28 F.3d 376 (3rd Cir. 1994), 93-5587, National Union Fire Ins. Co. of Pittsburgh, Pa. v. City Sav., F.S.B.

Docket Nº:Gulf Insurance Company, Appellant in No. 93-5587,
Citation:28 F.3d 376
Party Name:NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; Gulf Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, Appellant in Nos. 93-5595/5596,
Case Date:July 01, 1994
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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28 F.3d 376 (3rd Cir. 1994)

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA;

Gulf Insurance Company,

National Union Fire Insurance Company of Pittsburgh, PA,

Appellant in Nos. 93-5595/5596,

Gulf Insurance Company, Appellant in No. 93-5587,

v.

CITY SAVINGS, F.S.B., In Receivership, Resolution Trust

Corporation, as Receiver.

Nos. 93-5587, 93-5595 and 93-5596.

United States Court of Appeals, Third Circuit

July 1, 1994

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

Argued March 28, 1994.

As Amended Aug. 29, 1994.

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S. Gordon Elkins (argued), Samuel J. Arena, Jr., Pauline C. Scalvino, Stradley, Ronon, Stevens & Young, Philadelphia, PA, Peter I. Broeman, Bigham, Englar, Jones & Houston, Newark, NJ, for appellant National Union Fire Insurance Company of Pittsburgh, PA.

Thomas F. Quinn (argued), Wilson, Elser, Moskowitz, Edelman & Dicker, Newark, NJ, for appellant Gulf Insurance Co.

Gerald A. Liloia (argued), Robert J. Gilson, Riker, Danzig, Scherer, Hyland & Perretti, Morristown, NJ, for appellees City Savings, F.S.B., in Receivership, the Resolution Trust Corporation, as receiver.

Before: GREENBERG, COWEN and NYGAARD Circuit Judges.

OPINION OF THE COURT

COWEN, Circuit Judge.

National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union") and Gulf Insurance Company ("Gulf") filed a declaratory judgment action against City Savings, F.S.B., in Receivership ("City Savings") and the Resolution Trust Corporation, as Receiver ("RTC"). In the declaratory judgment action, National Union and Gulf sought to rescind insurance policies which they had issued and under which City Savings and the RTC were seeking coverage. The RTC filed a motion to dismiss the declaratory judgment action and also filed a counterclaim. The district court held that under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), 1 12 U.S.C. Sec. 1821(d)(3), (d)(13)(D), it lacked subject matter jurisdiction over National Union and Gulf's declaratory judgment action. The district court also held that under FIRREA, National Union and Gulf were jurisdictionally barred from raising certain affirmative defenses to the RTC's counterclaim. For the reasons stated below, we will affirm the district court's holding that under

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FIRREA the district court lacks subject matter jurisdiction over National Union and Gulf's declaratory judgment action. However, we will reverse the district court's holding that under FIRREA National Union and Gulf are barred from raising affirmative defenses to the counterclaim.

I. BACKGROUND

Effective March 22, 1989, National Union and Gulf issued policies of insurance 2 to CityFed Financial Corp. ("CityFed") and its subsidiaries. The insurance policies provide coverage for losses sustained from, among other things, the dishonest or fraudulent acts of employees of CityFed and its subsidiaries. On October 27, 1989, City Federal Savings Bank ("City Federal"), a subsidiary of CityFed, sent a letter to National Union and Gulf providing notice that City Federal might have suffered a loss covered by the insurance policies as a result of dishonest or fraudulent acts of City Federal employees. On December 7, 1989, City Federal put National Union and Gulf on notice of another potential claim involving the alleged dishonest and/or fraudulent acts of George E. Mikula, an Executive Vice President of City Federal. On January 4, 1990, City Federal placed National Union and Gulf on notice of a third potential claim arising from the alleged dishonest and/or fraudulent acts of Frank W. Allaben, a former Vice President of City Federal and City Federal Mortgage Corporation.

In the interim, by Order dated December 7, 1989, City Federal was declared insolvent by the Director of the Office of Thrift Supervision ("OTS") and ordered closed. By the same Order, the RTC was appointed Receiver of City Federal, succeeding to all rights, titles, powers, and interests of City Federal. Also on December 7, 1989, the Director of the OTS created City Savings Bank--a federally chartered mutual savings association--to take over certain assets and liabilities of City Federal. The RTC was then appointed as Conservator for and took possession of City Savings Bank.

