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From Banking and Finance Law Daily, April 05, 2018

FDIC’s complaint seeking $1.12B in deposit insurance from BoA survives motion to dismiss

By J. Preston Carter, J.D., LL.M.

Bank of America’s motion to dismiss the Federal Insurance Deposit Corporation’s amended complaint seeking $1.12B in deposit insurance payments from the bank was denied by the United States District Court for the District of Columbia. The court determined that: at this stage of the proceedings, the FDIC could claim equitable relief, even when a legal remedy was available; the FDIC adequately pleaded deposit insurance as an unjust enrichment to the bank; and it was premature to strike the FDIC’s claims as untimely (Federal Deposit Insurance Corporation v. Bank of America, April 4, 2018, Sullivan, E.).

In January 2017, the FDIC sued BoA for $542 million for failing to pay its mandatory assessments from the second quarter of 2013 through the fourth quarter of 2014 (see Banking and Finance Law Daily, Jan. 10, 2017). Later that year, the FDIC amended its complaint, adding a claim for unjust enrichment, alleging that BoA owes an additional $583 million for underpayments predating the second quarter of 2013 (see Banking and Finance Law Daily, May 3, 2017). On May 5, 2017, BoA filed its motion to dismiss or strike the FDIC’s amended complaint in part for failure to state a claim for relief.

BoA’s arguments. BoA made three arguments: (1) the FDIC’s unjust enrichment claim should be dismissed because the Federal Deposit Insurance Act provides the FDIC with an adequate legal remedy; (2) the FDIC’s unjust enrichment claim should be dismissed because the FDIC did not allege unjust enrichment as a matter of law; and (3) the FDIC’s claims should be dismissed as time-barred.

Adequate legal remedy. BoA argued that the FDIC’s claim for unjust enrichment must be dismissed because, as an equitable remedy, it is not available when a plaintiff has an adequate legal remedy. The bank contends that the FDIC’s FDIA claim for failure to pay mandatory assessments pursuant to 12 U.S.C. §1817(g)(1) precludes the agency from bringing its claim for unjust enrichment because both claims are "coterminous"—they seek the very same relief for the same alleged behavior.

The court, however, agreed with the FDIC’s argument that the Federal Rule of Civil Procedure 8(d) permits alternative theories of liability, adding that "courts in this Circuit have repeatedly denied motions to dismiss equitable claims, even when adequate legal remedies are available." The court also found the bank’s "coterminous" argument unavailing, concluding that "the FDIC may plead—if not ultimately recover upon—alternative common laws theories."

Adequate pleading. BoA also argued that the FDIC’s unjust enrichment claim must be dismissed because the agency did not plead the first element of unjust enrichment—that it conferred a benefit upon BoA. The court, however, agreed with the FDIC’s response, that BoA was unjustly enriched because it received a valuable benefit—deposit insurance—for which it underpaid.

Time-barred claims. BoA argued that the court should dismiss or strike the FDIC’s FDIA claim for the allegedly underpaid assessments from the first quarter of 2012 through the first quarter of 2013 as time-barred under the FDIA’s three-year statute of limitations (12 U.S.C. §1817(g)(2)). The court, however, agreed with the FDIC’s contention that there are "contested questions of fact" as to whether BoA’s actions fall within the FDIA’s exception, which tolls the statute of limitations when a defendant made a false or fraudulent statement with intent to evade any assessment.

BoA contended that the exception does not apply because the FDIC failed to allege that the bank made a false or fraudulent statement with intent to evade assessments. However, the court disagreed. "A plaintiff does not need to plead facts in its complaint to respond to a potential affirmative defense … That a complaint is time-barred is an affirmative defense that defendant must prove." The court added that whether BoA made a false statement with intent to evade its assessments is a contested question of act, precluding dismissal at the pleadings stage.

BoA also argued that the FDIC’s unjust enrichment claim was time-barred under the FDIA and D.C. law. However, the court said it need not decide, at this stage of the proceedings, which statute of limitations applies because the bank has not established that the FDIC’s claims would be conclusively time-barred under any of the limitations periods. The court stated that, if it were to accept BoA’s argument that it should apply the FDIA’s three-year statute of limitations, the previously discussed factual dispute arises. Also, were the court to accept BoA’s argument that the three-year statute of limitations pursuant to D.C. law governs, another factual dispute arises, which, the court said, cannot be resolved without the benefit of discovery.

The case is No. 17-36 (EGS).

Attorneys: Jon David Corey (Quinn Emanuel Urquhart & Sullivan, LLP) for Federal Deposit Insurance Corporation. Gabrielle Levin (Gibson, Dunn & Crutcher, LLP) for Bank of America, N.A.

Companies: Bank of America, N.A.

MainStory: TopStory DepositInsurance EnforcementActions

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