Battista et al v. Fed. Deposit Ins. Corp.
| Decision Date | 13 April 1999 |
| Docket Number | FULTON-MALONEY,No. 97-56747,97-56747 |
| Parties | (9th Cir. 1999) SANDRA KAY BATTISTA; JOAN RENEE TAYLOR; DOUGLAS FABBRI; LAURIE LOU CHANDLER; SHERRY LEYSEN; KAREN A. MARINO; PATSY D. THOMPSON; BOBBIE J. MCNEIL; MARY MARSICANO; SHIRLEY A. VAN BUSKIRK; ERIKA RIVERO; ROBERT B. FATERNICK; DONALD J. BRUYN; ANNETTE HANSON; JULIE C. MAZO; CONSTANDEANNA ELENIE WRIGHT; GLENDA C. MOBERG; PAMELA A. FAIRCHILD; REBECCA L. SMITH; CATHY LYNN; HAROLD RICHARD NORBROTHENDEBORAH JANE TAFOYA; CARMEN RAZO; ROBERT EDWARD STEELE; DAVID S. GORDON; LINDA SUSAN AUBIN; GILBERT FONSECA; MARY KELLOGG; LISA M. KELSEY; LAURA LILLY; CAROLE MEYERS; JAMES W. PILGRIM; SARAH E. RODRIGUEZ; NANCY L. SHIPMAN; SHAWN ALISON SHOEMAKER; DONNA SMITH; JACKIE TODD; COURTNEY WIGHT; CHERYL C. ZWEBER; CAROL ANN OKON; LOIS A. MARCUS; JAMES L. LAURITZEN; VALERIE A. HUSSEY; ROBERTA L. FACCHINA; INA HAHN; DIANE JO ALLEN; TRACY A. ALLEN; CAROL DIGNARD; HASMIK KEYRIBARYAN; CATHY KIAHA; GEORGE KLASSER; EVODIO MEDINA; VIOLETTE NAAMAN; KIMBERLY JO OLIVA; HASMIK PASHAIE; SUSAN J. ROSSI; MARIA DEL CARMEN CONTRERAS; JOHN U. CRANDALL, III; JAN M. EISENBEISZ; KYLE LANCE MILLER, Plaintiffs-Appellants, v. FEDERAL DEPOSIT INSURANCE CORPORATION, appointed receiver of Bank of Newport, a failed depository institution, Defendant-Appellee |
| Court | U.S. Court of Appeals — Ninth Circuit |
James Toledano, Toledano & Wald, Irvine, California, for the plaintiffs-appellants.
Roberta H. Clark, Federal Deposit Insurance Corporation, Washington, D.C., for the defendant-appellee.
Appeal from the United States District Court for the Central District of California; Gary L. Taylor, District Judge, Presiding. D.C. No. CV 95-00017 GLT
Before: Robert Boochever, Diarmuid F. O'Scannlain, and A. Wallace Tashima, Circuit Judges.
Sandra Kay Battista and other former employees (collectively "Battista" or "employees") of the Bank of Newport ("Bank") appeal an order of the district court that permitted the Federal Deposit Insurance Corporation ("FDIC") to pay a judgment to the employees in receiver's certificates rather than in cash. The employees also appeal the district court's refusal to award prejudgment interest. We have jurisdiction under 28 U.S.C. S 1291, and we affirm.
The Bank, a financial institution insured by the FDIC, had a severance policy that provided severance and separation payments to employees terminated without just cause. In 1994, the California Superintendent of Banks declared the Bank insolvent and the FDIC was appointed its receiver. Pursuant to its authority under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), the FDIC repudiated the employees' contracts, including the agreements regarding severance and separation payments. The employees timely filed claims with the FDIC for their severance and separation payments, which the FDIC disallowed.
The employees brought suit against the FDIC seeking damages for their severance and separation pay, interest, and attorney's fees and costs. The parties entered into a Stipulated Pretrial Conference Order, in which they stipulated that a trial of the facts was unnecessary. In addition to agreeing on a number of facts, the parties stipulated to the FDIC's authority to repudiate the severance and separation pay agreements under FIRREA and to the resulting liability of the FDIC, as receiver, for damages under 12 U.S.C. S 1821(e)(3).1 Two issues remained: (1) whether the employees were entitled to payment of the judgment in cash rather than in receiver's certificates; and (2) whether the FDIC was liable for prejudgment interest on the employees' damages.2
The district court subsequently granted the FDIC's motion that it be allowed to satisfy the judgment by payment with receiver's certificates and that the employees were not entitled to prejudgment interest, and entered judgment against the FDIC.3 The employees timely appealed.
The interpretation of a statute is a question of law reviewed de novo. See Alexander v. Glickman, 139 F.3d 733, 735 (9th Cir. 1998). Whether prejudgment interest is permitted is a question of law reviewed de novo. See Hopi Tribe v. Navajo Tribe, 46 F.3d 908, 921 (9th Cir. 1995).
