[00:00:01] Speaker 00: Case number are 17-50-09, Lynn Feldman as Chapter 7 Trustee of the Estates of Eastern Master Inc., OPFM Inc., DBA Personal Financial Management Inc., Mortgage Assistance Professionals Inc., [00:00:17] Speaker 00: Mortgage Assistance Professionals Inc. [00:00:19] Speaker 00: II, Discover Treasurers Inc. [00:00:21] Speaker 00: and DIVIDIT Inc. [00:00:24] Speaker 00: versus Federal Deposit Insurance Corporation as receiver for both IndyMac Bank, FSB, and Washington Mutual Bank. [00:00:32] Speaker 00: Mr. DeVito for the appellant, Ms. [00:00:34] Speaker 00: Agneben for the appellee. [00:00:46] Speaker 03: Give us a moment here. [00:01:04] Speaker 03: Thank you. [00:01:06] Speaker 05: Good morning, Your Honor. [00:01:07] Speaker 05: May it please the Court. [00:01:09] Speaker 05: Although this case involves a subject matter jurisdiction question arising under FIREA, which is a statute that has something of a well-deserved reputation for being a impenetrable thicket, briefing, I think, has really narrowed the issue to something of a very simple pleading issue, rather than one requiring the court to engage in statutory interpretation. [00:01:31] Speaker 05: And that issue is whether the facts set forth in the plaintiff's complaint suffice to permit her to invoke the late-filed claim exception, which is set forth in Section 1821D5C2 of 12 United States Code. [00:01:48] Speaker 05: In finding the pleading insufficient, the district court made a fundamental and highly prejudicial error in selecting the standard of review that applied to the FDIC's jurisdiction challenge. [00:02:01] Speaker 05: treating that challenge as a factual challenge rather than what it was clearly intended only as a facial challenge. [00:02:08] Speaker 03: Meaning what? [00:02:10] Speaker 05: Meaning that... The court lacked jurisdiction because... Well, the court said that it lacked jurisdiction because I find that you failed to present sufficient evidence to me to prove jurisdiction by a preponderance. [00:02:26] Speaker 05: But in doing that, the court didn't accept the allegations in the complaint and limit its analysis to looking only at what the complaint said and the inferences available there from. [00:02:40] Speaker 05: There was no record. [00:02:42] Speaker 05: There was no evidence submitted by anyone. [00:02:46] Speaker 05: Certainly, the plaintiff had no notice that the court was going to treat what the FDIC has never said it intended to make into a factual challenge as anything but a facial challenge. [00:03:02] Speaker 03: So in looking at the challenge, what was the error? [00:03:09] Speaker 05: Well, the error is sort of... The district court made findings of fact with respect to a motion to dismiss. [00:03:17] Speaker 02: That's the error. [00:03:18] Speaker 02: There you go. [00:03:18] Speaker 02: We just said in heard in July in a case we issued. [00:03:22] Speaker 02: The other side says... [00:03:25] Speaker 02: The district court relied on judicial notice to find facts and heard. [00:03:29] Speaker 02: We said that's absolutely prohibited on a motion to dismiss. [00:03:33] Speaker 02: District court can't wander around looking for facts. [00:03:35] Speaker 02: I mean, why don't you state your case? [00:03:37] Speaker 02: The case is district court made findings with respect to which your client was entitled to the inference on the face of the complaint. [00:03:47] Speaker 02: District court can't make findings of fact on a motion to dismiss. [00:03:50] Speaker 05: Absolutely, you can't. [00:03:51] Speaker 02: Well, that's your answer to Judge Edwards. [00:03:54] Speaker 05: Well, I was trying to get to a, perhaps you'd have simplified my case even further than I thought I could. [00:04:01] Speaker 04: You're very, you're always lucky around here when Judge Edwards does that. [00:04:04] Speaker 04: Yes. [00:04:06] Speaker 04: Well, I'll just sit down. [00:04:08] Speaker 04: Take my word for it. [00:04:11] Speaker 02: This is what we just said and heard. [00:04:13] Speaker 02: This report cannot make findings a fact. [00:04:16] Speaker 05: Well, then it's very simple because there's no question that this report did make findings a fact to the extent it made findings a fact. [00:04:25] Speaker 05: It certainly didn't find support for those findings of fact in what it says in the complaint or the inferences that are available from what it says in the complaint. [00:04:32] Speaker 02: The inference is supposed to be drawn in favor of the non-moving party. [00:04:35] Speaker 02: I mean, that's the other error. [00:04:36] Speaker 02: And the only question for you is whether your client pled enough in the complaint so that the facts asserted, inferences could be drawn for the case to continue forward. [00:04:48] Speaker 02: We said if there are potential issues of fact, then the district court's got to move it to summary judgment. [00:04:54] Speaker 05: And that certainly didn't happen. [00:04:55] Speaker 04: So what's your view of the difference between whether it's facial or factual in terms of whether the district court has to give the plaintiff the benefit of all inferences? [00:05:08] Speaker 04: Does the district court have to do that either way, under either theory? [00:05:14] Speaker 05: The party making the challenge has to say, this is what it is. [00:05:18] Speaker 05: Accept everything in the complaint is true. [00:05:20] Speaker 05: And I still don't think that they've [00:05:23] Speaker 05: made out a case for subject matter jurisdiction. [00:05:26] Speaker 04: And what is that? [00:05:26] Speaker 04: Is that facial? [00:05:28] Speaker 05: Yes, that's facial. [00:05:29] Speaker 04: And under that case, you know, under that case, you do give the plaintiff the benefit of all the inferences, correct? [00:05:36] Speaker 05: Yes, and that's, I think, what everyone thought was happening here, except then the district court says, well, you failed to meet your burden of proof by preponderance of the evidence. [00:05:45] Speaker 02: I find... Remind me if I'm remembering correctly, both sides, the appellate and the appellate [00:05:59] Speaker 02: And they can answer for themselves when they get up. [00:06:02] Speaker 02: The other side tries to get around that problem by saying, well, the district court took judicial notice of these critical facts. [00:06:09] Speaker 02: I don't know where that comes from, because Heard and many other cases have said district court can't take