DiGeronimo v. FDIC CV-97-117-JD 03/23/98 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Elizabeth Ann DiGeronimo
v. Civil No. 97-117-JD
Federal Deposit Insurance Corp., et a l .
O R D E R
The plaintiff, Elizabeth Ann DiGeronimo, in her capacity as
executrix of the estate of Anthony L. DiGeronimo, brought this
action seeking eguitable relief in the form of specific
performance against the Federal Deposit Insurance Corporation
("FDIC"), or alternately, against Beckley Capital Limited
Partnership ("Beckley"). Before the court now are the motions to
dismiss of the FDIC (document no. 9) and of Beckley (document no.
8) .
Background1
On August 25, 1988, Biotech Realty Trust, ("Biotech"),
executed a mortgage note (the "note") in favor of the Bank of New
England - Worcester, in the principal amount of $700,000. The
note was secured by a mortgage on Biotech's commercial building
1The facts described herein are either undisputed or alleged by the plaintiff. in Leominster, Massachusetts (the "property"). Anthony
DiGeronimo, Nunzio Lattanzio, and Robert Hakala executed personal
guaranties of Biotech's obligation under the note.
In 1991, the FDIC was appointed receiver of the Bank of New
England - Worcester, and succeeded to the bank's interest in the
note and the guaranties. The note and the guaranties were
administered on behalf of the FDIC by RECOLL Management
Corporation ("RECOLL"). Biotech and DiGeronimo negotiated with
RECOLL to either renew the note or to sell the property with a
"short payoff" of the outstanding balance on the note. RECOLL
obtained a foreclosure judgment in a Massachusetts state court
and prepared to foreclose. A release price of $292,442 was set
by RECOLL. Biotech and DiGeronimo proposed that they facilitate
the sale of the property for $450,000, and that the net proceeds
from the sale be applied to the outstanding balance on the note
in exchange for a discharge of the mortgage and the release of
the guarantors. RECOLL allegedly accepted the proposal with the
reguirement that the guarantors provide full financial
disclosures.
Biotech and DiGeronimo agreed to these additional terms and
an alleged "agreement or an accord and satisfaction" was reached
which replaced DiGeronimo's original obligation under the note
and guaranty. See Compl. at 3. The release of DiGeronimo from
2 personal liability was made an express condition of the purchase
and sale agreement with the buyer of the property. DiGeronimo
provided RECOLL with the required financial disclosure. In
February 1993, Alan Byrne, an account officer of RECOLL,
recommended that the sale go forward, that the proceeds be
applied to the balance on the note, and that DiGeronimo be
released from his personal liability under the guaranty. Final
approval of the transaction was granted on March 16, 1994,
conditioned on the FDIC's receipt of net proceeds from the sale
of $482,257. In reliance on Byrne's assurances that the
discharge and release of DiGeronimo had been approved by all
requisite authorities of RECOLL and the FDIC, and that a written
discharge and release would be provided. Biotech proceeded with
the closing and DiGeronimo paid additional consideration to reach
the FDIC's required net proceeds figure.
Despite assurances of Byrne and RECOLL's attorney Joseph
Shea that a written release would be forthcoming, DiGeronimo
never received one. On June 9, 1994, the FDIC sold the note and
DiGeronimo's guaranty to Beckley. On July 23, 1994, DiGeronimo
died testate. Elizabeth Ann DiGeronimo, his widow, was appointed
as executrix of his estate.
On April 11 or 12, 1996, Beckley filed an action against
DiGeronimo's estate seeking to recover the note deficiency under
3 DiGeronimo's 1988 written guaranty. See Beckley Capital Ltd.
Partnership v. DiGeronimo, 942 F. Supp. 728, 729 (D.N.H. 1996) .
On the plaintiff's motion for summary judgment, the court found
that Beckley's claim was time barred, and dismissed the action.
See id. at 731.
On March 13, 1997, the plaintiff filed this action seeking
an order from the court compelling the FDIC, or alternately
Beckley, to specifically perform and issue a written release on
behalf of the estate from "any and all obligations Anthony L.
DiGeronimo had under [the] Guaranty." Compl. at 1. The FDIC has
filed a motion to dismiss asserting that: (1) the court lacks
subject matter jurisdiction as the plaintiff has failed to
exhaust the receivership claims process set forth in 12 U.S.C.
