Summerhaze Company v. Federal Deposit Insurance Corporation
2014 UT 28
| Utah | 2014Background
- Plaintiffs Summerhaze & related entities sued the Bank for improper signatures, negligence, and respondeat superior after embezzlement by a Bank employee.
- Bank was insured by BancInsure under a Financial Institution Bond; coverage up to $2M.
- FDIC became receiver after Utah closed the Bank in May 2009; creditors received notice to file administrative claims by the August 5, 2009 deadline.
- Plaintiffs filed a claim with FDIC after the deadline; FDIC disallowed it as late.
- District court dismissed for lack of subject matter jurisdiction, ruling FIRREA exhaustion was mandatory and not satisfied.
- Court holds exhaustion of FIRREA’s administrative claims review is a jurisdictional prerequisite and that Plaintiffs failed to exhaust.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FIRREA exhaustion is a jurisdictional prerequisite. | Plaintiffs contend FIRREA does not apply or does not require exhaustion. | FDIC argues FIRREA applies and requires timely administrative claims; pre-/post-receivership exhaustion is mandatory. | Yes; exhaustion is mandatory and jurisdictional. |
| Whether pre-receivership claims are subject to FIRREA exhaustion. | Plaintiffs filed pre-receivership; exhaustion should not be required. | FIRREA applies to all claims against failed banks, regardless of filing time. | Exhaustion applies to prereceivership claims. |
| Whether the Bond/delay in filing affects jurisdiction or relief. | Tender of defense to BancInsure undermines FIRREA process; no direct claim against Bank/FDIC. | Tender of defense does not defeat jurisdiction; claims still fall within FIRREA. | Tender did not deprive Bank/FDIC of authority; filing deadline controls. |
| Whether due process was violated by the dismissal for lack of exhaustion. | Dismissal deprived Plaintiffs of hearing on merits. | FIRREA procedures foreclose due process concerns when exhausted. | No due process violation; exhaustion was not complied with. |
Key Cases Cited
- Brady Dev. Co. v. Resolution Trust Corp., 14 F.3d 998 (4th Cir. 1994) (Exhaustion mandatory for FIRREA claims; pre/post-receivership treated similarly)
- Tellado v. IndyMac Mortg. Servs., 707 F.3d 275 (3d Cir. 2013) (Administrative claims review mandatory for FDIC/RTC claims; timely filing required)
- Mustang Partners v. Resolution Trust Corp., 946 F.2d 103 (10th Cir. 1991) (Exhaustion required; pre/post claims under FIRREA)
- Intercontinental Travel Mktg., Inc. v. FDIC, 45 F.3d 1278 (9th Cir. 1994) (Administrative claims process governs FIRREA actions)
- Bueford v. Resolution Trust Corp., 991 F.2d 481 (8th Cir. 1993) (Exhaustion requirement applies to FIRREA claims; no automatic preemption)