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Saffer v. JP Morgan Chase Bank, N.A.

California Court of Appeals, Second District, Eighth Division

April 29, 2014

GREGORY SAFFER, Plaintiff and Appellant,
JP MORGAN CHASE BANK , N.A., et al., Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC415844 Michael L. Stern, Judge.

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Shegerian & Associates and Carney R. Shegerian for Plaintiff and Appellant.

Jackson Lewis, Mark R. Attwood and Sherry L. Swieca for Defendants and Respondents.




Plaintiff and appellant Gregory Saffer worked for Washington Mutual Bank (WaMu) between May 2007 and January 2008. In September 2008, WaMu failed. In short order, the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver for the bank, and JP Morgan Chase Bank, N.A.

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(JPMC) purchased some of WaMu’s assets and liabilities. The FDIC published notices informing creditors that claims against WaMu had to be submitted to the FDIC by the end of December 2008. In June 2009, Saffer filed suit against WaMu, “Chase Manhattan Bank, ” his former supervisor at WaMu, and WaMu’s former CEO. The suit alleged the defendants constructively discharged Saffer in violation of public policy and in breach of express or implied employment contracts. JPMC successfully compelled the suit to arbitration. Once in the arbitral forum, JPMC moved to dismiss the action. JPMC asserted neither the arbitrator nor any court had subject matter jurisdiction to adjudicate Saffer’s claims because he failed to exhaust his administrative remedies pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. § 1811, et seq. (FIRREA).[1] The arbitrator agreed and dismissed the case. The trial court subsequently confirmed the arbitration award.

Saffer now appeals the order compelling binding arbitration and the order confirming the arbitration award. Saffer contends the arbitration agreement was unenforceable. He also argues the arbitrator’s award should have been vacated because the arbitrator substantially prejudiced his rights by denying him discovery, and exceeded her powers by dismissing the case without a hearing on the merits. JPMC contends no court, including this court, has subject matter jurisdiction to entertain Saffer’s claims, and his complaint should accordingly be dismissed.

We conclude Saffer’s failure to timely comply with the mandatory administrative exhaustion requirements of FIRREA created a jurisdictional bar to his claims. For that reason we vacate the judgment and remand to the trial court with directions to enter an order of dismissal against Saffer for lack of subject matter jurisdiction.


Saffer began working for WaMu in late May 2007 as a mortgage loan consultant. At some point near the beginning of his employment, Saffer signed a “Binding Arbitration Agreement.” In the agreement, Saffer and WaMu agreed “that arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to [his] employment.”

In January 2008, Saffer’s employment with WaMu ended.

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In September 2008, the Office of Thrift Supervision seized WaMu and appointed the FDIC as the bank’s receiver. At essentially the same time, the FDIC sold certain of WaMu’s assets and liabilities to JPMC.[2]

On October 1 and October 31, 2008, the FDIC published notices in the Wall Street Journal informing creditors of WaMu that any claims against WaMu had to be submitted in writing to the FDIC by December 30, 2008, the “bar date.” The notices warned: “Under federal law, with certain limited exceptions, failure to file such claims by the Bar Date will result in disallowance by the Receiver, the disallowance will be final, and further rights or remedies with regard to the claims will be barred. 12 U.S.C. Section 1821 (d)(5)(C)(d)(6).”

In June 2009, Saffer filed suit against WaMu, “Chase Manhattan Bank, ” the former CEO of WaMu, and his former WaMu supervisor, Susan Wolf. Saffer asserted claims for wrongful termination in violation of public policy; breach of express and implied-in-fact contracts not to terminate employment without good cause; breach of the implied covenant of good faith and fair dealing; failure to pay wages in violation of the Labor Code and Industrial Welfare Commission Work Orders; false representations and fraudulent inducement; and negligent hiring, retention, and supervision. The complaint alleged Saffer refused to engage in “fraudulent schemes aimed to defraud clients, ” WaMu and Chase Manhattan Bank constructively discharged him in retaliation, and all defendants negligently hired, retained, or supervised employees who illegally retaliated against him. The complaint further alleged WaMu and Chase Manhattan Bank breached an oral agreement not to terminate him except for good cause, and did not pay all wages due to him. The complaint asserted the defendants, including Wolf, knowingly made false representations to him about WaMu’s financial position to induce him to accept employment with WaMu.

