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CAPITAL DATA CORP. v. CAPITAL NAT. BANK

November 7, 1991

CAPITAL DATA CORPORATION, PLAINTIFF,
v.
CAPITAL NATIONAL BANK, NEW YORK CAPITAL BANK, N.A., FEDERAL DEPOSIT INSURANCE CORPORATION, AND RESOLUTION TRUST CORPORATION, AND "JOHN DOE AND JANE DOE NOS. 1-10 INCLUSIVE," THE LAST TEN NAMES BEING FICTITIOUS AND UNKNOWN TO PLAINTIFF, THE PERSON OR PARTIES INTENDED BEING THE TENANTS, OCCUPANTS, PERSONS OR CORPORATIONS, IF ANY, DESCRIBED IN THE COMPLAINT HEREIN, DEFENDANTS.



The opinion of the court was delivered by: Sand, District Judge.

OPINION

This case involves Capital Data Corporation's ("CDC") efforts to foreclose on a mortgage it was allegedly given by Capital National Bank ("CNB") as collateral to secure CNB's performance on a stock purchase agreement. Because CNB was declared insolvent in July 1990, the Federal Deposit Insurance Corporation ("FDIC") and Resolution Trust Corporation ("RTC") were named as defendants in the action. On the consent of both plaintiff and defendant FDIC, the RTC has been dismissed as a party. The FDIC, however, has brought a motion for summary judgment to dismiss the complaint and to grant its counterclaim based on a notice of pendency filed by CDC.

The FDIC's summary judgment motion proposes four grounds for granting summary judgment to dismiss the complaint: (1) that based on the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. § 1821(d), the Court lacks subject matter jurisdiction over CDC's claim; (2) that the mortgage does not meet the statutory requirements enumerated in 12 U.S.C. § 1823(e); (3) that the mortgage is unenforceable because the contract upon which it was based has been properly repudiated; and (4) that a foreclosure remedy is barred by 12 U.S.C. § 1825(b). In addition, the FDIC seeks summary judgment on its counterclaim pursuant to New York Real Property Actions and Proceedings Law ("RPAPL") section 1521 (McKinney's 1981).*fn1 Because this Court agrees that it lacks subject matter jurisdiction under FIRREA for the reasons set forth below, the FDIC's motion for summary judgment dismissing the complaint and for relief on its counterclaim is granted.

I. BACKGROUND

CDC's claim arises out of extended business correspondence between CDC and CNB, the relevant features of which are summarized below. On December 31, 1986, CDC and CNB entered into an agreement (the "1986 Agreement") which addressed several business matters. The 1986 Agreement provided that CDC would perform data processing services for CNB, that CDC would pay CNB $1,700,000 for certain equipment and software licenses, and that CNB would retain an option (the "Option") to purchase all of CDC's stock at any time after January 1, 1988 at a price to be agreed upon. Affidavit of Daniel G. Gurfein (July 31, 1991) (hereinafter "Gurfein Aff."), Exh. A. By letter agreement dated July 6, 1989 (the "1989 Agreement"), CNB acknowledged that it had exercised the Option at some point previously and that a March 30, 1989 Certificate of Value had fixed the purchase price of the CDC stock at $1,700,000. While CNB agreed to pay that sum at an unspecified future date, it also stated that it was "not presently able to do so." Gurfein Aff., Exh. B; Affidavit of Anthony F. Bellucci (Apr. 16, 1991) (hereinafter "Bellucci Aff."), Exh. 2. On January 12, 1990, CNB executed a mortgage (the "Mortgage") giving CDC a $1,700,000 lien on the building in which CNB conducted its business (the "Premises"). Signed by CNB's Chairman, Renan Mazorra, the Mortgage specifically stated that it was "given as collateral security to guarantee that [CNB] will exercise its option."*fn2 Gurfein Aff., Exh. C; Bellucci Aff., Exh. 3. As a February 22, 1990 letter from CDC's Chairman reflects, the Mortgage was not to be recorded unless problems with the stock purchase agreement arose. See Bellucci Aff., Exh. 7.

On July 6, 1990, the Office of the Comptroller of the Currency declared CNB insolvent and appointed the FDIC as receiver. On July 12, 1990, pursuant to its statutory obligations, the FDIC mailed CDC a notice of CNB's insolvency and of CDC's right to file its claims against CNB, with proof, by October 16, 1990.*fn3 See Affidavit of Frank J. Recca (July 12, 1990) (hereinafter "Recca Aff.") (attached as Exhibit A to Affidavit of Marc E. Wieman in Further Support of the FDIC's and the RTC's Motions for Summary Judgment (October 10, 1991)). In addition, on July 13, 1990, August 12, 1990 and September 12, 1990, the FDIC published a general notice to creditors in the New York Times, alerting them to the insolvency and to an October 10, 1990 deadline for filing claims against CNB. Gurfein Aff., Exh. E. The FDIC also examined CNB's records, which failed to disclose the existence of the Mortgage, the notice of exercise of the Option, or CNB's ownership of CDC stock. Affidavit of Louis Vitolo ¶ 3 (Feb. 8, 1991).

