Freyer Santoni v. First Federal ( 1993 )

  • USCA1 Opinion

    October 5, 1993



    No. 93-1155


    Plaintiffs, Appellants,



    Defendant, Appellee.




    [Hon. Gilberto Gierbolini, U.S. District Judge]



    Selya, Boudin and Stahl,
    Circuit Judges.


    Jose Angel Freyre-Santoni on brief pro se.
    Carlos G. Latimer and Latimer, Biaggi, Rachid, Rodriguez-Suris &
    _________________ ___________________________________________
    Godreau on brief for appellee.



    Per Curiam. Pro se appellants Jose Angel Freyre

    Santoni, Jose A. Freyre Del Manzano, Anna M. Freyre, Doris C.

    Del Manzo Vazquez, and Vilma I. Castro ("appellants") appeal

    the district court's dismissal of their suit against the

    First Federal Savings Bank. The district court found that it

    had no subject matter jurisdiction over the suit under 12

    U.S.C. 632, which grants district courts original

    jurisdiction over suits "arising out of transactions

    involving . . . banking in a dependency or insular possession

    of the United States, . . . ."1 We affirm.

    I. Background

    In May 1989, appellants were evicted from their

    house pursuant to a default judgment of foreclosure the bank

    had received from a superior court of the Commonwealth of

    Puerto Rico.2 A few months later appellants sued the bank in

    the district court. Their complaint alleged that the bank


    1. Another prerequisite to suit under section 632 is that a
    "corporation organized under the laws of the United States
    shall be a party" to the suit, but there is no question that
    the bank meets that requirement. We also note that section
    632 applies to banking transactions in the Commonwealth of
    Puerto Rico although it is no longer a United States
    territory. See First Federal Savings & Loan Ass'n v. Ruiz de
    ______________________________________ _______
    Jesus, 644 F.2d 910, 912 (1st Cir. 1981).

    2. The record suggests that not all appellants were living
    in the house at the time the eviction took place, and that
    the appellants who actually had title to the house were
    living elsewhere. For convenience, we do not distinguish
    among the appellants in the opinion, but refer simply to
    "appellants" even when reference to only certain appellants
    would be correct.

    had harassed and threatened them by visiting and telephoning

    them and then evicting them after it had obtained the default

    judgment and bought their house at public auction. The

    appellants also alleged that the superior court's default

    judgment of foreclosure was invalid for several reasons. The

    bank had obtained the default judgment by reopening a

    previously dismissed foreclosure case without notice to

    appellants even though it knew their mailing address and

    phone number; it had submitted false affidavits to the court

    and not told the court that the parties had voluntarily

    dismissed the previous foreclosure case after reaching a

    settlement; and the previous dismissal had become final and

    nonappealable before the bank had reopened the case.3

    According to the complaint, the bank's harassing conduct and

    eviction of appellants from their property caused them

    physical injuries and mental or emotional distress. Its

    allegedly illegal foreclosure had transferred title of their

    house to the bank, depriving them of their property. In

    addition, the eviction had been carried out maliciously.

    Although the family had no place to move to, they were

    ordered out of the house in the evening in violation of the


    3. After filing its complaint in federal court, appellants
    apparently moved the local court to annul its default
    judgment of foreclosure. The state court did so, and its
    action was affirmed by the Supreme Court of Puerto Rico. The
    proceedings in the local court are not relevant to the issue
    on appeal.


    court order, and their belongings were removed to the street

    where they were damaged by rain and vandalism. Furthermore,

    one appellant had been ridiculed for being short, and her

    son's dog had been kicked in his presence. The complaint

    alleged that the bank's actions from the time the parties had

    settled the initial foreclosure action had been undertaken

    maliciously, and appellants sought compensatory and punitive


    II. Discussion

    We have held that jurisdiction under section 632

    exists when a cause of action arises out of "traditional

    banking activities." Diaz v. Pan American Federal Savings &
    ____ ______________________________

