UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
May 31, 2012
KAY NEE, PLAINTIFF,
FEDERAL DEPOSIT INSURANCE CORPORATION, IN ITS OWN NAME AND AS RECEIVER FOR INDYMAC BANK, F.S.B., PASADENA, CA; DOES 1 THROUGH 10, DEFENDANTS.
The opinion of the court was delivered by: Margaret M. Morrow United States District Judge
FINDINGS OF FACT AND CONCLUSIONS OF LAW
On July 11, 2008, the Office of Thrift Supervision ("OTS") closed IndyMac Bank, F.S.B. ("IndyMac") and appointed the Federal Deposit Insurance Corporation ("FDIC") as the bank's receiver pursuant to 12 U.S.C. § 1821(c)(2)(A). That same day, the FDIC formed IndyMac Federal Bank, a newly chartered depository institution, and transferred IndyMac's insured deposits to it. The FDIC made deposit insurance determinations for accounts held at IndyMac and notified depositors of the determinations via letter. Some depositors, including plaintiff, later filed actions challenging the FDIC's deposit insurance determinations and/or alleging wrongful acts by IndyMac or its former employees prior to commencement of the receivership.
Plaintiff filed an opening brief on January 25, 2010.*fn1
Defendant filed an opening brief on
February 1, 2010.*fn2 Plaintiff filed a responsive
brief on February 22, 2010,*fn3 while defendant filed
its responsive brief on March 1, 2010.*fn4 Following
the passage of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the "Dodd-Frank Act") on July 21, 2010, the parties
submitted supplemental briefing regarding the FDIC's revised deposit
insurance determinations for plaintiff's accounts.*fn5
I. FINDINGS OF FACT
A. The Accounts
1. Plaintiff Kay Nee had seven accounts with IndyMac prior to July 11, 2008.*fn6
2. Prior to July 11, 2008, account XXXXXX0718 had a balance of $30,412.51 and was held by Kay and Johnson Nee ITF James and Jennifer Nee.*fn7 Account XXXXXX2038 had a balance of $39,715.04 and was held by Kay and Johnson Nee ITF James and Jennifer Nee.*fn8 Account XXXXXX4322 had a balance of $2,587.41 and was held by Kay and Johnson Nee ITF James and Jennifer Nee.*fn9 Account XXXXXX1302 had a balance of $71,023.96 and was held by Kay Nee ITF James and Jennifer Nee.*fn10 Account XXXXXX4544 had a balance of $16,286.37 and was held by Kay Nee ITF James Nee, Jennifer Nee, and Johnson Nee.*fn11 Account XXXXXX5641 had a balance of $74,580.01 and was held by Kay Nee ITF James Nee, Jennifer Nee, Johnson Nee, and Lily Wu.*fn12
Finally, account XXXXXX7974 had a balance of $125,141.86 and was held by Kay and Johnson Nee ITF James Nee and Jennifer Nee.*fn13
3. All seven accounts were informal revocable trust accounts.*fn14
B. The FDIC's Recovery of IndyMac Data
4. Before IndyMac Bank closed, the FDIC requested deposit account records maintained by the computer deposit system at IndyMac Bank. The FDIC requested approximately 45 data fields for each deposit account along with electronic copies of trial balances, deposit application reconciliations, and the general ledger of the bank. The FDIC requested this data in advance of IndyMac Bank's closure to test delivery capabilities, prove the balancing and reconciliation processes, and make certain that all required data fields had been included.*fn15
5. As a result, from March 20 to July 18, 2008, FDIC employees transferred files from the computers of IndyMac Bank to those of the FDIC. Prior to IndyMac Bank's closure, the FDIC's technical staff worked with he bank to verify the accuracy of the data so that the files provided to the FDIC could be processed properly. The FDIC verified the sum of the current balance and accrued interest data fields. It also checked data against the bank's general ledger to ensure that it received all deposit products.*fn16
6. Subsequently, the FDIC transferred the computerized deposit account records of IndyMac Bank to its Receivership Liability System ("RLS"). This process involved three types of files maintained at IndyMac Bank:
a. The "Deposit.csv" file, known as the "Deposit File," a database of deposit accounts;
b. The "CIF.csv" file, known as the "Customer Information File," a database of all customers; and
c. The "DIF_CIF.csv" file, known as the "CIF Joint File," which maps customers and their relationships to deposit accounts.*fn17
7. Combining information from the Deposit File and the Customer Information File, the FDIC created an account title in the RLS for each IndyMac Bank deposit account. The Deposit and Customer Information files provided the account number, the owner or owners of each account, the "relationship code" for the names on the account, the then-current deposit balance, the accrued interest, and the date the account was opened, among other information.*fn18
