United States District Court, D. Maryland
DONALD J. LOWE, et al., Plaintiffs,
FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR NBRS FINANCIAL, et al., Defendants.
L. HOLLANDER UNITED STATES DISTRICT JUDGE.
Donald J. Lowe (“Mr. Lowe”), Joyce J. Lowe
(“Ms. Lowe”), and Lowe Services, Inc.
(“Lowe Services”) (collectively, the
“Lowes”) lodged a civil action against defendant
Federal Deposit Insurance Corporation (the
“FDIC”) as Receiver for NBRS Financial
(“NBRS”). ECF 1 (the “Complaint”).
They incorporated by reference the Affidavit of Mr. Lowe. ECF
1-1. Plaintiffs subsequently filed an Amended Complaint (ECF
12), again incorporating ECF 1-1, and naming the FDIC as two
defendants: the FDIC in its capacity as Receiver
(“FDIC-Receiver”) and also in its corporate
capacity (“FDIC-Corporate”). Plaintiffs seek
the release of a lien previously held by NBRS on Mr. and Ms.
Lowe's residential property. Id. ¶ 5. They
also seek damages pursuant to 12 U.S.C. § 1819(a). ECF
12, ¶¶ 3, 6.
FDIC-Receiver “in its corporate capacity as
attorney-in-fact” for the FDIC, and “as receiver
for NBRS, ” has moved to dismiss. ECF 29. It asserts
lack of jurisdiction under Fed.R.Civ.P. 12(b)(1) and (2) and
failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6).
The motion is supported by a memorandum (ECF 29-1)
(collectively, the “Receiver Motion”) as well as
several exhibits. ECF 29-3; ECF 29-5 to ECF 29-11.
FDIC-Corporate also moved to dismiss (ECF 30) (the
“Corporate Motion”), asserting lack of subject
matter jurisdiction under Rule 12(b)(1) and failure to state
a claim under Rule 12(b)(6). Plaintiffs oppose the Receiver
Motion (ECF 34) and the Corporate Motion. ECF 37. Defendants
have replied. ECF 36 (“Receiver Reply”); ECF 38
motions are fully briefed and no hearing is necessary to
resolve them. See Local Rule 105.6. For the reasons
that follow, I shall grant the motions.
Factual and Procedural Background
Lowe is the president and secretary of Lowe Services. ECF 12,
¶ 1. Lowe Services does business as Pioneer Outdoor
Equipment, and as Pioneer Maintenance and Repair Service,
which contracts for home improvements, small engine repairs,
and maintenance for commercial and residential customers. ECF
1-1, ¶¶ 3-5. Lowe Services operated in a commercial
building located at 1226 South Philadelphia Boulevard in
Aberdeen, Maryland (the “Commercial Property”).
Id. ¶ 6. Mr. and Ms. Lowe owned the property
from November 1999 until 2013, when the property went into
foreclosure. Id. ¶ 8.
2004, Lowe Services allegedly entered a business relationship
with NBRS, a bank with branches in Cecil County and Harford
County, Maryland. Id. ¶ 10. NBRS agreed to
refinance an outstanding mortgage on the Commercial Property;
the amount of the mortgage was $400, 000. Id. ¶
12. It also provided Mr. Lowe with a $150, 000 line of
credit, which it increased to $350, 000 in June 2005.
Id. ¶¶ 12-13.
2009, Lowe Services began to struggle financially.
Id. ¶ 15. To stay afloat, it allegedly employed
fewer people and liquidated certain inventory, including
equipment. Id. ¶ 16. It also accepted
additional jobs in home improvement and commercial
maintenance. ECF 1-1, ¶ 16. Lowe Services also sought
financial assistance from NBRS. Id. ¶ 17. In
response, NBRS offered to extend the maturity of the credit
line. Id. In 2011, it also offered to roll the
credit line into the mortgage on the Commercial Property,
increasing Lowe Services' total debt to $755, 000.
Id. NBRS also further secured the mortgage by
recording a lien on Mr. and Ms. Lowe's personal residence
in Churchville, Maryland. Id. ¶ 17.
same year, Mr. Lowe entered a contract to sell the Commercial
Property. Id. ¶ 18. However, the buyer withdrew
from the sale in October 2012, just two months before
closing. Id. As a result, plaintiffs were unable to
make rental payments on a biodiesel system that it leased
from Balboa Capital Corporation. Id. ¶¶
14, 20. Moreover, plaintiffs were unable to make their
mortgage payments on the Commercial Property. Id.
result, on August 26, 2013, NBRS initiated foreclosure
proceedings. Id. ¶ 22. NBRS also blocked Mr.
Lowe's access to the Commercial Property. Id.
¶¶ 23, 27. In addition, NBRS seized the Lowes'
business records, equipment, and tools. Id. ¶
24; see also Id. ¶¶ 25-26 (listing the
seized tools and the seized physical and digital business
records). In 2013, after Mr. Lowe unsuccessfully attempted to
negotiate a refinancing with NBRS, he filed for Chapter 13
bankruptcy relief, thereby staying the foreclosure.