judicial notice of potentially disputed facts and make findings. [00:06:18] Speaker 02: Everyone agreed this was a facial challenge. [00:06:20] Speaker 05: Correct. [00:06:25] Speaker 05: I think what we're looking at, look, that's the error. [00:06:29] Speaker 05: And I think that's sufficient right there to require reversal. [00:06:33] Speaker 05: There are fact findings made on an empty record without any notice to anyone. [00:06:37] Speaker 05: And so that's totally impermissible and obviously prejudicial. [00:06:41] Speaker 05: And so this notion that the FDIC tries to argue that this was somehow a harmless error is completely incorrect. [00:06:53] Speaker 03: So in line with an old case of ours, I think it's Papandreou's, where we said some discovery is permissible regarding jurisdictional questions. [00:07:08] Speaker 03: We just send it back to the district court, is your view. [00:07:12] Speaker 05: That's correct. [00:07:14] Speaker 02: Yeah, you haven't won anything. [00:07:16] Speaker 05: No, absolutely. [00:07:17] Speaker 05: All we thought we had done was plead a sufficient basis for invoking jurisdiction. [00:07:23] Speaker 02: Whether your pleading was sufficient to keep you in the game on its face. [00:07:26] Speaker 02: There was nothing more that was presented. [00:07:28] Speaker 02: The other side didn't present anything that any court can look at. [00:07:31] Speaker 05: No, not at all. [00:07:33] Speaker 03: So one response is, the only question was, did your client have notice, at least inquiry notice? [00:07:45] Speaker 03: And what kind of discovery would proceed on that ground? [00:07:52] Speaker 03: It would basically allow you to, what, flesh out your complaint? [00:07:57] Speaker 05: Sure. [00:07:57] Speaker 05: If they want to persist in raising a subject matter of jurisdiction challenge, meaning if they don't believe that my client lacked notice in time to file a timely claim by the bar date, then I suppose that we can take discovery on that issue and they can ask, [00:08:13] Speaker 04: Did you know? [00:08:15] Speaker 05: No, we didn't know. [00:08:16] Speaker 03: You didn't know. [00:08:17] Speaker 03: All right, so that's the nature of the discovery. [00:08:19] Speaker 05: Sure. [00:08:20] Speaker 03: But the... Because I thought you also had a point that you could have discovered the procedures being followed here as to whether or not her October 8th letter had been received. [00:08:33] Speaker 05: Well... No? [00:08:35] Speaker 02: I just want to be clear what your... Isn't that your case? [00:08:38] Speaker 02: You're talking about the last file exception applies. [00:08:41] Speaker 02: Absolutely. [00:08:41] Speaker 02: Well, that's the discovery you want. [00:08:43] Speaker 02: I'm confused, isn't that? [00:08:48] Speaker 05: I don't think I need to pursue it because I think that the pleading sets out the case for subject matter jurisdiction. [00:08:54] Speaker 05: But if it's disputed, then sure. [00:08:56] Speaker 05: We'll make an evidentiary record on whether or not we meet the two elements of that claim, and the court will decide whether [00:09:05] Speaker 05: of who it believes, in other words. [00:09:07] Speaker 05: But the court can't do that on the basis of a pleading and a motion to dismiss that's based purely on subject matter jurisdiction on an empty record. [00:09:20] Speaker 04: I just have two questions. [00:09:23] Speaker 04: In response to Judge Rogers, you said the question is whether Feldman-Lacke knows [00:09:30] Speaker 04: in time to file before the bar date, right? [00:09:32] Speaker 04: Yes. [00:09:32] Speaker 04: But I assume you meant lack notice of the receivership, correct? [00:09:36] Speaker 05: Yes. [00:09:36] Speaker 04: That's the question. [00:09:38] Speaker 04: Second question is, this is just a factual question. [00:09:42] Speaker 04: So what's your response to the fact that, and I didn't see any responses in your briefs, that so you rely heavily on her [00:09:57] Speaker 04: on this October 8th letter, right? [00:10:00] Speaker 04: Correct. [00:10:00] Speaker 04: But after the October 8th letter, on October 31, the agency republished the Notice of the Receivership and Departing. [00:10:10] Speaker 04: It was after that. [00:10:11] Speaker 05: Sure. [00:10:14] Speaker 04: So why wasn't that sufficient to put her on notice? [00:10:18] Speaker 05: Because publication notice isn't sufficient to defeat the exception. [00:10:21] Speaker 04: publication notice that seems... Under any certain... I'm assuming, you're assuming the October 8th letter put the FDIC on notice to give to notifier of the bar date, right? [00:10:37] Speaker 04: That's your theory? [00:10:39] Speaker 05: No, it doesn't need to be because the exception is for someone who lacks actual notice of the receiver's appointment. [00:10:50] Speaker 05: It doesn't, I didn't have to, look, in order to get into the due process argument that this could potentially be, then I would agree that the FDIC has to either know the identity of the claimant or have the reasonable ability to ascertain the identity of claimant. [00:11:10] Speaker 03: So the other argument, just so I'm clear what your position is, is given your client [00:11:19] Speaker 03: and your clients admitted scope of expertise. [00:11:26] Speaker 03: It's not disputed here. [00:11:29] Speaker 03: Given the nature of her world imploding, she was at least on inquiry notice. [00:11:38] Speaker 03: So while publication alone does not necessarily suffice, given who she was, the type of work she was doing, [00:11:49] Speaker 03: she at least was placed on inquiry notice. [00:11:52] Speaker 04: I disagree. [00:11:53] Speaker 03: Well, I know you disagree, but hear me out. [00:11:57] Speaker 03: OK. [00:11:57] Speaker 03: And there's nothing in the complaint other than those three paragraphs in an otherwise very long complaint that [00:12:13] Speaker 03: supports the inference that in those circumstances, she lacked even inquiry notice. [00:12:24] Speaker 05: I think that illustrates the error of what the district court did, right? [00:12:28] Speaker 05: Because I say, and I think that this is perfectly reasonable, right? [00:12:32] Speaker 05: My client knows that when banks get taken over by the FDIC, there's a claim procedure that has to be followed. [00:12:40] Speaker 03: The biggest. [00:12:41] Speaker 05: But she didn't know that this bank, if the FDIC can prove that she knew that Washington Mutual