Marquis v. F.D.I.C.

• Decision Date: 09 April 1992
• Docket Number: 92-1179,92-1216,Nos. 92-1113,s. 92-1113
• Citation: 965 F.2d 1148
• Parties: Serge MARQUIS, et al., Plaintiffs, Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Liquidating Agent of Hillsborough Bank & Trust Company, Defendant, Appellant. ELTREX INTERNATIONAL CORPORATION, et al., Plaintiffs, Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Liquidating Agent of Hillsborough Bank & Trust Company, Defendant, Appellant. Michael M. MILLS, Plaintiff, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Nashua Trust Company, Defendant, Appellant. James P. GOODRICH, Plaintiff, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Dartmouth Bank, Defendant, Appellant. to 92-1218. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1148

965 F.2d 1148

60 USLW 2734

Serge MARQUIS, et al., Plaintiffs, Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Liquidating Agent

of Hillsborough Bank & Trust Company, Defendant,

Appellant.

ELTREX INTERNATIONAL CORPORATION, et al., Plaintiffs, Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Liquidating Agent

of Hillsborough Bank & Trust Company, Defendant,

Appellant.

Michael M. MILLS, Plaintiff, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for

Nashua Trust Company, Defendant, Appellant.

James P. GOODRICH, Plaintiff, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for

Dartmouth Bank, Defendant, Appellant.

Nos. 92-1113, 92-1179, 92-1216 to 92-1218.

United States Court of Appeals First Circuit.

Heard April 9, 1992.

Decided May 15, 1992.

Order on Rehearing and Rehearing

En Banc Denied June 4, 1992.

Michael H. Krimminger, Counsel, with whom Ann S. Duross, Asst. Gen. Counsel, and Richard J. Osterman, Jr., Sr. Counsel, Washington, D.C., were on brief, for appellant F.D.I.C.

Jay L. Hodes, with whom Heather M. Jeans and Bossie, Kelly & Hodes, P.A., Manchester, N.H., were on brief, for appellees Serge Marquis, et al.

Eleanor Dahar, with whom Victor W. Dahar, P.A., Manchester, N.H., was on brief, for appellees Eltrex Intern. Corp., et al.

Before SELYA, Circuit Judge, COFFIN, Senior Circuit Judge, and YOUNG, ^* District Judge.

SELYA, Circuit Judge.

These consolidated appeals raise an important question concerning the extent of the restrictions on the federal courts' subject matter jurisdiction imposed by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub.L. No. 101-73, 103 Stat. 183, codified in scattered sections of 12 U.S.C. (Supp. II 1990). The Federal Deposit Insurance Corporation (FDIC) claims that FIRREA's jurisdictional bar, 12 U.S.C. § 1821(d)(13)(D), requires federal courts to dismiss virtually all civil actions pending against a failed financial institution at the time the FDIC is appointed as receiver. The court below rejected this broadcast claim. After careful consideration of the relevant portions of the Act, we hold that FIRREA does not require courts automatically to dismiss all actions instituted against a failed bank prior to the FDIC's appointment as receiver of the institution.

I. BACKGROUND

The nature of this proceeding does not demand an exegetic discussion of particular facts. ¹ It suffices to recount seven events common to the four underlying cases:

1. The plaintiff (or co-plaintiffs, in two of the cases) sued an FDIC-insured financial institution in a New Hampshire state court.

2. The pleadings stated one or more claims for money damages, chargeable against the institution's assets, arising out of some challenged banking practice.

3. The financial institution was declared insolvent while the litigation was pending.

4. The FDIC was appointed as receiver, see 12 U.S.C. § 1821(c)(3)(A), and thereupon removed the case to federal district court. See 12 U.S.C. § 1819(b)(2)(B).

5. Once removal was perfected, the FDIC sought dismissal, contending that the court lacked subject matter jurisdiction to adjudicate the creditors' claims unless and until those claims were timely filed with, and processed through, the administrative mechanism embodied in FIRREA. See 12 U.S.C. § 1821(d)(3)-(10).

6. The district court denied the motion for dismissal, 779 F.Supp. 6 (but, eventually, stayed proceedings to permit resort to, and operation of, FIRREA's administrative claims review process).

7. At the FDIC's request, the district court certified its ruling regarding subject matter jurisdiction for interlocutory appeal. ²

Because of the importance of the jurisdictional question, and its unsettled nature, we accepted appellate jurisdiction, see 28 U.S.C. § 1292(b) (1988), and expedited the appeals.

II. ISSUE PRESENTED

In this case, our inquiry reduces to a single question: do the federal courts retain subject matter jurisdiction over actions pending against failed financial institutions once the FDIC has been appointed as receiver? We answer this query in the affirmative, noting, moreover, that our ensuing discussion applies equally to the Resolution Trust Corporation (RTC) in those instances where the RTC is appointed as the receiver of a failed financial institution in place of the FDIC, see 12 U.S.C. § 1441a(b)(4). Ancillary to this response, we also examine, and comment upon, the federal courts' powers to stay litigation pending completion of FIRREA's administrative claims review process (ACRP).