§ 1821(d)(3)-(13); (2) venue is improper in the District of New
Hampshire; (3) the court lacks subject matter jurisdiction to
grant the relief sought - specific performance, pursuant to 12
U.S.C. § 1821(j); and (4) in the event the action is brought
against the FDIC as a corporation, not as a receiver, the
complaint fails to state a claim upon which relief can be
granted. See Mot. of the Def. Federal Deposit Insurance
Corporation to Dismiss ("FDIC Mot."). Beckley has also filed a
motion to dismiss, asserting that: (1) "specific performance of
a contract will not lie against a non-party to that contract;"
4 and (2) in the alternative, if the guaranty and the alleged
release contract are deemed to be part of the same agreement, the
plaintiff's action against Beckley is barred because she failed
to raise it as a compulsory counterclaim in Beckley's earlier
action against the DiGeronimo estate. See Mot. of Beckley
Capital Ltd. Partnership to Dismiss, at 2 ("Beckley Mot."). The
court will discuss these arguments seriatim.
Discussion
I. Defendant FDIC
As a preliminary issue, the court notes that the plaintiff
has failed to identify whether the action is brought against the
FDIC in its receiver capacity or its corporate capacity. See ABI
Inv. Group v. FDIC. 860 F. Supp. 911, 915 (D.N.H. 1994) ("The
FDIC generally functions in two separate and distinct legal
capacities."). Moreover, the plaintiff has failed to respond to:
(1) the FDIC's assertion that the plaintiff's action is against
the FDIC in its receivership capacity; or (2) the FDIC's argument
in its corporate capacity in support of its motion to dismiss.
"In its corporate capacity, the FDIC insures deposits in
federally insured depository institutions. ... In its
receivership capacity, the FDIC 'marshall[s] the insolvent bank's
assets and distributes them to the bank's creditors and
5 shareholders.'" Id. (citations omitted) (quoting Branch v. FDIC,
825 F. Supp. 384, 391 (D. Mass. 1993)). In light of the nature
of the plaintiff's claim, the plaintiff's arguments, and the
plaintiff's failure to contest the FDIC's characterization of her
claim, the court determines that the claim was indeed asserted
against the FDIC in its receivership capacity.
The FDIC moves to dismiss the plaintiff's cause of action
for lack of subject matter jurisdiction pursuant to Federal Rule
of Civil Procedure 12(b)(1). A motion to dismiss for lack of
subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1)
challenges the statutory or constitutional power of the court to
adjudicate a particular case. James William Moore et al.,
2 Moore's Federal Practice § 12.30[1] (3d ed. 1997). The court
assumes the truthfulness of the facts concerning jurisdiction as
alleged by the pleadings, and the case may be dismissed only if
the plaintiff fails to allege an element necessary for juris
diction to exist. Id.; see Garita Hotel Ltd. Partnership v.
Ponce Federal Bank, F.S.B., 958 F.2d 15, 17 (1st Cir. 1992)
(court takes factual allegations in complaint as true, indulges
every reasonable inference helpful to the plaintiff's cause);
Palumbo v. Robert!, 834 F. Supp. 46, 51 (D. Mass. 1993) (The
"[c]ourt is required to view the facts in plaintiff's favor
although the burden of persuasion as to jurisdiction rests with
6 [the] plaintiff."). However, the court is not required to adopt
the legal conclusions alleged by the plaintiff. See Dartmouth
Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir. 1989) (It
is "only when such conclusions are logically compelled, or at
least supported by the stated facts . . . that ''conclusions'
become 'facts' for pleading purposes.").
In 12 U.S.C. § 1821(d)(13)(D), Congress created a general
jurisdictional bar that prevents any court from hearing claims
against, or actions to determine the rights regarding, assets of
a failed institution which is being administered by the FDIC:
Except as otherwise provided in this subsection, no court shall have jurisdiction over-
(i) any claim or action for payment from, or any action seeking the determination of rights with respect to, the assets of any depository institution for which the Corporation has been appointed receiver, including assets which the Corporation may acquire from itself as such receiver; or
(ii) any claim relating to any act or omission of such institution or the Corporation as receiver.
12 U.S.C.A. § 1821(d)(13)(D) (West 1989). "[F]ederal courts are
[therefore] barred from asserting jurisdiction over claims
against the assets of failed depository institutions except as
expressly or impliedly permitted," Lloyd, 22 F.3d 335, 337 (1st
Cir. 1994), or from asserting jurisdiction over claims where the
7 plaintiff is "seeking the determination of rights with respect t
. . . the assets of [a] depository institution," 12 U.S.C. §
1821(d) (13) (D) (i) . Circuit courts "have broadly applied the
§ 1821 (d) jurisdictional bar to all manner of ''claims' and
'actions seeking a determination of rights with respect to' the
assets of failed banks, whether those claims and actions are by
debtors, creditors, or others." Freeman v. FDIC, 56 F.3d 1394,
1401 (D.C. Cir. 1995) (guoting 12 U.S.C.A. § 1821(d)(13)(d)(i));
see also Lloyd, 22 F.3d at 337; Marquis v. FDIC, 965 F.2d 1148,
1152 (1st Cir. 1992).
