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Jette v. Orange County Financial

December 14, 2009

SUSAN JETTE AND BARBARA ANN JETTE, INDIVIDUALS, PLAINTIFFS,
v.
ORANGE COUNTY FINANCIAL, INC., A CORPORATION; MORTGAGEIT, INC., A CORPORATION; INDYMAC FEDERAL BANK, F.S.B.; TIEMPO ESCROW, INC., A CORPORATION; JERRY INDES, AN INDIVIDUAL; MR. MINUS, AN INDIVIDUAL; AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING THE FDIC'S MOTION TO DISMISS*fn1

On October 29, 2009, Defendant Federal Deposit Insurance Corporation (the "FDIC"), Receiver for IndyMac Bank, F.S.B. and IndyMac Federal Bank, FSB, filed a motion under Federal Rule of Civil Procedure 12(b)(1) in which it seeks to dismiss Plaintiffs' claim under the Truth in Lending Act ("TILA") for lack of subject matter jurisdiction, or alternatively, for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (Docket No. 145.) For the reasons stated below, the motion is GRANTED.

I. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(1), a defendant may move to dismiss a complaint for lack of subject matter jurisdiction. Plaintiff has the burden of demonstrating that federal subject matter jurisdiction exists. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994).

A "[r]ule 12(b)(1) jurisdictional attack[] can be either facial or factual." White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). "In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004).

Here, the FDIC's jurisdictional attack is factual since the FDIC relies on extrinsic evidence outside of the pleadings in support of its argument that Plaintiffs' TILA claim is time barred. See id. "In resolving a factual attack on jurisdiction, the district court may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment.... Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction." Id. (citation omitted.)

II. Background

On April 3, 2008, Plaintiffs' filed a complaint in the district court for the Southern District of California, alleging federal and state claims against Defendants, including a claim under TILA against Defendant IndyMac Bancorp., Inc. ("IndyMac Bancorp"). The case was transferred from the Southern District of California to this federal district court in the Eastern District of California on July 30, 2008. IndyMac Bancorp, however, filed a Chapter 7 bankruptcy petition in United States' Bankruptcy Court in the Central District of California on July 31, 2008. (Not. of Filing for Bankruptcy.) As a result of IndyMac Bancorp's bankruptcy filing, on September 19, 2008, the parties stipulated to voluntarily dismiss IndyMac Bancorp from this action under Federal Rule of Civil Procedure 41(a)(1).

On July 11, 2008, the Office of Thrift Supervision ("OTS"), an agency of the Treasury Department that regulates savings banks, issued an order closing IndyMac Bank, F.S.B., and appointing the FDIC as that bank's receiver. (Stipulation to Substitute Real Parties in Interest, Ex. A.) That same day, the OTS chartered a new institution, IndyMac Federal Bank, FSB, and appointed the FDIC as the conservator to operate the new financial institution. (Id.)

On an unknown date, Plaintiffs filed a proof of claim with the FDIC, as the receiver for IndyMac Bank, F.S.B., seeking to rescind their loan under TILA. (Golden Decl., Ex. A).*fn2 In a letter dated November 5, 2008, and received by Plaintiffs' Counsel on November 10, 2008, the FDIC notified Plaintiffs that their claim had been disallowed. (Mallory Decl., Exs. A, C.) The FDIC's letter further stated:

Pursuant to 12 U.S.C. Section 1821(d)(6), if you do not agree with this disallowance, you have the right to file a lawsuit on your claim (or continue any lawsuit commenced before the appointment of the Receiver), in the United States District (or Territorial) Court for the District within which the failed institution's principal place of business was located or the United States District Court for the District of Columbia within 60 days from the date of this notice. (Id.)

On March 5, 2009, Plaintiffs filed a first amended complaint in this action, in which they allege a TILA claim against IndyMac Federal Bank FSB. On March 19, 2009, the OTS issued an order appointing the FDIC as the receiver, instead of conservator, of IndyMac Federal Bank, FSB. (Stipulation to Substitute Real Parties in Interest, Ex. B.) Subsequently, the parties filed a stipulation and order in this case, which was entered on May 22, 2009, substituting "the FDIC, as Receiver for IndyMac Federal Bank, FSB and as Receiver for IndyMac Bank, F.S.B." On October 29, 2009, the FDIC filed a motion to dismiss Plaintiffs' TILA claim under Rules 12(b)(1) and 12(b)(6).

III. Discussion

The FDIC argues Plaintiffs' TILA claim is time barred under 12 U.S.C. ยง 1821(d)(6), and therefore the court lacks jurisdiction over the claim. Plaintiffs counter their TIlA claim is not time barred because the applicable statute authorizes them to continue litigating their claim in this lawsuit ...


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