Tuesday, March 24, 2015
Page 1
Panel Says Venue Provision Fatal to Suit Over Bank Failure
By a MetNews Staff Writer
A developer’s suit arising from the failure of a bank that stopped making payments on a construction loan was filed in the wrong court, a jurisdictional defect, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The panel dismissed an appeal by MTB Enterprises, Inc. and others against ADC Venture 2011-2, LLC.
ADC Venture acquired the assets of ANB Financial, an Arkansas-based bank. Among the assets it acquired was the bank’s $17 million loan to MTB, the developer of a parcel called Sundance Ranch in Canyon County, Idaho.
MTB sued the Federal Deposit Insurance Corporation, as receiver, and ANB in the federal District of Idaho in 2008. It claimed that ANB had wrongfully withheld $6 million in payments before the bank and the development project both failed.
The case was transferred to the Western District of Arkansas, where ANB was headquartered, before MTB dismissed it. In 2012, however, MTB filed a new suit against ADC Venture in the District of Idaho, claiming the company was liable for breach of contract as successor to ANB.
U.S. District Judge Edward Lodge dismissed, finding that the claimed liability was not one of the liabilities that ADC had assumed. ADC later moved to dismiss MTB’s appeal on the ground, not previously asserted, that the Financial Institutions Reform, Recovery, and Enforcement Act of 1989’s venue provision is a jurisdictional bar to the claim.
The provision says that an action arising from a bank failure can only be filed in the district where the bank had its principal headquarters, or in the District of Columbia.
Judge M. Margaret McKeown, in her opinion for the Ninth Circuit, said ADC was correct.
Noting that several federal courts have reached the same conclusion, she wrote:
“We join the chorus and hold that the venue provision in [12 U.S.C.] § 1821(d)(6)(A) is a jurisdictional limitation on federal court review—a conclusion that MTB acknowledges is correct. Accordingly, Congress has vested two federal district courts with jurisdiction over this lawsuit: the United States District Court for the Western District of Arkansas, where the failed bank’s principal place of business is located, and the United States District Court for the District of Columbia. MTB, however, filed this complaint in the United States District Court for the District of Idaho. Because that court lacked subject-matter jurisdiction from the start, this case must be dismissed.”
The case is MTB Enterprises, Inc. v. ADC Venture 2011-2, LLC, 13-35468.
Copyright 2015, Metropolitan News Company