Heno v. F.D.I.C.
| Decision Date | 22 April 1994 |
| Docket Number | No. 92-1936,92-1936 |
| Citation | 20 F.3d 1204 |
| Parties | Floyd V. HENO, Plaintiff, Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Defendant, Appellee. |
| Court | U.S. Court of Appeals — First Circuit |
Robert G. Wilson IV, with whom Robert G. Wilson III and Law Offices of Robert G. Wilson III, Boston, MA, were on brief, for appellant.
Richard J. Osterman, Jr., Sr. Counsel, with whom Ann S. DuRoss, Asst. Gen. Counsel, Marta W. Berkley, Counsel, Washington, DC, Adam J. Ruttenberg, Sr. Atty., F.D.I.C., Franklin, MA, and Russell F. Conn of Conn, Kavanaugh, Rosenthal & Peisch, Boston, MA, were on brief, for appellee.
Before BREYER, Chief Judge, CAMPBELL, Senior Circuit Judge, and CYR, Circuit Judge.
Plaintiff Floyd Heno appeals from a district court order dismissing claims for compensatory and injunctive relief brought against the Federal Deposit Insurance Corporation ("FDIC") under the Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA"). In an earlier opinion, see Heno v. FDIC, 996 F.2d 429 (1st Cir.1993), we affirmed the district court order dismissing the claim for injunctive relief pursuant to Federal Rule of Civil Procedure 12(b)(6), but vacated its Rule 12(b)(1) order dismissing the claim for compensatory relief. Thereafter, we granted FDIC's petition for panel rehearing on the claim for compensatory relief, see Fed.R.App.P. 40, and allowed further briefing, argument, and supplementation of the appellate record relating to the proper interpretation of FIRREA Sec. 1821(d), (e), 12 U.S.C. Sec. 1821(d), (e). We now withdraw our original opinion, and substitute the present opinion.
We review a Rule 12(b)(6) dismissal de novo, crediting all allegations in the complaint and drawing all reasonable inferences favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Rumford Pharmacy, Inc. v. East Providence, 970 F.2d 996, 997 (1st Cir.1992). Similarly, a Rule 12(b)(1) dismissal is reviewed de novo where, as here, the only issue is the legal sufficiency of undisputed jurisdictional facts. See Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 732 (11th Cir.1982); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977).
The complaint alleges that Heno sold Balcol Corporation a 104-acre tract of real property in 1986, for which Balcol gave Heno a promissory note secured by a first mortgage on the undeveloped property. In September 1987, Balcol began to develop the property, known as the Prospect Heights residential subdivision, and obtained construction financing through Home National Bank of Milford ("Bank"). Heno agreed to subordinate his first mortgage to the Bank's construction loan mortgage. In return for the release of Heno's second mortgage lien as each lot was sold, Balcol and the Bank promised to release $19,125 from the sale proceeds.
By April 1990, Balcol and Prospect Heights were experiencing financial difficulties, and the three principal parties entered into a recapitalization agreement. Heno agreed to accept $5,000 (rather than $19,125) per lot for releasing his second mortgage lien on the next nine lots sold by Balcol. Balcol and the Bank agreed: (1) to transfer two additional lots to Heno (Lots 82 and 111), free and clear of the Bank's first mortgage liens, at the time Heno released his second mortgage lien on the ninth lot; and (2) to deposit the net proceeds from the nine lots in escrow with the Bank. The escrow monies were to be used exclusively for immediate Although Balcol conveyed Lots 82 and 111 to Heno on May 2, 1990, the Bank did not release its first mortgage liens on the lots. During April and May 1990, seven of the nine original lots were sold by the Bank after Heno had released his second mortgage liens. By June 1, 1990, more than $232,000 had been deposited in escrow with the Bank pursuant to the recapitalization agreement among Heno, Balcol, and the Bank. Ultimately, the eighth and ninth lots were sold, and the net proceeds, approximating $90,000, were deposited with FDIC. 1 The complaint alleges, hence we must assume, that $125,000 was to have been devoted to roadwork at the project. 2
completion of roadwork in the project and to defray Balcol's first mortgage interest payments to the Bank.
On June 1, 1990, the Bank was declared insolvent and FDIC was appointed receiver. At an unspecified later date, FDIC applied the escrow monies toward the principal due on Balcol's first mortgage loan account with the Bank, contrary to the express terms of the recapitalization agreement. Heno's counsel thereafter held discussions with FDIC, and was informed by Balcol that FDIC would determine, after obtaining an appraisal of the Prospect Heights project, whether to release the Bank's first mortgage liens on Lots 82 and 111, the two additional lots at issue on appeal. On December 13, 1990, 3 and again on February 19, 1991, Heno submitted written requests for action by FDIC, but to no avail. 4 Subsequently, FDIC foreclosed on the Prospect Heights subdivision, including Lots 82 and 111. The escrow monies were neither redeposited nor applied toward the purposes agreed upon under the recapitalization agreement.
