Meyerland Co., Matter of

• Citation: 910 F.2d 1257
• Decision Date: 07 September 1990
• Docket Number: No. 89-6118,89-6118
• Parties: In the Matter of MEYERLAND CO., and William M. Adkinson, Debtors. FEDERAL DEPOSIT INSURANCE CORP. as Manager of the FSLIC Resolution Fund as Receiver for Continental Savings Association, Appellant, v. MEYERLAND CO., and William Adkinson, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1257

910 F.2d 1257

59 USLW 2187

In the Matter of MEYERLAND CO., and William M. Adkinson, Debtors FEDERAL DEPOSIT INSURANCE CORP. as Manager of the FSLIC Resolution Fund as Receiver for Continental Savings Association, Appellant, v. MEYERLAND CO., and William Adkinson, Appellees.

No. 89-6118.

United States Court of Appeals Fifth Circuit.

Sept. 7, 1990.

Rehearing and Rehearing En Banc

Denied Oct. 5, 1990.

Bruce R. Coulombe, Lee Larkin, Andrews & Kurth, Houston, Tex., Richard J. Osterman, Jr., Atty., F.D.I.C., Washington, D.C., for F.D.I.C.

Michael L. O'Brien, Houston, Tex., for Meyerland Co.

Daniel Kistler, Robert L. Collins, Houston, Tex., for Adkinson.

Appeal from the United States District Court for the Southern District of Texas.

Before GARZA, HIGGINBOTHAM and DUHE, Circuit Judges.

DUHE, Circuit Judge:

Proceedings Below and Appellate Jurisdiction

Meyerland Co. and William M. Adkinson sued Continental Savings Association ("Continental") for, among other things, usury and fraud in state court. Continental counterclaimed for fraud and breach of contract. The trial court awarded Continental $30,031,089.99 and Adkinson $1,124,109.59 in damages. Meyerland and Adkinson appealed.

After the appeal was filed, the Federal Home Loan Bank Board declared Continental insolvent and appointed the Federal Savings and Loan Insurance Corporation (FSLIC) as receiver. The FSLIC removed to federal district court which remanded on April 21, 1989.

On August 9, 1989, the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), Pub.L. 101-73, 103 Stat. 183 was enacted. The Federal Deposit Insurance Corporation (FDIC) succeeded the FSLIC as the receiver of Continental and the FDIC then removed this case on September 7, 1989 under Sec. 209 of the FIRREA (12 U.S.C. Sec. 1819(b)(2)(B)). ¹ The district court again remanded and awarded the appellees $2,500 in sanctions.

The FDIC appeals. Although remand orders are generally not appealable, 12 U.S.C. Sec. 1819(b)(2)(C) authorizes an appeal in this case. This appeal presents two issues: (1) Whether 12 U.S.C. Sec. 1819(b)(2) authorizes the FDIC to remove a state court appellate proceeding; and (2) Whether the district court erred in awarding sanctions.

(1) Whether Congress meant what it said.

12 U.S.C. Sec. 1819(b)(2) states:

(A) In general

Except as provided in subparagraph (D), all suits of a civil nature at common law or in equity to which the Corporation, in any capacity, is a party shall be deemed to arise under the laws of the United States.

(B) Removal

Except as provided in subparagraph (D), the Corporation may ... remove any such action, suit, or proceeding from a state court to the appropriate United States district court. (emphasis supplied).

The exception in subparagraph (D) does not apply to the instant case and the sole issue to be decided, therefore, is whether Congress meant to authorize the FDIC to remove a state court appellate proceeding. To decide this issue, we must first determine (A) whether Article Three authorizes jurisdiction over this type of removal and, (B) if so, whether Congress meant to authorize appellate removal when it enacted Sec. 1819(b)(2). ²

(A) Article Three

It is black letter law that "Congress may not expand the jurisdiction of the federal courts beyond the bounds established by the Constitution." Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 491, 103 S.Ct. 1962, 1970, 76 L.Ed.2d 81 (1983). The power of Congress to authorize removal of cases on appeal has been repeatedly affirmed. See Martin v. Hunter's Lessee, 14 U.S. (1 Wheat.) 304, 349, 4 L.Ed. 97 (1816) ("Congress ... may authorize removal either before or after judgment."); Gaines v. Fuentes, 92 U.S. 10, 18, 23 L.Ed. 524 (1876); and Tennessee v. Davis, 100 U.S. 257, 269, 25 L.Ed. 648 (1880). Congress, however, has seldom chosen to exercise this power and we must decide whether it has done so by enacting the FDIC removal statute. ³

(B) The FDIC Removal Statute

The FDIC argues that 12 U.S.C. Sec. 1819(b)(2) means exactly what it says and since it does not exclude appellate removal, then it authorizes appellate removal. We would agree with the FDIC that the plain meaning of the statute controls its interpretation. See Mills v. Director, 877 F.2d 356, 362 (5th Cir.1989) (en banc) (Duhe, J., dissenting). Jurisdictional statutes, however, must also be interpreted with an eye towards history. Justice Frankfurter in Romero v. International Terminal Operating Co., 358 U.S. 354, 360-379, 79 S.Ct. 468, 473-484, 3 L.Ed.2d 368 (1959) explained:

[a]bstractly stated, the problem is the ordinary task of a court to apply the words of a statute according to their proper construction. But 'proper construction' is not satisfied by taking the words as if they were self-contained phrases. So considered, the words do not yield the meaning of the statute. The words we have to construe are not only words with a history. They express an enactment that is part of a serial, and a serial that must be related to Article III of the Constitution, the watershed of all judiciary legislation, and to the enactments which have derived from that Article.

