JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. FEDERAL DEPOSIT INSURANCE CORPORATION et al | JPMorgan Chase (JPM) has sued the Federal Deposit Insurance Corp. over Washington Mutual's legal liabilities
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, 1111 Polaris Parkway, Columbus, Ohio 43240, Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as Receiver for Washington Mutual Bank, 550 17th Street N.W., Washington, D.C. 20429, -and- FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, 550 17th Street N.W., Washington, D.C. 20429, Defendants. . NATURE OF ACTION 1. JPMC brings this action to recover substantially in excess of a billion dollars in indemnification from the Federal Deposit Insurance Corporation in its capacity as Receiver for Washington Mutual Bank ("WMB") (the "FDIC-Receiver") under the terms of the Purchase & Assumption Agreement between JPMC, the FDIC-Receiver, and the Federal Deposit Insurance Corporation in its corporate capacity ("FDIC-Corporate", and collectively with FDICReceiver, the "FDIC"), dated as of September 25, 2008 (the "P&A Agreement" or "P&A"), pursuant to which JPMC acquired from the FDIC-Receiver essentially all of the assets and assumed certain liabilities of WMB. As described more fully below, the FDIC-Receiver has wrongly refused to acknowledge or honor its expansive indemnification obligations to JPMC under the P&A Agreement and in doing so has subjected JPMC to massive liability. 2. The FDIC' s indemnification obligations that are the subject of this action are a matter of contract. They are promises that the FDIC made to JPMC to induce JPMC to enter into the P&A Agreement when WMB failed in September 2008, in the largest bank failure in this nation's history. By entering into the P&A Agreement and agreeing to assume WMB's enormous deposit liabilities, JPMC protected the FDIC from potentially unprecedented liability and helped ensure the stability of the country's banking system by enabling the former WMB branches to remain open for business as usual following the failure. 3. The FDIC-Receiver bears the primary responsibility to indemnify JPMC. Its indemnification obligations to JPMC are paid out of existing assets held in the WMB receivership, not borne by taxpayers or depositors. Following resolution of JPMC's indemnification claims, any amounts remaining in the WMB receivership would be paid out to WMB creditors, primarily to holders of WMB senior debt, a group currently constituted mainly of hedge funds and similar entities that have bought up WMB senior debt for pennies on the dollar. FDIC-Corporate acts as a guarantor of the FDIC-Receiver's indemnification obligations to JPMC under the P&A Agreement; however, JPMC believes that the FDIC-Receiver has sufficient assets to meet the existing indemnification obligations that are the subject of this action and that, if the FDIC-Receiver does so, it will not be required to call upon FDIC-Corporate's guarantee. 4. The FDIC' s indemnification obligations that are the subject of this action are in addition to the obligations that the FDIC has to indemnify JPMC for any liability it may incur with respect to the multi-billion dollar mortgage-backed securities repurchase claims being asserted in the Deutsche Bank v. FDIC action in this Court (Civil Action No. 09-cv-1656), for the various tax claims that are already the subject of other litigation between JPMC and the FDIC, and for other claims in litigation where JPMC has asserted third-party claims against the FDIC. The indemnification obligations that are the subject of this action are not exhaustive of JPMC' s indemnification rights under the P&A Agreement, and JPMC reserves the right to demand indemnification from the FDIC under the P&A Agreement for matters that are not the subject of this complaint. [...]