Neman v. Commercial Capital Bank

• Decision Date: 29 April 2009
• Docket Number: No. B208164.,B208164.
• Citation: 92 Cal. Rptr. 3d 800,173 Cal.App.4th 645
• Parties: TONY NEMAN, Plaintiff and Appellant, v. COMMERCIAL CAPITAL BANK, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

173 Cal.App.4th 645

92 Cal. Rptr. 3d 800

TONY NEMAN, Plaintiff and Appellant, v. COMMERCIAL CAPITAL BANK, Defendant and Respondent.

No. B208164.

Court of Appeals of California, Second District, Division Five.

April 29, 2009.

Mink Law Firm and Lyle R. Mink for Plaintiff and Appellant.

Allen Matkins Leck Gamble Mallory & Natsis, David R. Zaro and Joshua A. del Castillo for Defendant and Respondent.

OPINION

TURNER, P. J. —

I. INTRODUCTION

In 1989, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which is often referred to by the acronym FIRREA, and is codified at title 12 United States Code section 1821(d) (the act). The act was designed to provide for takeovers of failed federally insured banking institutions. And the act was designed to provide a smooth mechanism for the rehabilitation and disposal of claims against such institutions. (Yeomalakis v. F.D.I.C. (1st Cir. 2009) 562 F.3d 56, ___; Marquis v. F.D.I.C. (1st Cir. 1992) 965 F.2d 1148, 1154.) As will be noted, the act created an administrative review process for the resolution of claims against a failed bank. Here, the Federal Deposit Insurance Corporation, as the receiver for defendant, Washington Mutual Bank as the successor to Commercial Capital Bank, FSB, has moved to dismiss or further stay the appeal of plaintiff, Tony Neman. We conclude the Federal Deposit Insurance Corporation has presented no basis to dismiss plaintiff's appeal. But we agree with the Federal Deposit Insurance Corporation it is entitled to a stay of the appeal pending completion of the 180-day time period described in title 12 United States Code section 1821(d)(5)(A)(i) in order to complete the administrative review process.

II. PROCEDURAL BACKGROUND

On March 3, 2005, plaintiff and U.S. Development 26, LLC (the limited liability corporation), filed suit against Commercial Capital Bank, FSB. Plaintiff alleged he was the "managing member" of the limited liability corporation and the personal guarantor of two construction loans. After answering, Commercial Capital Bank, FSB, filed a cross-complaint against the limited liability corporation, plaintiff, and two other cross-defendants. On August 25, 2006, Commercial Capital Bank, FSB, filed its first summary judgment and adjudication motion. On November 11, 2006, the summary judgment and adjudication motion of Commercial Capital Bank, FSB, was denied. On January 10, 2008, Commercial Capital Bank, FSB, filed another summary judgment motion. On March 25, 2008, the summary judgment motion of Commercial Capital Bank, FSB, was granted. On April 15, 2008, judgment was entered on plaintiff's complaint in favor of Commercial Capital Bank, FSB. On its cross-complaint, Commercial Capital Bank, FSB, received $185,489.74 plus interest and costs including attorney fees. On May 27, 2008, plaintiff appealed from the judgment in favor of Commercial Capital Bank, FSB.

On September 25, 2008, the Federal Deposit Insurance was appointed as the receiver for Washington Mutual Bank, the successor in interest of Commercial Capital Bank, FSB, by Darrell W. Dochow, the Regional Director of the Office of Thrift Supervision of the United States Department of the Treasury. On December 3, 2008, we ordered the Federal Deposit Insurance Corporation substituted as defendant in place of Washington Mutual Bank, the successor in interest of Commercial Capital Bank, FSB. On December 2, 2008, plaintiff and the limited liability corporation filed a claim with the Federal Deposit Insurance Corporation which involved the matters set forth in the complaint. Further, pursuant to title 12 United States Code section 1821(d)(12)(A)(ii),¹ the motion of the Federal Deposit Insurance Corporation for a 90-day stay of the appeal until March 4, 2009, was granted. While the 90-day stay was in effect, the Federal Deposit Insurance Corporation moved to dismiss plaintiff's appeal, or in the alternative, stay his appeal pending the conclusion of its administrative review process. The limited liability corporation is not a party to this appeal.

III. DISCUSSION

The act is so extraordinarily complex that one circuit court panel described it thusly: "[The act'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." (Marquis v. F.D.I.C., supra, 965 F.2d at p. 1151.) Another circuit wrote: "`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.'" (F.D.I.C. v. Lacentra Trucking, Inc. (11th Cir. 1998) 157 F.3d 1292, 1300.) Fortunately, since its adoption in 1989, courts have resolved many of the act's ambiguities. Rather than engage in a detailed analysis of the act, we will rely on the controlling decisional authority.