was in receivership with the FDIC, then I can't prove my case. [00:12:57] Speaker 03: No, but hear me out. [00:12:59] Speaker 03: The district court's notion was that how could she not be on inquiry notice given what she does? [00:13:10] Speaker 05: That cuts both ways, right? [00:13:12] Speaker 05: And I'm entitled to the benefit of the inferences at this point, right? [00:13:16] Speaker 03: So even though her world has imploded as to the biggest bank ever. [00:13:21] Speaker 05: Well, I'm not sure that you've got that exactly right, because my client is the trustee for a separate bunch of businesses that were being run as a Ponzi scheme. [00:13:33] Speaker 05: She's not thinking about Washington Mutual every day. [00:13:37] Speaker 03: She's the Chapter 7 trustee. [00:13:40] Speaker 05: for Image Masters, Inc., and hosts of related businesses, not for Washington Mutual. [00:13:46] Speaker 05: So Washington Mutual's world is imploding, but that's not my client's world. [00:13:54] Speaker 05: Now, here's what I think is the main point, which is the publication notice. [00:13:59] Speaker 03: When you say it's not your client's world, I understand that point, but it is your client's world to the extent of who she was representing. [00:14:07] Speaker 05: Well, it's her world to the extent of who she was suing among the dozens and perhaps more than dozens of parties that she needed to sue as a result of having taken over for these businesses. [00:14:19] Speaker 05: But she was not representing Washington Mutual. [00:14:23] Speaker 03: She was suing them. [00:14:24] Speaker 03: She was suing them. [00:14:25] Speaker 03: And on behalf of her clients, she had to know is the argument. [00:14:33] Speaker 05: I hear that argument, but my point is, in this exception, the late file claim exception, when it says notice in the statute, that has to mean actual notice. [00:14:44] Speaker 05: Because if it's publication notice alone, then there's no point at all. [00:14:48] Speaker 03: No, we're not there. [00:14:50] Speaker 03: We're just somebody who's in the field, and there's nothing in the complaint other than she sent a letter. [00:14:57] Speaker 05: Right, and so there's sort of two different points. [00:14:59] Speaker 05: One is did the FDIC know who I was so that when, and then we can get into the mail notice obligation that the FDIC has that it never complied with. [00:15:08] Speaker 03: No, it's what her complaint told the district court about who she was. [00:15:11] Speaker 05: Her complaint told the district court [00:15:13] Speaker 05: I sent this letter to Washington Mutual, which is in receivership under the FDIC. [00:15:18] Speaker 05: Obviously, I didn't know it was in an FDIC receivership because I would have sent it to the FDIC. [00:15:22] Speaker 03: It's not obvious. [00:15:23] Speaker 05: It's not obvious? [00:15:24] Speaker 05: Well, it's debatable. [00:15:27] Speaker 05: Let's say it's debatable on the basis of the complaint. [00:15:29] Speaker 03: She gets discovery on what she knew. [00:15:32] Speaker 03: That's what I just want to understand. [00:15:35] Speaker 03: That's the way you present the case. [00:15:39] Speaker 05: If we had known that this was the type of challenge that the district court construed it to be, then I'll have my client write out an affidavit about what she knows, and we can have an evidentiary record. [00:15:49] Speaker 05: And if they don't believe her affidavit, then they can take her deposition, and we'll have an evidentiary here. [00:15:54] Speaker 05: But that's not what happened. [00:15:56] Speaker 05: The question is, based solely on the complaint and with the inferences construed in favor of my client, [00:16:03] Speaker 05: My client certainly doesn't admit in the complaint that she knew that Washington Mutual was in receivership. [00:16:08] Speaker 03: So does she have the burden to demonstrate jurisdiction? [00:16:12] Speaker 05: She has the burden to plead jurisdiction and then to prove it if it's challenged. [00:16:18] Speaker 05: And if it's challenged on a factual basis, then there needs to be a record made. [00:16:24] Speaker 04: What's your point? [00:16:25] Speaker 04: Could you repeat your point about what notice has to mean, that notice must mean actual notice? [00:16:31] Speaker 05: Sure. [00:16:32] Speaker 05: Could you repeat that? [00:16:33] Speaker 05: For purposes of the late-file claim exception. [00:16:36] Speaker 05: The first element of that is that the party lacked notice of the existence of the receivership. [00:16:43] Speaker 05: If publication notice is sufficient to defeat that, then there's no exception at all, because they published the notice before you have to comply with the bar date. [00:16:55] Speaker 05: It's necessarily defeated by the publication then. [00:16:59] Speaker 04: I mean, it would only occur if they fail to give public notice. [00:17:03] Speaker 04: That's your point, right? [00:17:04] Speaker 04: Once they give public notice, there can be no exceptions, unless it means actual notice. [00:17:09] Speaker 05: Right. [00:17:09] Speaker 04: Is that your argument? [00:17:10] Speaker 05: Yeah. [00:17:11] Speaker 05: Yes. [00:17:12] Speaker 05: If publication notice is sufficient to defeat the exception, then there is no exception, because the published notice goes out before anyone has to comply with the barding. [00:17:23] Speaker 04: And then at one point you said the main point is, and you didn't finish your sentence, would you? [00:17:35] Speaker 05: Well, I think that the main point there was relating to the point I just made relative to the actual, that notice in that section of the statute has to mean actual notice. [00:17:44] Speaker 05: The due process argument, Judge Edwards, is [00:17:48] Speaker 05: Again, on the pleading, I think there's no question that the letter that my client sent to Washington Mutual at least plausibly could have. [00:18:02] Speaker 05: We don't know what happened, and that's why it was wrong for the district court to do what it did. [00:18:05] Speaker 05: But it certainly raises an inference that the FDIC did or could have discovered the existence of my claim, in which case my claim cannot be extinguished [00:18:17] Speaker 05: on the basis of publication notice alone. [00:18:20] Speaker 05: And that's what you see. [00:18:21] Speaker 05: And that's the warning sort of given in this court's opinion in Freeman in footnote two. [00:18:27] Speaker 05: And it's the