Wednesday, April 30, 2014
Appeals Court Says Bank Not Liable for Claim Against Predecessor
C.A. Says Trial Court Lacked Jurisdiction Where Administrative Claim Was Untimely
By KENNETH OFGANG, Staff Writer
A financial institution that acquired the assets and liabilities of a failed bank out of receivership cannot be held liable on claims not submitted to the receiver in a timely manner, the Court of Appeal for this district ruled yesterday.
Div. Eight yesterday sided with JP Morgan Chase Bank, which prevailed in an arbitration with Gregory Saffer, a former employee of Washington Mutual Bank. The arbitrator had agreed with Chase that Saffer’s claims were barred because he did not submit them to the Federal Deposit Insurance Corporation, as receiver for WaMu, within the required time.
The Court of Appeal held that neither the arbitrator, nor any court, had subject-matter jurisdiction, due to the untimeliness of the claim. It ordered that judgment confirming the arbitration award be vacated and the action dismissed.
Saffer, a mortgage loan consultant, worked for WaMu from May 2007 to January 2008. The FDIC took control of the bank in September 2008 and sold certain of its assets and liabilities to Chase.
The FDIC published notices that WaMu creditors had to submit their claims in writing to the agency by Dec. 30, 2008, the “bar date” under the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Saffer filed suit in June 2009, claiming wrongful termination in violation of public policy; breach of express and implied-in-fact contracts not to terminate employment without good cause; breach of the implied covenant of good faith and fair dealing; failure to pay wages in violation of the Labor Code and Industrial Welfare Commission Work Orders; false representations and fraudulent inducement; and negligent hiring, retention, and supervision.
He claimed he was fired for refusing to engage in fraudulent practices aimed at customers.
Chase moved to compel arbitration, based on Saffer’s employment agreement, and its petition was granted in 2010. The arbitrator rejected Saffer’s contention that his claim with the FDIC, filed in 2012, was timely because he had not received notice of the bar date.
Presiding Justice Tricia Bigelow, on appeal from the trial judge’s order confirming the arbitration award, said the proper remedy was to dismiss.
She distinguished cases holding that courts are not deprived of subject-matter jurisdiction due to a failure to exhaust administrative remedies.
“Unlike administrative remedies set forth in a contract between the parties, or a permissive statutory procedure, FIRREA’s exhaustion requirements are set forth by federal statute, they are mandatory, they do not allow for waiver by consent, and they explicitly state courts do not have jurisdiction to consider claims subject to exhaustion unless the claimant first follows the administrative procedures,” the presiding justice wrote.
She went on to say that the fact that Chase, and not the FDIC, was the defendant made no difference. A number of cases “have concluded FIRREA exhaustion requirements apply even when a claim is asserted against a successor bank, rather than the failed bank or the FDIC,” Bigelow wrote.
“Here, all of Saffer’s claims challenge the actions or omissions of the failed bank, WaMu. The complaint contains no allegations that involve actions taken by any party after the receivership or the sale of WaMu’s assets. Instead, Saffer seeks legal recourse for the conduct of WaMu and WaMu agents, before the FDIC was appointed receiver, and before JPMC purchased WaMu assets. There are no allegations based on JPMC’s own conduct, nor could there be given the time period relevant to Saffer’s claims. These are squarely the kinds of claims that must first be presented to the FDIC under [FIRREA].”
The case is Saffer v. JP Morgan Chase Bank, B246412.
Copyright 2014, Metropolitan News Company