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Hap Taylor & Sons, Inc. v. Kromann

September 14, 2010

HAP TAYLOR & SONS, INC. D/B/A KNIFE RIVER, AN OREGON CORPORATION DOING BUSINESS AS KNIFE RIVER, PLAINTIFFS,
v.
DENNIS KROMANN AND IRMA KROMANN, HUSBAND AND WIFE, WILLIAM H. WEAVER, PE/LS, INDIVIDUALLY; AND ALL PERSONS IN POSSESSION OR CLAIMING ANY RIGHT TO POSSESSION, DEFENDANTS. WILLIAM H. WEAVER, PE/LS, INDIVIDUALLY COUNTERPLAINTIFF,
v.
HAP TAYLOR & SONS, INC. D/B/A KNIFE RIVER, AN OREGON CORPORATION DOING BUSINESS AS KNIFE RIVER, COUNTERDEFENDANT.
WILLIAM H. WEAVER, PE/LS, INDIVIDUALLY, CROSS-CLAIMANT,
v.
DENNIS KROMANN AND IRMA KROMANN, HUSBAND AND WIFE, AND DOES I-X, WHOSE TRUE NAMES ARE UNKNOWN REPRESENTING ALL PERSONS IN POSSESSION OR CLAIMING ANY RIGHT TO POSSESSION CROSS-DEFENDANTS
WILLIAM H. WEAVER, PE/LS, INDIVIDUALLY, THIRD-PARTY PLAINTIFF,
v.
ANB FINANCIAL N.A., A NATIONAL ASSOCIATION; PIONEER TITLE COMPANY OF ADA COUNTY, AN IDAHO CORPORATION; NORTHWEST TRUSTEE SERVICES, INC., AN IDAHO CORPORATION, THIRD-PARTY DEFENDANT



The opinion of the court was delivered by: Honorable Edward J. Lodge U. S. District Judge

ORDER ADOPTING REPORT AND RECOMMENDATION

On August 4, 2010, United States Magistrate Judge Ronald E. Bush issued a Report and Recommendation, recommending that the Third-Party Defendant's Motion for Summary Judgment be denied. Any party may challenge a Magistrate Judge's proposed recommendation by filing written objections within ten days after being served with a copy of the magistrate's Report and Recommendation. 28 U.S.C. § 636(b)(1)(C). The district court must then "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." Id. The district court may accept, reject, or modify in whole or in part, the findings and recommendations made by the magistrate. Id.; see also Fed. R. Civ. P. 72(b).

The Third-Party Defendant, Federal Deposit Insurance Corporation (FDIC), filed objections challenging the Report and Recommendation's conclusion that 12 U.S.C. § 1821(d)(6) requires that the claiming party actually receive the mailed notice of disallowance of claim. (Dkt. No. 51.) Such conclusion, the FDIC argues, is contrary to the plain text of the statute, the applicable case law, and the policy underpinnings of the statute. The Third-Party Claimant, William H. Weaver, PE/LS, responded to the objections asserting the Report and Recommendation are correct; particularly in light of the fact that it is undisputed that neither he nor his attorney ever received the notice evidencing the FDIC's failure to comply with the mailing requirements of 12 U.S.C. § 1821(d)(5)(A)(iii). The FDIC has filed a reply. The Court has considered the parties' contentions and conducted a de novo review of the record and finds as follows.

Discussion

The issue in this case turns on the interpretation of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). "Congress enacted FIRREA in 1989 in response to the growing crisis in the financial industry. Its goal was to provide a detailed regulatory framework so as to restore the financial integrity of the thrift industry's deposit insurance fund and to provide funds from public and private sources to deal expeditiously with failed depository institutions." Betancourt v. F.D.I.C., 851 F.Supp. 126, 129 (S.D.N.Y. 1994) (citations omitted). Thus, "FIRREA establishes a claims determination procedure by which the creditors of a failed institution must first present their claims to the FDIC as receiver before pursuing a judicial remedy." Guglielmi v. F.D.I.C., 863 F.Supp. 54, 56 (D.R.I. 1994) (citing 12 U.S.C. § 1821(d)). "The primary purpose of the exhaustion scheme is to allow the FDIC to perform its statutory duty of efficiently resolving claims without resort to litigation." Id. (citation omitted). "FIRREA granted the FDIC broad powers in its capacity as receiver to determine claims against the failed institutions, and established a comprehensive administrative claim process, adherence to which is a prerequisite to judicial review of those claims." Betancourt, 851 F.Supp. at 129.

