Opinion ID: 8704066
Heading Depth: 4
Heading Rank: 1

Heading: Whether BOA Exhausted the Administrative Remedies under FIRREA on behalf of Ocala

Text: In enacting FIRREA, Congress created a comprehensive statutory scheme under which it granted the FDIC the authority to act as the Receiver for a failed financial institution. The “core purpose” of FIRREA is to “ensure that the assets of a failed institution are distributed fairly and promptly among those with valid claims against the institution.” Freeman v. FDIC, 56 F.3d 1394, 1401 (D.C.Cir. 1995). Congress intended to grant the FDIC the “power to take all actions necessary to resolve problems posed by financial institutions in default” in an “expeditious manner.” H.R.Rep. No. 101-54(1) at 322, 330, as reprinted in 1989 U.S.C.C.A.N. 86, 118, 126. To that end, Congress created a statutory procedure for the orderly and efficient processing of claims against failed financial institutions. This administrative claims process, set forth in 12 U.S.C. §§ 1821(d)(3) through (13), centralizes the initial consideration and resolution of claims by requiring that all claims be submitted to the Receiver by the “claims bar date,” a date certain established by the Receiver. Once a timely administrative claim is submitted, the Receiver has 180 days to determine whether to approve or disallow the claim. Id. § 1821(d)(5)(A)(i). The Receiver may disallow any portion of a timely claim that is not proven to the Receiver’s satisfaction. Id. §§ 1821(d)(5)(C), 1821(d)(5)(D). Section 1821(d)(6)(A) also establishes that a claimant can file a new suit, or continue a preexisting suit, on a claim within 60 days after the earlier of (i) the Receiver’s initial determination of a claim, or (ii) termination of the 180-day period in which the Receiver may determine the claim. In such a suit, the court performs a de novo judicial determination of the claim. Id. § 1821(d)(5)(A)7(E). The administrative claims process is mandatory. Thus, in Section 1821(d)(13)(D), Congress withdrew jurisdiction from all courts to hear claims against the FDIC as Receiver, except as granted elsewhere in Section 1821(d). See Freeman, 56 F.3d at 1399-1400. The jurisdictional bar provision and the claims procedures work together to impose a “statutory exhaustion requirement” that is “explicitly jurisdictional.” Rosa v. RTC, 938 F.2d 383, 395 (3d Cir.1991), cert. denied, 502 U.S. 981, 112 S.Ct. 582, 116 L.Ed.2d 608 (1991); see 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.”). This Circuit recognizes that “[¡Jurisdictional provisions in federal statutes are [] strictly construed.” Hardin v. City Title & Escrow Co., 797 F.2d 1037, 1040 (D.C.Cir.1986); Freeman, 56 F.3d at 1400 (strictly applying Sections 1821(d)(6) and (13)(D) to dismiss claims for lack of jurisdiction); see Office & Prof'l Emps. Int’l Union, Local 2 v. FDIC, 962 F.2d 63, 66 (D.C.Cir.1992) (“FIRREA ... preclude^] suit on a claim that was not first presented to the Receiver.”); see also, Brady Dev. Co. v. RTC, 14 F.3d 998, 1007 (4th Cir. 1994) (“The administrative prerequisite to suit set forth [FIRREA] has been strictly construed and is considered an absolute and unwaivable jurisdictional requirement ....”) (internal quotation marks and brackets omitted). In the suit at hand, BOA purports to assert claims on behalf of Ocala. The FDIC moves to dismiss these claims, arguing that neither Ocala, nor BOA on Ocala’s behalf, filed an administrative claim with the FDIC, as is required to confer jurisdiction upon this Court. The FDIC asserts that while BOA contends that it filed administrative claims on behalf of Ocala (i.e., the November 19 and December 19, 2009 proofs of claim referenced above in Section II.D.), the claims themselves reveal that they were actually filed on behalf of DB, BNP, and BOA. In support of its argument, the FDIC points to the cover page for each proof of claim on which “claimant” is identified as “BOA as Trustee (as defined in Exhibit A hereto).” (Dkt. No. 20 at Exs. A and C.). Exhibit A, in turn, states that the claim is submitted “on behalf