Professional Documents
Culture Documents
No. FAR-26395
_____________________
ON APPEAL OF A JUDGMENT OF
THE BARNSTABLE SUPERIOR COURT
____________________
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The filing party, a nongovernmental corporation,
identifies Deutsche Bank Trust Company Americas as its
parent corporation.
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TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENTS...................... i
TABLE OF AUTHORITIES................................. v
A. FIRREA..................................... 3
B. Factual Background......................... 8
CONCLUSION.......................................... 25
ADDENDUM
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CERTIFICATE OF SERVICE
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TABLE OF AUTHORITIES
CASES
Page(s)
Acosta-Ramirez v. Banco Popular de Puerto Rico,
712 F.3d 14 (1st Cir. 2013) ........................7
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Hudson United Bank v. Chase Manhattan Bank
of Connecticut, N.A.,
43 F.3d 843 (3d Cir. 1994) .........................8
Willner v. Dimon,
849 F.3d 93 (4th Cir. 2017) ...................passim
12 U.S.C.
§ 1821(d)(2)(A) ...................................24
§ 1821(d)(2)(G) ...................................24
§ 1821(d)(3)(B)(i) .................................4
§ 1821(d)(5)(A)(i) .................................4
§ 1821(d)(6)(A) .................................4, 7
§ 1821(d)(13)(D) ............................5, 6, 20
§ 1821(d)(13)(D)(ii) ..........................passim
G. L. c. 106,
§ 3-301 ...........................................24
§ 3-305 ...........................................24
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INTRODUCTION AND
REQUEST FOR LEAVE TO OBTAIN FURTHER APPELLATE REVIEW
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conflict with the Fourth Circuit’s decision in Willner
v. Dimon, 849 F.3d 93, 105 (4th Cir. 2017), which
considered and rejected the argument that FIRREA’s
jurisdictional bar is inapplicable to claims relating to
assets sold before FIRREA receivership. Second, the
decision below contravenes FIRREA’s plain text and lacks
support in the cited case law. Third, even under the
Appeals Court’s erroneous view of FIRREA, it should have
concluded that the jurisdictional bar applies and
forecloses plaintiffs’ claims.
FIRREA is a critical federal banking statute to
which nationwide uniformity and prompt administration of
a failed bank’s assets and liabilities are vital. The
Appeals Court’s erroneous holding “affect[s] the public
interest or the interests of justice,” and therefore
warrants further review from this Court. Mass. R. App.
P. 27.1. Indeed, this Court previously granted further
appellate review in a case about the proper
interpretation of FIRREA’s jurisdictional bar. See
Botschafter v. FDIC, 416 Mass. 1004, 1004 (1993). The
Court should likewise grant review here and reinstate
the Superior Court’s decision.
STATEMENT OF PRIOR PROCEEDINGS
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Trust Company (Deutsche Bank), JPMorgan Chase Bank, N.A.
(JPMC), and other entities related to JPMC and WaMu.
On September 4, 2014, the Superior Court dismissed
all but one claim under FIRREA’s jurisdictional bar.
The parties subsequently settled and dismissed the
surviving claim. In accordance with that settlement,
the Superior Court’s final judgment dismissed all
remaining claims against all defendants.
On September 11, 2018, the Appeals Court reversed
and remanded. Defendants petitioned for rehearing or,
in the alternative, clarification of the Appeals Court’s
opinion. On October 18, the court denied rehearing but
granted the alternative request for clarification.
STATEMENT OF RELEVANT FACTS
A. FIRREA
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“comprehensive” administrative “claims process.”
Rundgren, 760 F.3d at 1060; accord, e.g., Willner v.
Dimon, 849 F.3d 93, 102 (4th Cir. 2017); Demelo v. U.S.
Bank Nat’l Ass’n, 727 F.3d 117, 121 (1st Cir. 2013).
This claims process is critical to FIRREA’s purpose: to
allow the FDIC “to ensure that the assets of a failed
institution are distributed fairly and promptly among
those with valid claims against the institution, and to
expeditiously wind up the affairs of failed banks ...
without unduly burdening” the courts. Rundgren, 760
F.3d at 1060 (internal quotation marks and citation
omitted).
Once appointed as receiver for a failed bank, the
FDIC must publish certain notices to potential
claimants, and claimants must comply with the required
claims process by (among other things) submitting claims
to the FDIC by a designated deadline. See 12 U.S.C.
§ 1821(d)(3)(B)(i). The FDIC has 180 days to decide
whether to allow or disallow a filed claim. Id.
§ 1821(d)(5)(A)(i). Disappointed claimants may seek
administrative review of “any claim against a depository
institution for which the Corporation is receiver” or
seek judicial review in federal district court. Id.
§ 1821(d)(6)(A).
“This regime affords a streamlined method for
resolving most claims against failed institutions in a
prompt, orderly fashion, without lengthy litigation.”
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Demelo, 727 F.3d at 121 (internal quotation marks
omitted). Congress accordingly “ma[de] participation in
the administrative claims review process mandatory for
all parties asserting claims against failed
institutions.” McLaughlin v. FDIC, 415 Mass. 235, 238
(1993). Congress did so by providing that “courts lose
jurisdiction over a claim or action against a failed
institution if an administrative claim is not timely
filed with the FDIC.” Id. at 239; accord, e.g., Willner,
849 F.3d at 103.
Specifically, FIRREA’s jurisdiction-stripping
provision states that, absent administrative exhaustion:
[N]o court shall have jurisdiction over--
12 U.S.C. § 1821(d)(13)(D).
FIRREA’s plain terms thus “create an exhaustion
requirement that ... is absolute and unwaivable.”
