Federal Sav. & Loan Ins. Corp. v. Griffin

• Decision Date: 15 July 1991
• Docket Number: No. 90-1301,90-1301
• Citation: 935 F.2d 691
• Parties: The FEDERAL SAVINGS & LOAN INSURANCE CORP., etc., Plaintiff, and First Gibraltar Bank, FSB, Intervenor-Appellee, v. Jack GRIFFIN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 691

935 F.2d 691

The FEDERAL SAVINGS & LOAN INSURANCE CORP., etc., Plaintiff, and First Gibraltar Bank, FSB, Intervenor-Appellee, v. Jack GRIFFIN, Defendant-Appellant.

No. 90-1301.

United States Court of Appeals,

Fifth Circuit.

July 15, 1991.

Rehearing Denied Aug. 19, 1991.

Bill C. Hunter, Stephen J. Mass, Hunter, Van Amburgh & Wolf, and Tresi Moore Freemyer, Richard Jackson, Richard Jackson & Assoc., Dallas, Tex., for defendant-appellant.

Steven P. Anderson, Mary L. O'Connor, Akin, Gump, Strauss, Hauer & Feld, Dallas, Tex., for intervenor-appellee.

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

Before JOHNSON, WILLIAMS, and HIGGINBOTHAM, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Intervenor-appellee First Gibraltar Bank, FSB ("First Gibraltar") seeks to recover under a guaranty executed by defendant-appellant Jack Griffin. The district court granted summary judgment in favor of First Gibraltar. Griffin appeals, claiming breach of other agreements and other matters.

FACTS

Griffin began an unsuccessful attempt to make money in Dallas real estate in 1985 when he and Worth Williams formed a joint venture named Village at Spring Park Joint Venture ("joint venture"). Griffin and Williams approached First Texas Savings Association ("First Texas") about the possibility of a loan for the joint venture. Griffin and Williams sought financing in three stages: purchase and planning, construction, and permanent financing. On July 11, 1985, First Texas agreed to fund the first phase and loaned 5.6 million dollars to the joint venture. A deed of trust and security agreement covering certain real property in Dallas secured the promissory note. Concurrently with execution of the note, Griffin and Williams executed and delivered a guaranty in favor of First Texas, by which they unconditionally guaranteed the prompt payment of the note in an amount limited as set out in the guaranty. First Texas had an option to finance the next two stages of the project.

Like many businesses in Texas real estate, the joint venture fell upon hard times in 1986. First Texas added to the joint venture's troubles by refusing to exercise its option to supply construction financing. The joint venture subsequently failed to fulfill its obligations under the note. By letter dated October 9, 1986, First Texas notified the joint venture, Griffin, and Williams of default under the note. Payment of amounts due was demanded, and notice was given of intention to accelerate the note if the default was not cured by noon on October 14, 1986. The joint venture failed to cure the default. By letter dated October 14, 1986, First Texas gave notice that it was accelerating the note and also notice of a substitute trustee's sale of the property described in the deed of trust. On November 4, 1986, the joint venture, which held title to the property, filed for federal bankruptcy protection under Chapter 11. An automatic stay prevented the foreclosure sale of the property.

In March 1987, First Texas filed suit in state court against Griffin and Williams on the basis of the guaranty the two had executed. The federal bankruptcy court subsequently modified the automatic stay, which had been protecting the joint venture, and the court permitted a foreclosure sale. First Texas gave notice of substitute trustee's sale by letter dated April 13, 1987. First Texas purchased the property at the sale for $3,888,500.

The state court suit against Williams and Griffin continued for the deficiency due under the promissory note. Williams was subsequently dismissed from the case after he filed for bankruptcy protection.

First Texas itself fell into financial difficulties. On December 27, 1988, the Federal Home Loan Bank Board ("FHLBB") placed First Texas in receivership and appointed Federal Savings and Loan Insurance Corporation ("FSLIC") as receiver. The Texas Savings and Loan Commissioner concurred that grounds existed for authorizing appointment of FSLIC as receiver for First Texas. Once it became receiver, FSLIC automatically succeeded to all of First Texas' assets and liabilities. Shortly thereafter, FSLIC entered into a purchase and assumption agreement with First Gibraltar, a newly chartered federal institution. First Gibraltar purchased substantially all of First Texas' assets and assumed the deposit and secured liabilities of First Texas.

On January 26, 1989, FSLIC removed the suit against Griffin to federal court. First Gibraltar intervened on July 3, 1989. On November 21, 1989, the district court granted Griffin's motion to dismiss without prejudice his counterclaims against Federal Deposit Insurance Corporation ("FDIC"), which had succeeded FSLIC as receiver of First Texas. The only parties to this appeal are First Gibraltar and Griffin. Having assigned the guaranty and the promissory note to First Gibraltar, FDIC as receiver for First Texas is apparently no longer pursuing any claims against Griffin.

