Marc Development, Inc. v. F.D.I.C.

• Decision Date: 06 May 1993
• Docket Number: No. 91-4172,91-4172
• Citation: 992 F.2d 1503
• Parties: MARC DEVELOPMENT, INC., an Illinois corporation; Keith-Marc Properties, Ltd., an Illinois limited partnership, Plaintiffs-Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for the Cosmopolitan National Bank of Chicago, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1503

992 F.2d 1503

MARC DEVELOPMENT, INC., an Illinois corporation; Keith-Marc

Properties, Ltd., an Illinois limited partnership, Plaintiffs-Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for the

Cosmopolitan National Bank of Chicago, Defendant-Appellant.

No. 91-4172.

United States Court of Appeals,

Tenth Circuit.

May 6, 1993.

Rehearing Granted Aug. 31, 1993.

Richard J. Osterman, Jr., Sr. Counsel, (Ann S. Duross, Asst. Gen. Counsel, Michael H. Krimminger, Gen. Counsel, with him on the brief) F.D.I.C., Washington, DC, for defendant-appellant.

Neil A. Kaplan and Ted Boyer of Clyde, Pratt & Snow, Salt Lake City, UT, for plaintiffs-appellees.

Before McKAY, Chief Judge, LOGAN and BALDOCK, Circuit Judges.

BALDOCK, Circuit Judge.

Defendant Federal Deposit Insurance Corporation (the "FDIC") appeals the district court's denial of its request for a 180 day stay under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub.L. No. 101-73, 103 Stat. 183 (1989) (relevant sections codified at 12 U.S.C. § 1821). The FDIC specifically claims that it is entitled to the stay under 12 U.S.C. § 1821(d) and for support cites FIRREA's legislative history. The FDIC also points us to our opinion in Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103 (10th Cir.1991), published subsequent to the district court's order, as authority for its claim. Plaintiffs Marc Development, Inc. and Keith-Marc Properties, Ltd. ("Plaintiffs") move to dismiss this appeal for lack of jurisdiction, claiming it is not a collateral order immediately appealable under 28 U.S.C. § 1291. We also address whether the FDIC's claim is moot.

Plaintiffs initially instituted an action in state court against Cosmopolitan Bank of Chicago (the "Bank") to enforce certain real estate loan agreements and to obtain clear title to the property securing the loans. Plaintiffs claimed that they had paid the loan obligations in full and were entitled to reconveyance of the land. After commencement of this suit, the Bank became insolvent, and the FDIC was appointed receiver pursuant to 12 U.S.C. § 1821(c). The FDIC then removed the case to federal court and sought to stay the proceedings for 180 days while the FDIC administratively processed Plaintiffs' claim. The FDIC argued that 12 U.S.C. § 1821(d)(13)(D) deprived the district court of subject matter jurisdiction for 180 days. By order dated August 15, 1991, the district court denied the FDIC's request for the 180 day stay. See Marc Development, Inc. v. FDIC, 771 F.Supp. 1163 (D.Utah 1991). On November 22, 1991, the FDIC, after completing its administrative review process, denied Plaintiffs' claim.

I.

Plaintiffs claim that the district court's interlocutory order denying the stay is not appealable under 28 U.S.C. § 1291 because it is not a collateral order under Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). For Cohen's collateral order doctrine to apply, the district court's order must: (1) "conclusively determine the disputed question"; (2) "resolve an important issue completely separate from the merits of the action"; and (3) "be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1988).

A district court's order is deemed to have conclusively determined the disputed question if the order is "made with the expectation that [it] will be the final word on the subject addressed." Gulfstream Aerospace v. Mayacamas Corp., 485 U.S. 271, 277, 108 S.Ct. 1133, 1137, 99 L.Ed.2d 296 (1988). The district court's order of August 15, 1991 represents its final word on the subject of the 180 day stay as the district court has denied all FDIC requests to alter, amend or reconsider its order.

The district court's order also resolves an important issue completely separate from the merits of the action. The collateral order doctrine requires that the issue be important in a jurisprudential sense. Nemours Foundation v. Manganaro Corp., New England, 878 F.2d 98, 100 (3d Cir.1989). See also Nixon v. Fitzgerald, 457 U.S. 731, 742, 102 S.Ct. 2690, 2697, 73 L.Ed.2d 349 (1982) (collateral appeal of interlocutory order must present a serious and unsettled question). Given the confusion created by 12 U.S.C. § 1821(d) with regard to this 180 day stay issue, which affects a large number of receivership claims, and the wealth of cases decided in the district courts, all of which reached different results using conflicting methodology, ¹ the question is important in a jurisprudential sense. Moreover, the issue of the availability of the 180 day stay is separate from the merits as it is not "enmeshed in the factual and legal issues comprising the plaintiff's cause of action." Coopers & Lybrand, 437 U.S. at 469, 98 S.Ct. at 2458. In examining the propriety of this order, we need not reach the underlying factual and legal issues regarding Plaintiffs' loan obligations with the Bank but need only address the isolated legal issue of whether the district court appropriately denied a 180 day stay of these proceedings under 12 U.S.C. § 1821(d).

