In re Thomas

• Decision Date: 06 June 2011
• Docket Number: No. 10SA234.,10SA234.
• Court: Colorado Supreme Court
• Parties: In re Steven P. THOMAS, and Thomas Properties, Inc., Plaintiffsv.FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as receiver of New Frontier Bank; The Bridges Country Club, Inc.; The Bridges Golf & Country Club; Clinton Blum, personal representative of Estate of D.L. Day Jr., a/k/a Larry Day, Jr., a/k/a Delbert L. Day; Black Canyon Golf, LLLP; Brown Financial LLC; Weslin, LLC; Keenan's Industries, Inc.; RJ's Painting, LLC; Ridgway Valley Enterprises, LLC; John Prater, as personal representative for the Estate of James L. Lear; ASAP Rental Sales of Leadville, Inc.; United Rentals Northwest; Robert Beisen–Herz; Downey Excavation, Inc.; Patrik Davis Associates, P.C.; Chuck's Glass, Inc.; Buckhorn Geotech, Inc.; The Bridges at Black Canyon, Inc.; Northstar Bridges, LLC; Leslie Buttorff; Judy Pfountz; MPI/DBS Colorado/Texas LLLP, d/b/a Foothills Lighting & Supply; Richard P. Chulick, as receiver in Montrose District Court Case 07CV49; Rosemary Murphy, as the public trustee of Montrose County, Colorado; First City Corp.; and All Unknown Persons who Claim any interest in the Subject Matter of this Action., Defendants.

255 P.3d 1073

In re Steven P. THOMAS, and Thomas Properties, Inc., Plaintiffs

v.FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as receiver of New Frontier Bank; The Bridges Country Club, Inc.; The Bridges Golf & Country Club; Clinton Blum, personal representative of Estate of D.L. Day Jr., a/k/a Larry Day, Jr., a/k/a Delbert L. Day; Black Canyon Golf, LLLP; Brown Financial LLC; Weslin, LLC; Keenan's Industries, Inc.; RJ's Painting, LLC; Ridgway Valley Enterprises, LLC; John Prater, as personal representative for the Estate of James L. Lear; ASAP Rental Sales of Leadville, Inc.; United Rentals Northwest; Robert Beisen–Herz; Downey Excavation, Inc.; Patrik Davis Associates, P.C.; Chuck's Glass, Inc.; Buckhorn Geotech, Inc.; The Bridges at Black Canyon, Inc.; Northstar Bridges, LLC; Leslie Buttorff; Judy Pfountz; MPI/DBS Colorado/Texas LLLP, d/b/a Foothills Lighting & Supply; Richard P. Chulick, as receiver in Montrose District Court Case 07CV49; Rosemary Murphy, as the public trustee of Montrose County, Colorado; First City Corp.; and All Unknown Persons who Claim any interest in the Subject Matter of this Action., Defendants.

No. 10SA234.

Supreme Court of Colorado, En Banc.

June 6, 2011.

Cashen, Cheney & Thomas, Robert J. Thomas, Montrose, Colorado, Attorney for Plaintiffs.Dufford & Brown, P.C., David W. Furgason, Christian D. Hammond, Denver, Colorado, Attorneys for Defendant Federal Deposit Insurance Corporation.

No Appearance for Defendants The Bridges Country Club, Inc.; The Bridges Golf & Country Club; Clinton Blum, personal representative of Estate of D.L. Day Jr., a/k/a Larry Day, Jr., a/k/a Delbert L. Day; Black Canyon Golf, LLLP; Brown Financial LLC; Weslin, LLC; Keenan's Industries, Inc.; RJ's Painting, LLC; Ridgway Valley Enterprises, LLC; John Prater, as personal representative for the Estate of James L. Lear; ASAP Rental Sales of Leadville, Inc.; United Rentals Northwest; Robert Beisen–Herz; Downey Excavation, Inc.; Patrik Davis Associates, P.C.; Chuck's Glass, Inc.; Buckhorn Geotech, Inc.; The Bridges at Black Canyon, Inc.; Northstar Bridges, LLC; Leslie Buttorff; Judy Pfountz; MPI/DBS Colorado/Texas LLLP, d/b/a Foothills Lighting & Supply; Richard P. Chulick, as receiver in Montrose District Court Case 07CV49; Rosemary Murphy, as the public trustee of Montrose County, Colorado; First City Corp.; and All Unknown Persons who Claim any interest in the Subject Matter of this Action.Justice MÁRQUEZ delivered the Opinion of the Court.

In this original proceeding, we address whether a state court retains jurisdiction over claims brought against a bank that later enters receivership, where the claimant fails to exhaust the administrative remedies of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), Pub.L. No. 101–73, 103 Stat. 183 (1989) (codified as amended in scattered sections of 12 U.S.C.).¹

Plaintiffs Steven P. Thomas and Thomas Properties, Inc. (collectively, “Thomas”) brought contract-related claims against New Frontier Bank, which later was placed in receivership. Defendant Federal Deposit Insurance Corporation (“FDIC”), in its capacity as receiver of New Frontier Bank, moved to dismiss Thomas's claims under C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction, citing Thomas's failure to exhaust the administrative claims review process established by Congress under FIRREA. The trial court denied the motion, and the FDIC now seeks review under C.A.R. 21. We issued a rule to show cause to Plaintiffs to review the trial court's order.