holding of the fourth circuit state. [00:18:29] Speaker 02: And the court even distinguishes between notice of receivership and notice of the process. [00:18:33] Speaker 02: It's completely different. [00:18:34] Speaker 02: And that's essentially what you're arguing about. [00:18:36] Speaker 02: Correct. [00:18:38] Speaker 02: And the district court didn't attend to the due process question at all. [00:18:41] Speaker 05: It did not. [00:18:42] Speaker 03: So back to Judge Taylor's point. [00:18:46] Speaker 03: I thought you were going to make another point. [00:18:49] Speaker 03: And that was publication is never sufficient because it would be a meaningless requirement because inquiry notice has no place in this statutory construct. [00:19:07] Speaker 03: Is that your thesis here? [00:19:11] Speaker 05: Not necessarily. [00:19:12] Speaker 05: I think the published notice [00:19:15] Speaker 05: is sufficient to defeat the claims, I think, of anyone who isn't known to the FDIC, potentially. [00:19:24] Speaker 05: But the LAFA claim exception, as it's worded, if publication notice is sufficient to defeat it, if all they have to do is say, oh, well, we published notice in the Wall Street Journal, then that notice goes out before anyone complies with the bar date. [00:19:43] Speaker 05: And so the whole world has noticed. [00:19:47] Speaker 03: The point of publication, arguably, is to put you on notice that maybe you ought to inquire. [00:19:57] Speaker 05: Sure. [00:19:57] Speaker 05: But in order for that to be effective, someone has to see it. [00:20:01] Speaker 05: And so in order for publication notice to become anything like notice sufficient to defeat my right to invoke the lay file claim exception, I have to know about it. [00:20:10] Speaker 05: And there's no record whatsoever that that happened. [00:20:12] Speaker 03: So even though in representing her clients who wanted to sue an entity about whose world had imploded, publication was not enough to put her on inquiry notice as to whether there had been an appointment of a receiver. [00:20:40] Speaker ?: No. [00:20:42] Speaker 03: So what is the point of publication? [00:20:45] Speaker 05: That publication is sufficient, I think, to defeat the claims of anyone, for example, who would show up today and say, hey, I have this claim against Washington Mutual Bank. [00:21:00] Speaker 05: Too bad. [00:21:01] Speaker 05: You failed to comply with the bar date. [00:21:03] Speaker 05: The notice went out. [00:21:04] Speaker 05: We complied with our procedures. [00:21:08] Speaker 03: So any time a complaint is filed and there's a letter, you get discovery. [00:21:16] Speaker 05: No, I don't think that's the case at all. [00:21:24] Speaker 05: The exception is there. [00:21:25] Speaker 05: Now, could someone today plausibly make out a case that they didn't know of the receivership at the time? [00:21:31] Speaker 05: I doubt it. [00:21:32] Speaker 05: I sincerely doubt it. [00:21:33] Speaker 05: But the way the statute's worded, if they could prove that they were buried underground for seven years, then they could probably invoke the exception. [00:21:44] Speaker 05: No actual notice. [00:21:45] Speaker 05: Now, they probably would miss the other prong of it, which is that they filed the claim in time for it to be paid. [00:21:53] Speaker 05: Those are the only two problems. [00:21:54] Speaker 05: And on the first one, it has to be actual notice or its meeting one. [00:22:00] Speaker 02: Isn't the statute fairly clear in Congress saying that there are different ways you can give notice and uses the word shell. [00:22:08] Speaker 02: They are mandating mail notice because it's a better form of notice in those situations in which [00:22:17] Speaker 02: The sender has reason to know the address. [00:22:20] Speaker 05: Absolutely. [00:22:20] Speaker 02: You're saying you're in that category. [00:22:22] Speaker 02: You're entitled to the higher form of notice. [00:22:25] Speaker 02: No one says you otherwise knew. [00:22:27] Speaker 02: There's nothing about a duty of inquiry. [00:22:29] Speaker 02: It says there are two forms of notice. [00:22:32] Speaker 02: If you are in the second category, you're entitled to it. [00:22:35] Speaker 02: And I think that's where Freeman is wandering off into the due process concern. [00:22:39] Speaker 02: Congress made the call, and it shall. [00:22:42] Speaker 02: is a requirement. [00:22:43] Speaker 02: It's not may, it says you must if you have reason to know that this person might have a claim and the fight here is whether or not the complaint with the interest is drawn in favor of your client gets you that far along. [00:22:59] Speaker 05: No question and that's not only the Freeman footnote but that's essentially the Supreme Court's decision [00:23:06] Speaker 05: Mullen versus Central Hanover Bank from 1950. [00:23:09] Speaker 05: If someone's distinguishing your property rights, then you're entitled to written notice as opposed to someone putting something in a newspaper. [00:23:17] Speaker 04: So sort of an unrelated question. [00:23:19] Speaker 04: The complaint does not allege that Feldman lacked actual notice, does it? [00:23:24] Speaker 05: I would concede, Your Honor, that at this point, if I had known that this would happen. [00:23:29] Speaker 04: Was there a reason for not making that allegation? [00:23:33] Speaker 05: No, there wasn't a reason. [00:23:35] Speaker 05: We didn't know that there was gonna be this type of subject matter jurisdiction challenge, and then when it turned into one, we... Well, but you know the statute. [00:23:42] Speaker 04: I mean, you know... Sure, and I think that... You just said to us very clearly, it has to be actual notice, yet your complaint doesn't allege it. [00:23:48] Speaker 04: Now, the reason I ask is, you say in your reply brief you're prepared to do that, right? [00:23:53] Speaker 04: Yes. [00:23:54] Speaker 04: But in the district court, you know, when the FDIC made this same point, that the complaint doesn't allege absence of notice, you didn't amend your complaint then. [00:24:04] Speaker 05: No, because I didn't think I need to, and I still don't think I needed to, because I'm entitled to the benefit of the inferences, and the inference is plainly there. [00:24:11] Speaker 05: But yes, is that a shortcut? [00:24:13] Speaker 04: You can see it would have been a lot easier if you had made the allegation, right? [00:24:15] Speaker 04: There's no