John Acevedo v. First Union Nat'l Bank

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
JAN 26, 2007
THOMAS K. KAHN
No. 06-12477
CLERK
D. C. Docket No. 01-01961 CV-CAM-1
JOHN ACEVEDO,
Plaintiff-Appellant,
versus
FIRST UNION NATIONAL BANK,
a foreign banking corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Georgia
(January 26, 2007)
Before DUBINA and WILSON, Circuit Judges, and HODGES,* District Judge.
_____________________
*Honorable Wm. Terrell Hodges, United States District Judge for the Middle District of Florida,
sitting by designation.
DUBINA, Circuit Judge:
John Acevedo (“Acevedo”) appeals from the district court’s order granting
summary judgment in favor of First Union National Bank (“First Union”) which
refused to honor cashier’s checks issued by a failed bank, whose assets and
liabilities First Union assumed. For the reasons set forth below, we affirm the
district court’s entry of summary judgment in favor of First Union.
I. BACKGROUND
In July 1981, Southeast Bank (“Southeast Bank”) in Miami, Florida, issued
five cashier’s checks, totaling $450,000, to five named payees (Roberto Sanchez
(“Sanchez”), Alvaro Ocampo, Eugenio Echavarria and Juan Santamaria). In
August 1981, Sanchez transferred all five cashier’s checks to Juan Diaz (“Diaz”).1
Ten years later, in 1991, Southeast Bank failed, and the Federal Deposit Insurance
Corporation (“FDIC”) assumed receivership over the bank. The FDIC, as
Southeast Bank’s receiver, was required to pay Southeast Bank’s insured deposits
in cash or make such funds available to depositors in another insured depository
institution. See 12 U.S.C. § 1821(f)(1) (1994). The FDIC chose the latter option
and entered into an Assistance Agreement with First Union under which First
Union assumed Southeast Bank’s liability for demand deposits, including
1
It is unclear how Sanchez became the holder of all five cashier’s checks.
2
outstanding cashier’s checks. The FDIC transferred funds to First Union to cover
the liabilities.
As receiver, the FDIC also assumed control of Southeast Bank’s records and
was responsible for notifying Southeast Bank’s depositors that they must claim
their deposit. See 12 U.S.C. § 1822(e) (1992) (amended 1993).2 The Assistance
Agreement required First Union to return any unclaimed funds to the FDIC if,
within eighteen months after Southeast Bank’s closing, any depositor had not
claimed his unpaid deposit. Depositors who had failed to claim their deposit were
barred from asserting a right to the unclaimed deposits, if the FDIC provided
notice pursuant to § 1822(e). See id.; see also Acevedo, 357 F.3d at 1248.
In September, October, and November 1991, The Miami Herald published a
notice to Southeast Bank’s creditors. The notice advised creditors that Southeast
Bank had closed and that creditors must present their claims to the FDIC by
December 31, 1991. The notice also advised creditors that claims filed after
December 31, 1991, may be barred in accordance with 12 U.S.C. § 1821.
Although the amended 12 U.S.C. § 1822(e) did not change the notification
2
“In 1993, Congress amended 12 U.S.C. § 1822(e), but instructed that the former version of
§ 1822(e) apply to banks placed in receivership between January 1, 1989, and June 28, 1993.”
Acevedo v. First Union Nat’l Bank, 357 F.3d 1244, 1248 n.1 (11th Cir. 2004); see also Unclaimed
Deposits at Insured Banks and Savings Associations, Pub. L. No. 103-44, sec. 2(b), 107 Stat. 220,
221 (1993).
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procedures for banks placed in receivership between January 1, 1989, and June 28,
1993, for purposes of existing receiverships, Congress instructed that § 1822(e)
not bar an insured depositor’s claim, so long as the claim was made prior to the
termination of the receivership. See Pub. L. No. 103-44, sec. 2(b), 107 Stat. 220,
221. As a result, in September 1993, The Florida Times-Union (Jacksonville), the
Orlando Sentinel, the St. Petersburg Times, The Tampa Tribune, The Palm Beach
Post, the Sarasota Herald-Tribune, the South Florida Sun-Sentinel (Broward,
Palm Beach, and Dade counties), and The Miami Herald published notices to the
former depositors of Southeast Bank. The notices advised depositors that
Southeast Bank was closed, and that the FDIC had arranged for all deposits to be
transferred to First Union. The notice also advised depositors that Congress had
extended the claiming period, and that depositors could claim their deposits at any
time before the FDIC terminated the receivership. Finally, the notice advised
depositors that claims filed after the FDIC terminated the receivership would be
barred.
