## Facts

- Bank of America, N.A. (BoA), as trustee for mortgage-loan securitization investors, held legal title to certain mortgage loans in trust.
- Colonial Bank acted as custodian/intermediary to facilitate sale of those loans to Freddie Mac under a custodial/servicing agreement.
- The agreement required Colonial, within 15 days of receiving loans from BoA for Freddie Mac sale, either to remit sales proceeds to BoA or return any unsold loans.
- After BoA transmitted loans to Colonial, Colonial’s financial condition deteriorated, and BoA demanded proceeds or return of the remaining loans.
- Colonial refused to remit proceeds or return the loans.
- BoA sued in federal district court seeking injunctive relief to prevent dissipation or transfer of the loans and proceeds.
- The district court issued a temporary restraining order (TRO) preventing Colonial from selling, transferring, or otherwise disposing of the loans or sales proceeds.
- The next day, regulators closed Colonial Bank and appointed the FDIC as receiver under FIRREA; the FDIC was substituted as defendant.
- The FDIC moved to dissolve the TRO and opposed conversion to a preliminary injunction, relying on 12 U.S.C. § 1821(j)’s bar on court actions that restrain or affect the FDIC’s receiver powers.
- The district court denied the FDIC’s motion and entered a preliminary injunction preserving the disputed loans and proceeds from transfer or commingling; the FDIC appealed.

## Issues

1. Whether 12 U.S.C. § 1821(j) barred injunctive relief restraining the FDIC, as receiver, from transferring or disposing of assets that a plaintiff claimed were not receivership property.
2. Whether the FDIC’s asserted control over allegedly non-estate property qualified as an “exercise of powers or functions” under FIRREA such that judicial restraint was prohibited.

## Decision

- The Eleventh Circuit affirmed the preliminary injunction.
- Section 1821(j) did not bar a narrowly tailored injunction maintaining the status quo over specific assets where the plaintiff asserted a colorable claim that the assets were not part of the failed bank’s receivership estate.
- The court emphasized it was not deciding ultimate ownership; it held only that preserving the disputed loans and proceeds pending adjudication did not improperly restrain the FDIC’s lawful receiver functions.
- The injunction was sufficiently limited because it applied only to the specific loans and proceeds in dispute and did not interfere with broader receivership administration.

## Legal Principles

- 12 U.S.C. § 1821(j) broadly prevents courts from granting equitable relief that restrains or affects the FDIC’s exercise of its lawful powers as receiver.
- The FDIC’s receiver powers under FIRREA extend to assets that belong to the failed bank’s receivership estate, not to property plausibly held by the bank in a custodial or trust capacity for others.
- A court may issue a narrowly tailored injunction preserving specific disputed assets when the claimant presents a colorable, non-frivolous ownership claim that the assets are not receivership property.
- FIRREA’s administrative claims process primarily governs claims against the receivership estate; it does not necessarily foreclose judicial measures needed to preserve specific property pending resolution of an ownership dispute.

## Conclusion

The Eleventh Circuit held that FIRREA’s anti-injunction provision did not strip federal courts of power to preserve specific disputed loans and proceeds from transfer by the FDIC where the claimant plausibly alleged the assets were trust or custodial property outside the receivership estate, and the injunction was limited to maintaining the status quo pending adjudication of ownership.


Bank of Am. Nat'l Ass'n v. Colonial Bank, 604 F.3d 1239 (11th Cir. 2010)