Willner, 849 F.3d at 103 (internal quotation marks
omitted). That is, FIRREA “routes claims through an
administrative review process” and “withholds judicial
review unless and until claims are so routed.” Westberg
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v. FDIC, 741 F.3d 1301, 1303 (D.C. Cir. 2014); accord
Bueford v. RTC, 991 F.2d 481, 484 (8th Cir. 1993)
(collecting cases), cited favorably by Botschafter v.
FDIC, 416 Mass. 1004, 1004 (1993). This “jurisdictional
exhaustion requirement ... cannot [be] excuse[d],”
Westberg, 741 F.3d at 1303, and “is clear as a bell,”
Demelo, 727 F.3d at 122.
The term “claim” in 12 U.S.C. § 1821(d)(13)(D) has
a broad, “ordinary” meaning: “a cause of action or the
aggregate of facts that gives rise to a right to payment
or an equitable remedy.” Rundgren, 760 F.3d at 1061.
Accordingly, a “claim” under FIRREA includes requests
for “monetary and nonmonetary” relief. Id.
Moreover, because the jurisdictional bar is phrased
expansively--as relevant here, referring to “any claim
relating to any act or omission” of a failed bank, 12
U.S.C. § 1821(d)(13)(D)(ii) (emphasis added)--courts
have “given this provision the full scope that its text
demands,” Demelo, 727 F.3d at 123. Subsection (ii), as
courts have explained, “distinguishes claims on their
factual bases rather than on the identity of the
defendant: It asks whether claims ‘relate to any act
o[r] omission’ of a failed institution .... [T]he
provision does not make any distinction based on the
identity of the party from whom relief is sought.”
Benson v. JPMorgan Chase Bank, N.A., 673 F.3d 1207, 1212
(9th Cir. 2012); accord, e.g., Westberg, 741 F.3d at
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1306.
Courts have thus uniformly held that, “[w]here a
claim is functionally, albeit not formally, against a
[failed bank], it is a ‘claim’ within the meaning of
FIRREA’s administrative claims process” and is therefore
jurisdictionally barred absent exhaustion. American
Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1142 (D.C. Cir.
2011); accord, e.g., Willner, 849 F.3d at 104; Rundgren,
760 F.3d at 1064; Acosta-Ramirez v. Banco Popular de
Puerto Rico, 712 F.3d 14, 20-21 (1st Cir. 2013); Farnik
v. FDIC, 707 F.3d 717, 722-723 (7th Cir.), cert. denied,
571 U.S. 974 (2013); Tellado v. IndyMac Mortg. Servs.,
707 F.3d 275, 280 (3d Cir. 2013). In other words, “[a]
claimant cannot circumvent the exhaustion requirement by
suing the purchasing bank”--i.e., the third-party bank
that purchased the failed bank’s assets--“based on the
conduct of the failed institution.” Rundgren, 760 F.3d
at 1064.
Finally, there is one context in which some courts
have stated that the term “claim” is a “term of art,”
but that context is not relevant here. On its face,
§ 1821(d)(13)(D)(ii) strips jurisdiction over claims not
only against failed banks, but also against “the [FDIC]
as receiver.” But only claims against failed banks may
be brought in the administrative process. See 12 U.S.C.
§ 1821(d)(6)(A). Thus, under subsection (ii), courts
could lack jurisdiction over some claims--i.e., those
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against the FDIC--that are not subject to resolution in
the administrative process. Some courts have resolved
this issue by characterizing “the word ‘claim’ [a]s a
term-of-art,” American Nat’l Ins., 642 F.3d at 1142, in
the sense that § 1821(d)(13)(D)(ii) “bars only claims
that could be brought under the administrative
procedures of § 1821(d),” Bank of N.Y. v. First
Millennium, Inc., 607 F.3d 905, 921 (2d Cir. 2010);
accord, e.g., Village of Oakwood v. State Bank & Tr.
Co., 539 F.3d 373, 385 (6th Cir. 2008); Hudson United
Bank v. Chase Manhattan Bank of Conn., N.A., 43 F.3d
843, 849 (3d Cir. 1994).
This case, however, does not involve a claim
against the FDIC. Thus, as relevant here, any assertion
of a legal right functionally pleaded against a failed
bank is a “claim” that must be exhausted
administratively and otherwise will be jurisdictionally
barred. See supra pp.5-7.
B. Factual Background
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The Starkeys’ mortgage note was subsequently
securitized: It was pooled with other assets, and the
assets were sold to the WaMu Mortgage Pass Through
Certificates Series 2006-AR1 Trust (WaMu 2006 AR1 Trust
or trust) in return for the revenue from securities that
the trust simultaneously issued backed by the stream of
income from future loan payments. The trustee was
Deutsche Bank. See generally RA.162-406 (Pooling and
Serving Agreement).
2. FDIC’s receivership of WaMu
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3. The Starkeys’ lawsuit
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counts (all but count five) under FIRREA’s
jurisdictional bar. It concluded that these six counts
“clearly ‘arise out of and relate exclusively to pre-
receivership acts or omissions’ of WaMu, the failed
institution, or the FDIC.” Add.21-22. As the court
made clear, five of these six counts--counts two, three,
four, six, and seven--arose from WaMu’s conduct only.
