UNITED STAT ES DIS TRICT COURT F OR THE D ISTRIC T OF CO LU M BIA

) WASHINGTON MUTUA L, INC., e t al . , ) ) P laintif fs, )

) v. ) Civil Action No. 09-533 (RMC) ) F EDERAL DEPOSIT INSURANCE CORP ORATION, et al ., ) ) ) Defendan ts. ) ) M EM OR

AN DU M OP IN ION Plaintiffs W ashing ton Mutual, I nc. (“WMI ”), and WMI I nvestment Corp. have f iled this action ag ainst the Fe dera l D eposit I nsuranc e Corporation (“F DI C”) in its separ ate c apac ities as

a cor poration and a s rec eiver for Washington Mutual Ba nk, Hende rson, Neva da (“ WMB”), a fede ral

savin g s b ank ow ne d by WMI

. WMI br ing s this c a se purs ua nt to the F e de ra l De po sit

I ns ur anc e Ac t, 12 U.S.C. § 1811 et seq. , w hic h a llo ws a pa rt y to se e k ju dic ia l r e vie w o f i ts c la ims a ft e r s uc h c la ims

are disallowed by

the re ceive r. See 12 U.S.C. § 1821(d)(6). The Complaint effec tively alleg es that the FD I C, as rec eiver for WMB, purported to se ll c erta in a ssets to J.P. Morg an Chase (“ J PMC”) but that such asse ts belong ed to Plaintiffs, not to W MB, a nd that the FD I C ow es P laintiffs billions of dollars in compensation. See Compl. [Dkt. # 1]. J PMC s eeks to interve ne as a defe ndant. Dkt. # 4. As explained below, the motion to intervene w ill be gr anted. I. F AC TS On September 25, 2008, the Dire ctor of the Offic e of Thr ift Supervision (“OTS”)

a pp oin te d th e F DI C a s rece ive r f or WMB (“ F DI C- Re c e ive r” ). F DI C- Re c e ive r i mme diate ly so ld “substantially

all the assets of WM B” to J PMC pursuant to a Purchase a nd Assumption Agr eeme nt-2-

(“P & A Agre ement”) dated September 25, 2008. C ompl. ¶ 8. The following day , Plaintiffs filed for ba nkruptcy protec tion pursuant to chapter 11 of title 11 of the United S t at es Code (the “B ankruptc y

Code”) in the U nited States Ba nkruptcy Court for the District of Dela war e (the “B ankruptc y

Court”). See I

n r e W a s h in g to n M

u tu a l, I nc. , Ba n kr. No. 08-12229 ( Ba nkr. D. De l., filed Sept. 26, 2008). In the sche dules of asse ts submit ted to the Bankruptcy Court, “WMI claimed it owned or other

wise held intere sts in certain WMB a ssets acquire d by J PMC from th e FD I C as

rec eiver for WMB unde r the P& A.” J PMC’s Mem. in Supp. of Mot. to Interve ne (“ J PMC’s Mem.”) [Dkt. # 4] at 3. Simi larly , WMI submitt ed cla ims ag ainst the FD I C-Rece iver a sserting that it owned or held interests i n cer

tain assets purportedly sold to J PMC pursuant to the P & A Ag ree ment. Id. The F DI C-Rece iver disallowed WMI ’s claims on January 23, 2009, on the g rounds that, int e r a lia , WMI ’s claims l ac k ed sufficient documentation, failed to state cla ims ag ainst the

rec eiver ship, and appe are d to assert c laims ag ainst t h i rd p ar t i es. See Compl. Ex . 2 (“N otice of Disallowanc e of Claim”) . There afte r, WMI filed t his action pursuant to 12 U.S.C. § 1821(d)( 6). On Marc h 24, 2009, J PMC i nitiated an adve rsar y proce eding ag ainst WMI in the Ba nkrupcty Court, and on Marc h 30, 2009, J PMC filed a motion to intervene in this case, in both instances se eking to assert and prote ct its ownership intere sts in the assets it purportedly purcha sed fr om the FDI C-Rece iver. II. AP P LICABLE LAW A movant may

intervene as of r ight whe n the movant (1) makes a timely motion; (2 ) h a s an in te re st r e la tin g to t he pr op e rt

y or tr ans a c tio n w hic h is the su bje c t of the a c tio n; ( 3) is so situated that the disposition of the action may as a pr actica l matter impair or impede the

mov ant’ s a

bil ity to p ro te c t th a t in te re st; and (4 ) w he re the mov ant’ s in te re sts are no t a de qu a te ly

re pr e se nte d b y

the e xistin g pa

rt ie s. F e d. R. C iv. P. 2 4( a ); se e als o Sie rra Clu b v . V an An twe rp ,-3-

523 F. Supp. 2d 5, 6 (D.D .C. 2007).

A par ty wishing to interve ne also must demonstrate that it has standing unde r Article I I Iof the Constituti on. Fund for Animals, Inc. v. Norton , 322 F.3d 728, 731- 32 (D.C. Cir. 20 03 ). “ To e sta

bli shsta nd ingun de r A rt ic le I I I , a

pr os pe c tiv e int e rv e no r –

lik e any pa rt y – mu st show: (1) injury -in-fa ct, (2) c ausation, and ( 3) re dressa bility .” Id. at 732-33. The injury alleg ed must be immi nent; it cannot be mer ely hy pothetical or spe culative. Se e Nat ’l Tre as ur y Employe es Union v. U

nited States , 101 F.3d 1423, 1427 ( D.C. Cir. 1996).

