UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
KIM S. WESTBERG et al., :
:
Plaintiffs, : Civil Action No.: 09-1690 (RMU)
:
v. : Re Document Nos.: 21, 22
:
FEDERAL DEPOSIT INSURANCE :
CORPORATION, as Receiver for Silver :
State Bank, et al., :
:
Defendants. :
MEMORANDUM OPINION
GRANTING THE FDIC’S MOTION TO DISMISS AND
DENYING MULTIBANK’S MOTION TO DISMISS
I. INTRODUCTION
This action arises from the repudiation of a construction loan by the Federal Deposit
Insurance Corporation (“FDIC”), acting as receiver for the original lender, Silver State Bank.
The plaintiffs seek a declaratory judgment against the FDIC and its successor in interest,
MULTIBANK 2009-1 RES-ADC VENTURE, LLC (“Multibank”), declaring that the FDIC’s
repudiation of the loan discharged the plaintiffs’ obligation to repay funds previously disbursed
by Silver State Bank and voided an existing lien against their property. The plaintiffs also seek
to recover damages they allegedly suffered as a result of the FDIC’s repudiation of the loan.
Before the court are motions to dismiss the plaintiffs’ amended complaint filed by the
FDIC and Multibank. For the reasons discussed below, the court grants the FDIC’s motion to
dismiss and denies Multibank’s motion to dismiss.
II. FACTUAL & PROCEDURAL BACKGROUND1
The plaintiffs are the owners of real property located in Maricopa County, Arizona. Am.
Compl. ¶ 7. In or around May of 2008, they obtained a residential construction loan
commitment from Silver State Bank in the principal amount of $1,318,000 for the purpose of
constructing a home on the property. Id. ¶ 8. In connection with the loan commitment, the
plaintiffs executed a Residential Construction Loan Agreement, dated May 20, 2008 (“the
Agreement”), a Promissory Note, dated May 20, 2008 (“the Note”) and a Deed of Trust,
recorded on May 28, 2009, which secured payment of the Note by creating a lien against the
property. Id. ¶ 9. The Agreement contemplated that the plaintiffs would submit periodic draw
requests to Silver State Bank to finance the construction of their home. Id., Ex. 2 ¶ 7.
Following the execution of these loan instruments, the plaintiffs submitted a draw request
and received a disbursement in the amount of $171,510.95. Id. ¶ 13. The plaintiffs used these
funds to pay costs incurred in connection with the construction of the home. Id. In or around
September 2008, the plaintiffs submitted a second draw request to Silver State Bank, but the
draw request was denied. Id. ¶ 14. The plaintiffs received no further disbursements from Silver
State Bank. Id.
1
The FDIC and Multibank have moved to dismiss the amended complaint pursuant to Rules
12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. Insofar as these motions are
premised on Rule 12(b)(6), the court assumes the truth of the plaintiffs’ allegations. See Atherton
v. D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009) (observing that “[w]hen ruling on
a defendant’s motion to dismiss, a judge must accept as true all of the factual allegations
contained in the complaint” (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007))). While the
plaintiffs’ factual allegations may be subjected to closer scrutiny for purposes of a Rule 12(b)(1)
motion to dismiss, see Macharia v. United States, 334 F.3d 61, 64, 69 (D.C. Cir. 2003), the
defendants have not raised any factual disputes that bear on the disposition of the motions now
before the court, see generally FDIC’s Mot. to Dismiss Am. Compl. (“FDIC Mot.”); Multibank’s
Joinder in FDIC Mot. (“Multibank Mot.”).
2
In September 2008, the FDIC notified the plaintiffs that Silver State Bank had been
closed and that the FDIC had been appointed as receiver. Id. ¶ 15. Thereafter, in April 2009, the
FDIC notified the plaintiffs that the FDIC, as receiver for Silver State Bank, had elected to
repudiate the Agreement. Id. ¶ 17 & Ex. 5. The FDIC further notified the plaintiffs that they
were required to notify the FDIC of any claims they may have against the receivership estate
arising from the repudiation of the Agreement and that their failure to file such a notice would
result in the disallowance of the claim. Id., Ex. 5.