8. The "relationship code" is a code included in IndyMac Bank's Customer Information File that described the relationship between the account owner or owners and other names on the account, including beneficiaries. Names and relationship codes in the Customer Information File were used to create the account title for each account loaded into the RLS. These codes included:
a. "BNI," which stands for "beneficiary -- individual trust," i.e., a beneficiary of a revocable trust account held by a single owner;
b. "BNJ," which stands for "beneficiary -- joint trust," i.e., a beneficiary of a revocable trust account held by multiple owners;
c. "JBO," which stands for "joint owner with a beneficiary," i.e., a joint revocable trust account;
d. "JTO," which stands for 'joint owner," i.e., a joint ownership account; e. "SLB," which stands for "sole owner with beneficiary," i.e., a beneficiary of a revocable trust account;
f. "SOL," which stands for "individual owner," i.e., a single ownership account; g. "TRS," which stands for "trustee," i.e., funds held by a bank pursuant to an irrevocable trust account; and
h. "TST," which stands for "trust," i.e., a formal revocable trust account.*fn19
9. The Customer Information File also uses the following acronyms:
a. "AFT" means "as trustee for";
b. "ITF" means "in trust for"; and
c. "POD" means "payable-on-death to."*fn20
10. On July 11, 2008, after the FDIC closed out the day's business so that it could determine end-of-day account balances, it processed IndyMac Bank's deposit data for use in the RLS.*fn21 Using all of the data previously described, as uploaded from IndyMac Bank's deposit records, the RLS grouped depositors based on name, address, and tax identification number to produce a "Final Grouping Report." The report lists the accounts owned by an individual depositor, the account balances in those accounts, and the account numbers. If there are uninsured or potentially uninsured funds, the RLS also produces an "XX/PH Worksheet" for use by FDIC Claims Agents.*fn22 The Final Grouping Report and the XX/PH Worksheet are reviewed by FDIC Claim Agents to approve a deposit insurance determination. Once that determination is finalized, the RLS produces a Notice of Allowance of Claim and a Receivership Certificate for the uninsured balances.*fn23
11. In response to the court's order requiring the FDIC to augment the administrative record to provide source information, the FDIC submitted the information obtained from IndyMac Bank for plaintiff's accounts that was used to populate the RLS. These records show the account numbers, the owners, the relationship code for the names on the accounts, the then-current deposit balance, the accrued interest, and the date the account was opened.*fn24
12. The source information confirms that:
a. On account XXXXXX0718, Kay and Johnson Nee are listed under the relationship code "JBO," indicating that they are joint owners with a beneficiary. James and Jennifer Nee are listed under relationship code "BNJ," indicating that they are the beneficiaries of a jointly owned revocable trust.*fn25 The account had a balance of $30,376.15 in principal and $36.36 in accrued interest, confirming the RLS-reported balance of $30,412.51.*fn26
b. On account XXXXXX2038, Kay and Johnson Nee are listed under the relationship code "JBO," indicating that they are joint owners with a beneficiary. James and Jennifer Nee are listed under relationship code "BNJ," indicating that they are the beneficiaries of a jointly owned revocable trust.*fn27 The account had a balance of $39,666.96 in principal and $48.08 in accrued interest, confirming the RLS-reported balance of $39,715.04.*fn28
c. On account XXXXXX4322, Kay and Johnson Nee are listed under the relationship code "JBO," indicating that they are joint owners with a beneficiary. James and Jennifer Nee are listed under relationship code "BNJ," indicating that they are the beneficiaries of a jointly owned revocable trust.*fn29 The account had a balance of $2,587.00 in principal and $0.41 in accrued interest, confirming the RLS-reported balance of $2,587.41.*fn30
d. On account XXXXXX1302, Kay Nee is listed under relationship code "SLB," indicating that she was the sole owner with beneficiaries. James and Jennifer Nee are listed under relationship code "BNI," indicating they are the beneficiaries of a revocable trust.*fn31 The account had a balance of $70,936.90 in principal and $87.06 in accrued interest, confirming the RLS-reported balance of $71,023.96.*fn32
e. On account XXXXXX4544, Kay Nee is listed under relationship code
"SLB," indicating that she was the sole owner with beneficiaries.
