Hartford Cas. Ins. Co. v. F.D.I.C.

• Citation: 21 F.3d 696
• Decision Date: 01 June 1994
• Docket Number: No. 93-2367,93-2367
• Parties: HARTFORD CASUALTY INSURANCE COMPANY, Hartford Fire Insurance Company, Hartford Accident and Indemnity Company, Hartford Insurance Company of the Midwest, Hartford Underwriters Insurance Company, and Twin City Fire Insurance Company, Petitioners, v. The FEDERAL DEPOSIT INSURANCE CORPORATION, in its Corporate Capacity and in its Capacity As Receiver for Texas Investment Bank, N.A. of Houston, Texas, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 696

21 F.3d 696

62 USLW 2759

HARTFORD CASUALTY INSURANCE COMPANY, Hartford Fire Insurance

Company, Hartford Accident and Indemnity Company, Hartford

Insurance Company of the Midwest, Hartford Underwriters

Insurance Company, and Twin City Fire Insurance Company, Petitioners, v. The FEDERAL DEPOSIT INSURANCE CORPORATION, in its Corporate

Capacity and in its Capacity As Receiver for Texas

Investment Bank, N.A. of Houston, Texas,

Respondent.

No. 93-2367.

United States Court of Appeals,

Fifth Circuit.

June 1, 1994.

James D. Cupples, Williams, Cupples & Chapman, Houston, TX, for petitioners.

Thomas Holzman, Washington, DC, for respondent.

Petition for Review of an Order of the Federal Deposit Insurance Corporation.

Before HIGGINBOTHAM and WIENER, Circuit Judges, KAUFMAN, District Judge. ^*

KAUFMAN, District Judge.

Plaintiffs ("Hartford") are six corporate entities, each affiliated with the ITT Hartford Insurance Group of Companies. In February 1984, Hartford Accident & Indemnity Co., one of those six entities, furnished a performance bond for Morchem Resources, Inc. ("Morchem") to secure a project undertaken by Morchem for Peoples Gas System, Inc. ("Peoples"), the obligee under the bond. Morchem contracted with Peoples to remove and to dispose of sludge from three low pressure gas holding vessels located in North Miami Beach, Florida. As collateral, Morchem gave Hartford a $492,000 CD issued by Texas Investment Bank, N.A. of Houston, Texas ("TIB") in Morchem's name. On November 15, 1985, Morchem's parent company, Finultra, issued a promissory note to TIB, pledging the same $492,000 CD as collateral for payment of the note. During oral argument in this case, when asked by this Court about why that November 1985 act took place, none of counsel for the parties was able to provide any explanation.

On January 7, 1987, Hartford Accident & Indemnity Co. and Morchem agreed to substitute six CDs in place of the single $492,000 CD. Each of the six CDs was for $82,000, thus totaling 492,000, and each was issued separately to a different Hartford subsidiary. Counsel for plaintiffs explained during oral argument before us that Hartford desired the substitution because Hartford became uneasy after Hartford was notified that Morchem was in default on the performance bond. The insurance provided by the Federal Deposit Insurance Company ("FDIC") for a single deposit is limited to the amount of $100,000. Hartford apparently sought to have provided to it total FDIC insurance coverage by causing the substitution of the six CDs for one single CD and by having each $82,000 CD considered separately.

On May 21, 1987, the Comptroller of the Currency declared TIB insolvent and the FDIC on that date took over TIB in the FDIC's capacity as receiver ("FDIC-R"). On or about May 22, 1987, River Oaks Bank notified Plaintiffs that it was in receipt of the insured deposits of TIB and welcomed Plaintiffs as new bank customers. On June 24, 1987, the FDIC, in its corporate capacity ("FDIC-C"), ¹ informed Hartford of its determination that the six CDs issued in Hartford's name were the property of Morchem and also that those CDs had to be aggregated for deposit insurance purposes. Accordingly, the FDIC concluded that $392,000 of the $492,000 represented by the CDs was uninsured and that only $100,000 was insured. The FDIC-C paid that insured portion of the CDs, ie., $100,000, to River Oaks Bank, the institution which had acquired the deposits of TIB from the FDIC-R. On July 24, 1987, the FDIC-R retrieved the $100,000 from River Oaks Bank, and on July 29, 1987, offset the entire $492,000 represented by the six CDs against the debt Finultra owed TIB. ²

On June 24, 1991, Plaintiffs filed suit in the district court against the FDIC as defendant in both its receivership and corporate capacities, seeking to recover $492,000 in deposit insurance for the six CDs or in the amount of the value of the CDs. On May 11, 1993, the district court severed all of plaintiffs' claims against the FDIC in its corporate capacity and transferred them to this Court. The district court reasoned that 12 U.S.C. Sec. 1821(f)(4), one of the sections of Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), which places claims for deposit insurance within the exclusive jurisdiction of the federal Courts of Appeals, applied retroactively to plaintiffs' claims, ie., claims arising out of a receivership which commenced before August 9, 1989, the effective date of FIRREA. Accordingly, the district court denied the FDIC-C's motion for summary judgment because that court held that it lacked jurisdiction as to the insurance claim, but retained jurisdiction over non-insurance claims alleged against the FDIC-R. During oral argument before this Court, counsel for both sides confirmed that all claims against the FDIC-R had been settled.

