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FDIC Enforcement Decisions and Orders |
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The FDIC Board, rejecting an administrative law judge's recommendation, denies motion for entry of a default judgment and orders the ALJ to hold a hearing on the merits. Respondent's reply to ALJ's show cause order was postmarked within twenty days after personal service, but not received by FDIC until after ALJ's recommended decision was issued on the 21st day.
[.1] Practice and Procedure Default Orders
[.2] Practice and Procedure Answer to Notice Filing by Mail
In the Matter of
This matter is before the Board of Directors ("Board") of the Federal Deposit Insur-
On September 9, 1991, a Notice of Intention to Prohibit from Further Participation ("Notice") was issued to Respondent. Pre. Plead. at 5975. FDIC Enforcement Counsel filed a motion requesting entry of an order of default on December 18, 1991, when Respondent failed to answer the prohibition notice within twenty days as required. Pre. Plead. at 4951. On December 31, 1991, the ALJ issued a Show Cause Order giving the Respondent ten days to show cause why the FDIC motion for default should not be granted. Pre. Plead. at 28. Service of the Show Cause Order was attempted by regular first class mail as well as by United States certified mail; however, all letters sent by certified mail were returned to the ALJ marked "Unclaimed."
[.1] Default orders are warranted when the Respondent has failed to file an Answer within twenty days. 12 C.F.R. § 308.19(a) and (c). Failure to respond within the time period prescribed by the FDIC's Rules of Practice and Procedures is deemed to be a waiver of the right to appear and to contest the allegations of fact contained in the Notice and is deemed a consent by that Respondent to entry of an order grating any proper relief that is sought by the Notice.
[.2] In this case, however, a default order is not warranted. It appears that ALJ Shipe's Recommended Decision on Default was issued after Respondent's Answer was posted. Section 308.10 of the FDIC's Uniform Rules of Practice and Procedure provides that filing may be accomplished by mailing the papers by first class mail. 12 C.F.R. § 308.10(b)(3). Further, 12 C.F.R. § 308.12(b)(ii) provides that filing is deemed to be effective in the case of first class mail "upon deposit in or delivery to an appropriate point of collection." 12 C.F.R. § 308.12(b)(ii).
Therefore, pursuant to the FDIC's rules regarding service and considerations of relative harm and prejudice to the respective parties, a default order against the Respondent is not warranted. The Board orders this case to proceed to the merits.
The Board of the FDIC has considered the entire record in this proceeding, including the ALJ's Recommended Decision and Order. The Board hereby DENIES FDIC Enforcement Counsel's Motion for Entry of an Order of Default and ORDERS the ALJ to proceed to hearing on the merits of the charges set forth in the Notice.
In the Matter of
This matter was instituted by the Board of Directors of the Federal Deposit Insurance Corporation, by issuance of a notice of intent to prohibit the above respondent from participation in the affairs of federally insured depository institutions, pursuant to section 8(e) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)). |
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Last Updated 6/6/2003 | legal@fdic.gov |