In 1996, Diaz transferred the five cashier’s checks, issued by Southeast
Bank, to Acevedo. On January 16, 2001, Acevedo, through his attorney, tendered
the five cashier’s checks to First Union for payment; however, First Union refused
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to honor them.3 Acevedo filed suit against First Union in state court for its refusal
to honor the cashier’s checks. First Union removed the action to the United States
District Court for the Northern District of Georgia. On the parties’ cross-motions
for summary judgment, the district court entered summary judgment in favor of
First Union because it held that First Union had complied with the Assistance
Agreement by returning the funds representing the unclaimed deposits to the
FDIC.
On appeal, this court concluded that no language within the Assistance
Agreement expressly terminates First Union’s liability to pay the cashier’s checks.
Acevedo, 357 F.3d at 1248. We held that the Assistance Agreement neither
limited First Union’s liability to the passing of a specified time or the occurrence
of a certain event, nor did the Assistance Agreement expressly shift liability for an
unclaimed deposit back to the FDIC. Id. However, we explained that Acevedo,
having failed to present the cashier’s checks within eighteen months after the
FDIC was appointed receiver, was barred from recovering the deposits, pursuant
to § 1822(e), “if the FDIC mailed notice to the depositor’s last known address
appearing on the failed bank’s records.” Id. Therefore, we reversed the judgment
3
The parties do not indicate the date upon which the FDIC terminated the receivership;
however, we assume that the FDIC terminated the receivership prior to January 16, 2001.
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in favor of First Union and remanded the case for a determination whether the
FDIC satisfied the notice provision in § 1822(e). Id. at 1248-49.
On remand, First Union presented the affidavit testimony of George Fritz
(“Fritz”), FDIC Supervisory Resolutions and Receiverships Specialist. Fritz
attested that neither the five named payees nor the subsequent holders of the
checks were listed as depositors of Southeast Bank. Additionally, Fritz attested
that Southeast Bank had no address information on file for any of the payees or
subsequent holders of the checks. Therefore, according to Fritz, the FDIC could
not, and did not, mail notice to any of the payees or subsequent holders of the
checks.
The district court concluded that mailed notice is required by the Due
Process Clause only if a claimant’s identity is known or reasonably ascertainable.
Given that the records of Southeast Bank did not contain the names or addresses
of any of the holders of the cashier’s checks, the district court found that notifying
the holders by mail would require impracticable and extended searches. Under
these circumstances, the district court held that published notices were sufficient
to meet the requirements of due process. The district court again entered summary
judgment in favor of First Union. Acevedo appeals that judgment.
II. STANDARD OF REVIEW
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We review de novo a district court’s order granting summary judgment.
Green v. Union Foundry Co., 281 F.3d 1229, 1233 (11th Cir. 2002). In
conducting our review, we apply the same legal standards as the district court.
Vaughan v. Cox, 343 F.3d 1323, 1328 (11th Cir. 2003). Thus, we review the facts
in the light most favorable to the non-moving party and draw all reasonable
inferences in his favor. Artistic Entm’t, Inc. v. City of Warner Robins, 331 F.3d
1196, 1203 (11th Cir. 2003). Summary judgment is not appropriate unless the
evidence demonstrates that “there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
56(c).
III. DISCUSSION
Acevedo argues that the district court erred in granting summary judgment
in favor of First Union because the plain language of 12 U.S.C. § 1822(e) requires
notice by mail. Acevedo does not dispute that the records of Southeast Bank did
not contain the names or addresses of any of the payees or subsequent holders of
the cashier’s checks. However, relying on Lepelletier v. FDIC, 164 F.3d 37 (D.C.