(1) First, there is no merit to the argument of the Federal Deposit Insurance Corporation that the appeal must be dismissed. At the outset, it bears emphasis that state courts have subject matter jurisdiction over lawsuits against failed federally insured financial institutions filed prior to the appointment of the Federal Deposit Insurance Corporation as the receiver. (RTC Commercial Assets v. Phoenix Bond & Indem. (7th Cir. 1999) 169 F.3d 448, 454; Holmes Fin. Associates v. Resolution Trust Corp. (6th Cir. 1994) 33 F.3d 561, 566, 569-570 & fn. 6; Simard v. Resolution Trust Corp. (D.C.App. 1994) 639 A.2d 540, 545, fn. 8; Robbins v. Foothill Nissan (1994) 22 Cal.App.4th 1769, 1772, 1780-1786 .) As noted, this is a case where suit was filed and the matter was on appeal when the Federal Deposit Insurance Corporation was appointed as the receiver and plaintiff then filed his administrative claim. The Federal Deposit Insurance Corporation argues though that since the administrative review process has not yet been completed, the appeal must be dismissed.

(2) Title 12 United States Code section 1821(d)(2)(H)² provides that the Federal Deposit Insurance Corporation, once it is appointed as the receiver, has the obligation to pay all valid claims of a failed bank. (Sharpe v. FDIC (9th Cir. 1997) 126 F.3d 1147, 1154; Robbins v. Foothill Nissan, supra, 22 Cal.App.4th at pp. 1776-1780.) In order to evaluate creditors' claims, the act provides for an administrative review process. (12 U.S.C. § 1821(d)(3), (5); Meliezer v. Resolution Trust Co. (5th Cir. 1992) 952 F.2d 879, 881 ["To assure that the RTC or Federal Deposit Insurance Corporation could deal expeditiously with failed depository institutions, Congress created a new claims determination procedure by which the creditors of a failed institution may be required to first present their claims to the Receiver for administrative consideration before pursuing a judicial remedy." (Fn. omitted.)].) The duration of the administrative review process is set forth in title 12 United States Code section 1821(d)(5)(A)(i): "Before the end of the 180-day period beginning on the date any claim against a depository institution is filed with the [Federal Deposit Insurance Corporation] as receiver, the [Federal Deposit Insurance Corporation] shall determine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such a claim." (See Carney v. Resolution Trust Corp. (5th Cir. 1994) 19 F.3d 950 956, fn. 1; Meliezer v. Resolution Trust Co., supra, 952 F.2d at p. 881.) The parties may agree in writing to extend the 180-day period. (12 U.S.C. § 1821(d)(5)(A)(ii).)³

(3) The act does not explicitly require exhaustion of the administrative review process as a precondition to resort to the courts. (Marquis v. F.D.I.C., supra, 965 F.2d at p. 1151; Meliezer v. Resolution Trust Co., supra, 952 F.2d at p. 882.) The United States Supreme Court has held when a federal statute does not explicitly require exhaustion of an administrative remedy, the issue then turns on whether Congress intended such to exist. (McCarthy v. Madigan (1992) 503 U.S. 140, 144 [117 L.Ed.2d 291, 112 S.Ct. 1081]; Patsy v. Florida Board of Regents (1982) 457 U.S. 496, 502, fn. 4 [73 L.Ed.2d 172, 102 S.Ct. 2557].) Courts evaluating the act have concluded Congress intended that the exhaustion of the administrative review process before the Federal Deposit Insurance Corporation is mandatory. (Meliezer v. Resolution Trust Co., supra, 952 F.2d at p. 882; see Marquis v. F.D.I.C., supra, 965 F.2d at p. 1151.) Thus, exhaustion of the act's administrative review process is a precondition to litigation against the Federal Deposit Insurance Corporation to recover a debt owed by a failed bank. (Meliezer v. Resolution Trust Co., supra, 952 F.2d at p. 882; 2974 Properties, Inc. v. Resolution Trust Corp. (1994) 23 Cal.App.4th 871, 878-880 .) The duty to exhaust the act's administrative review process applies even in a case such as this one where suit is filed and thereafter the Federal Deposit Insurance Corporation was appointed as the receiver for the failed bank. (Intercontinental Travel Marketing v. F.D.I.C. (9th Cir. 1994) 45 F.3d 1278, 1283; Brady Dev. v. Resolution Trust Corp. (4th Cir. 1994) 14 F.3d 998, 1005; Resolution Trust Corp. v. Mustang Partners (10th Cir. 1991) 946 F.2d 103, 106.)

Here, plaintiff could not pursue his administrative remedies at any time suit was pending in the trial court. Judgment was entered on April 15, 2008. The Federal Deposit Insurance Corporation was not appointed as the receiver until September 25, 2008, by Regional Director Dochow of the Office of Thrift Supervision. In Marquis v. F.D.I.C. supra, 965 F.2d at pages 1150-1155, in four separate cases, federally insured financial institutions were sued. In each case after suit was filed, the Federal Deposit Insurance...