Add.22-25. As for count one, it too arose from WaMu’s
conduct. Add.22. While the Superior Court indicated
that count one might also involve the “FDIC, as WaMu’s
successor,” id., that count challenged the conveyance of
the note into the trust and thus necessarily arose from
WaMu conduct, see id.; RA.30 (challenging the “fail[ure]
to properly convey the Starkey’s mortgage note into the
trust”). Accordingly, because “FIRREA precludes
judicial review” of such claims absent administrative
exhaustion, Add.21 (citing Demelo, 727 F.3d at 122), and
because the Starkeys did not exhaust the FDIC’s
administrative process, the Superior Court granted the
motion to dismiss as to these counts.
The Superior Court concluded that count five was
not subject to the jurisdictional bar because it arose
out of JPMC’s alleged conduct, not WaMu’s. Add.26. The
Superior Court thus denied the motion to dismiss as to
count five against JPMC. Add.26-27.
The parties then settled count five and dismissed
it by separate judgment. The Superior Court’s final
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judgment thus effected a complete dismissal of all
remaining counts against all defendants. See Add.4.
D. Appeals Court Decision
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can be brought directly against the “assignee [who] will
have whatever ‘successor liability’ comes with the
assigned mortgage.” Id. (quoting Demelo, 727 F.3d at
124).
The Appeals Court further stated that its
“approach”--i.e., not applying the jurisdictional bar to
claims relating to assets sold prior to the
receivership, even if they arise out of the failed bank
bank’s acts or omissions--was “taken by” the Second
Circuit in its Bank of New York decision. Add.12. That
case involved an interpleader action between various
securities holders and the FDIC, with both claiming a
right to certain assets held by a trust; the assets had
been assigned to the trust from the failed bank prior to
the FDIC’s receivership. Bank of N.Y., 607 F.3d at 909-
911. The Second Circuit held that § 1821(d)(13)(D)(ii)
did not apply to the noteholders’ claims against the
trust, because “the noteholders assert no claim against
either the FDIC or [the failed bank], and since they are
not compelled to comply with the administrative
procedures of § 1821(d),” “FIRREA ... did not deprive
the district court of subject matter jurisdiction over
the interpleader action.” Id. at 921. The Appeals Court
“f[ou]nd that reading of FIRREA persuasive.” Add.14.
Defendants petitioned for rehearing or, in the
alternative, for clarification concerning the scope of
the Appeals Court’s decision. The Appeals Court
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“allowed [the motion] to the extent it seeks
clarification,” and stated that its holding applied to
all of the Starkeys’ operative claims. Add.17. “To the
extent the petition seeks rehearing,” the Appeals Court
stated, “it is denied.” Id.
STATEMENT OF POINTS WITH RESPECT TO
FURTHER APPELLATE REVIEW
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STATEMENT WHY FURTHER APPELLATE REVIEW IS APPROPRIATE
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The Fourth Circuit affirmed. Reaffirming settled
law, it held that FIRREA’s jurisdictional bar applies to
“unexhausted claims [that] are functionally pleaded
against the acts and omissions of” a failed bank. 849
F.3d at 104. It then held that the claims were
functionally pleaded against a failed bank because they
alleged only misconduct by WaMu. Id.
In so doing, the Fourth Circuit expressly
considered the homeowners’ “argument that FIRREA’s
exhaustion requirement doesn’t apply” because the note
was “securitized ... by depositing it into the [trust]
prior to [WaMu’s] failure” and thus never “passed
through the FDIC’s receivership estate.” 849 F.3d at
105 (emphasis added). That argument, the court of
appeals concluded, was “irrelevant” to the
jurisdictional analysis because the plain text of FIRREA
applies to “any claim relating to any act or omission of
[any depository institution for which the FDIC has been
appointed receiver].” Id. (alteration in original).
Because the relevant claims were “functionally pleaded
against [WaMu’s] conduct,” the jurisdictional bar
applied. Id.
B. The Appeals Court attempted to distinguish
Willner in a footnote. It posited that Willner’s
“holding was limited to claims that could have been
brought in an administrative proceeding ... and that, if
found meritorious, would have been paid by the FDIC, not
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[a] third party.” Add.14-15.n.7. In offering that
distinction, the Appeals Court appeared to assume that
the Starkeys’ claims would be paid by a third party.
The court offered no authority or basis in the record to
support that assumption, other than a brief reference
earlier in the opinion to “successor liability,” Add.12.
The footnote is unpersuasive, for two independent
reasons. First, the Appeals Court misstated Willner’s
clear holding by conflating two distinct points.
Willner did recognize that the jurisdictional bar
applies only to claims that can be brought in the
administrative process. 849 F.3d at 105-106. But
Willner held that such claims are those functionally
pleaded against a failed bank--not, as the Appeals Court
suggested, claims that, if meritorious, would be paid by
the FDIC. Id. at 108-109. In fact, the Fourth Circuit
declined “to blindly speculate ... how the FDIC would
have resolved” a particular claim. Id. at 108. Willner
thus rejected the very inquiry the Appeals Court
suggested in its footnote--speculation as to the chain
of successor liability and who is responsible for
payment--underscoring the conflict between the Fourth
Circuit and the Appeals Court’s decision.
Second, the Appeals Court’s footnote is also
unpersuasive because its operative, unqualified
assumption (that the Starkeys’ claim would be paid by a
third party, not the FDIC) is incorrect. As explained
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below, infra pp.23-24, even if WaMu sold the Starkeys’
mortgage note before receivership, any liabilities
underlying the Starkeys’ claim would have remained with
WaMu at the time of the receivership. The FDIC would
have assumed those liabilities. If the Starkeys had
timely filed their claims against WaMu before the FDIC,
those claims (if meritorious) would have been paid or
otherwise resolved by the FDIC.
