“We are particularly persuaded by the interpretation advanced 10 by other circuits that section 1821(d)(5)(E) directs the district courts to analyze claims against failed 11 banking institutions de novo.”
How later courts described this case
- “We are particularly persuaded by the interpretation advanced 10 by other circuits that section 1821(d)(5)(E) directs the district courts to analyze claims against failed 11 banking institutions de novo.”
Written by the judges who cited it.
The opinion
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4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 FARELLA BRAUN + MARTEL LLP, Case No. 24-cv-01306-SI
8 Plaintiff,
ORDER GRANTING SUMMARY
9 v. JUDGMENT
10 FEDERAL DEPOSIT INSURANCE Re: Dkt. No. 95
CORPORATION,
11
Defendant.
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13 Defendant has requested summary judgment in its favor. Dkt. No. 95. For the reasons stated
14 below, the Court GRANTS defendant’s motion.
15
16 BACKGROUND
17 I. Relevant Factual Background
18 This litigation arises out of legal work performed by plaintiff Farella Braun + Martel for the
19 Silicon Valley Bank before it failed on March 10, 2023. Defendant Federal Deposit Insurance
20 Corporation (FDIC) was appointed to be the receiver for the failed bank. Dkt. No. 95-11 ¶ 3. The
21 FDIC then published a notice that any claims against Silicon Valley Bank must be filed by July 10,
22 2023. Id. The FDIC ultimately processed almost 6,000 claims against the bank. Id. ¶ 4.
23 On July 6, 2023, plaintiff submitted a proof of claim for $211,025.72 encompassing
24 seventeen separate bills for work performed in 2022 and early 2023. Dkt. No. 95-4. On October
25 26, 2023, the FDIC asked plaintiff to supply more detail to support its claim, including invoices,
26 detail about who performed the work and for how long, and documentation showing a flat rate if
27 plaintiff and Silicon Valley Bank had agreed to a flat rate. Dkt. No. 95-9 at 5. The FDIC requested
1 its claim would be disallowed if the requested material was not provided within the statutory 180-
2 day determination period. Id. The next day, plaintiff provided the FDIC with invoices and plaintiff
3 attorney Gary Kaplan wrote, “Let me know if you seek any further information to review our claim
4 in the Silicon Valley Bank receivership.” Id. at 4. Only eight of the seventeen invoices contained
5 the requested detail. Dkt. No. 95-11 ¶ 8.
6 Plaintiff did not hear anything further from the FDIC so Mr. Kaplan followed up on January
7 9, 2024, several days after the end of the 180-day determination period. Dkt. No. 95-9 at 4. Mr.
8 Kaplan then learned that the FDIC had mailed a notice of partial allowance on January 5. Id. at 3.
9 That notice informed plaintiff that it would receive payment for $162,193.97 but not for the
10 remaining $48,831.75. Dkt. No. 95-5 at 1. The latter portion was disallowed because it was “[n]ot
11 proven to the satisfaction of the Receiver.” Id. When plaintiff sought clarification, the FDIC
12 informed plaintiff that “[l]egal invoices without billing rates, billed hours, and itemized lists of work
13 done (with dates and description of work done) are disallowed.” Dkt. No. 95-9 at 2. Plaintiff sought
14 administrative review, but the FDIC denied that request on January 16. Id. at 1-2. The FDIC
15 informed plaintiff that it could pursue its claim via a lawsuit filed within 60 days of its January 5,
16 2024 denial notice. Id. at 2.
17 On January 30, plaintiff then provided the FDIC with additional invoices. Id. at 1. Mr.
18 Kaplan wrote, “I understand that this information was not included with the invoices actually
19 presented to Silicon Valley Bank (and included in our claim in the Receivership) in light of the
20 parties’ agreement for FBM to perform the particular services at a reduced fee.” Id. Plaintiff then
21 asked the FDIC whether it would reconsider its partial disallowance. Id. In a phone call, the FDIC
22 informed plaintiff that it would not change its position. Dkt. No. 100-5 (Kaplan Dep.) at 37.
23 On March 4, 2024, plaintiff filed this judicial review action under 12 U.S.C. § 1821(d)(6).
24 Dkt. No. 1.
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26 LEGAL STANDARD
27 Summary judgment is proper if the pleadings, the discovery and disclosure materials on file,
1 is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). The moving party bears the
2 initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v.
3 Catrett, 477 U.S. 317, 323 (1986). The moving party, however, has no burden to disprove matters
4 on which the non-moving party will have the burden of proof at trial. The moving party need only
5 demonstrate to the Court that there is an absence of evidence to support the non-moving party’s
6 case. Id. at 325.
7 Once the moving party has met its burden, the burden shifts to the non-moving party to
8 “designate ‘specific facts showing that there is a genuine issue for trial.’” Id. at 324 (quoting then
9 Fed. R. Civ. P. 56(e)). To carry this burden, the non-moving party must “do more than simply show
10 that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v.
