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Mintz v. Federal Deposit Insurance Corp.

August 6, 2010


The opinion of the court was delivered by: Paul L. Friedman United States District Judge


This matter is before the Court on the motion of the defendant, the Federal Deposit Insurance Corporation ("FDIC"), to dismiss the plaintiff's complaint. In connection with its motion to dismiss, the FDIC has also filed a motion requesting that the Court take judicial notice of a statement contained in an SEC filing. Plaintiff Edward Mintz has responded to the defendant's motions by filing a motion of his own, one that seeks a stay of these proceedings pending the outcome of a related bankruptcy proceeding in federal court in Delaware. After consideration of the parties' arguments, the relevant law, and the entire record in this case, the Court will grant the FDIC's motion to dismiss the complaint and deny the remaining motions as moot.*fn1


A. Dime Bancorp and Litigation Tracking Warrants

According to his complaint and the various documents attached to and incorporated into it, plaintiff Edward Mintz is a former shareholder of the now-defunct Dime Bancorp, Inc., the holding company of Dime Savings Bank of New York, FSB ("Dime Savings"). See Ex. A; Warrant Agreement at 2. In 1995 Dime Bancorp acquired Anchor Savings Bank ("Anchor"), which merged into Dime Savings. Ex. A; Prospectus at 1. After the merger, Dime Savings, as the legal successor to Anchor, pursued certain legal claims against the United States in Anchor's name ("the Anchor Litigation"). Prospectus at 1. The damages claimed by Dime Savings under alternative theories of liability were substantial, ranging from $512 million to $980 million. Id.

In 2000, several years before the Anchor Litigation yielded an initial judgment, the Board of Directors of Dime Bancorp announced that it wished to "pass along the potential value of our claim against the government to our existing shareholders in the form of tradeable securities." Prospectus at 1. To realize that goal, Dime Bancorp released a "Warrant Agreement," a contract among Dime Bancorp itself, EquiServe Trust Company, N.A., and EquiServ Limited Partnership. Warrant Agreement at 1. Pursuant to that agreement, EquiServe Trust Company, N.A., and EquiServ Limited Partnership (collectively referred to as "the Warrant Agent") issued to each holder of Dime Bancorp's common stock a number of "Litigation Tracking Warrants" ("LTWs") equal to the number of shares of common stock held by that shareholder. Id. at 4. By their terms, those warrants would become exercisable only if (1) Dime Savings won a final judgment in the Anchor Litigation; (2) the amount of damages awarded to Dime Savings as part of that judgment ("the Anchor Award") exceeded various litigation and other costs incurred by Dime Bancorp and/or Dime Savings; and (3) Dime Bancorp received any necessary regulatory approval for the issuance of the common stock underlying the LTWs.

Id. at 3.

In the event that the warrants did become exercisable, each LTW would confer upon its holder the right to purchase at par value that number of Dime Bancorp common shares whose aggregate stock price equaled a certain portion of the Anchor Award divided by the total number of LTWs issuable under the Warrant Agreement. Warrant Agreement at 7. In other words, the number of shares for which an LTW would be exercisable was directly dependent on the size of the Anchor Award.

In January of 2002, Dime Bancorp was acquired by Washington Mutual, Inc. ("WM Inc."), the holding company of Washington Mutual Bank ("WM Bank"). Ex. A; see Am. Nat'l Ins. Co. v. JPMorgan Chase & Co., Civil Action No. 09-1743, 2010 WL 1444533, at *1 (D.D.C. Apr. 13, 2010) (explaining that WM Inc. is the former holding company of WM Bank).*fn2

Several years later, in 2008, the United States Court of Federal Claims determined that Anchor Savings Bank was entitled to receive approximately $356,455,000 in damages from the United States. See Anchor Sav. Bank, FSB v. United States, 597 F.3d 1356, 1360 (Fed. Cir. 2010); see generally Anchor Sav. Bank, FSB v. United States, 81 Fed. Cl. 1 (Fed. Cl. 2008). That determination was largely upheld on appeal, although the Federal Circuit remanded the case, instructing the Claims Court to re-examine its calculation of the damages award to discern whether the award should not in fact be larger. See Anchor Sav. Bank, FSB v. United States, 597 F.3d at 1373-74.

On September 25, 2008, after the Claims Court had issued its initial award in the Anchor Litigation, the United States Office of Thrift Supervision closed WM Bank and placed it in receivership, with the FDIC as its receiver. Compl. ¶ 16. The next day, WM Inc. filed a petition for bankruptcy, initiating a complex case in the United States Bankruptcy Court for the District of Delaware. See In re Washington Mutual, Inc., Case No. 08-12229, Voluntary Petition (Chapter 11) at 1 (Bankr. Del. Sept. 26, 2008). The FDIC, WM Inc., and JPMorgan Chase Bank, National Association, which acquired WM Bank from the FDIC, are currently vigorously contesting in the Delaware proceedings the proper disposition of various assets held by WM Inc. and/or WM Bank. Compl. ¶¶ 4, 18.

B. Mr. Mintz's Claim

Parties who wish to assert an interest in the assets of a failed financial institution for which the FDIC acts as a receiver may file a claim for review by the FDIC. See 12 U.S.C. § 1821(d)(5)-(6). The FDIC will allow the claim if it is timely and "is proved to the [FDIC's] satisfaction." Id. § 1821(d)(5)(B).

Mr. Mintz alleges that he owns some of the LTWs issued by Dime Bancorp. Ex. A. On December 29, 2008, he filed an administrative claim with the FDIC on behalf of himself and "all similarly situated parties." Id. His claim documents made no specific request for particular action by or payments from the FDIC in its capacity as WM Bank's receiver, but instead stated that Mr. Mintz and other warrant holders "have or might have claims against" WM Bank because "a [WM Bank] affiliate or a successor in interest may intend to assert ownership of the [Anchor] Litigation damage recovery and unjustly disregard ...

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