Holmes Financial Associates, Inc. v. Resolution Trust Corp.
| Decision Date | 19 August 1994 |
| Docket Number | No. 93-5911,93-5911 |
| Citation | 33 F.3d 561 |
| Parties | HOLMES FINANCIAL ASSOCIATES, INC., Plaintiff-Appellee, v. RESOLUTION TRUST CORPORATION, as Receiver for Metropolitan Federal Bank, F.S.B., and as Receiver for Metropolitan Federal Savings & Loan Association, F.A., Defendants-Appellants, L. Hall Jones, Jr., et al., Defendants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
J. Alan Hanover, Jeffrey S. Rosenblum (argued and briefed), Michael E. Goldstein, Douglas R. Pyne, Hanover, Walsh, Jalenak & Blair, Memphis, TN, for Holmes Financial Associates, Inc.
Leo Bearman, Jr., R. Mark Glover, Heiskell, Donelson, Bearman, Adams, Williams & Caldwell, Memphis, TN, Thomas R. Dyer, Memphis, TN, William E. Long, Jr., Walt, Dyer & James, Nashville, TN, Jacqueline R. Helmberger, Kirk K. Van Tine (briefed), Wendy J. Lang (argued), Baker & Botts, Washington, DC, Andrew B. Williams, II, Resolution Trust Corp., Atlanta, GA, Jeffrey Ehrlich, Munsell St. Clair, Resolution Trust Corp., Washington, DC, P. Matthew Sutko (briefed), Washington, DC, for Resolution Trust Corp.
Before: JONES, SUHRHEINRICH, and BATCHELDER, Circuit Judges.
The issue presented is whether, under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), Pub.L. No. 101-73, 103 Stat. 183 (1989) (), federal courts have exclusive jurisdiction over suits against the Resolution Trust Corporation (RTC) as receiver for a failed savings and loan, which suits were filed in state court prior to the RTC's appointment as receiver. This issue is one of first impression in the federal courts. Because FIRREA does not contain a clear and unequivocal withdrawal of state court jurisdiction, we hold that state courts retain jurisdiction over cases against the RTC which were pending when the RTC was appointed receiver. Accordingly, inasmuch as Holmes' state court action is jurisdictionally proper, the district court's decision to stay this case pending the outcome of the state case was not an abuse of discretion. Therefore, we AFFIRM the district court's order.
In an ordinary case brought in federal court, there is no way to address, other than in dicta, whether the plaintiff was required to bring that case in federal court. Thus, it comes as no surprise that, to date, no federal court has ruled on the exclusivity of federal jurisdiction under FIRREA. As set forth below, however, the unusually complex procedural posture of this case squarely presents this issue which has, until now, eluded federal review.
In 1990, Holmes Financial Associates, Inc., (Holmes) filed suit in Tennessee state court against Metropolitan Federal Bank, F.S.B. ("Old Met"). That case sought redress on claims identical to those in the present case. Old Met moved for dismissal on the ground that Holmes had not stated a claim under state law. The trial court dismissed the case and Holmes appealed.
In 1991, while Holmes' case was pending in the Tennessee Court of Appeals, Old Met was declared insolvent and the RTC was appointed its receiver. Old Met's assets were transferred to a newly created institution, Metropolitan Federal Savings and Loan Association, F.A. ("New Met"), which operated under the conservatorship of the RTC.
In 1992, while Holmes' appeal was still pending, New Met was declared insolvent and the RTC was appointed its receiver. In June, 1992, the Tennessee Court of Appeals reversed Holmes' dismissal and remanded the case for trial.
On remand, the RTC moved for dismissal on the ground that the state court lacked subject matter jurisdiction. Under FIRREA, the RTC claimed, federal courts have exclusive jurisdiction over cases against the RTC. The trial court denied the RTC's motion and the RTC took an interlocutory appeal on that issue. The Tennessee Court of Appeals affirmed on the ground that jurisdiction was concurrent, not exclusive.
As noted above, the RTC was appointed receiver of Old Met during the pendency of the state court action appeal. It notified Holmes of the receivership and Holmes promptly filed its proof of claims. These claims were denied by the RTC. Both parties agree that Holmes has exhausted its administrative remedies 1 and that a de novo judicial determination of its claims is proper, once the underlying jurisdictional dispute is resolved.