In accordance with FIRREA, 12 U.S.C. Sec. 1821(d)(3)(B), the RTC then caused to be published notice to all creditors of City Federal that they had until March 17, 1990 to bring any claims against the assets of City Federal. In addition, the RTC sent known creditors, i.e., those then appearing on City Federal's books, individual letters in December of 1989 informing them of the bar date. National Union was among those who were sent a letter notifying it of the RTC's appointment as Receiver and the bar date for the submission of claims. The RTC thereafter published the bar date in the newspaper on December 17, 1989, January 21, 1990, and February 18, 1990. Gulf apparently received from the RTC information concerning the appointment of the RTC as Receiver, but never was sent information concerning the March 17, 1990 bar date.

On December 14, 1989 and February 22, 1990, respectively, Gulf and National Union informed the RTC that effective December 8, 1989--the takeover date of City Federal--the insurance policies would be treated as canceled pursuant to the terms of these policies that they would automatically terminate upon the takeover of the insured by receiver, other liquidators, or other state or federal officials. Although both National Union and Gulf notified the RTC that they considered the policies canceled effective the date the RTC took over the operations of the bank, neither raised or asserted to the RTC a right to rescind the policies before the March 17, 1990 bar date. That is, prior to the March 17, 1990 bar date, neither National Union nor Gulf informed the RTC that it denied coverage under the policies for events occurring prior to the RTC's appointment as Receiver.

By an Order dated September 21, 1990, the Director of OTS closed City Savings Bank and appointed the RTC as its Receiver. City Savings--a federally chartered mutual savings association--was then organized to take over the assets and liabilities of City Savings Bank. The RTC was appointed Conservator of City Savings and, accordingly, took possession and charge of this newly

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created entity. Thereafter, by Order dated January 11, 1991, the Director of the OTS closed City Savings and appointed the RTC as its Receiver.

On or about February 27, 1991, the RTC as Receiver for City Savings filed three proofs of loss totaling approximately $152 million with National Union and Gulf, claiming that the losses were covered by the insurance policies. The three claims were attributed to the alleged dishonest and/or fraudulent acts of City Federal employees. After investigating the RTC's claims, National Union and Gulf tendered the entire premiums paid for the insurance policies, plus interest, to the RTC on June 12th and 26th, 1992, respectively, in an effort to rescind the insurance contracts. The RTC rejected the premium refunds.

On August 7, 1992, National Union and Gulf commenced the declaratory judgment action against the RTC, as Receiver of City Savings, asserting that National Union and Gulf had the right to rescind the insurance policies issued to CityFed. The RTC made a motion to dismiss the declaratory judgment action for lack of subject matter jurisdiction, and also filed a counterclaim.

The district court granted the RTC's motion to dismiss the declaratory judgment action. The district court held that under Sec. 1821(d)(3) and (d)(13)(D) of FIRREA, it lacked subject matter jurisdiction over the declaratory judgment action seeking rescission. The district court also held that under FIRREA, National Union and Gulf were jurisdictionally barred from raising their rescission theory as an affirmative defense to the counterclaim brought by the RTC against them.

II. DISCUSSION

  1. APPELLATE JURISDICTION

    We first address whether we have appellate jurisdiction over the order of the district court dismissing appellant's complaint for lack of subject matter jurisdiction. Because the RTC brought a counterclaim which has not been finally adjudicated, the district court's dismissal of National Union and Gulf's Complaint for Declaratory Judgment would not ordinarily be considered a "final judgment," and we would not ordinarily have appellate jurisdiction under 28 U.S.C. Sec. 1291. However, pursuant to Fed.R.Civ.P. 54(b), the district court entered a final judgment dismissing National Union and Gulf's Complaint for Declaratory Judgment. 3 We therefore have appellate jurisdiction over the district court's dismissal of the declaratory judgment complaint. 28 U.S.C. Sec. 1291.

    The parties did not raise the question of whether we have appellate jurisdiction to review that portion of the district court's Order entered May 27, 1993 which barred National Union and Gulf from raising affirmative defenses to any counterclaims brought by the RTC. Since appellate jurisdiction cannot be waived or consented to by the parties, Carpenters Health & Welfare Fund of Phila. & Vicinity v. Kenneth R. Ambrose, Inc., 665 F.2d 466, 468 (3d Cir.1981), we must determine whether we have jurisdiction to review the district court's holding concerning the bar against affirmative defenses by National Union and Gulf.

    The district court certified the entire Order dated May 27, 1993 as final under

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    Fed.R.Civ.P. 54(b), including its holding that National Union and Gulf could not raise their rescission theory as an affirmative defense to the counterclaim brought by the RTC. However, simply because a district court certifies a...

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