11 Zenith Radio Corp., 475 U.S. 574, 586 (1986). “The mere existence of a scintilla of evidence . . .
12 will be insufficient; there must be evidence on which the jury could reasonably find for the
13 [nonmoving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
14 In deciding a summary judgment motion, the Court must view the evidence in the light most
15 favorable to the non-moving party and draw all justifiable inferences in its favor. Id. at 255.
16 “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences
17 from the facts are jury functions, not those of a judge . . . ruling on a motion for summary
18 judgment . . . .” Id. However, conclusory, speculative testimony in affidavits and moving papers is
19 insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill Publ’g Co., Inc.
20 v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 738 (9th Cir. 1979). The evidence the parties present must
21 be admissible. Fed. R. Civ. P. 56(c).
22
23 DISCUSSION
24 Defendant first argues that the Court lacks jurisdiction to hear plaintiff’s claim. To consider
25 this argument, the Court reviews the relevant provisions of the Financial Institutions Reform,
26 Recovery and Enforcement Act of 1989 (“FIRREA”), 12 U.S.C. § 1821.
27 The FDIC’s 180-day claim determination period starts on the day a claim is filed. 12 U.S.C.
1 to [its] satisfaction.” Subparagraph (E) of paragraph (5) states, “No court may review the
2 Corporation’s determination pursuant to subparagraph (D) to disallow a claim.” Id. § 1821(d)(5)(E).
3 A separate paragraph in the statute allows for agency administrative review or judicial review if
4 requested or filed within 60 days of the earlier of the end of the 180-day claim determination period
5 or the date of the notice of disallowance.1 Id. § 1821(d)(6)(A). These provisions appear at odds,
6 and the law “is not a model of statutory clarity.” Bueford v. Resol. Tr. Corp., 991 F.2d 481, 486
7 (8th Cir. 1993). This Court agrees with other courts that the best way to reconcile these provisions
8 is with an understanding that a court may review a claim de novo, but may not review the FDIC’s
9 determination of the claim. See id. (“We are particularly persuaded by the interpretation advanced
10 by other circuits that section 1821(d)(5)(E) directs the district courts to analyze claims against failed
11 banking institutions de novo.”); see also Brady Dev. Co. v. Resol. Tr. Corp., 14 F.3d 998, 1003 (4th
12 Cir. 1994) (“If judicial relief is chosen, review is by a de novo determination of the claim, not a
13 review of the administrative disallowance of the claim.”).
14 By citing the judicial review provisions in 12 U.S.C. § 1821(d)(6), plaintiff’s complaint
15 sufficiently established the Court’s jurisdiction. Defendant argues that, according to the complaint,
16 plaintiff “seeks judicial review of the partial disallowance by the defendant FDIC,” which is barred
17 by 12 U.S.C. § 1821(d)(5)(E). Dkt. No. 101 at 2 (citing Dkt. No. 1 ¶ 1). The Court does not read
18 the complaint so narrowly. The Court understands the complaint to ask for the Court’s de novo
19 review of the validity of the claim itself, not the propriety of defendant’s initial rejection. The Court
20 retains jurisdiction for this review.
21 Defendant next contends that if the Court considers plaintiff’s claim, the Court’s review
22 must be limited to the material presented to FDIC during the 180-day claim window. In defendant’s
23 view, to consider material not presented to the FDIC would frustrate the purpose of FIRREA. The
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25 1 If a claimant does not request administrative review or file suit before the end of the 60-
day period, the claim must be disallowed. 12 U.S.C. § 1821(d)(6)(B). The Court notes that plaintiff
26 filed this lawsuit within 60 days of the notice of disallowance but not within 60 days of the end of
the 180-day claim period. However, since the notice was sent after the end of the claim period, the
27 Court finds it reasonable to start the 60-day clock on the later of these days, even though the statute
suggests otherwise. See id. § 1821(d)(6)(A). Moreover, defendant does not challenge the timeliness
1 Ninth Circuit summarized that purpose as follows:
2 Congress enacted the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, 12 U.S.C. § 1821, to enable the federal
3 government to respond swiftly and effectively to the declining
financial condition of the nation’s banks and savings institutions. The
4 statute grants the FDIC, as receiver, broad powers to determine claims
asserted against failed banks. 12 U.S.C. § 1821(d)(3)(A).
5 To effectuate this power, Congress created a claims process for the
filing, consideration and determination of claims against insolvent
6 banks. 12 U.S.C. § 1821(d)(3)-(10). The receivership claims process
“allow[s] the FDIC to quickly resolve many of the claims against
7 failed financial institutions without unduly burdening the District
Courts.” H.R.Rep. No. 101–54(I), 101st Cong., 1st Sess., reprinted in
8 1989 U.S.C.C.A.N. 87, 215.
