Helm v. Resolution Trust Corp.

Decision Date21 May 1996
Docket NumberNo. 95-2488,95-2488
PartiesRuby HELM, Plaintiff-Appellant, v. RESOLUTION TRUST CORPORATION, * as Receiver for Great American Savings of Oak Park, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Everett J. Cygal, Nicholas Geanopoulos (argued), Chicago, IL, for Plaintiff-Appellant.

Jeffrey Ehrlich (argued), Resolution Trust Corp., Washington, DC, for Defendant-Appellee

Resolution Trust Corp., as receiver for Great America Savings of Oak Brook.

Arthur F. Radke, Martin B. Carroll, Hefter & Radke, Chicago, IL, for Defendant-Appellee Federal Deposit Insurance Corporation.

Before POSNER, Chief Judge, and COFFEY and KANNE, Circuit Judges.

KANNE, Circuit Judge.

The district court dismissed Ruby Helm's suit against the Resolution Trust Corporation for lack of subject matter jurisdiction. Helm filed a motion for relief from judgment under FED.R.CIV.P. 60(b)(1) and (6) on the ground that she had mistakenly cited the wrong statute in her complaint. The district court denied the motion, finding that the error resulted from attorney negligence and not mistake or excusable neglect. Helm appeals that decision, and we affirm.

I

Ruby Helm owned an apartment building in Chicago. The Resolution Trust Corporation was the receiver of the bank that held the mortgage to her building. In 1990, a fire damaged the building, and Helm's insurance company paid the insurance proceeds to the RTC. Helm hired a contractor to repair the damage, and the RTC made periodic payments from the insurance proceeds to the contractor. Helm was dissatisfied with the contractor's work. She claims that he neither completed the work nor performed it in a workmanlike manner, and thus she believes that the RTC should not have paid the contractor. In January 1992, Helm filed an administrative complaint with the RTC, alleging that the RTC breached its fiduciary duty by paying the contractor for the shoddy work.

On January 20, 1993, the RTC sent Helm a letter, notifying her that it had disallowed her claim. The one-page letter also provided:

Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 12 U.S.C. Section 1821(d)(6)(A), which governs Receivership matters, if you choose to contest this decision, you have 60 days from the date of this letter to bring action against the Resolution Trust Corporation as Receiver for Great American Federal Savings.

On March 22, Helm filed a complaint against the RTC in federal court. The complaint stated that the action was brought under 12 U.S.C. § 1821(d)(7)(A) and requested that the decision of the RTC be reversed on the ground that it was arbitrary and capricious.

As we explained in an earlier opinion in this case, § 1821(d) provides two grounds for federal jurisdiction over a disallowed claim. Helm v. Resolution Trust Corp., 43 F.3d 1163, 1165 (7th Cir.1995). First, under § 1821(d)(7)(A), an individual may file suit in federal court requesting review of the RTC's disallowance of a claim, but federal jurisdiction lies only after the individual has requested RTC internal review, the RTC has granted the request, and the RTC has made a final determination on the claim. The court would then review the RTC's determination under the Administrative Procedure Act. Second, under § 1821(d)(6)(A), an individual may file suit against the RTC in federal court, not for review of the RTC's disallowance of her claim, but for relief on the underlying claim. The court would then ignore the RTC's disallowance of the claim and perform a de novo examination of the merits of the underlying claim.

The RTC filed a motion to dismiss under FED.R.CIV.P. 12(b)(1) and (6), arguing that the district court did not have jurisdiction to review the RTC's decision denying Helm's claim under § 1821(d)(7)(A) because the RTC had not administratively reviewed the claim. The district court held a hearing on the motion to dismiss at which the court provided Helm's counsel with an opportunity to explain why the court had subject matter jurisdiction over the case. Helm's counsel failed to offer an argument in favor of subject matter jurisdiction. Consequently, the district court granted the RTC's Rule 12(b)(1) motion and dismissed the case.

Twenty-eight days after the dismissal of her case, Helm filed a "Motion to Reconsider and for Leave to File an Amended Complaint." In her motion, Helm admitted to bringing her suit under the wrong section of Title 12. She claimed that she had intended to bring suit under § 1821(d)(6)(A), and she attached an amended complaint which cited § 1821(d)(6)(A). 1 The district court denied the motion as an untimely Rule 59(e) motion. Helm appealed that decision as well as the underlying Rule 12(b)(1) dismissal. In our earlier opinion, we did not reach the merits of the Rule 12(b)(1) dismissal. Instead, we vacated the dismissal of the "Motion to Reconsider" and remanded the case to the district court, holding that because Helm served the motion more than ten days after final judgment the district court should have treated it as a motion under FED.R.CIV.P. 60(b). Helm, 43 F.3d at 1166-67. On remand, Helm argued that her motion should be granted under either Rule 60(b)(1) or (6). She claimed that her citation to § 1821(d)(7)(A) instead of (d)(6)(A) was an inadvertent, technical error and therefore qualified as a mistake or excusable neglect.

