This is a consolidated appeal of six orders from the Southern District of Georgia denying motions for remand to state court, granting summary judgment to the FDIC on federal claims, and refusing to exercise supplementary jurisdiction over remaining state law claims against other defendants. After careful review, and having had the benefit of oral argument, we affirm the District Court’s denial of remand and award of summary judgment to the FDIC. However, we reverse the District Court’s dismissal of the remaining claims against the non-FDIC defendants.
I. BACKGROUND AND PROCEDURAL HISTORY
The original plaintiffs in this action are various parties (Tenants) that independently leased or purchased floor space in the Drayton Tower building in Savannah, Georgia.
Against Darby Bank (now the FDIC), the Tenants alleged fraud and negligent misrepresentation based on statements made about when funds would be made available for renovation of Drayton Tower. The Tenants point to a letter dated May 20, 2005, written by Darby Bank Vice President Salita Hill on bank letterhead, and addressed to the Drayton Tower Condominium Association (Hill Letter). Among other things, the Hill Letter says that “for the refurbishing of Drayton Tow
Against the Drayprop Defendants, the Tenants alleged fraud and negligent misrepresentation based on statements about when renovations to Drayton Tower would be finished, and breach of contract based on the Drayprop Defendants’ failure to finish the work by the dates promised.
After Darby Bank’s failure, the FDIC was substituted as a party for Darby Bank in each of the Tenants’ lawsuits. The FDIC then removed each case to the U.S. District Court under 12 U.S.C. § 1819(b)(2)(B). The Tenants each moved for remand, citing a limited exception to the FDIC’s removal authority for cases in which “only the interpretation of the law of [the] State is necessary” to the disposition. 12 U.S.C. § 1819(b)(2)(D). The FDIC opposed the motions for remand, and moved for summary judgment in each ease, arguing that beyond the state law issues presented, federal law compelled dismissal under §§ 1823(e) and 1821(d)(9)(A), and the D’Oench Doctrine.
In each case, the District Court agreed with the FDIC and, over the Tenants’ objections, denied the motions for remand and dismissed all claims against the FDIC. Then, assuming that it lacked original jurisdiction over the Tenants’ pendent state law claims against the Drayprop Defendants, the District Court declined to exercise supplemental jurisdiction under 28 U.S.C. § 1367(c)(3), and dismissed these claims as well. These appeals followed. After each serving individual notices of appeal, the Tenants filed a “Joint Motion to Consolidate Appeals,” which was granted. The Tenants’ appeals are now consolidated “for all purposes.”
II. DISCUSSION
The Tenants raise two issues on appeal. First, they argue that the District Court was wrong to deny their motions for remand to Georgia state court on the ground that it lacked jurisdiction over their state law claims. Second, they say that even if the District Court had jurisdiction over their claims against the FDIC, it was wrong for a number of reasons when it granted the FDIC’s motions for summary judgment. In their cross-appeal, the Drayprop Defendants raise a third issue. The Drayprop Defendants now argue that after granting summary judgment to the FDIC, the District Court should not have dismissed the pendent state law claims. They point to § 1819(b)(2)(A) — the FDIC jurisdictional statute — to say that the District Court “ha[d] original jurisdiction over [the remaining] state law claims against non-FDIC defendants [even] after the FDIC [was] dismissed from the case.”
