Hudson United Bank v. Chase Manhattan Bank of Connecticut, N.A.

• Decision Date: 29 December 1994
• Docket Number: No. 93-5729,93-5729
• Citation: 43 F.3d 843
• Parties: HUDSON UNITED BANK, as successor in interest to HUB National Bank, formerly known as Meadowlands National Bank, Appellant v. CHASE MANHATTAN BANK OF CONNECTICUT, N.A.; Consolidated Asset Recovery Corporation; Federal Deposit Insurance Corporation, in its corporate capacity; Federal Deposit Insurance Corporation, as Receiver for Citytrust.
• Court: U.S. Court of Appeals — Third Circuit

Page 843

43 F.3d 843

63 USLW 2418

HUDSON UNITED BANK, as successor in interest to HUB National Bank, formerly known as Meadowlands National Bank, Appellant v. CHASE MANHATTAN BANK OF CONNECTICUT, N.A.; Consolidated Asset Recovery Corporation; Federal Deposit Insurance Corporation, in its corporate capacity; Federal Deposit Insurance Corporation, as Receiver for Citytrust.

No. 93-5729.

United States Court of Appeals Third Circuit.

Argued July 20, 1994.

Decided Dec. 29, 1994.

Richard W. Mackiewicz, Jr. (argued), Van Borkulo-Nuzzo & Mackiewicz, Union City, NJ, for appellant.

Colleen B. Bombardier (argued), Lawrence H. Richmond, F.D.I.C., Washington, DC, James T. Davis, II, Stephen R. Farber, Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone, Roseland, NJ, for appellee F.D.I.C. as Receiver for Citytrust.

Sheryl L. Newman, McManimon & Scotland, Newark, NJ, for appellee Consolidated Asset Recovery Corp.

Gerald T. Ford, Siff Rosen, Newark NJ, for appellee Chase Manhattan Bank of Connecticut, N.A.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

There are two interrelated issues in this appeal. First, whether the venue provision of the Financial Institution Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. Sec. 1821(d)(6)(A) (Supp. II 1990), ¹ governs only actions brought against the failed depository institution or whether it also applies to actions against the institution's receiver. Second, whether the claims procedures established in FIRREA, 12 U.S.C. Sec. 1821(d), cover actions against the receiver as well as actions against the failed institution.

This case arises out of the failure of a state bank, Citytrust of Connecticut. Hudson United Bank brought suit in the United States District Court for the District of New Jersey against Chase Manhattan Bank of Connecticut, the Federal Deposit Insurance Corporation, and Chase's wholly owned subsidiary, Consolidated Asset Recovery Corporation, seeking a declaratory judgment of its rights to certain funds as a result of its participation interest in loans made by the failed bank. The Federal Deposit Insurance Corporation, as receiver for the failed bank, moved to transfer the action to the District of Connecticut under 12 U.S.C. Sec. 1821(d)(6)(A). The district court granted the motion to transfer, holding that the claims procedures applied to actions against the receiver and that a change of venue was required under FIRREA. The court then certified the issue for interlocutory appeal. Hudson United Bank v. Chase Manhattan Bank, NA, 832 F.Supp. 881 (D.N.J.1993). We will affirm.

I.

Plaintiff/appellant Hudson United Bank ("Hudson") is a New Jersey corporation. ² Defendant/appellee Chase Manhattan Bank of Connecticut, NA ("Chase"), is a national association of the state of Connecticut, with offices in Connecticut. Citytrust of Connecticut ("Citytrust"), the failed bank now in receivership, was a state bank licensed in Connecticut. Kleinberg Electric is a New York corporation that was a customer of Citytrust and is now in bankruptcy, allegedly as a result of actions of the defendants. Paul and Carol Kleinberg, the guarantors on the loan, were both New Jersey residents at the time the loan was executed.

In 1987, Citytrust extended to Kleinberg Electric a $1 million term loan and a $1.25 million line of credit. Hudson bought a 63% interest in Kleinberg Electric's term loan as part of a Loan Participation Agreement. In 1991, Citytrust failed and was placed under the control of the Federal Deposit Insurance Corporation as receiver. Following standard procedure, the FDIC sought a buyer for Citytrust and found Chase, which entered into a Purchase and Assumption Agreement with the FDIC allowing Chase to evaluate Citytrust's assets and "put" any unwanted assets back to the receiver. Chase's subsidiary, Consolidated Asset Recovery Corporation ("CARC"), was to manage (with FDIC supervision) any Citytrust assets that were retained or reacquired by the FDIC.

Sometime after Citytrust's bankruptcy in August 1991 and the start of this new arrangement, Hudson ceased receiving payments for its participation interest in the Kleinberg loan. In addition, the Kleinberg line of credit was terminated, apparently upon the closing of the FDIC's Purchase and Assumption Agreement with Chase. Hudson, 832 F.Supp. at 883. Two months later, Chase "put" the Kleinberg loans back to the receiver, to be managed by CARC.