Cir. 1999), he contends that First Union failed to show that the FDIC made
diligent efforts to ascertain the identity and addresses of the payees or holders of
the checks. Without a showing of such diligent efforts, he argues, publication
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alone was insufficient to comport with due process requirements. First Union
argues that § 1822(e) does not require mailed notice if the depositor’s last-known
address does not appear in the records of the depository institution in default.
Given that the identities and addresses of the depositors were unknown to the
FDIC, First Union alleges that notice by publication was sufficient. We agree.
Before the claim of a depositor of a failed bank is extinguished, §1822(e)
requires the FDIC to notify the depositor that he must claim the deposit. Prior to
the 1993 amendment, § 1822(e) stated, in relevant part,
[if], after the Corporation shall have given at least three months’
notice to the depositor by mailing a copy thereof to his last-known
address appearing on the records of the depository institution in
default, any depositor in the depository institution in default shall fail
to claim his insured deposit . . . within eighteen months after the
appointment of the receiver for the depository institution in default . .
. all rights of the depositor . . . against the new bank . . . with respect
to the transferred deposit, shall be barred . . . .
§ 1822(e) (emphasis added). By its plain terms, § 1822(e) required notice by mail
only to the extent that a depositor’s last known address appears in the records of
the depository institution in default. In the present case, neither the names nor the
addresses of the holders of the cashier’s checks appeared in Southeast Bank’s
files. We conclude that Lepelletier, the case upon which Acevedo relies, is
8
unpersuasive because it does not address the precise issue of notification when the
identity and address of a claimant is unknown.
Moreover, even if First Union was required to go beyond Southeast Bank’s
records to search for the depositor’s address, without at least a record of the name
of the depositor, it would be impossible to locate him. Under these circumstances,
with no information in the bank’s records to locate the depositor, even the most
diligent search efforts would prove futile. Because the records of Southeast Bank
contained neither the name nor the address of any depositor associated with
Acevedo’s checks, we conclude that the FDIC was neither able nor required to
mail notice under § 1822(e).
We turn now to whether notice by publication satisfied due process
requirements. The Supreme Court has stated that the precise form of notice
required by the Due Process Clause will vary, depending upon the circumstances
and conditions of each case. Walker v. City of Hutchinson, Kansas, 352 U.S. 112,
115, 77 S. Ct. 200, 202 (1956). As the district court correctly observed, notice by
mail is required only if a claimant’s identity is known or reasonably ascertainable.
See Tulsa Prof’l Collection Servs., Inc. v. Pope, 485 U.S. 478, 490-91, 108 S. Ct.
1340, 1347-48 (1988). However, “[f]or creditors who are not ‘reasonably
9
ascertainable,’ publication notice can suffice.” Id. at 490, 108 S. Ct. at 1347. This
has long been recognized as the law:
This Court has not hesitated to approve of resort to publication . . .
where it is not reasonably possible or practicable to give more
adequate warning. Thus[,] it has been recognized that, in the case of
persons missing or unknown, employment of an indirect and even a
probably futile means of notification is all that the situation permits
and creates no constitutional bar to a final decree foreclosing their
rights.
Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 317, 70 S. Ct. 652,
658 (1950); see also Jones v. Flowers, __ U.S. __, 126 S. Ct. 1708, 1720 (2006)
(recognizing that notice by publication is adequate when it is not reasonably
possible or practicable to give more adequate warning). Because it is undisputed
that the FDIC could not readily ascertain the identities and addresses of the named
payees or subsequent holders of the checks, we conclude that the FDIC’s
published notices were sufficient to comport with due process requirements.
Therefore, § 1822(e) bars Acevedo’s claim against First Union for refusal to honor
the cashier’s checks.4
IV. CONCLUSION
4
Alternatively, First Union urges this court to affirm the district court’s entry of summary
judgment because it contends that Acevedo’s claim is barred by 12 U.S.C. § 1822(c). Because we
affirm the judgment of the district court on the above-stated grounds, we need not address § 1822(c).
10
For the foregoing reasons, we hold that the FDIC was neither able nor
required to mail notice pursuant to § 1822(e) and notice by publication was
sufficient. Accordingly, we affirm the district court’s grant of summary judgment
in favor of First Union.
AFFIRMED.
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