of the Secured Parties, as defined in the [Ocala Facility Documents].” (Id.). The FDIC asserts that Ocala is not included in the definition of “Secured Parties” under the Ocala Facility Documents. Rather, Ocala is listed as the “Issuer.” (Id.). The FDIC also maintains that the proofs of claim do not allege damages to Ocala. Instead, the claims only seek recovery for losses allegedly incurred by the Secured Parties. Therefore, the FDIC concludes, the proofs of claim cannot reasonably be read as asserting a claim on behalf of Ocala. BOA counters that it filed the proofs of claim as a “representative” of Ocala, thereby exhausting Ocala’s administrative remedies. BOA asserts that the proofs of claim expressly state that Ocala had granted BOA a security interest in all of Ocala’s assets and that BOA was pursuing the claims with the receivership to vindicate BOA’s security interest. According to BOA, this representative status is expressly recognized in the definition of “Secured Parties.” BOA further asserts that the FDIC had abundant notice not only of the nature of the claims asserted by BOA, but also of the specific relationships among the various Ocala parties and the representative capacity in which BOA was filing the proofs of claim. BOA also maintains that courts take a “lenient” view in determining whether a claim constitutes notice under FIRREA. According to BOA, neither FIRREA nor the FDIC regulations define the precise form in which a claim must be presented in order to satisfy the administrative exhaustion requirement. (Dkt. No. 35, at 13 (citing FDIC v. Lacentra Trucking, Inc., 157 F.3d 1292, 1304 (11th Cir.1998); Branch v. FDIC, 833 F.Supp. 56, 59 (D.Mass.1993)).). In light of this absence of statutory definition, BOA argues, the D.C. Circuit has construed the term “claim” liberally and used broad latitude in determining whether the claimant has adequately presented a claim in the administrative process. (Id. at 14 (citing Branch, 833 F.Supp. at 60 (“an administrative claim is sufficient if it provides the government with notice of the general nature of the claim and with sufficient information to allow it to investigate and determine whether settlement of the claim is appropriate”)).). Given this “flexible” standard for reviewing claims, BOA argues, the FDIC had enough notice of Ocala’s potential claims to satisfy the FIR-RE A’s exhaustion requirement. (Id.). The Court disagrees. A careful reading of the proofs of claim shows that BOA filed the claims on its own behalf and that of DB and BNP-not Ocala. BOA submitted the claims on a standard “proof of claim” form that is available at the FDIC’s website. (Dkt. No. 35 at 13 fn. 3.). In the section of the form left blank for the name of the debtee, BOA entered “Bank of America, National Association, as Trustee (as defined in Exhibit A hereto).” 10 (Dkt. No. 20, Ex. A at 1.). On the section of the form that requests information on whose behalf the claim is filed, BOA entered: “the Trustee for the [SJecured [PJarties on the Ocala Funding, LLC Short Term and Subordinate Notes.” (Id.) (emphasis added.). BOA again reiterated that it submitted the claims on behalf of itself and the Secured Parties in a footnote to the proof of claim: “The tax ID number shown is for [BOA]. Many of the claims described in this proof of claim, however, are made by [BOA] in its capacity as Trustee on behalf of the [SJecured [PJaHies with respect to the Ocala Funding, LLC Short Term and Subordinate Notes.” (Id. at 1 fn. 1) (emphasis added). Exhibit A, which is attached to each proof of claim, describes the nature and basis of each claim in more detail. (Dkt. No. 20, Exs. A and C.). In the first paragraph of Exhibit A, BOA explains that it is the “indenture trustee, collateral agent and custodian” with respect to the Ocala Notes. (Id. at Ex. A and C to FAC, Ex. A at ¶ 1.). BOA then states that it is acting “on behalf of the Secured Parties, as defined in the [Ocala Facility Documents] ...” and further states that it submits “Exhibit A to its proof of claim ... on behalf of the Secured Parties.” (Ex. A