The district court denied Helm's Rule 60(b) motion on May 15, 1995. The district judge noted that the complaint, instead of requesting a de novo examination of her claim, was couched in terms of judicial review of an administrative action, challenging the RTC's decision as "arbitrary and capricious" and "unsupported by substantial evidence." The district judge also noted that he had provided Helm's counsel with an opportunity to remedy the jurisdictional defect of the complaint during the hearing on the RTC's motion to dismiss but that Helm's counsel had failed to do so. Based on the foregoing, the district judge found that Helm's counsel had intended to cite § 1821(d)(7)(A) and therefore the failure to cite the proper section did not qualify as a "mistake" under Rule 60(b)(1). The district judge found that the error was instead caused by inexcusable attorney negligence, which does not qualify for relief under Rule 60(b)(1). The district judge also denied relief under Rule 60(b)(6), holding that Rule 60(b)(6) cannot be used as "an end run around" the disentitlement to relief from inexcusable attorney negligence under Rule 60(b)(1). Finally, the district court summarily denied Helm's Rule 15(a) motion for leave to amend.

Helm filed her notice of appeal on June 22, 1995. She appeals only the district court's denial of her Rule 60(b) motion and the alternative Rule 15(a) motion to amend.

II
A

Rule 60(b) provides a district court with the discretion to afford relief from a judgment or order under certain circumstances, two of which are relevant to the case at hand. Rule 60(b)(1) allows a district judge to provide relief from a judgment on the grounds of "mistake, inadvertence, surprise or excusable neglect." Rule 60(b)(6) allows for relief for "any other reason justifying relief from the operation of the judgment." Relief is available pursuant to 60(b)(6) only in "exceptional circumstances." Williams v. Hatcher, 890 F.2d 993, 995 (7th Cir.1989) (quoting Spika v. Village of Lombard, 763 F.2d 282, 285 (7th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 793, 88 L.Ed.2d 771 (1986)); see also 11 CHARLES A. WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 2864, at 357-76 (2d ed.1995). The decision whether to grant or deny relief is within the sound discretion of the district judge. United States v. Golden Elevator, Inc., 27 F.3d 301, 303 (7th Cir.1994).

Helm first argues that the district court erred in finding that her citation to § 1821(d)(7)(A) instead of § 1821(d)(6)(A) in her original complaint was the result of attorney negligence and not a clerical mistake. Helm's argument is unavailing, for the record more than adequately supports the district court's finding. As the court noted, the complaint not only cited the wrong statutory provision, it was framed throughout in terms of seeking judicial review of administrative action, which is consistent with § 1821(d)(7)(A) but inconsistent with § 1821(d)(6)(A). More revealing is the failure of Helm's attorney to inform the court during the hearing on the RTC's motion to dismiss that the court could exercise jurisdiction over the complaint pursuant to § 1821(d)(6)(A). If the citation to § 1821(d)(7)(A) was an unintentional clerical error, the motion to dismiss would have brought this fact to the attention of Helm's attorney, and the attorney would have explained the proper jurisdictional ground to the court. The fact that the attorney stood silent while the judge explained that he lacked subject matter jurisdiction over the complaint under § 1821(d)(7)(A) belies the claim that the citation to that statute was the result of an inadvertent, clerical mistake.

Nor did the district court abuse its discretion in finding that the failure to bring the complaint under § 1821(d)(6)(A) was the result of inexcusable attorney negligence. The one-page letter from the RTC to Helm explicitly set forth § 1821(d)(6)(A) as the proper section under which to pursue a judicial remedy for her disallowed claim. Helm's attorney disregarded that information, performed independent research, and chose to pursue her claim for relief under § 1821(d)(7)(A). Helm's attorney's attempt to justify her error by characterizing FIRREA as an extremely complicated statute is unavailing. First, difficult legal questions are why people hire and depend upon their lawyers. It is the lawyer's responsibility to spend sufficient time on a matter so that he may adequately represent his client and, if the matter is beyond his expertise or abilities, to so inform his...

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