David Williams v. Fdic

Ninth Circuit

David Williams v. Fdic

492 F. App'x 796

CourtCourt of Appeals for the Ninth Circuit

DecidedSeptember 11, 2012

Docket11-35812

StatusUnpublished

This text of 492 F. App'x 796 (David Williams v. Fdic) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

David Williams v. Fdic, 492 F. App'x 796 (9th Cir. 2012).

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Opinion

MEMORANDUM **

The plaintiffs are a group of former employees of Washington Mutual (“WAMU”), a federal thrift institution that failed in 2008 and was seized by the Federal Deposit Insurance Corporation (“FDIC”) pursuant to 12 U.S.C. § 1464(d)(2)(A). The plaintiffs seek to recover from the FDIC payments allegedly due them under a provision of their employment contracts and triggered by a change of ownership of the company. The controlling federal regulation, however, is 12 C.F.R. § 563.39(b)(4). Under that regulation, when the FDIC takes over as receiver “all obligations under the [employment] contract shall terminate as of the date of default” except for any “vested rights of the contracting parties[.]” 12 C.F.R. § 563.39(b)(4). For a right to vest, the employee must have had an enforceable right to a claim of immediate payment before the Office of Thrift Supervision (“OTS”) appointed the FDIC as receiver. Modzelewski v. RTC, 14 F.3d 1374, 1378-79 (9th Cir.1994).

WAMU failed on September 25, 2008 when the OTS declared that WAMU was in an “unsafe and unsound condition” and appointed the FDIC as receiver. The plaintiffs’ contractual rights terminated by operation of law on that date. Their rights to compensation under the employment contracts would only be enforceable if they had vested prior to failure, which required an actual sale of WAMU’s assets prior to the FDIC becoming receiver. Transfer of WAMU’s assets did not occur until after the FDIC became receiver.

Plaintiffs argue that the FDIC should not be able to rely on 12 C.F.R. § 563.39(b) because it did not raise the regulation as a defense in the FDIC’s administrative claims process. After the FDIC denied their claims, the plaintiffs filed this action in the district court pursuant to 12 U.S.C. § 1821(d)(6)(A). These *798 proceedings at the district court are de novo. See 12 U.S.C. § 1821(d)(5)(E), (6), (7). The district court proceeding is independent of the administrative claims process. It is irrelevant that the FDIC failed to raise 12 C.F.R. § 563.89(b) as a defense until the district court proceeding.

AFFIRMED.

**

This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.

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MEMORANDUM **

The plaintiffs are a group of former employees of Washington Mutual (“WAMU”), a federal thrift institution that failed in 2008 and was seized by the Federal Deposit Insurance Corporation (“FDIC”) pursuant to 12 U.S.C. § 1464(d)(2)(A). The plaintiffs seek to recover from the FDIC payments allegedly due them under a provision of their employment contracts and triggered by a change of ownership of the company. The controlling federal regulation, however, is 12 C.F.R. § 563.39(b)(4). Under that regulation, when the FDIC takes over as receiver “all obligations under the [employment] contract shall terminate as of the date of default” except for any “vested rights of the contracting parties[.]” 12 C.F.R. § 563.39(b)(4). For a right to vest, the employee must have had an enforceable right to a claim of immediate payment before the Office of Thrift Supervision (“OTS”) appointed the FDIC as receiver. Modzelewski v. RTC, 14 F.3d 1374, 1378-79 (9th Cir.1994).

WAMU failed on September 25, 2008 when the OTS declared that WAMU was in an “unsafe and unsound condition” and appointed the FDIC as receiver. The plaintiffs’ contractual rights terminated by operation of law on that date. Their rights to compensation under the employment contracts would only be enforceable if they had vested prior to failure, which required an actual sale of WAMU’s assets prior to the FDIC becoming receiver. Transfer of WAMU’s assets did not occur until after the FDIC became receiver.

Plaintiffs argue that the FDIC should not be able to rely on 12 C.F.R. § 563.39(b) because it did not raise the regulation as a defense in the FDIC’s administrative claims process. After the FDIC denied their claims, the plaintiffs filed this action in the district court pursuant to 12 U.S.C. § 1821(d)(6)(A). These *798 proceedings at the district court are de novo. See 12 U.S.C. § 1821(d)(5)(E), (6), (7). The district court proceeding is independent of the administrative claims process. It is irrelevant that the FDIC failed to raise 12 C.F.R. § 563.89(b) as a defense until the district court proceeding.

AFFIRMED.

**

This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.

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492 F. App'x 796, Counsel Stack Legal Research, https://law.counselstack.com/opinion/david-williams-v-fdic-ca9-2012.

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