Opinion ID: 8704066
Heading Depth: 4
Heading Rank: 2

Heading: Whether BOA Has Standing to Bring Claims on Behalf of DB and BNP

Text: Next, the FDIC moves to dismiss the claims that BOA asserts on behalf of DB and BNP. It argues that this Court does not have jurisdiction over those claims because: (1) DB and BNP do not have Article III standing to bring the claims, and (2) BOA did not allege a basis for bringing such claims on behalf of DB and BNP. (Dkt. No. 26 at 12-13.).
As the party invoking federal jurisdiction, BOA bears the burden of establishing standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); City of Waukesha v. Envtl. Prot. Agency, 320 F.3d 228, 233 (D.C.Cir.2003) (per curiam). In Lujan, the Supreme Court set forth the test for Article III standing. Sierra Club v. Envtl. Prot. Agency, 292 F.3d 895, 898 (D.C.Cir. 2002) (citing Lujan, 504 U.S. at 560, 112 S.Ct. 2130). First, DB and BNP must have suffered an injury-in-fact, defined as a harm that is concrete and actual or imminent, not conjectural or hypothetical. Byrd v. Envtl. Prot. Agency, 174 F.3d 239, 243 (D.C.Cir.1999) (citing Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 103, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).). Second, the injury must be fairly traceable to Colonial’s or Platinum’s alleged conduct. Id. Finally, it must be likely that the requested relief will redress the alleged injury. Id. This Circuit has made clear that no standing exists if the plaintiffs allegations are “purely speculative[, which is] the ultimate label for injuries too implausible to support standing.” Tozzi v. Dep’t of Health & Human Servs., 271 F.3d 301, 307 (D.C.Cir.2001). Nor does standing exist where a court “would have to accept a number of very speculative inferences and assumptions in any endeavor to connect the alleged injury with [the challenged conduct].” Winpisinger v. Watson, 628 F.2d 133, 139 (D.C.Cir.1980). However, a court must also be cognizant of the fact that a motion to dismiss is brought during the initial stages of a case, before discovery has commenced, thus general factual allegations of injury resulting from the defendant’s alleged conduct will suffice to support standing. Sierra Club, 292 F.3d at 898-99. The parties dispute whether DB and BNP suffered an “injury-in-fact” that is “fairly traceable” to Colonial’s and Platinum’s actions. Focusing on the derivative nature of DB and BNP’s claims, the FDIC asserts that BOA does not, and indeed, cannot, allege that DB and BNP were directly harmed by Colonial and/or Platinum. Rather, any injury suffered by DB and BNP is indistinguishable from harm sustained by Ocala, and thus too remote to confer standing. (See Dkt. No. 26 at 12 (citing Assoc. Gen’l Contractors of Calif., Inc. v. Calif. State Council of Carpenters, 459 U.S. 519, 532, fn. 25, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983)).). BOA counters that the “notion that a financial loss of nearly $1.75 billion does not constitute [an] ‘injury-in-fact’ is absurd.” (Dkt. No. 35 at 24.). According to BOA, the injury in fact requirement consistently has been described as a minimalist threshold and that a “massive financial loss” of the sort suffered by DB and BNP necessarily meets this threshold. (Id. (citing Shaffer v. Defense Intelligence Agency, 601 F.Supp.2d 16, 23 (D.D.C.2009)).). Moreover, BOA argues, the Amended Complaint is replete with examples of how DB and BNP’s injuries are directly traceable to Colonial’s and/or Platinum’s fraudulent activities. (Dkt. No. 35 at 24.). The Court concludes that BOA has alleged factual allegations sufficient to state a plausible injury-in-fact to DB and BNP that is fairly traceable to Colonial and Platinum’s actions. (See, e.g., Dkt. No. 20 at ¶ 2 (“TBW’s, Colonial’s, and Platinum’s fraud on the Trustee, Ocala Funding, and the holders of beneficial interests in Ocala Funding ...”) (emphasis added); Id. at ¶ 64 (alleging that “TBW and Colonial engaged in a scheme to defraud various entities and individuals, including investors in Ocala Funding ”) (emphasis added); Id. at ¶¶ 66-68, 74, 78 (describing specific fraudulent transfers from Ocala to Colonial and Platinum); Id. at ¶¶ 1, 3 (asserting that DB and BNP lost approximately $1.7 billion as a result of TBW’s, Colonial’s, and Platinum’s action).). The standing requirement is meant to ensure that a plaintiff has a “personal stake in the outcome of the controversy as to warrant ... federal-court jurisdiction and to justify” a court-imposed remedy. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); Russell-Murray Hospice, Inc. v. Sebelius, 724 F.Supp.2d 43, 53 (D.D.C.2010) (citing Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976)). BOA claims that Colonial and Platinum misappropriated the very assets that secured DB’s and BNP’s investment in the Ocala Notes. As a result, DB and BNP are out nearly $2 billion. Clearly, DB and BNP have a personal stake in whether the Ocala assets can be recovered from the banks. If the assets can be recovered, DB and BNP stand to recoup at least a portion of their losses. In addition, BOA has sufficiently alleged that the injury would not have occurred but for the banks’ challenged conduct. See Duke Power Company v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 74-75, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978) (a plaintiff establishes sufficient causal connection between injury and challenged action if he can make a reasonable showing that the alleged injury would not have occurred “but for” the defendant’s challenged conduct). Accordingly, the Court concludes that DB and BNP have standing to assert their claims. 12
Having concluded that DB and BNP have Article III standing to bring their claims, the Court now must determine whether BOA has standing to bring the claims on their behalf. The FDIC argues that the Amended Complaint does not allege the basis for BOA’s “derivative standing on behalf of [DB and BNP],” and, therefore, to the extent that BOA seeks recovery on their behalf, the Complaint must be dismissed for lack of subject matter jurisdiction. (See Dkt. No. 26 at 19.). 13 BOA counters that the Ocala Facility Documents, specifically the Indenture Agreement and the Security Agreement, unquestionably give it the right to pursue the claims on behalf of DB and BNP. 14 The Court finds BOA’s position to be correct. Section 3.1 of the Indenture Agreement expressly states that Ocala granted BOA a security interest in all of Ocala’s collateral for the benefit of DB and BNP: Section 3.1 Security Interest, (a) Pursuant to the Security Agreement, in order to secure [Ocala’s] Obligations, [Ocala] has pledged, assigned, conveyed, delivered, transferred and set over to [BOA], for the benefit of the [Secured Parties], and has granted to [BOA] for the benefit of the Secured Parties, a security interest in all of [Ocala’s] right, title and interest in and to all of the Collateral assigned to [BOA] pursuant to the Security Agreement. (See the Indenture Agreement at § 3.1; see also, Security Agreement at § 4.01.). Section 6.02 of the Security Agreement states that in the event of a default by Ocala: [BOA] shall have, with respect to the Assigned Collateral ..., in addition to any other rights and remedies which may be available to it at law or in equity or pursuant to this [Security] Agreement ... all rights and remedies of a secured party under any applicable version of the Uniform Commercial Code ... relating to the Assigned Collateral (Security Agreement at § 6.02, second paragraph.). Section 9.2 of the Indenture Agreement requires that in the event of a default, BOA “shall” exercise the rights and remedies available to it under the Security Agreement. Finally, section 9.10 of the Indenture Agreement authorizes BOA to: file such proofs of claim ... as may be necessary or advisable in order to have the claims of [BOA] allowed in any judicial proceedings relative to [Ocala] ..., its creditors or its property, and shall be entitled and empowered to collect, receive and distribute and money or other property payable or deliverable on any such claim. (Id. at § 6.). These provisions make it clear that BOA has a security interest in the very claims being pursued in this suit. This is sufficient to confer standing on BOA to pursue the present claims on behalf of DB and BNP. See, e.g., Sprint Commc’ns Co. v. APCC Services, Inc., 554 U.S. 269, 285, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008) (upholding the long tradition of conferring Article III standing on assignees of claims, even if the party seeking recovery must turn it over to another upon collection); W.R. Huff Asset Management Co., LLC v. Deloitte & Touche LLP, 549 F.3d 100, 107 (2d Cir.2008) (the assignment of the right to pursue a claim confers standing).