The plaintiffs subsequently submitted a Proof of Claim form to the FDIC, seeking
compensation for costs resulting from the construction delay caused by the FDIC’s repudiation
of the Agreement. Id. ¶ 18 & Ex. 6 (“Proof of Claim”). By letter dated July 6, 2009, the FDIC
notified the plaintiffs that their claim for alleged damages had been denied. Id. ¶ 19 & Ex. 7.
After repudiating the Agreement, the FDIC issued a statement to the plaintiffs directing
them to repay the funds previously disbursed by Silver State Bank. Id. ¶ 20. The FDIC did not
release the plaintiffs from their obligations under the Note or release the Deed of Trust recorded
against the plaintiffs’ property. Id.
On September 3, 2009, the plaintiffs filed a complaint against the FDIC seeking a
declaratory judgment that the FDIC’s repudiation of the Agreement released the plaintiffs from
all of their obligations under the Note and Deed of Trust. Compl. ¶ 24. The complaint also
included a claim for damages the plaintiffs’ allegedly suffered as a result of the FDIC’s
repudiation of the Agreement. Id. ¶¶ 25-26.
On November 9, 2009, the FDIC moved to dismiss the plaintiffs’ complaint. See
generally FDIC’s Mot. to Dismiss Compl. After the motion to dismiss was fully briefed, the
FDIC sold the plaintiffs’ loan to Multibank through a Loan Contribution and Sale Agreement
3
(the “Sale Agreement”). Am. Compl. ¶ 23 & Ex. 8. After purchasing the loan from the FDIC,
Multibank demanded that the plaintiffs satisfy their obligations under the Note. Id. ¶ 23.
In light of the sale of the loan to Multibank, the plaintiffs filed an amended complaint on
July 19, 2010. See generally Am. Compl. In Count I of the amended complaint, the plaintiffs
seek a declaratory judgment against the FDIC and Multibank stating that the FDIC’s repudiation
of the Agreement released the plaintiffs from all of their obligations under the Note and Deed of
Trust. Id. ¶ 28. In Count II, the plaintiffs seek to recover damages from the FDIC for harm they
allegedly suffered as a result of the FDIC’s repudiation of the Agreement. Id. ¶¶ 29-30. The
FDIC filed a motion to dismiss the amended complaint on August 25, 2010, see generally FDIC
Mot., and on August 27, 2010, Multibank joined in the FDIC’s motion, see generally Multibank
Mot. The FDIC and Multibank seek dismissal of Count I under Federal Rule of Civil Procedure
12(b)(1) and the FDIC seeks dismissal of Count II under Federal Rule of Civil Procedure
12(b)(6). See generally FDIC Mot.; Multibank Mot. With these motions now ripe for
adjudication, the court turns to the applicable legal standards and the parties’ arguments.
III. ANALYSIS
A. The Court Grants the FDIC’s Motion to Dismiss and Denies Multibank’s Motion to
Dismiss Count I of the Amended Complaint
1. Legal Standard for a 12(b)(1) Motion to Dismiss
Federal courts are courts of limited jurisdiction and the law presumes that “a cause lies
outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994); see also Gen. Motors Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C. Cir. 2004)
4
(noting that “[a]s a court of limited jurisdiction, we begin, and end, with an examination of our
jurisdiction”).
Because “subject-matter jurisdiction is an ‘Art[icle] III as well as a statutory
requirement[,] no action of the parties can confer subject-matter jurisdiction upon a federal
court.’” Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003) (quoting Ins.
Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982)). On a motion
to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), the plaintiff bears the
burden of establishing by a preponderance of the evidence that the court has subject matter
jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).
Because subject matter jurisdiction focuses on the court’s power to hear the claim,
however, the court must give the plaintiff’s factual allegations closer scrutiny when resolving a
Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a
claim. See Macharia v. United States, 334 F.3d 61, 64, 69 (D.C. Cir. 2003); Grand Lodge of
Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001). Thus, the court is
not limited to the allegations contained in the complaint. Hohri v. United States, 782 F.2d 227,
241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S. 64 (1987). Instead, “where necessary,
the court may consider the complaint supplemented by undisputed facts evidenced in the record,
or the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.”