We construe the provisions of FIRREA to limit the jurisdiction of courts to review claims involving failed financial institutions that have entered receivership. Under the Act, litigants who have an action pending against a bank that is later placed in receivership must pursue the administrative claims process under FIRREA in order thereafter to continue the action against the receiver. Congress has made clear that if a claimant fails to exhaust the administrative claims process, “no court shall have jurisdiction” over any claim or action seeking a determination of rights against the receiver. 12 U.S.C. § 1821(d)(13)(D).

We therefore hold that where, as here, a claimant has received proper notice of the required administrative claims procedures under FIRREA, yet fails to exhaust those administrative remedies, the Act precludes any court from continuing to exercise jurisdiction over pre-receivership claims filed against the failed bank. Accordingly, we make the rule absolute and remand the matter to the trial court with directions to dismiss Thomas's claims against the FDIC for lack of subject matter jurisdiction.

I. Facts and Procedural History

Thomas purchased a 40–acre tract of land adjacent to a golf course in the City of Montrose, intending to create a residential development on the property. In August 2006, Thomas entered into an agreement with The Bridges Country Club, Inc. to purchase golf memberships and other club privileges at The Bridges Golf & Country Club and associated facilities adjacent to Thomas's property. Under the agreement, Thomas paid $500,000 in exchange for the right to allocate different levels of club memberships to future lot owners on his residential development.

D.L. Day, Jr. signed the agreement on behalf of The Bridges Country Club, Inc. Day operated and served as an officer/board member for several business entities, including Black Canyon Golf, LLLP, which owned or operated certain club facilities identified in the agreement with Thomas.

Day subsequently passed away, and the operation of the club underwent various changes. Relevant here, New Frontier Bank of Greeley acquired the facilities property owned or operated by Black Canyon Golf, LLLP. Thomas was later unable to obtain performance of the club's obligations under the agreement to issue or honor the memberships. Consequently, in September 2007, Thomas filed suit against Day's estate, Day's business entities, New Frontier Bank, and other defendants, seeking declaratory judgment and specific performance of the agreement. In October 2007, Thomas filed an amended complaint, adding claims for reformation of contract, damages, and unjust enrichment. Among his requests for relief, Thomas sought recoupment of the $500,000 he paid under the agreement, plus allowable interest.²

In April 2009, the Colorado State Bank Commissioner, by order of the Colorado State Banking Board, closed New Frontier Bank and appointed the FDIC as receiver. Pursuant to FIRREA, 12 U.S.C. § 1821(d)(2), the FDIC assumed “all rights, titles, powers, and privileges” of the failed bank. In May 2009, the FDIC was substituted for New Frontier Bank in this case.³

As required by FIRREA, 12 U.S.C. § 1821(d)(3)(B), the FDIC published notices in local newspapers on three separate dates. These notices advised that all creditors having claims against the former New Frontier Bank, together with supporting proof, had to be filed with the FDIC by July 15, 2009. These notices further advised that:

Under federal law, with certain limited exceptions, failure to file such claims by the Bar Date [July 15, 2009] will result in disallowance by the Receiver, the disallowance will be final, and further rights or remedies with regard to the claims will be barred. 12 U.S.C. Section 1821(d)(5)(C), (d)(6).

In addition, on July 17, 2009, the FDIC sent Thomas a “Notice to Discovered Creditor” pursuant to section 1821(d)(3)(C). This individual notice provided Thomas an additional ninety days (to October 15, 2009) to file a proof of claim with the FDIC together with an explanation of why a claim had not been filed by the Bar Date. Despite these notices, Thomas did not file any proof of claim with the FDIC, before or after the Bar Date or the October deadline.

In February 2010, after settlement efforts were unsuccessful, the FDIC moved to dismiss Thomas's claims against it for lack of subject matter jurisdiction under C.R.C.P. 12(b)(1), citing Thomas's failure to exhaust the administrative claims process under FIRREA. The trial court denied the motion, reasoning that FIRREA does not divest courts of subject matter jurisdiction over claims filed prior to receivership. The FDIC then petitioned this court for relief under C.A.R. 21, contending that the trial court was proceeding without jurisdiction. We issued a rule to show cause and now make the rule absolute.

II. Analysis

The issue in this case is whether a litigant who has an action pending against a bank that is later placed in receivership (a pre-receivership claim) must pursue FIRREA's administrative claims process in order to continue the action in state court. At base, this case presents a conflict between (1) the general principle that once subject matter jurisdiction is established at the time of filing, it is not lost by subsequent actions or omissions of the parties, and (2) a federal statute that precludes jurisdiction over claims against receivers except as otherwise provided in that statute.

The mere appointment of a receiver does not divest a state court of jurisdiction over pre-receivership claims against a failed bank. Rather, a state court action may be stayed pending the exhaustion of FIRREA's administrative claims process. Thereafter, if the receiver denies the administrative claim, or the 180–day period to process the claim otherwise expires, a claimant may continue a previously filed state court action.

However, we conclude that FIRREA withdraws jurisdiction over pre-receivership claims where a claimant fails to exhaust the administrative claims process. Congress has made clear that “no court” shall have jurisdiction over any claim or action against the assets of a failed bank that has been placed in receivership “except as otherwise provided” in section 1821(d), which sets forth the administrative claims process. 12 U.S.C. § 1821(d)(13)(D). To permit a claimant to maintain a pre-receivership claim in ...