Davidson v. F.D.I.C.

Decision Date25 January 1995
Docket NumberNo. 93-8335,93-8335
Citation44 F.3d 246
PartiesWilliam C. DAVIDSON, Plaintiff-Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION as Receiver for United Bank of Texas, Defendant-Intervenor-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

William C. Davidson, Jr., Minter, Joseph & Thornhill, P.C., pro se.

Manual A. Palau, Washington, DC, Roy G. Morris, Richard E. Anderson, F.D.I.C., Dallas, TX, for appellee.

Appeal from the United States District Court for the Western District of Texas.

Before GARWOOD and EMILIO M. GARZA, Circuit Judges, and HEAD, * District Judge.

GARWOOD, Circuit Judge:

Plaintiff-appellant William C. Davidson (Davidson) brought this suit to enjoin and, ultimately, to set aside a nonjudicial foreclosure sale of his property conducted on behalf of the Federal Deposit Insurance Corporation (the FDIC) as receiver for United Bank of Texas. Following the district court's entry of judgment for the FDIC as receiver, 821 F.Supp. 1176, Davidson filed a timely notice of appeal. We affirm.

Facts and Proceedings Below

The facts in this case are undisputed. On October 5, 1983, R. Bird Corporation, a Texas corporation, acting through its president Richard Bird, executed a "Real Estate Note" for $350,000 payable, principal and interest, on April 13, 1984, to United Bank of Texas (the Bank) in Travis County, Texas. The note, as recited therein, was secured by a lien on a tract of land located in Travis County, Texas (the Property), described in a deed of trust dated October 5, 1983, and recorded in the Travis County, Texas real property records. The note and deed of trust likewise recite that the note is in part payment of the purchase price of the property and is also secured by a vendor's lien retained in deed of even date of the property to the maker of the note. The deed of trust contained a clause granting the Bank's trustee a power to sell the Property in the event of default in the note. The note's due date passed, but the Bank did not foreclose. Thereafter, on October 6, 1986, R. Bird Corporation deeded the Property to Richard Bird; in the deed, Richard Bird assumed the outstanding indebtedness against the Property.

On June 4, 1987, the Texas Banking Commissioner declared the Bank--a Texas bank, the deposits of which were insured by the FDIC--insolvent and appointed the FDIC receiver of the Bank. Vernon's Ann.Tex.Civ.Stats. art. 489b, Secs. 1, 3. As the Bank's receiver, the FDIC acquired the Bank's assets, including the deed of trust and the promissory note, the cause of action on which accrued April 13, 1984, the date the note became past due. On March 27, 1990, almost six years after the note became past due and almost three years after the FDIC became receiver, Davidson acquired the Property from Richard Bird and subsequently invested approximately $8,000 in repairs to the improvements thereon.

In March 1992, Davidson petitioned a Texas state court for injunctive relief against the Bank's substitute trustee under the deed of trust, seeking to prevent a proposed nonjudicial foreclosure on the Property. After the state court granted a temporary restraining order, the FDIC as receiver intervened as a defendant and removed the case to the district court below, where Davidson's request for injunctive relief was denied on April 6, 1992. The next day, the Bank's substitute trustee, acting on behalf of the FDIC as receiver, conducted a nonjudicial foreclosure sale in Travis County in accordance with the deed of trust. The FDIC as receiver was the successful bidder at the sale, purchasing the Property for a $104,300 credit on the note.

Davidson claimed the sale was untimely and asked the district court to set it aside on that basis. After a bench trial on stipulated facts, the district court entered judgment for the FDIC as receiver. The court held that the sale was valid because it took place within the six-year limitations period of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub.L. 101-73, 103 Stat. 183 (1989); 12 U.S.C. Sec. 1821(d)(14). Davidson now appeals, principally arguing that, on the date FIRREA became effective, the deed of trust had already become void under Texas law and therefore could not be revived.

Discussion

The ultimate issue in this case is whether the power of sale contained in the Bank's deed of trust acquired by the FDIC as receiver was still enforceable on August 9, 1989, the date FIRREA became effective. Resolution of that issue initially turns on whether the claim was valid when acquired by the FDIC on June 4, 1987. If time-barred or otherwise void under state law at the time of the FDIC's appointment as receiver, the claim cannot be revived merely because a government agency holds it. F.D.I.C. v. Dawson, 4 F.3d 1303, 1306-07 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 2673, 129 L.Ed.2d 809 (1994); see also R.T.C. v. Seale, 13 F.3d 850, 853 (5th Cir.1994) (government cannot revive claims that are stale when acquired unless Congress explicitly directs otherwise); F.D.I.C. v. Belli, 981 F.2d 838, 842-43 (5th Cir.1993); F.D.I.C. v. Bledsoe, 989 F.2d 805, 808 (5th Cir.1993). An acquired claim is thus valid if, at the time of the FDIC's appointment as receiver, it is still good under the law that created it. In Texas, a mortgage is an incident of the debt; it is therefore generally enforceable so long as the debt itself is enforceable, which is to say, four years after the cause of action on the debt accrued. Tex.Civ.Prac. & Rem.Code Secs. 16.004(a)(3) (debt), 16.035 (power of sale) (1986). Here, as the parties concede, the FDIC became receiver and acquired the deed of trust some three years after the cause of action on the note accrued; the claim was therefore good at the time of the FDIC's appointment.

