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Regas, Frezados & Dallas Llp v. Federal Deposit Insurance Corporation

October 10, 2011


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:


Regas, Frezados & Dallas LLP (Regas) has sued the Federal Deposit Insurance Corporation (FDIC), in its capacity as receiver for Mutual Bank, to recover unpaid legal fees and expenses that Mutual Bank allegedly owed to Regas. The Court previously denied the FDIC's motion to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim. Regas, Frezados & Dallas LLP v. FDIC, No. 10 C 3420, 2011 WL 332545 (N.D. Ill. Jan. 28, 2011). Regas has moved for summary judgment. For the reasons stated below, the Court grants the motion in part and denies it in part.


On a motion for summary judgment, the Court draws "all reasonable inferences from undisputed facts in favor of the nonmoving party and [views] the disputed evidence in the light most favorable to the nonmoving party." Harney v. Speedway SuperAmerica, LLC, 526 F.3d 1099, 1104 (7th Cir. 2009). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The Court may grant summary judgment "where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

In this motion, Regas seeks a determination by the Court that it is owed $831,134.37 in attorneys' fees. Regas initially asserted that it was owed $832,259.62, but it elected not to contest the difference after the FDIC issued a receiver's certificate for $831,134.37. Regas argues that the FDIC's issuance of a receiver's certificate amounted to a conclusive determination of the amount Regas is owed and that the FDIC cannot now reverse itself by contesting the total. Regas also seeks a determination that liens it has asserted on $612,591.16 that it currently holds are valid and enforceable and that it may therefore retain those funds in partial satisfaction of its claim.

The Court assumes familiarity with its decision on the FDIC's motion to dismiss, which provided a summary of the allegations underlying Regas's claim. See Regas, 2011 WL 332545, at *1-2. The Court assumed the truth of those allegations for the purpose of deciding the motion to dismiss, but of course it does not do so on summary judgment.

A. Preclusive effect of the receiver's certificate

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) sets out an administrative review process under which the FDIC, following its appointment as a receiver for a failed bank, reviews and determines claims against the bank. Under FIRREA, the FDIC "shall allow any claim . . . which is proved to the satisfaction of the receiver." 12 U.S.C. § 1821(d)(5)(B). Regas contends that the FDIC has already determined the value of Regas's claim and is therefore barred from challenging the amount of the claim in this case.

The Court concludes that the doctrine of judicial estoppel, which Regas invokes, does not apply. That doctrine "prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding." New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (citation omitted). The doctrine applies to prevent a litigant from successfully making a representation to one tribunal and then reversing itself in front of another tribunal. See, e.g., In re Airadigm Commc'ns, Inc., 616 F.3d 642, 662 (7th Cir. 2010); Pakovich v. Broadspire Servs., Inc., 535 F.3d 601, 606 (7th Cir. 2008). The FDIC not a litigant before a tribunal when it decided Regas's claim. Rather, it was the decision maker.

The doctrine of judicial estoppel may be the wrong legal pigeonhole for Regas's contention. This does not mean, however, that the FDIC can escape its prior determination of the amount of Regas's claim.

Regas followed the steps FIRREA required when it submitted its claim. Regas asserts that the proof of claim that it submitted to the FDIC as receiver "included all of the invoices for legal fees and expenses owed by Mutual Bank to Plaintiff." Pl.'s LR 56.1 Stmt. ¶ 6 (citing id. Ex. 6, Dallas Aff. ¶6). In response, the FDIC tries to sidestep the point, stating the following:

FDIC/R admits that Plaintiff timely filed its Proof of Claim. At the present time, without discovery, FDIC/R lacks knowledge or sufficient information upon which to form a belief as to whether the Proof of Claim included all supporting invoices for legal fees and expenses, and which portion of those claimed fees were actually owed to Plaintiff. Moreover, FDIC/R has not been provided with the underlying supporting documentation demonstrating the scope of work, the case/matter files, invoicing for the entire course of representation. To the extent that FDIC/R has received invoices at all, they fail to identify the attorney who performed the services listed. E.g. Exhibit F to Plaintiff's 56.1 Statement.

Def.'s LR 56.1 Stmt. ¶ 6. The FDIC's contention that it wants more information to defend the case does give rise to a genuine factual dispute regarding whether Regas submitted what it was required to submit to support its administrative claim. In response to the claim, the FDIC stated in writing on July 2, 2010 that Regas "has made satisfactory proof" that it was a creditor in the amount of $831,134.37. Pl.'s LR 56.1 Stmt., Ex. B. The FDIC further stated on that same date that the receiver's certificate that it issued in that amount "represents a formal record of [Regas's] claim as allowed." Id., Ex. C. And in cutting Regas's claim from $832,259.62 to $831,134.37 (also on July 2, 2010), the FDIC stated that it had made "a thorough review of [Regas's] filed claim along with [its] supporting documentation." Id., Ex. D.

These written determinations by the FDIC establish beyond peradventure that it had everything it required to assess and determine the amount of Regas's claim before deciding whether to allow the claim. This is further underscored by the fact that the FDIC made its decision on the claim after Regas had commenced this litigation. If the FDIC felt that it lacked sufficient information to complete its review and issue the receiver's certificate, it should have requested more or disallowed the claim. It did neither.*fn1 In sum, the FDIC, as receiver, ...

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