Franklin Sav. Ass'n v. Office of Thrift Supervision, 93-3180

Citation35 F.3d 1466
Decision Date16 September 1994
Docket NumberNo. 93-3180,93-3180
PartiesFRANKLIN SAVINGS ASSOCIATION, formerly a Kansas Savings and Loan Association; Franklin Savings Corporation, a Kansas corporation, Plaintiffs-Appellants, v. OFFICE OF THRIFT SUPERVISION, Director, Department of the Treasury, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Mark S. Gunnison (R. Pete Smith, Jonathan A. Margolies and Katharina E. Beal of McDowell, Rice & Smith, Kansas City, MO, with him on the briefs) of McDowell, Rice & Smith, Overland Park, KS, for plaintiffs-appellants.

Aaron B. Kahn, Asst. Chief Counsel (Carolyn B. Lieberman, Acting Chief Counsel, and Thomas J. Segal, Deputy Chief Counsel, with him on the brief), Office of Thrift Supervision, Washington, DC, for defendant-appellee.

Before BRORBY, SETH and EBEL, Circuit Judges.

BRORBY, Circuit Judge.

Franklin Savings and Loan Association (the Association) appeals the decision of the district court that held the Association was not entitled to judicial review of a decision of the Director of the Office of Thrift Supervision (the Director). The Director replaced the conservator, who was to operate the Association, with a receiver, who will liquidate the Association. We hold judicial review of the replacement decision is not permitted. We furthermore hold Franklin Savings Corporation (the Holding Company), a holding company that owns more than ninety percent of the Association's stock, does not have standing.

The Director, in 1990, determined the Association was "in an unsafe and unsound condition to transact business" and appointed the Resolution Trust Corporation as a conservator of the Association. 1 Both the Association and its Holding Company commenced an action pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA or the Act) to remove the conservator. The district court agreed, and we reversed holding the proper scope of judicial review of the Director's appointment decision is limited to the administrative record and finding the Director's decision to appoint a conservator supported by the record. Franklin Sav. Ass'n v. Office of Thrift Supervision, 742 F.Supp. 1089 (D.Kan.1990), rev'd, 934 F.2d 1127 (10th Cir.1991) ("Franklin I "). After the case was dismissed, the Director of the Office of Thrift Supervision decided to change the role of the Resolution Trust Corporation from conservator to receiver. 57 Fed.Reg. 41,969 (Sept. 14, 1992). The Association and the Holding Company initiated this suit to challenge the replacement. The district court sustained the Director's motion to dismiss holding the Director's decision to impose a receivership in the case at bar is not subject to judicial review. Franklin Sav. Ass'n v. Office of Thrift Supervision, 821 F.Supp. 1414 (D.Kan.1993) ("Franklin II ").

The Holding Company's Standing to Sue

A threshold question in this case is whether the Holding Company has standing to bring this suit pursuant to 12 U.S.C.A. Sec. 1464(d)(2)(B) (Supp.1994). 2 The district court determined the Holding Company lacked standing because the statute provides only "the association" may bring an action Appellants assert the question of the Holding Company's standing has been raised and fully litigated in an earlier suit between the parties and claim res judicata and collateral estoppel relieve this court from considering standing. The issue of standing was argued before the district court during the summary judgment phase of the first Franklin case. Franklin Sav. Ass'n v. Office of Thrift Supervision, 740 F.Supp. 1531, 1533-34 (D.Kan.1990). The district court found the Holding Company had the capacity to be a party plaintiff on its own behalf. Standing was not raised during the appeal of the district court's decision on the merits. Franklin I, 934 F.2d at 1135 n. 2 (Tenth Circuit panel noted the issue of standing had not been raised). This court vacated the district court's determination in the entirety, however, and ordered the case dismissed. See id. at 1151. We noted the issue of standing need not be addressed because we reversed on other grounds. Id. at 1135 n. 2.

under FIRREA challenging the appointment of a receiver or conservator. 12 U.S.C.A. Sec. 1464(d)(2)(B). The Holding Company is not the association; it is merely a stockholder. The district court relying upon the clear statutory language reasoned that the Holding Company lacked standing. We agree.