Hudson claimed it had not been notified of Citytrust's bankruptcy and learned of it only in November 1991 when it inquired about the discontinued loan payments. In January 1992 CARC accelerated the loans, allegedly causing Kleinberg to file for bankruptcy. Even after filing for bankruptcy, Kleinberg continued to make payments to CARC on the Citytrust loans, but CARC allegedly failed to remit to Hudson its full share of those payments. By early 1992 it appeared that Hudson was losing money on the Kleinberg loan. In March 1992, however, Chase deposited $476,176.80 into an account of Hudson's at Chase, and Hudson withdrew that money as payment in full of the loan participation. Chase then decided it had deposited the money by mistake and asked for it back. Hudson responded by seeking a declaratory judgment of its rights to the funds, punitive damages, and litigation expenses. Hudson alleged breach of the Loan Participation Agreement, breach of the duty of good faith, breach of fiduciary duty, and fraudulent concealment. Chase counterclaimed for the return of the money.

After filing its action, Hudson asked the FDIC receiver whether administrative review of its claims was a necessary prerequisite to bringing suit. The FDIC forwarded a claim notice to Hudson, which Hudson filed. The FDIC then disallowed the claim and moved to transfer the case to the District of Connecticut under 28 U.S.C. Sec. 1406(a) (1988) ³ and 12 U.S.C. Sec. 1821(d)(6)(A). The FDIC contended that New Jersey was the wrong venue because 12 U.S.C. Sec. 1821(d)(6)(A) specifies that a claimant can only bring suit in the district where the failed depository institution had its principal place of business or in the District of Columbia. Because Citytrust's principal place of business was in Connecticut, the FDIC asserted that the case should be transferred there. Hudson opposed transfer, contending Sec. 1821(d)(6)(A) only refers to claims against the failed depository institution, not to claims based on actions taken by the FDIC after the bank failed, which are actually against the receiver, not the institution. The district court granted the FDIC's motion to transfer and then certified the following question for interlocutory appeal: ⁴Does the venue provision in [FIRREA], 12 U.S.C. Sec. 1821(d)(6) apply to an action which is brought against the receiver for wrongs allegedly committed by the receiver rather than the failed institution?

II.

We have plenary review over the district court's conclusions of law. Tudor Dev. Group, Inc. v. United States Fidelity & Guar. Co., 968 F.2d 357, 359 (3d Cir.1992); Gregoire v. Centennial Sch. Dist., 907 F.2d 1366, 1370 (3d Cir.), cert. denied, 498 U.S. 899, 111 S.Ct. 253, 112 L.Ed.2d 211 (1990). We are not limited to the certified question, but may rule on other issues relevant to the appeal. Johnson v. Alldredge, 488 F.2d 820, 823 (3d Cir.1973), cert. denied, 419 U.S. 882, 95 S.Ct. 148, 42 L.Ed.2d 122 (1974).

The district court granted the motion to transfer venue under FIRREA, 12 U.S.C. Sec. 1821(d)(6)(A). The provision on venue is entitled "Provision for agency review or judicial determination of claims." 12 U.S.C. Sec. 1821(d)(6). Subparagraph (A) provides:

In general

Before the end of the 60-day period beginning on the earlier of--

(i) the end of the period described in paragraph (5)(A)(i) with respect to any claim against a depository institution for which the Corporation is receiver; or

(ii) the date of any notice of disallowance of such claim pursuant to paragraph (5)(A)(i), ⁵

the claimant may request administrative review of the claim ... or file suit on such claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the depository institution's principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim).

12 U.S.C. Sec. 1821(d)(6)(A) (footnote supplied).

As we have noted, Hudson contends this subparagraph, with its venue provision, applies only to claims against a depository institution; that is, it applies only to claims against Citytrust and not to claims against the FDIC. If true, the FDIC as receiver cannot request a change of venue under FIRREA. In addition, Hudson maintains the entire subsection (d) is inapplicable to breach of contract actions like the present dispute. Finally, Hudson asserts that under certain circumstances application of the provisions in subsection (d) would create an unconstitutional result.

A.

Hudson maintains that claims against the receiver cannot be considered under Sec. 1821(d)(6)(A), ⁶ but must be analyzed under Sec. 1821(d)(5)(C) ("Disallowance of claims filed after end of filing period") ⁷ or under Sec. 1821(d)(6)(B) ("Statute of Limitations"). ⁸ Hudson points out that Sec. 1821(d)(13)(D) ⁹ specifically provides for claims against the receiver while Sec. 1821(d)(6)(A), which contains the venue provision, does not. From this Hudson concludes that the venue provision (Sec. 1821(d)(6)(A)) if read literally applies only to claims against the depository institution, not to claims against the receiver. The FDIC disagrees, contending Congress intended Sec. 1821(d)(6)(A) to include claims against the receiver. The district court agreed with the FDIC.

The district court acknowledged that Hudson's argument had some force if Sec. 1821(d)(6)(A) were read without reference to the related parts of...