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Shaw v. Bank of America

United States District Court, S.D. California

November 7, 2017

NORMAN SHAW, Plaintiff,



         Pending before the Court is Defendant U.S. Bank, N.A.'s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). The motion came on for hearing on November 3, 2017. Plaintiff appeared on behalf of himself, and Bryant Delgadillo appeared on behalf of Defendant. After considering the parties' briefs, oral argument, the relevant legal authority, and the record, Defendant's motion is granted.

         I. BACKGROUND

         In July 2006, Plaintiff refinanced his residence located at 308 Corto Street in Solana Beach, California (“Property”) by borrowing $1.26 million from Washington Mutual Bank (“WaMu”), secured by a deed of trust on the Property. (First Amended Complaint (“FAC”) ¶¶ 6-7.) Plaintiff alleges WaMu sent a defective notice of the right to cancel in violation of the Truth in Lending Act (“TILA”) and Regulation Z. (Id. ¶ 20.) On June 26, 2009, Plaintiff sent a notice of rescission to WaMu, Defendant, and other financial institutions on the ground that WaMu failed to satisfy TILA's disclosure requirements. (Id. ¶ 10.) Although Defendant acknowledged receipt of the notice, it has not rescinded the loan. (Id. ¶ 11.)

         At the time Plaintiff sent the notice of rescission, the Office of Thrift Supervision had already closed WaMu. On September 25, 2008, WaMu was placed into the receivership of the Federal Deposit Insurance Corporation (“FDIC”). JPMorgan Chase Bank, N.A. (“Chase”) entered into a Purchase and Assumption Agreement with the FDIC. Pursuant to the Agreement, Chase acquired WaMu's assets. Defendant is the designated trustee of the WaMu Mortgage Pass-Through Certificate Series 2006-AR11, which includes Plaintiff's loan. (Mem. of P. & A. in Supp. of Mot. at 5; Mem. of P. & A. in Opp'n to Mot. at 2.)

         In March 2009, after Plaintiff defaulted on the loan, a notice of default and election to sell was recorded, with a foreclosure date of July 14, 2009. (Declaration of Norman Shaw (“Decl. Shaw”) ¶ 8.) Facing foreclosure, Plaintiff filed for Chapter 11 bankruptcy on July 9, 2009. (Id. ¶¶ 9, 21.)

         On May 18, 2012, Plaintiff filed a complaint against Defendant, seeking rescission of the loan. On September 6, 2013, the Court issued an order conditionally denying Defendant's motion for summary judgment. The denial was contingent on Plaintiff complying with his obligations to tender by November 13, 2013. When Plaintiff failed to tender, the Court dismissed the action on December 10, 2013. On January 6, 2014, Plaintiff filed a notice of appeal.

         On appeal, Defendant raised for the first time the issue of subject matter jurisdiction. On June 6, 2017, the Ninth Circuit remanded the action to this Court with instructions to conduct fact-finding and to determine whether Plaintiff's rescission claim under TILA is barred by the jurisdiction-stripping provisions of the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”). Thereafter, Defendant filed the present motion to dismiss for lack of subject matter jurisdiction.


         Federal courts are courts of limited jurisdiction. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). “A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock W., Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989). Lack of subject matter jurisdiction may be raised at any time by any party or by the court. See Fed. R. Civ. P. 12(h). “A party invoking the federal court's jurisdiction has the burden of proving the actual existence of subject matter jurisdiction.” Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996). “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed.R.Civ.P. 12(h)(3).

         “A Rule 12(b)(1) jurisdictional attack may be facial or factual .” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A “facial” attack accepts the truth of the plaintiff's allegations but asserts that they “are insufficient on their face to invoke federal jurisdiction.” Id. In resolving a facial attack, the court, “[a]ccepting the plaintiff's allegations as true and drawing all reasonable inferences in the plaintiff's favor, … determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (citing Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013)). In contrast, a “factual” attack “contests the truth of the plaintiff's factual allegations, usually by introducing evidence outside the pleadings.” Id. (citations omitted). In resolving a factual attack, the court “may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment.” Meyer, 373 F.3d at 1039 (citing Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003)).

         III. DISCUSSION[1]

         Defendant argues the court lacks subject matter jurisdiction over Plaintiff's TILA claim pursuant to the jurisdiction-stripping provisions of FIRREA. Defendant contends the allegations contained in the FAC are insufficient on their face to invoke federal jurisdiction because Plaintiff has not alleged he has exhausted his claim through FIRREA's administrative claims process. Defendant also argues Plaintiff cannot satisfy his burden of establishing subject matter jurisdiction because it is undisputed he failed to file the required administrative claim with the FDIC. Defendant therefore makes both facial and factual jurisdictional challenges.

         Congress enacted FIRREA “in an effort to prevent the collapse of the [savings and loan] industry” in the late 1980s. Wash. Mut. Inc. v. United States, 636 F.3d 1207, 1211 (9th Cir. 2011). In order “to enable the federal government to respond swiftly and effectively to the declining financial condition of the nation's banks and savings institutions, ” FIRREA granted “the FDIC, as receiver, broad powers to determine claims asserted against failed banks.” Henderson v. Bank of New Eng., 986 F.2d 319, 320 (9th Cir. 1993). To maximize the FDIC's ability to fulfill its role as claim adjudicator, FIRREA ‚Äúprovides ...

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