Opinion
2:09-CV-177 JCM (LRL).
November 9, 2010
ORDER
Presentlybefore the court is receiver for appellant Washington Mutual Bank, Federal Deposit Insurance Corporation's ("FDIC") motion to alter or amend judgment pursuant to Fed.R.Civ.P. 59(e) (doc. #25) and supporting memorandum (doc. #26). Appellant/respondent Woolman Oval Holdings, LLC filed an opposition. (Doc. # 29). FDIC filed a reply. (Doc. #32).
Also before the court is Woolman Oval's motion for writ of execution. (Doc. #28). FDIC filed a motion to quash the writ of execution (doc. #35) and a memorandum in support of the motion (doc. #36). Woolman Oval filed an opposition to the motion, (doc. #38) and FDIC filed a reply (doc. # 39).
Also before the court is Woolman Oval's motion for leave to file a response to FDIC's reply in support of its motion to alter or amend according to FRCP 59(e). (Doc. # 33). FDIC filed an opposition (doc. # 34), and Woolman Oval filed a reply (doc. # 37).
This case arises out of a Nevada state trial court judgment issued on February 22, 2007, against Washington Mutual Bank. The trial court held that Washington Mutual had wrongfully foreclosed on Michael A. Weisman's home, and that it owed Woolan Oval, the company that purchased the foreclosure, certain damages. On September 25, 2008, when the bank failed and FDIC took over, the state trial court's judgment was on appeal to the Nevada Supreme Court. As the case had not been argued, and the judgment was not final, FDIC removed the matter to this court.
Motion to Alter or Amend Judgment
On June 8, 2010, the court entered an order (doc. #24) granting Woolman Oval's motion for judgment (doc. #18), and denying its motion to amend/correct judgment (doc. #19). In its order, the court held that adopting the state court's judgment was proper, since the parties jointly requested it. Further, in denying the motion to amend judgment, the court stated that Woolman Oval's arguments did not rise to a level warranting an "extraordinary remedy" under Fed.R.Civ.P 59(e), and that "unless there is a federal question or an issue not previously litigated" the court will not grant a motion to amend.
A motion under Fed.R. Civ P. 59(e) should not be granted absent "highly unusual circumstances." Carroll v. Nakatini, 342 F.3d 934, 945 (9th Cir. 2003). In light of a new federal question being interjected in the case, it is appropriate for the court to consider such a question under rule 59(e). Resolution Trust Corp. v. Bayside Developers, 43 F.3d 1230, 1238 (9th Cir. 1994); Resolution Trust Corp. v. Allen, 16 F.3d 568 (4th Cir. 1994). Specifically, the Ninth Circuit held in Bayside, that this approach "allows the district court to consider any new federal questions injected into the case by the addition of Resolution Trust Corporation, and require whatever briefing, argument, or hearing it deems necessary to resolve these questions and prepare an adequate record for review on appeal." Bayside, 43 F.3d at 1238 (citing Allen, 16 F.3d at 573).
The Resolution Trust Corporation ceased to exist in December of 1995, and the FDIC succeeded in its role and function on January 1, 1996. 12 U.S.C. § 1441a(m)(1).
FDIC filed the present motion to alter or amend the court's judgment on June 21, 2010 (doc. #25 and #26), stating that since it is now present in the litigation, the court may "consider the unique federal issues and defenses that are raised." Pursuant to the case law, and under the Federal Deposit Act, 12 U.S.C. § 1823(e), FDIC asserts a defense that was not previouslyraised, which makes certain agreements unenforceable against FDIC as receiver, even if those same agreements might have been enforceable against a depository institution prior to its failure.
FDIC asserts that 12 U.S.C. § 1823(e) bars enforcement "of side agreements or conditions that diminish the FDIC-Receiver's interest in an asset it has acquired unless the agreement or condition meets all four of the statute's requirements." (Emphasis added). Section 1823(e) requires that such an agreement or condition be (1) in writing, (2) signed by the parties, (3) approved by the institution's board or loan committee, and (4) be an official record of the institution. See 12 U.S.C. § 1823(e). Further, the Ninth Circuit Court of Appeals held that unrecorded, "secret" agreements that fail to meet the requirements above are not enforceable against the FDIC. FDIC v. Zook Bros. Constr'n Co., 973 F.2d 1448, 1450 (9th Cir. 1992).