In this appeal, the issues arise whether this Court has jurisdiction over Hartford's appeal, whether Hartford's claim against the FDIC was timely filed, whether the FDIC-C acted arbitrarily and capriciously in determining that the CDs belonged to Hartford, and whether, under various equitable principles, the FDIC's offset of the six CDs against the debt owed to TIB by Finultra was wrongful.

I. SUBJECT MATTER JURISDICTION

In Nimon v. Resolution Trust Corp., 975 F.2d 240, 244 (5th Cir.1992), this Court determined that 12 U.S.C. Sec. 1821(f)(4) places claims involving deposit insurance within the exclusive jurisdiction of the federal Courts of Appeals. That FIRREA provision provides:

Final determination made by the Corporation shall be reviewable in accordance with the chapter 7 of Title 5 by the United States Court of Appeals for the District of Columbia or the court of appeals for the Federal judicial circuit where the principal place of business of the depository institution is located.

In the court below, Hartford argued that Sec. 1821(f)(4), which was enacted on August 9, 1989, did not apply retroactively to receiverships created before that date, and thus, does not apply to the FDIC's 1987 receivership of TIB. Rejecting that argument, the district court transferred all of Hartford's claims against the FDIC-C to this Court pursuant to 28 U.S.C. Sec. 1631. ³ Hartford has, in its reply brief in this appeal, dropped its opposition to retroactive application of Sec. 1821(f)(4) to this case. However, in order to clarify the basis for our subject matter jurisdiction, we address the question of whether 12 U.S.C. Sec. 1821(f)(4) applies retroactively to this case and conclude that it does.

We have recently applied 12 U.S.C. Sec. 1821(f)(4) to an insurance coverage dispute, relating to the Federal Savings and Loan Insurance Corporation, based on "deposits made prior to enactment of [FIRREA]," although we did so without elaborating upon the retroactivity issue. Pool v. RTC, 13 F.3d 880, 880-81 (5th Cir.1994). The Supreme Court recently clarified the circumstances in which a new statute which itself does not explicitly state whether it applies to pending cases should be applied retroactively. See Landgraf v. USI Film Products, et al., --- U.S. ----, 114 S.Ct. 1483, --- L.Ed.2d ---- (1994) (deciding whether certain provisions of the Civil Rights Act of 1991, Pub.L. No. 102-166, 105 Stat. 1071 (1991), should be applied retroactively to pending cases). ⁴ In so doing, the Supreme Court endorsed "the traditional presumption against applying statutes affecting substantive rights, liabilities, or duties to conduct arising before their enactment." Id. at ----, 114 S.Ct. at 1504. That presumption is based on "the unfairness of imposing new burdens on persons after the fact." Id. at ----, 114 S.Ct. at 1506. However, the Supreme Court stated that regardless of the general presumption against statutory retroactivity, "in many situations, a court should 'apply the law in effect at the time it renders its decision.' " Id. (citing Bradley, 416 U.S. at 711, 94 S.Ct. at 2016). Such situations generally involve procedural changes to existing law, including statutes which merely alter jurisdiction. "We have regularly applied intervening statutes conferring or ousting jurisdiction, whether or not jurisdiction lay when the underlying conduct occurred or when the suit was filed." Id. --- U.S. at ----, 114 S.Ct. at 1501. In such a circumstance, "[a]pplication of a new jurisdictional rule usually 'takes away no substantive right but simply changes the tribunal that is to hear the case.' " Id. (quoting Hallowell v. Commons, 239 U.S. 506, 508, 36 S.Ct. 202, 202, 60 L.Ed. 409 (1916)).

This Court has previously recognized that principle, holding that amendments to statutes which affect procedural or remedial rights generally apply to pending cases, where such change does not deprive a party of its " 'day in court.' " NCNB Texas Nat'l Bank v. P & R Invs. No. 6, 962 F.2d 518, 519 (5th Cir.1992) (quoting FDIC v. 232, Inc., 920 F.2d 815, 818-19 (11th Cir.1991)). "When Congress adopts statutory changes while a suit is pending, the effect of which is not to eliminate a substantive right but rather to 'change the tribunal which will hear the case,' those changes--barring specifically expressed intent to the contrary--will have immediate effect." Turboff v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 867 F.2d 1518, 1521 (5th Cir.1989) (quoting Hallowell, 239 U.S. at 508, 36 S.Ct. at 202). Thus, we have retroactively applied 12 U.S.C. Sec. 1819(b)(2), ⁵ permitting the FDIC to remove cases in which it is a party to federal court, to pending cases. See, e.g., NCNB Texas Nat'l Bank, 962 F.2d at 519; In re Meyerland Co., 960 F.2d 512, 514 n. 2 (5th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 967, 122 L.Ed.2d 123 (1993); Walker v. FDIC, 970 F.2d 114, 120 (5th Cir.1992); FSLIC v. Griffin, 935 F.2d 691, 695-96 (5th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1163, 117 L.Ed.2d 410 (1992); Triland Holdings & Co. v. Sunbelt Service Corp., 884 F.2d 205...