover, it is the very “opportunity to cure” 

that renders the Section 51 Notice conditional, not “definitive.” 

Additionally, the Section 51 Notice was not issued by an “impartial trial agency” 

following any kind of “hearing.” 

Thus, the Section 51 Notice was not a “definitive” administrative ruling that responded to 

an “application” and “terminated proceedings.” As such, it cannot be deemed a “final 

administrative decision” under Section 48(10) of the Illinois Banking Act and cannot be the basis 

for finding that meaningful and ripe pre-deprivation judicial review existed. 

Even more attenuated and misplaced is the FDIC-R’s reliance on the IDFPR’s and FDICCorporate’s Joint Reports of Examination (“ROEs”) issued in the years preceding the Bank’s 

seizure. (FDIC-R’s 12/18/13 Br. at 4.) The FDIC-R asserts that the Bank could have challenged 

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 11 

those earlier ROEs pursuant to the Illinois Administrative Code, 38 Ill. Admin. Code Ch. II, Part 

385. Indeed, the Bank had that right, but the point is immaterial. 

The ROEs are not a “final administrative decision” for the same reasons discussed above: 

they were not issued in response to applications and they were not definitive rulings that 

terminated proceedings. Although the Bank could have sought changes to the ROEs through the 

Illinois Administrative Code, that would not have transformed the ROEs into final administrative 

decisions capable of direct, pre-deprivation judicial review: the ROEs themselves did not 

purport to seize, receive or deprive the Bank of anything. To the contrary, even the worst rating 

offered in a ROE, a “5,” represents only the possibility of liquidation “[i]n the absence of urgent 

and decisive corrective measures.” (Exhibit A hereto.) 

The ROEs merely purported to report on the Bank’s condition over time. The FDIC-R 

cannot legitimately rely on the ROEs as a mechanism for the Bank to have triggered meaningful 

pre-deprivation judicial review under Section 48(10) of the Illinois Banking Act. 

B. Because The Federal APA Does Not Apply, The FDIC-R Is Incorrect 

That The Bank Could Have Received Post-Deprivation Judicial Review

The FDIC-R additionally (or alternatively) claims that the Bank was afforded direct postdeprivation review under the Federal APA. (FDIC-R’s 12/18/13 Br. at 6.) This, too, is incorrect. 

The Federal APA provides a right of judicial review only to federal agency decisions, not 

to decisions rendered by state agencies, such as the IDFPR’s decision to seize the assets of the 

Bank and to appoint the FDIC-R as receiver. E.g., Department of Transp. & Dev. v. BeairdPoulan, Inc., 449 U.S. 971, 973 (1980) (“[T]he APA is of course not applicable to state 

agencies.”) (Rehnquist, J., dissenting); Milwaukee Inner-City Congregations Allied for Hope v. 

Gottlieb, 2013 U.S. Dist. LEXIS 127184, at *9-10 (W.D. Wis. 2013) (same); Resident Council of 

Allen Parkway Vill. v. United States Dep’t of House. & Urban Dev., 980 F.2d 1043 (5th Cir. 

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 12 

1993) (“[T]he APA [is] a route through which private plaintiffs can obtain federal court review 

of the decisions of federal agencies .... [T]he right of review under section 702 does not give 

district courts the jurisdiction to enjoin ... nonfederal entities.”).3

The Federal APA has no application in this case. By its silence, the FDIC-R also 

concedes that the Illinois APA offers no means for direct post-deprivation judicial review (and, 

again, the Giannoulias Defendants are aware of no such right through state law). Furthermore, as 

discussed above, there is no “final administrative decision” that could be the subject of postdeprivation judicial review under Section 48(10) of the Illinois Banking Act. 

The FDIC-R is incorrect that either (let alone both) pre- and/or post-deprivation judicial 

review was available in this case. Accordingly, because such judicial review was 

constitutionally required but non-existent in this case, the FDIC-R’s appointment as receiver of 

the Bank violated the Due Process Clause of the Fourteenth Amendment. 