The problematic issue in this case, then, is whether the deed of trust remained enforceable on the effective date of FIRREA, August 9, 1989. That is, although both sides concede the validity of the claim when the FDIC was appointed, both dispute what happened to the claim in the intervening two years between the FDIC's appointment as receiver and the effective date of FIRREA. If the claim died in the interim, FIRREA does not revive it, and the foreclosure should have been set aside. If the claim survived the interim, then the limitation provisions of FIRREA apply, and the foreclosure was timely. 1

Accordingly, the emphasis in this litigation has been on what law applies during the two-year period between the FDIC's appointment and FIRREA. The district court concluded that, once the FDIC acquired the Bank's claim, the six-year general limitations period of 28 U.S.C. Sec. 2415(a), the general statute of limitations for contract actions, relayed the deed of trust beyond FIRREA's effective date. In other words, because the deed of trust was valid when acquired, the Texas four-year limitations period was displaced by the six-year federal rule under 28 U.S.C. Sec. 2415(a), which in turn carried the deed of trust over FIRREA's effective date and into the safe harbor of FIRREA's own six-year limitations period. According to the reasoning of the district court, it was by way of this statute-of-limitations relay race that the foreclosure avoided a time bar.

Section 2415(a) provides in part, "[E]very action for money damages brought by the United States ... or agency thereof which is founded upon any contract ... shall be barred unless the complaint is filed within six years after the right of action accrues." Because the debt was not barred on June 4, 1987, when the FDIC was appointed receiver, the debt then became subject to section 2415(a)'s six-year limitations period, calculated from the note's April 13, 1984, maturity. Belli at 840-42; Bledsoe at 807 & n. 4. But for FIRREA, the debt would thus have become barred April 13, 1990. Because the debt was not barred when FIRREA became effective August 9, 1989, FIRREA's six-year limitations period, which is calculated from June 4, 1987, meant that the debt would not be barred until June 1993, well after the foreclosure (see note 1, supra ). Bledsoe at 808-09.

Davidson argues that section 2415(a) does not apply to mortgage foreclosures, and apparently every court that has considered this question agrees. See United States v. Alvarado, 5 F.3d 1425, 1430 (11th Cir.1993); Westnau Land Corp. v. U.S. Small Business Admin., 1 F.3d 112, 115-16 (2d Cir.1993) (collecting cases); United States v. Dos Cabezas Corp., 995 F.2d 1486, 1489 (9th Cir.1993); United States v. Ward, 985 F.2d 500, 501-03 (10th Cir.1993); Cracco v. Cox, 66 A.D.2d 447, 414, 414 N.Y.S.2d 404 (4th Dept.1979); United States v. Warren Brown & Sons Farms, 868 F.Supp. 1129 (E.D.Ark.1994); United States v. Succession of Siddon, 812 F.Supp. 674, 675-76 (W.D.La.1993); United States v. LaSalle National Trust, 807 F.Supp. 1371, 1372-73 (N.D.Ill.1992); United States v. Mr. Wonderful Enterprises, 1992 WL 521532 (E.D.N.Y. Feb. 25, 1992); United States v. Freidus, 769 F.Supp. 1266, 1273-74 (S.D.N.Y.1991); United States ex rel. Small Business Administration v. Edwards, 765 F.Supp. 1215, 1222 (M.D.Pa.1991); United States v. Copper, 709 F.Supp. 905, 908 (N.D.Iowa 1988); United States v. Matthews, 1988 WL 76567 (E.D.N.Y.1988); Curry v. United States, 679 F.Supp. 966, 970 (N.D.Cal.1987).

We join the Ninth, Eleventh, Tenth, and Second Circuits in this respect and hold that section 2415(a) does not directly apply to foreclosures on security for the debt. It is a well-established principle that all statutes of limitations against the United States are to be strictly construed. Badaracco v. Commissioner, 464 U.S. 386, 391-92, 104 S.Ct. 756, 761, 78 L.Ed.2d 549 (1984). The courts have all agreed that, by characterizing the action as one for "money damages," the strict terms of section 2415(a) distinguish between actions for recovery on the promissory note and actions to foreclose on the...

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