Herbert v. Nat’l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992) (citing Williamson v. Tucker,
645 F.2d 404, 413 (5th Cir. 1981)).
2. The Court Lacks Subject Matter Jurisdiction Over Count I as Against the FDIC
The FDIC contends that it relinquished any legally cognizable interest it had in the loan
when it sold the loan to Multibank. FDIC Mot. at 6-7. Because it relinquished its interest in the
5
loan, the FDIC argues that the plaintiffs’ claim for declaratory relief against it is moot and that
the court therefore lacks subject matter jurisdiction over that claim.2 Id. at 7. The plaintiffs
respond that, notwithstanding the sale of the loan to Multibank, the FDIC retained substantial
rights and obligations related to the loan. Pls.’ Opp’n to FDIC Mot. (“Pls.’ FDIC Opp’n”) at 5.
The plaintiffs argue that as a result of the FDIC’s “continuing entanglement” in the loan, the
FDIC has a legally cognizable interest in the outcome of their claim for declaratory relief and is
appropriately included as a party to that claim. Id. at 6.
Article III’s case-or-controversy requirement prohibits courts from issuing advisory
opinions or decisions based on hypothetical facts or abstract issues. Flast v. Cohen, 392 U.S. 83,
96 (1968). “The doctrine of mootness is a logical corollary of the ‘case or controversy’
requirement[.]” Better Gov’t Ass’n v. Dep’t of State, 780 F.2d 86, 90 (D.C. Cir. 1986). In cases
where challenged conduct ceases and “there is no reasonable expectation that the wrong will be
repeated . . . it becomes impossible for the court to grant any effectual relief whatever to the
prevailing party . . . [and] any opinion as to the legality of the challenged action would be
advisory.” City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000) (internal quotations and
citations omitted). Accordingly, a party may move to dismiss a case under Rule 12(b)(1) on
grounds of mootness. Comm. in Solidarity with People of El Salvador v. Sessions, 929 F.2d 742,
744 (D.C. Cir. 1991); Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1060
(Fed. Cir. 1995); Am. Historical Ass’n v. Peterson, 876 F. Supp. 1300, 1308 (D.D.C. 1995).
2
As alternate grounds for dismissal of Count I, the FDIC argues that the plaintiffs failed to exhaust
their administrative remedies and that entry of a declaratory judgment would constitute a judicial
restraint prohibited by the Federal Deposit Insurance Act (“FDI Act”). See FDIC Mot. at 8-12.
Because the FDIC’s motion to dismiss Count I is resolved on the basis of mootness, the court
does not reach the FDIC’s alternative arguments.
6
A case is moot when “the issues presented are no longer live or the parties lack a legally
cognizable interest in the outcome.” City of Erie, 529 U.S. at 287 (internal quotations omitted).
An intervening event will render a claim moot if it becomes impossible for the court to grant the
prevailing party effective relief. Lemon v. Geren, 514 F.3d 1312, 1316 (D.C. Cir. 2008); see also
Church of Scientology v. United States, 506 U.S. 9, 12 (1992) (noting that “if an event occurs
while a case is pending on appeal that makes it impossible for the court to grant any effectual
relief whatever to a prevailing party, the appeal must be dismissed” as moot) (internal quotation
omitted); In re DSC, Ltd., 486 F.3d 940, 945 (6th Cir. 2007) (recognizing that “[a] claim
becomes moot . . . ‘when the plaintiff receives the relief sought or when it is factually, not
legally, impossible to receive such relief’” (quoting Liberles v. Cook Cnty., 709 F.2d 1122, 1127
(7th Cir. 1983))). A case is not moot, however, so long as any single claim for relief remains
viable, as the remaining live issues satisfy the case-or-controversy requirement. Tucson Med.
Ctr. v. Sullivan, 947 F.2d 971, 978 (D.C. Cir. 1991) (internal quotations and citations omitted).
