Brady Development Co., Inc. v. Resolution Trust Corp., 1

Citation14 F.3d 998
Decision Date27 January 1994
Docket NumberNo. 92-1671,No. 1,1,92-1671
PartiesBRADY DEVELOPMENT COMPANY, INCORPORATED; Gordon L. Albro; Agnes C. Albro; Chester B. Bahn; Elaine B. Bahn; Alan M. Baker; Jacqueline Hansen Baker; Howard C. Bates; Carol J. Bates; Ned S. Bauer; Elaine Hough Bauer; John J. Bevan; Yolanda Bevan; Thomas A. Brophy; Clare S. Brophy; Bruce W. Campbell; Susan M. Campbell; Nai Chung Chang; John W. Cole; Joan Cole; Harry W. Cost; Ralph J. Dalessio; Grace Ann Dalessio; Walter Dermody; Carol Dermody; Albert I. Dodd; Lorraine K. Dodd; Michael L. Dominak; Karen L. Dominak; Edward J. Dorosz; Suzanne D. Dorosz; Jennifer Lynn Dorosz; Lauren Renee Dorosz; Kathryn Anne Dorosz; Frederick R. Drews; Dolores J. Drews; Bruce Richard Ehlers; Phyllis S. Ehlers; Steve H. Finch; Sarah D. Finch; James E. Fitzgerald; Donna R. Fitzgerald; Richard J. Forcelli; Joseph F. Garraty; Ann Marie Garraty; Robert L. Hackenberg; Marthena W. Hackenberg; Raymond L. Handlan; Scharlie B. Handlan; Patrick J. Hoover; Trudy M. Hoover; David C. Howard; Leslie L. Howard; Terrence F. Hunek; Denice D. Hunek; Clyde B. Johnston; Anthony Kane; Charlotte Kane; David N. Kendall; Ruth S. Kendall; Walter A. Kinell; Charlotte H. Kinell; Janice M. Klimo; Gary L. Levit; Edward C. Levit; Arlene G. Levit; Glen E. Lindeman; Joan L. Lindeman; Jose L. Lizarribar; Carmen Lizarribar; Carol A. Lovell; Joseph F. Ludwikowski, Jr.; Lydia B. Ludwikowski; Joseph P. Martin; Malita A. Martin; Frederick J. McCarty; Rose M. McCarty; Edward J. McDonnell; Sophia McDonnell; John McGaley; Margaret M. McGaley; Ann McIntosh; Robert T. Mourad; Sally V. Mourad; Leon S. Nase; George P. Pealer; Lyndia R. Pealer; Vincent J. Petruzzi; Theresa C. Petruzzi; Edward M. Pollock; Claire D. Pollock; Earl Praml; Shirley J. Praml; Donald R. Rose; Reta Rose; Andrew J. Scharnagl; Carl G. Schatz; Frances S. Schatz; Roger P. Schurig; Jill M. Schrig; Robert W. Seegar; Glenn C. Seifried; Norma P. Seifried; Helen E. Soutter; Zivota Stevovich; Vera Stevovich; John H. Voelker; Adelaide T. Voelker; Thomas L. Waterson; Patri
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

ARGUED: Edward Mobley Woodward, Jr., Woodward, Leventis, Unger, Daves, Herndon & Cothran, Columbia, SC, for Appellants. Jeffery Isaac Ehrlich, Resolution Trust Corporation, Washington, DC, for Appellee. ON BRIEF: Michael P. Condon, Senior Counsel, Resolution Trust Corporation, Washington, DC; Glenn M. Young, James M. Cole, Rawle Andrews, Jr., Squire, Sanders & Dempsey, Washington, DC; William L. Pope, Pope & Rodgers, Columbia, SC, for Appellee.

Before ERVIN, Chief Judge, PHILLIPS, Circuit Judge, and HILL, Senior Circuit Judge of the United States Court of Appeals for the Eleventh Circuit, sitting by designation.

OPINION

ERVIN, Chief Judge:

Brady Development Company, Inc. and other lot owners in the Indigo Run Plantation (hereinafter "Brady") appeal the decision of the district court dismissing their complaint for lack of subject matter jurisdiction. The district court held that the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub.L. No. 101-73, 103 Stat. 183, Secs. 101-1404, required Brady to exhaust its administrative remedies before proceeding with this action. As a result of Brady's failure to exhaust its administrative remedies, the district court held that it lacked subject matter jurisdiction to hear the case. Finding that the district court was correct in that determination, we affirm.