II. THE ABSENCE OF ANY STATUTORY RIGHT FOR 

THE BANK TO HAVE SOUGHT DIRECT JUDICIAL REVIEW OF THE 

FDIC-R’S APPOINTMENT AS RECEIVER ALSO VIOLATED THE 

EQUAL PROTECTION CLAUSE OF THE FOURTEENTH AMENDMENT 

The Equal Protection Clause of the Fourteenth Amendment “is essentially a direction that 

all persons similarly situated should be treated alike.” City of Cleburne v. Cleburne Living Ctr., 

Inc., 473 U.S. 432, 439 (1985) (citation omitted). Economic legislation “is presumed to be valid 

and will be sustained if the classification drawn by the statute is rationally related to a legitimate 

state interest.” Id. at 440 (citations omitted). 

 

3

 The FDIC-R’s authorities on this point are not to the contrary. (FDIC-R’s 12/18/13 Br. at 6.) 

Each of the cases cited – James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1094 (D.C. Cir. 

1996), Impro. Prods., Inc. v. Block, 722 F.2d 845, 850 (D.C. Cir. 1983), and FDIC v. Irwin, 916 

F.2d 1051, 1054 (5th Cir. 1990) – involved federal agency decisions, not state agency decisions. 

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 13 

As explained above, the FDI Act and the Illinois Banking Act both provide for some 

form of direct judicial review in other contexts concerning receivership appointments, but neither 

provides for any similar right of direct judicial review in the unique circumstance where, as here, 

the IDFPR appoints the FDIC-R to be a receiver. See also National R.R. Passenger Corp. v. 

National Ass’n of R.R. Passengers, 414 U.S. 453, 458 (1974) (“A frequently stated principle of 

statutory construction is that when legislation expressly provides a particular remedy or remedies, 

courts should not expand the coverage of the statute to subsume other remedies.... This 

principle of statutory construction reflects an ancient maxim – expressio unius est exclusion 

alterius.”) (citations and quotations omitted). 

The statutory prejudice shown to entities like the Bank, whether intended or not, is 

arbitrary and irrational, and thus violates the Equal Protection Clause. 

Even if the Court were to entertain the FDIC-R’s (meritless) positions regarding the 

Section 51 Notice and/or the ROEs (discussed above), the protracted means suggested by the 

FDIC-R for the Bank to have tried to find judicial review do not satisfy “equal protection.” The 

FDIC-R fails to explain why other banks facing other receivership appointments should be 

statutorily entitled to direct access to a court, but banks like Broadway, facing receivership 

appointments by the IDFPR that name the FDIC-R, should have to struggle to find an open 

courtroom door. Indeed, there is no rational explanation for such disparate treatment. 

When a bank is seized, the situation is immediate and dire. The FDIC-R cannot contend 

otherwise. A receiver routinely acts within days to begin selling the bank’s seized assets. If the 

bank cannot enjoin that conduct quickly, then the harm to the bank is irreparable, and the ability 

to raise new capital is non-existent. That is why immediate post-deprivation judicial review is 

necessary, and why the peculiar statutory gap exhibited in this case (where the IDFPR appointed 

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 14 

the FDIC-R as receiver) is an irrational and constitutionally impermissible anomaly. See, e.g., 

Craig Boyd Garner, Unconstitutional Regulatory Seizures Under the Federal Deposit Insurance 

Corporation Improvement Act of 1991: The Final Blow to the Business of Banks 22 Pepperdine 

L. Rev. 131, n. 65 (1994) (surveying laws of jurisdictions). 

The IDFPR’s appointment of the FDIC-R as receiver of the Bank violated the Equal 

Protection Clause of the Fourteenth Amendment. 

III. BECAUSE THE FDIC-R’S APPOINTMENT WAS 

CONSTITUTIONALLY INVALID, THE GIANNOULIAS DEFENDANTS’ SIXTH 

AFFIRMATIVE DEFENSE FOR “LACK OF STANDING” IS MERITORIOUS

In other circumstances (not applicable here) when the FDI Act permits post-deprivation 

judicial review, that statute “requires” the “removal” of an improvidently appointed receiver. 12 

U.S.C. § 1821(c)(7). Likewise, when the Illinois Banking Act permits judicial review (in 

circumstances not applicable here), the reviewing court is required to “enjoin” an improvidently 

appointed receiver from taking any action purportedly on behalf of the bank. 205 ILCS 5/67. 

Because the opportunity for meaningful judicial review was irrationally absent in this 

case, the FDIC-R was able to evade the possibility of judicial removal. That, however, does not 

make the FDIC-R’s receivership status any more valid. See also FDIC v. New York, 718 F. Supp. 