9 Henderson v. Bank of New England, 986 F.2d 319, 320 (9th Cir. 1993).
10 Defendant cites several cases to bolster its claim. In Brown Leasing Co. v. F.D.I.C., the
11 plaintiff amended a complaint to add new claims in federal court for conversion and breach of
12 contract against the FDIC without having brought those claims through the administrative claims
13 process. 833 F. Supp. 672, 673 (N.D. Ill. 1993), aff’d sub nom. Brown Leasing Co. v. Cosmopolitan
14 Bancorp, Inc., 42 F.3d 1112 (7th Cir. 1994). The federal court found that “that the FDIC is entitled
15 to fair notice of the facts and legal theories on which a claimant seeks relief from the failed
16 institution.” Id. at 675. Similarly, in Ravenswood, LLC v. F.D.I.C., the plaintiff sought relief under
17 a damages theory it had not presented to the FDIC during the administrative claims process. No.
18 10-CV-1064, 2011 WL 1079495, at *1 (N.D. Ill. Mar. 21, 2011). The court dismissed the new claim
19 based on the plaintiff’s failure to bring that theory through the administrative process. Id. at *5.
20 The court asked rhetorically, “How was the FDIC–R supposed to respond to a theory it did not know
21 Ravenswood was presenting?” Id.; see also 15th & Spruce Bldg. LLC v. Colorado Cap. Bank, No.
22 12-CV-00851-REB-MEH, 2012 WL 6814127, at *5 (D. Colo. Nov. 30, 2012), report and
23 recommendation approved sub nom. 15th & Spruce Bldg. LLC v. F.D.I.C., No. 12-CV-00851-REB-
24 MEH, 2013 WL 104890 (D. Colo. Jan. 9, 2013) (“Though the FDIC could have theoretically
25 conducted further investigation, the Court finds that requiring the FDIC to ensure that the asserted
26 Proof of Claim presents the appropriate theory of recovery conflicts with FIRREA’s intent to enable
27 receivers to ‘deal expeditiously with failed financial institutions’ and is otherwise unreasonable.”).
1 theories of damages, the Court extends the reasoning of these cases to the current circumstances. If
2 a plaintiff could withhold evidence from the FDIC and then seek a remedial ruling in Court with
3 newly presented evidence, it would frustrate the purpose of FIRREA to encourage speedy resolution
4 of claims. To be sure, plaintiff here did not intentionally hide any evidence. On the contrary,
5 plaintiff expected to receive notice from the FDIC if its documentary submissions were insufficient
6 to support their claim. From a customer service perspective, plaintiff’s expectation was not
7 unreasonable. But the FDIC had to deal with nearly 6,000 claims resulting from the failure of the
8 Silicon Valley Bank. See Dkt. No. 95-11 ¶ 4. It was not legally obligated to repeatedly follow up
9 with claimants whose documentation was lacking, and plaintiff unfortunately did not proactively
10 seek reassurance until after the close of the claim window.
11 Thus the Court only considers the evidence submitted to the FDIC within the claim
12 determination window. The FDIC refused payment for nine of the seventeen invoices that plaintiff
13 sent after the FDIC requested further documentation. These invoices listed the legal fees and costs
14 and a short description of the nature of the work provided—for example, “Fees plus out of pocket
15 costs for Streamlined Growth Capital Term Loan documentation for Castiron, Inc.” See Dkt. No.
16 95-7.2 The invoices do not contain any detail about the number of hours worked, billing rates, or
17 the individuals who performed the work. See id. Only sometimes is a particular bank client
18 mentioned. See id. Plaintiff did not provide any evidence of a flat fee agreement to the FDIC before
19 the claim determination window expired.3 Dkt. No. 95-11 ¶ 6.
20 Reviewing the disallowed invoices, the Court finds the detail contained therein insufficient
21 to merit payment for the claims. The Court does not question plaintiff’s veracity or intent behind
22 submitting these claims. However, requiring billing details—including rates and hours worked or
23 a flat fee agreement if one existed—is necessary and fair to protect the interests of the FDIC and the
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2 This exhibit is missing invoice number 389082 for $900, but absent any argument to the
contrary the Court will assume that the level of information provided in that invoice is equivalent
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to the other eight invoices in the exhibit. See Dkt. No. 95-7.
27 3 Defendant argues that any agreement must have been in writing pursuant to 12 U.S.C.
§ 1821(e). Since no evidence of an agreement was submitted during the 180-day window, the Court
1 other creditors of the failed bank. Since plaintiff did not provide these details in a timely fashion,
2 || the Court GRANTS defendant’s motion for summary judgment.
3
4 CONCLUSION
5 For the foregoing reasons and for good cause shown, the Court hereby GRANTS defendant’s
6 || motion for summary judgment.
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8 IT IS SO ORDERED.
9 Dated: September 5, 2025 Site WU tee
10
SUSAN ILLSTON
I United States District Judge
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