C. The split created by the Appeals Court’s
FIRREA holding warrants further appellate review, as it
involves a central provision of a critical federal
banking law. FIRREA governs national banks and savings
associations, where uniform nationwide administration is
vital. See, e.g., Willner, 849 F.3d at 110. The next
time a bank fails, the FDIC and interested parties should
not have to be concerned that FIRREA might apply
differently in Massachusetts from how it operates in the
Fourth Circuit (which includes Maryland, Virginia, West
Virginia, North Carolina, and South Carolina).
Moreover, the Appeals Court’s FIRREA holding undermines
Congress’s goal of “‘expeditiously wind[ing] up the
affairs of failed banks,’” Rundgren, 760 F.3d at 1060.
Without confidence in FIRREA’s jurisdictional bar, for
example, purchasing banks are less able to properly
appraise their liabilities and thus less likely to
assist the FDIC in winding up failed banks.
Perhaps in recognition of all this, this Court
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previously has granted further appellate review in a
case about the proper interpretation of FIRREA’s
jurisdictional bar. See Botschafter v. FDIC, 416 Mass.
1004, 1004 (1993). Further appellate review is
similarly warranted here.
THE APPEALS COURT’S FIRREA HOLDING IS WRONG
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against failed institutions.’” Id. at 238. And “courts
lose jurisdiction over a claim or action against a failed
institution if an administrative claim is not timely
filed with the FDIC.” Id. at 239.
FIRREA’s jurisdictional bar applies to “any claim
relating to any act or omission” of a failed bank. 12
U.S.C. § 1821(d)(13)(D)(ii) (emphasis added). Courts
have “given this provision the full scope that its text
demands,” and thus rejected arguments to recognize
unstated exceptions for certain types of claims.
Demelo, 727 F.3d at 123; see supra pp.5-7. The same is
true here: There is no textual exception for claims
relating to assets sold (or liabilities transferred)
before receivership.
All of the dismissed claims relate to WaMu’s
conduct at origination or during securitization--a
Superior Court holding the Appeals Court (rightly) left
undisturbed. Thus, all claims are “against a failed
institution.” McLaughlin, 415 Mass. at 239. Because
the Starkeys did not timely file their claims with the
FDIC, FIRREA’s bar applies and “no court shall have
jurisdiction over” them. 18 U.S.C. § 1821(d)(13)(D).
B. Moreover, the plain-language reading of
FIRREA’s jurisdictional bar is efficient and fair. In
requiring exhaustion of all claims against a failed
bank--regardless of whether those claims concern assets
sold before receivership--Congress made clear that it
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falls to the FDIC, not courts many years later, to
determine whether the liabilities underlying those
claims remained with the failed bank at the time of
receivership or were previously transferred to a third
party. That is a task to which the FDIC is properly
suited, given its “cumulative administrative expertise”
and its access to the relevant factual records. Heno v.
FDIC, 20 F.3d 1204, 1209 (1st Cir. 1994).
Moreover, this exhaustion assists claimants in many
cases. If the FDIC concludes that liabilities were not
transferred to a third party, the FDIC may pay the
claimants. If the FDIC concludes that the liabilities
were transferred (by disallowing the claim), the
claimant may then bring suit against the third party.
By contrast, the Appeals Court’s approach is not
easily administrable and contrary to Congress’s intent.
Courts would be compelled to resolve potentially
complicated questions about whether a claim concerns an
asset sold before receivership and, if so, whether that
assignment also conveyed any legal liabilities relating
to that asset. And by permitting post-hoc
“speculat[ion] about how the FDIC would have resolved”
the claim, courts would be improperly permitting
plaintiffs to “circumvent FIRREA’s exhaustion
requirement by declining to pursue the remedies
available to them and later arguing that such remedies
are ineffective.” Willner, 849 F.3d at 109.
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C. The cases on which the Appeals Court relied do
not support its FIRREA holding. The Appeals Court quoted
language from Second Circuit and D.C. Circuit decisions
as though those courts adopted a narrow interpretation
of “claim” under 12 U.S.C. § 1821(d)(13)(D)(ii). In
fact, as discussed supra pp.7-8, those courts were only
harmonizing the term “claim” in the jurisdictional bar
with “claim” as defined in the administrative process.
Under that interpretation, both courts concluded that
the jurisdictional bar applies to any claim against a
failed bank. See Bank of N.Y., 607 F.3d at 921; American
Nat’l Ins., 642 F.3d at 1142. Here, the Starkeys’ claims
are against a failed bank--arising from WaMu’s acts or
omissions. Those claims are thus barred under Second
Circuit and D.C. Circuit law.
The other case relied upon by the Appeals Court,
the First Circuit’s decision in Demelo, does not support
its FIRREA interpretation either. In the quoted passage
from Demelo, the First Circuit explained that,
notwithstanding a Massachusetts law stating that an
assignee is responsible for liabilities arising out of
a high-cost mortgage, when the assignee acquires the
“mortgage by way of the powers vested in the FDIC under
FIRREA,” “the plaintiffs’ claims are subject to ...
[the] jurisdictional bar.” 727 F.3d at 125. The Appeals
Court appears to have reasoned by inference that, where
a mortgage is assigned pre-receivership, the assignee is
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necessarily liable under Massachusetts law, and thus the
FDIC has no role in resolving claims relating to that
asset and the jurisdictional bar does not apply. Add.12.
That reasoning suffers from many flaws. Most
fundamentally, a single state’s laws cannot dictate the
interpretation of federal law. Moreover, the Appeals
Court’s reasoning is a veiled policy argument. The court
reasoned that, where a plaintiff’s claims can be brought
against a solvent third party, administrative exhaustion
is unnecessary and should not be required. But Congress
did not make that policy judgment. It stated instead
that the jurisdictional bar applies to “any claim
relating to any act or omission of” a failed bank. 12
U.S.C. § 1821(d)(13)(D)(ii) (emphasis added). That
language is controlling here.