. . . . .

If the history of the interpretation of judiciary legislation teaches anything, it teaches the duty to reject treating such statutes as a wooden set of self-sufficient words.... [We must not forget that it] is a statute, not a Constitution, we are expounding.

History tells us clearly what Congress meant when it enacted 12 U.S.C. Sec. 1819(b)(2). In Osborn v. Bank of the United States, 22 U.S. (9 Wheat) 738, 822, 6 L.Ed. 204 (1824) Justice Marshall expounded on the outer limits of Article Three jurisdiction: "when a question to which the judicial power of the Union is extended by the constitution forms an ingredient of the original cause, it is in the power of Congress to give the circuit courts jurisdiction of that cause." Osborn "reflects a broad conception of 'arising under' jurisdiction, according to which Congress may confer on the federal courts jurisdiction over any case or controversy that may call for the application of federal law." Verlinden, 461 U.S. at 492, 103 S.Ct. at 1970. Even though the only issues to be decided are ones of state law, Article Three permits the exercise of jurisdiction if one of the parties is a federal corporation. See, e.g., The Bank of the United States v. The Planters' Bank of Georgia, 22 U.S. (9 Wheat) 904, 6 L.Ed. 244 (1824). Congress however, did not actually grant the lower federal courts removal jurisdiction over federal question cases until 1875. ⁴ This statute, the predecessor to 28 U.S.C. Sec. 1441, was given an expansive interpretation in the Pacific Railroad Removal Cases, 115 U.S. 1, 5 S.Ct. 1113, 29 L.Ed. 319 (1885). The Pacific Railroad Court relied on Osborn to hold that "every case, irrespective of its nature, brought by or against a federally charted corporation is a suit arising under the 'laws of the United States.' " Frankfurter, Distribution of Judicial Power Between United States and State Courts, 13 Cornell L.Q. 499, 509 (1928). The expansive reading given by the Pacific Railroad Court to "arising under" was soon curtailed. Id. See also Romero, 358 U.S. at 379 n. 50, 79 S.Ct. at 484 n. 50. 28 U.S.C. Sec. 1331, for example, is interpreted more narrowly than the Constitution permits. Verlinden, 461 U.S. at 494-95, 103 S.Ct. at 1971-72. The general removal statute, 28 U.S.C. Sec. 1441, is also not interpreted as broadly as it could be. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941) (the "policy of the successive acts of Congress regulating the jurisdiction of the federal courts is one calling for the strict construction of [removal]") and Willy v. Coastal Corp., 855 F.2d 1160 (5th Cir.1988). See also Collins, The Unhappy History of Federal Question Removal, 71 Iowa L.Rev. 717 (1986). It is clear that no federal jurisdiction exists over the present dispute under either 28 U.S.C. Sec. 1331 or Sec. 1441 because the issues are governed by state law and federal law is a small ingredient of the dispute. See Gully v. First National Bank at Meridian, 299 U.S. 109, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936) (for a suit to "arise under" federal law, a "right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action") and Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). It is equally clear that Congress enacted 12 U.S.C. Sec. 1819 precisely so that the FDIC could enjoy federal question jurisdiction similar to that articulated in Osborn and the Pacific Railroad Removal Cases. See Pernie Bailey Drilling Co. v. FDIC, 905 F.2d 78, 79-80 (5th Cir.1990); Franklin National Securities Litigation v. Andersen, 532 F.2d 842 (2nd Cir.1976); and FDIC v. George-Howard, 153 F.2d 591 (8th Cir.), cert. denied, 329 U.S. 719, 67 S.Ct. 53, 91 L.Ed. 623 (1946). Thus, Sec. 1819 authorizes the exercise of jurisdiction over a dispute which involves only issues of state law and to which the FDIC is a party.

History does not tell us, however, whether 12 U.S.C. Sec. 1819 supports the exercise of removal jurisdiction over an appellate proceeding. The appellants rely on Barrow v. Hunton, 99 U.S. 80, 25 L.Ed. 407 (1879) to argue that the removal of a post-judgment proceeding is improper. In Barrow, Hunton won a state court judgment. The judgment debtor moved to have the judgment nullified and Hunton removed. The Supreme Court reasoned that if the removed proceeding was an appeal or similar to an appeal of a state court judgment, then removal would be improper because "[o]therwise, the [lower federal courts] would become invested with power to control the proceedings in the state courts, or would have appellate jurisdiction over them.... Such a result would be totally inadmissible. Id. 99 U.S. at 83.

The...