James Nee, Jennifer Nee, and Johnson Nee are listed under relationship
code "BNJ," indicating that they are
the beneficiaries of a jointly owned revocable trust.*fn33
The account had a balance of $16,266.41 in principal and
$19.96 in accrued interest, confirming the RLS-reported balance of
f. On account XXXXXX5641, Kay Nee is listed under relationship code "SLB," indicating that she was the sole owner with beneficiaries. James Nee, Jennifer Nee, Johnson Nee, and Lily Wu are listed under relationship code "BNI," indicating they are the beneficiaries of this revocable trust.*fn35 The account had a balance of $74,491.96 in principal and $88.05 in accrued interest, confirming the RLS-reported balance of $74,580.01.*fn36
g. On account XXXXXX7974, Kay and Johnson Nee are listed under the relationship code "JBO," indicating that they are joint owners with a beneficiary. James and Jennifer Nee are listed under relationship code "BNJ," indicating that they are the beneficiaries of a jointly owned revocable trust.*fn37 The account had a balance of $124,994.12 in principal and $147.74 in accrued interest, confirming the RLS-reported balance of 125,141.86.*fn38
C. The FDIC's Insurance Determination
13. The FDIC as receiver for IndyMac assigned Patrick Collins to review deposit insurance coverage and claims arising out of IndyMac's failure. Collins reviewed the seven accounts at issue in this case.*fn39
14. Collins concluded that James and Jennifer Nee were qualifying beneficiaries on accounts held by Kay and/or Johnson Nee, because James and Jennifer are Kay's and Johnson's children. See 12 C.F.R. § 330.10(a) (2008). Similarly, Johnson Nee is a qualifying beneficiary on an account held by Kay Nee because he is her spouse. See id. Whether or not Lily Wu was a qualifying beneficiary does not affect the accuracy of the FDIC's deposit insurance determination since, if she was not a qualifying beneficiary, the funds allocated to the trust relationship between Kay Nee as owner and Lily Wu as beneficiary would have been treated as a single ownership account owned by Nee. See id., § 330.10(c). That amount, along with all other single ownership accounts held by Kay Nee, would have been insured up to $100,000.00. See id., § 330.6(a). Because Kay Nee did not hold any single ownership accounts at IndyMac Bank, the funds for the relationship between Ms. Nee and Ms. Wu would have been insured whether they were treated as part of a revocable trust account or as a single ownership account.*fn40
15. If an informal revocable trust account has multiple beneficiaries the FDIC will assume that each beneficiary has an equal interest in the account unless otherwise stated in the bank's deposit account records. If an individual is not qualifying beneficiary, his or her interest is insured as if it were a single ownership account. Pursuant to 12 C.F.R. § 330.10(a), at the time IndyMac Bank closed, each trust relationship between an owner and a beneficiary was insured up to $100,000.00 across all accounts. When an account owner named the same qualifying beneficiary on more than one informal revocable trust account at the same bank, the amounts placed in trust for that beneficiary were aggregated for purposes of determining the insured amount. Collins therefore concluded that the trust relationships for Kay Nee as owner and James Nee as beneficiary totaled $109,049.99, or $9,049.99 over the deposit insurance limit. He further concluded that the trust relationships for Kay Nee as owner and Jennifer Nee as beneficiary totaled $109,049.99, once again $9,049.99 over the deposit insurance limit. As a result, Kay Nee had uninsured deposits of $18,099.98.*fn41 The FDIC therefore sent her a Receivership Certificate for $18,099.98 dated July 22, 2008.*fn42
16. Based on the FDIC's calculation that disposition of IndyMac's assets would result in recovery of approximately 50% of the uninsured deposits of IndyMac, the FDIC also sent Kay Nee a 50% advance dividend of $9,049.99.*fn43
17. After making this initial determination, the FDIC obtained the Signature Card for Account No. XXXXXX4544 showing that Johnson Nee was an owner on the account and not a beneficiary. Accordingly, the FDIC determined that Account No. XXXXXX4544 had two owners, Kay Nee and Johnson Nee, and two beneficiaries, James Nee and Jennifer Nee.*fn44
Based on this additional information, pursuant to 12 C.F.R. § 330.5(a)(1), the FDIC re-determined the deposit insurance applicable to Account No. XXXXXX4544.*fn45