EVEN UNDER ITS ERRONEOUS FIRREA HOLDING, THE
APPEALS COURT SHOULD HAVE CONCLUDED THAT THE
JURISDICTIONAL BAR APPLIES
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conclusion does not follow. The logical flaw is that
the Appeals Court conflated assignment of the Starkeys’
mortgage note (an asset) with assignment of the
Starkeys’ legal claims (a liability relating to that
asset). General legal principles treat notes and
liabilities as separate; indeed, under the holder-in-
due-course doctrine, the sale of a note does not
generally convey liabilities relating to that note. See
G. L. c. 106, §§ 3-301, 3-305 (adopting the Uniform
Commercial Code’s holder-in-due-course doctrine). 2
Thus, even if WaMu sold the Starkeys’ mortgage to
the trust pre-receivership, any legal liabilities
arising from the mortgage remained with WaMu. Those
liabilities were then acquired by the FDIC when it became
receiver. See supra p.9; 12 U.S.C. § 1821(d)(2)(A),
(G). Thus, even under the Appeals Court’s own reasoning,
the jurisdictional bar should apply.
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CONCLUSION
Alan E. Schoenfeld
(pro hac vice pending)
WILMER CUTLER PICKERING
HALE AND DORR LLP
7 World Trade Center
250 Greenwich Street
New York, N.Y. 10007
(212) 230-8800
alan.schoenfeld@wilmerhale.com
Albinas J. Prizgintas
(pro hac vice pending)
Arpit K. Garg
(pro hac vice pending)
WILMER CUTLER PICKERING
HALE AND DORR LLP
1875 Pennsylvania Ave. N.W.
Washington, D.C. 20006
(202) 663-6000
albinas.prizgintas@wilmerhale.com
arpit.garg@wilmerhale.com
- 25 -
ADDENDUM
ADDENDUM
Tab Description Page(s)
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TAB 1
NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us
No. 16-P-1594.
1 Louisa H. Starkey.
Add.1
2
Add.2
3
properly convey these assets into the trust (count 1), that the
induced to sign the mortgage and note (count 3), that the
the judge with a copy of Demelo v. U.S. Bank Nat'l Ass'n, 727
Add.3
4
F.3d 117 (1st Cir. 2013), and argued that FIRREA, as construed
The motion judge ordered the dismissal of all but one claim
of FIRREA. That motion was denied the same day it was filed.
Add.4
5
2014) (FDIC set December 30, 2008, as deadline for filing claims
Add.5
6
They alleged that they were not informed that anyone other than
Foreclose Mortgage. The notion that the mortgage loan was held
inference, since, three days before bringing the May 14, 2009,
trust, did nothing to clarify the question of who owned the note
Add.6
7
that the mortgage was securitized and sold to the trust long
that the trust obtained all its assets through a purchase from
over $1.5 billion. The PSA states that those assets include
the PSA, the "Mortgage Files," which include the mortgage notes
closing date.
Add.7
8
under Mass. R. Civ. P. 56, 365 Mass. 824 (1974), rather than as
Add.8
9
novo. Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 680 (2016).
2008. If, as the PSA suggests, the note and the mortgage were
the note and the mortgage would have been the property of the
in May, 2009.
Add.9
10
§ 1821(d)(13)(D)(ii).
American Nat'l Ins. Co. v. Federal Deposit Ins. Corp., 642 F.3d
the word "claim" accords with the purposes of FIRREA, which are
Corp., 348 F.3d 1075, 1079 (9th Cir. 2003), quoting Freeman v.
Federal Deposit Ins. Corp., 56 F.3d 1394, 1401 (D.C. Cir. 1995).
See Marquis v. Federal Deposit Ins. Corp., 965 F.2d 1148, 1154
banks"); Rosa v. Resolution Trust Corp., 938 F.2d 383, 396 (3d
Add.10
11
the assets of the failed bank from the FDIC as receiver and
bank. See, e.g., Tellado v. IndyMac Mtge. Servs., 707 F.3d 275,
280-281 (3d Cir. 2013); Benson v. JPMorgan Chase Bank, N.A., 673
Chase & Co., 755 F. Supp. 2d 441, 448 (E.D.N.Y. 2010). In those
cases, the suit was functionally against the failed bank because
the purchasing bank held, at the time of the suit, the assets
Co., supra at 1144; Benson, supra at 1214. This was the case
with the defendant bank in Demelo v. U.S. Bank Nat'l Ass'n, 727
Add.11
12
Demelo the United States Court of Appeals for the First Circuit
Forest Park, Inc., 198 F.3d 1259, 1263 n.3 (11th Cir. 1999)
("[The bank], having purchased the note from the [FDIC], stands
Millennium, Inc., 607 F.3d 905 (2d Cir. 2010). In that case, a
the notes, and the FDIC as receiver for the trust's creator.
the dispute. Id. at 908-910. The FDIC argued that the case was
Add.12
13
were only against the solvent trust –- not against the failed
bank or the FDIC as receiver. Since such claims could not have
Add.13
14
the failed bank from the FDIC -- for either money damages that
Add.14
15
The court held that FIRREA applied, but only because the
money damages claim was "functionally" against the failed bank
and "upon receiving a timely and meritorious claim for damages,
the FDIC can resolve it by making a payment to the claimant."