We address each argument in turn. “We review de novo whether a district court had federal subject matter ju
A. THE DISTRICT COURT’S DENIAL OF THE TENANTS’ REQUESTS FOR REMAND
The Tenants first argue that the District Court erred in denying their motions to remand because the District Court lacked jurisdiction over their claims. “Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant.” Caterpillar Inc. v. Williams,
Here, however, statutes establishing jurisdiction for FDIC matters trump the general rules governing federal subject matter jurisdiction and removal. Indeed, “special provisions” define a federal court’s jurisdiction to hear cases involving the FDIC. Castleberry,
The sole exception to the FDIC’s authority to remove a case once it becomes a party is triggered when: (1) a state authority appointed the FDIC as receiver; (2) the litigation involves only the pre-closing rights against the failed institution; and (3) only state law need be interpreted. 12 U.S.C. § 1819(b)(2)(D). To defeat removal under this “state law exception,” “each of these three prongs must be established.” Castleberry,
In arguing that the District Court should have remanded their claims to state court, the Tenants’ invoke the state law exception. Specifically, they say “this action involves ... tort claims against Darby [Bank] outside the scope of [federal law].” Alternatively, they argue that their cases should have been remanded because the FDIC has failed to raise a federal defense that is “colorable for decision and is not meritless.” See Diaz v. McAllen State Bank,
B. THE DISTRICT COURT’S GRANT OF SUMMARY JUDGMENT TO THE FDIC
The FDIC moved for summary judgment on the basis of D’Oench, Duhme & Company v. FDIC,
In D’Oench, the Supreme Court opined that “in litigation between a bank customer and the FDIC, as successor in interest to a bank, the customer may not rely on agreements outside the documents contained in the bank’s records to defeat a claim of the FDIC.” Baumann v. Savers Fed. Sav. & Loan Ass’n,
In a suit over the enforcement of an agreement originally executed between an insured depository institution and a private party, a private party may not enforce against a federal deposit insurer any obligation not specifically memorialized in a written document such that the agency would be aware of the obligation when conducting an examination of the institution’s records.
Id. at 1515.
The D’Oench Doctrine is codified at 12 U.S.C. § 1823(e). See Twin Constr., Inc. v. Boca Raton, Inc.,
In general
No agreement which tends to diminish or defeat the interest of the [FDIC] in any asset acquired by it ... shall be valid against the [FDIC] unless such agreement—
(A) is in writing,
(B) was executed[6 ] by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the depository institution,
(C) was approved by the board of directors of the depository institution or its loan committee, which approval shall be reflected in the minutes of said board or committee, and
(D) has been, continuously, from the time of its execution, an official record of the depository institution.
12 U.S.C. § 1823(e)(1) (emphasis added). Section 1823(e) gets additional strength from § 1821(d)(9)(A) which provides, in part, that “any agreement which does not meet the requirements set forth in section 1823(e) ... shall not form the basis of, or substantially comprise, a claim against the [FDIC].”
A “narrow exception” to § 1823(e) and D’Oench exists when the plaintiff asserts “free standing tort claims.” In re Geri Zahn, Inc.,
The Tenants make three arguments for why § 1823(e) and D’Oench do not bar their claims against the FDIC. First, they argue that their claims fall outside the scope of § 1823(e) and D’Oench because they “lack the potential to diminish or defeat the interest of the FDIC in [Darby Bank],” to the extent that liability for their claims would be covered by “a[] large insurance policy.” Alternatively, they argue theirs are free standing torts outside the scope of D’Oench. This is so, they say, because the basis of their complaints — the Hill Letter — was “not [written] in connection with any regular banking transaction, but [rather] as part of an effort to induce potential buyers to purchase property in the Drayton Tower building from the developer and its agents.” Finally, they argue that summary judgment was premature because discovery may yet produce additional “documents [that] would meet the requirements of D’Oench.” For reasons we will discuss, each of the Tenants’ arguments fails.
in Darby Bank
First, the Tenants offer no authority to support the idea that their claims fall outside D’Oench’s scope because Darby Bank’s insurance policy protects the FDIC from any diminution in Darby Bank’s value. As capably explained by the District Court:
Congress’s use of the word “tends” [in § 1823(e) ] demonstrates the needlessness of an exact determination of whether the FDIC[ ]’s interest in a particular asset is diminished or defeated in each case. Enforcement of a promise to make $1,500,000 available would certainly “tend[] to diminish or defeat the interest” of the FDIC[], regardless of whether the FDIC[ ] would see an actual diminution in value of its assets in this case. Because a tendency to defeat or diminish is all that is required for application of the statute, a precise computation of the FDIC[ ]’s net loss or gain in a particular case is unnecessary.
