Now Updating
In re Jerry Dewaye Gaddy

Summarizing by Matthew Hale

Benson v. JPMorgan Chase Bank, N.A.

No. 10-17402, DC No. 3:09-cv-05272-MEJ & No. 10-17404, DC No. 3:09-cv-05560-MEJ (heard jointly)
The Ninth Circuit Court of Appeals held that plaintiffs’ conclusory allegations regarding JPMorgan fell short of stating a claim for relief that is free from the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) exhaustion requirements. Although the Court held that a claim—or a portion of a claim—based on JPMorgan’s independent, post-purchase conduct would not be subject to FIRREA’s jurisdictional bar, the plaintiffs’ complaints did not include such a claim. Accordingly, the District Court’s Order dismissing the complaints are proper.
Procedural context:
The Ninth Circuit Court of Appeals jointly heard two related cases from Chief Magistrate Judge Maria-Elena James in the United States District Court for the Northern District of California.
From 1999 to 2009, a Canadian attorney raised $68 million by selling fraudulent CDs through a Ponzi scheme using WaMu bank to conduct business. Suits against the individuals involved in the Ponzi scheme were enjoined and settled. Subsequently, two similar complaints involving aiding and abetting in the Ponzi scheme were filed against JPMorgan after WaMu merged with JPMorgan. The Magistrate Judge granted defendant’s Fed. R. Civ. Pro. 12(b)(1) Motion arguing that the District Court lacked jurisdiction because plaintiffs had not exhausted administrative remedies under FIRREA. Under FRCP 60(b) plaintiffs sought to amend their complaints. They argued that even if their claims based on WaMu’s conduct could be dismissed, the complaints alleged independent misconduct on the part of JPMorgan after the merger. Thus, their claims fall outside of FIRREA’s requirement that a plaintiff must exhaust their administrative remedies with the FDIC before filing certain claims.

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