" 'A judgment that has been vacated, reversed, or set aside on appeal is thereby deprived of all conclusive effect, both as res judicata and as collateral estoppel.' " Jaffree v. Wallace, 837 F.2d 1461, 1466 (11th Cir.1988) (quoting 1B Moore's Federal Practice p 0.416, at 517 (1984)). Because we entirely vacated the district court's decision and remanded the case to be dismissed, the summary judgment determination on standing lacks preclusive effect. Martinez v. Winner, 800 F.2d 230, 231 (10th Cir.1986) (the court of appeals's order to vacate and dismiss will remove the res judicata and the stare decisis effect of the vacated judgments); cf. Johnson v. Chicago Board of Educ., 457 U.S. 52, 53-54, 102 S.Ct. 2223, 2224, 72 L.Ed.2d 668 (1982) ("Because we have vacated the Court of Appeals' judgments in this case, the doctrine of the law of the case does not constrain either the District Court or, should an appeal subsequently be taken, the Court of Appeals."). Because the earlier determination has been vacated, res judicata is not a concern.

The United States, as sovereign, is immune from suits unless it consents to be sued. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d 607 (1980); see Transohio Sav. Bank v. Office of Thrift Supervision, 967 F.2d 598, 606 (D.C.Cir.1992). The terms of the United State's consent to be sued defines the court's jurisdiction to hear the case. Mitchell, 445 U.S. at 538, 100 S.Ct. at 1351. Through Sec. 1464(d)(2)(B) 3 the United States has waived its sovereign immunity and consented to be sued by the association. This waiver of sovereign immunity is limited and explicit; only the association is authorized by Congress to seek judicial review of the Director's appointment of the receiver. See United Liberty Life Ins. Co. v. Ryan, 985 F.2d 1320, 1328 (6th Cir.1993); Marietta Franklin Sec. Co. v. Muldoon, 972 F.2d 128, 129 (6th Cir.1992). Congress has not authorized stockholders of a savings and loan association to sue under this portion of FIRREA, only the association.

The Holding Company lacks standing to sue the Director under Sec. 1464(d)(2)(B) of FIRREA. 4

JUDICIAL REVIEW

The district court determined the replacement of a conservator by a receiver, as in the Association's situation, is not reviewable by the courts. The court found the statute was unambiguous and the plain meaning of the statute only could be read one way: FIRREA prohibits judicial review of the Director's decision to replace the conservator with a receiver. Franklin II, 821 F.Supp. at 1419. Under this interpretation, the Association's The statute outlines procedural review by the courts. The statute reads:

current action would be barred by the statute. We agree.

(2) Conservatorships and receiverships

....

(B) Power of appointment; judicial review

The Director shall have exclusive power and jurisdiction to appoint a conservator or receiver for a Federal savings association. If, in the opinion of the Director, a ground for the appointment of a conservator or receiver for a savings association exists, the Director is authorized to appoint ex parte and without notice a conservator or receiver for the savings association. In the event of such appointment, the association may, within 30 days thereafter, bring an action in the United States district court ... for an order requiring the Director to remove such conservator or receiver, and the court shall upon the merits dismiss such action or direct the Director to remove such conservator or receiver....

(C) Replacement

The Director may, without any prior notice, hearing, or other action, replace a conservator with another conservator or with a receiver, but such replacement shall not affect any right which the association may have to obtain judicial review of the original appointment, except that any removal under this subparagraph shall be removal of the conservator or receiver in office at the time of such removal.

(D) Court action

Except as otherwise provided in this subsection, no court may take any action for or toward the removal of any conservator or receiver or, except at the request of the Director, to restrain or affect the exercise of powers or functions of a conservator or receiver.

12 U.S.C.A. Sec. 1464(d)(2) (Supp.1994) (emphasis added).

In interpreting FIRREA, we begin with the plain language of FIRREA. Our inquiry is complete if the words of the statute are unambiguous. See Connecticut Nat'l Bank v. Germain, --- U.S. ----, ----, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992). We also must read the provisions of the Act together to understand the meaning of the judicial restriction in the statute. The meaning of the statutory language, plain or not, depends on context. King v. St. Vincent's Hosp., 502 U.S. 215, ----, 112 S.Ct. 570, 574, 116 L.Ed.2d 578 (1991); Homeland Stores, Inc. v. Resolution Trust Corp., 17 F.3d 1269, 1273 (10th Cir.1994), petition for cert. filed, 63 USLW 3067 (U.S. Jul. 25, 1994) (No. 94-149).

The statute provides for judicial review of an "appointment" of a conservator or a receiver. 12 U.S.C.A. Sec. 1464(d)(2)(B) (Supp.1994). The statute also allows for a "replacement" of the conservator with a receiver. 12 U.S.C.A. Sec. 1464(d)(2)(C) (Supp.1994). However, there is no indication from this section of FIRREA that the court may review the "replacement." Section 1464(d)(2)(C) provides "replacement shall not affect any right which the association may have to obtain judicial review of the original appointment." Id. (...

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