Finally, the district court's order is effectively unreviewable on appeal. If we were to wait to resolve this issue on direct appeal after a determination on the merits as Plaintiffs request, and if we were to determine that the district court improperly denied the 180 day stay as the FDIC asserts, the FDIC will have permanently lost the opportunity to resolve Plaintiffs' claims administratively without simultaneously defending this litigation in the district court. Cf. Mitchell v. Forsyth, 472 U.S. 511, 526-27, 105 S.Ct. 2806, 2815-16, 86 L.Ed.2d 411 (1985) (because qualified immunity is immunity from suit rather than a mere defense to liability, the immunity is effectively lost if a case is erroneously permitted to go to trial). Thus, the FDIC has asserted a right which would be destroyed if not vindicated before trial. United States v. MacDonald, 435 U.S. 850, 860, 98 S.Ct. 1547, 1552, 56 L.Ed.2d 18 (1978). ²

Given that the issue before us meets all three requirements of the collateral order doctrine, we hold that the district court's order denying the FDIC a 180 day stay is immediately appealable.

II.

The fact that the FDIC has completed the administrative claims process and has denied Plaintiffs' claim raises a mootness issue, because the FDIC now lacks a legally cognizable interest in obtaining a 180 day stay in this case. See United States Parole Comm'n v. Geraghty, 445 U.S. 388, 396, 100 S.Ct. 1202, 1208, 63 L.Ed.2d 479 (1980) (if issues presented are no longer live or parties lack a "legally cognizable interest in the outcome," the case is ordinarily moot). However, an exception to the mootness doctrine exists when the issue is "capable of repetition, yet evading review." See Johansen v. City of Bartlesville, 862 F.2d 1423, 1426 (10th Cir.1988). This exception applies when " '(1) the challenged action [i]s in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there [i]s a reasonable expectation that the same complaining party would be subjected to the same action again.' " Id. (quoting Weinstein v. Bradford, 423 U.S. 147, 149, 96 S.Ct. 347, 348, 46 L.Ed.2d 350 (1975)). Any appeal of the 180 day stay issue will always take longer than the FDIC's claims procedure, and there is a reasonable expectation that the FDIC will be placed in the same situation again. Therefore, because this issue presents the classic scenario of an issue "capable of repetition, yet evading review," the mootness doctrine does not bar our review. Cf. Praxis Properties v. Colonial Sav. Bank, 947 F.2d 49, 61-2 (3d Cir.1991) (district court denial of 90 day stay provided in 12 U.S.C. § 1821(d)(12) is not barred by mootness, even though more than 90 days have elapsed pending this appeal and even though the result has no practical effect on the parties, because the issue is capable of repetition yet evading review).

III.

A.

Having determined that our jurisdiction is proper and that the mootness doctrine does not bar our review, we affirm the district court's denial of the 180 day stay, and adopt and incorporate into this opinion the district court's opinion of Marc Development, Inc. v. FDIC, 771 F.Supp. 1163 (D.Utah 1991), in its entirety. The district court's thorough and well-reasoned opinion fully addresses, disposes of, and rejects the FDIC's assertions that it is entitled to the 180 day stay as a result of FIRREA provisions contained in 12 U.S.C. § 1821(d) and as a result of the FIRREA's legislative history.

B.

We further hold that our opinion in Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103 (10th Cir.1991), is consistent with the district court's opinion in Marc Development, 771 F.Supp. 1163, which we adopt today. Contrary to the FDIC's assertions, Mustang Partners does not require exhaustion of the administrative claims process before the lawsuit can continue, but merely requires compliance with the administrative claims process in order to preserve a claimant's right to continue pursuing a pending lawsuit involving the same claim. Mustang Partners, 946 F.2d at 106. Therefore, Marc Development, which allows the claims process to proceed simultaneously with the litigation subject only to a 90 day stay provided in 12 U.S.C. § 1821(d)(12)(A)(ii), is consistent with Mustang Partners in that it allows the litigation to continue without inhibiting concurrent compliance with the FDIC's administrative claims process.

C.

The First Circuit recently addressed the 180 day stay issue in Marquis v. FDIC, 965 F.2d 1148 (1st Cir.1992). ³ The Marquis opinion is essentially consistent with our adoption of Marc Development to the extent it holds that, under the FIRREA, federal courts retain subject matter jurisdiction in litigation filed prior to the appointment of the receiver. Marquis, 965 F.2d...