On August 10 and August 15, 1990, the FDIC mailed letters to CDC, informing CDC that it was exercising its right as receiver to disaffirm certain contracts and leases to which CNB was a party. The letters again notified CDC of its right to file a claim based on the disaffirmances, and included an address at which claims could be filed. Gurfein Aff., Exh. F; Bellucci Aff., Exh. 10. Shortly thereafter, on August 21, 1990, CDC recorded the Mortgage. Gurfein Aff., Exh. C; Bellucci Aff., Exh. 3.

On August 31, 1990, Javier Garcia, the Chairman of CDC, sent a letter to Luciano Garcia, the Liquidator in Charge of the CNB insolvency.*fn4 This letter, which CDC characterizes as a formal claim for the $1,700,000 owed on the agreement to purchase its stock, "implores" the liquidator to include CDC in "whatever type of negotiations" the FDIC might have regarding the building where CNB conducted its business. Bellucci Aff., Exh. 8. On September 25, 1990, the FDIC sent CDC another letter, stating that it was disaffirming CDC's data processing contract with CNB and advising CDC of the procedure for filing a claim based on that disaffirmance. Bellucci Aff., Exh. 8. On November 6, 1990, CDC's Chairman (Javier Garcia) sent another letter to the FDIC liquidator (Luciano Garcia), explaining that he was enclosing certain "payments" that he, his brother, and CDC owed the FDIC for a "line of credit" they once had with CNB. Bellucci Aff., Exh. 11. Despite the apparent lack of connection between the FDIC's letter of September 25, 1990 and either of Javier Garcia's letters, CDC characterizes the November 6, 1990 letter as a "supplementation" of its August 31, 1990 "claim" based upon the Mortgage. See CDC's Memorandum of Law in Opposition to FDIC's and RTC's Motions for Summary Judgment at 4.

On November 23, 1990, CDC filed a notice of pendency on the Premises and initiated this mortgage foreclosure action in the New York State Supreme Court, New York County. In December 1990, the FDIC removed the action to this Court pursuant to 28 U.S.C. § 1446 and 12 U.S.C. § 1819(b)(2)(B).

On December 19, 1990, more than two months after the FDIC's October 16, 1990 filing deadline, CDC submitted a formal claim based on the Mortgage with the FDIC. Gurfein Aff., Exh. H. On January 28, 1991, the FDIC notified CDC that its claim had been disallowed, denied, and rejected on the basis of its untimeliness. Gurfein Aff., Exh. J.

II. DISCUSSION

In deciding defendant's motion for summary judgment, this Court must examine "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," to determine whether there exists a "genuine issue as to any material fact" or whether the moving party is entitled to a judgment "as a matter of law." Fed.R.Civ.P. 56(c). The Court's role in such a context is not to resolve disputed factual issues, but rather to determine whether the record, taken as a whole, supports any issues that require a trial. See Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Nevertheless, the very language of the summary judgment standard provides that "the mere existence of some alleged factual dispute will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in the original). Materiality is determined by reference to the substantive law applicable to the case at hand, and factual disputes irrelevant to its outcome "will not be counted." Id. at 248, 106 S.Ct. at 2510.

The above guidance is important in this case because CDC contests a number of the FDIC's factual allegations. CDC disputes the FDIC's claim that it mailed its July 12, 1990 Notice to Creditors (the "Notice"), and suggests that it should not be bound by the FDIC's October 16, 1990 deadline for submitting claims against CNB. See Affidavit of Javier Garcia in Opposition to Summary Judgment Motion ¶ 4 (October 24, 1991) (hereinafter "Garcia Aff."). In addition, CDC alleges that even had it received the Notice, neither it nor any of the FDIC's subsequent letters applied to the Mortgage at issue. Id. ¶¶ 9, 13, 14, 20. Finally, CDC challenges the FDIC's contention that it did not file a claim until December 1990, arguing that its August 31, 1990 and November 6, 1990 letters served as claims based on the Mortgage. See CDC's Memorandum of Law in Opposition to Motion for Summary Judgment at 4. As the discussion below makes clear, while these factual issues may be "material" to the question of whether we have subject matter jurisdiction under FIRREA, they are not sufficiently "genuine" to require resolution by trial. Summary judgment for the FDIC must therefore be entered accordingly.

A. Lack of Subject Matter Jurisdiction Under FIRREA.

As its first basis for summary judgment, the FDIC maintains that this Court lacks subject matter jurisdiction to review plaintiff's claim. Specifically, the FDIC argues that plaintiff has forfeited its right to judicial review by failing to adhere to the mandatory ...


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