Congress enacted FIRREA in 1989 in response to the nation's banking crisis. See Sharpe v. FDIC, 126 F.3d 1147, 1154 (9th Cir. 1997). The statute "allows the FDIC to act as receiver or conservator of a failed institution for the protection of depositors and creditors," id., establishing a scheme for dealing with claims against the failed institution.
Section 1821(d) of FIRREA outlines the powers and duties of the FDIC as conservator or receiver, authorizing the agency to, inter alia, determine and pay claims against the financial institution in accordance with the subsection's requirements. Subsections 1821(d)(3)-(6) set forth the procedures for the determination of claims, and S 1821(d)(11) establishes a distribution priority for claims to the financial institution's assets.
Subsection 1821(e) authorizes the FDIC, as receiver, to repudiate any contract of the insolvent financial institution it deems burdensome, so long as the repudiation of the contract will promote the orderly administration of the financial institution's affairs, see S 1821(e)(1), and the repudiation is made within a reasonable time of the receiver's appointment, see S 1821(e)(2). Repudiation gives rise to an ordinary contract claim for damages. See Howell v. FDIC, 986 F.2d 569, 571 (1st Cir. 1993). FIRREA, however, limits damages for repudiation to those enumerated in S 1821(e)(3):"actual direct compensatory damages" determined as of "the date of the appointment of the conservator or receiver." 4 The question we must decide is whether a claim for damages underS 1821(e) based on a repudiated contract is subject to the payment scheme outlined in S 1821(d), or whether, as Battista claims, subsection (e) establishes a separate right to payment.
There is no question that the FDIC may pay creditors with receiver's certificates instead of with cash. See RTC v. Titan Fin. Corp., 36 F.3d 891, 892 (9th Cir. 1994) (per curiam). Section 1821(d)(10)(A) authorizes the FDIC, as receiver, to "pay creditor claims . . . in such manner and amounts as are authorized under this chapter." In Titan, we reasoned that the FDIC may use receiver's certificates as its manner of payment because requiring cash payments would subvert the comprehensive scheme of FIRREA, including S 1821(i)(2)'s limitation on an unsecured general creditor's claim to only a pro rata share of the proceeds from the liquidation of the financial institution's assets. See Titan, 36 F.3d at 892 (citing Franklin Bank v. FDIC, 850 F. Supp. 845 (N.D. Cal. 1994)). To require the FDIC to pay certain creditors in cash would allow those creditors to "jump the line," recovering more than their pro rata share of the liquidated assets, if the financial institution's debts exceed its assets. See id. (quoting Franklin Bank, 850 F. Supp. at 849).
Attempting to extricate her case from Titan's seemingly dispositive holding, Battista argues that S 1821(d) does not govern situations in which the FDIC has repudiated a contract pursuant to S 1821(e). Specifically, she argues that Congress established two different types of claims: (1) approved claims under S 1821(d), which are payable with receiver's certificates from the assets of the financial institution; and (2) damages for repudiation under S 1821(e), which are payable only in cash. Analyses of S 1821's text, a related FDIC regulation, and case law, however, point to the conclusion thatS 1821(e) is better interpreted as being subject to the various provisions of S 1821(d).
Contrary to Battista's argument, little in S 1821 indicates that Congress intended to establish two distinct types of non-depositor claims, beyond the fact that Congress provided for damages for repudiation in subsection (e), while discussing the claims payment process in subsection (d).
Battista points to the different time lines established in SS 1821(d) and (e) for the making of claims. She notes that while S 1821(d) requires creditors to file claims within a specified period of time after receiving notice of the financial institution's liquidation, see S 1821(d)(3)(B)(i), and requires the FDIC to approve or reject those claims within 180 days of their filing, see S 1821(d)(5)(A)(i), the FDIC need only repudiate a contract under S 1821(e) within a "reasonable period" following its appointment as receiver,S 1821(e)(2). From this difference, Battista concludes that S 1821(e) creates a "full-blown absolute right to seek damages for the repudiation."
Battista also argues that Congress must have created two types of claims because S 1821(d) speaks in terms of "approved claims" or "disallowed claims, " while S 1821(e) refers only to "claims for damages." According to Battista, the principle of statutory construction that "[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally . . . in the disparate inclusion or exclusion," Russello v. United States, 464 U.S. 16, 23 (1983) (citation omitted) (internal quotation marks omitted), requires us to find that damages, which are not mentioned in S 1821(d), are not included withinS 1821(d)'s framework.
The absence of specific deadlines or references to "approved" or "disallowed claims" inS 1821(e), however, also supports the contrary conclusion that S 1821(e) does not establish a separate regime from S 1821(d). There is no reason to repeat S 1821(d)'s requirements in S 1821(e), if S 1821(e) claims are to be dealt with under S 1821(d). 5 Similarly, Congress had no reason to speak of "approved claims" or "disallowed claims" in S 1821(e),...
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