MBIA Insurance v. Federal Deposit Insurance
404 U.S. App. D.C. 156
| D.C. Cir. | 2013Background
- FIRREA prioritizes certain expenses of a failed institution, with administrative expenses given priority over general creditors under 12 U.S.C. § 1821(d)(11)(A).
- MBIA, as insurer for IndyMac Bank securitizations, sued FDIC as conservator arguing PSAs were approved and thus MBIA’s damages are administrative expenses under § 1821(d)(11)(A) and § 1821(d)(20).
- IndyMac Federal and the FDIC entered into a P&A and assumed the PSAs, with the FDIC later selling assets to OneWest Bank and repudiating certain contracts; the No Value Determination left MBIA with no distribution.
- MBIA’s amended complaint asserts damages from breaches of PSAs and Put Back obligations, plus claims against FDIC Corporate, with MBIA contending priority should attach to these damages as administrative expenses.
- The district court dismissed MBIA’s claims as not entitled to administrative priority and as prudentially moot after the No Value Determination, leaving MBIA as a general creditor; MBIA appeals.
- MBIA contends the FDIC’s actions and conduct post-appointment constitute formal approval under § 1821(d)(20), supporting administrative priority; the FDIC contends only written approval after appointment suffices and that MBIA’s broad reading would undermine the depositor preference.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ‘approved’ under § 1821(d)(20) requires written sanction. | MBIA argues broad reading; approval can be implied from P&A and servicing. | FDIC argues strict, written approval required to grant priority. | Written approval required; broad reading rejected. |
| Whether MBIA’s damages from PSAs qualify as administrative expenses under § 1821(d)(11)(A). | Damages from insurer-backed securitizations should be administratively prioritized. | No value; priority limited to narrowly defined expenses. | Damages not entitled to administrative priority. |
| Whether the district court properly dismissed as prudentially moot after No Value Determination. | No value determination should not moot MBIA’s claims. | No Value Determination forecloses redress for general creditors. | Prudential mootness dismissal affirmed. |
| Whether the action is barred by § 1821(j) against injunctive relief. | § 1821(j) does not bar all relief when FDIC acts beyond powers. | § 1821(j) broadly bars court action against FDIC exercising conservator/receiver powers. | § 1821(j) bars injunctive relief; no jurisdiction to challenge process. |
Key Cases Cited
- Freeman v. FDIC, 56 F.3d 1394 (D.C. Cir. 1995) (recognizes drastic restrictions on court relief against FDIC)
- Wells Fargo Bank v. FDIC, 310 F.3d 202 (D.C. Cir. 2002) (Skidmore deference for regulatory interpretation; context of FIRREA scheme)
- Russello v. United States, 464 U.S. 16 (Supreme Court 1983) (support for interpretive approach to ambiguity in statutes)
- Jarecki v. G.D. Searle & Co., 367 U.S. 303 (Supreme Court 1961) (noscitur a sociis doctrine used in interpretation)
- National Trust for Historic Preservation v. FDIC, 995 F.2d 238 (D.C. Cir. 1993) (limits on judicial review of FDIC actions; § 1821(j) admonitions)
- Nashville Lodging Co. v. RTC, 59 F.3d 236 (D.C. Cir. 1995) (repudiation under FDIC powers; relation to timing of actions)
- Doe v. United States, 372 F.3d 1347 (Fed. Cir. 2004) (utilized as comparative statutory interpretation)