Royal Car Rental, Inc. v. Banco Popular de Puerto Rico

Not for Publication in West's Federal Reporter

United States Court of Appeals
For the First Circuit

No. 12-2131

ROYAL CAR RENTAL, INC.; BUMPERS ROYAL CORP.;
FRANK LÓPEZ-CARBALLO; NAIDABEL SOTO-MENÉNDEZ,

Plaintiffs, Appellants,

v.

BANCO POPULAR DE PUERTO RICO,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Juan M. Pérez-Giménez, U.S. District Judge]

Before

Howard, Lipez and Kayatta,
Circuit Judges.

Fernando E. Longo-Quiñones and Berríos & Longo Law Offices,
P.S.C. on brief for appellants.
Salvador J. Antonetti-Stutts and O'Neill & Borges LLC on brief
for appellee.

May 24, 2013
 Per Curiam. This is an appeal of the dismissal of a

complaint against Banco Popular de Puerto Rico ("Banco Popular")

arising from conduct by Westernbank Puerto Rico, Inc.

("Westernbank"), whose assets and liabilities Banco Popular assumed

when Westernbank failed. In light of our decision in Acosta-

Ramírez v. Banco Popular de Puerto Rico, 712 F.3d 14 (1st Cir.

2013), we vacate the district court's judgment and remand the case

with instructions to dismiss for lack of subject matter

jurisdiction.

In 2007, Westernbank extended a line of credit to Royal

Car Rental, Inc. ("Royal") for the purpose of acquiring a fleet of

vehicles to use in Royal's business. Westernbank required that

Royal pledge the vehicles as collateral, and that the loan be

guaranteed by Royal's affiliate Bumpers Royal, Inc.; Frank López-

Carballo, the sole shareholder of Royal and Bumpers Royal; and

López's then-spouse, Naidabel Soto-Menéndez. According to the

complaint, Westernbank later falsely represented that Royal was not

complying with the terms of the loan and wrongfully attempted to

accelerate the debt. Royal was forced to file for bankruptcy, and

it commenced an adversary proceeding against Westernbank in 2009.

The bankruptcy court granted summary judgment to Westernbank, and

Royal did not appeal. Around the same time, the guarantors of

Royal's loan sued Westernbank on similar grounds in Puerto Rico's

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Court of First Instance. That court also granted summary judgment

to Westernbank.

Shortly before it was awarded summary judgment in the

bankruptcy and commonwealth courts, Westernbank was closed by the

Puerto Rico Office of the Commissioner of Financial Institutions,

and the Federal Deposit Insurance Corporation ("FDIC") was named

Westernbank's Receiver. The FDIC immediately transferred all of

Westernbank's deposits and certain of its loans (including the loan

at issue here) to Banco Popular under a Purchase and Assumption

Agreement.

Following the closure of Westernbank, Royal and the

guarantors of its loan filed yet another action on similar grounds

in the Court of First Instance, this time against Banco Popular as

successor to Westernbank. Banco Popular removed the action to the

United States District Court for the District of Puerto Rico. The

plaintiffs amended their complaint, alleging various wrongful

actions by Westernbank, including the use of perjury to deceive the

bankruptcy court. The amended complaint's allegations against

Banco Popular all depended on Westernbank's conduct: Banco Popular

"did not rectify Westernbank's conduct," and its "actions have been

the continuation of the conduct, acts, perjury, dolus [a concept

similar to fraud in the inducement], breach, and fraud in which

Westernbank was embarked against [Royal] and plaintiffs." The

district court dismissed the action for failure to state a claim,

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primarily because the bankruptcy court had already decided many of

the issues in the case. The plaintiffs appealed.

After the parties had briefed this appeal, but before

oral argument, we held in Acosta-Ramírez that no court had

jurisdiction over a suit for severance pay by former employees of

Westernbank against Banco Popular. 712 F.3d at 15-16. That was

because the Financial Institutions Reform, Recovery, and

Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183,

requires that claims based on the actions of a failed bank be

submitted to the FDIC through its administrative claims process. 12

U.S.C. § 1821(d)(3)-(13). If a claimant does not exhaust his or

her administrative remedies, then "no court shall have jurisdiction

over . . . any claim relating to any act or omission of" the failed

bank. Id. § 1821(d)(13)(D). At our request, the parties and the

FDIC submitted supplemental briefs discussing whether we have

jurisdiction over this appeal in light of Acosta-Ramírez.

The appellant makes no persuasive argument that the

complaint alleges a claim that is unrelated to the conduct of

Westernbank. On the contrary, every allegation against Banco

Popular "relat[es] to an act or omission of" Westernbank. 12

U.S.C. § 1821(d)(13)(D); see Acosta-Ramírez, 712 F.3d at 21. The

appellants do not claim that they have availed themselves of the

FDIC's administrative claims process. Acosta-Ramírez, 712 F.3d at

21. We therefore conclude that no court has jurisdiction over this

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case. Accordingly, we vacate the district court's judgment and

remand the case with instructions to dismiss for lack of subject

matter jurisdiction. No costs are awarded.

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