18. As a result of that re-determination, the trust relationships for Kay Nee as owner and James Nee as beneficiary totaled $107,692.78, which was $7,692.78 over the deposit insurance limit. Similarly, the trust relationship for Kay Nee as owner and Jennifer Nee as beneficiary totaled $107,692.78, which was $7,692.78 over the deposit insurance limit. As a result, Kay Nee had $15,385.56 over the deposit insurance limit. The FDIC sent Ms. Nee a new Receivership Certificate for $15,385.56 dated September 16, 2008.*fn46
19. Because the FDIC increased the insured portion of Account No. XXXXXX4544 by $2,714.42, the amount due to Ms. Nee and her husband as an advance dividend decreased to $7,692.78. Kay and Johnson Nee received $1,357.21, which represented the difference between the first dividend and the insured amount due them.*fn47
20. On July 21, 2010, the Dodd-Frank Act, Pub. L. No.1 I 1-203, took effect. Section 335 of the Dodd-Frank Act amended the Federal Deposit Insurance Act, 12 U.S.C. § 1821(a)(1)(E), by increasing the standard maximum deposit insurance amount ("SMDIA") from $100,000.00 to $250,000.00. The act made the increase permanent and retroactive to January 1, 2008. Section 335 directed that, in applying the $250,000.00 deposit insurance amount retroactively to January 1, 2008, the FDIC subtract: (1) deposit insurance previously paid to depositors by the FDIC, and (2) payments (such as dividends) previously made to depositors by the FDIC as Receiver.*fn48
21. Immediately following the effective date of the Dodd-Frank Act,
the FDIC calculated the increased deposit insurance amounts due
IndyMac Bank depositors with uninsured deposit balances.*fn49
The starting point for its analysis was its final deposit
insurance determination following the bank's closure in
2008,*fn50 specifically each depositor's account
balance as of July 11, 2008, the amount of insurance provided to each
depositor, the amount of any Receivership Certificates sent to
depositors, and the amount of the 50% advance dividend paid to
22. As a result of the application of the retroactive $250,000.00 insurance coverage under the Dodd-Frank Act, plaintiff's deposits are now fully insured. On July 22, 2010, the FDIC Receiver sent plaintiff a check for $7,692.78, or 50% of the deposit insurance balance previously deemed uninsured. No additional funds are owed to plaintiff.
II. CONCLUSIONS OF LAW
A. Standard of Review
23. The FDIC's determination of insurance coverage is governed by the Federal Deposit Insurance Act ("FDIA"), as amended, 12 U.S.C. §§ 1811 et seq.
24. The FDIC's final determination "regarding any claim for insurance coverage [is] a final agency action reviewable in accordance with" the Administrative Procedure Act ("APA").
12 U.S.C. § 1821(f)(4). Under the APA, the court examines whether the FDIC's decision was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). The parties agree that the relevant question the court must answer iswhether the FDIC's action was arbitrary or capricious.*fn52
25. Final agency action is arbitrary and capricious if the agency "'has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.'" O'Keeffe's Inc. v. U.S. Consumer Product Safety Commission, 92 F.3d 940, 942 (9th Cir. 1996) (quoting Motor Vehicle Manufacturers' Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 (1983)).
26. A district court is limited to a review of the reasoning on which the agency relied in making its decision. Safe Air for Everyone v. EPA, 488 F.3d 1088, 1091 (9th Cir. 2007) (citing SEC v. Chenery Corp., 318 U.S. 80, 87 (1943)). It can "uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Motor Vehicles Manufacturers' Association, 463 U.S. at 43. Where an agency offers an "interpretation of its own regulation [that] reflects its considered views," even if those views are developed in response to litigation and communicated in a legal brief, the court should accept the interpretation if convinced it is not "merely a post hoc rationalization." Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 171 (2007). See also Alaska v. Federal Subsistence Board, 544 F.3d 1089, 1094 (9th Cir. 2008) ("While we may not fabricate a rational basis for an agency's action, we will 'uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned,'" quoting Motor Vehicles Manufacturers' Association, 463 U.S. at 43). "'Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.'" Northwest Coalition for Alternatives to Pesticides (NCAP) v. United States Environmental Protection Agency, 544 F.3d 1043, 1048 (9th Cir. 2008) (quoting Motor Vehicles Manufacturers' Association, 463 U.S. at 43).
