Court Opinion

ID: 2962152
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:53:29.243781+00
Date Added: 2024-06-11T15:00:32.824533
License: Public Domain

USCA1 Opinion

	

          October 5, 1993                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1155                           JOSE ANGEL FREYRE-SANTONI, ET AL.,                               Plaintiffs, Appellants,                                          v.                             FIRST FEDERAL SAVINGS BANK,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                   [Hon. Gilberto Gierbolini, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                               Selya, Boudin and Stahl,                                   Circuit Judges.                                   ______________                                 ____________________            Jose Angel Freyre-Santoni on brief pro se.            _________________________            Carlos G. Latimer  and Latimer, Biaggi, Rachid, Rodriguez-Suris  &            _________________      ___________________________________________        Godreau on brief for appellee.        _______                                 ____________________                                 ____________________                      Per Curiam.   Pro  se appellants Jose  Angel Freyre                      __________            Santoni, Jose A. Freyre Del Manzano, Anna M. Freyre, Doris C.            Del Manzo Vazquez, and  Vilma I. Castro ("appellants") appeal            the  district court's  dismissal  of their  suit against  the            First Federal Savings Bank.  The district court found that it            had no  subject matter jurisdiction  over the  suit under  12            U.S.C.      632,  which   grants  district   courts  original            jurisdiction   over  suits   "arising  out   of  transactions            involving . . . banking in a dependency or insular possession            of the United States, . . . ."1  We affirm.                      I.  Background                          __________                      In  May 1989,  appellants were  evicted  from their            house pursuant to a default judgment of foreclosure the  bank            had received  from a  superior court  of the  Commonwealth of            Puerto Rico.2  A few months later appellants sued the bank in            the district court.   Their complaint  alleged that the  bank                                            ____________________            1.  Another prerequisite to suit under  section 632 is that a            "corporation organized  under the  laws of the  United States            shall be a party" to the  suit, but there is no question that            the bank meets that  requirement.  We also note  that section            632 applies  to banking  transactions in the  Commonwealth of            Puerto  Rico  although  it  is  no  longer  a  United  States            territory.  See First Federal Savings & Loan Ass'n v. Ruiz de                        ______________________________________    _______            Jesus, 644 F.2d 910, 912 (1st Cir. 1981).             _____            2.  The record  suggests that not all  appellants were living            in  the house at  the time the eviction  took place, and that            the  appellants who  actually  had title  to  the house  were            living  elsewhere.   For convenience,  we do  not distinguish            among  the appellants  in the  opinion, but  refer  simply to            "appellants" even when  reference to only  certain appellants            would be correct.            had harassed and threatened  them by visiting and telephoning            them and then evicting them after it had obtained the default            judgment  and bought  their  house at  public  auction.   The            appellants also  alleged that  the  superior court's  default            judgment of foreclosure was invalid for several reasons.  The            bank  had  obtained  the  default  judgment  by  reopening  a            previously  dismissed  foreclosure  case  without  notice  to            appellants  even though  it  knew their  mailing address  and            phone number;  it had submitted false affidavits to the court            and  not  told the  court  that the  parties  had voluntarily            dismissed  the  previous foreclosure  case  after reaching  a            settlement; and  the previous dismissal had  become final and            nonappealable before the bank had reopened the case.3              According to the complaint,  the bank's harassing conduct and            eviction  of  appellants  from  their  property  caused  them            physical  injuries and  mental  or emotional  distress.   Its            allegedly illegal foreclosure had transferred title of  their            house  to the  bank, depriving  them of  their property.   In            addition,  the  eviction  had been  carried  out maliciously.            Although  the family  had  no place  to  move to,  they  were            ordered out of the  house in the evening in  violation of the                                            ____________________            3.  After filing its  complaint in federal court,  appellants            apparently  moved  the  local  court  to  annul  its  default            judgment of foreclosure.   The  state court did  so, and  its            action was affirmed by the Supreme Court of Puerto Rico.  The            proceedings  in the local court are not relevant to the issue            on appeal.                                          -3-            court order, and their belongings were  removed to the street            where  they were damaged by rain and vandalism.  Furthermore,            one appellant  had been  ridiculed for  being short,  and her            son's dog had  been kicked  in his presence.   The  complaint            alleged that the bank's actions from the time the parties had            settled the  initial foreclosure  action had  been undertaken            maliciously,  and appellants sought compensatory and punitive            damages.                      II.  Discussion                           __________                      We have  held that jurisdiction  under section  632            exists  when a  cause of  action  arises out  of "traditional            banking activities."  Diaz v.  Pan American Federal Savings &                                  ____     ______________________________            Loan  Association,  635 F.2d  30, 32  (1st  Cir. 1980).4   In            _________________            order to determine whether the  appellants' suit arose out of            traditional banking activities,  we review  the complaint  to            determine the  nature of  the transaction or  activity giving                                            ____________________            4.  