Florida Appellate Court Holds FDIC’s State Court Case Was Barred by Statute of Limitations, Even Though FDIC Filed in Federal Court Before the Limitations Period Expired

In a split decision, the District Court of Appeal of Florida recently held that the FDIC was barred from bringing a state court action due to the statute of limitations having expired, despite the fact that the FDIC initially timely filed in federal court, but the federal court dismissed the action at defendant’s urging due to the FDIC’s failure to abide by a venue provision.  See Fed. Deposit Ins. Corp. v. Nationwide Equities Corp., 2020 WL 912944 (Fla. Dist. Ct. App. Feb. 26, 2020).  The defendant loan originator entered into a contract with a bank that contained a forum-selection clause mandating that any action be filed in Miami-Dade County Circuit Court.  The bank later failed, and the FDIC took over.  Almost six years later—three days before the expiration of the limitations period for the FDIC to bring actions—the FDIC brought an action against defendant for breach of contract in the United States District Court for the Southern District of Florida.  Defendant filed a motion to dismiss based on the venue provision.  As part of its forum non conveniens argument, defendant stated that “[t]he FDIC [would] not be prejudiced or inconvenienced by filing this action in State Court because . . . it is the correct forum and the one chosen by the parties.”  The federal court agreed and dismissed the action without prejudice, stating that “[the] FDIC-R can reinstate its lawsuit in state court without undue inconvenience or prejudice.” After the FDIC refiled in state court, defendant moved to dismiss, arguing that the limitations period expired.  The trial court agreed and dismissed the action.  The FDIC then filed a reconsideration motion with the federal court, which the federal court denied, and then sought an appeal of the state court ruling.

On appeal, the Court affirmed.  The Court held that the FDIC was not entitled to equitable tolling or judicial estoppel because it was “neither blameless nor ignorant” and “the FDIC’s intentional flouting of its obligation to file in Miami-Dade was no mistake. The FDIC sat on its rights, and waited until three days before the expiration of the six year statute of limitations to file its action in a federal forum in contravention of the forum-selection clause.”  The Court further found that “the FDIC failed to apprise the federal court that the statute of limitations had expired. Had it done so, the federal court could have conditioned the dismissal upon Nationwide's agreement to waive its statute of limitations defense in state court.”  In dissent, one of the judges argued that judicial estoppel should bar defendant from making the statute of limitations argument:  “defendant cannot succeed in getting the plaintiff’s complaint dismissed based on the legal position that the plaintiff ‘can reinstate its suit in State Court without undue inconvenience or prejudice,’ and then, when the complaint is refiled in the State court, adopt the opposite legal position that the plaintiff cannot reinstate its suit in State court because the statute of limitations has expired.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Anthony Lombardo at alombardo@riker.com.