Bullion Services, Inc. v. Valley State Bank

• Citation: 50 F.3d 705
• Decision Date: 20 March 1995
• Docket Number: No. 93-55912,93-55912
• Parties: BULLION SERVICES, INC., Plaintiff-Appellee, v. VALLEY STATE BANK; Federal Deposit Insurance Corporation, as Receiver for Valley State Bank, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 705

50 F.3d 705

63 USLW 2595

BULLION SERVICES, INC., Plaintiff-Appellee, v. VALLEY STATE BANK; Federal Deposit Insurance Corporation as Receiver for Valley State Bank, Defendants-Appellants.

No. 93-55912.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 6, 1995.

Decided March 20, 1995.

S. Alyssa Roberts, F.D.I.C., Washington, DC, for defendants-appellants.

Timothy Bowles and Robert A. Wiener, Bowles & Moxon, Hollywood, CA, for plaintiff-appellee.

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

Before: TROTT, FERNANDEZ, and T.G. NELSON, Circuit Judges.

Opinion by Judge TROTT; Dissent by Judge T.G. NELSON.

TROTT, Circuit Judge:

OVERVIEW

The Federal Deposit Insurance Corporation in its corporate capacity ("FDIC Corporate") appeals the district court order remanding to state court Bullion Services, Inc.'s ("BSI") action filed originally against FDIC only as receiver for Valley State Bank ("FDIC Receiver"). After BSI obtained a jury verdict in state court against FDIC Receiver, BSI was granted post verdict permission to amend its complaint to include FDIC Corporate. FDIC Corporate then attempted

to remove the case to federal district court pursuant to 12 U.S.C. Sec. 1819(b)(2)(B). The district court remanded the action, however, concluding that FDIC Corporate had not been made a party to the litigation and, alternatively, that FDIC Receiver had waived the FDIC's right to removal. We have jurisdiction under 12 U.S.C. Sec. 1819(b)(2)(C). We reverse, vacate the order and remand.

BACKGROUND

On September 28, 1987, the FDIC was appointed receiver of Valley State Bank ("Bank") after the Bank was ordered closed. Prior to the closure, the Bank and BSI had been involved in thousands of precious metals transactions. In September 1990, BSI filed a complaint in state court against FDIC Receiver alleging, inter alia, a right to special deposits. The case was tried before a jury, and a verdict was returned in favor of BSI. BSI then filed a post verdict motion captioned Motion to Amend the Complaint to Conform to Proof asking the state court for permission to add FDIC Corporate to its complaint. The court granted the motion on February 11, 1993. Subsequently, the court entered judgment against both FDIC Receiver and FDIC Corporate.

FDIC Corporate removed the case to federal district court claiming removal was proper because the "FDIC in its Corporate Capacity was moved in this action by post-verdict motion" and "[t]his matter [was] removed by FDIC in its Corporate Capacity within 90 days of being made a party." In support of its petition for removal, FDIC Corporate attached as exhibits all 88 state court pleadings. On May 3, 1994, the district court, sua sponte, issued an Order to Show Cause Re Remand ordering FDIC Corporate to establish the propriety and timeliness of removal by identifying the pleading that made FDIC Corporate a party to the litigation. The district court also indicated that under its reading of the removal statute, 12 U.S.C. Sec. 1819(b)(2)(B), FDIC Receiver had waived the FDIC's right to removal by failing to remove the case within 90 days of the suit's initiation.

In response to the district court's order, FDIC Corporate argued that Sec. 1819(b)(2)(B) applied to FDIC Corporate and FDIC Receiver independently. However, FDIC Corporate did not address the district court's request that it identify the pleading establishing its status as a party. On May 13, 1993, the district court ordered the case remanded. The district court stated that because "no pleading in the file indicates that the FDIC in its corporate capacity is a party ... the court finds that [FDIC Corporate] does not have the right to remove." Additionally, the district court concluded that 12 U.S.C. Sec. 1819(b)(2)(B) did not apply independently to FDIC Receiver and FDIC Corporate and therefore the FDIC's petition for removal was untimely.

STANDARD OF REVIEW

We review questions of statutory construction de novo. Hellon & Assocs., Inc. v. Phoenix Resort Corp., 958 F.2d 295, 297 (9th Cir.1992). "Moreover, removal of cases from the state courts to the federal court raise questions of federal subject matter jurisdiction which we review de novo." Id.

