Colman v. Wendover Funding, Inc.

• Decision Date: 29 November 1993
• Citation: 89 F.3d 849,1996 WL 316460
• Parties: NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of
• Court: U.S. Court of Appeals — Tenth Circuit

Page 849

89 F.3d 849

NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.

Earl R. COLMAN and Dorothy P. Colman, husband and wife Plaintiffs-Appellants, v. WENDOVER FUNDING, INC., Defendant-Appellee.

No. 95-8051.

United States Court of Appeals, Tenth Circuit.

June 12, 1996.

ORDER AND JUDGMENT ^*

Before BRORBY, BRISCOE, and LUCERO, Circuit Judges.

Plaintiffs Earl and Dorothy Colman appeal the summary judgment entered in favor of defendant Wendover Funding, Inc. (Wendover). Plaintiffs originally filed this action in state court seeking a declaratory judgment to declare the terms of the mortgage and loan modification agreement which Wendover is allegedly responsible for servicing. Plaintiffs also sought damages for alleged violations of the Truth-in-Lending Act and for negligence in failing to provide a satisfactory accounting. Wendover removed the action to federal court. We affirm in part, reverse in part, and remand.

I.

On May 12, 1981, Earl Colman and his former wife, Catherine Colman, borrowed $150,000 from Provident Federal Savings and Loan Association (Provident) to purchase a home at 2650 South Poplar in Casper, Wyoming. The loan was secured by a 20-year mortgage with interest at 17.75 percent per year, with monthly principal and interest payments of $2,286.15.

On June 1, 1983, the parties executed a loan modification agreement which reduced the annual interest rate to 13 percent and the monthly payments to $1,779.20. On April 24, 1987, they executed a second modification agreement which reduced the annual interest rate to 10 percent and the monthly payments to $1,332.00. The second modification agreement provided in pertinent part:

The next payment is due on the 1st day of April, 1987, to be applied first to interest at the rate of Ten Percent (10.000%) per annum upon the unpaid balance of said indebtedness and the balance to principal and such monthly payments shall continue until said indebtedness is paid in full. * * This modification will expire 24 months from the due date of the first payment in this agreement.

Appellant's append. at 122. Earl Colman contends the last sentence quoted was inserted without the parties' knowledge or permission after the agreement had been signed. Although he acknowledges receiving a copy of the agreement with all of the quoted language, it appears to be his position that the parties did not become aware of the 24-month limitation provision until sometime after October 1990. Moreover, it is uncontroverted that, notwithstanding the presence of this provision, the lower monthly payments continued through at least June 1990.

Subsequent to the modification agreements, Catherine Colman conveyed her interest in the property to Earl Colman and he assumed the obligations under the note and mortgage. On April 14, 1992, Dorothy Colman became a co-owner of the property.

Provident was declared insolvent on February 22, 1990, and Resolution Trust Corporation (RTC) was appointed as receiver. As part of the receivership transactions, a federal association was created entitled Provident Savings Association, F.A. (Provident F.A.). On February 23, 1990, a purchase and assumption agreement was entered into between RTC and Provident F.A. whereby Provident F.A. purchased various assets, including the subject note and mortgage. On August 17, 1990, RTC was appointed receiver for Provident F.A. and the note and mortgage were assigned to RTC.

Servicing on the loan was transferred to IMCO Realty Services (IMCO) in October 1990. From the limited record on appeal, it appears IMCO began to require payments larger than those made during the period of April 1987 through June 1990. It further appears that payments were somewhat sporadic during the time IMCO serviced the loan. On March 25, 1991, Wendover and RTC entered into a written agreement whereby Wendover agreed to act as servicing agent on behalf of RTC for various institutions, including Provident F.A. The loan was transferred to Wendover for servicing on September 23, 1992.

Earl Colman alleged that, beginning in March 1991, he began to request information on the remaining loan balance in order to try to refinance the loan obligation. However, he alleges that he never received any understandable reply or explanation of the balance owing or calculations of the default amounts. Compounding the confusing history of the note and mortgage at issue is Earl Colman's Chapter 7 bankruptcy. He filed for protection under Chapter 11, and the case was later converted to a Chapter 7 bankruptcy. His discharge in bankruptcy was filed November 27, 1991. Although he did not reaffirm the note with RTC or Wendover, he has continued to make monthly payments and Wendover has accepted those payments. The record on appeal indicates each post-bankruptcy payment has been for approximately $1,206.57, an amount consistent with the monthly principal and interest due under the 1987 modification agreement.

