Benson v. JPMorgan Chase Bank

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 bars claims asserted against a purchasing bank when the claim is based on the conduct of the failed institution, but does not bar claims based on the purchasing bank’s own acts.

Plaintiffs, a group of investors defrauded by the “Millennium Ponzi scheme,” argued that JPMorgan, as successor in interest of Washington Mutual (“WaMu”), is liable because it purchased most of WaMu’s assets and liabilities from the Federal Deposit Insurance Corporation (“FDIC”) and continued WaMu’s practices. The district court dismissed the complaint for failure to exhaust the administrative remedies under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) before filing a claim. After reviewing decisions from other circuits, the Court rejected the class’s argument that FIRREA’s jurisdictional bar against claims not first presented to the FDIC is limited to claims against a failed bank or the FDIC and therefore does not apply to claims against a purchasing bank. The Ninth Circuit concluded that the bar applies to claims asserted against a purchasing bank when the claim is based on the conduct of the failed institution. However, FIRREA does not bar claims based on the purchasing bank’s own acts. The Court held that a claim based on JPMorgan’s independent, post-purchase conduct would not be subject to FIRREA’s jurisdictional bar, but the class did not adequately plead a complaint. Therefore, the district court was correct in dismissing the complaint. AFFIRMED.