USCA1 Opinion
October 5, 1993
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 93-1155
JOSE ANGEL FREYRE-SANTONI, ET AL.,
Plaintiffs, Appellants,
v.
FIRST FEDERAL SAVINGS BANK,
Defendant, Appellee.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Gilberto Gierbolini, U.S. District Judge]
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Before
Selya, Boudin and Stahl,
Circuit Judges.
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Jose Angel Freyre-Santoni on brief pro se.
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Carlos G. Latimer and Latimer, Biaggi, Rachid, Rodriguez-Suris &
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Godreau on brief for appellee.
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Per Curiam. Pro se appellants Jose Angel Freyre
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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
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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
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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
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Jesus, 644 F.2d 910, 912 (1st Cir. 1981).
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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
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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.
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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
damages.
II. Discussion
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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 &
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Loan Association, 635 F.2d 30, 32 (1st Cir. 1980).4 In
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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
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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,
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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.
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1101, 1103 (S.D. Fla. 1988).
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rise to their claims. Telecredit Service Center v. First
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National Bank, 679 F. Supp. 1101, 1103 (S.D. Fla. 1988).
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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
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of Baltimore, 303 F. Supp. 482, 483 (D.P.R. 1969) (a local
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court suit challenging the validity of a federal court
judgment of foreclosure for jurisdictional reasons could not
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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
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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
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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.
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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
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(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
banking).
The judgment of the district court is affirmed.6
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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.
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