The plaintiff asserts a number of arguments in support of
her contention that § 1821(d) does not bar the court's juris
diction in this case. First, the plaintiff argues that the
court's jurisdiction is not barred because the plaintiff's
action, if successful, does not state a 'claim' that "would
reguire satisfaction out of the assets of a failed bank." Pl.'s
Objection to FDIC's Mot. to Dismiss, at 5, 6 ("Pl.'s FDIC Obj.")
However, the simple fact that the plaintiff's claim would not
reguire payment from the assets of the failed bank does not
remove § 1821's jurisdictional bar. The claim would still
reguire a determination of the rights of the parties to an asset
of the bank. See, e.g., Lloyd, 22 F.3d at 337 ("eguitable
reformation and/or cancellation of the contract fare no better" under § 1821(d) (13) (D) where plaintiff sought cancellation of
promissory note).
The plaintiff next argues that DiGeronimo's personal
guaranty was already released by the FDIC. Therefore, "[t]o the
extent the Guaranty is considered an asset of the bank, the
rights and obligations with respect to that Guaranty were
determined over three years ago" when the FDIC agreed to a
release. Pl.'s FDIC Obj. at 6. As a conseguence, the plaintiff
argues, she is seeking "not a determination of rights with
respect to the Guaranty, but rather a piece of paper to document
the release already effectuated." Id. at 7. In short, the
plaintiff merely seeks an order directing the FDIC to perform a
"simple ministerial act." Id. at 8.
The plaintiff's argument belies what an order from the court
that compelled the FDIC "to specifically perform in accordance
with the [release] and to deliver the written discharge and
release of Mr. DiGeronimo's personal liability" would reguire
this court to determine. Compl. at 5. For the court to order
the FDIC to issue a release of DiGeronimo's guaranty, the court
would have to determine that such a release was due, and
therefore it would have to find that the FDIC actually released
DiGeronimo. That this determination is inherent in such an order
is evidenced by the plaintiff's extended discussion regarding the validity of the alleged release. See Pl.'s FDIC Obj. at 6-8. A
finding that the FDIC did indeed release DiGeronimo's guaranty
necessarily involves "a determination of rights with respect to
. . . the assets" of the failed bank for which the FDIC has been
appointed receiver. See 12 U.S.C.A. § 1821(d)(13)(D)(i).
The plaintiff's reliance on Homeland Stores Inc. v. RTC, 17
F.3d 1269 (10th Cir. 1994), for the proposition that the claim
amounts to a simple ministerial act and therefore survives
§ 1821's bar is misplaced. At issue in Homeland was whether or
not the physical property of an asset was being maintained, and
whether leasing one portion of the property to a particular
tenant violated another tenant's lease. See id. at 1270, 1271.
In Homeland, the Tenth Circuit was addressing a claim "which
[arose] due to RTC action in managing an institutional asset
after an institution [entered] receivership." Id. at 1272. In
the case at hand the court is asked to order the FDIC to issue a
release of DiGeronimo's guaranty; in effect, the court is asked
to determine the validity of the alleged release and the parties'
rights to the asset of the guaranty. This is expressly precluded
under § 1821, and presents a very different situation from that
in Homeland.
The plaintiff next asserts that the FDIC's failure to follow
the procedural reguirements for giving notice to the plaintiff
10 renders the jurisdictional bar of § 1821(d)(13)(D) null and void.
See Pl.'s FDIC Obj. at 8 ("It is fundamentally unjust for the
FDIC to request the dismissal of plaintiff's claim for an alleged
failure to comply with administrative procedure when the FDIC,
itself, failed to comply with the provisions of the very same
statute. The FDIC must establish that it complied with the
notice requirement in 12 U.S.C. § 1821 before it can take
advantage of the bar against claims.").
