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Ravenswood, LLC v. Federal Deposit Insurance Corp.

November 23, 2010

RAVENSWOOD, LLC, PLAINTIFF,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, IN ITS CAPACITY AS RECEIVER FOR BANK OF LINCOLNWOOD, LINCOLNWOOD, ILLINOIS DEFENDANT.



The opinion of the court was delivered by: Marvin E. Aspen, District Judge

MEMORANDUM OPINION AND ORDER

Presently before us is the Federal Deposit Insurance Corporation's ("FDIC") motion to dismiss Ravenswood Center, LLC's ("Ravenswood") Amended Complaint for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). (Mot.) Previously, we granted the FDIC's motion to dismiss Ravenswood's Initial Complaint for failure to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). (Init. Compl.; Ord. 7/6/10.) Ravenswood filed its Amended Complaint in a timely manner. (Am. Compl.) The FDIC now claims we lack subject matter jurisdiction due to Ravenswood's failure to exhaust the administrative remedies established under the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"). 12 U.S.C. § 1811 et seq. We agree and grant the FDIC's motion to dismiss.

BACKGROUND

As we stated in our prior order granting the FDIC's initial motion to dismiss, this case arises from the FDIC's repudiation of a construction loan agreement ("loan") between Ravenswood and the Bank of Lincolnwood, for which the FDIC became receiver on June 5, 2009. (Ord. 7/6/10 at 1--2.) We need not reiterate all the facts of the case here but instead highlight those relevant to this motion.

We begin with a short statement of the procedural history subsequent to our granting the first motion to dismiss. In granting that motion, we determined that the Initial Complaint failed to allege facts sufficient to indicate Ravenswood suffered "actual direct compensatory damages." (Ord. 7/6/10 at 7.) FIRREA limits Ravenswood's right to recover to this type of damages. 12 U.S.C. § 1821(e)(3)(A)(1). Other types of damages, specifically punitive or exemplary damages, damages for lost profits or opportunity, or damages for pain and suffering, are not recoverable.

12 U.S.C. § 1821(e)(3)(B)(i)--(iii). Although Ravenswood claimed $1,407,556 in damages, we stated that "Ravenswood provides no explanation as to how it arrived at this number, making it impossible for us to determine whether the alleged damages fall within the three categories that are not compensable under the statute." (Ord. 7/6/10 at 7.)

Ravenswood subsequently filed an Amended Complaint alleging "actual direct compensatory damages" based on the "diminution in value" of its property as a result of the FDIC's repudiation of the loan. (Am. Compl. ¶¶ 20--23.) The Amended Complaint states as the basis for this diminution in value the "value of the Property with the Construction Loan in place as of June 5, 2009 (the date the FDIC was appointed receiver)" as compared to "the value of the Property without the Construction Loan in place following the FDIC's repudiation on or about September 28, 2009." (Id. ¶ 22.) The Amended Complaint does not specify what these two values are.

The FDIC argues we lack subject matter jurisdiction, because Ravenswood failed to adequately present its diminution in value claim in the FDIC's administrative review process. (Mem. at 2--3.) In support of its motion, the FDIC points to the Proof of Claim Ravenswood filed as part of the FDIC's administrative review process. (Furnier Aff., Ex. 1 at 6.) In the space for the description of its claim, Ravenswood stated: "REPUDIATION OF CONSTRUCTION CONTRACT BY LENDER AND FDIC AS RECEIVER FOR BANK OF LINCOLNWOOD (FAILED INSTITUTION)[.]" (Id.) Ravenswood also stated the amount of the claim to be $1,407,556.00, the same amount sought in the Amended Complaint. (Id.; Am. Compl. ¶ 21.) But according to the FDIC, Ravenswood failed to present an explanation of how it calculated this amount in the Proof of Claim. (Mem. at 4.) Such an explanation is crucial to determining whether Ravenswood's claim is for "actual direct compensatory damages" or "damages for lost profits or opportunity." 12 U.S.C. § 1821(e)(3)(A)--(B). As we noted above and in our prior order, FIRREA permits the former but bars the latter. (Ord. 7/6/10 at 6--7.)

Ravenswood responds that it has consistently presented a diminution in value claim similar to the one allowed in FDIC v. Parkway Exec. Office Center, Case No. 96-121, 1998 WL 18204, at *5 (E.D. Pa. Jan. 9, 1998) ("Parkway"). According to theory behind this claim, the FDIC's repudiation of the loan converted Ravenswood's property from "a partially renovated building with sufficient funding in place for its full development, into an incomplete building with insufficient financing for its completion." (Am. Compl. ¶ 20.) In other words, Ravenswood seeks the difference in the market value of its property with a financed and, presumably, ongoing construction project and the market value of its property with no financing and, presumably, no ongoing construction project.

Ravenswood points to two letters from its attorney to the FDIC as evidence that the FDIC knew the basis of Ravenswood's claim during the administrative review process. (Resp. at 7.) On August 5, 2009, nearly two months prior to the FDIC's repudiation of the loan on September 28, 2009, Ravenswood's attorney sent the FDIC a letter urging the FDIC not to repudiate the loan. In that letter, Ravenswood's attorney stated that Ravenswood "would be entitled to offset any diminution in the value of the Project caused by the repudiation." (Resp., Ex. 1 at 1.) Similarly, Ravenswood's attorney submitted another letter to the FDIC urging reconsideration of the repudiation one month after the repudiation but prior to the formal filing of the Proof of Claim. The letter cites Parkway in support of the contention that Ravenswood "is entitled to offset any diminution in the value of the Project caused by the repudiation[.]" (Resp., Ex. 2 at 1.) The letter elaborates:

Borrower [Ravenswood] has been unable to secure replacement financing to complete the construction. As result [sic], the Project is valued as of the date of the Receivers' appointment, in its condition at that point in time. (Id. at 3.) The letter fails to state, however, what the value on that date was or to what that value ought to be compared. Nevertheless, Ravenswood asserts that these letters demonstrate that it "repeatedly disclosed to the FDIC" the basis for its claim during the administrative review process. (Resp. at 7.)

STANDARD OF REVIEW

The FDIC seeks dismissal of Ravenswood's Amended Complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Fed. R. Civ. P. 12(b)(1). Jurisdiction is the "power to decide" and must be "conferred, not assumed." In re Chicago, Rock Island & Pacific R.R. Co., 794 F.2d 1182, 1188 (7th Cir. 1986). In reviewing a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, the court may look beyond the complaint to pertinent evidence submitted by the parties. See United Transp. Union v. Gateway W. Ry. Co., 78 F.3d 1208, 1210 (7th Cir. 1996). The plaintiff faced with a properly supported 12(b)(1) motion ...


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