II.

We review the district court's grant of summary judgment de novo, applying the same standard as the district court under Fed.R.Civ.P. 56(c). Universal Money Centers v. American Tel. & Tel. Co., 22 F.3d 1527, 1529 (10th Cir.), cert. denied 115 S.Ct. 655 (1994). Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). We examine the factual record and reasonable inferences therefrom in the light most favorable to the nonmoving party. Applied Genetics Intern. v. First Affiliated Securities, 912 F.2d 1238, 1241 (10th Cir.1990). If there is no genuine issue of material fact in dispute, we must determine whether the district court correctly applied the law. Id.

III.

A. Plaintiffs' claim for declaratory and injunctive relief.

In count one of their complaint, plaintiffs sought a declaratory judgment setting forth the applicable terms and conditions of the note and mortgage, enjoining Wendover from accelerating the remaining balance on the note, and enjoining Wendover from initiating foreclosure proceedings against the property. In reviewing this claim, the district court concluded that RTC, as holder of the note and mortgage, was an indispensable party to the action under Fed.R.Civ.P. 19(a). The court further concluded that RTC could not be joined in the action because of limitations on jurisdiction over claims against RTC set forth in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1811 et seq. Accordingly, the court granted summary judgment in favor of Wendover on count one of the complaint.

The section of FIRREA cited by the district court, 12 U.S.C. § 1821(d)(13)(D), contains a jurisdictional bar:

Except as otherwise provided in this subsection, no court shall have jurisdiction over--

(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution for which [RTC] has been appointed receiver, including assets which [RTC] may acquire from itself as such receiver; or

(ii) any claim relating to any act or omission of such institution or [RTC] as receiver.

The "[e]xcept as otherwise provided" language refers in part to FIRREA's administrative claim procedure outlined in § 1821(d)(3)-(13). See National Union Fire Ins. Co. of Pittsburgh v. Midland Bancor, 869 F.Supp. 880, 884 (D.Kan.1994). Under this administrative claim procedure, the RTC must give notice to creditors of a financial institution upon appointment of a receivership. 12 U.S.C. § 1821(d)(3)(B). Creditors are then required to file a claim with RTC within a limited time frame. Id. After receiving a claim, RTC has 180 days in which to allow or disallow the claim. 12 U.S.C. § 1821(d)(5)(A)(i). If a claim is disallowed or not ruled on by RTC within 180 days, the claimant can seek judicial review. 12 U.S.C. § 1821(d)(6)(A).

In Homeland Stores v. Resolution Trust Corp., 17 F.3d 1269, 1273 (10th Cir.), cert. denied 115 S.Ct. 317 (1994), this court acknowledged the language of § 1821(d)(13)(D), standing alone, is very broad. However, proceeding on the assumption that Congress intended the "claims" barred by § 1821(d)(13)(D) to parallel those contemplated under the FIRREA administrative claims process, this court examined the overall structure of the administrative claims process. The court concluded that "much of § 1821(d) indicates that in requiring administrative review--and in the meantime forbidding federal court jurisdiction--of 'claims,' Congress had in mind creditor and related claims arising before an institution enters receivership." Id. at 1274. The court further noted that the statutory provisions describing claim preferences put "the claims process in the context of a conventional winding up of the debts accrued by an institution before entering receivership." Id. at 1275. Accordingly, the court concluded the term "claim," as used in § 1821(d)(13)(D), did not include claims brought against RTC based on its own actions in managing the assets of a failed financial institution.

Based in part upon the analysis of the FIRREA administrative claim process in Homeland, we conclude that plaintiffs' claim for declaratory relief against RTC is not jurisdictionally barred by § 1821(d)(13)(D). ¹ First, plaintiffs are debtors, not creditors, of RTC. Accordingly, as concluded in Homeland, their claims are not the type that Congress had in mind when it enacted FIRREA's administrative claim process. 17 F.2d at 1274; see also In re Parker North American Corp., 24 F.3d 1145, 1152 (9th Cir.1994) (holding FIRREA...