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

Heading: Whether the Breach of Bailment Counterclaims State a Claim for Relief

Text: Next, BOA argues that even if the Bailee Letters constitute valid, enforceable agreements between the parties, the individual bailment Counterclaims fail to state a claim upon which relief may be granted. BOA moves to dismiss Counts 6 and 7, alleging that the provisions of the Bailee Letters on which the FDIC bases these claims are inconsistent with the terms of the Custodial Agreement, and therefore, unenforceable. This argument fails for the reasons discussed in the previous section. BOA’s motion to dismiss Counts 6 and 7 is denied. In Counts 8 and 9, the FDIC alleges that, under the terms of the Bailee Letters, BOA was obligated to either remit to Colonial the proceeds for the sale of the Participated Mortgage Loans or to return the Loans to Colonial within 45 days of the initiation of the bailment. (See Dkt. No. 25 at ¶¶ 107, 112, and 113.). The FDIC alleges that more than 45 days have passed since the 4,808 Participated Mortgage Loans were transferred to BOA, and BOA has not returned the Loans, nor has it remitted the proceeds for the 4,808 Loans to Colonial, an amount that the FDIC alleges is approximately $898,873,958. (Id. at ¶ 108.). The FDIC alleges that this failure constitutes a breach of the bailment. (Id. at ¶ 109.). In moving to dismiss Counts 8 and 9, BOA mischaracterizes the claims as a demand that BOA “pay” the sale proceeds. (Dkt. No. 36 at 31-32.). It argues that neither the Custodial Agreement nor the Bailee Letters require BOA to “pay” for the Loans. The FDIC makes no such claim. To the contrary, the FDIC alleges that BOA breached the bailment by failing to either “remit”, ie., transmit, the sale proceeds to Colonial or return the Loans (with Colonial’s ownership interest intact) within the 45 day timeframe. (Dkt. No. 25 at ¶ 108.). The FDIC alleges that BOA’s failure to comply with this obligation under the Bailee Letters has damaged Colonial in the amount of nearly $1 billion. These allegations are sufficient to state a claim for relief. BOA also maintains that it returned the Loans to Colonial. (Dkt. No. 36 at 32-33.). This argument borders on farcical. As the FDIC correctly maintains, BOA did not “return” the Loans to Colonial in Colonial’s capacity as owner of the Loans, but sent them to Colonial’s Trust Department in Colonial’s capacity as custodian for Freddie Mac. What is more, BOA returned “qualitatively different [L]oans,” that are now “owned by Freddie Mac.” (Dkt. No. 41 at 36; Dkt. No. 25 at ¶ 38.). Again, the FDIC has alleged factual allegations that are sufficient to state a claim for relief. Accordingly, BOA’s motion to dismiss Counts 8 and 9 is denied. In Count 10, the FDIC alleges that BOA breached the bailment agreement by failing to subordinate its alleged interest in the Participated Mortgage Loans to Colonial’s interest. (Dkt. No. 25 at ¶¶ 118-120.). The FDIC alleges, that, “based in part on the allegations of BOA’s Amended Complaint, BOA has asserted alleged interest of its own which BOA claims to be superior to, rather than subordinate to, Colonial’s interest in the Participated Mortgage Loans.” (Id. at ¶ 119.). The FDIC asserts that by bringing these claims, BOA has breached the bailment. (Id. at ¶ 120.). BOA counters that it does not assert any interest in the Loans on its own behalf. (Dkt. No. 36 at 34.). Rather, it brings these claims in its representative capacity on behalf of Ocala, DB, and BNP. (Id.). Contrary to BOA’s assertion, the record is not clear that BOA is not asserting any interest of its own in the Loans. For instance, in its opposition to the FDIC’s motion to dismiss the Amended Complaint, BOA argues that it seeks to recover for losses incurred by Ocala, “including losses incurred by all investors in the Ocala facility and by BOA itself.” (Dkt. No. 35 at 18) (emphasis in original). BOA states further that it “sought an administrative remedy for Ocala and all parties with interests in Ocala assets, including Ocala’s investors and BOA itself.” (Id.) (emphasis in original). In addition, the proofs of claim state “[t]he 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 secured parties with respect to [Ocala Notes].” (Dkt. No. 20 at Ex. A, n. 1.) (emphasis added). This statement indicates that at least some of the claims in the proofs of claim were brought by BOA on behalf of its own purported interest in the Loans. Accordingly, the FDIC has stated a plausible claim that BOA breached the bailment by failing to subordinate its interest in the Loans to that of Colonial. Count 10 will not be dismissed. In Counts 11 and 12, the FDIC alleges that BOA exercised its alleged rights with respect to the Participated Mortgage Loans without first receiving written authorization to do so from Colonial and, instead, acted pursuant to instructions from TBW. (Dkt. No. 25 at ¶¶ 123-126 and 130-131.). The FDIC asserts that these actions breached the terms of the bailment. (Id. at ¶¶ 127 and 132.). BOA counters that the requirement to seek written authorization from Colonial before acting and the prohibition from following TBW’s instructions are inconsistent with the terms of the Custodial Agreement and therefore cannot be the basis for a claim for relief. This argument fails for the reasons discussed above at Section IV. D.3.a. BOA’s motion to dismiss Counts 11 and 12 is denied.