When Holmes' administrative claim was denied, it found itself facing a dilemma. On the one hand, Holmes contended that it could obtain a de novo judicial review of its claim simply by continuing its state court action. On the other hand, if its contention of concurrent jurisdiction were subsequently determined to be wrong, it had only sixty days to file a claim in federal court for judicial review. See 12 U.S.C. Sec. 1821(f)(5). 2 To protect itself, Holmes filed the present, contingent action against the RTC in the Middle District of Tennessee, Old Met's principal place of business. Once filed, Holmes moved for a stay of the federal proceeding pending resolution of the state court action. The district court granted the stay and the RTC appeals.
In Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), the Supreme Court held that, where the ordinary abstention doctrines are not applicable, a federal court's decision whether or not to defer to an ongoing state court proceeding "rest[s] on considerations of '(w)ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.' " Id. at 817, 96 S.Ct. at 1246 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200 (1952)). Mindful of the "virtually unflagging obligation of the federal courts to exercise the jurisdiction given them," id., the Court stressed that "[o]nly the clearest of justifications will warrant dismissal." Id. at 819, 96 S.Ct. at 1247. See also Moses H. Cone Memorial Hospital v. Mercury Construction Corporation, 460 U.S. 1, 8-9, 103 S.Ct. 927, 933, 74 L.Ed.2d 765 (1983) ().
In Arizona v. San Carlos Apache Tribe of Arizona, 463 U.S. 545, 103 S.Ct. 3201, 77 L.Ed.2d 837 (1983), the Court addressed a situation, much like the present one, in which identical federal claims were pending in federal and state courts. The Court held that "a dismissal or stay of the federal suits would have been improper if there was no jurisdiction in the concurrent state actions to adjudicate the claims at issue in the federal suits." Id. at 560, 103 S.Ct. at 3210. Where a state court has jurisdiction, however, the Court found that, "concurrent federal proceedings are likely to be duplicative and wasteful" and can create "the serious potential for spawning an unseemly and destructive race to see which forum can resolve the same issues first...." Id. at 567, 103 S.Ct. at 3214. The Court held, therefore, that although the district court was not required to defer to concurrent state proceedings, its decision to do so was not error. Id. at 570, 103 S.Ct. at 3215.
Because the issue of exclusive federal jurisdiction is a matter of statutory interpretation, our review is de novo. Heitmanis v. Austin, 899 F.2d 521, 527 (6th Cir.1990). If state courts retain jurisdiction over pre-receivership lawsuits, however, the district court's decision to defer to such a suit is reviewed only for an abuse of discretion. San Carlos Apache Tribe, 463 U.S. at 560, 103 S.Ct. at 3210.
The Supreme Court has held that "under our system, the States possess sovereignty concurrent with that of the Federal Government, subject only to limitations imposed by the Supremacy Clause." Tafflin v. Levitt, 493 U.S. 455, 458, 110 S.Ct. 792, 795, 107 L.Ed.2d 887 (1990). 3 Accordingly, "state courts have inherent authority, and are presumptively competent, to adjudicate claims arising under the law of the United States." Id. It is axiomatic, however, that Congress has the power to preclude state court jurisdiction over federal claims if it so chooses. Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 477-78, 101 S.Ct. 2870, 2874-75, 69 L.Ed.2d 784 (1981). To overcome the presumption of concurrent jurisdiction, the Court has stated that it must be "rebutted by explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state court jurisdiction and federal interests." Id. at 478, 101 S.Ct. at 2875. It is this three-part analysis to which both parties have addressed their arguments before this court.
The Gulf Offshore analysis, however, has been abandoned, in part, by the Supreme Court in later cases. In Tafflin, Justice Scalia concurred separately to express his view that the second and third "prongs" of the Gulf Offshore analysis were dicta in Gulf Offshore, unsupported by the Court's precedent, and simply wrong. Tafflin, 493 U.S. at 472-73, 110 S.Ct. at 802 (Scalia, J., concurring). Justice Scalia, in reviewing the Court's concurrent jurisdiction jurisprudence, stated:
"State courts have jurisdiction over federal causes of action not because it is "conferred" upon them by Congress; nor even because their inherent powers permit them to entertain transitory causes of action arising under the laws of foreign sovereigns, but because
It therefore takes an affirmative act of power under the Supremacy Clause to oust the States of jurisdiction--an exercise of what one of...
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