question. [00:24:16] Speaker 04: Would you see why it makes us wonder why it's not there? [00:24:19] Speaker 05: Well, I can certainly represent to you that it would be there, and perhaps that's the simplest way to deal with it. [00:24:24] Speaker 03: No, it's the negative inference, all right? [00:24:27] Speaker 03: And you're trying to get over that by saying you're entitled to all favorable inferences. [00:24:34] Speaker 05: Well, look, I think the facts that are in there plausibly suggest that my client did not have actual notice of the receivership. [00:24:45] Speaker 05: And yes, I'm entitled to the benefit of that inference. [00:24:47] Speaker 05: And there's no question that the court could not, certainly not, make a factual finding that my client did have actual notice. [00:24:55] Speaker 05: There was no basis in the record for that. [00:24:59] Speaker 05: Or even should have had no. [00:25:01] Speaker 03: Why don't we hear from. [00:25:03] Speaker 03: Thank you happily. [00:25:05] Speaker 01: Good morning and may it please the court Michelle Agnew Benny on behalf of the FDIC is receiver for Washington Mutual Bank. [00:25:22] Speaker 01: And since the theme of the appellant's presentation was whether she pled enough in the complaint, I'm going to focus on that first. [00:25:30] Speaker 01: Our short answer to that is no. [00:25:32] Speaker 01: Really, there are only three allegations in the complaint that she relies on to support her claim that she lacked notice of the receiver's appointment in time to file a claim by the bar date. [00:25:43] Speaker 01: And first, the fact that she mailed a letter to Washington Mutual Home Loans, Inc. [00:25:48] Speaker 01: rather than the receiver on October 8, 2008, doesn't support a conclusion that she was unaware of the receiver's appointment and time to file a claim by the bar date. [00:25:57] Speaker 01: The letter was sent over two months before the bar date, and it would require several logical leaps, none of which is supported by any facts in the complaint, to infer that a letter to an entity other than [00:26:12] Speaker 01: Washington Mutual Bank or the receiver shows that she lacked knowledge of the bank's failure. [00:26:17] Speaker 04: Well, her argument is, it's obvious that I didn't know, otherwise I would have sent it to the FDIC. [00:26:22] Speaker 04: That's her whole point. [00:26:23] Speaker 01: I don't think it is obvious. [00:26:24] Speaker 04: I mean, it may be... No, I didn't say, but that's her point, correct? [00:26:28] Speaker 01: That is her point, and at most I think that shows that she didn't know about the receiver's appointment on October 8th. [00:26:34] Speaker 01: It doesn't show us that she didn't learn of it later by virtue of the publication notice on October 31st. [00:26:41] Speaker 04: But do you agree with her that the notice requirement in the statute must mean actual notice? [00:26:47] Speaker 01: I think the FDIC does agree that if a claimant could show that they lacked actual notice of the receiver's appointment, the exception could apply in those circumstances. [00:26:59] Speaker 01: But she just hasn't pled that here, and the allegations that she's relying on [00:27:03] Speaker 01: It's just not a plausible conclusion that you can draw. [00:27:09] Speaker 01: Given the historic and well-publicized nature of the WAMU failure, as Doug Rogers noted, this was the largest bank failure in U.S. [00:27:17] Speaker 01: history on the front pages of multiple newspapers covered everywhere. [00:27:22] Speaker 01: It's just implausible that she lacked knowledge of the receiver's appointment simply because she failed to receive mailed notice and she filed her claim late. [00:27:31] Speaker 01: I mean, we don't know why she did that. [00:27:32] Speaker 01: She's never told us when she actually learned of the receiver's appointment. [00:27:36] Speaker 01: And so without any of that, it's just [00:27:40] Speaker 01: not plausible based on what she has alleged that she didn't know about the receiver's appointment. [00:27:45] Speaker 02: It's interesting your argument. [00:27:47] Speaker 02: I'm not following your argument given what the statute says. [00:27:51] Speaker 02: You're arguing as if the statute says it's two steps. [00:27:54] Speaker 02: We use publication and maybe sometimes mailing is required. [00:27:59] Speaker 02: That's not what the statute says. [00:28:01] Speaker 02: The statute says mailing is required. [00:28:03] Speaker 02: The receiver shall mail notice if. [00:28:07] Speaker 02: It's another form of notification. [00:28:10] Speaker 02: And the statute makes it mandatory if the conditions are met. [00:28:14] Speaker 02: And they have pled enough facially, and you all agree it's a facial challenge, they have pled enough facially to suggest [00:28:22] Speaker 02: that FDIC should have, could have, did. [00:28:26] Speaker 02: You've never suggested you didn't, because we've never gotten to any of those facts. [00:28:30] Speaker 02: You've never denied that that letter was received by someone in power to respond to it. [00:28:35] Speaker 02: I looked through all the papers. [00:28:37] Speaker 02: It's not there. [00:28:38] Speaker 02: But of course, it wouldn't be there, because it's not a factual dispute. [00:28:41] Speaker 02: But the statute says you're required to give mail notice. [00:28:46] Speaker 02: It doesn't say only if the publication notice somehow fails. [00:28:50] Speaker 02: It says you must. [00:28:52] Speaker 02: with respect to someone who meets these requirements. [00:28:57] Speaker 02: That's what the law is. [00:28:57] Speaker 02: That's what they're pleading. [00:29:01] Speaker 01: Well, Judge Edwards, I think we would disagree that it's undisputed that she was entitled to mailed notice. [00:29:08] Speaker 02: No, no, it's not undisputed. [00:29:10] Speaker 02: It's whether she pled enough [00:29:12] Speaker 02: to put this in dispute. [00:29:14] Speaker 02: And the district court tried to get around it, and you tried to save the district court by saying it's judicial notice that she knew that Schneider had moved and that Washington Neutral wasn't really in existence, et cetera. [00:29:27] Speaker 02: That's to defeat the exception, and not to dispute. [00:29:30] Speaker 01: Your honor, it's not just judicial notice that was taken about the JP Morgan Chase acquisition. [00:29:35] Speaker 01: I mean, the appellant herself has stated that in her brief in this appeal. [00:29:42] Speaker 