The opinion of the court was delivered by: O'neill, J.
Plaintiffs Robert Alexander and James Lee Reed allege that they obtained residential mortgage loans from Washington Mutual Bank (WMB): Alexander in December of 2005 and Reed in April of 2007. Compl. ¶¶ 10-11. Each purchased his home with a down payment of less than twenty percent and was required to purchase private mortgage insurance. Id. Each plaintiff alleges that he purchased PMI from an insurer with whom WMB had a captive reinsurance arrangement. Id.
On October 22, 2007, plaintiffs filed a class action complaint alleging that defendants WMB, Washington Mutual, Inc., Washington Mutual Bank FSB and WM Mortgage Reinsurance Company violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2601 et seq., by collecting illegal referral or kickback payments in the form of excessive reinsurance premiums. See 12 U.S.C. § 2607(a) ("No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding . . . that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person."). Plaintiffs contend that WMB would steer residential loan customers who needed PMI to PMI insurers selected by WMB. Id. ¶ 56. In exchange for the referral, these PMI providers allegedly paid a portion of the PMI premiums received from borrowers to WM Reinsurance, a captive reinsurer and wholly owned subsidiary of WMB. Id. ¶¶ 59. Plaintiffs assert that the captive reinsurer received payments that were not commensurate with its actual risk exposure. Id. ¶¶ 60-65, 67. They allege that the captive reinsurance arrangement was a sham transaction meant to allow WMB to collect illegal kickbacks in return for referring borrowers to certain PMI providers. Id. ¶¶ 66-67. Plaintiffs seek statutory penalties and attorney's fees under RESPA section 2607(d).*fn1
Approximately one year after plaintiffs filed their complaint, WMB failed and the Federal Deposit Insurance Corporation was appointed as receiver for WMB. On February 23, 2010, I ordered the FDIC in its capacity as receiver for WMB to be substituted for WMB in this action.*fn2
Before me now is FDIC-Receiver's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1), plaintiffs' response and FDIC-Receiver's reply. I held oral argument on the motion on June 22, 2011. FDIC-Receiver argues that under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), and in particular, 12 U.S.C. § 1825(b)(3), the relief sought by plaintiffs may not be awarded against it as a matter of law. For the reasons that follow, I will grant the motion.
Federal Rule of Civil Procedure 12(b)(6) permits a Court to dismiss all or part of an action for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Typically, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations," though plaintiff's obligation to state the grounds of entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). The complaint must state "'enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." Wilkerson v. New Media Tech. Charter Sch.Inc., 522 F.3d 315, 321 (3d Cir. 2008), quoting Twombly, 550 U.S. at 556. The Court of Appeals has recently made clear that after Ashcroft v. Iqbal, --- U.S. ---, 129 S. Ct. 1937, 1955, 173 L. Ed. 2d 868 (2009), "conclusory or 'bare-bones' allegations will no longer survive a motion to dismiss: 'threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.' To prevent dismissal, all civil complaints must now set out 'sufficient factual matter' to show that the claim is facially plausible." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009), quoting Iqbal, 129 S. Ct. at 1949. The Court also set forth a two part-analysis for reviewing motions to dismiss in light of Twombly and Iqbal: "First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Id. at 210-11, quoting Iqbal, 129 S. Ct. at 1950 . The Court explained, "a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Id., citing Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234-35 (3d Cir. 2008). "Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--'that the pleader is entitled to relief.'" Iqbal, 129 S. Ct. at 1949.
I. Plaintiffs' Claim for Statutory Penalties
When FDIC-Receiver stepped into WMB's place in the aftermath of WMB's failure, the dictates of FIRREA became applicable to plaintiffs' claims and the types of relief that plaintiffs may pursue. FDIC-Receiver argues that FIRREA divests this Court of jurisdiction over plaintiffs' claims because plaintiffs may not recover the relief they sought against WMB from FDIC-Receiver. FDIC-Receiver asserts that penalties cannot be awarded against FDIC-Receiver under FIRREA and that plaintiffs may not recover the relief they seek pursuant to RESPA because the relief sought constitutes a penalty. Plaintiffs counter that FIRREA only exempts the FDIC from liability for penalties and fines related to taxes and the damages they seek are compensatory, not penal.
A. Section 1825(b)(3) Precludes Plaintiffs From Recovering Penalties from FDIC-Receiver.
12 U.S.C. section 1825(b)(3) provides that the FDIC as Receiver "shall not be liable for any amounts in the nature of penalties or fines, including those arising from the failure of any person to pay any real property, personal property, probate, or recording tax or any recording or filing fees when due." "[S]tatutory interpretation begins with the language of the statute itself." Gov't of the V.I. v. Knight, 989 F.2d 619, 633 (3d Cir. 1993), citing Penn. Dep't of Pub. Welfare v. Davenport, 495 U.S. 552, 557-58 (1990). "If the statutory language is clear, a court must give it effect unless this 'will produce a result demonstrably at odds with the intention of the drafters.'" Id., quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982). The plain language of FIRREA clearly prohibits the application of all penalties against the FDIC as receiver. After the phrase "including those," the referenced taxes and fees present a nonexhaustive list of examples of the types of penalties or fines for which FDIC-Receiver shall not be liable.
The legislative history of section 1825(b)(3) lends further support to a finding that the provision is intended to exempt FDIC-Receiver from liability for all penalties and not just those related to taxes. When FIRREA was enacted in 1989 section 219 added subsection (b)(3) to 12 U.S.C. section 1825. Pub. L. 101-73, 103 Stat. 183 (1989). At the time, section 219 was titled "Exemption from Taxation: Limitation on Borrowing." In the Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. No. 102-242, 105 Stat. 2236 (1991), Congress amended the subject heading of FIRREA Section 219 by striking the words "From Taxation" and leaving only the word "Exemption." Id. Noting that "under a heading formerly referring to 'Taxation' but later broadened by deletion, § 1825(b)(3) states that FDIC 'shall not be liable for any amounts in the nature of penalties or fines . . . .'" The Court of Appeals for the Ninth Circuit thus found that there was no basis for a district court's award of penalties against the FDIC in Monrad v. Fed. Dep. Ins. Corp., 62 F. 3d 1169, 1175 (9th Cir. 1995).
Plaintiffs argue that the Court of Appeals' decision in Hennessy v. Federal Dep. Ins. Corp., 58 F.3d 908 (3d Cir. 1995), supports their position that FIRREA's grant of immunity to the FDIC for claims that are penal in nature applies only in the area of taxes. I am not convinced by plaintiffs' argument. In a footnote, the Court of Appeals noted that the provision "appears to concern exemptions from taxes." Id. at 924 n.11 (emphasis omitted). Without further explanation, the Court stated that it found "unconvincing" the Receiver's argument that Section 1825(b)(3) created an exemption from the relevant ERISA penalty. Id. I concur with FDIC-Receiver that the Court of Appeals' footnote is dictum: "a statement in a judicial opinion that could have been deleted without seriously impairing the analytical foundations of the holding -- that, being peripheral, may not have received the full and careful consideration of the court that uttered it." In re McDonald, 205 F.3d 606, 612 (3d Cir. 2000), quoting Sarnoff v. Am. Home Prods. Corp., 798 F.2d 1075, 1084 (7th Cir.1986); see also Calhoun v. Yamaha Motor Corp., 216 F.3d 338, 344 n. 9 (3d Cir. 2000) ("Insofar as this determination was not necessary to either court's ultimate holding, however, it properly is classified as dictum. It therefore does not possess a binding effect on us pursuant to the 'law of the case' doctrine."). The Court's ...