On October 18, 1991, Heno initiated the present action to enjoin FDIC's sale of Lots 82 and 111 and to compel it to redeposit the escrow monies previously misapplied to Balcol's first mortgage with the Bank. The complaint demanded an equitable accounting of the escrow monies, and compensatory relief for the loss occasioned by FDIC's refusal to release the Bank's first mortgage liens on Lots 82 and 111. FDIC moved to dismiss the claim for compensatory relief pursuant to Fed.R.Civ. 12(b)(1), and the claim for injunctive relief pursuant to Fed.R.Civ.P. 12(b)(6). The district court decided that it lacked jurisdiction to consider the claim for compensatory relief by virtue of 12 U.S.C. Sec. 1821(d)(13)(D)(i), and that injunctive relief was precluded by 12 U.S.C. Sec. 1821(j).
FIRREA Sec. 1821(d) regulates the filing, determination, and payment of "claims" against "assets" of failed financial institutions after FDIC has been appointed receiver. Subsections 1821(d)(3)(B) and (C) require FDIC to publish and mail notice of liquidation to "any creditor shown on the institution's books" and to allow at least ninety days for filing "claims." 12 U.S.C. Sec. 1821(d)(3)(B), (C). As FDIC points out, anyone with a "claim" against the assets of Heno consistently has advanced two contentions on appeal. First, he argues that neither FIRREA Sec. 1821(j), see infra note 8, nor the ACRP established under subsection 1821(d), applies to "non-creditors"--including Heno--who assert claims to property, such as the alleged escrow account, which, though held by the failed bank, is held "in trust" for third parties and is not a bank "asset." 6 See, e.g., Purcell v. FDIC ( In re Purcell ), 141 B.R. 480 (Bankr.D.Vt.1992), aff'd, 150 B.R. 111, 113-15 (D.Vt.1993). Second, and in the alternative, Heno contends that his claim for compensatory relief should not have been dismissed for failure to comply with the administrative claim procedure established under subsection 1821(d).
the failed institution must submit an administrative claim to FDIC within the prescribed statutory period. Id. Sec. 1821(d)(5)(C). "[P]articipation in the administrative claims review process [is] mandatory for all parties asserting claims against failed institutions...." Marquis v. FDIC, 965 F.2d 1148, 1151 (1st Cir.1992). Failure to participate in the administrative claims review process (hereinafter "ACRP") is a "jurisdictional bar" to judicial review. Id.; see also 12 U.S.C. Sec. 1821(d)(13)(D); FDIC v. Shain, Schaffer & Rafanello, 944 F.2d 129, 132 (3d Cir.1991) ("Congress expressly withdrew jurisdiction from all courts over any claim to a failed bank's assets that are [sic] made outside the procedure set forth in section 1821."). 5 The subsection 1821(d) bar date for filing administrative claims in the present case was September 6, 1990. Since neither letter detailing Heno's "claims" predated the bar date, see supra notes 3 and 4, the district court ruled that Heno could no longer file a timely administrative claim under subsection 1821(d), and that his "claims" therefore were not entitled to judicial review
The "task of interpretation begins with the text of the statute itself, and statutory language must be accorded its ordinary meaning." Telematics Int'l, Inc. v. NEMLC Leasing Corp., 967 F.2d 703, 706 (1st Cir.1992) ( FIRREA Sec. 1821(j)) (emphasis added) (citations omitted). The original panel opinion rejected FDIC's contention that Heno was required to file an administrative claim before the bar date even though the "claim" was grounded in a pre-receivership agreement with the Bank and remained executory and unrepudiated both at the time of FDIC's appointment and throughout the entire 90-day bar period prescribed in subsections 1821(d)(3)(B)(i) and 1821(d)(5)(C)(i). As our opinion pointed out, FIRREA Sec. 1821(d) prescribes a single exception to the pre-bar date filing requirement: it permits late-filed claims only if "the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date; and ... such claim is filed in time to permit payment of such claim." 12 U.S.C. Sec. 1821(d)(5)(C)(ii). Because Heno--no doubt like many others who assert claims arising out of executory contracts with a failed bank--concededly had actual notice of FDIC's appointment, but held no assertable
or provable "claim" until after the bar date, the original panel opinion reasoned that the ACRP established under subsection 1821(d) rationally could not have been intended to preclude judicial review of post-receivership "claims" which arise after the expiration of the 90-day...
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