III. ANALYSIS

FIRREA's text comprises an almost impenetrable thicket, overgrown with sections, subsections, paragraphs, subparagraphs, clauses, and subclauses--a veritable jungle of linguistic fronds and brambles. In light of its prolixity and lack of coherence, confusion over its proper interpretation is not only unsurprising--it is inevitable.

Our concern here is with 12 U.S.C. § 1821(d) (Supp. II 1990), reproduced in the Appendix. This section deals, generally, with the FDIC's powers and duties when acting as a receiver of a failed financial institution. In the interest of affording context, it may be noted that section 1821(d) trails directly in the wake of statutory descriptions of the FDIC's responsibilities for insuring deposits, 12 U.S.C. § 1821(a); intervening in bank liquidations, 12 U.S.C. § 1821(b); and becoming the receiver for failed depository institutions, 12 U.S.C. § 1821(c). Section 1821(d), then, is a relatively small piece of the statutory puzzle--but one which exemplifies the larger interpretive problem: section 1821(d) is comprised of nineteen separately numbered fascicles, most with myriad subparts, occupying seven pages of the United States Code. It is, in short, an avalanche of words.

A.

We begin our analysis with the rudiments of the statutory scheme. We think that FIRREA makes participation in the administrative claims review process mandatory for all parties asserting claims against failed institutions, regardless of whether lawsuits to enforce those claims were initiated prior to the appointment of a receiver. ³ See Meliezer v. RTC, 952 F.2d 879, 882 (5th Cir.1992) ("Although FIRREA does not explicitly mandate exhaustion of administrative remedies before judicial intervention, the language of the statute and indicated congressional intent make clear that such is required."); FDIC v. Shain, Schaffer & Rafanello, 944 F.2d 129, 132 (3d Cir.1991) (in enacting FIRREA, "Congress expressly withdrew jurisdiction from all courts over any claim to a failed bank's assets that are made outside the procedure set forth in section 1821."); see also RTC v. Elman, 949 F.2d 624, 627 (2d Cir.1991); RTC v. Mustang Partners, 946 F.2d 103, 106 (10th Cir.1991) (per curiam); Coston v To this point, our analysis comports with the FDIC's views. But at the next crossroad, we head in different directions. The FDIC not only urges that claimants must exhaust the remedies afforded by the ACRP, but says that, while the ACRP runs its course, preexisting actions must be dismissed (even though, as a practical matter, claimants can file new lawsuits if not fully satisfied with the outcome of the administrative proceedings, see 12 U.S.C. § 1821(d)(6)(A)). This is the matter's crux.

                Gold Coast Graphics, Inc., 782 F.Supp. 1532, 1537 (S.D.Fla.1992).   But see FDIC v. Grillo, 788 F.Supp. 641, 647 (D.N.H.1992) (holding that "utilization of the administrative adjudication procedure is not mandatory or exclusive").   Accordingly, we rule that, where a claimant has been properly notified of the appointment of a federal insurer as receiver, 12 U.S.C. § 1821(d)(3)(B)-(C), and has nonetheless failed to initiate an administrative claim within the filing period, 12 U.S.C. § 1821(d)(3)(B)(i), the claimant necessarily forfeits any right to pursue a claim against the failed institution's assets in any court.   See 12 U.S.C. § 1821(d)(5)(C)(i)
                

B.

The FDIC bases its argument on the following statutory provision:

Except as otherwise provided in this subsection, no court shall have jurisdiction over--

(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution for which the [FDIC] has been appointed receiver, including assets which the [FDIC] may acquire from itself as such receiver; or (ii) any claim relating to any act or omission of such institution or the [FDIC] as receiver.

12 U.S.C. § 1821(d)(13)(D). The jurisdictional bar of section (d)(13)(D) reaches all claims seeking payment from the assets of the affected institution; all suits seeking satisfaction from those assets; and all actions for the determination of rights vis-a-vis those assets. See Rosa v. RTC, 938 F.2d 383, 393 (3d Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 582, 116 L.Ed.2d 608 (1991). Starting from this baseline, the FDIC asserts that, with respect to suits pending against financial institutions at the time an FDIC receivership ensues, no jurisdiction inheres until after the ACRP, described in subsections (d)(3)-(10), has run its course. ⁴

Quite plainly, Congress intended the ACRP to provide a streamlined method for resolving most claims against failed institutions in a prompt, orderly fashion, without lengthy litigation. See H.R.Rep. No. 101-54(I), 101st Cong., 1st Sess., at 418-19, reprinted in 1989 U.S.Code Cong. & Admin.News 86, 214-15 ("The claims determination procedure ... creates a system which ... enables the FDIC to dispose of the bulk of claims against failed financial institutions expeditiously and fairly."). In the FDIC's view, this intent would be thwarted if pending actions were allowed to proceed in the district court in lieu of, or concurrent with, the processing of administrative claims premised on the same nucleus of operative facts.

This interpretation, however, seems inconsistent with other parts of FIRREA. The single sentence which is most...