The plaintiff has provided no authority for its proposition,
and the court finds this argument to be without merit. Although
section 12 U.S.C. § 1821(d)(3)(C) does require that notice be
sent to creditors, the drafters anticipated that the FDIC will on
occasion fail to send notice to a creditor. 12 U.S.C. § 1821
(d)(5)(C)(ii) provides for this possibility by permitting an
extension of the relevant time limitations and thereby allowing
overlooked creditors who otherwise lack notice an opportunity to
file their claims in the administrative claims procedure. See 12
U.S.C.A. § 1821 (d)(5)(C)(ii) (West 1989). Indeed, the plaintiff
acknowledges that the FDIC has sent the required notice, although
it was late. See Compl. at 8. The court is unaware of any
authority for the proposition that the jurisdictional bar of
§ 1821(d)(13)(D) can be negated when the FDIC is late in sending
notice to a creditor.
11 The court concludes that the jurisdictional bar of 12 U.S.C.
§ 1821(d)(13)(D) applies to the plaintiff's claims in this case.
The plaintiff has failed allege that the claim falls within one
of the exceptions to § 1821(d) (13) (D)'s jurisdictional bar, and
the court concludes therefore that it lacks subject matter
jurisdiction over the plaintiff's claim against the FDIC.2
II. Beckley
Beckley seeks to have the plaintiff's action dismissed
pursuant to Federal Rule of Civil Procedure 12(b)(6) on two
alternate theories. Beckley first argues that it is not bound by
the release if the release and the guaranty are considered two
separate contracts, as Beckley was assigned only the FDIC's
rights under the guaranty, not under the release. See Beckley
Mot. at 2 ("[SJpecific performance of a contract will not lie
against a non-party to that contract."). Alternatively, Beckley
argues that if the release and the guaranty are deemed part of
the same contract or transaction, the plaintiff's claim against
Beckley is precluded as it had to have been asserted as a
counterclaim in Beckley's earlier action against the DiGeronimo
estate. See Beckley Mot. at 2.
2In light of its conclusion, the court need not address the FDIC's remaining arguments.
12 Because Beckley has already filed an answer to the
plaintiff's complaint, the pleadings have closed under Fed. R.
Civ. P. 7(a). As such, the court will treat the defendant's
motion to dismiss as a motion for judgment on the pleadings. See
Fed. R. Civ. P. 12(c). Pursuant to Fed. R. Civ. P. 12(c), a
motion for judgment on the pleadings will be granted if,
accepting all of the plaintiff's factual averments contained in
the complaint as true, and drawing every reasonable inference
helpful to the plaintiff's cause, "it appears beyond doubt that
the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief." Rivera-Gomez v. de Castro,
843 F .2d 631, 635 (1st Cir. 1988).
The standard for evaluating a Rule 1 2 (c)motion for judgment
on the pleadings is essentially the same as the standard for
evaluating a Rule 12(b)(6) motion. See Republic Steel Corp. v.
Pennsylvania Enq'q Corp., 785 F.2d 174, 182 (7th Cir. 1986). In
both cases, the court's inguiry is a limited one, focusing not on
"whether a plaintiff will ultimately prevail but whether [he or
she] is entitled to offer evidence to support the claims."
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (motion to dismiss
under Fed. R. Civ. P. 12(b)(6)). In making its inguiry, the
court must accept all of the factual averments contained in the
complaint as true, and draw every reasonable inference in favor
13 of the plaintiff. See Garita Hotel Ltd. Partnership v. Ponce
Fed. Bank, 958 F.2d 15, 17 (1st Cir. 1992) (Rule 12(b) (6)
motion); Santiago de Castro v. Morales Medina, 943 F.2d 129, 130
(1st Cir. 1991) (Rule 12(c) motion). In the end, the court may
grant a motion to dismiss under Rule 12(b)(6) "'only if it
clearly appears, according to the facts alleged, that the
plaintiff cannot recover on any viable theory.'" Garita, 958
F.2d at 17 (guoting Correa-Martinez v. Arrillaaa-Belendez, 903
F .2d 49, 52 (1st Cir. 1990)).
Federal Rule of Civil Procedure 13(a) provides that:
A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not reguire for its adjudication the presence of third parties of whom the court cannot acguire jurisdiction.