01: She concedes that it's not a disputed fact. [00:29:44] Speaker 01: So it's not really a matter of judicial notice. [00:29:46] Speaker 01: That was an undisputed fact that the district court considered. [00:29:50] Speaker 02: Wait, wait, wait. [00:29:51] Speaker 02: What was an undisputed fact? [00:29:52] Speaker 01: It's undisputed that the FDIC's receiver sold all the assets to JP Morgan Chase. [00:29:59] Speaker 02: It doesn't answer the suggestion made in the complaint that the FDIC still, we can reasonably assume they would have gotten a copy of this letter, or Snyder would have gotten it, etc. [00:30:11] Speaker 02: None of that has played out, and they've pled that. [00:30:14] Speaker 02: And what I'm saying to you is, facially, [00:30:17] Speaker 02: The section with respect to mail-in required is not dependent upon what happens with respect to publication. [00:30:25] Speaker 02: We've been discussing it that way, but that's not what the statute says. [00:30:28] Speaker 01: Well, there are two responses to that. [00:30:30] Speaker 01: First of all, just as a matter of what she's pled, she's pled that she sent a letter to Washington Mutual Home Loans, Inc. [00:30:38] Speaker 01: The president of that was David Schneider. [00:30:42] Speaker 01: At that time, on October 8th, the FDIC did not own any assets of Washington Mutual Bank. [00:30:48] Speaker 01: No. [00:30:48] Speaker 01: They had already been transferred to JP Morgan Chase, and that's undisputed. [00:30:52] Speaker 01: And so there's no [00:30:53] Speaker 01: way to infer that the FDIC was receiving mail sent to any WAMU entity at that time. [00:31:00] Speaker 02: It is a reasonable inference unless it's contested, and we haven't gotten to that stage. [00:31:04] Speaker 02: And maybe you can blow them out on summary judgment. [00:31:07] Speaker 02: And Hurd says a district court can't do this. [00:31:12] Speaker 02: They can't make these kinds of factual findings that are going to be dispositive. [00:31:18] Speaker 01: Well, I don't think that the district court really made any factual findings. [00:31:22] Speaker 01: It only considered the allegations in the complaint, which we agree with the district court, that they were insufficient. [00:31:28] Speaker 01: And it relied on undisputed facts. [00:31:30] Speaker 01: And it relied on sort of the, by judicial notice, we meant the general, you know, [00:31:36] Speaker 01: Things that were acknowledged in another district court decision, others that there had been widespread media coverage. [00:31:41] Speaker 02: Exactly what you meant because you were responding to the points, watching a mutual's non-existence, somebody's departure, and what kind of inferences. [00:31:51] Speaker 02: What do we think about that? [00:31:52] Speaker 02: We don't think anything about it because it's not a proven fact. [00:31:56] Speaker 01: Well, I think it's a conceited fact. [00:31:58] Speaker 01: But moving on, as for what the consequences of a failure to mail notice would be if the FDIC were obligated to mail notice here, if you're assuming that, this court in Freeman acknowledged that there are really no consequences to a failure to mail notice if a claimant had actual notice. [00:32:15] Speaker 02: No question. [00:32:15] Speaker 01: And so I think that her failure to allege that she lacked actual notice, the failure to include facts in her complaint that would support a reasonable conclusion that she lacked actual notice, and the undisputed fact that this was the largest bank failure in U.S. [00:32:32] Speaker 01: history and was well publicized, [00:32:34] Speaker 01: Those things combined with the undisputed fact that the FDIC complied with its publication notice requirements. [00:32:44] Speaker 02: She has to have actual notice of the process available and the due date. [00:32:49] Speaker 02: That's what Freeman is suggesting. [00:32:51] Speaker 02: We distinguish between notice of the appointment of receiver and the due date and the process. [00:32:58] Speaker 01: Well, the process requirement was not actually part of Freeman's holding. [00:33:02] Speaker 01: Freeman acknowledged that really the exception only talks about lack of notice of the receiver's appointment. [00:33:09] Speaker 01: Freeman said that there could be a due process concern if someone lacked notice of the claims process. [00:33:15] Speaker 01: But here, I think that she hasn't even alleged that. [00:33:19] Speaker 01: And as a bankruptcy trustee, she herself acknowledges that she's very familiar with how claims processes work. [00:33:26] Speaker 01: If she had notice of the receiver's appointment, she was at least on inquiry notice. [00:33:31] Speaker 01: I should look into this and find out what I need to do to preserve my rights. [00:33:35] Speaker 01: And she didn't do that, I suppose. [00:33:37] Speaker 01: Or she chose to just wait. [00:33:39] Speaker 01: We don't know. [00:33:40] Speaker 01: Because we don't know when she learned of the receiver's appointment. [00:33:42] Speaker 01: She hasn't told us. [00:33:43] Speaker 01: And she hasn't provided any other facts to indicate how it was that she didn't hear about the largest failure in US bank history. [00:33:53] Speaker 01: And I think there's a lot of discussion about this facial versus factual distinction. [00:34:00] Speaker 01: But I think what the appellant has not emphasized, and I want to make sure the court doesn't lose sight of it, she bears the burden to plead facts sufficient to allow the court to conclude that it has jurisdiction. [00:34:13] Speaker 01: If that's challenged, she bears the burden to present evidence to prove it. [00:34:18] Speaker 01: She hasn't identified what disputed facts were decided by the district court. [00:34:23] Speaker 01: As I said, I think that they were only, the district court really only considered the allegations in the complaint and undisputed facts. [00:34:31] Speaker 01: And really at the end of the day, the key difference between these challenges is whether disputed facts need to be decided. [00:34:38] Speaker 01: The cases on which the appellant relies indicate that if there are factual disputes, [00:34:44] Speaker 01: The plaintiff should be allowed some time to conduct discovery, if needed, as appropriate, to discover the information she needs to plead the necessary facts. [00:34:57] Speaker 01: But it's unclear how discovery would have helped Feldman here. [00:35:02] Speaker 01: In her opposition