I

Brady raises five issues on appeal: (1) whether the district court erred in holding that it did not have subject matter jurisdiction due to Brady's failure to exhaust administrative remedies; (2) whether the district court erred in holding that the Resolution Trust Corporation ("RTC") did not waive its right to require Brady to file administrative claims; (3) whether the district court gained jurisdiction because of the RTC's deposit of funds with the court; (4) whether the RTC was obligated as the successor to a savings and loan association to provide the amenities stated in Indigo Run Plantation's Declaration of Restrictions; and (5) whether the district court's decision amounted to an uncompensated taking under the Fifth Amendment.

II

This case arises from the financial crisis and eventual bankruptcy of Hilton Head Corporation ("HHC"), a real estate development company, and of its Indigo Run Plantation real estate development, and the subsequent failure of Southern Floridabanc Savings & Loan Association. The Brady appellants are lot owners in the Indigo Run Plantation on Hilton Head Island; they purchased their lots either from the developer, HHC, or from individuals who originally had bought the lots from HHC.

The Indigo Run Plantation was developed subject to a master plan and a Declaration of Restrictions (the "Declaration") found in the deeds to each lot. The Declaration required the developer to build numerous amenities including water and sewer service, several golf courses, a racquet club, and a golf clubhouse. The original developer, HHC, experienced financial difficulties in the mid 1980s, and a change in ownership occurred before the project was finished, leaving many amenities incomplete.

In 1986 Southern Floridabanc Savings and Loan Association, a creditor of HHC, foreclosed on the unsold Indigo Run property. The developer and development went into bankruptcy. Soon thereafter, Southern Floridabanc experienced financial difficulties itself and was placed into receivership with the Federal Home Loan Bank Board, becoming Southern Floridabanc Federal. In May 1987, the bankruptcy trustee for the developer auctioned off the remaining unsold Indigo Run property located in the "inner core" of the development. Southern Floridabanc Federal successfully acquired fee simple title in the property, free and clear of any of the obligations of HHC.

In June 1989, Brady, as a landowner, brought suit in South Carolina state court seeking enforcement of the Declaration against Southern Floridabanc Federal and other individuals and corporations. Brady contended that as successors to the original developers, Southern Floridabanc Federal and other defendants were obligated to complete the amenities in the development as provided in the master plan.

On August 9, 1989, Congress enacted FIRREA, thereby abolishing the functions of the Federal Home Loan Bank Board and creating the RTC as its successor. Pursuant to FIRREA, the RTC became receiver for Southern Floridabanc Federal on October 5, 1989. As Southern Floridabanc Federal's receiver, the RTC acquired title to all remaining unsold property in the Indigo Run Plantation development. The RTC removed Brady's state court action to the district court once it became the receiver for Southern Floridabanc Federal.

On November 12, 1989 the RTC began its claims process for Indigo Run Plantation pursuant to FIRREA, which provided that the RTC had to publish notice to all creditors. The RTC published notice as required; the advertisement stated that the creditors had ninety days to present their claims. Brady, and the other claimants who had yet to join Brady's suit, failed to submit any proof of claim before the expiration of the ninety day period on February 10, 1990.

In July 1990, five months after the deadline for filing claims, the RTC met with Brady's counsel and counsel for a group of Indigo Run landowners. This was the first time that the RTC was formally made aware of the group of Indigo Run landowners who claimed that they were creditors of the development. The RTC was aware of the suit that Brady, as an individual landowner, previously had brought against Southern Floridabanc Federal based on the latter's prior removal action. Brady informed the RTC of its decision to amend its complaint and add the numerous plaintiffs. The RTC agreed to accept amended service of process to reflect the addition and deletion of parties. Brady subsequently amended its complaint against the RTC as receiver for Southern Floridabanc Federal by adding the other Indigo Run landowners/creditors and asserting additional claims. Thus, the present group of plaintiffs/appellants was formed.

In October 1990, Brady moved to attach the proceeds from the impending sale of the remaining Indigo Run assets. The district court denied that motion. Brady, however, filed a notice of lis pendens against the Indigo Run property. In order to facilitate the sale of the property, the RTC agreed to substitute money as security for the lis pendens. A magistrate judge entered an order approving the substitution in May 1991. The RTC made an initial deposit of $2.7 million to serve as security and later supplemented it. The sale of the Indigo Run Plantation was eventually finalized and the development currently is being completed.

In July 1991, after being involved in the case with Brady for over one year, the RTC filed a motion for summary judgment on the ground that the district court lacked subject matter jurisdiction. The RTC asserted that the plaintiffs had failed to avail themselves of the administrative process required by FIRREA. Therefore, the RTC contended, FIRREA prohibited the district court from adjudicating the claim.

The district court granted the RTC's motion following oral argument. The court held that it lacked subject matter jurisdiction under section 1821(d)(13)(D) of FIRREA because Brady had failed to follow the administrative remedies required...

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