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Ravenswood, LLC v. Federal Deposit Insurance Corporation

March 21, 2011

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

In the present motion, Ravenswood Center, LLC ("Ravenswood") asks us to alter or amend our order of November 23, 2010 ("Order") dismissing Ravenswood's claim due to lack of subject matter jurisdiction. (Dkt. Nos. 40, 42.) We deny Ravenswood's motion.

I. BACKGROUND

Ravenswood filed this claim, because the Federal Deposit Insurance Corporation in itscapacity as receiver ("FDIC-R") of the failed Bank of Lincolnwood ("Bank") repudiated a construction loan agreement between the Bank and Ravenswood. (Amend. Compl. ¶¶ 20--24.) The loan agreement provided that the Bank would loan Ravenswood $2,950,000 for the renovation of an industrial loft building into office suites to be leased to commercial tenants. (Id.¶¶ 7--9.) The Bank had disbursed $2,675,918.90 of the $2,950,000 total when the FDIC-R became receiver on June 5, 2009. (Id. ¶¶ 10--11.) Ultimately, pursuant to its authority under the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"), see 12 U.S.C. § 1821(e)(1), the FDIC-R repudiated the loan agreement on September 28, 2009 and refused to fund the outstanding portion of the loan. (Id. ¶ 15.) Because of this repudiation, Ravenswood claims it has suffered $1,407,556 in damages. (Id. ¶ 21.)

The nature of the damages Ravenswood claims to have suffered has been the subject of dispute in this litigation. FIRREA limits claims for damages arising from the FDIC-R's repudiation of contracts to "actual direct compensatory damages" and specifically excludes "damages for lost profits or opportunity." 12 U.S.C. § 1821 (e)(3). Indeed, we dismissed Ravenswood's initial complaint without prejudice, because we were unable to determine whether the damages Ravenswood sought were compensable under FIRREA. (Dkt. No. 23 at 1.)

Following our dismissal of the initial complaint, Ravenswood filed an amended complaint explaining its damages as "the difference between: (1) the value of the Property with the Construction Loan in place as of June 5, 2009 (the date the FDIC was appointed receiver); and, (2) the value of the Property without the Construction Loan in place following the FDIC's repudiation on or about September 28, 2009." (Amend. Compl. ¶ 22.) The FDIC-R then moved for dismissal of the amended complaint based on Ravenswood's failure to exhaust the administrative claims process. (Dkt. Nos. 29--31.) Specifically, the FDIC-R argued that Ravenswood's amended complaint presented a diminution in value claim that had not been raised in the administrative claims process. (Dkt. No. 31 at 2.) Because FIRREA requires exhaustion of the administrative claims process before a district court has subject matter jurisdiction to review a claim, the FDIC-R moved to dismiss Ravenswood's claim pursuant to Rule 12(b)(1). 12 U.S.C. § 1821 (d)(13)(D); Fed. R. Civ. P. 12(b)(1).

We granted the FDIC-R's motion to dismiss for lack of jurisdiction, because we concluded that Ravenswood had failed to notify the FDIC-R of the factual basis for its diminution in value claim. (Dkt. No. 40 at 5--7.) Although Ravenswood produced two letters from counsel invoking a diminution in value theory, we found that Ravenswood had failed to provide the FDIC-R with any factual basis to evaluate that theory. (Id.) Ravenswood now moves for reconsideration of that Order. (Dkt. No. 42.)

II. STANDARD

Ravenswood brings its Motion pursuant to Rule 59(e). Fed. R. Civ. P. 59(e). To succeed on a Rule 59(e) motion, the moving party must present newly discovered evidence, point out an intervening change in controlling law, or clearly establish that the court committed a manifest error of law or fact. See Caisse Nationale de Credit Agricole v. CBA Indus., Inc., 90 F.3d 1264, 1269-70 (7th Cir. 1996); Publishers Res., Inc. v. Walker-Davis Publ'ns, Inc., 762 F.2d 557, 561 (7th Cir. 1985). A Rule 59(e) motion "does not provide a vehicle for a party to undo its own procedural failures, and it certainly does not allow a party to introduce new evidence or advance arguments that could and should have been presented to the district court prior to the judgment." Bordelon v. Chicago School Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). Indeed, reconsideration is appropriate in very limited circumstances, such as "where (1) the court has patently misunderstood a party; (2) the court has made a decision outside the adversarial issues presented to the court by the parties; (3) the court has made an error not of reasoning but of apprehension; (4) there has been a controlling or significant change in law . . . or (5) there has been a controlling or significant change in the facts." BP Amoco Chem. v. Flint Hills Res., LLC, 489 F. Supp. 2d 853, 856 (N.D. Ill. 2007); Bank of Waunakee v. Rochester Cheese Sales, Inc.,906 F.2d 1185, 1191-92 (7th Cir. 1990); see also Hickory Farms, Inc. v. Snackmasters, Inc., 509F.Supp.2d 716, 719 (N.D. Ill. 2007) ("Reconsideration is appropriate, generally speaking, only when the Court overlooked or misunderstood something.").

III. ANALYSIS

In its motion, Ravenswood argues that our Order violates its due process rights. Specifically, Ravenswood argues that our Order denies it the opportunity to seek review of the FDIC-R's disallowance of its claim. (Mem. at 7.) Ravenswood also claims that the reason we dismissed its amended complaint-Ravenswood's failure to provide a factual basis for its diminution in value theory during the administrative claims process-was not the reason the FDIC-R provided in disallowing Ravenswood's claim. (Id. at 8.) Thus, Ravenswood argues that the notice it received regarding the denial of its claim was inadequate. (Id.)

Ravenswood also contends that the FDIC-R is responsible for any insufficiency in the proof submitted in support of its claim. (Id. at 9.) In support of this argument, Ravenswood submits an affidavit and emails purporting to show that the FDIC-R, after requesting more documentation from Ravenswood, denied its claim without allowing it sufficient time to submit those documents. (Id.; Hatch Aff., Exs. 2--5.) Ravenswood alleges that the FDIC-R "denies such claims as a matter of policy, regardless of supporting documentation or facts." (Mem. at 9.) Lastly, Ravenswood submits a document purporting to show its diminution in value damages stemming from the FDIC-R's repudiation of the construction loan. (Mem., Ex. B.)

We conclude that Ravenswood's motion is based largely on new arguments and new evidence that it has improperly raised for the first time at this stage. But even when we consider the new evidence Ravenswood offers, it ultimately vindicates our conclusion that ...


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