The burden of establishing mootness rests on the party raising the issue, and it is a heavy burden.
Cnty. of Los Angeles v. Davis, 440 U.S. 625, 631 (1979); United States v. W.T. Grant Co., 345
U.S. 629, 633 (1953); Motor & Equip. Mfrs. Ass’n v. Nichols, 142 F.3d 449, 458-59 (D.C. Cir.
1998).
Courts must evaluate mootness “through all stages” of the litigation in order to ensure
that a live controversy remains. 21st Century Telesis Joint Venture v. Fed. Commc’ns Comm’n,
318 F.3d 192, 198 (D.C. Cir. 2003) (citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC), Inc., 528 U.S. 167, 191 (2000); Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990)).
As a result, “[e]ven where litigation poses a live controversy when filed, the [mootness] doctrine
requires a federal court to refrain from deciding it if ‘events have so transpired that the decision
7
will neither presently affect the parties’ rights nor have a more-than-speculative chance of
affecting them in the future.’” Id. (quoting Clarke v. United States, 915 F.2d 699, 701 (D.C. Cir.
1990)).
In Count I of their complaint, the plaintiffs seek a declaratory judgment that the FDIC’s
repudiation of the Agreement released and discharged the plaintiffs from any and all obligations
under the Note and Deed of Trust. See Am. Compl. ¶¶ 27-28. Because the FDIC sold the loan
to Multibank, Multibank is the only party that could enforce the plaintiffs’ obligations under
these instruments. See ARIZ. REV. STAT. § 47-3203 (stating that transfer of an instrument “vests
in the transferee any right of the transferor to the instrument”); id. § 47-3301 (stating that the
“‘[p]erson entitled to enforce’ an instrument means the holder of an instrument”). Indeed, the
FDIC has acknowledged that it “cannot seek to enforce the [plaintiffs’] obligations under the
Note . . . [and is not] entitled to loan payments from the [plaintiffs].” See FDIC Mot. at 6. The
plaintiffs do not dispute this fact. See generally Pls.’ FDIC Opp’n. It therefore appears that the
FDIC is no longer the appropriate subject of the declaratory relief the plaintiffs seek.
Although the plaintiffs contend that the FDIC has a “continuing entanglement” in the
loan, they have not explained how such entanglement gives the FDIC any interest in the
repayment of the loan, which is the subject of the declaratory relief sought by the plaintiffs. For
example, the plaintiffs seize upon the fact that the FDIC has agreed to be “responsible and
monetarily liable for [the] lawsuit notwithstanding the assignment.” Pls.’ FDIC Opp’n at 5. Yet
any obligations the FDIC has to Multibank under the Sale Agreement are separate and distinct
from the plaintiffs’ loan obligations. Even if the FDIC is ultimately liable to Multibank for the
costs and expenses of this litigation or any award rendered in favor of the plaintiffs, the plaintiffs
have not explained how such liability would give the FDIC a legally cognizable interest in the
8
plaintiffs’ repayment of the loan to Multibank.
Equally unavailing is the plaintiffs’ contention that the FDIC has retained certain claims
against third parties for “misconduct in connection with the initiation, origination or servicing of
the Loan.” Pls.’ FDIC Opp’n at 6; see also Am. Compl., Ex. 8 § 2.7. The retained rights do not
encompass the right to enforce the repayment of the plaintiffs’ loan. See Am. Compl., Ex. 8 §
2.7. Therefore, the fact that the FDIC retained certain claims related to the loan, including
potential claims against the plaintiffs, does not give the FDIC the authority to seek repayment of
the loan, which is the subject of the declaratory relief sought by the plaintiffs.
