United States District Court, District of Columbia
MICHAEL A. WILLNER and MARGUERITE WILLNER, Plaintiffs,
JAMES DIMON et al., Defendants.
CHRISTOPHER R. COOPER JUDGE
Michael and Marguerite Willner defaulted on a $3 million
refinancing loan that they obtained in 2006 from the
now-defunct Washington Mutual Bank. Seeking to halt a
foreclosure sale of their property, the Willners brought suit
in the Eastern District of Virginia alleging, in essence,
that the banks who had since acquired rights to the loan had
no power to enforce it. That court dismissed many of the
Willners' claims for lack of subject matter jurisdiction.
It found that the claims were governed by the Financial
Institutions Reform, Recovery, and Enforcement Act
(“FIRREA”)-a statute that establishes an
administrative scheme to resolve claims against failed
financial institutions that have been placed in receivership
with the Federal Deposit Insurance Corporation
(“FDIC”). As a result, in the court's view,
the Willners' failure to raise their claims with the FDIC
in the first instance barred the court from reviewing them.
Fourth Circuit affirmed that dismissal in February 2017. In
the meantime, the Willners had filed their claims with the
FDIC. The FDIC denied them as untimely because they were
filed long after the December 2008 “bar date”
that the FDIC set to govern claims against Washington Mutual
Bank. The Willners, proceeding pro se, then brought
suit in this Court challenging the FDIC's denial.
Following the Fourth Circuit's decision, they amended
their complaint to add constitutional claims against the
FDIC. Because the Willners fail to state viable claims
against the FDIC, and because the doctrine of issue
preclusion requires this Court to accord conclusive effect to
the Fourth Circuit's relevant holdings, the Court will
dismiss all of the Willners' claims.
following facts are drawn from the Willners' Amended
Complaint and are taken as true for purposes of this motion.
The Willners own a home on an eleven-acre lot in Lorton,
Virginia along the Potomac River. They purchased the lot in
1989 for $477, 000 and spent about $2 million to build a
custom home on the property. Am. Compl. ¶¶ 28-29.
Between then and 2006, the Willners obtained three
refinancing loans from Washington Mutual Bank, FA
(“WMBFA”)-a trade name for the now-defunct
Washington Mutual Bank (“WMB”)-to “cash
out” equity in the property in order to pay their
mortgage. Id. ¶ 32.
heart of this litigation is the third of these refinancing
loans, which Mr. Willner (who is an attorney) obtained from
WMBFA in September 2006 for $3 million. In applying for this
loan, Mr. Willner alleges that he told a WMBFA employee that
he expected about $52, 000 in annual income that year.
Id. ¶ 37. The employee, according to Mr.
Willner, listed this figure as Mr. Willner's
monthly income. Id. ¶ 38. A few weeks
later, a different WMBFA employee provided Mr. Willner with
WMBFA's estimate of the property value-$5.2 million-which
the Willners believed to be accurate. But WMBFA received a
separate, undisclosed appraisal of the property for only $4
million. Mr. Willner alleges that he would not have obtained
the loan (and instead would have sold the property) had he
known about the lower appraisal value. Id. ¶
refinancing loan was secured by a deed of trust for the
property. Id. Ex. C. Mrs. Willner, afraid of risking
her share of the equity, refused to apply or cosign for the
loan and did not sign the promissory note. Id.
¶ 50-51. Both she and Mr. Willner did, however, sign the
deed of trust, which identifies both as the
“borrower.” Id. ¶¶ 64-65;
id. Ex. C, at 3, 15. By signing the deed and not the
promissory note, Mrs. Willner apparently believed that she
was releasing her interest in Mr. Willner's share of the
property and thereby allowing him to secure the loan with his
interest alone. Id. ¶ 65.
long after the 2008 recession struck, WMB collapsed. On
September 25, 2008, the Office of Thrift Supervision, an arm
of the Treasury Department, declared the bank insolvent and
placed it into receivership with the FDIC. Id.
¶ 101. Notice of the FDIC's receivership and the
claims bar date was published in several newspapers,
including the Wall Street Journal. Decl. Donald G.
Grieser Support FDIC-Receiver's Mot. Dismiss ¶ 5.
The day that the FDIC took over WMB, it facilitated a
transaction whereby JPMorgan Chase bought most of WMB's
assets, including the right to service Mr. Willner's
loan. Am. Compl. ¶ 103. Sometime in October 2008, Chase
notified Mr. Willner that it had acquired the right to
service the loan from the FDIC. Id. ¶ 107.
Willners' loan was subsequently repackaged and
transferred to U.S. Bank N.A., and the right to service the
loan was transferred to Select Portfolio Servicing, Inc.