to the FDIC's motion to dismiss, she never asked for discovery, and it's not true that no evidence was presented here. [00:35:09] Speaker 01: The FDIC attached [00:35:11] Speaker 01: a declaration with its publication notices to its motion to dismiss. [00:35:16] Speaker 01: It was quite clear what the FDIC's theory was, and as the person bearing the burden, it was on Feldman to produce evidence to support her claim that the court had jurisdiction. [00:35:26] Speaker 01: She didn't do that. [00:35:27] Speaker 01: She didn't ask for discovery. [00:35:32] Speaker 02: Well, I said they attached a declaration with the publication notices. [00:35:47] Speaker 02: Well, that's not advancing us anywhere. [00:35:49] Speaker 01: Well, Your Honor, I think that it shows Feldman clearly what the FDIC's argument is, and if she wanted to rebut that evidence with evidence that she truly lacked notice of the receiver's appointment, it was incumbent on her to do so. [00:36:05] Speaker 01: Or if she thought she needed discovery, it was incumbent on her to ask for it. [00:36:09] Speaker 01: She didn't. [00:36:10] Speaker 01: And so I think that, you know, and also she now claims on appeal, you know, I could have amended my complaint to include these allegations. [00:36:20] Speaker 01: Well, this case was stayed for many years before we eventually, the FDIC eventually filed its motion to dismiss. [00:36:27] Speaker 01: She could have amended at any time during that period. [00:36:31] Speaker 01: She eventually did amend when the stay was listed right away, but didn't include any supplemental allegations about her lack of knowledge. [00:36:39] Speaker 01: And so it's hard to see how she truly would be able to make these amendments that would be plausible in the circumstances if she hasn't done so already. [00:36:55] Speaker 03: I think also to just touch on- Are you familiar with the case, Judge Edwards referred to heard? [00:37:03] Speaker 01: I don't think I'm familiar with that particular decision. [00:37:08] Speaker 01: But as I said, I don't think the district court really took improper judicial notice of anything. [00:37:14] Speaker 01: By judicial notice, I think primarily the district court relied on just the allegations in the complaint and the undisputed facts to take judicial notice. [00:37:25] Speaker 01: I was merely referring to [00:37:26] Speaker 01: the media coverage of the Washington Mutual Bank failure, which have also been acknowledged in other court decisions, which were cited in the district court's opinion. [00:37:36] Speaker 01: So I'm not really sure that it was properly categorized as judicial notice. [00:37:39] Speaker 01: Maybe that was just an error in choice of terms on my part. [00:37:43] Speaker 03: But you acknowledged the district court made some findings of fact regarding Mr. [00:37:50] Speaker 03: the person to whom she addressed the letter. [00:37:53] Speaker 01: Well, that fact, though, was not disputed. [00:37:56] Speaker 01: And even in Appellant's opening brief. [00:37:59] Speaker 03: No, but it was used as a way to show that the FDIC did not have notice of her claim. [00:38:11] Speaker 01: Yes, but I think that that was not [00:38:15] Speaker 03: I understand you want to parse her findings so that we don't have a legal error, but she did make these findings of that. [00:38:26] Speaker 01: Yes, but I don't think those findings were necessary to the conclusion that she ultimately reached that lack of notice was not adequately alleged in the complaint and that there wasn't a reasonable inference you could draw from the allegation. [00:38:39] Speaker 04: That can't be. [00:38:40] Speaker 04: That's not what the district court said. [00:38:43] Speaker 04: I mean, it would have been a much shorter opinion if that was dispositive to the district judge. [00:38:48] Speaker 04: She simply said the complaint fails to allege lack that she had no notice. [00:38:53] Speaker 04: But the district court did go on to discuss how well known this was, that the October 8th letter couldn't have gotten there because the company no longer existed. [00:39:04] Speaker 04: Why did she put all that in there if they weren't necessary to her opinion? [00:39:07] Speaker 01: Well, what I meant was I don't think that the particular fact about whether WAMU existed, those sorts of things, I don't think they're really essential because it's undisputed that JPMorgan Chase had acquired Washington Mutual's assets at that point. [00:39:32] Speaker 01: There's even a question about whether Washington Mutual Home Loans Inc. [00:39:35] Speaker 01: was even part of Washington Mutual Bank. [00:39:37] Speaker 01: I don't think it was, but we haven't gotten into that. [00:39:40] Speaker 01: It's not in the district court's opinion. [00:39:42] Speaker 02: In the complaint in paragraph 54, she pled that she was not mailed notice of the claims bar date. [00:39:51] Speaker 02: And under 12B, that will require an inference that she also did not actually know about the claims bar date. [00:40:00] Speaker 02: I don't know how respectfully, your honor. [00:40:02] Speaker 01: I don't think that's true. [00:40:04] Speaker 01: She did not. [00:40:05] Speaker 01: She did not receive mailed notice. [00:40:07] Speaker 01: Okay, we'll accept that as true. [00:40:10] Speaker 01: But that does not mean that she that does not lead to a reasonable inference in these circumstances. [00:40:18] Speaker 01: And given her other allegations that she lacked actual notice of the receiver's appointment through some other means actual notice about the claims. [00:40:27] Speaker 02: There's a reasonable inference, you're saying, that she did not have actual notice of the claims awarded. [00:40:32] Speaker 01: No, I disagree. [00:40:33] Speaker 01: I don't think that that's a reasonable inference you can draw from the fact that she did not receive mailed notice. [00:40:38] Speaker 01: And many courts have drawn that conclusion, Judge Edwards. [00:40:42] Speaker 01: There have been many cases where claimants have not received mailed notice. [00:40:47] Speaker 01: You know, in those cases, maybe it was undisputed whether they were known to the receiver. [00:40:52] Speaker 01: But in any case, they didn't receive mailed notice. [00:40:55] Speaker 01: And yet, the bar date was still applied to them. [00:40:58] Speaker 01: They were charged with notice via the publication notice. [00:41:03] Speaker 02: Or because they had an actual notice through