Rundgren v. Washington Mutual Bank, FA
2014 U.S. App. LEXIS 14622
| 9th Cir. | 2014Background
- Rundgrens refinanced with WaMu for ~$3,000,000 on their Hawaii property; alleged WaMu fraud in loan origination.
- WaMu was seized by the OTS and placed in FDIC receivership; FDIC transferred WaMu assets, including the Rundgrens’ mortgage, to Chase under a Purchase and Assumption Agreement.
- FDIC retained most liabilities; the agreement allows Chase to have stability while the FDIC resolves claims.
- Rundgrens sued Chase and WaMu in Hawaii state court; sought injunctive relief, rescission, damages, and TILA remedies among others.
- Chase removed the case to federal court; district court dismissed for lack of jurisdiction under FIRREA’s exhaustion requirement (12 U.S.C. § 1821(d)(13)(D)).
- Court must determine whether Rundgrens’ claims are “claims” and relate to WaMu’s acts or omissions as FDIC receiver.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FIRREA exhausts all non-exhausted claims | Rundgrens argue lack of exhaustion precludes jurisdiction. | WaMu/FDIC claims require administrative review under § 1821(d)(5)–(6). | Yes, exhaustion required; jurisdiction stripped. |
| Whether Rundgrens’ complaint is a claim or an affirmative defense | Claims should be treated as independent actions against WaMu/Chase. | Cannot recharacterize as affirmative defenses under FIRREA. | Claims are not affirmative defenses; they are subject to exhaustion. |
| Whether the claims relate to WaMu’s acts or omissions as FDIC receiver | WaMu’s alleged fraud relates to loan origination and securing the mortgage. | No independent WaMu-WaMu liability; claims relate to institution’s acts. | Yes, relate to WaMu’s acts/omissions; thus barred from district court. |
| Whether the purchasers’ rights or defenses survive nonjudicial foreclosure context | Foreclosure defenses should block the sale. | Foreclosure process enabled by Hawaii nonjudicial regime; no court relief. | Foreclosure defenses do not override FIRREA exhaustion. |
Key Cases Cited
- McCarthy v. FDIC, 348 F.3d 1075 (9th Cir. 2003) (exhaustion applies to debtors as well as creditors)
- Benson v. JPMorgan Chase Bank, N.A., 673 F.3d 1207 (9th Cir. 2012) (claims procedure governs disposition of claims against receivership assets)
- Henderson v. Bank of New England, 986 F.2d 319 (1st Cir. 1993) (FDIC claims process; efficiency concerns in receivership)