Freyer Santoni v. First Federal

• Court: Court of Appeals for the First Circuit
• Decided: October 5, 1993
• Docket: 93-1155
• Status: Published

Opinion

USCA1 Opinion

October 5, 1993
                                [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ____________________

No. 93-1155 

                          JOSE ANGEL FREYRE-SANTONI, ET AL.,

                               Plaintiffs, Appellants,

                                          v.

                             FIRST FEDERAL SAVINGS BANK,

                                 Defendant, Appellee.

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                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

[Hon. Gilberto Gierbolini, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                               Selya, Boudin and Stahl,
                                   Circuit Judges.
                                   ______________

                                 ____________________

            Jose Angel Freyre-Santoni on brief pro se.
            _________________________
            Carlos G. Latimer  and Latimer, Biaggi, Rachid, Rodriguez-Suris  &
            _________________      ___________________________________________
        Godreau on brief for appellee.
        _______

____________________

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Per Curiam.   Pro  se appellants Jose  Angel Freyre
                      __________

            Santoni, Jose A. Freyre Del Manzano, Anna M. Freyre, Doris C.

            Del Manzo Vazquez, and  Vilma I. Castro ("appellants") appeal

            the  district court's  dismissal  of their  suit against  the

            First Federal Savings Bank.  The district court found that it

            had no  subject matter jurisdiction  over the  suit under  12

            U.S.C.      632,  which   grants  district   courts  original

            jurisdiction   over  suits   "arising  out   of  transactions

            involving . . . banking in a dependency or insular possession

            of the United States, . . . ."1  We affirm.

                      I.  Background
                          __________

                      In  May 1989,  appellants were  evicted  from their

            house pursuant to a default judgment of foreclosure the  bank

            had received  from a  superior court  of the  Commonwealth of

            Puerto Rico.2  A few months later appellants sued the bank in

            the district court.   Their complaint  alleged that the  bank

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            1.  Another prerequisite to suit under  section 632 is that a
            "corporation organized  under the  laws of the  United States
            shall be a party" to the  suit, but there is no question that
            the bank meets that  requirement.  We also note  that section
            632 applies  to banking  transactions in the  Commonwealth of
            Puerto  Rico  although  it  is  no  longer  a  United  States
            territory.  See First Federal Savings & Loan Ass'n v. Ruiz de
                        ______________________________________    _______
            Jesus, 644 F.2d 910, 912 (1st Cir. 1981). 
            _____

            2.  The record  suggests that not all  appellants were living
            in  the house at  the time the eviction  took place, and that
            the  appellants who  actually  had title  to  the house  were
            living  elsewhere.   For convenience,  we do  not distinguish
            among  the appellants  in the  opinion, but  refer  simply to
            "appellants" even when  reference to only  certain appellants
            would be correct.

had harassed and threatened  them by visiting and telephoning

            them and then evicting them after it had obtained the default

            judgment  and bought  their  house at  public  auction.   The

            appellants also  alleged that  the  superior court's  default

            judgment of foreclosure was invalid for several reasons.  The

            bank  had  obtained  the  default  judgment  by  reopening  a

            previously  dismissed  foreclosure  case  without  notice  to

            appellants  even though  it  knew their  mailing address  and

            phone number;  it had submitted false affidavits to the court

            and  not  told the  court  that the  parties  had voluntarily

            dismissed  the  previous foreclosure  case  after reaching  a

            settlement; and  the previous dismissal had  become final and

            nonappealable before the bank had reopened the case.3  

            According to the complaint,  the bank's harassing conduct and

            eviction  of  appellants  from  their  property  caused  them

            physical  injuries and  mental  or emotional  distress.   Its

            allegedly illegal foreclosure had transferred title of  their

            house  to the  bank, depriving  them of  their property.   In

            addition,  the  eviction  had been  carried  out maliciously.

            Although  the family  had  no place  to  move to,  they  were

            ordered out of the  house in the evening in  violation of the

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            3.  After filing its  complaint in federal court,  appellants
            apparently  moved  the  local  court  to  annul  its  default
            judgment of foreclosure.   The  state court did  so, and  its
            action was affirmed by the Supreme Court of Puerto Rico.  The
            proceedings  in the local court are not relevant to the issue
            on appeal. 

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court order, and their belongings were  removed to the street

            where  they were damaged by rain and vandalism.  Furthermore,

            one appellant  had been  ridiculed for  being short,  and her

            son's dog had  been kicked  in his presence.   The  complaint

            alleged that the bank's actions from the time the parties had

            settled the  initial foreclosure  action had  been undertaken

            maliciously,  and appellants sought compensatory and punitive

            damages.

