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CARLYLE TOWERS CONDO. ASS'N, INC. v. FDIC

October 30, 1997

CARLYLE TOWERS CONDOMINIUM ASSOCIATION, INC., VINCENT RIGOLOSI, CHRYSS CHRYSSANTHOU, RICHARD LINDE, and MARSHA SQUIRES, Individually and as representatives of the class of persons owning units at the Carlyle Towers Condominium, Plaintiffs, against THE FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as receiver for Crossland Savings, FSB, Defendant.


The opinion of the court was delivered by: BLOCK

 BLOCK, District Judge:

 Plaintiffs bring suit against the Federal Deposit Insurance Corporation ("FDIC") in its capacity as the receiver for Crossland Savings Bank, FSB ("Crossland"), which was closed by the United States Office of Thrift Supervision ("OTS") on January 24, 1992. Plaintiffs seek to hold the FDIC liable, pursuant to the Financial Institution Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub. L. No. 101-73, 103 Stat. 183, for damages pertaining to the construction of Carlyle Towers, a 370-unit condominium building (the "Towers") located in New Jersey and financed in part by Crossland. Presently before the Court is the FDIC's motion, pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, to dismiss the complaint, as amended, for lack of subject matter jurisdiction on the ground that plaintiffs' failure to file a timely proof of claim ("claim") with the FDIC precludes judicial review of the FDIC's rejection of plaintiffs' claim.

 FIRREA provides a time frame within which the creditors appearing on the books of a failed financial institution must present their claims to the FDIC. Specifically, 12 U.S.C. § 1821(d)(3)(B)(i) requires the receiver to specify, in a notice to be published and mailed to these creditors, a date "not less than 90 days after the publication of such notice" for the presentation of their claims. This date is commonly known as the "bar date," and claims received after this date "shall be disallowed" unless the claimant "did not receive notice of the appointment of the receiver in time to file such claim before such date," 12 U.S.C. § 1821(d)(5)(C)(ii)(I), and "such claim is filed in time to permit payment of such claim." 12 U.S.C. § 1821(d)(5)(C)(ii)(II). The FDIC has interpreted § 1821(d)(5)(C)(ii)(I) to allow for the administrative processing by the FDIC of claims which do not accrue or are not discoverable until after the bar date, but has applied a 90-day filing requirement for such "post-bar date" claims. Plaintiffs contend that there is no statutory warrant for such a time requirement, and their post-bar date claim must therefore be allowed so long as it was filed in time to permit payment. The Court disagrees, and accordingly grants the FDIC's motion to dismiss plaintiffs' untimely claim.

 I. BACKGROUND

 Plaintiffs bring suit for damages relating to alleged defects in the design and construction of the Towers. Among the defects alleged in their amended complaint are: "water infiltration, . . . [problems in] the domestic hot water supply, the HVAC and smoke evacuation systems, sink holes . . . sinking floor tile, freezing pipes, disruptive elevator noises . . . [and] missing fire stopping in chaseways . . . ." Amended Complaint at P 29. Plaintiffs seek to hold Crossland and, perforce, the FDIC, liable for these defects because in April 1991, Crossland entered into a certain agreement with the original developers of the Towers, apparently after the developers failed to make payments on financing supplied by Crossland, whereby Crossland succeeded to the Towers' developers' rights and liabilities in respect to that building project.

 The FDIC established a May 8, 1992 bar date. Plaintiffs allege in their amended complaint that their claim was not filed by that date because the defects in construction and design underlying their lawsuit were not discovered until after that date. By letter dated August 21, 1995, the FDIC wrote to plaintiffs that "the Receiver has discovered that you may have a [post-bar date] claim." Tracking the language of the statutory provision for the consideration of post-bar date claims, the letter instructed the claimants that "the Receiver may consider a claim filed after the bar date if it is shown that the claimant did not receive notice of the appointment of the Receiver in time to file such claim before the bar date, and such claim is filed in time to permit payment of the claim." The letter also stated, however, that the claim had to be received by the receiver "no later than 90 days from the date or postmark of this letter, whichever is later." The contents of the letter, including the 90-day time constraint, derived from one of a series of form letters which the FDIC characterizes as its "internal manual procedures." Plaintiffs did not submit their claim until February 6, 1996, and offer no excuse why they could not have done so within the 90-day period established by the FDIC. By letter dated March 19, 1996, the FDIC rejected plaintiffs' claim as untimely. This lawsuit followed.

 II. DISCUSSION

 A. Standard Applied to Motion to Dismiss for Lack of Subject Matter Jurisdiction

 All claims cognizable under FIRREA must be administratively reviewed as a jurisdictional precondition to judicial relief. 12 U.S.C. § 1821(d)(13)(D); see Resolution Trust Corp. v. Elman, 949 F.2d 624, 627 (2d Cir. 1991); Heno, 20 F.3d 1204, 1208-10. Plaintiffs contend that they need not here exhaust the FDIC's administrative review process for the following reasons: (1) post-bar date claims are not embraced by FIRREA; (2) neither the FDIC's administrative review of post-bar date claims nor its imposition of a 90-day limit on such claims has been memorialized by regulation; and (3) the FDIC's letter notice was ambiguous. In any event, plaintiffs contend that even if their post-bar date claim is subject to administrative review, the time limitation imposed by the FDIC is impermissible.

 It is well settled that "the burden of proving jurisdiction is on the party asserting it." Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996) (quoting Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994)). "When deciding whether to dismiss for lack of subject matter jurisdiction, the court must accept the material allegations of the complaint as true." Djordjevic v. Postmaster General, U.S. Postal Serv., 911 F. Supp. 72, 74 (E.D.N.Y. 1996) (quoting Atlantic Mut. Ins. Co. v. Balfour Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992)). However, unlike a Rule 12(b)(6) motion, the Court may consider "any material in the record," in conjunction with the complaint, when deciding a motion under Rule 12(b)(1). See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997). Although the FDIC argues that plaintiffs' claims arose prior to the bar date, it has submitted no affidavits or evidence to support this contention. The Court will therefore accept as true for purposes of the motion that plaintiffs' claims accrued after the bar date.

 B. Plaintiffs' Claim is Subject to Administrative Review

 In Stamm v. Paul, 121 F.3d 635 (11th Cir. 1997), the Eleventh Circuit Court of Appeals specifically held that post-bar date claims are not exempted from administrative review. There, the precise issue was whether such claims are cognizable under § 1821(d)(5)(C)(ii), and hence subject to administrative review, even if the claimant had notice of the appointment of the receiver before the expiration of the initial bar date. As previously noted, § 1821(d)(5)(C)(ii) provides that post-bar date claims may be allowed by the agency if "the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date." § 1821(d)(5)(C)(ii)(I). The Stamm court gave its approbation to the interpretation by the Resolution Trust Corporation ("RTC"), which agency Congress has empowered (in addition to the FDIC) to administer FIRREA's claim procedures, 12 U.S.C. § 1441a(b)(4), that such post-bar date claims are cognizable because the phrase "in time to file such claim" means "at a time when [the claimant] could have filed that claim." Id. at 641 (emphasis added). The Stamm court agreed with the RTC, therefore, that as cognizable claims, they are subject to administrative review.

 In so holding, the Eleventh Circuit registered its agreement with the First Circuit, which had previously come to the same conclusion in respect to the FDIC's identical interpretation of § 1821(d)(5)(C)(ii). Heno v. Federal Deposit Ins. Corp., 20 F.3d 1204, 1208-10 (1st Cir. 1994). Notably, the Stamm and Heno courts gave their approbation to the agencies' interpretations of FIRREA despite the fact that ...


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