27. "[A]n agency's interpretation of its own regulations is 'controlling' unless 'plainly erroneous' or inconsistent with 'the regulations being interpreted.'" Public Citizen v. Nuclear Regulatory Commission, 573 F.3d 916, 923 (9th Cir. 2009) (quoting Long Island Care at Home, 551 U.S. at 171). See also Long Island Care at Home, 551 U.S. at 170-71 ("[A]s long as interpretive changes create no unfair surprise . . . change in interpretation alone presents no separate ground for disregarding the Department's present interpretation"); River Runners for Wilderness v. Martin, 574 F.3d 723, 736 (9th Cir. 2009) ("[F]ederal agencies are entitled to some leeway when interpreting their own policies and regulations," citing Stinson v. United States, 508 U.S. 36, 45 (1993)). "In other words, we must defer to the [agency's] interpretation unless an 'alternative reading is compelled by the regulation's plain language or by other indications of the [agency's] intent at the time of the regulation's promulgation.'" Thomas Jefferson University v. Shalala, 512 U.S. 504, 512 (1994) (quoting Gardebring v. Jenkins, 485 U.S. 415, 430 (1988)). See also Oregon Paralyzed Veterans of America v. Regal Cinemas, Inc., 339 F.3d 1126, 1131 (9th Cir. 2003) ("When the meaning of regulatory language is ambiguous, the agency's interpretation of the regulation controls 'so long as it is 'reasonable,' that is, so long as the interpretation sensibly conforms to the purpose and wording of the regulations,'" quoting Martin v. Occupational Safety & Health Review Commission, 499 U.S. 144, 150-51 (1991)); Wards Cove Packing Corp. v. National Marine Fisheries Service, 307 F.3d 1214, 1218 (9th Cir. 2002) ("An agency's interpretation of regulations it is charged with administering is entitled to a high degree of deference and will be upheld as long as it is not plainly erroneous or inconsistent with the regulation").
B. Supplementation of the Record
28. Although judicial review of an agency's decision under 5 U.S.C. § 706 is typically confined to the administrative record, courts have crafted narrow exceptions to this rule. See, e.g., Lands Council v. Powell, 395 F.3d 1019, 1030 (9th Cir. 2005) ("In limited circumstances, district courts are permitted to admit extra-record evidence: (1) if admission is necessary to determine 'whether the agency has considered all relevant factors and has explained its decision,' (2) if 'the agency has relied on documents not in the record,'
(3) 'when supplementing the record is necessary to explain technical terms or complex subject matter,' or (4) 'when plaintiffs make a showing of agency bad faith.' These limited exceptions operate to identify and plug holes in the administrative record. Though widely accepted, these exceptions are narrowly construed and applied" (citations omitted)).
29. The Ninth Circuit has held that "[t]he 'whole' administrative record [ ] consists of all documents and materials directly or indirectly considered by agency decision-makers and includes evidence contrary to the agency's position." Thompson v. United States Department of Labor, 885 F.2d 551, 555 (9th Cir. 1989) (internal quotation marks and citation omitted).
30. When a reviewing court finds it necessary to look outside the administrative record to evaluate whether an agency has considered all relevant factors and adequately explained its decision, it should obtain additional explanations of agency action from the agency itself. Camp v. Pitts, 411 U.S. 138, 142-43 (1973) ("If . . . there was such failure to explain administrative action as to frustrate effective judicial review, the remedy was not to hold a de novo hearing but, as contemplated by [Citizens to Preserve] Overton Park [v. Volpe, 401 U.S. 402 (1971)], to obtain from the agency, either through affidavits or testimony, such additional explanation of the reasons for the agency decision as may prove necessary"); see also, e.g., Animal Defense Council v. Hodel, 840 F.2d 1432, 1436 (9th Cir. 1988) (quoting Camp). In such instances, "[t]he court's inquiry outside the record is limited to determining whether the agency has considered all relevant factors or has explained its course of conduct or grounds of decision." Id. (citing Friends of the Earth v. Hintz, 800 F.2d 822, 829 (9th Cir. 1986)).
31. By contrast, where it appears that the agency has relied on documents not included in the administrative record, "supplementation is appropriate." Portland Audubon Society, 984 F.2d at 1548. In such instances, "the crux of the analysis is whether the documents or materials [that a party requests be added to the administrative record] were actually considered, directly or indirectly, by the agency decisionmakers." Pacific Coast Federation of Fishermen's Association/ Institute for Fisheries Resources v. Gutierrez, No. 1:06-CV-00245 OWW LJO, 2007 WL 1752287, *2 (E.D. Cal. June 15, 2007) (citing Thompson, 885 F.2d at 555).
32. The FDIC's deposit insurance determinations are governed by regulations set forth in 12 C.F.R. § 330. These regulations state that "deposit account records" include "account ledgers, signature cards, certificates of deposit, passbooks, corporate resolutions authorizing accounts in the possession of the insured depository institution and other books and records of the insured depository institution, including records maintained by computer, which relate to the insured depository institution's deposit taking function." 12 C.F.R. § 330.1(e).*fn53 Regulations providing for the recognition of deposit ownership and fiduciary relationships note that, except under circumstances not relevant here, when "determining the amount of insurance available to each depositor, the FDIC shall presume that deposited funds are actually owned in the manner indicated on the deposit account records of the insured depository institution." 12 C.F.R. § 330.5(a)(1).*fn54 Significantly, there is no mention of the RLS in the FDIC's governing regulations.