Id. ¶ 32.
October 17, 2014, NBRS was closed by the Maryland Office of
the Commissioner of Financial Regulation, and the FDIC was
named as Receiver for NBRS. Id. ¶ 36.
Plaintiffs allege that the FDIC-Receiver assumed NBRS's
financial assets, including the Commercial Property and the
lien on Mr. and Ms. Lowe's personal residence.
Id. ¶ 37.
Lowe filed an administrative claim with the FDIC-Receiver on
November 27, 2014, seeking $30, 000, 000 for the financial
losses suffered by his businesses. ECF 29-5; see
also ECF 29-6. A month later, on December 29, 2014, the
Lowes filed suit against the FDIC-Receiver in this District.
Lowe v. FDIC, JKB-14-4024 (D. Md. Dec. 29, 2014);
see ECF 29-8. In a letter dated January 23, 2015,
the FDIC-Receiver requested additional documentation from Mr.
Lowe to substantiate his claim against the receivership. ECF
29-6. That letter provided that if the requested
documentation was not received by February 23, 2015, Mr.
Lowe's claim would be disallowed. Id.
Lowe failed to provide the required documentation. Therefore,
the FDIC-Receiver disallowed his claim, by notice of July 20,
2015. ECF 29-7. The notice also advised Mr. Lowe that he
could challenge the disallowance in a lawsuit. Id.
And, the FDIC-Receiver advised Mr. Lowe that if, within 60
days of the notice, he did not file a lawsuit or continue any
previously filed lawsuit, the disallowance of his claim would
be final, pursuant to 12 U.S.C. § 1821(d)(6)(B)(ii). ECF
29-7 at 1.
plaintiffs had already filed a lawsuit against the
FDIC-Receiver, they were permitted to continue their suit,
which was pending in this District before Judge James K.
Bredar. See ECF 29-11. However, plaintiffs did not
serve that suit on the FDIC-Receiver. As a result, by order
of July 24, 2015, Judge Bredar directed plaintiffs to show
cause as to why their suit should not be dismissed for
failure to prosecute. Id. On August 10, 2014,
plaintiffs moved for leave to amend their complaint. See
Lowe, JKB-14-4024, ECF 15. Judge Bredar denied the
motion on August 14, 2015, and dismissed the case, without
prejudice, under Fed.R.Civ.P. 41(b) and Local Rule 103.8. ECF
29-9. From that time until plaintiffs filed the instant
action on February 15, 2018, plaintiffs appear to have taken
no further legal action in pursuit of their suit or the
underlying administrative claim In June 2016, NBRS agreed to
release its lien on Mr. and Ms. Lowe's personal
residence, upon the sale of the Commercial Property. ECF 1-1,
¶ 33; see ECF 29-8, ¶¶ 139-40. This
release was entered in the Bankruptcy Court by a consent
order dated June 8, 2016. ECF 1-1, ¶ 33. On May 16,
2016, the FDIC-Receiver sold the Commercial Property at
auction for $325, 000. ECF 1-1, ¶ 46. According to
plaintiffs, the sale price was less than one-third of the
Commercial Property's appraised value in 2011.
Id. ¶¶ 19, 46.
August 2017, Mr. Lowe was notified that the auction sale of
the Commercial Property did not satisfy his debt and that he
owed $172, 396.31 on the debt to “Republic Credit One,
L.P., Republic Credit Corporation, General Partner, ”
which had allegedly purchased his debt from the
FDIC-Receiver. Id. ¶ 43. Further, Mr. Lowe
states that NBRS's lien on his home has not been removed
and has impeded his ability to obtain refinancing.
Id. ¶ 50.
allege that NBRS and later FDIC-Receiver failed to sell the
Lowes' equipment and business tools. Id.
¶¶ 44, 49. Instead, they allegedly left the
equipment and tools unattended for two years, resulting in
their theft. Id. ¶ 44.
plaintiffs allege that on multiple occasions Mr. Lowe
requested that NBRS and FDIC return the leased biodiesel
system, which was located on the Commercial Property.
Id. ¶¶ 27-28, 40, 45. Both entities
refused to allow him to remove the biodiesel system.
Id. Additionally, Scarpulla Enterprises Inc., which
had purchased the Commercial Property at auction, also
refused to allow Mr. Lowe to retrieve the system. Id.
¶¶ 47-48. As a result, he has been unable to
retrieve it. Id. ¶ 51.
seek over $1.5 million dollars in damages from the FDIC. ECF
12, ¶ 3. They claim that the FDIC seized tools,
equipment, and records, resulting in damages totaling $463,
250. Id. Further, plaintiffs allege that the FDIC is
responsible for the “shortfall in sale price” of
the Commercial Property, resulting in damages totaling $975,
000. Id. Moreover, plaintiffs seek $275, 000 in
damages for FDIC's alleged failure to take “all
efforts to return a biodiesel system to either Balboa
Capital” or the Lowes. Id.
Standard of Review
noted, both FDIC-Receiver and FDIC-Corporate have moved to
dismiss under Rule 12(b)(1) for lack of subject matter
jurisdiction and ...