Id. at 108. It did not address whether a money-damages claim
that would be paid by the third party, not the FDIC, would be
barred by the statute. Likewise, it explicitly declined to
determine whether the claims procedure could be used to issue a
declaratory judgment binding against the third party. Id. at
108-109.
Add.15
16
See also, e.g., Beaton v. Land Court, 367 Mass. 385, 392 (1975)
the fact that the motion judge was presented with the FIRREA
these issues were not fully briefed before the motions were
this opinion.
So ordered.
Add.16
TAB 2
From: AppealsCtClerk@appct.state.ma.us
Sent: Thursday, October 18, 2018 10:30 AM
To: Solomont, Charles L.; Mailloux, Nancy H.
Subject: 2016-P-1594 - Notice of Order
[EXTERNAL EMAIL]
-COMMONWEALTH OF MASSACHUSETTS
H. CHRISTOPHER STARKEY & another vs. CHASE HOME FINANCE LLC & others
Please take note that, with respect to the PETITION for Rehearing filed for Chase Home Finance LLC, Deutsche Bank
National Trust Company, JP Morgan Chase Bank NA and Washington Mutual Mortgage Service Corporation by Attorney
Charles Solomont. (Paper #24), on October 18, 2018, the following order was entered on the docket:
RE#24: Defendants-Appellees JPMorgan Chase Bank, N.A.and Deutsche Bank National Trust Company, Acting Solely in its
Capacity as Trustee for the WAMU Mortgage Pass-Through Certificates Series 2006 AR1 Trust have filed a petition for
rehearing "or, in the alternative, clarification of [this court's] opinion of September 11, 2018 in the above captioned
appeal." The premise of that motion is that "[o]n Appeal, Appellants sought reversal only of the Trial Court's dismissal of
Count I." Petition at 4. That premise is incorrect. See, e.g., Appellants' Brief at 38 ("Therefore, it was error for the
Superior Court Judge to dismiss Plaintiffs remaining claims solely on the basis of the holding in DeMelo . . ."). Although
our opinion is clear, the motion is allowed to the extent it seeks clarification concerning the scope of our judgment: We
reversed the dismissal of counts 1, 2, 3, 4, 6, and 7 and remanded the case to the Superior Court for further proceedings
consistent with our opinion. To the extent the petition seeks rehearing it is denied. (Rubin, Lemire, Shin, JJ.) *Notice
Every attorney with an appeal pending in the Appeals Court must have an account with
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Add.17
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To: Glenn F. Russell, Jr., Esquire, Wayne E. George, Esquire, Charles L. Solomont, Esquire, Randall M. Levine, Esquire
----------------------------------------------------------------------
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Office at 617-725-8106. Thank you.
Add.18
TAB 3
BARNSTABLE, ss. SUPERIOR COURT
CIVIL ACTION
NO. 2009-00829
The plaintiffs, H. Christopher Starkey and Louisa A. Starkey ("the Starkeys"), are
homeowners who refinanced a $1,000,000 loan mortgaging their residence at 149 River Street,
South Yarmouth, with loan originator Washington Mutual, Inc. ("WaMu") in 2006. The
mortgage was quickly packaged into a security sold to Deutsche Bank National Trust Company
("Deutsche Bank"). In the course of the subsequent economic crisis, WaMu was seized and
placed into the receivership of the Federal Deposit Insurance Corporation ("FDIC"), which sold
certain WaMu assets, including the Starkeys' loan, to JPMorgan Chase Bank, N.A. ("JPMC"), on
September 25, 2008. The plaintiffs thereafter fell behind on their mortgage payments and
initiated these proceedings challenging the validity of the mortgage and the note on several bases,
including failure to properly convey or assign the note, an action for rescission of the note under
1Louisa A. Starkey
2As trustee for WaMu Mortgage Pass Through Certificates Series 2006-ARI Trust
3JPMorgan Chase Bank, N.A.; Chase Home Finance, LLC; Washington Mutual, Inc.; Washington Mutual Bank, FA;
Washington Mutual Mortgage Securities Corporation; Washington Mutual Mortgage Service Corporation
Add.19
("RE SPA"), fraud under G.L.c.93A, and violation of the Borrower's Interest Act, G.L.c.183,
§ 28C(a). Defendants Deutsche Bank, JPMC, Chase Home Finance, LLC ("Chase Home"),
Washington Mutual Mortgage Service Corporation ("WaMu Service") now move to dismiss the
entirety of the complaint for failure to state a claim under Massachusetts Rule of Civil Procedure
12(b)(6), as well as failure to exhaust administrative remedies against WaMu through the claims
processing regime set out by the Financial Institutions Reform, Recovery, and Enforcement Act
("FIRREA").
DISCUSSION
I. Standard of Review
court must accept as true the well pleaded factual allegations of the complaint, as well as any
reasonable inferences which can be drawn therefrom in the plaintiffs favor. Eyal v.Helen
Broadcasting Corp., 411 Mass.426,429 (1991). In order to survive such a motion, "a complaint
must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible
on its face."' Ashcroft v.Iqbal, 556 U.S.662, 678 (2009), quoting Bell Atl. Corp. v. Twombly,
550 U.S.544, 570 (2007).These factual allegations, taken as true, must be '"enough to raise a
right to relief above the speculative level "'. Iannacchino v.Ford Motor Co., 451 Mass.623, 636
(2008), quoting Twombly, 550 U.S.at 555. Therefore, "[w]hat is required at the pleading stage
are factual allegations plausibly suggesting (not merely consistent with) an entitlement to relief,
in order to reflect[] the threshold requirement ...that the plain statement possess enough heft to
sho[w] that the pleader is entitled to relief." Id, (internal quotations omitted). See Iqbal, 556
U.S.at 678 ("A claim has facial plausibility when the plaintiff pleads factual content that allows
Add.20
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.").