One   court  has   suggested  that   traditional  banking            activities include  the "making  and collection of  loans and            issuance  of documents  evidencing  them, such  as notes  and            guaranties, the opening and  closing of checking accounts and            the processing of checks  drawn upon them, and the  filing of            lawsuits  for the  collection  of monies  when  loans are  in            default . . . ."  Fumero-Vidal v. First Federal Savings Bank,                              ____________    __________________________            788 F. Supp.  1275, 1278  (D.P.R. 1992).   Another court  has            said that traditional banking activities include transactions            involving "mortgage foreclosures, letters of  credit, letters            of guaranty when the bank relied on the  letter in granting a            loan,  and  transactions  involving Federal  Reserve  Banks."            Telecredit Service  Ctr. v.  First Nat'l Bank,  679 F.  Supp.            ________________________     ________________            1101, 1103 (S.D. Fla. 1988).                                         -4-            rise to their  claims.   Telecredit Service  Center v.  First                                     __________________________     _____            National Bank, 679 F. Supp. 1101, 1103 (S.D. Fla. 1988).            _____________                      In their complaint, appellants raised basically two            distinct claims.  First, they challenged the way in which the            bank  had  procured  its  default  judgment  of  foreclosure,            alleging that procedural errors and misrepresentations by the            bank rendered the judgment  invalid.  Second, they challenged            the  way in which the  bank had communicated  with them after            the default judgment and public sale and the  way in which it            had evicted them.                        Thus, the appellants challenged the validity of the            default judgment and the manner in which the bank had pursued            its rights  under the judgment.  Their  proffered reasons for            invalidating  the judgment were not based on the terms of any            mortgage  agreement  or other  banking or  financing activity            between the parties, but on the circumstances surrounding the            dismissal  of the  prior  foreclosure action  and the  bank's            reopening  of that  action.   For that reason,  their present            claim that the default judgment was invalid did not arise out            of a banking transaction or activity, even though the default            judgment had permitted the bank  to foreclose on its mortgage            on their  property.  See Gonzalez-Roman v.  Federal Land Bank                                 __________________     _________________            of  Baltimore, 303 F. Supp.  482, 483 (D.P.R.  1969) (a local            _____________            court  suit  challenging  the  validity of  a  federal  court            judgment  of foreclosure for jurisdictional reasons could not                                         -5-            be removed to  federal court  under section  632 because  the            suit did not  arise out of a transaction  involving banking);            contrast Conjugal Society v. Chicago Title Insurance Co., 690            _________________________    ___________________________            F.2d 1, 5 (1st  Cir. 1982) (plaintiffs' rights were  based on            defendants'  mortgage  agreements and  thus  arose  out of  a            transaction involving  banking within the meaning  of section            632); First  Federal Savings & Loan  Association v. Zequeira,                  __________________________________________    ________            305  F. Supp. 37, 39  (D.P.R. 1969) (the  court "clearly" had            jurisdiction over  a  mortgage foreclosure  action where  the            pertinent  evidence   was  the  original   mortgage  note,  a            certified copy of the mortgage deed, and a sworn statement by            the bank's treasurer showing that a mortgage account had been            opened  and had  a certain balance  since those  are "banking            transactions") (dictum or alternative holding).5                      Likewise,  the  actions of  the  bank  in visiting,            calling  and evicting the appellants did not arise out of any            banking transaction.  They were  alleged to be wrongful,  not            because of any rights accruing to appellants by virtue of any            mortgage  agreement between  the  parties,  but  because  the            default  judgment was alleged to be invalid and because those                                            ____________________            5.  Although  some   evidence  touching  upon   the  mortgage            relationship between  the bank  and appellants may  well have            been necessary,  e.g., to show that the  bank had appellants'            mailing address and so  could have properly served appellants            when it  reopened the foreclosure case,  proof of appellants'            claims  did not depend on the terms of any mortgage agreement            or other financial or banking transaction between the parties            or on their adherence  to the terms of any  mortgage or other            financing agreement.                                          -6-            actions were allegedly undertaken negligently or maliciously,            thereby causing  appellants  harm in  violation  of  standard            principles  of  tort  law.     See  Diaz,  635  F.2d   at  32                                           ___  ____            (plaintiff's  suit for malicious or negligent prosecution was            dismissed for lack of  jurisdiction under section 632 because            the bank's  filing of criminal charges  against plaintiff for            passing  bad  checks was  outside  the  scope of  traditional            banking).                        The judgment of the district court is affirmed.6                                                            _________                                            ____________________            6.  Appellants also ask this court to resolve certain motions            left  undecided  by  the  district court  when  it  dismissed            appellants'  suit.    We cannot  do  so.    The dismissal  of            appellants'  suit,  which   we  now   affirm,  rendered   any            outstanding motions moot.   In any event, it is  not the role            of this court to resolve in the first instance motions before            the district  court.  If  resolution of  pending motions  had            been  necessary, we would have had to remand those motions to            the district court for decision.                                         -7-