Finally, the plaintiffs contend that under the Sale Agreement,3 there are a number of
circumstances under which the FDIC may be required to repurchase the plaintiffs’ loan. See
Pls.’ FDIC Opp’n at 6. The fact that the FDIC has a contingent future interest in the loan,
however, does not support a conclusion that the FDIC is a proper defendant to the plaintiffs’
currently pending claim for declaratory relief; rather, it is clear that, due to the intervening sale of
the loan to Multibank, this dispute does not affect any rights currently held by the FDIC, and the
contention that this dispute will affect rights the FDIC may acquire in the future is premised on
pure speculation. See 21st Century Telesis Joint Venture, 318 F.3d at 198 (recognizing that a
claim becomes moot when events transpire such that “the decision will neither presently affect
the parties’ rights nor have a more-than-speculative chance of affecting them in the future”
(quoting Clarke, 915 F.2d at 701)).
The court cannot declare that the plaintiffs are relieved from obligations to the FDIC that
3
Although the plaintiffs state that the FDIC’s obligation to repurchase the loan may be triggered
under the Agreement, see Pls.’ FDIC Opp’n at 6, it appears that any obligation of the FDIC to
repurchase the loan could only arise under the Sale Agreement between the FDIC and Multibank,
see generally Am. Compl., Ex. 8.
9
no longer exist or prevent the FDIC from exercising rights it no longer possesses. Because it
would be impossible to grant the plaintiffs any meaningful relief against the FDIC on Count I of
the amended complaint, the court grants the FDIC’s motion to dismiss Count I as against it.
3. Multibank Has Failed to Articulate Any Basis for Relief in its Motion to Dismiss
In its motion to dismiss, the FDIC also argues that the plaintiffs’ claim for declaratory
relief should be dismissed as against the FDIC on three jurisdictional grounds: mootness based
on the FDIC’s sale of the loan to Multibank, failure to exhaust administrative remedies and the
FDI Act’s limitation of the courts’ power “to restrain or affect the exercise of powers or
functions of the [FDIC] as a conservator or a receiver.” See generally FDIC Mot. at 5-12. After
the FDIC filed its motion to dismiss the amended complaint, Multibank filed a two-page brief
joining in the FDIC’s motion. See generally Multibank Mot. Multibank contends that its
defenses are aligned with those of the FDIC and has adopted the FDIC’s arguments. See
generally id. Without explaining how those arguments apply to the plaintiffs’ claim against
Multibank, Multibank requested that Count I be dismissed against it for the reasons expressed in
the FDIC’s motion. See generally id.
In opposing Multibank’s joinder in the FDIC’s motion to dismiss, the plaintiffs noted that
Multibank “assumes without analysis or citation to authority that the FDIC’s jurisdictional
arguments . . . apply equally to MultiBank.” Pls.’ Opp’n to Multibank Mot. at 1. The plaintiffs
contend that even if the FDIC’s jurisdictional arguments support dismissal of Count I as against
the FDIC, they do not apply to the claim for declaratory relief as against Multibank. See
generally id.
After receiving the plaintiffs’ opposition brief, Multibank filed a reply memorandum in
support of its “motion to dismiss.” See generally Multibank’s Reply. In its reply brief,
10
Multibank specified that it only joined in the FDIC’s argument that the plaintiffs failed to
exhaust their administrative remedies. See id. at 2 n.1. Multibank then articulated, for the first
time, its position as to why the plaintiffs’ purported failure to exhaust administrative remedies
should serve as a jurisdictional bar to their claim for declaratory relief against Multibank. See id.
at 2-4.
By failing to articulate in its joinder how the FDIC’s jurisdictional arguments apply to the
plaintiffs’ claims against Multibank and support the relief Multibank requested, Multibank
deprived the plaintiffs of a meaningful opportunity to respond to those arguments. The court
therefore declines to consider those arguments at this time. See Aleutian Pribilof Islands Ass’n,
Inc. v. Kempthorne, 537 F. Supp. 2d 1, 12 n.5 (D.D.C. 2008) (noting that “it is a well-settled
prudential doctrine that courts generally will not entertain new arguments first raised in a reply
brief” (citing Herbert, 974 F.2d at 196)). Accordingly, the court denies Multibank’s motion to
dismiss Count I as against Multibank.
B. The Court Grants the FDIC’s Motion to Dismiss
Count II of the Amended Complaint
1. Legal Standard for a 12(b)(6) Motion to Dismiss
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint. Browning v.
Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). The complaint need only set forth a short and plain
statement of the claim, giving the defendant fair notice of the claim and the grounds upon which
it rests. Kingman Park Civic Ass’n v. Williams, 348 F.3d 1033, 1040 (D.C. Cir. 2003) (citing
FED. R. CIV. P. 8(a)(2) and Conley v. Gibson, 355 U.S. 41, 47 (1957)). “Such simplified notice
pleading is made possible by the liberal opportunity for discovery and the other pretrial
procedures established by the Rules to disclose more precisely the basis of both claim and
11
defense to define more narrowly the disputed facts and issues.” Conley, 355 U.S. at 47-48
(internal quotation marks omitted). It is not necessary for the plaintiff to plead all elements of
his prima facie case in the complaint, Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511-14 (2002),
or “plead law or match facts to every element of a legal theory,” Krieger v. Fadely, 211 F.3d
134, 136 (D.C. Cir. 2000) (internal quotation marks and citation omitted).
Yet, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.
Ct. 1937, 1949 (2009) (internal quotation marks omitted); Bell Atl. Corp. v. Twombly, 550 U.S.
544, 562 (2007) (abrogating the oft-quoted language from Conley, 355 U.S. at 45-46, instructing
courts not to dismiss for failure to state a claim unless it appears beyond doubt that “no set of
facts in support of his claim [] would entitle him to relief”). A claim is facially plausible when
the pleaded factual content “allows the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at
556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more
than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at
556).
In resolving a Rule 12(b)(6) motion, the court must treat the complaint’s factual
allegations – including mixed questions of law and fact – as true and draw all reasonable
inferences therefrom in the plaintiff’s favor. Holy Land Found. for Relief & Dev. v. Ashcroft,
333 F.3d 156, 165 (D.C. Cir. 2003); Browning, 292 F.3d at 242. While many well-pleaded
complaints are conclusory, the court need not accept as true inferences unsupported by facts set
out in the complaint or legal conclusions cast as factual allegations. Warren v. District of
Columbia, 353 F.3d 36, 39 (D.C. Cir. 2004); Browning, 292 F.3d at 242. “Threadbare recitals of
12
the elements of a cause of action, supported by mere conclusory statements, do not suffice.”
Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 555).
2. The Court Dismisses Count II Without Prejudice for Failure to
State a Claim for Which Relief Can Be Granted
The FDIC has also moved to dismiss Count II of the plaintiffs’ amended complaint in
which they seek compensatory damages resulting from the FDIC’s repudiation of the
Agreement, for failure to state a claim upon which relief can be granted. FDIC Mot. at 13-17.
The FDIC acknowledges that the Proof of Claim form that was attached to the amended
complaint itemizes the plaintiffs’ purported “Project Delay costs.” Id. at 16; see also Am.
Compl., Ex. 6. But to the extent the plaintiffs rely on those purported costs to support their claim
for damages, the FDIC contends that the plaintiffs failed to plead sufficient facts to demonstrate
that those costs constitute legally compensable damages and that the FDIC’s repudiation of the
Agreement caused those alleged damages. FDIC Mot. at 15-16. The plaintiffs respond that the
“detailed, five-page itemization of their loss” that is set forth in the Proof of Claim form “more
than meets [their] notice pleading obligation.” Pls.’ FDIC Opp’n at 25.
The Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”)
authorizes the recovery of damages that arise from the FDIC’s repudiation of a contract. 12
U.S.C. § 1821(e)(3). Such damages are “limited to actual direct compensatory damages” and are
“determined as of the date of the appointment of the conservator or receiver.” Id. §
1821(e)(3)(A). The statute expressly precludes the recovery of certain types of damages,
including “(i) punitive or exemplary damages; (ii) damages for lost profits or opportunity; or (iii)
damages for pain and suffering.” Id. § 1821(e)(3)(B). Thus, compensable damages under the
FIRREA are those that “flow[] directly from the repudiation, which make one whole, as opposed
13
to those which go farther by including future contingencies such as lost profits and opportunities
or damages based on speculation.” McMillian v. Fed. Deposit Ins. Corp., 81 F.3d 1041, 1055
(11th Cir. 1996); see also Nashville Lodging Co. v. Resolution Trust Corp., 59 F.3d 236, 246
(D.C. Cir. 1995) (holding that a plaintiff’s reliance damages were recoverable under the
FIRREA); Office & Prof’l Emps. Int’l Union, Local 2 v. Fed. Deposit Ins. Corp., 27 F.3d 598,
604 (D.C. Cir. 1994) (noting that in the FIRREA, “Congress appears . . . to have wished to
distinguish between those damages which can be thought to make one whole and those that are
designed to go somewhat further and put a plaintiff securely in a financial position he or she
would have occupied but for the breach”).
To support their claim for damages, the plaintiffs allege only that the FDIC repudiated a
contract and that “[they] have suffered actual, direct compensatory damages in an amount to be
proven at trial which they are entitled to recover.” Am. Compl. ¶ 30. The plaintiffs also attached
to the amended complaint an itemized list of their “project delay costs,” see id., Ex. 6, and the
court may consider and draw reasonable inferences from documents attached to the complaint,
see FED. R. CIV. P. 10(c) (stating “[a] copy of a written instrument that is an exhibit to a pleading
is a part of the pleading for all purposes”). Nonetheless, the amended complaint includes no
factual allegations to support an inference that the alleged damages are compensable under the
14
FIRREA or that the FDIC’s repudiation of the Agreement actually caused the alleged damages.4
See generally Am. Compl.
Given the dearth of allegations supporting the plaintiffs’ claim for damages, the court
cannot ascertain whether the alleged damages would be compensable under the FIRREA.
Therefore, the plaintiffs have failed to state a plausible claim for relief that would allow the court
to reasonably infer, beyond mere speculation, that the FDIC is liable to the plaintiffs. See Iqbal,
129 S. Ct. at 1949; Ravenswood Ctr., LLC v. Fed. Deposit Ins. Corp., 2010 U.S. Dist. LEXIS
66598, at *11 (N.D. Ill. July 6, 2010) (granting the FDIC’s motion to dismiss a complaint in
which the plaintiff failed to plead sufficient facts from which the court could infer that the
plaintiff suffered damages that are compensable under the FIRREA). Accordingly, the court
dismisses Count II without prejudice.
IV. CONCLUSION
For the foregoing reasons, the court grants the FDIC’s motion to dismiss Count I, denies
Multibank’s motion to dismiss Count I and grants the FDIC’s motion to dismiss Count II,
4
There are several allegations in the amended complaint from which the court can infer that the
FDIC’s repudiation of the Agreement caused the plaintiffs to suffer damages. See, e.g., Am.
Compl. ¶ 22 (alleging that the plaintiffs “were forced to liquidate assets to pay for the completion
of the construction of the home on the Property”). Nonetheless, in opposing the FDIC’s motion
to dismiss, the plaintiffs rely only on the itemized list of costs set forth in the Proof of Claim form
to support Count II, see Pls.’ FDIC Opp’n at 25, and there is no apparent nexus between the
allegations concerning the plaintiffs’ post-repudiation construction financing and the purported
“project delay costs” for which the plaintiffs seek compensation, see generally Am. Compl.
While the court must give the plaintiff “the benefit of all reasonable inferences derived from the
facts alleged,” Stewart v. Nat’l Educ. Ass’n, 471 F.3d 169, 173 (D.C. Cir. 2006), the plaintiffs do
not point to any allegations from which the court can infer that the FDIC caused the specific harm
for which they seek compensation and the court need not “strain to find inferences favorable to
the plaintiffs,” Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 361 (5th Cir.
2004) (internal quotation omitted).
15
dismissing that count without prejudice. An Order consistent with this Memorandum Opinion is
separately and contemporaneously issued this 4th day of January, 2011.
RICARDO M. URBINA
United States District Judge
16
Westberg v. Federal Deposit Insurance Corporation
Combined Opinion