III . A NA LY SIS F or the re a so ns se t fo rt

h be low , the Court fi nd s that JPMC is e nti tle d to int e rv e ne in this action pursuant to Fe dera l Rule of Civil Procedur e 24(a). First, J PMC’s mot ion to intervene w as timely , having been filed only ten day s afte r P laintiffs commence d this action. Second, JP MC has

an in te re st i n the pr op e rt

y or tr ans a c tio n w hic h is the su bje c t of the a c tio n. Th e Court

a g re e s w ith JPMC th a t Pla int if

fs ’ c la ims are “ pr e mis e d o n th e a lle g a tio n th a t a sse ts s old by the F DI C to JPMC . . . belong to WM I .” JP MC’s Mem. at 1

. I n C o unt 4 of the Complaint, for example, Plaintiffs all ege th at “pro pert y tak en int o the Rece iv ers hi p that (a) belo nged to Pl ain ti ffs rat her th a n W M B, (b ) w a s im

pr op e rl y tr ans fe rr e d to WMB , and /or (c ) i s p ro pe rt

y that ot he rw ise sh ou ld b e re tur

ne d to Plaintiffs under applic ab l e l aw .” Compl. ¶ 94. The prope rty to which Plaintiffs ref

er is the ve ry

same pr op e rt

y JPMC purp or

te dly purc ha se d und e r t

he P & A A g re e me nt. “ An int e rv e no r’ s in te re st is obvious when he asse rts a cla im to property that is t h e s u b

ject matter

of the suit.” Foster v. Gu e or y , 655 F.2d 1319, 1324 ( D.C. Cir. 1981). The third ele ment requ i re d for inter vention of rig ht under Rule 24(a ) is that the dispositi on of the a ction may impair the movant’s a

bility to protect his interests. That e lement is met-4-

here , as W M I i s aski ng the Court to find that it was the owner of the prope rty

FDI C-Rece iver purp or te d to se ll t o JPMC o r, a t th e ve ry le a st, that its c la im of ow ne rs hip is c olo ra ble and the F DI CRece iver wa s wrongto disallow it. Such a finding would likely impair J PMC’s int ere sts under the P & A Ag ree ment. Finally , the Court notes none of the curr ent par ties adequately

repr esents JP MC’s int e re sts in t

his ma tte r. Pla int if

fs ’ i nte re sts are dir e c tly op po se d to tho se of JPMC, and the F DI C,

a s a g ov e rnme nt e nti ty , mu st s e rv e the pu bli c int e re st a

nd a dh e re to fe de ra l law. Th e F DI C “ wo uld be shirking its duty

wer e it to a dvance [J PMC’s] narr ower interest at the e x pense of its repre sentation of the g ener al public intere st.” Di mo nd v . D ist ric t of Col um bia , 792 F.2d 179, 192- 93 (D.C. Cir. 19 86 ); s e e a ls o F

u n d fo r A n im a ls , I

n c . v . No r ton , 3 2 2 F. 3 d 7 28, 736 (D.C. Cir. 2003) (g ranting intervention whe re, a lthough f eder al def endant a nd movant’s initial posit ions were simil ar, it wa s not unlikely that their i ntere sts “mig ht diverg e during the course of litigation” due to their diff ering obligations). There fore , J PMC has met the criteria for inter vention of rig ht in this action. JPMC a lso me e ts the re qu ir e me nts fo r Ar tic le I I I sta

nd ing

. JPMC a sse rt s that WMI

se e ks to d ive st i t of

its ow ne rs hip int e re st i n a sse ts i t pu rp or te dly purc ha se d und e r t

he P & A Ag ree ment. See J PMC’s Mem. at 8. WMI argues that it merely seeks moneta

ry damag es fr om the FDI C; howeve r, t he Complaint clear ly alleg es that WMI had an ow nership intere st in some or all of the prope rty

the FD I C Receiver

purported to tra

nsfer to J PMC. See, e .g. , Compl. ¶¶ 32-33, 94. Pla int if fs a lso ma de the se a lle g a tio ns in WM I ’s c la ims to t he F DI C, w hic h WMI

a sk s th e Court

to decla re va lid. Id. Pray er F or Relief ¶ 1. Thus, J PMC a s s er t s an i m p en ding injury , cause d by Pla int if fs , r e dr e ssa

ble by thi s Co ur t. Plaintiffs arg ue, howe ver, that the automatic stay in the bankruptc y

proce eding bars J PMC from intervening and asse rting a counte rcla im in thi s matter. See Pls.’ Mem. in Opp’n (“Pls.’-5-