Lindley v. FDIC, No. 4:11-cv-147, slip op. at 4,
2. The Tenants Have Not Alleged Free-Standing Torts
Next, the Tenants have failed to allege “free standing tort[s]” because their claims obviously “implicate the records of regular banking transactions.” See In re Geri Zahn,
In contrast to their claims that the Hill Letter reflects regular banking transactions, the Tenants point to Vernon v. Resolution Trust Corporation (Vernon I),
Our Court has since elaborated on our rationale in the Vernon cases:
The tort claims in Vernon II involved alleged violations of securities laws and related claims arising from the claimants’ purchase of preferred stock and warrants to purchase common stock in the failed institution itself. Because “the relevant records would reside in the department of the bank which handled the sale or transfer of the bank’s own stock,” and would not appear among the records of “regular banking transactions,” the claims in Vernon II constituted free standing torts, not barred by the D’Oench doctrine. Thus, the court drew a distinction: on the one hand, typical claims like employment discrimination and automobile accidents would be free standing torts not barred by D’Oench; on the other hand, those claims relating to “ordinary banking transactions” and imposing obligations on the bank with respect thereto — obligations that would ordinarily be reflected in the records of banking transactions — would be
D’Oench barred unless thus recorded. Motorcity of Jacksonville,
Here, we are not talking about claims related to “automobile accidents,” “employment discrimination,” “violations of securities laws,” or stock sales. See id. Instead, we have allegations about a promise to extend credit — the quintessential “ordinary banking transaction ]” — that, if true, would “be reflected] in the records of banking transactions.” Id. Thus, D’Oench and § 1823(e) each apply, and the Tenants’ claims are barred unless they satisfy each prong of the § 1823(e) inquiry. This, they cannot do.
3. No Factual Disputes Remain to be Resolved
Contrary to the Tenants’ argument, there are no remaining disputes about facts which would impede the disposition of their claims against the FDIC. Before the District Court, the Tenants admitted: (1) their “allegations against Darby Bank are predicated [solely] upon [the Hill Letter]”; and (2) “[t]he Hill Letter was not reviewed or approved by anyone else at Darby Bank prior to Ms. Hill’s issuance of the letter.” It is also obvious from the face of the Hill Letter that none of the Tenants were party to its “execution.” Thus, the Tenants cannot rely on the Hill Letter as a basis for their claims. At a minimum, it fails two prongs of the § 1823(e) test: specifically, it was not “executed {i.e. signed] by the depository institution and [the] person claiming an adverse interest thereunder.” Neither was it “approved by the board of directors of the depository institution or its loan committee.” 12 U.S.C. § 1823(e) (emphasis added); id. § 1821(d)(9)(A).
In sum, the District Court properly decided that D’Oench and § 1823(e) applied to the Tenants’ claims against the FDIC because their claims “relat[ed] to ordinary banking transactions and ... would ordinarily be reflected in the records of banking transactions.” Motorcity of Jackson
C. THE DISTRICT COURT’S DISMISSAL OF THE REMAINING CLAIMS AGAINST THE NON-FDIC DEFENDANTS
Upon dismissal of the Tenants’ claims against the FDIC, the District Court went on to dismiss their remaining state law claims against the Drayprop Defendants. The Court assumed that it lacked original jurisdiction over these claims, and “careful consideration” yielded “no reason to exercise ... supplemental jurisdiction” under 28 U.S.C. § 1367(c)(3). The final issue we must decide is whether the District Court was right to dismiss the Tenants’ remaining state law claims.
The Drayprop Defendants argue that the District Court should not have dismissed the Tenants’ remaining claims because under 12 U.S.C. § 1819(b)(2)(A) the District Court had original jurisdiction over all of the Tenants’ claims, which necessarily persisted after their claims against the FDIC were dismissed. This is so, the Drayprop Defendants contend, because federal courts have original jurisdiction over all civil actions “arising under the ... laws ... of the United States,” 28 U.S.C. § 1331 (emphasis added), and because “all suits of a civil nature at common law or in equity to which the [FDIC], in any capacity, is a party shall be deemed to arise under the laws of the United States,” 12 U.S.C. § 1819(b)(2)(A) (emphasis added). Thus, they argue that a District Court has original jurisdiction over state law claims against non-FDIC defendants once the FDIC is involved in the case, and this jurisdiction cannot be divested even if the claims against the FDIC are later dismissed.
Whether a federal court has jurisdiction over a pendent state law claim that the FDIC has removed to the District Court when the FDIC is later dismissed from the case is an issue of first impression in our Circuit. Ultimately, this question turns on the meaning of § 1819(b)(2)(A), and, in particular, the term “is a party” as used in that statute. See id.