191, 196-97 (S.D.N.Y. 1989) (finding assignment of claim to FDIC to be invalid where relevant 

statute “prohibited” such assignment), aff’d, 928 F.2d 56 (2d Cir. 1991); Canning v. NLRB, 705 

F.3d 490, 496-99 (D.C. Cir.) (invalidating NLRB orders where Board lacked quorum due to 

court’s finding that President violated Constitution by purporting to appoint Board members 

when Congress was not in “recess”), cert. granted, 133 S. Ct. 2861 (2013). 

Because the FDIC-R’s appointment as receiver offends the Constitution, and thus the 

FDIC-R is an invalid receiver, the FDIC-R lacks any basis to assert a justiciable “case or 

Case: 1:12-cv-01665 Document #: 180 Filed: 02/12/14 Page 15 of 18 PageID #:3243
 15 

controversy” against the Giannoulias Defendants (or any of the Defendants) and accordingly 

lacks standing as a matter of law. See Canning, 705 F.3d at 499; FDIC v. New York, 718 F. Supp. 

at 196-97 (dismissing FDIC’s claims for lack of standing); Landmark Land Co. v. FDIC, 256 

F.3d 1365, 1380 (Fed. Cir. 2001) (same); FDIC v. Ernst & Young, LLP, 256 F. Supp. 2d 798, 

805 (N.D. Ill. 2003), aff’d, 374 F.3d 579 (7th Cir. 2004) (same). 

The FDIC-R cannot avoid the constitutional problems presented in this case by claiming, 

without any authority, that the Giannoulias Defendants lack standing to assert their Sixth 

Affirmative Defense. (FDIC-R’s 12/18/13 Br. at 7.) Because the FDIC-R has sued the 

Giannoulias Defendants by claiming, illegitimately, to be the voice of the “Bank,” the 

Giannoulias Defendants are plainly within the “zone of interests protected by the law involved” 

and can defend themselves by challenging the FDIC-R’s illegitimate status. See, e.g., Lujan v. 

Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Lepelletier v. FDIC, 164 F.3d 37, 42-45 

(D.C. Cir. 1999) (independent money finder had standing to assert rights of bank depositors); 

Fischetti v. Scarpone, No. Civ. A. No. 06-4838 (SRC), 2008 U.S. Dist. LEXIS 25359, at *2-4 

(D.N.J. Mar. 28, 2008) (defendant in related adversarial proceeding had standing to challenge 

bankruptcy trustee’s appointment as fraudulent). 

CONCLUSION

 For the foregoing reasons, the Giannoulias Defendants respectfully request that the 

FDIC-R’s supplemental motion to strike be denied, and that the Court award the Giannoulias 

Defendants such other and further relief as deemed just and proper. 

 

Case: 1:12-cv-01665 Document #: 180 Filed: 02/12/14 Page 16 of 18 PageID #:3244
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Dated: February 12, 2014 Respectfully submitted, 

DEMETRIS AND GEORGE 

GIANNOULIAS 

By: /s/ Eric Y. Choi 

 One of Their Attorneys 

William L. Charron, Esq. 

Bryan T. Mohler, Esq. 

PRYOR CASHMAN LLP 

7 Times Square 

New York, New York 10036 

T: (212) 421-4100 

F: (212) 326-0806 

wcharron@pryorcashman.com 

bmohler@pryorcashman.com 

-andEric Y. Choi, Esq. 

NEAL, GERBER & EISENBERG LLP 

Two North LaSalle Street, Suite 1700 

Chicago Illinois 60602 

T: (312) 827-1053 

F: (312) 980-0736 

echoi@ngelaw.com

Case: 1:12-cv-01665 Document #: 180 Filed: 02/12/14 Page 17 of 18 PageID #:3245
CERTIFICATE OF SERVICE 

The undersigned certifies that a copy of the foregoing Defendants Demetris 

Giannoulias and George Giannoulias’s Memorandum of Law in Opposition to FDIC-R’s 

Motion to Strike the Giannoulias Defendants’ Sixth Affirmative Defense was served on all 

counsel of record via electronic case filing procedures on February 12, 2014. 

 s/ Eric Y. Choi 

An Attorney for Defendants 

Case: 1:12-cv-01665 Document #: 180 Filed: 02/12/14 Page 18 of 18 PageID #:3246