                      II.  Discussion
                           __________

                      We have  held that jurisdiction  under section  632

            exists  when a  cause of  action  arises out  of "traditional

            banking activities."  Diaz v.  Pan American Federal Savings &
                                  ____     ______________________________

            Loan  Association,  635 F.2d  30, 32  (1st  Cir. 1980).4   In
            _________________

            order to determine whether the  appellants' suit arose out of

            traditional banking activities,  we review  the complaint  to

            determine the  nature of  the transaction or  activity giving

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            4.  One   court  has   suggested  that   traditional  banking
            activities include  the "making  and collection of  loans and
            issuance  of documents  evidencing  them, such  as notes  and
            guaranties, the opening and  closing of checking accounts and
            the processing of checks  drawn upon them, and the  filing of
            lawsuits  for the  collection  of monies  when  loans are  in
            default . . . ."  Fumero-Vidal v. First Federal Savings Bank,
                              ____________    __________________________
            788 F. Supp.  1275, 1278  (D.P.R. 1992).   Another court  has
            said that traditional banking activities include transactions
            involving "mortgage foreclosures, letters of  credit, letters
            of guaranty when the bank relied on the  letter in granting a
            loan,  and  transactions  involving Federal  Reserve  Banks."
            Telecredit Service  Ctr. v.  First Nat'l Bank,  679 F.  Supp.
            ________________________     ________________
            1101, 1103 (S.D. Fla. 1988).

                                         -4-

rise to their  claims.   Telecredit Service  Center v.  First
                                     __________________________     _____

            National Bank, 679 F. Supp. 1101, 1103 (S.D. Fla. 1988).
            _____________

                      In their complaint, appellants raised basically two

            distinct claims.  First, they challenged the way in which the

            bank  had  procured  its  default  judgment  of  foreclosure,

            alleging that procedural errors and misrepresentations by the

            bank rendered the judgment  invalid.  Second, they challenged

            the  way in which the  bank had communicated  with them after

            the default judgment and public sale and the  way in which it

            had evicted them.  

                      Thus, the appellants challenged the validity of the

            default judgment and the manner in which the bank had pursued

            its rights  under the judgment.  Their  proffered reasons for

            invalidating  the judgment were not based on the terms of any

            mortgage  agreement  or other  banking or  financing activity

            between the parties, but on the circumstances surrounding the

            dismissal  of the  prior  foreclosure action  and the  bank's

            reopening  of that  action.   For that reason,  their present

            claim that the default judgment was invalid did not arise out

            of a banking transaction or activity, even though the default

            judgment had permitted the bank  to foreclose on its mortgage

            on their  property.  See Gonzalez-Roman v.  Federal Land Bank
                                 __________________     _________________

            of  Baltimore, 303 F. Supp.  482, 483 (D.P.R.  1969) (a local
            _____________

            court  suit  challenging  the  validity of  a  federal  court

            judgment  of foreclosure for jurisdictional reasons could not

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be removed to  federal court  under section  632 because  the

            suit did not  arise out of a transaction  involving banking);

            contrast Conjugal Society v. Chicago Title Insurance Co., 690
            _________________________    ___________________________

            F.2d 1, 5 (1st  Cir. 1982) (plaintiffs' rights were  based on

            defendants'  mortgage  agreements and  thus  arose  out of  a

            transaction involving  banking within the meaning  of section

            632); First  Federal Savings & Loan  Association v. Zequeira,
                  __________________________________________    ________

            305  F. Supp. 37, 39  (D.P.R. 1969) (the  court "clearly" had

            jurisdiction over  a  mortgage foreclosure  action where  the

            pertinent  evidence   was  the  original   mortgage  note,  a

            certified copy of the mortgage deed, and a sworn statement by

            the bank's treasurer showing that a mortgage account had been

            opened  and had  a certain balance  since those  are "banking

            transactions") (dictum or alternative holding).5

                      Likewise,  the  actions of  the  bank  in visiting,

            calling  and evicting the appellants did not arise out of any

            banking transaction.  They were  alleged to be wrongful,  not

            because of any rights accruing to appellants by virtue of any

            mortgage  agreement between  the  parties,  but  because  the

            default  judgment was alleged to be invalid and because those

____________________

            5.  Although  some   evidence  touching  upon   the  mortgage
            relationship between  the bank  and appellants may  well have
            been necessary,  e.g., to show that the  bank had appellants'
            mailing address and so  could have properly served appellants
            when it  reopened the foreclosure case,  proof of appellants'
            claims  did not depend on the terms of any mortgage agreement
            or other financial or banking transaction between the parties
            or on their adherence  to the terms of any  mortgage or other
            financing agreement. 

                                         -6-

actions were allegedly undertaken negligently or maliciously,

            thereby causing  appellants  harm in  violation  of  standard

            principles  of  tort  law.     See  Diaz,  635  F.2d   at  32
                                           ___  ____

            (plaintiff's  suit for malicious or negligent prosecution was

            dismissed for lack of  jurisdiction under section 632 because

            the bank's  filing of criminal charges  against plaintiff for

            passing  bad  checks was  outside  the  scope of  traditional

            banking).  

                      The judgment of the district court is affirmed.6
                                                            _________

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            6.  Appellants also ask this court to resolve certain motions
            left  undecided  by  the  district court  when  it  dismissed
            appellants'  suit.    We cannot  do  so.    The dismissal  of
            appellants'  suit,  which   we  now   affirm,  rendered   any
            outstanding motions moot.   In any event, it is  not the role
            of this court to resolve in the first instance motions before
            the district  court.  If  resolution of  pending motions  had
            been  necessary, we would have had to remand those motions to
            the district court for decision.

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