Id. ¶¶ 16-17. The Willners made payments
on the loan for several years without serious issue. But by
mid-2010, signs of trouble arose. The couple sought to
refinance the loan with Chase in July 2010, but were denied
due to insufficient income. Id. ¶ 111. By May
2011, the Willners were unable to keep up on their loan
payments and defaulted. Id. ¶¶ 112,
115-16. Mr. Willner asked Chase for a 90-day delay on
foreclosure so that he could attempt to sell the property,
but Chase apparently ignored the request. Id. ¶
115. He also sought a loan modification from Chase, but it
notified him that he was ineligible due to the nature of the
loan. Around this time, Mr. Willner discovered documents
purportedly showing that his loan application listed his
annual income as $624, 000 (or $52, 000 per month); that
WMBFA had received a $4 million appraisal for the property;
and that, according to records of the Securities and Exchange
Commission, WMBFA ceased to exist several months before the
loan agreement was executed. Id. ¶¶
November 2012, Chase notified the Willners that it intended
to foreclose on the property by auctioning it the next month.
Mr. Willner filed for Chapter 11 bankruptcy shortly
thereafter. Id. ¶ 182. While bankruptcy
proceedings were pending,  the Willners in July 2014 filed suit
pro se in the Eastern District of Virginia against
JPMorgan Chase, its CEO James Dimon, U.S. Bank, and Select
Portfolio Servicing. See Willner v. Dimon, 2015 WL
12755135 (E.D. Va. May 11, 2015). In its twenty-seven counts,
the complaint essentially sought a declaration that the
promissory note and deed of trust were unenforceable, an
injunction to halt any foreclosure, and damages. Id.
at *2. By order issued in May 2015, the district court
dismissed the entire case on various grounds. As relevant
here, it dismissed twelve of the counts for lack of subject
matter jurisdiction, finding that, under FIRREA, the
Willners' failure to properly exhaust those claims with
the FDIC precluded the court from reviewing them. The
Willners then appealed to the Fourth Circuit.
August 2015, while their appeal was pending, the Willners
each filed a proof of claim with the FDIC. Decl. of Donald G.
Grieser in Support FDIC-Receiver's Mot. Dismiss
(“Grieser Decl.”) ¶ 6; id Ex. C.
Both alleged six identical claims that requested essentially
the same relief sought in their Fourth Circuit litigation. In
certified letters dated September 2, 2015, the FDIC denied
the Willners' claims. Defs.' MTD Ex. D. The FDIC
explained that it received their proofs of claim after the
December 30, 2008 bar date; that FIRREA (specifically, 12
U.S.C. § 1821(d)(5)(C)(i)) demanded denying the claims
as untimely filed; and that the FDIC would “not consent
to any further administrative review of this claim
after they received the FDIC denial letters, the Willners
brought suit in this Court against James Dimon, JPMorgan
Chase, U.S. Bank, Select Portfolio Servicing, and nineteen
unspecified Does-all together, the “bank
defendants.” The Willners sought the same relief that
was denied by the FDIC:
1. A declaration that none of the bank defendants have a
legal right to foreclose on the property under the deed of
trust because it was signed only by Mr. Willner;
2. A similar declaration based on the fact that the bank
defendants would be unjustly enriched if allowed to
3. Damages and the right to rescind the loan agreement based
on all of the bank defendants' fraudulent concealment of
facts material to the contract;
4. A declaration as to the bank defendants that the deed of
trust is unenforceable because WMBFA had no legal capacity to
enter a loan agreement;
5. An order to quiet title against U.S. Bank based on the
6. Damages based on the bank defendants' conspiracy to
commit fraudulent concealment.
See Amend. Compl. 34-46. At the parties'
request, this Court stayed this case until the Fourth Circuit
issued its decision.
Fourth Circuit ultimately affirmed dismissal. 849 F.3d 93,
114 (4th Cir. 2017). With respect to the claims that had been
dismissed pursuant to FIRREA,  the court rejected the argument
that those claims actually challenged conduct by Chase and
U.S. Bank-neither of which were under FDIC receivership-and
therefore did not fall within FIRREA's exhaustion
requirement. As the court explained, while several counts of
the complaint were “formally asserted against Chase and
U.S. Bank, they [were] functionally pleaded against WMB's
acts and omissions.” Id. at 104; see also
id. at 110-11. The Court also saw no constitutional
problem with FIRREA's withdrawal of jurisdiction for
claims that purportedly “didn't accrue until Chase
threatened foreclosure, which was years after the December
2008 ‘bar date, '” as it found that
“the Willners had actual notice that WMB was in
receivership” before that date. Id. at 111.
The Willners did not seek Supreme Court review of the Fourth
the Fourth Circuit's decision, this Court lifted its
stay. The Willners filed an amended complaint, adding as a
defendant the FDIC in its capacity as receiver for WMB. The
amended complaint asserted three new counts against the FDIC
alone with a unifying theme: that, unless the Court agreed to
review the six claims raised against the bank defendants, the
FDIC's administrative denial of those claims as untimely
would violate their due process rights under the Fifth
Amendment; their Seventh Amendment right to a jury trial; and
Article III. Am. Compl. 49-51. In separate motions, the bank
defendants and the FDIC have moved to dismiss the