In the case before the trial court, the issue came down to whether the foreclosure by the bank was wrongful. The court held that a homeowner's assistance package that the bank sent to the plaintiff rendered the foreclosure wrongful. The plaintiff admitted that he failed to submit the completed package to the bank, but that he understood the package to mean that the bank would not proceed with the foreclosure and would allow him to cure the arrears. Specifically, plaintiff testified that the package indicated to him that the bank was willing to work with him and that he "had three choices." The court ruled on May 20, 2005, holding that the foreclosure was wrongful and that the plaintiff had "relied on his receipt of the Homeowner's Assistance Package in believing that the defendant Washington Mutual would not foreclose on the [property]."
FDIC now argues that this homeowner's assistance package is not enforceable against FDIC because, as a condition to the plaintiff's obligation to pay his mortgage in accordance with the terms, it does not meet the criteria listed in 12 U.S.C. § 1823(e). Accordingly, FDIC asserts that the foreclosure was proper and amending the judgment is appropriate.
The assistance package did in fact fail to meet the requirements of 12 U.S.C. § 1823(e). It was received by the plaintiff, yet never signed. The package requested that the plaintiff complete and return it. This was admittedly never done. Since the plaintiff never submitted any forms or requested documentation, there cannot be said to have been an agreement approved by the institution's board or loan committee. Moreover, since nothing was received from the plaintiff in response to the assistance package, there is no document that could be deemed an official record of the institution.
With the addition of the new federal defense raised by FDIC under 12 U.S.C. § 1823(e), the foreclosure was valid and the subsequent sale to Woolman Oval was appropriate. Thus, FDIC, as receiver of Washington Mutual, does not owe any damages to Woolman Oval.
Woolman Oval argues that the present motion is moot. However, this court finds that the interests of the parties in relation to the property are a live issue, and that any determination of the court will impact the parties' rights and obligations. Therefore, the court in not inclined to deem the present motion moot.
Motion for Leave to File Response to the FDIC's Reply In Support of the Motion to Alter or Amend According to FRCP 59(e)
In Woolman Oval's motion for leave (doc. #33) it asserts that FDIC raised the issue for the first time in its reply (doc. #32), that "Woolman Oval's judgment against Washington Mutual Home Loan is unsecured and must be paid by the FDIC." Woolman Oval argues that in fact the judgment is secured by a supersedeas bond. Further, Woolman Oval states that "if the court relies upon the FDIC's argument raised for the first time in its reply . . . the court should allow Woolman Oval to respond to these issues."
In deciding on the above motion to alter or amend (doc. #32), the court did not consider the issue raised by the FDIC with regards to the secured or unsecured nature of the home loan. Therefore, the court is not inclined to grant leave to file a response.
Motion for Writ of Execution
In receiver FDIC's motion to quash (doc. # 36), it asserts that the motion for writ of execution (doc. #28) is prohibited by multiple provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). However, in light of this court's determination that the federal defenses raised by FDIC deem the foreclosure and subsequent sale valid and that FDIC does not owe damages to Woolman Oval, there is no judgment upon which to execute. Therefore, the motion for writ of execution and subsequent motion to quash are moot.
Accordingly,
IT IS HEREBY ORDERED ADJUDGED AND DECREED that receiver Federal Deposit Insurance Corporation's motion to alter or amend judgment pursuant to Fed.R.Civ.P. 59(e). (Doc. #25) be, and the same hereby is GRANTED.
IT IS FURTHER ORDERED that Woolman Oval Holding, LLC's motion for leave to file response to the FDIC'S reply (doc. #33) be, and the same hereby is DENIED.
IT IS FURTHER ORDERED that FDIC's motion to quash request for writ of execution (doc. #35) be, and the same hereby is DENIED as moot.
IT IS THEREFORE ORDERED that Woolman Oval Holding LLC's motion for writ of execution. (Doc. #28) be, and the same hereby is DENIED as moot.
DATED November 9, 2010.