In DeMelo v. US. Bank, the United States Court of Appeals for the First Circuit
considered the preclusion under the Financial Institutions Reform, Recovery, and Enforcement
against the bank that assumed the mortgage pursuant to an FDIC purchase and assumption
agreement after the originating bank was placed into receivership. 727 F.3d 117 (1 st Cir. 2013).
Like the case at bar, the DeMelos sought to bring a claim under the Borrower's Interest Act,
claiming that the originating bank, "in making the loan, violated a state consumer protection
law." Id. at 121. The court held that FIRREA constituted a jurisdictional bar to the
consideration of the homeowners' state-court claims, where the claims processing regime set up
by FIRREA "is not optional: participation in its is mandatory for all parties asserting claims
against failed institutions" and "[t]he failure to pursue and administrative claim is fatal." Id. at
122 (internal citations and quotations omitted). Specifically, FIRREA precludes judicial review
of '"any claim relating to any act or omission of [the failed] institution"' , such as the "consumer
protection claims aris[ing] out of and relat[ing] exclusively to pre-receivership acts or omissions
of the failed institution" under the Borrower's Interest Act. Id at 122, quoting 12 U.S.C.A. §
1821(d)(13)(D).
In the case at bar, the Starkeys bring seven causes of action against the defendants, six of
which clearly "arise out of and relate exclusively to pre-receivership acts or omissions" of
Add.21
WaMu, the failed institution, or the FDIC. See id.
A. Count I
Count I alleges that the defendants, generally, do not have proper standing to enforce the
note against the Starkeys because the note was not properly conveyed or assigned. As with the
failed institution in DeMelo, "[t]he FDIC, as a matter of federal law, succeeded to the assets" of
WaMu as receiver, and "[a]cting in that capacity, the FDIC was empowered by federal law to
'transfer any asset or liability of [the failed bank] ... without any approval, assignment, or
1821(d)(2)(G)(i)(II). Thus, the Starkeys' claim as to the validity of the conveyance or assignment
of note to the current holder necessarily arise from the actions or omission of either WaMu or the
FDIC, as WaMu's successor. For that reason, Count I falls within the FIRREA jurisdictional bar;
B. Count II
Count II claims that the Starkeys have a right to rescind the note under G.L.c. 140D,
because WaMu failed to accurately disclose financing charges and give required consumer
information to the Starkeys ( e.g. telephone notifications and various publications including the
Notice of Right to Cancel, the Truth in Lending Disclosure Statement, and the Consumer
Handbook on Adjustable Rate Mortgages). The Starkeys do not allege any conduct or omissions
by any party other than WaMu that forms the grounds for recision under c.140D, and thus the
Starkeys are required to pursue this claim through the process set out in FIRREA. Accordingly,
Add.22
C. Count III
Count III sounds in common law fraud, resting on three types of misrepresentations.
First, the plaintiffs allege that the defendants, generally, failed to disclose material facts regarding
the loan transaction. The plaintiffs plead a multitude of facts regarding the acts and omissions of
WaMu that support the contention that the failed institution engaged in extensive fraud during
the origination of the loan. 4 However, the plaintiffs do not plead any facts relating to conduct by
Deutsche Banlc, JPMC, Chase Home, or WaMu Service at any time thereafter; this aspect of the
fraud claim finds no support against any defendant except WaMu. Second, the plaintiffs allege
that the defendants misrepresented facts in the origination of the loan. Clearly, as WaMu was the
only defendant that was a party to the origination of the loan, this aspect of the plaintiffs' fraud
Finally, the plaintiffs contend that the defendants created false records for the purposes of
deceiving the plaintiffs and the court. While this contention could be construed to refer to some
unspecified creation of false records by Deutsche Banlc, JPMC, Chase Home, or WaMu Service
during the course of this litigation, such a contention is without any support in the pleadings. 5
4
These well pleaded facts include, inter alia, WaMu's fraudulent appraisal of the plaintiffs' home, WaMu's
securities fraud in the securitization of the plaintiffs' loan, WaMu's fraud in the inducement causing the plaintiffs to
enter into a unfavorable loan agreement, WaMu's misrepresentations that it was the 'true' lender when the real parties
in interest were other financial institutions involved in the securitization process, WaMu's failure to notify the
plaintiffs of transfer of the note for the purposes ofrecision notification, WaMu's breach of its fiduciary duty to the
plaintiffs, WaMu's falsification of the plaintiffs' income and home value to obtain approval for the loan, and
WaMu's receipt of undisclosed fees from intermediaries for securitization of the loan.
5
At hearing, the plaintiffs invoked the specter of the possible falsity of the FDIC--JPMC Purchase and Assumption
Agreement that the defendants included as an attachment to their Motion to Dismiss, providing this jurist with copies
ofpleadin.gs filed in wholy unrelated cases in other jurisdictions that contain passing references to a P&A Agreement
with a different number of pages than the one produced by the defendants in this case. The plaintiffs failed to
develop this implication of fraud on the court beyond vague references to the apparent inconsistency; until such time
as such a claim is formally lodged with this court, it will be disregarded as a red herring. Further, the specific terms
Add.23
Any claim for fraud must be pleaded with particularity under Massachusetts Rule of Civil
Procedure 9(b), which requires that the plaintiff identify specify the creator, time, place and
substance of the alleged false document or misrepresentation, as well as the particulars of the
plaintiffs' detrimental reliance on the falsehood. See, e.g., Guo v. Datavantage Corp., 2008 WL
6603 3 8, at * 5 (D .Mass. 2008). In the absence of any pleaded facts identify misrepresentations or
false documentation produced any defendant, with the exception of WaMu, this aspect of the
plaintiffs' fraud claim also falls wholly within the confines ofFIRREA's claims processing
scheme for claims arising from the acts of the failed institution. See DeMelo, 727 F.3d at 122.
