INTERFACE KANNER, LLC, Plаintiff-Counter-Defendant-Appellant, v. JPMORGAN CHASE BANK, N.A., Defendant-Cross-Defendant-Appellee, National Association, Defendant-Appellee, Federal Deposit Insurance Corporation as Receiver for Washington Mutual Bank, Intervenor-Cross Claimant-Counter Claimant-Appellee.
No. 11-13579.
United States Court of Appeals, Eleventh Circuit.
Jan. 10, 2013.
Adopting the petitioner‘s interpretation of the statutory language would mean that every time the Supreme Court issued a decision recognizing a new, retroactively applicable constitutional right, the statute of limitations bar would be lifted for any and all other claims a petitioner wished to bring. And that would be true no matter how old those other claims were, no matter how unrelated they were to the new law claim, and no matter how baseless the new law claim was in that case.
Two examples illustrate the absurdity of the petitioner‘s interpretation. Under it, any petitioner could have used the decision in Atkins v. Virginia, 536 U.S. 304, 122 S.Ct. 2242, 153 L.Ed.2d 335 (2002), to lift the statute of limitations bar on any and all non-Atkins claims, even if the petitioner had an IQ in the genius range and even if he were not under a sentence of death, making the Atkins claim doubly frivolous. And the Supreme Court‘s decision in Miller v. Alabama, — U.S. —, 132 S.Ct. 2455, 183 L.Ed.2d 407 (2012), could be used by any petitioner to lift the statute of limitations bar for any and all otherwise time-barred, non-Miller claims he wants to assert, even if he is not serving a life imprisonment without parole sentence and even if he was not a juvenile when he committed his сrimes, making the Miller claim doubly frivolous.
The petitioner‘s position is contrary to “the common mandate of statutory construction to avoid absurd results,” Rowland v. California Men‘s Colony, Unit II Men‘s Advisory Council, 506 U.S. 194, 200, 113 S.Ct. 716, 720, 121 L.Ed.2d 656 (1993); see Corley v. United States, 556 U.S. 303, 317, 129 S.Ct. 1558, 1568, 173 L.Ed.2d 443 (2009) (interpreting a statute to avoid “the absurdities of literalism that show that Congress could not have been writing in a literalistic frame of mind“); E.E.O.C. v. Commercial Office Products Co., 486 U.S. 107, 120-121, 108 S.Ct. 1666, 1674, 100 L.Ed.2d 96 (1988) (rejecting an interpretation that would lead to “absurd or futile results . . . plainly at vаriance with the policy of the legislation as a whole, which this Court need not and should not countenance“) (quotation marks omitted); United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981) (“[A]bsurd results are to be avoided” in statutory construction.); Miedema v. Maytag Corp., 450 F.3d 1322, 1326 (11th Cir. 2006) (It is a “venerable” principle that “statutory language should not be applied literally if doing so would produce an absurd result.“).
There is enough unavoidable absurdity in life. We should avoid absurdity in the law. Today‘s decision does.
Joseph Brooks, Federal Deposit Insurance Corporation (FDIC), Appellate Litig. Unit, Arlington, VA, Dora Faye Kaufman, Liebler, Gonzalez & Portuondo, PA, Miami, FL, for Intervenor-Cross Claimant-Counter Claimant-Appellee.
Christopher J.M. Collings, Morgan, Lewis & Bockius, LLP, Miami, FL, Kathleen M. Waters, Morgan, Lewis & Bockius, LLP, Los Angeles, CA, for Defendants-Appellees.
Before DUBINA, Chief Judgе, and PRYOR and ANDERSON, Circuit Judges.
DUBINA, Chief Judge:
Appellant Interface Kanner, LLC (“Interface“) appeals two district court orders that collectively granted Appellee JPMorgan Chase Bank, N.A.‘s (“JPMorgan“) motion for summary judgment, denied Interface‘s motion for summary judgment, and granted Appellee Intervenor Federal Deposit Insurance Corporation‘s (the “FDIC“) request for declaratory relief. In its оrder granting summary judgment, the district court found that Interface lacked standing to assert a breach of lease claim against JPMorgan. The district court also declared that the FDIC owes no damages to Interface. For the reasons that follow, we vacate the judgment of the district court and remand with instructions to dismiss for lack of subject matter jurisdiction.
I.
On April 15, 2008, Interface, as lessоr, and Washington Mutual Bank (“WaMu“), as lessee, entered into a lease agreement (the “Lease“) involving a parcel of vacant real property located in Martin County, Florida. The Lease obligated Interface to obtain necessary permits, approvals, and utilities for the property and construct a bank on the premises. Thereafter, WaMu would use the property as a bank branch location.