In federal district court, Griffin asserted four affirmative defenses to defeat his liability under the guaranty: breach of partnership duties, usury, wrongful foreclosure of property, and breach of agreement to

fund. ¹ First Gibraltar asserts that the defenses are barred by the doctrine established in D'Oench Duhme & Co. v. Federal Deposit Insurance Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942). That doctrine protects the FDIC and FSLIC from unrecorded side agreements not reflected in the bank's records. First Gibraltar also asserts that the defenses are barred by state law. The district court agreed that Griffin was liable under the guaranty in spite of his claimed defenses. We affirm

DISCUSSION

I. REMOVAL

Griffin first appeals on the ground that federal courts lack subject matter jurisdiction over this case and that therefore the district court should have remanded the case to state court.

FSLIC removed this suit to federal court pursuant to 12 U.S.C. Sec. 1730(k)(1). Under this section, FSLIC can remove to federal court any action to which it is a party. Such action is deemed by Sec. 1730(k)(1) to "arise under the laws of the United States." A proviso excepts from the statute's general grant of federal jurisdiction cases that meet two conditions: (1) only rights or obligations of investors, creditors, stockholders, and a state-chartered institution in FSLIC receivership or conservatorship are at issue, and (2) only questions of state law are involved. Griffin argues that the proviso applies to this case, that Sec. 1730(k)(1) is thus inapplicable, and that no other grounds for removal remain.

According to Sec. 1730(k)(1), this case arises under the laws of the United States because FSLIC was a party at the time of removal. Federal subject matter jurisdiction therefore exists. The proviso is not applicable because of the presence of "non-proviso" parties. First Gibraltar, a newly chartered federal institution, is a non-proviso party. See Bean v. Independent Am. Sav. Ass'n, 838 F.2d 739, 742 (5th Cir.1988); Andrew D. Taylor Trust v. Security Trust Fed. Sav. and Loan Ass'n, 844 F.2d 337, 341 (6th Cir.1988); North Mississippi Sav. & Loan Ass'n v. Hudspeth, 756 F.2d 1096, 1100 (5th Cir.1985), cert. denied, 474 U.S. 1054, 106 S.Ct. 790, 88 L.Ed.2d 768 (1986). ²

Even if Sec. 1730(k)(1) did not provide federal subject matter jurisdiction, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) would. Section 407 of FIRREA repealed 12 U.S.C. Sec. 1730(k)(1), and Sec. 209 amended 12 U.S.C. Sec. 1819. Section 1819 now provides that federal courts have jurisdiction over suits in which the FDIC is a party except when the FDIC is appointed exclusively by state authorities and when the case involves certain types of state law claims. The exception to Sec. 1819 is not applicable here because state authorities did not exclusively appoint FSLIC as a receiver. FHLBB, a federal agency, appointed FSLIC as receiver. FDIC later replaced FSLIC as receiver because FIRREA transferred FSLIC's functions to FDIC.

Amended Sec. 1819 applies here even though FIRREA became law after removal and even though FSLIC removed this case. Section 1819 applies retroactively to cure any possible jurisdictional defect in either FSLIC's or FDIC's removal. Triland Holdings & Co. v. Sunbelt Services Corp., 884 F.2d 205, 207 (5th Cir.1989); accord Sunbelt Sav., FSB v. Bent Trail Phase IV

Joint Venture, 907 F.2d 1569, 1571 (5th Cir.1990); Pernie Bailey Drilling Co. v. Federal Deposit Ins. Corp., 905 F.2d 78, 80 (5th Cir.1990) (per curiam). Since FSLIC was a party at the time of removal and since Sec. 1819 applies retroactively to cure any possible defects at the time of FSLIC's removal, Sec. 1819 unmistakably confers federal jurisdiction in this case. Triland, 884 F.2d at 207

Griffin tries to distinguish Triland and its progeny on the ground that FSLIC was still a party at the time of appeal in Triland and here neither FSLIC or FDIC is still a party. For this reason, Griffin urges, amended Sec. 1819 should not apply retroactively to his case. This fact does not negate the applicability of Triland. The power to remove is evaluated at the time of removal. The dismissal of one of the parties by the time of the appeal does not affect the propriety of removal. Congress enacted FIRREA to correct any possible jurisdictional defects existing at the time of removal; the fact that neither FSLIC or FDIC is a party at the time of appeal cannot defeat this intent.

Further, we can conclude that Congress did not intend the result Griffin urges. The policy reasons for insuring federal jurisdiction over cases involving the actions of failed thrifts continue when the FDIC is voluntarily dismissed as a party and the owner of the failed thrift's assets remains. A transferee from FSLIC or FDIC, as successor of their interests, is still entitled to the protection of federal courts applying D'Oench Duhme, even when FSLIC or FDIC is...