Resolution Trust Corp. v. Bayside Developers

• Decision Date: 20 January 1995
• Docket Number: No. 93-15451,93-15451
• Citation: 43 F.3d 1230
• Parties: RESOLUTION TRUST CORPORATION, as Conservator for Great American First Savings Bank, Plaintiff-Appellee, v. BAYSIDE DEVELOPERS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1230

43 F.3d 1230

RESOLUTION TRUST CORPORATION, as Conservator for Great American First Savings Bank, Plaintiff-Appellee, v. BAYSIDE DEVELOPERS, Defendant-Appellant.

No. 93-15451.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 15, 1994.

Decided Dec. 13, 1994.

As Amended Jan. 20, 1995.

Sandra Naisbitt Rowell, Woodside, CA, for defendant-appellant Bayside Developers.

George A. Furst, Hughes Hubbard & Reed, Los Angeles, CA, Dennis S. Klein, Kevin M. Crotty, Hughes Hubbard & Reed, Washington, DC, Michael P. Condon, Resolution Trust Corporation, Washington, DC, for plaintiff-appellee Resolution Trust Corp.

Appeal from the United States District Court for the Northern District of California.

Before: FARRIS, BEEZER, Circuit Judges and MUECKE ^*, District Judge.

MUECKE, Senior District Judge:

This case primarily concerns the authority of the Resolution Trust Corporation (RTC) to remove an action from a state court of appeals after its appointment as conservator for a party in the state court action. Bayside alleges that the RTC lacks authority to remove an action from a state court of appeals. Thus, Bayside alleges the district court lacked subject matter jurisdiction over this action.

BACKGROUND

The extensive factual and procedural background of this case is set forth in the district court opinion. RTC v. Bayside Developers, 817 F.Supp. 822, 823-24 (N.D.Cal.1993).

DISCUSSION

I. Removal jurisdiction

Removal of a case from state to federal court is an exercise of federal subject matter jurisdiction which is reviewed de novo. Hellon & Assocs., Inc. v. Phoenix Resort Corp., 958 F.2d 295, 297 (9th Cir.1992).

A. Retroactivity of the December 1991 amendment to 12 U.S.C.A. Sec. 1441a(l)(3)

Appellant Bayside first argues that there is no federal subject matter jurisdiction in this action because the RTC was not formally substituted as a party in place of its predecessor bank in the state court action prior to removal and that the district erred in applying the amended removal statute which provides that the RTC shall be deemed substituted in any action upon the filing of a copy of its appointment order. The RTC removed this action to federal district court on October 7, 1991. While this case was pending in district court, in December of 1991, Congress amended 12 U.S.C.A. Sec. 1441a(l )(3). 12 U.S.C. Sec. 1441a(l ) is part of the Financial Institutions Reform, Recovery and Enforcement Act [FIRREA] and provides that any action in which the RTC is a party, either originally or substituted for an insolvent institution, is a federal question action over which the federal district courts have original jurisdiction. 12 U.S.C.A. Sec. 1441a(l ) (West Supp.1994). Relevant to this action, the December 1991 amendment added subsection B which clarifies that the RTC need not be formally substituted into a state court action to remove that action to federal court. ¹ The amendment became effective on February 1, 1992. The District Court issued its decision on February 9, 1993 and properly found that the amended provision applied to this action. RTC v. Bayside Developers, 817 F.Supp. at 825, n. 2.

To the extent that this amendment is a change in the law, ² it is a procedural change in a jurisdictional statute and in both jurisdictional and procedural changes the Supreme Court has clarified that the district court should apply the law in effect at the time it renders the decision. Landgraf v. USI Film Products, --- U.S. ----, ---- - ----, 114 S.Ct. 1483, 1501-02, 128 L.Ed.2d 229 (1994). Thus, the district court did not err in applying the amended FIRREA removal provision to this action when it issued its opinion.

The Supreme Court recently clarified the standard for retroactivity of statutes in Landgraf. Prior to Landgraf, the Supreme Court acknowledged that the standard for interpretation of the possible retroactive effect of statutes was unclear. Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 110 S.Ct. 1570, 108 L.Ed.2d 842 (1990). In Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988), the Supreme Court stated that because retroactivity is not favored in the law, Congressional enactments will not be construed to have retroactive effect "unless their language requires this result." Bowen, 488 U.S. at 208, 109 S.Ct. at 471. However, in an earlier opinion, the Court applied the general rule that "a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary." Bradley v. Richmond Sch. Bd., 416 U.S. 696, 711, 94 S.Ct. 2006, 2016, 40 L.Ed.2d 476 (1974). The Supreme Court acknowledged, but did not resolve, the inconsistencies in these standards in the Kaiser Aluminum case finding that the Court need not reconcile the cases since under either view the clear intent of Congress governs. Kaiser Aluminum, 494 U.S. at 837, 110 S.Ct. at 1577.