On September 25, 2008, prior to performance, WaMu closed as a “failed bank” and entered receivership under the direction of the FDIC. Consequently, under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA“),
13.5 Successors. All terms and conditions of this Agreement shall be binding on the successors and assigns of the Receiver, the Corporation and [JPMorgan]. Except as otherwise sрecifically provided in this Agreement, nothing expressed or referred to in this Agreement is intended or shall be construed to give any Person other than the Receiver, the Corporation and [JPMorgan] any legal or equitable right, remedy or claim under or with respect to this Agreement or any provisions contained herein, it being the intention of the parties hereto that this Agreement, the obligations and statements of responsibilities hereunder, and all other conditions and provisions hereof are for the sole and exclusive benefit of the Receiver, the Corporation and [JPMorgan] and for the benefit of no other person.
[R. 37-3 at 45.]
Under the P & A Agreement, JPMorgan acquired some, but not all, of the assets and liabilities which passed from WaMu to the FDIC. While the P & A Agreement provides JPMorgan the option to accept or reject “Bank Premises” leases, it does not include a similar allowance for “Other Real Estate” leases.1 Interface argues that JPMorgan assumed the Lease automatically under the P & A Agreement as “Other Real Estate,” while JPMorgan and the FDIC argue that JPMorgan had 90 days to accept or reject the Lease as a “Bank Premises.”
Within 90 days of executing the P & A Agreement, JPMorgan gave the FDIC and Interface notice that it would not assume the Lease. Following JPMorgan‘s election, the FDIC continued to treat the Lease as a retained liability. Pursuant to
Thereafter, neither the FDIC nor JPMorgan made any payments under the Lease. Thus, on December 23, 2009, Interface provided JPMorgan with a default notice. JPMorgan did not cure this alleged default, resulting in Interface filing this lawsuit against JPMorgan in the Southern District of Florida asserting one count of breach/repudiation аnd/or abandonment of the Lease. The FDIC intervened and asserted both a counterclaim and cross-claim for declaratory relief. Specifically, the FDIC sought a declaration that (1) the FDIC did not sell, transfer or assign the Lease to JPMorgan, (2) the FDIC timely repudiated the Lease, and (3) Interface failed to file a timely claim with the FDIC and is not entitled to damages. Subsequently, Interfаce, JPMorgan, and the FDIC all filed cross-motions for summary judgment.
Interface appealed the initial district court order. This court dismissed Interface‘s appeal sua sponte, however, because the order did not dispose of all claims against all parties. Following dismissal of the premature appeal, the district court issued a second order pertaining to the FDIC‘s request for declaratory relief and Interface‘s post-summary judgment motions for a new trial and reconsideration. In its second order, the district court denied both of Interface‘s post-summary judgment motions and granted declaratory relief to the FDIC. This timely appeal followed.
Interface contends that the district court erred and that it has standing to maintain the current action because (1) it is an intended third-party beneficiary to the P & A Agreement and (2) it is in privity of estate with JPMorgan. Interface also argues that the district court erred in granting declaratory relief to the FDIC.
II.
We review standing determinations de novo. Elend v. Basham, 471 F.3d 1199, 1204 (11th Cir. 2006). “We review a summary judgment ruling de novo, viewing the materials presented and drawing all factual inferences in a light most favorable to the non-moving party.” Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir. 2005).
III.
A. Interface‘s Standing to Sue
The distriсt court granted JPMorgan‘s summary judgment motion on the grounds that Interface is not an intended third-party beneficiary to the P & A Agreement under Florida law. We hold that Interface cannot enforce the P & A Agreement under federal common law because it is not an intended third-party beneficiary of that contract. Consequently, the district court lacked subject matter jurisdiction over Interface‘s claim against JPMorgan, and the judgment of the district court is vacated. See Nat‘l Parks Conservation Ass‘n v. Norton, 324 F.3d 1229, 1240 (11th Cir. 2003) (“[A]lthough we agree with the [district] court‘s conclusions regarding justiciability of these claims, . . . we vacate its order of summary judgment and remand to the district court with instructions to dismiss these claims pursuant to
1. Applicable Law
The district court applied Florida law in determining that Interface is not an intended third-party beneficiary tо the P & A Agreement because “[t]he question of whether, for standing purposes, a non-party to a contract has a legally enforceable right is a matter of state law.” AT&T Mobility, LLC v. Nat‘l Ass‘n for Stock Car Auto Racing, Inc., 494 F.3d 1356, 1360 (11th Cir. 2007). While this is true, the P & A Agreement includes a choice-of-law provision which provides that federal law controls:
13.4 Governing Law. This agreement and the rights and obligations hereunder shall be governеd by and construed in accordance with the federal law of the United States of America, and in the absence of controlling federal law, in accordance with the laws of the state in which the main office of the failed bank is located.
