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Recovery and Enforcement Act of 1989
(FIRREA), an administrative claims process
was established for the settlement of claims
and liquidation of assets of the failed
institution. Taking the floor of the wrong
court, the plaintiffs never had a chance.
With the deadline passed to file claims in
the administrative process, the plaintiffs
got slammed because “FIRREA operates
as a jurisdictional bar to claims that parties
did not submit to the FDIC’s administrative
process.” Willner v. Dimon, 849 F.3d 93,
2017 U.S. App. LEXIS 2737.
A final example of a litigant lacking
standing arises when plaintiffs make claims
in another court after their bankruptcy.
Remember that bankruptcy spawns a new
creature, the “estate,” which basically
becomes the owner of all assets of the
debtor, even contingent claims. Before,
the North Carolina Court of Appeals was a
plaintiff’s claim against his employer. Wiley
and Gilman v. L3 Communications, 795 S.E.
2d 580, 2016 N.C. App. LEXIS 1314, cert.
denied, 797 S.E. 2d 17, 2017 N.C. LEXIS
185. The defendant had failed to answer and
the lower court had entered judgment and an
award in favor of Gilman, a plaintiff. If you
think time had run out for the defendant,
think again. Heaving from half-court, the
defendant swished a miracle shot using
Rule 12(b)( 1). Judge Richard Dietz for the
appellate panel found that Gilman lacked
standing to sue for labor law violations
because he had a pending Chapter 13
bankruptcy and had failed to inform the
bankruptcy court (in his schedules or
otherwise) of the existence of his legal
claims. Those claims against the defendant
would have been property of the estate and
could have been pursued by Gilman or
the trustee—for the estate. So, the claims
were not Gilman’s and thus Gilman had no
standing. The judgment was vacated by the
appellate court citing an old case, High v.
Pearce, 220 N.C. 266, 271, 17 S.E.2d 108,
112 (1941): “[w]here there is no jurisdiction
of the subject matter the whole proceeding is
void ab initio and may be treated as a nullity
anywhere, at any time, and for any purpose.”
Boom. Subject matter jurisdiction is what
And what about more remote plaintiffs?
Those lacking privity? Ones who have not
exhausted their contractual remedies? Ones
whose claims are moot? Ones who can’t link
their damages to the wrong? Depending on
the cause of action, such barriers also may
prove insurmountable, resulting in dismissal
for lack of subject matter jurisdiction.
What’s cool about challenging subject
matter jurisdiction using the litigant’s
shortcomings is that, unlike cousin 12(b)
( 6), other stuff can be presented to the
court without converting the motion to a
summary judgment. But, there is a catch. A
dismissal based on lack of subject matter
jurisdiction typically is without prejudice.
Nonetheless, while some plaintiffs might
return to the locker room to cook up a new
game plan (for example, send a new demand
to the business), others may lack a route to
rehabilitation, or the game clock expired.
So, pull out your Converse Chucks, dust
off your hornbooks, and scrutinize all your
12(b) defenses. An early or late dunk based
on lack of subject matter jurisdiction could
be your game changer.