Bayside argues that the intent of Congress is clear because the savings provision of the amendment preserves the validity of any right, duty or obligation which arises under the amendment and which existed before its effective date of February 1, 1992. However, this argument is without merit because the amendment in question in this case concerns procedure regarding removal, whereas the savings clause applies only to substantive "rights, duties, or obligations." See Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991, Pub.L. No. 102-233 Sec. 317, 105 stat. 1761 (1991).

Because the intent of Congress is not clear, this court must apply the standards clarified by the Supreme Court in Landgraf. Specifically relevant to this action, the Supreme Court states in Landgraf that it has "regularly applied intervening statutes conferring or ousting jurisdiction, whether or not jurisdiction lay when the underlying conduct occurred or when the suit was filed." Landgraf, --- U.S. at ----, 114 S.Ct. at 1501. The Supreme Court explained that "[a]pplication of a new jurisdictional rule usually 'takes away no substantive right but simply changes the tribunal that is to hear the case.' " Id. "Present law normally governs in such situations because jurisdictional statutes 'speak to the power of the court rather than to the rights or obligations of the parties.' " Id. The amendment in this case clarifies when the RTC is deemed substituted for purposes of removal jurisdiction. Therefore, the district court properly applied the amended statute to this action.

Moreover, "changes in procedural rules may often be applied in suits arising before their enactment without raising concerns about retroactivity." Id. "Because rules of procedure regulate secondary rather than primary conduct, the fact that a new procedural rule was instituted after the conduct giving rise to the suit does not make application of the rule at trial retroactive." Id. In this case, the relevant change in the statute, consistent with earlier court decisions, merely clarified that the RTC is substituted into an action by filing a pleading that informs the court that it has been appointed conservator or receiver for the party. 12 U.S.C.A. Sec. 1441a(1)(3)(B) (West Supp.1994). This change is procedural as it clarifies when the RTC is deemed substituted. Therefore, the district court properly applied the amended version of the statute.

B. Authority of the RTC to remove an action from a state court of appeals to federal district court

Bayside argues that the FIRREA statute does not allow removal from a state appellate court. However, the plain language in FIRREA authorizes removal from state appellate courts as long as the state court appellate proceedings have not been exhausted. In statutory interpretation, courts must adhere to the plain language of a statute unless "literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters." Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982). Therefore, this court must first look to the plain language of 12 U.S.C. Sec. 1441a. The plain language of 12 U.S.C.A. Sec. 1441a(l )(3)(A) provides that the RTC "may remove any action, suit or proceeding from a State court to the United States district court...." 12 U.S.C.A. Sec. 1441a(l )(3)(A). Nothing in the language of the RTC removal statute limits the stage at which the RTC may remove. Lester v. RTC, 994 F.2d 1247, 1252 (7th Cir.1993); In re. 5300 Memorial Investors Ltd., 973 F.2d 1160, 1162 (5th Cir.1992); In re Meyerland, 960 F.2d 512, 516 (5th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 967, 122 L.Ed.2d 123 (1993). Rather, Sec. 1441a(l )(3) "gives the RTC greater removal authority than that available to others." Hellon & Assocs., Inc. v. Phoenix Resort Corp., 958 F.2d 295, 299 (9th Cir.1992). ³ The RTC is only bound by final unappealable judgments entered before its appointment under 12 U.S.C.A. Sec. 1441a(b)(4)(A) (West Supp.1994) and 12 U.S.C.A. Sec. 1821(d)(13)(A) (1989). ⁴

The First, Third, Fourth, Fifth, Seventh, Eighth and Eleventh Circuits agree that the RTC or FDIC may remove a state court action after the state trial court has entered judgment but before the highest state court has entered final judgment. RTC v. Allen, 16 F.3d 568, 572 n. 4 (4th Cir.1994) (after trial court judgment while appeal was pending); Sweeney v. RTC, 16 F.3d 1, 6 (1st Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 291, 130 L.Ed.2d 206 (1994) (before judgment was entered by the trial court); RTC v. Nernberg, 3 F.3d 62, 66-67 (3d Cir.1993) (after the appellate briefs were filed but before the appellate court reached the appeal); Lester, 994 F.2d at 1253-54 (after trial court judgment while post-trial motions were pending); In re 5300 Memorial Investors, Ltd., 973 F.2d at 1162 (after the state court of appeals' decision and while the case was on...