[R. 37-3 at 35.]
In diversity cases, the choice-of-law rules of the forum state determine what law governs, American Family Life Assurance Co. of Cоlumbus, Georgia v. United States Fire Co., 885 F.2d 826, 830 (11th Cir. 1989), and under Florida law, courts “enforce choice-of-law provisions unless the law of the chosen forum contravenes strong public policy.” Maxcess, Inc. v. Lucent Technologies, Inc., 433 F.3d 1337, 1341 (11th Cir. 2005) (per curiam) (internal citations and quotations omitted). The parties have not offered any reason why the choice-of-law provision above contravenes strong public policy, and the court is aware of no such reason. Accordingly, federal law applies in determining whether Interface is an intended third-party beneficiary to the P & A Agreement.
2. Interface is not an intended third-party beneficiary to the P & A Agreement
To assert a breach of lease claim against JPMorgan, Interface must establish the existence of a contract between itself and JPMorgan. Interfaсe seeks to do so by enforcing its interpretation of the P & A Agreement entered between FDIC and JPMorgan. That is, Interface argues that under the P & A Agreement, JPMorgan now stands in the shoes of the FDIC who took over as lessee from WaMu when it failed. JPMorgan and the FDIC contend that Interface lacks standing to do so.
“[S]tanding is a threshold jurisdictional question which must be addressed prior to and indeрendent of the merits of a party‘s claims.” Bochese, 405 F.3d at 974 (quoting Dillard v. Baldwin Cnty. Comm‘rs, 225 F.3d 1271, 1275 (11th Cir. 2000)). “In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Koziara v. City of Casselberry, 392 F.3d 1302, 1304 (11th Cir. 2004) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975)). Interface can only establish standing if it is an intended third-party beneficiary of the P & A Agreement. See Bochese, 405 F.3d at 981; see also Kremen v. Cohen, 337 F.3d 1024, 1029 (9th Cir. 2003) (applying federal common law in finding that “[a] party can enforce a third-party contract only if it reflects an express or implied intention of the parties to the contract to benefit the third party” (internal quotation marks omitted)).
Under federal common law, the court looks to general contract principles in interpreting the P & A Agreement. Ellinger v. United States, 470 F.3d 1325, 1336 (11th Cir. 2006); see also Belize Telecom, Ltd. v. Gov‘t of Belize, 528 F.3d 1298, 1307 n. 11 (11th Cir. 2008) (“When interpreting contracts under federal law, courts look to general common law on contracts.“). One such principle is that only a pаrty to a contract or an intended third-party beneficiary may sue to enforce the terms of a contract. GECCMC, 2005-C1 Plummer St. Office L.P. v. JPMorgan Chase Bank, N.A., 671 F.3d 1027, 1032-33 (9th Cir. 2012) (applying federal common law); RESTATEMENT (SECOND) OF CONTRACTS § 304 (1981). In contrast, a beneficiary
Further, government contracts, such as the P & A Agreement, “often benefit the public, but individual members of the public are treated as incidental beneficiaries unless a different intention is manifested.” RESTATEMENT (SECOND) OF CONTRACTS § 313(2) cmt. a. Thus, third parties to government contracts “are generally assumed to be incidental beneficiaries.” Klamath Water Users Protective Ass‘n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 1999). To overcome this presumption, Interface must show that the pаrties “clear[ly] inten[ded]” that Interface be permitted to sue to enforce the P & A Agreement. Beckett v. Air Line Pilots Ass‘n, 995 F.2d 280, 288 (D.C. Cir. 1993). Although Interface “need not be specifically or individually identified in the contract, [Interface] must fall within a class clearly intended to be benefited thereby.” Montana v. United States, 124 F.3d 1269, 1273 (Fed. Cir. 1997).
Interface‘s task of demonstrating “clear intent” is made significantly more difficult by the P & A Agreement‘s express disclaimer to the contrary. As rеferenced above, section 13.5 of the P & A Agreement expressly disclaims any intent to create third-party beneficiaries. To overcome this disclaimer, Interface points out that section 13.5 also states that this disclaimer is limited “as otherwise specifically provided in this Agreement.” Interface argues that this disclaimer limitation, when read together with language from seсtion 2.1, which provides that “[JPMorgan] agrees to pay, perform, and discharge, all of the liabilities of [WaMu] as of Bank Closing,” creates a clear intention to benefit a landlord such as Interface.