33. The administrative record attached to the Collins declaration did not contain copies of relevant bank records that must be reviewed to evaluate whether the FDIC's determination was arbitrary and capricious or an abuse of discretion. Indeed, the only record attached was the XX/PH Worksheet produced by the RLS. Because this document was insufficient to establish ownership of the account, the court could not definitively determine on which records or other information the FDIC relied in making the insurance determination. Indeed, after reviewing the XX/Ph Worksheet produced by the RLS, it appeared clear that the FDIC had relied indirectly on some other document or documents in compiling the information in the RLS.
34. If, after considering the administrative record, the court finds that the agency's rationale is not sufficiently explained, it can "obtain from the agency . . . such additional explanation of the reasons for the agency decision as may prove necessary." Camp, 411 U.S. at 142-43. See also City and County of San Francisco v. United States, 930 F.Supp. 1348, 1355-56 (N.D. Cal. 1996) ("When the administrative record so fails to explain agency action that judicial review of that action is effectively frustrated, the court may 'obtain from the agency, either through affidavits or testimony, such additional reasons for the agency decision as may prove necessary.' . . . Similarly, the court may inquire outside of the administrative record 'when it appears the agency has relied on documents or materials not included in the record,'" quoting Camp, 411 U.S. at 143).
35. In this case, because it appeared that "the agency ha[d] relied on documents not in the record," the court on May 25, 2010 concluded sua sponte that supplementation of the record was needed "to determine whether the agency ha[d] considered all relevant factors and explained its decision." Cf. Home Box Office, 567 F.2d at 52 (court sua sponte ordered the Federal Communications Commission to provide "a list of all of the ex parte presentations, together with the details of each, made to it, or any of its members or representatives, during the rulemaking proceedings").
36. It directed the FDIC to produce: (1) evidence in the form of declarations or documents explaining how the information in the RLS concerning plaintiff's accounts was populated;
(2) any documents that would augment the record in that they were documents upon which the FDIC indirectly relied because they constituted the source information for the data input into the RLS; and (3) evidence in the form of declarations or otherwise explaining any technical terms or abbreviations included in the RLS or the documents produced pursuant to this order. The court noted that the supplementation it sought should be comprised of records of the type enumerated in 12 C.F.R. § 330.1(e) upon which the FDIC relied in reaching its final deposit insurance determination, as well as any other information which the FDIC, in its discretion, had gathered and considered concerning plaintiff's accounts prior to the date the insurance determination was made (e.g., communications between the FDIC and plaintiff or between the FDIC and IndyMac employees). Cf. 12 C.F.R. § 330.5(a)(1). In particular, the court sought evidence as to whether the RLS, upon which the FDIC's insurance determination was based, and which itself is not an IndyMac deposit account record, relied on and/or summarized documents not included in the administrative record filed with the court.
37. In response to the court's order requiring supplementation of the administrative record, the FDIC filed the Villarreal declaration, which (1) explains the methodology by which the RLS database was populated from deposit account records maintained by IndyMac Bank;
(2) attaches IndyMac Bank deposit account records reflecting the deposit balance and nature of Nee's accounts at IndyMac Bank; and (3) explains all technical terms and abbreviations used both in the RLS and the IndyMac Bank source information. It is clear from the Villarreal declaration that this source information is data upon which the FDIC indirectly relied in reaching its insurance determination.
C. Whether the FDIC Properly Determined Plaintiff's Deposit Insurance
38. The FDIC's deposit insurance determinations are governed by the regulations set forth in 12 C.F.R. Part 330. As noted, regulations concerning the recognition of deposit ownership and fiduciary relationships state that, except in circumstances not relevant here, when "determining the amount of insurance available to each depositor, the FDIC shall presume that deposited funds are actually owned in the manner indicated on the deposit account records of the insured depository institution." 12 C.F.R. § 330.5(a)(1). See also Villafane-Neriz v. F.D.I.C., 75 F.3d 727, 731 (1st Cir. 1996) (holding that the FDIC "is entitled to rely exclusively on the account records of the failed institution," and that "while ownership under state law is one prerequisite for insurance coverage, the deposit account records are controlling"). "Deposit account records" include "account ledgers, signature cards, certificates of deposit, passbooks, corporate resolutions authorizing accounts in the possession of the insured depository institution and other books and records of the insured depository institution, including records maintained by computer, which relate to the insured depository institution's deposit taking function." 12 C.F.R. § 330.1(e). Under this definition, IndyMac Bank's computerized data was a deposit account record on which the FDIC was entitled to rely.