    Loan Association, 635 F.2d 30, 32 (1st Cir. 1980).4 In

    order to determine whether the appellants' suit arose out of

    traditional banking activities, we review the complaint to

    determine the nature of the transaction or activity giving


    4. One court has suggested that traditional banking
    activities include the "making and collection of loans and
    issuance of documents evidencing them, such as notes and
    guaranties, the opening and closing of checking accounts and
    the processing of checks drawn upon them, and the filing of
    lawsuits for the collection of monies when loans are in
    default . . . ." Fumero-Vidal v. First Federal Savings Bank,
    ____________ __________________________
    788 F. Supp. 1275, 1278 (D.P.R. 1992). Another court has
    said that traditional banking activities include transactions
    involving "mortgage foreclosures, letters of credit, letters
    of guaranty when the bank relied on the letter in granting a
    loan, and transactions involving Federal Reserve Banks."
    Telecredit Service Ctr. v. First Nat'l Bank, 679 F. Supp.
    ________________________ ________________
    1101, 1103 (S.D. Fla. 1988).


    rise to their claims. Telecredit Service Center v. First
    __________________________ _____

    National Bank, 679 F. Supp. 1101, 1103 (S.D. Fla. 1988).

    In their complaint, appellants raised basically two

    distinct claims. First, they challenged the way in which the

    bank had procured its default judgment of foreclosure,

    alleging that procedural errors and misrepresentations by the

    bank rendered the judgment invalid. Second, they challenged

    the way in which the bank had communicated with them after

    the default judgment and public sale and the way in which it

    had evicted them.

    Thus, the appellants challenged the validity of the

    default judgment and the manner in which the bank had pursued

    its rights under the judgment. Their proffered reasons for

    invalidating the judgment were not based on the terms of any

    mortgage agreement or other banking or financing activity

    between the parties, but on the circumstances surrounding the

    dismissal of the prior foreclosure action and the bank's

    reopening of that action. For that reason, their present

    claim that the default judgment was invalid did not arise out

    of a banking transaction or activity, even though the default

    judgment had permitted the bank to foreclose on its mortgage

    on their property. See Gonzalez-Roman v. Federal Land Bank
    __________________ _________________

    of Baltimore, 303 F. Supp. 482, 483 (D.P.R. 1969) (a local

    court suit challenging the validity of a federal court

    judgment of foreclosure for jurisdictional reasons could not


    be removed to federal court under section 632 because the

    suit did not arise out of a transaction involving banking);

    contrast Conjugal Society v. Chicago Title Insurance Co., 690
    _________________________ ___________________________

    F.2d 1, 5 (1st Cir. 1982) (plaintiffs' rights were based on

    defendants' mortgage agreements and thus arose out of a

    transaction involving banking within the meaning of section

    632); First Federal Savings & Loan Association v. Zequeira,
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    305 F. Supp. 37, 39 (D.P.R. 1969) (the court "clearly" had

    jurisdiction over a mortgage foreclosure action where the

    pertinent evidence was the original mortgage note, a

    certified copy of the mortgage deed, and a sworn statement by

    the bank's treasurer showing that a mortgage account had been

    opened and had a certain balance since those are "banking

    transactions") (dictum or alternative holding).5

    Likewise, the actions of the bank in visiting,

    calling and evicting the appellants did not arise out of any

    banking transaction. They were alleged to be wrongful, not

    because of any rights accruing to appellants by virtue of any

    mortgage agreement between the parties, but because the

    default judgment was alleged to be invalid and because those


    5. Although some evidence touching upon the mortgage
    relationship between the bank and appellants may well have
    been necessary, e.g., to show that the bank had appellants'
    mailing address and so could have properly served appellants
    when it reopened the foreclosure case, proof of appellants'
    claims did not depend on the terms of any mortgage agreement
    or other financial or banking transaction between the parties
    or on their adherence to the terms of any mortgage or other
    financing agreement.


    actions were allegedly undertaken negligently or maliciously,

    thereby causing appellants harm in violation of standard

    principles of tort law. See Diaz, 635 F.2d at 32
    ___ ____

    (plaintiff's suit for malicious or negligent prosecution was

    dismissed for lack of jurisdiction under section 632 because

    the bank's filing of criminal charges against plaintiff for

    passing bad checks was outside the scope of traditional


    The judgment of the district court is affirmed.6


    6. Appellants also ask this court to resolve certain motions
    left undecided by the district court when it dismissed
    appellants' suit. We cannot do so. The dismissal of
    appellants' suit, which we now affirm, rendered any
    outstanding motions moot. In any event, it is not the role
    of this court to resolve in the first instance motions before
    the district court. If resolution of pending motions had
    been necessary, we would have had to remand those motions to
    the district court for decision.