Fed. R Civ P. 13(a)(West 1997). Pursuant to Rule 13(a) and the
principles of claim preclusion, ""'a final judgment on the merits
of an action precludes the parties or their privies from
relitigating issues that were or could have been raised in that
action."'" Puerto Rico Maritime Shipping Auth. v. Federal
Maritime Comm'n, 75 F.3d 63, 66 (1st Cir. 1996) (guoting Manego
v. Orleans Bd. of Trade, 773 F.2d 1, 5 (1st Cir. 1985) (guoting
Allen v. McCurry, 449 U.S. 90, 94 (1980))). Moreover,
characterizing a claim in a current action as an affirmative
14 defense in a prior action will not defeat the "required joinder
of compulsory counterclaims [because it] is designed to prevent
parties from hiding behind formal distinctions between defenses
and counterclaims." Puerto Rico Maritime Shipping Auth., 75 F.3d
at 67 (citations omitted). Therefore, where a party could have
raised a claim as an affirmative defense in an earlier action,
but failed to do so, that party will be precluded from
relitigating the claim in a later action, assuming it arose from
the same transaction or occurrence, there was identity of the
parties, a final judgment was obtained, and a full and fair
opportunity to litigate was provided. See id. at 66-69.
The plaintiff argues that the guaranty and the release are
two separate transactions or occurrences, and that as a
consequence, the plaintiff's claim in the present action did not
need to be asserted in the earlier action. The plaintiff bases
this argument, inter alia, on the five year time span between the
execution of the note and the alleged release, and the
differences in remedies sought in the two actions (monetary
damages v. equitable relief). See Pl.'s Obj. to Mot. of Beckley
Capital Ltd. Partnership to Dismiss, at 8, 9 ("Pl.'s Beckley
Obj."). The court finds the plaintiff's arguments to be wholly
without merit and inconsistent with its own characterization of
the alleged transactions. See Pl.'s Beckley Obj. at 4-7.
15 In determining whether a claim arises from the same
transaction or occurrence, courts apply a "logical relationship
test." See, e.g., Porchiro v. Prudential Ins. Co. of America,
827 F.2d 1246, 1249 (9th Cir. 1987). "This flexible approach to
Rule 13 problems attempts to analyze whether the essential facts
of the various claims are so logically connected that considera
tions of judicial economy and fairness dictate that all the
issues be resolved in one lawsuit." Harris v. Steinem, 571 F.2d
119, 123 (2d Cir. 1978).
In the earlier action, Beckley sought to enforce the
guaranty against the DiGeronimo estate. Accord and satisfaction
or release, if asserted, would have been an affirmative defense
of the estate.3 Indeed, this is precisely what the estate argues
in this action to secure the relief it seeks. See Pl.'s FDIC
Obj. at 7 ("An accord and satisfaction, such as was reached in
this case, is a new contract, substituting a new obligation for a
former one, that, when satisfied, extinguished the former
obligation."). Similarly, in countering Beckley's motion to
dismiss, the plaintiff argues that the alleged release obtained
3Indeed, Federal Rule of Civil Procedure 8 (c) reguired the plaintiff to assert these affirmative defenses: "In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction . . . , release . . . , and any other matter constituting an avoidance or affirmative defense." Fed. R Civ. P. 8(c) (West 1997).
16 was binding on Beckley because Beckley, as the assignee of the
FDIC's rights under the guaranty, also was bound by the FDIC's
release of the guaranty. See Pl.'s Beckley Obj. at 6, 7 ("FDIC's
agreement to release DiGeronimo from personal liability was made
before the Guaranty was assigned to Beckley. As such, when
Beckley was assigned the Guaranty, it not only acguired all
rights the FDIC may have had under the Guaranty, but all
obligations the FDIC had as well.").
The court finds the plaintiff's contemporaneous arguments
that: (1) Beckley was assigned not only the guaranty, but the
FDIC's rights and obligations under the guaranty, including the
release; and (2) the compulsory counterclaim reguirement of Rule
1 3 (a) is inapplicable because the release and guaranty are
separate transactions and occurrences, to be contradictory.
Accord and satisfaction and release were affirmative defenses
that the plaintiff had to raise in the earlier proceedings, such
that the plaintiff's claim in this case should have been asserted
in the prior action as a compulsory counterclaim. The plaintiff
does not dispute that this claim or defense was not raised in the
prior proceedings. Nor does the plaintiff assert that she lacked
a full and fair opportunity to litigate the issues in the earlier
proceeding, nor that there was a third party beyond the
17 jurisdiction of the court in the earlier action.4 Therefore, the
plaintiff is barred from bringing her claim against Beckley.
Conclusion
The court grants the FDIC's motion to dismiss (document n o .
9) as well as Beckley's motion to dismiss (document no. 8). The
clerk is ordered to close the case.
SO ORDERED.
Joseph A. DiClerico, Jr. District Judge
March 23, 1998
cc: Thomas J. Pappas, Esguire Steven A. Solomon, Esguire Frank P. Spinella Jr., Esguire
4Given the court's conclusion, it need not address the second basis for dismissal asserted by Beckley.