39. At the time IndyMac closed, revocable trust accounts were insured up to $100,000.00 per beneficiary if certain conditions were met. First, the title of the account had to reflect that the funds were held pursuant to a formal revocable trust created by an owner or grantor. The owner or grantor was required to retain ownership of the account during his or her life. 12 C.F.R. § 330.10(f)(1), (4) (2008), 69 Fed. Reg. 2829-30 (Jan. 21, 2004) (stating that "revocable trust accounts held in connection with a formal revocable trust created by an owner/grantor and over which the owner/grantor retains ownership during his or her lifetime," qualify for coverage if "the title of the account . . . reflect[s] that the funds in the account are held pursuant to a formal revocable trust"). Second, while the beneficiaries need not be identified by name in the deposit account records, they must be "qualifying" beneficiaries. The "owner's spouse, child/children, grandchild/grandchildren, parent/parents, brother/brothers or sister/sisters" are "qualifying beneficiaries." 12 C.F.R. § 330.10(a) (2008), 64 Fed. Reg. 15657 (Apr. 1, 1999).*fn55
40. While the trust owner is the insured party, insurance coverage is provided for the interest of each qualifying beneficiary up to $100,000.00. 12 C.F.R. § 330.10(a) (2008), 64 Fed. Reg. 15657 (Apr. 1, 1999); 12 C.F.R. § 330.10(f)(1) (2008), 69 Fed. Reg. 2829 (Jan. 21, 2004).
41. Stated differently, the FDIC insured each grantor up to $100,000.00 for the interest of each qualifying beneficiary. If each grantor held an amount for the benefit of the same qualifying beneficiary, those amounts were separately insured. 12 C.F.R. § 330.10(d) (2008), 63 Fed. Reg. 25760-61 (May 11, 1998); Advisory Opinion FDIC-05-05, Question Regarding Deposit Insurance for a "Spousal Revocable Living Trust," 2005 WL 2979649, *1-2 (Sept. 12, 2005) ("Under this rule, the FDIC would assume . . . that the two grantors . . . have contributed equal amounts. . . . The amount contributed by each grantor for each 'qualifying beneficiary' would be insured separately").
42. A qualifying joint account is insured separately from an individually owned or single ownership deposit account maintained by the co-owners. A qualifying joint account in the name of both husband and wife at the time IndyMac Bank failed was insured up to $200,000.00 irrespective of any funds deposited in accounts titled in their individual names. 12 C.F.R. § 330.9(a) ("Qualifying joint accounts in the names of both husband and wife which are comprised of community property funds shall be added together and insured up to [$200,000.00], separately from any funds deposited into accounts bearing their individual names"). A joint account qualifies for separate treatment if all co-owners are natural persons, each co-owner has personally signed a deposit account signature card, and each co-owner has equal withdrawal rights. Id., § 330.9(c).*fn56
43. If the FDIC finds that the bank records it reviews clearly and unambiguously reflect the ownership of a depositor's accounts, it must rely on those records even if they are erroneous or the product of unauthorized activity. 12 C.F.R. § 330.5(a)(1); Raine v. Reed, 14 F.3d 280, 283-84 (5th Cir.1994) (nothing that "[e]ven where the bank itself has committed a mistake," the FDIC may rely on clear records to determine if a deposit is insured); In re Collins Securities Corp., 998 F.2d 551, 555 (8th Cir. 1993) (explaining that the FDIC can rely on bank records, even if they are wrong, because "[d]eposit insurance protects depositors from loss due to the bank's insolvency, not loss from the bank's pre-insolvency mistake"); see also Villafane-Neriz, 75 F.3d at 733 (collecting cases).
44. If the deposit records are clear and unambiguous, the alleged absence of a specific document in the records of the failed bank has no probative value; the governing law and regulations allow for consideration only of bank records in existence at the time of the bank's closure. See 12 C.F.R. § 330.5(a)(1) ("If the FDIC, in its sole discretion, determines that the deposit account records of the insured depository institution are clear and unambiguous, those records shall be considered binding on the depositor, and the FDIC shall consider no other records on the manner in which the funds are owned"); see also Villafane-Neriz, 75 F.3d at 731-32 (1st Cir. 1996) (stating that the FDIC "is entitled to rely exclusively on the account records of the failed institution"); Nimon v. Resolution Trust Corp., 975 F.2d 240, 246 (5th Cir. 1992) (stating that where "the account records are clear and unambiguous, their statement of the capacity in which funds are owned is conclusive").