and C to FAC, Ex. A at ¶ 2) (emphasis added). Finally, BOA states that it filed the receivership claims in order “to preserve its rights and the rights of the [SJecured [PJarties on whose behalf it is making the claims set forth in this proof of claim.” (Id. at ¶ 17) (emphasis added). The Ocala Facility Documents, in turn, define “Secured Parties” as “... each Swap Counterparty, the Indenture Trustee, the Collateral Agent, the Series 2005-I Depository, the Series 2008-1 Depository, the holders of the Short Term Notes, the holders of the Term Notes, the holders of the Subordinated Notes, the holders of the Extended Notes and the holders of the Non-Called Notes (such Persons, collectively the ‘Secured Parties and each a ‘Secured Party’).” (See Dkt. No. 39, Ex. B the Security Agreement at fourth WHEREAS clause; see also Dkt. No. 39 Ex. C Schedule I to the Base Indenture Agreement, at p. 31 (using the same definition for the term “Secured Parties”).). On the other hand, the Facility Documents list Ocala as the “Issuer” under the agreements. Therefore, by stating that it is submitting the receivership claims as the “Trustee for the Secured Parties” and that is acting “on behalf of the Secured Parties,” BOA, by definition, is not acting on behalf of Ocala. Nevertheless, BOA argues that, read as a whole, the proofs of claim clearly indicate that it seeks to recover for “losses incurred by the Ocala [FJacility itself, including losses incurred by all investors in the Ocala [FJacility and by BOA itself.” (Dkt. No. 35 at 18) (emphasis in original). According to BOA, “[b]y bringing claims ‘on the Ocala Funding, LLC Short Term and Subordinate Notes,’ see Exs. A & C at 1, and pursuant to the security interest granted to it by Ocala in Ocala’s assets, see id. at ¶ 3, BOA necessarily sought an administrative remedy for Ocala and all parties with interest in the Ocala assets, including Ocala’s investors and BOA itself.” (Id.) (emphasis in original). The Court is not persuaded. A common sense reading of the proofs of claim shows that they were filed on behalf of entities other than Ocala. Nowhere in the claims does BOA state that it is acting on behalf of Ocala. Instead, the claims repeatedly state that they are being made for, or on behalf of, BOA and the Secured Parties (i.e., DB and BNP). Indeed, in every instance where the claims mention Ocala’s alleged property, it is clear that BOA seeks to recover the property for itself and DB and BNP and not for the benefit of Ocala. (See, e.g., Dkt. No. 20, Exs. A and C, Ex. A at ¶ 5(i)-(ii) (asserting a claim to all Ocala property to which the “Trustee has a security interest” and to which “the Trustee is entitled to be paid in full before other creditors of Colonial Bank”).). In short, regardless of BOA’s right under the Ocala Facility Documents to exhaust Ocala’s administrative remedies, BOA failed to do so. Nor is the Court persuaded that it must apply a lenient standard in determining whether the proofs of claim were sufficient to exhaust Ocala’s administrative remedies. The cases on which BOA relies for this proposition are inapposite and contrary to the law of this Circuit. For instance, the first case on which BOA relies, Office & Prof'l Emps. Inter’l Union v. FDIC, 962 F.2d 63 (D.C.Cir.1992), stands only for the proposition that a representative can make an administrative claim on behalf of another and that such claim will be sufficient to exhaust the administrative remedies of the represented entity. The FDIC has not argued that BOA cannot make an administrative claim on behalf of Ocala; rather, the FDIC argues that BOA failed to make such a claim. Lacentra Trucking, Inc., is equally inapplicable. In that case, the plaintiff never filed an administrative claim and was absolved by the court of doing so by the Receiver’s decision to litigate. FDIC v. Lacentra Trucking, Inc., 157 F.3d 1292 (11th Cir.1998). That is not the case here. Finally, the third case on which BOA relies, Branch v. FDIC, is no longer good law. 833 F.Supp. 56 (D.Mass.1993). Branch takes the position that statutory