some other means. [00:41:06] Speaker 02: Even if it says, if you fit the category of mailing required, publication does it. [00:41:12] Speaker 02: I haven't found that yet. [00:41:14] Speaker 01: No, no. [00:41:14] Speaker 02: That's my whole point. [00:41:16] Speaker 02: But I think the problem is... You're misreading the statute. [00:41:19] Speaker 02: They claim they didn't get the mail most, which obviously means you infer that there's no knowledge. [00:41:24] Speaker 02: And the statute says if you're in a certain category, you are entitled to mail most. [00:41:29] Speaker 01: I think our disagreement here is whether she actually was entitled to mailed notice, and I don't think she's alleged an adequate basis for concluding that she was. [00:41:37] Speaker 01: That's our argument. [00:41:39] Speaker 02: And my concern in any event is the district court preempted it by making findings of facts which you're wavering on. [00:41:46] Speaker 02: You called them judicial notice in your arguments. [00:41:49] Speaker 02: They're not judicial notice, which knocks out her argument. [00:41:52] Speaker 02: of which would put her in the exception. [00:41:55] Speaker 02: And if she's in the exception, the statute says she's entitled to mail notice. [00:42:03] Speaker 01: I just think that her allegation that she sent a letter to Washington Mutual Home Loans Inc. [00:42:08] Speaker 01: is just not sufficient to draw a reasonable inference that the FDIC received that letter, given the undisputed fact that the FDIC no longer had any assets of Washington Mutual on that date. [00:42:22] Speaker 01: And it's undisputed that JP Morgan Chase had taken over. [00:42:26] Speaker 01: And the person to whom that letter was directed was employed by JP Morgan Chase. [00:42:30] Speaker 01: Those are undisputed facts. [00:42:32] Speaker 01: And so the allegation that she sent a letter to a WAMU entity of some sort [00:42:37] Speaker 01: does not support an inference that the FDIC received it. [00:42:41] Speaker 01: You could disagree with me, but ultimately, I think that it [00:42:46] Speaker 01: Even if that's the case, under the Elmco Properties case, the Fourth Circuit decision that the appellant cites, even if the FDIC had the obligation to mail notice to her and she never received it, if she had actual notice of the receiver's appointment, which we don't think she's adequately alleged that she didn't, then that wouldn't matter. [00:43:09] Speaker 01: The failure to mail notice would essentially be harmless if she had actual notice. [00:43:14] Speaker 01: So really, that's the key flaw here in her complaint. [00:43:18] Speaker 01: She hasn't alleged a lack of actual notice, either under the exception analysis or under the due process analysis. [00:43:26] Speaker 03: All right. [00:43:26] Speaker 03: Thank you. [00:43:27] Speaker 03: Thank you. [00:43:32] Speaker 03: Council for a poll? [00:43:38] Speaker 05: I find it bizarre, to say the least, to hear that, well, the district court didn't make any fact findings. [00:43:46] Speaker 05: All you need to do is read the district court's opinion to know that the district court did make fact findings. [00:43:51] Speaker 05: And I also think it's strange for them, FDIC, to argue that, well, OK, those fact findings are there, but they don't matter because. [00:43:58] Speaker 04: Well, is she right that it's uncontested that the FDIC didn't own any assets at that point? [00:44:06] Speaker 04: And it's uncontested that, what's his name, Schneider? [00:44:08] Speaker 04: Didn't work there anymore? [00:44:09] Speaker 04: No. [00:44:10] Speaker 05: That's not uncontested. [00:44:11] Speaker 05: And where would the district court have found a basis? [00:44:14] Speaker 04: Don't respond to a question with a question. [00:44:17] Speaker 04: Tell me whether or not it's contested. [00:44:19] Speaker 05: It's contested. [00:44:19] Speaker 04: And how would I know that from the record? [00:44:22] Speaker 05: You would know it because it's not in my complaint, and that's all that anyone should have been looking at. [00:44:27] Speaker 05: And so for the district court to go off and find facts about what the state of affairs was at Washington Mutual, where no one has said anything, [00:44:38] Speaker 05: and there's no record for making that finding, is an error. [00:44:42] Speaker 05: Now, I also think just sort of fundamentally that this notion that Washington Mutual ceased to exist on the day that it went into a receivership, and therefore every piece of mail that was in transit to Washington Mutual [00:44:56] Speaker 05: just went into a black hole. [00:44:59] Speaker 05: And if you sent your mail to someone who was fired, no one ever looked at it then. [00:45:04] Speaker 05: Is that what the FDIC does with institutions that it's responsible for liquidating the assets of? [00:45:11] Speaker 05: It ignores all the mail once it takes it over? [00:45:13] Speaker 05: I think that's that strange credulity to look at it that way and say, oh, well, this letter was addressed to the wrong person at the bank. [00:45:20] Speaker 05: So we couldn't possibly have figured out who your claim was. [00:45:23] Speaker 05: That's the importance of the mailed notice for filing. [00:45:26] Speaker 03: So you file a complaint that has three paragraphs about a letter sent before the publication, the no date, bar date. [00:45:37] Speaker 03: And you never ask for discovery, is that correct? [00:45:41] Speaker 03: Even after the FDIC filed its motion and attached the notice of publications? [00:45:51] Speaker 05: Correct, because one, we can get the exception without defeat. [00:45:55] Speaker 05: Yes, the notice was published. [00:45:58] Speaker 05: It doesn't matter. [00:45:59] Speaker 05: The question is, did we have actual notice of the receivership? [00:46:03] Speaker 05: The inference is there in the complaint that we did. [00:46:06] Speaker 05: And so I don't need discovery, because I can defeat their motion. [00:46:09] Speaker 05: Because they confined their motion. [00:46:11] Speaker 03: That's what I thought your position was. [00:46:13] Speaker 03: You do not need discovery, because those three paragraphs are sufficient. [00:46:20] Speaker 03: to show that no matter what the state of the world, your client did not have notice. [00:46:28] Speaker 03: Correct. [00:46:30] Speaker 05: All right. [00:46:31] Speaker 05: Thank you. [00:46:32] Speaker 03: We will take the case under advisement.