Me m.” ) [D kt. # 2 1] a t 11 . T he B ank ru ptc y Cod e imp os e s an a

uto ma tic sta

y pr oh ibi tin g any

e nti ty fr om c omm e nc ingor

c on tin uin g any a c tio n w ithre sp e c t to a

c la im a g a ins t th e de bto r i f s uc h c la im

arose prior to the filing of the bankruptc y petition a nd prohibiting “any

act to obtain possession of proper ty of the estate

. . . or to e x erc ise control over proper ty of the estate.” 11 U.S.C. 362(a)(1) and (3). How ever , J PMC i s not attempting to br ing a claim ag ainst the debtor — r ather , the debtor ha s broug ht claims that impli cate J PMC’s int ere sts. Thus, WMI ’s claim that the automatic stay applies to J PMC’s proposed intervention must fail. As the Seventh Circuit noted,

[T] he automatic sta

y is inapplicable to suits by the bankr upt. . . . The fun d a me n ta l p u r

p o s e o f b an kr

u p tc y . . . is to p r e v e n t c r e d it ors from tr y ing to st eal a

marc h o n e a c h o the r, and the a uto ma tic sta

y is essentia l t o acc omplishi ng this purpose. Ther e is, in contrast, no policy o f p r e v e n ti n g p e r s o n s w h o m t h e b an kr u p t h a s s u e d

f r om pr ote c tin g the ir

le g a l r ig hts

. Martin-Trigona v. C

hampion Fede ral Sav. & Loan Ass’n. , 8 92 F .2 d 5 75 , 5 77 (7 th C ir . 1 98 9) ; see als o Gordon v. W

hitmore ( In re M errick) , 1 75 B .R. 33 3, 33 8 (B .A .P. 9th Cir . 1 99 4) (“ Th e a

uto ma tic stay should not ti e the ha

nds of a defe ndant whil e the plaintiff debtor is g iven fre e re in to lit igate.”) ; Justus v. Financial News Network ( In re Financ ial News N

etwork) , 1 5 8 B. R

. 570, 573 (S.D.N.Y. 1993) (“Since [t he Ba

nkruptcy Code] mandates a stay only of litigation ag ainst the debtor . . . it does not preve nt en t i t i es aga inst whom the debtor proc eeds in a n offe nsive posture – for example, by initiating a judicial or adver sarial proce eding – from prote cting their leg al rig hts.”) (inter nal citation and quotation marks omitted).

Nor doe s the automatic stay apply to J PMC’s counterc l ai m seeking a dec laratory judgme nt finding that W M I does not own the prope rty at issue. J PMC does not seek to take possession of or asse rt control over WMI ’s ca

use of a ction here , which is rig htfully part of the estate.-6-

See 11 U. S.C. 54 1( a )( 1) ; Martin-Trigona , 89 2 F .2 d a t 57 7 (“ Tr ue , the ba nk ru pt’ s c a us e of a c tio n is

an asse t of the estate ; but as t he defenda nt in the bankr

upt’s suit is not , by

opposing that suit, seeking to t a ke po sse ssi on of it, [the a uto ma tic sta

y do e s n ot a

pp ly ].” ). Ad dit ion a lly , JPMC’ s c ounte rc la im did not arise until af

ter WMI filed for

bankruptc y , when WMIasser ted an owne rship interest in the proper ty J PMC purportedly

purcha sed via t h e FDI C as rec eiver of WMB. The a

utomatic stay provision of the B ankruptc y Cod e o nly

applies to those claims ar ising prior to the filing of

a b an kruptcy

petition. See 11 U. S.C. § 3 62 (a )( 1) ; see also United States v . Inslaw, Inc. , 9 3 2 F.2d 1467, 1473 (D.C. Cir. 1991) (f inding that a ca

use of a ction that arises post-pe tition i s not stay ed, and there fore is not an “ac t to obtain possession of property of the e state” in violati on of 11 U.S.C. § 362(a) (3), be cause to find otherwise would require finding a viol ation “whe never someone a lrea dy in possession of proper

ty mistakenly ref

uses t o capitulate to a bankr upt’s asser

tion of rig hts in that proper ty ”). IV . C ON CL USI ON For the fore g oing rea sons, the C ourt will g rant JP MC’s motion t o intervene [Dkt. # 4] as a defenda

nt in this matter. A me morializi ng Orde r ac companies this Memora ndum Opinion.

Date : Oc tob e r 5 , 2 00 9 /s/ ROSEMARY M. COL L YER United States District J udg e