Jahn v. Federal Deposit Insurance Corporation
828 F. Supp. 2d 305
D.D.C.2011Background
- USIG Chapter 7 Trustee sues FDIC as receiver for Park Avenue Bank to recover $6.5 million for alleged fraudulent transfers, civil conspiracy to deceive, and conversion.
- FDIC moves to dismiss, asserting superior FIRREA rights under 12 U.S.C. § 1821(d)(17) and failure to exhaust administrative remedies for conspiracy and conversion.
- Alleged scheme involved Charles Antonucci, Bedford Consulting, and Oxygen Unlimited; Oxygen purportedly funded USIG, leading to a roundtrip transfer of funds via Bedford to Antonucci and back to the Bank.
- USIG transferred $6.5 million to Bedford, which then transferred to Antonucci and ultimately to the Bank as a purported capital investment.
- USIG filed a voluntary Chapter 11 bankruptcy (later converted to Chapter 7); FDIC was appointed receiver of Park Avenue Bank on March 12, 2010.
- An adversary proceeding in Tennessee bankruptcy court against Bedford was dismissed from FDIC; plaintiff proceeded in district court seeking relief against the FDIC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do FDIC’s FIRREA rights bar Count I? | FDIC’s rights under 12 U.S.C. § 1821(d)(17) do not bar the trustee’s fraudulent transfer claim. | FDIC has superior rights to avoid and recover funds; § 1821(d)(17) preempts the trustee’s claim. | Count I dismissed due to FDIC’s superior rights. |
| Are FDIC’s avoidance and recovery rights under § 1821(d)(17) applicable to this case? | Only recovery rights apply, not avoidance in this context. | FDIC has both avoidance and recovery rights under § 1821(d)(17). | FDIC has both avoidance and recovery rights; applicable here to foreclose the claim. |
| Does Subparagraph (C) of § 1821(d)(17) bar recovery from a good-faith transferee? | USIG took funds for value in good faith; § 1821(d)(17)(C) forecloses recovery against such transferees. | Subparagraph (C) limits recovery where the FDIC pursues Subparagraph (B) recoveries; here the FDIC seeks avoidance/defense, not recovery from USIG. | Subparagraph (C) does not defeat avoidance; the FDIC may proceed with avoidance without conflicting on recovery here. |
| Are Counts II and III subject to dismissal for lack of subject matter jurisdiction due to exhaustion? | Administrative claim notice should cover conspiracy and conversion. | No exhaustion since claims not raised in the administrative proof of claim. | Counts II and III dismissed for lack of jurisdiction due to failure to exhaust administrative remedies. |
Key Cases Cited
- Branch v. FDIC, 833 F. Supp. 56 (D. Mass. 1993) (jurisdictional exhaustion and scope of claims in FDIC proceedings)
- Nants v. FDIC, 864 F. Supp. 1211 (S.D. Fla. 1994) (new claims not in proof of claim require exhaustion)
- Coleman v. FDIC, 826 F. Supp. 31 (D. Mass. 1993) (original complaint controls claims asserted against FDIC)
- Brown Leasing Co. v. FDIC, 833 F. Supp. 672 (N.D. Ill. 1993) (fair notice in administrative claim process for FDIC claims)
- In re Colonial Realty Co., 980 F.2d 125 (2d Cir. 1992) (FDIC rights under § 1821(d)(17) and priority analysis)
- FDIC v. Elio, 39 F.3d 1239 (1st Cir. 1994) (avoidance and recovery parallel to bankruptcy code concepts)
- Southmark Corp. v. Schulte, Roth & Zabel, L.L.P., 242 B.R. 330 (N.D. Tex. 1999) (distinguishing avoidance vs. recovery rights in bankruptcy-like contexts)