Builders Nab LLC v. Federal Deposit Insurance Corporation

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 18-2799 & 18-2804
BUILDERS NAB LLC,
Plaintiff-Appellant,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION,
Defendant-Appellee.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
Nos. 15 C 6033 & 16 C 9940 — Sharon Johnson Coleman, Judge.
____________________
ARGUED APRIL 12, 2019 — DECIDED APRIL 25, 2019
____________________
Before FLAUM, EASTERBROOK, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. After an examination in 2015,
the Federal Deposit Insurance Corporation assigned Builders
Bank a CAMELS rating of 4, near the boZom of the scale.
The acronym, which stands for capital adequacy, asset quali-
ty, management, earnings, liquidity, and sensitivity to mar-
ket risk, reflects a bank’s ability to withstand financial chal-
lenges, and a rating of 4 exposes a bank to extra oversight.
Builders Bank sued, and we concluded that some compo-

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2 Nos. 18-2799 & 18-2804
nents of a CAMELS rating are open to judicial review. Build-
ers Bank v. FDIC, 846 F.3d 272 (7th Cir. 2017). Before the case
could be resolved on remand, however, Builders Bank
merged into a non-bank enterprise, Builders NAB LLC, and
left the banking business. This led the district court to dis-
miss the suit as moot. 2018 U.S. Dist. LEXIS 53678 (N.D. Ill.
Mar. 30, 2018).
The request for a beZer CAMELS rating in the future is
moot, as the district judge found, because Builders is no
longer a bank. But it also wants damages, contending that
the rating required it to pay too much for deposit insurance.
It submits that it is entitled to compensation if the court con-
cludes that the rating should have been 3 rather than 4. The
district court rejected that argument on the ground that
Builders Bank is not the real party in interest. Fed. R. Civ. P.
17(a). Indeed it no longer exists. But a corporate merger re-
places the old firms with the designated survivor. Builders
Bank’s assets became part of Builders NAB, the surviving
firm, and we have recaptioned this case accordingly. Build-
ers NAB owns any claim that Builders Bank possessed. That
includes the claim against the FDIC for a refund.
But what is the source of that claim? In the district court
Builders relied on the Administrative Procedure Act, con-
tending that 5 U.S.C. §702 waives the national government’s
sovereign immunity and entitles it to a remedy. There are
two potential problems.
First, §702 waives sovereign immunity only with respect
to relief “other than money damages”. Although money is
not necessarily damages, see Bowen v. Massachuse@s, 487 U.S.
879 (1988), compensation for a completed injury is usually
understood to be a form of damages. Builders does not want

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Nos. 18-2799 & 18-2804 3
a prospective adjustment of the rate it must pay for insur-
ance, with overpayments credited against future premiums;
it seeks a financial award to recompense it for past injury.
Whether that counts as “damages” for the purpose of §702—
in other words, whether it is “substitute relief” rather than
“specific relief” (on which see Department of the Army v. Blue
Fox, Inc., 525 U.S. 255, 262 (1999)) is not something we need
to decide, in light of the second problem.
The APA establishes a right of review only when “there
is no other adequate remedy in a court”. 5 U.S.C. §704.
Builders itself points to one potential remedy: 12 U.S.C.
§1817(e)(1), which says:
In the case of any payment of an assessment by an insured de-
pository institution in excess of the amount due to the Corpora-
tion, the Corporation may—
(A) refund the amount of the excess payment to the insured
depository institution; or
(B) credit such excess amount toward the payment of subse-
quent assessments until such credit is exhausted.
This knocks out Builders’ claim under the APA, but without
necessarily entitling it to any relief. To use §1817(e)(1) as a
source of a financial payout, Builders needs a statute waiv-
ing sovereign immunity. The Tucker Act, 28 U.S.C. §1491, fits
that bill but limits venue to the Court of Federal Claims. The
FDIC’s sue-and-be-sued clause, 12 U.S.C. §1819(a) Fourth,
may provide an alternative waiver, but Builders did not
bring it to the district court’s aZention. In that court it relied
entirely on the APA. Indeed, Builders did not alert the dis-
trict court to §1817(e)(1) as a potential source of relief until a
motion filed after judgment. The FDIC contends that Build-
ers’ claim is now foreclosed for that reason alone.

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4 Nos. 18-2799 & 18-2804
To this Builders replies that it has not waived reliance on
§1817(e)(1) and §1819(a) Fourth but just overlooked them,
and a court of appeals may relieve a party from a forfeiture.
That’s true, see Teumer v. General Motors Corp., 34 F.3d 542,
546 (7th Cir. 1994), but to say that an appellate court may ad-
dress an issue that was forfeited in the district court is not to
say that it must. Teumer itself declined to entertain a new
theory.
This is not the first time that Builders has recast its argu-
ment following defeat in the district court. It did so when the
case was here earlier and we indulged it, because the ques-
tion then concerned subject-maZer jurisdiction. In finding
jurisdiction, we suggested (as Builders had not) that there
might be a possibility of damages for overpayment of depos-
it-insurance premiums. 846 F.3d at 275. That experience may
have led Builders to think that it could litigate haphazardly
in the district court and be bailed out on appeal again. If we
conveyed that impression, we regret it.
Apart from those that affect subject-maZer jurisdiction,
legal contentions must be presented in the district court—
must be presented before the district judge acts, rather than
as afterthoughts—and Builders has already received its
share (perhaps more than its share) of appellate indulgence.
Litigants that do not do their legal research until after losing
in the district court have wasted a judge’s valuable time. By
refusing to entertain arguments first advanced after the dis-
trict judge’s decision, we give litigants appropriate incen-
tives to present their cases properly so that they may be de-
cided correctly without appeals.
This suit was litigated on remand as a financial claim un-
der the APA. So cast, it fails. We hold Builders to its litigation

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Nos. 18-2799 & 18-2804 5
strategy and do not permit it to change on appeal both its
substantive theory and its asserted waiver of sovereign im-
munity. We modify the district court’s judgment to be one
on the merits rather than a dismissal for mootness. As so
modified, the judgment is
AFFIRMED.

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