DISCUSSION

I

We consider first the district court's conclusion that FDIC Corporate had not been made a party to this litigation and thus could not remove the case. In its May 3, 1993 order to show cause, the district court stated it could not "ascertain from the file if or when the FDIC in its corporate capacity was 'made a party.' " In fact, the required showing was in FDIC Corporate's exhibits nos. 63, 64, 66, 76, 77, 81, and 85, attached to its petition for removal. Thus, the district court was wrong in its order of May 13, 1993, when it said, "no pleading in the file indicates that the FDIC in its corporate capacity is a party." Exhibit 76, BSI's second amended complaint (Amended by Interlineation to Conform to Proof at Trial), shows on page two that the FDIC in its corporate capacity was a party to the case when removal was sought. Exhibit 85, BSI's judgment, reveals that after the complaint was amended, judgment was entered against both FDIC Receiver and FDIC Corporate.

Under the circumstances, the court erred when it used this mistaken ground as an alternate basis to deny the petition for removal. We note in this regard that the district court did not base its ruling on FDIC Corporate's failure to respond to its order to show cause, relying instead on its misapprehension of the file. Moreover, the district court also misunderstood the manner in which FDIC Corporate had become involved in the state case. This misapprehension appears in the district court's May 13, 1993 order on page two: "For some reason, the FDIC awaited until post-verdict to seek to become a party in its corporate capacity." FDIC Corporate never sought to become a party in the state action, rather it resisted BSI's attempt to bring it into the case.

In sum, the pleadings attached to the petition for removal demonstrate that despite FDIC Corporate's resistance, it was made a party to the present action. The only question remaining, therefore, is whether Sec. 1819(b)(2)(B) allows FDIC Corporate and FDIC Receiver to exercise independently the right to remove a case to federal district court.

II

We begin our analysis with the proposition that the scope of the FDIC's removal right is entirely a matter of congressional intent. See McCarthy Western Constructors v. Phoenix Resort Corp., 951 F.2d 1137, 1140 (9th Cir.1991). When Congress amended the FDIC's enabling statute by enacting the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), it greatly expanded the FDIC's ability to remove cases to federal court. Section 1819(b)(2)(B) provides in relevant part that

the Corporation may, without bond or security, remove any action, suit, or proceeding from a State court to the appropriate United States district court before the end of the 90-day period beginning on the date the action, suit, or proceeding is filed against the Corporation or the Corporation is substituted as a party.

This section confers several procedural advantages on the FDIC that go beyond the general removal authorization found in 28 U.S.C. Secs. 1441-1452. See, e.g., Resolution Trust Corp. v. BVS Dev., Inc., 42 F.3d 1206, 1211 (9th Cir.1994) (joining other circuits in holding that the FDIC may remove a case even after a state court has entered judgment); Kirkbride v. Continental Casualty Co., 933 F.2d 729, 733 (9th Cir.1991) (stating that "Congress drafted the FIRREA removal provisions to supplement, not supplant, the general removal statute" (internal quotations omitted)); FSLIC v. Frumenti Dev. Corp., 857 F.2d 665, 666-67 n. 1 (9th Cir.1988) (noting that the FDIC may remove an action under Sec. 1819 even as a plaintiff); FDIC v. S & I 85-1, Ltd., 22 F.3d 1070, 1074 (11th Cir.1994) (acknowledging that Sec. 1819 establishes a removal time period of ninety days in a clear departure from thirty days allowed by the general removal statute). Moreover, except for the state law exception of Sec. 1819(b)(2)(D) ¹, any case in which the FDIC is a party is "deemed to arise under the laws of the United States." 12 U.S.C. Sec. 1819(b)(2)(A).

In light of these statutory provisions, we have held "that the grant of subject matter jurisdiction contained in FDIC's removal statute evidences Congress' desire that cases involving FDIC should generally be heard and decided by the federal courts." Kirkbride, 933 F.2d at 731-32 (internal quotations omitted); see also Lazuka v. FDIC, 931 F.2d 1530, 1535 (11th Cir.1991) ("Congress used very strong language to afford the FDIC every possibility of having a federal forum within the limits of Article III."). With this statutory framework in mind, we address the parties' contentions.

Section 1819(b)(2)(B) allows the FDIC to remove a state action to a federal court within 90 days of either the date an action, suit, or proceeding is filed against the FDIC or the date FDIC is substituted as a party. S & I 85-1, Ltd., 22 F.3d at 1074. BSI acknowledges that FDIC Corporate removed the case within 90 days of being made a party to the litigation, but contends that Sec. 1819(b)(2)(B) applies to the FDIC as a single entity. Accordingly, BSI argues that FDIC's removal period began to run when BSI filed suit against FDIC Receiver, and that 90 days had long since past when FDIC Corporate sought to remove the present action. FDIC Corporate, on the other hand, asserts that Sec. 1819(b)(2)(B) allows either FDIC Corporate or FDIC Receiver to remove a case when either entity is the subject of a suit or is made a party. Thus, under FDIC Corporate's interpretation of the statute, its removal of the instant action was timely.

Section 1819(b)(2)(B) provides that "the Corporation" may remove a case to federal court, but does not indicate whether "the Corporation"...