F.D.I.C. v. Nordbrock

• Decision Date: 16 January 1997
• Docket Number: No. 96-1481,96-1481
• Citation: 102 F.3d 335
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff-Appellee, Norwest Bank, National Association, A National Banking Association, Intervenor Plaintiff, v. Gerald L. NORDBROCK, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 335

102 F.3d 335

FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate

capacity, Plaintiff-Appellee,

Norwest Bank, National Association, A National Banking

Association, Intervenor Plaintiff, v. Gerald L. NORDBROCK, Defendant-Appellant.

No. 96-1481.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 9, 1996.

Decided Dec. 6, 1996.

Rehearing Denied Jan. 16, 1997.

Thomas Cunningham, argued, West Des Moines, IA (Michael A. Dee, on the brief), for Defendant-Appellant.

T. Randall Wright, argued, Omaha, NE, for Plaintiff-Appellee.

Before BOWMAN, BRIGHT and LOKEN, Circuit Judges.

BRIGHT, Circuit Judge.

The Federal Deposit Insurance Corporation (FDIC), in its corporate capacity, sued Gerald L. Nordbrock, a resident of Nebraska, on a promissory note. The district court ¹ granted summary judgment for the FDIC.

Nordbrock contends that the applicable statute of limitations under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1821 (1994), bars this action. Nordbrock also contends that the district court erred in rejecting his affirmative defense of laches. We affirm.

I. BACKGROUND

The facts are not in dispute. In the late 1970's, Gerald L. Nordbrock acquired the Mt. Pleasant Bank and Trust Company in Iowa. Nordbrock subsequently began a lending relationship with the State Bank of Cuba (Cuba Bank), which was organized and existed under Illinois state law.

In 1981, Nordbrock borrowed $168,000 from Cuba Bank and signed a promissory note. Nordbrock and Cuba Bank renewed the note four times during the next three years, eventually executing the promissory note of June 29, 1984, at issue here, for the principal amount of $264,820.54. The note contained a contractual choice of law provision requiring that Illinois law governed the contract.

On June 29, 1985, the note matured and Nordbrock began making payments. On August 26, 1985, Nordbrock paid $5,000 and on September 1, 1986, he paid $2,000.

In January 1987, the Illinois Commissioner of Banks ordered that Cuba Bank be closed. The FDIC was subsequently appointed receiver of Cuba Bank and Nordbrock's 1984 promissory note was among the assets purchased by the FDIC as receiver. Between 1988 and 1990, Nordbrock unsuccessfully attempted to negotiate a settlement with the FDIC. On June 13, 1994, the FDIC filed suit against Nordbrock for $264,820.54, approximately seven years after the FDIC purchased the note.

On January 4, 1996, the United States District Court for the District of Nebraska granted the FDIC's motion for summary judgment and denied Nordbrock's cross-motion for summary judgment. The court held that the FDIC's action was not time-barred and that there were no genuine issues of material fact concerning Nordbrock's liability on the promissory note. The district court also denied Nordbrock's affirmative defenses of laches, estoppel and waiver. The district court entered judgment against Nordbrock in the amount of $634,484.74 for principal and interest due on the promissory note.

II. DISCUSSION

"We review the district court's grant of summary judgment de novo." Landreth v. First Nat'l Bank, 45 F.3d 267, 268 (8th Cir.1995). This review requires us to "determine whether the evidence, viewed in the light most favorable to the nonmoving party, shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Id.

We also review the district court's application of Nebraska's choice of law rules de novo. Enron Corp. v. Lawyers Title Ins. Corp., 940 F.2d 307, 312 (8th Cir.1991) (citing Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1220-1221, 113 L.Ed.2d 190 (1991)). "[A] federal district court sitting in Nebraska must follow Nebraska's conflict of laws rules." Modern Computer Systems, Inc. v. Modern Banking Systems, Inc., 858 F.2d 1339, 1342 (8th Cir.1988) (citation omitted).

A.

Jurisdiction in this matter is based upon the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. § 1821 (1994). FIRREA provides the appropriate statute of limitations for actions brought under the statute:

Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the [FDIC] as conservator or receiver shall be--

(i) in the case of any contract claim, the longer of--

(I) the 6-year period beginning on the date the claim accrues; or

(II) the period applicable under State law....

12 U.S.C. § 1821(d)(14)(A). Thus, FIRREA provides for a minimum statute of limitations of six years, which may be extended if the applicable state law statute of limitations is longer.