“As with any question of statutory interpretation, we begin by examining the text of the statute to determine whether its meaning is clear.” Harry v. Marchant,
Section 1819(b)(2)(A) reads, in full, as follows: “Except as provided in subparagraph (D),[
Turning next to the legislative history, U.S. Steel Mining Co.,
An interpretation that establishes jurisdiction over pendent state law claims at the time of filing is also consistent with other “canons of statutory construction.” U.S. Steel Mining Co.,
Finally, this conclusion is consistent with what this Court has already said about § 1819(b)(2)(A). See N. Savannah Props.,
After careful review, we join the Second, Fifth, and Eighth Circuits in concluding that when the FDIC is a party to a civil suit and removes that case to federal court, the District Court has original jurisdiction over claims against non-FDIC defendants, and this jurisdiction is not lost if the FDIC is later dismissed from the case. The language of § 1819(b)(2)(A), the legislative history of FIRREA, other canons of statutory construction, our own precedent, and the weight of persuasive authority from other Circuits all lead us to this interpretation.
Thus, as applied to this case, § 1819(b)(2)(A) operated to create arising under jurisdiction over the Tenants’ claims against the Drayprop Defendants, and the dismissal of the Tenants’ claims against the FDIC did not divest the District Court’s jurisdiction over those claims. See
III. CONCLUSION
The District Court properly granted summary judgment to the FDIC on the Tenants’ claims against Darby Bank. However, the District Court improperly dismissed the remaining claims against the non-FDIC defendants because § 1819(b)(2)(A) operated to create original jurisdiction over those claims. Thus, we AFFIRM in part, REVERSE in part, and REMAND for proceedings consistent with this opinion.
AFFIRMED in part, REVERSED in part, and REMANDED.
Notes
.The Tenants are: Stephanie Lindley (appellant in Appeal No. 12-12015); Robert M. Osborne, Jr., et al. (cross-appellants in Appeal No. 12-12290); Don Reinke, et al. (cross-appellants in Appeal No. 12-12292); Jim Hunt (cross-appellant in Appeal No. 12-12297); Warren Lokey (cross-appellant in Appeal No. 12-12299); and Harris Baking Company (cross-appellant in Appeal No. 12-12359).
. This is not the first time we have grappled with legal issues stemming from Darby Bank's failure. E.g., FDIC v. N. Savannah Props., LLC,
. The Drayprop Defendants are appellants in all of these appeals other than Appeal No. 12-12015.
. "The D'Oench decision is the origin of the rule that, in a suit against the maker of a note by a federal deposit insurer, the maker is not allowed to raise a secret agreement between die maker and the payee bank as a defense.” Bufman Org. v. FDIC,
. Typically a District Court’s decision not to exercise supplemental jurisdiction over pendent state law claims is reviewed for abuse of discretion. Engelhardt v. Paul Revere Life Ins. Co.,
. In the context of § 1823(e), “executed” means "signed the agreement.” See Twin Constr.,
. Indeed, the Tenants also acknowledged at oral argument that their claims failed to satisfy certain prongs of the § 1823(e) analysis— specifically prong three (that the Hill Letter was approved by Darby Bank’s board of directors) and prong four (that the Hill Letter was among Darby Bank’s official records). See 12 U.S.C. § 1823(e).
. Section 1819(b)(2)(D) outlines the state law exception to the federal courts’ jurisdiction over causes of action involving the FDIC which, for reasons already explained, does not apply here. See 12 U.S.C. § 1819(b)(2)(D).
. North Savannah Properties, Castleberry, and Lazuka do not control our analysis here because those cases dealt with different questions under § 1819(b)(2). See N. Savannah Props.,
. The Fifth Circuit has observed that the Second Circuit has not consistently applied its determination that § 1819(b)(2)(A) creates original jurisdiction over pendent state law claims. Adair,
. We are not persuaded by the Third Circuit’s holding in New Rock Asset Partners for two reasons. First, the Court was interpreting 12 U.S.C. § 1441a(Z)(l), the section of FIRREA that created federal jurisdiction over claims involving the Resolution Trust Corporation. See New Rock Asset Partners,