In an almost identical case, GECCMC, 2005-C1 Plummer Street Office L.P. v. JPMorgan Chase Bank, N.A., the Ninth Circuit Court of Appeals rejected the same argument that Interface asserts here, concluding that the P & A Agreement did not “reflect a ‘clear intent’ to confer a benefit on [the landlord.]” 671 F.3d at 1034. More specifically, the court found that the landlord‘s “reliance on section 2.1 . . . does not evince the specificity required to carve out enforceable rights as contemplated by section 13.5,” nor does section 2.1 “show the ‘clear intent’ needed to rebut the presumption that [the landlord] is merely an incidental beneficiary.” Id. at 1035; see also Wichita Falls Office Assocs. v. Banc One Corp., No. 3:90-CV-1301-H, Mem. Op. at 19 (N.D.Tex. Nov. 22, 1993), aff‘d without opinion, 40 F.3d 384 (5th Cir. 1994) (finding that the phrase “except as otherwise specifically provided” did not reference other sections of a P & A Agreement in a clear enough manner to overcome the presumption against intended third-party beneficiaries). We agree with this reasoning and find that the P & A Agreement does not provide a “clear intent” to benefit Interface. Thus, we conclude that Interface is not an intended third-party beneficiary to the P & A Agreement and cannot sue to enforce it.
3. Privity of Estate
Interface also argues that it has standing to sue JPMorgan for breach of lease because the two are in privity of estate. This argument fails because it is dependent on Interface‘s ability to enforce its interpretation of the P & A Agreement, which, as discussed above, Interface lacks standing to do.
The district court declared that the FDIC owed no damages to Interface based on any potential claim Interface had against the FDIC. This determination was erroneous. The district court did not have the authority to grant declaratory relief because Interface had yet to submit a claim against the FDIC through the FIRREA administrativе claims process. Except as otherwise provided in FIRREA, “no court shall have jurisdiction over—(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution for which the [FDIC] has been appointed receiver . . . or (ii) any claim relating to any act or omission of such institution or the [FDIC.]”
While FIRREA does not provide “an explicit mandate for exhaustion of administrative remedies[,] [its] provisions are accepted by the cases and by Congress as having that meaning.” F.D.I.C. v. Lacentra Trucking, Inc., 157 F.3d 1292, 1294 (11th Cir.1998). Thus, for post-receivership claims—such as Interface‘s potential claim against the FDIC—the court has “no subject matter jurisdiction unless the claimant has exhausted the administrative remedies.” Damiano v. F.D.I.C., 104 F.3d 328, 333 (11th Cir.1997); see also Aguilar v. F.D.I.C., 63 F.3d 1059, 1061 (11th Cir. 1995) (per curiam) (noting that “[u]nder FIRREA, federal courts generally lack the authority to decide claims against an institution in federal receivership until the claimant has exhausted his administrative remedies against the FDIC“). Because “FIRREA contains no provision granting federal jurisdiction to claims filed after a receiver is appointed but before administrative exhaustion,” Meliezer v. Resolution Trust Co., 952 F.2d 879, 882 (5th Cir.1992), and beсause it is undisputed that Interface has not submitted a claim against the FDIC through the FIRREA administrative claims process, the district court lacked jurisdiction to declare that Interface is not entitled to damages from the FDIC. Accordingly, this portion of the district court‘s judgment is also vacated.
IV.
For the foregoing reasons, we conclude that Interface is not an intended third-party beneficiary of the P & A Agreement executed between FDIC and JPMorgan, and, as a result, Interface lacks standing to enforce its interpretation of that agreement. We also conclude that the district court lacked jurisdiction to award declaratory relief to the FDIC. Consequently, upon remand, the district court should dismiss this action for lack of subject matter jurisdiction.
VACATED and REMANDED.
Notes
the banking houses, drive-in banking facilities, and teller facilities (staffed or automated) together with appurtenant parking, storage and service facilities and structures connecting remote facilities to banking houses, and land on which the foregoing are located, that are owned or leased by the Failed Bank and that are occupied by the Failed Bank as of Bank Closing. [R. 23-4 at 2.]
“Other Real Estate” is defined as
all interеsts in real estate (other than Bank Premises and Fixtures) including but not limited to mineral rights, leasehold rights, condominium and cooperative interests, air rights and development rights that are owned by the Failed Bank. [Id. at 6.]