D. Count IV
Count IV asserts that the plaintiffs had a right to rescission under the terms of the note
that extended for four years if there were specific violations of G. L. c. 140D and related
provisions of the Code of Massachusetts Regulations by the originator. While the plaintiffs
assert that any defendant who currently holds the note is bound by the terms of the note,
including to respond to the plaintiffs' notification of rescission, a breach can only be found where
the plaintiffs prevail on the merits of the underlying claim for violation of c. 140D, set out in
Count IL Thus, the breach of contract claim arises out of the acts or omissions of WaMu, and is
precluded by FIRREA for the same reasons discussed with respect to Count IL Id. For that
reason, the defendants' Motions to Dismiss must be ALLOWED with respect to Count IV.
of the P&A Agreement are irrelevant where the plaintiffs' claims against the defendants (with the exception of
WaMu) are entirely predicated on the fact that those defendants assumed the plaintiffs' loan from the FDIC after
WaMu failed, thus subjecting the plaintiffs to the strictures of the FIRREA-dictated claims process. See DeMelo,
727 F.3d at 122.
Add.24
D. CountVI
Count VI also alleges fraud, this time under the auspices of the consumer protection
statute, G. L. c. 93A. The plaintiffs specifically claim that WaMu offered them a loan at a teaser
rate which is presumptively unfair, and further reallege "well over 50 violations" listed elsewhere
in the complaint. As discussed above with respect to Count III, the plaintiffs' common law fraud
claim, this court can only identify pleaded facts relating to the conduct of WaMu at the time of
the loan origination that could support a claim of fraud-the plaintiffs fail to allege any facts
relating to fraud by the other defendants, let alone any sufficient to meet the heightened pleading
standard. Accordingly, the 93A claim is also limited solely to the acts and omission of WaMu, a
failed institution, before it was placed into the receivership of the FDIC, and thus this claim is
precluded by the mandatory claims processing scheme set out in FIRREA. Id Thus, the
E. CountVII
The plaintiffs' final claim is the one that tracks most closely with the facts in DeMelo,
violation of the Borrower's Interest Act, G. L. c. 183, §28C(a) by the originating bank. As
extensively discussed above and in DeMelo, this type of state consumer protection claim arising
solely from the acts or omissions of an originating bank, which thereafter fails, must be first filed
with the FDIC and subjected to the claims-processing regime set out in FIRREA. Jd. at 121. The
plaintiffs' failure to exhaust such administrative remedy therefore precludes this claim, and the
Add.25
Fax Server 9 / 8 / 2 0 1 4 3 : 2 3 : 34 PM PAGE 2 / 002 Fax Server
The Court now turns to the remaining claim, Counts V, violation of the provisions of the
federal RESP A statute relating to qualified written requests for loan servicing infom1ation on a
residential mortgage. 1 2 U.S.C. § 2605(e). The substance of the claim is that the defendants had
a duty under RESPA to respond to each of the plaintiffs' five written communications sent
between January and October of 2009 with the extensive infonnation and documentation therein.
As the duties and alleged omissions that this claim arises from occurred entirely after the loan
was assumed by JPMC from the FDIC, it is not subject to claim preclusion for failure to exhaust
The defendants argue that the plaintiffs' five letters do not constitute "qualified written
requests" under 1 2 U.S.C.A. § 2605(e), in that the subject of the letters was not a request for
loan servicing information, but a contention that the note was invalid. However, the matter
before the Court at this time is a motion to dismiss, not one for summary judgment. The
plaintiffs have adequately pleaded that they sent five letters containing subject matter that
rendered them qualified written communications, that the response to the letters was inadequate,
and that negative credit reporting continued during the sixty days following each letter, in
violation of the provisions of RESPA. Taking these facts as true, the plaintiffs have stated a
claim upon which relief may be granted; the merits of the nature of the letters as qualified written
The defendants also argue that only JPMC, as the loan servicer of the plaintiffs'
mortgage, is bound by RESPA, and thus the plaintiffs fail to state a claim against the other
defendants. The Court agrees. RESP A clearly specifies which entities have a duty to respond to
Add.26
qualified written requests by borrowers: Section 2605(e) is titled "duty of loan servicer to
respond to borrower inquiries". Only JPMC was a servicer of the plaintiffs' loan at the time the
letters were sent; none of the other named defendants has duty to respond to the plaintiffs letters
under RESPA. Accordingly, the defendants' Motions to Dismiss must be ALLOWED with
ORDER
For the reasons stated herein, it is hereby ORDERED that JP Morgan Chase Bank,
N.A.'s Motion to Dismiss be DENIED as to CountV, but the defendants' Motions to Dismiss
September 4, 2014
Add.27
TAB 4
12 U.S.C. § 1821(d)(13)
(i) have all the rights and remedies available to the insured
depository institution (before the appointment of such
conservator or receiver) and the Corporation in its corporate
capacity, including removal to Federal court and all
appellate rights; and
Add.28
12 U.S.C. § 1821(d)(13)
(i) maximizes the net present value return from the sale or
disposition of such assets;
Add.29
CERTIFICATE OF SERVICE