In July 2009, JPMC answered the complaint, identifying itself as “JP Morgan Chase Bank, N.A., as acquirer of certain assets and liabilities of Washington Mutual Bank from the FDIC acting as receiver.” Wolf subsequently also answered the complaint.[3] In October 2009, JPMC filed a petition to compel arbitration. Saffer opposed the petition, arguing he was fraudulently induced to sign the agreement, and it was unenforceable due to procedural and substantive unconscionability. Following an evidentiary hearing, the trial court granted the petition to compel arbitration in April 2010.

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The parties proceeded to arbitration under the auspices of the American Arbitration Association. The record does not reveal what took place over the next two years. In June 2012, JPMC informed the arbitrator and Saffer it would move to dismiss the complaint for lack of subject matter jurisdiction, based on FIRREA. In response, Saffer noticed the deposition of JPMC’s person most knowledgeable regarding FIRREA. JPMC objected to the notice and sought a protective order preventing the deposition, which the arbitrator issued. In August 2012, JPMC moved to dismiss the complaint, arguing Saffer’s failure to exhaust administrative remedies with the FDIC in accordance with FIRREA barred him from pursuing his claims in the arbitration or in any court.

In September 2012, Saffer filed a claim with the FDIC. He also opposed JPMC’s motion to dismiss, arguing FIRREA was not applicable because he never received proper notice of the FDIC’s receivership of WaMu. He further contended the time to file a claim with the FDIC should be equitably tolled.

In November 2012, the arbitrator concluded the court and the arbitrator lacked subject matter jurisdiction to hear Saffer’s claims and dismissed the case. Saffer subsequently filed a motion to vacate the arbitration ruling in the superior court. Saffer contended his rights were substantially prejudiced by the arbitrator’s refusal to allow discovery to determine whether the FDIC could have resolved his claims. He further argued the arbitrator should have waited until the FDIC issued a response to his claim. JPMC opposed the motion, arguing that neither the arbitrator nor the courts had jurisdiction to entertain Saffer’s claims. However, instead of asserting the trial court should dismiss the action, JPMC contended there was no basis to vacate or review the arbitrator’s award and it should be confirmed. In December 2012, the trial court confirmed the arbitrator’s award. This appeal followed.[4]


I. The Case Must Be Dismissed for Lack of Subject Matter Jurisdiction

On appeal, Saffer contends the trial court erred in granting JPMC’s petition to compel arbitration and subsequently in confirming the arbitration award.

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JPMC disagrees, but also contends neither the trial court, nor this court has subject matter jurisdiction to entertain any aspect of Saffer’s claims. Subject matter jurisdiction may be raised for the first time on appeal. (Totten v. Hill (2007) 154 Cal.App.4th 40, 46 [64 Cal.Rptr.3d 357] (Totten).) In addition, an alleged lack of subject matter jurisdiction must be addressed whenever it comes to a court’s attention. (In re Gloria A. (2013) 213 Cal.App.4th 476, 481 [152 Cal.Rptr.3d 550]; Totten, supra, at p. 46.) A respondent may raise the issue in a respondent’s brief. (Totten, supra, at pp. 46-47.)

Saffer’s first argument is that the trial court erred in compelling him to arbitrate his claims. However, if indeed the courts of this state lack subject matter jurisdiction over Saffer’s claims, any issues regarding arbitrability are moot; even if the arbitration agreement was unenforceable, the trial court would still lack the ability to adjudicate his claims. Thus, we independently consider JPMC’s jurisdictional challenge.[5] We conclude the action must be dismissed due to a lack of subject matter jurisdiction, resulting from Saffer’s failure to timely exhaust his administrative remedies with the FDIC as required by FIRREA.

A. FIRREA Background

Under FIRREA, the FDIC has “authority to ‘act as receiver or conservator of a failed institution for the protection of depositors and creditors.’ [Citation.] [FIRREA] provides detailed procedures to allow the FDIC to consider certain claims against the receivership estate, see 12 U.S.C. § 1821, (d)(3)-(10), ‘to ensure that the assets of a failed institution are distributed fairly and promptly among those with valid claims against the institution, and to expeditiously wind up the affairs of failed banks, ’ [Citation]. [¶] FIRREA requires that a plaintiff exhaust these administrative remedies with the FDIC before filing certain claims.” (Benson v. JPMorgan ...

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