limitations on federal court jurisdiction “are to be construed narrowly,” citing Heno v. FDIC, 996 F.2d 429, 435 (1st Cir.1993) withdrawn and substituted on reh’g by 20 F.3d 1204 (1st Cir. 1994) for this proposition. See Branch, at 60. However, in a subsequent ruling, the First Circuit withdrew the opinion upon which Branch relied, and replaced it with an opinion which does not include the language cited in Branch. See Heno v. FDIC, 20 F.3d 1204 at 1205. Next BOA argues that even if the proofs of claim were not sufficient to place the FDIC on notice that BOA was bringing a claim on behalf of Ocala, its prereceivership suit against Colonial filed in the Southern District of Florida was sufficient to place the FDIC on notice of the claim. This argument is unavailing. The FIRREA administrative exhaustion requirement applies to all claimants, even those that filed pre-receivership suits against failed financial institutions. See, e.g., Marquis v. FDIC, 965 F.2d 1148, 1151 (1st Cir.1992) (“FIRREA makes participation in the administrative claims review process mandatory for all parties asserting claims against failed institutions, regardless of whether a lawsuit to enforce those claims was initiated prior to the appointment of a receiver”); Brady Development Co., Inc. v. RTC, 14 F.3d 998, 1002 (4th Cir.1994) (“litigants who have an action pending in court against a [financial institution] that is subsequently placed in receivership ... must avail themselves of FIRREA’s administrative process in order to continue the action”); Intercontinental Travel Mktg., Inc. v. FDIC, 45 F.3d 1278, 1283 (9th Cir.1994) (citing Carney v. Resolution Trust Corp., 19 F.3d 950, 955-56 (5th Cir.1994) (the FIRREA “neither creates a separate scheme for cases pending at the time of the FDIC’s appointment as receiver, nor allows claimants to pursue administrative and judicial remedies simultaneously”)). 11 Finally, BOA alleges that “repeated communications” between the FDIC and BOA were sufficient to place the FDIC on notice of Ocala’s claim. This argument is without merit. A claimant may not exhaust its administrative remedies through communications outside of its proof of claim. See, e.g., Brady Dev. Co., 14 F.3d at 1003 (noting that Congress sought to ensure that all claims undergo the administrative claims process); Henderson v. Bank of New England, 986 F.2d 319, 320-21 (9th Cir.1993) (holding that FIRREA strips all courts of jurisdiction over claims made outside the administrative process of FIRREA); RTC v. Elman, 949 F.2d 624, 627 (2d Cir.1991) (holding that a claimant must first present its case to the RTC under the administrative procedures erected by FIRREA before seeking relief in federal court). Again, BOA cites to three inapposite cases in support of its theory: Plymouth Mills, Inc. v. FDIC, 876 F.Supp. 439 (E.D.N.Y.1995); Heno, 20 F.3d at 1205; and Hachikian v. FDIC, 914 F.Supp. 14 (D.Mass.1996). Heno and Plymouth Mills both dealt with cases in which the claimants’ claims came into existence after the claims bar date. In Heno, the First Circuit approved the FDIC’s having permitted late filing by certain claimants whose claims had not come into existence until after the bar date had passed. 20 F.3d at 1209. In Plymouth Mills, the claimant had timely filed a proof of claim with respect to some claims, but later attempted to supplement the claim with a letter detailing claims that allegedly occurred after the bar date. 876 F.Supp. at 441. Thus Heno and Plymouth Mills are inapplicable; BOA does not contend that Ocala’s claims came into existence after the relevant claims bar dates. Likewise, Hachikian is also inapplicable. In Hachikian, the claimant did not file a formal proof of claim, but did file a detailed letter setting forth his claims. 914 F.Supp. at 16. The Hachikian court determined that the letter was sufficient notice of a claim. Here, BOA did not submit a claim on behalf of Ocala. Accordingly, based on the foregoing, to the extent that the Amended Complaint purports to state claims on behalf of Ocala, those claims are dismissed.