Nebraska has a five-year statute of limitations, Neb.Rev.Stat. § 25-205 (1995), and Illinois has a ten-year statute of limitations, 735 Ill.Comp.Stat.Ann. 5/13-206 (West 1992). The FDIC's claim accrued, at the latest, on January 9, 1987, and the FDIC commenced this action on June 13, 1994. Accordingly, unless FIRREA's six-year statute of limitations is extended by the Illinois statute of limitations, the suit is time-barred. In order to make this determination, we must consider the statute of limitations period otherwise applicable under Nebraska law. 12 U.S.C. § 1821(d)(14)(A)(i)(II). This requires an examination of Nebraska's choice of law principles.

The district court utilized section 142 of the Restatement (Second) of Conflict of Laws (1989) to determine whether the statute of limitations under Nebraska or Illinois law should apply according to Nebraska state law. Add. at 9. After applying section 142, the district court determined that Illinois had the most significant relationship to this matter and that the Illinois statute of limitations for actions on written contracts applied under Nebraska's choice of law rules. Add. at 11.

Nordbrock contends that the district court erred by utilizing section 142 of the Restatement (Second) of Conflict of Laws (1989) and, alternatively, that even under section 142 the district court erred in finding that Illinois had the most significant relationship.

1.

As a preliminary matter, the promissory note contained a choice of law provision requiring that Illinois law governed the contract. The district court observed that this contractual choice of law provision was inapplicable to the resolution of this matter because such provisions only incorporate substantive law and statute of limitations issues, under Nebraska law, are procedural. Add. at 8. The district court is correct in stating that Nebraska considers its statute of limitations as procedural, Whitten v. Whitten, 250 Neb. 210, 548 N.W.2d 338, 340 (1996), however, it is unnecessary to undertake this analysis because FIRREA expressly excludes consideration of "any provision of any contract" concerning the statute of limitations. 12 U.S.C. § 1821(d)(14)(A). Accordingly, the statute of limitations question falls beyond the ambit of the contractual choice of law provision.

The district court then examined the choice of law rules applied by Nebraska courts and determined that Nebraska utilizes section 142 of the Restatement (Second) of Conflict of Laws in determining the appropriate statute of limitations. Add. at 9. Nordbrock argues this was improper and contends that, because statute of limitations are procedural, Nebraska's statute of limitations must apply.

Nebraska courts have not directly addressed this question. However, the Nebraska Supreme Court, as a general matter, utilizes the Restatement (Second) for issues relating to a choice of law, Harper v. Silva, 224 Neb. 645, 399 N.W.2d 826, 828 (1987); Cockle v. Cockle, 215 Neb. 329, 339 N.W.2d 63, 66 (1983), and specifically adopts the approach set forth in section 188 of the Restatement (Second) of Conflict of Laws to determine the choice of law applicable to a contract action. Powell v. American Charter Fed. Sav. & Loan Ass'n, 245 Neb. 551, 514 N.W.2d 326, 331-32 (1994). Furthermore, the Eighth Circuit recognizes that Nebraska adheres to the Restatement (Second) of Conflict of Laws in other contexts. See Enron Corp. v. Lawyers Title Ins. Corp., 940 F.2d 307, 312 (8th Cir.1991); Modern Computer Systems, Inc. v. Modern Banking Systems, Inc., 858 F.2d 1339, 1342 (8th Cir.1988).

We conclude that the district court correctly determined that Nebraska law utilizes section 142 of the Restatement (Second) of Conflict of Laws (1989) to determine Nebraska's choice of law for the applicable statute of limitations.

2.

After determining that section 142 of the Restatement (Second) of Conflict of Laws must be utilized, the district court correctly applied the seven factors presented in section 6 as required by section 142. Section 142 states:

Whether a claim will be maintained against the defense of the statute of limitations is determined under the principles stated in § 6. In general, unless the exceptional circumstances of the case make such a result unreasonable:

(1) The forum will apply its own statute of limitations barring the claim.

(2) The forum will apply its own statute of limitations permitting the claim unless:

(a) maintenance of the claim would serve no substantial interest of the forum; and

(b) the claim would be barred under the statute of limitations of a state having a more significant relationship to the parties and the occurrence.

Restatement (Second) of Conflict of Laws § 142 (1989).

The factors listed in section 6 of the Restatement (Second) of Conflict of Laws are as follows:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to...