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Yang v. Home Loan Funding

January 22, 2009

NICK N. YANG AND GER CT. MOUA, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
HOME LOAN FUNDING, INC., AND DOES 1 THROUGH 20, INCLUSIVE, DOCUMENT NUMBERS 48 AND 62 DEFENDANTS



The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge

ORDER ON DEFENDANTS' MOTION TO DISMISS PURSUANT TO F.R.C.P. 12(B)(1) OR, IN THE ALTERNATIVE, TO STAY

This is an action pursuant to the Truth In Lending Act against two named financial institutions, Home Loan Funding, Inc., and IndyMac Bank, F.S.B. ("IndyMac"), and several Doe defendants (collectively, "Defendants") who allegedly originated, serviced, purchased/sold or were otherwise involved in promoting or marketing a type of home mortgage loan called an Option Adjustable Rate Mortgage ("Option ARM"). Defendant IndyMac Bank failed and went into receivership. On November 12, 2008, the Federal Deposit Insurance Corporation ("FDIC"), in its role as receiver of IndyMac Bank (hereinafter "FDIC-Receiver"), moved pursuant to Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. § 1821(d)(12) ("FIRREA"), to impose a 90-day stay on the proceedings. Later, in its reply to Plaintiffs' opposition to the motion to stay, FDIC- Receiver moved to dismiss the complaint without prejudice as to FDIC/IndyMac on the ground district courts lack jurisdiction over claims against banks where the action has been instituted after appointment of the receiver and the administrative claims procedure established by FIRREA has not been exhausted. In the instant memorandum opinion and order, the court addresses the FDIC-Receiver's motion to dismiss and will deny the motion to stay without prejudice as moot.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Plaintiffs filed the original complaint on October 5, 2007. The first amended complaint was filed on October 26, 2007. Plaintiffs moved for leave to file a Second Amended Complaint on July 11, 2008. The motion for leave to amend was granted on September 26, 2008. The currently-operative Second Amended Complaint ("SAC") was filed on October 1, 2008. The SAC names defendant IndyMac as one of the "Doe" defendants for the first time. On October 24, 2008, Plaintiffs filed a proof of service indicating the SAC had been served on IndyMac on October 22, 2008. Although the SAC styles the action as a class action, the court's docket indicates that there has not been any motion to certify a class. At present no other individual defendants, other than the two identified in the SAC, have been identified.

The parties do not dispute that the Office of Thrift Supervision ("OTS") closed IndyMac and appointed FDIC as Receiver on July 11, 2008. FDIC-Receiver further alleges, and Plaintiffs do not dispute, that:

On that same date [July 11, 2008,] OTS authorized the creation of a new institution, IndyMac Federal Bank F.S.B. ("IndyMac Federal"), and appointed the FDIC as Conservator for IndyMac Federal ("FDIC-Conservator"). Also on July 11, 2008, pursuant to a Purchase and Assumption Agreement among the FDIC in its Corporate capacity, FDIC-Receiver and FCIC-Conservator, the bulk of the assets of IndyMac were transferred to FDIC-Conservator, but the transfer did not include "any defensive litigation with respect to which [IndyMac] was a defendant or counterclaimant." [Citation.] Such litigation, including this case, remained with FDIC-Receiver.

Doc. # 48 at ¶ 2.

FDIC-Receiver filed a motion to stay proceedings in this action on November 12, 2008. Plaintiffs opposed FDIC-Receiver's motion for stay on the ground the amount of time authorized for a stay by 12 U.S.C. § 1821(d)(12)(A)*fn1 began to run as of the appointment of FDIC as receiver, and the 90-day stay period had already expired by the time of the motion. In their opposition, Plaintiff's argued that the restriction of the stay period to the first 90 days after the appointment of the receiver was consistent with the purposes of the statute "particularly [... ] where the litigation at issue was not even commenced against the failed bank until after the FDIC took over as receiver...." Doc. # 60 at 6: 21-22. In their reply brief, FDIC-Receiver noted Plaintiffs' admission that Plaintiffs' action was not filed against FDIC until after FDIC was appointed receiver. Based on that admission, FDIC-Receiver moved to dismiss Plaintiffs' claims without prejudice on the ground the court lacks jurisdiction over Plaintiffs' claims against FDIC-Receiver pursuant to section 1821(d)(13)(D) because Plaintiffs did not file and exhaust an administrative claim prior to filing the instant action.

On December 16, 2008, he court requested further briefing from the parties regarding FDIC-Receiver's motion to dismiss. In their sur-opposition to FDIC-Receiver's motion to dismiss, Plaintiffs assert that administrative claims were timely filed and the claim procedure was exhausted. FDIC-Receiver in its sur-reply, contends that the documents that were exchanged between FDIC-Receiver and the attorney-representatives for Plaintiffs, and that are provided as exhibits to Plaintiff's sur-opposition, are not sufficient to constitute evidence of either the filing of an administrative claim or the final denial of an administrative claim sufficient to satisfy the exhaustion requirement.

The hearing on FDIC-Receiver's motions to stay or dismiss was vacated on December 10, 2008. Plaintiffs filed their sur-opposition on December 29, 2008, and FDIC- Receiver filed their sur-reply on January 8, 2009.

LEGAL STANDARD

Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a motion to dismiss for lack of subject matter jurisdiction. It is a fundamental precept that federal courts are courts of limited jurisdiction. Limits upon federal jurisdiction must not be disregarded or evaded. Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). The plaintiff has the burden to establish that subject matter jurisdiction is proper. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). This burden, at the pleading stage, must be met by pleading sufficient allegations to show a proper basis for the court to assert subject matter jurisdiction over the action. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Fed. R. Civ. P. 8(a)(1). When a defendant challenges jurisdiction "facially," all material allegations in the complaint are assumed true, and the question for the court is whether the lack of federal jurisdiction appears from the face of the pleading itself. Thornhill Publishing Co. v. General Telephone Electronics, 594 F.2d 730, 733 (9th Cir. 1979); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F. 2d 884, 891 (3d Cir.1977); Cervantez v. Sullivan, 719 F. Supp. 899, 903 (E.D. Cal.1989), rev'd on other grounds, 963 F. 2d 229 (9th Cir.1992).

A defendant may also attack the existence of subject matter jurisdiction apart from the pleadings. Mortensen, 549 F. 2d at 891. In such a case, the court may rely on evidence extrinsic to the pleadings and resolve factual disputes relating to jurisdiction. St. Clair v. City of Chico, 880 F. 2d 199, 201 (9th Cir.1989); Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.1987); Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir.1983). "No presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial ...


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