The claims process begins when, after the FDIC is appointed receiver of a failed institution, the FDIC "promptly publish[es] a notice to ... creditors to present their claims, together with proof, to the receiver" by a specified date no less than 90 days from the date of publication. 12 U.S.C. § 1821(d)(3)(B). The FDIC must also mail a similar notice to all known creditors of the institution at their last address appearing on the institution's books.

12 U.S.C. § 1821(d)(3)(C). Creditors must then present their claims with the requisite proof and the FDIC has 180 days to determine whether to allow or disallow it. 12 U.S.C. § 1821(d)(5)(A)(i). "Upon disallowance, or in the event that the FDIC fails to make a determination within the 180 day period, claimants have the right to seek either administrative or judicial review in a district court, provided they do so within 60 days of the disallowance or end of the 180 day period (whichever is earlier)." Betancourt, 851 F.Supp. at 130 (citing 12 U.S.C. § 1821(d)(6)(A)). Failure to adhere to the statutory time constraints is fatal.

"If a claimant does not submit his claim until after the date specified in the FDIC notice to creditors, section 1821(d)(5)(C)(i) directs that the untimely claim 'shall be disallowed and such disallowance shall be final.' Similarly, where a claimant fails to seek review of an FDIC disallowance within the allotted 60 day period, section 1821(d)(6)(B) directs that the claim 'be deemed to be disallowed ..., such disallowance shall be final, and the claimant shall have no other rights and remedies with respect to such claim.' Finally, the statute expressly limits the jurisdiction of the district courts to claims that have first been presented to the receiver." Betancourt, 851 F.Supp. at 130.

In this case, the sum and substance of the FDIC's objections to the Report and Recommendation center around the question of when the 60-day time for filing a claim contained in 12 U.S.C. § 1821(d)(6) is triggered. The FDIC maintains the time runs from either the date on the notice of disallowance or from the date such notice is mailed. (Dkt. No. 51.) Mr. Weaver counters that the 60-day time runs from the date the notice of disallowance is received by the claimant which, in this case, it is undisputed that it was never received. Having reviewed the parties' Motion, briefing, and the entire record in these matters, the Court finds the Report and Recommendation has correctly decided the Motion.

1. Compliance with the 12 U.S.C. § 1821(d)(6)(A)(ii) 60-Day Limitations Period

On April 8, 2008, Mr. Weaver filed a Claim of Lien against the real property secured by a loan from ANB Financial, N.A. and filed an Answer, Counterclaim, Cross-Claim, and Third-Party Complaint in state court. Thereafter, on May 9, 2008, the FDIC was appointed as Receiver for ANB Financial and, on October 8, 2008, it notified Mr. Weaver to submit a Proof of Claim on or before January 6, 2009. On October 17, 2008, Mr. Weaver, through his counsel, mailed his Proof of Claim on from the following address:

[signature of William L. Smith]

Smith Law, P.A.

5987 W. State St. Boise, ID 83703-5056

(Dkt. No. 29-1.) The FDIC's February 23, 2009 Notice of Disallowance of Claim was addressed to:

William Weaver 5987 W. State St.

Boise, ID 83703-5056 (Dkt. No. 29-2.)*fn1 Mr. Weaver did not receive the Notice until September 16, 2009. (Dkt. No. 30, Att. 5.)

The question here is when the 60-day time period began. The Report and Recommendation concluded that the 60 days began on the date Mr. Weaver received the Notice on September 16, 2009. The FDIC disagrees and objections challenging the Report and Recommendation's interpretation of the plain text of the statute, the case law, the policy underpinnings of ...


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