45. Nee challenges the FDIC's determination that she is the sole owner of Account No. 1302, asserting that a signature card for the account has not been located and produced by the FDIC.*fn57 The FDIC conducted a diligent search for the signature card in the records of One West Bank, the successor to IndyMac Federal Bank, F.S.B. and IndyMac Bank, F.S.B., but was unable to find it. Because the records that did exist were clear and unambiguous, the FDIC was required to rely on them even if they were wrong or incomplete. See Raine, 14 F.3d at 283-84 (noting that "[e]ven where the bank itself has committed a mistake" the FDIC may rely on clear records to determine if a deposit is insured); In re Collins Securities Corp., 998 F.2d at 555.
46. Consequently, the FDIC's decision that Nee was the sole owner of Account No. XXXXXX1302 was not arbitrary or capricious or otherwise not in accordance with the law. and was a determination made within the FDIC's sole discretion. See 12 C.F.R. § 330.5(a)(1).*fn58
D. Whether Plaintiff Is Entitled To Interest, Fees, and Costs Under the Dodd-Frank Act
47. "Section 335 of the [Dodd-Frank Act] retroactively increases the standard maximum deposit insurance amount from $100,000[.00] to $250,000[.00] for depositors in any institution for which, as here, the FDIC was appointed as receiver between January 1, 2008, and October 3, 2008." Sunflower Bank, N.A. v. F.D.I.C., No. 09-4006-SAC, 2010 WL 3913597, *2 n. 4 (D. Kan. Sept. 30, 2010) (citing Pub.L. No. 111-203).
48. Section 335 of the Dodd-Frank Act requires that "any payment on a deposit claim made by the [FDIC] as receiver. . . to a depositor above the standard maximum deposit insurance amount in effect at the time of the appointment of the [FDIC] as receiver. . . shall be deemed to be part of the net amount due to the depositor under." 12 U.S.C. § 1821(a)(l)(B); Pub. L. No. 111-203, § 335,124 Stat. 1376 (July 21, 2010) (amending 12 U.S.C. § 1821(a)(l)(E)).
49. As a result of application of the retroactive $250,000.00 insurance coverage under the Dodd-Frank Act, Nee's deposits are fully insured. On July 22, 2010, the FDIC Receiver sent Nee a check for $7,692.78, or 50% of the deposit insurance balance previously deemed uninsured.
50. Nee contends that in addition to this payment, she is entitled to interest, fees, and costs related to the retroactive deposit insurance she received as a result of the Dodd-Frank Act. Congress has not expressly waived the FDIC's immunity against prejudgment interest claims. See, e.g., Battista v. FDIC, 195 F.3d 1113, 1120 (9th Cir. 1999) ("Congress has not expressly waived the FDIC's immunity against prejudgment interest, nor does the FDIC fall under the exception of the government's waiver immunity when it operates as a commercial entity"); Sharpe v. FDIC, 126 F 3d 1147, 1154 n. 3 (9th Cir. 1997) (stating that the FDIC's sovereign immunity bars an award of prejudgment interest); Far West Federal Bankv. OTS-Director, 119 F.3d 1358, 1366-67 (9th Cir. 1997) (same); see also Spawn v. Western Bank-Westheimer, 989 F.2d 830, 838 (5th Cir. 1993) ("[W]e hold that the FDIC is immune from prejudgment interest awards in the context of erroneous deposit insurance determinations").
51. Where the FDIC acts as a deposit insurer - as it has here - it retains its sovereign immunity as a regulator and an agency of the United States, Spawn, 989 F.2d at 838,which also bars an award of attorneys' fees or other litigation costs against the FDIC. See Anderson v. United States, 127 F.3d 1190, 1191 (9th Cir. 1997) ("[S]overeign immunity bars an award of attorneys' fees against the United States unless a statute expressly authorizes such an award"); Campbell v. United States, 835 F. 2d 193, 195 (9th Cir. 1987) ("Except to the extent it has waived its immunity, the federal government is immune from claims for attorneys' fees"); Van Hoomissen v. Xerox Corp., 503 F.2d 1131, 1132 (9th Cir. 1974) ("[T]he government is exempt from liability for costs and attorneys' fees except as specifically and unequivocally authorized by Congress"); see also Cunningham v. FBI, 664 F.2d 383, 384 (3d Cir. 1981) ("In the absence of any express waiver of sovereign immunity, costs and expenses of litigation are not recoverable from the United States").
52. The Dodd-Frank Act neither waives the FDIC's sovereign immunity nor provides for the payment of interest, fees, or costs on retroactively insured deposit amounts. Consequently, Nee is not entitled to an award of interest, fees, or costs related to the retroactive deposit insurance she received.
For the reasons stated, the court finds that plaintiff is not entitled to recover further insurance for her revocable trust accounts from the FDIC, nor is she entitled to recover interest, attorneys' fees, or costs.