New Maine Nat. Bank v. Reef, Civ. No. 91-0044-P.

• Decision Date: 31 May 1991
• Docket Number: Civ. No. 91-0044-P.
• Citation: 765 F. Supp. 763
• Parties: NEW MAINE NATIONAL BANK, Plaintiff, Federal Deposit Insurance Corporation, Counterclaim Defendant, v. Norman S. REEF and Robert L.S. McClure, III, Defendants.
• Court: U.S. District Court — District of Maine

765 F. Supp. 763

NEW MAINE NATIONAL BANK, Plaintiff, Federal Deposit Insurance Corporation, Counterclaim Defendant, v. Norman S. REEF and Robert L.S. McClure, III, Defendants.

Civ. No. 91-0044-P.

United States District Court, D. Maine.

May 31, 1991.

Thomas A. Cox, Michael K. Martin, Petrucelli, Cox & Martin, Portland, Me., for plaintiff.

Allen Hrycay, Reef, Jordan, Hrycay & Sears, Portland, Me., for defendants.

MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' RESPONSE TO THE COURT'S ORDER TO SHOW CAUSE OF MARCH 8, 1991 (Docket No. 7)

GENE CARTER, Chief Judge.

This matter is now before the Court on the Court's review of Defendant's Response (Docket No. 9), filed on March 27, 1991, to this Court's Order to Show Cause (Docket No. 7), entered herein on March 8, 1991. In their Response, Defendants take the position that the counterclaim should not be dismissed without prejudice pursuant to the provisions of 12 U.S.C. section 1821(d)¹ pending exhaustion of the procedure for claims resolution by the FDIC, as that is established by 12 U.S.C. sections 1821(d)(3) and (5) and the regulations promulgated under 12 U.S.C. sections 1821(d)(4) for the reason that this Court is not without jurisdiction over the counterclaim because the claim was commenced and pending in court prior to the appointment of the FDIC as Receiver. Defendants' Response to Order to Show Cause (Docket No. 9) at 2. This position is amplified by the assertion that

The provisions of 18 sic U.S.C. section 1821(d)(13)(D) are not applicable to actions which were pending in Court prior to the appointment of the FDIC because such actions are governed by other provisions of that subsection. 12 U.S.C. section 1821(d)(6)(A) clearly refers to the continuation of action commenced before the appointment of the receiver and 12 U.S.C. section 1821(d)(12)(A) & (B) clearly provides that upon the application for a stay by the FDIC this Court must grant the stay as to all parties.

Id. Accordingly, Defendants argue that the Court is not presently without jurisdiction over the counterclaim pursuant to the provisions of 12 U.S.C. section 1821(d)(13)(D) of the Act and that it may not, therefore, dismiss the counterclaim without prejudice pending exhaustion of the administrative claims process mandated by FIRREA. Defendants' construction of the statutory provisions is wholly in error; therefore, the predicate for its argument that the Court maintains substantive jurisdiction over the counterclaim in this case is without merit.²

First of all, the provisions of sections 1821(d)(13)(D)(i) and (ii) make it clear that the Court is without substantive jurisdiction over any claim or action of the type put forth in the counterclaim herein. The statute provides:

(D) Limitation on judicial review

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 Corporation has been appointed receiver, including assets which the Corporation may acquire from itself as such receiver; or

(ii) any claim relating to any act or omission of such institution or the Corporation as receiver.

No provision is made in subsection (13) of section 1821(d) that would place the counterclaim within the exception referred to in the first phrase of subsection (D). Further, Defendants' argument that somehow section 1821(d)(6)(A) or section 1821(d)(12)(A) and (B) apply to place the counterclaim herein in a category of claims excepted from the clear operation of the language of subsection (D) is without merit.

First of all, section 1821(d)(6)(A) relates to the statutory grant of a right to a claimant against the FDIC or the receiver bank to request either administrative review or judicial review by filing a suit on such claim after the expiration of the period for the administrative processing of the claim by the FDIC. Clearly, no jurisdiction is conferred upon the Court by the filing of any claim for administrative review. It is equally clear that no jurisdiction exists in the court with respect to a claim for judicial determination of a claim subject to the administrative claims process until the specified "suit on such claim" has been filed with the court.

The parenthetical phrase in subsection (6) "(or continue an action commenced before the appointment of the receiver)" can apply only where there has been some administrative action of the court in the particular procedural posture of a matter commenced prior to the appointment of the receiver which leaves the action pending for administrative purposes.³ However, it is clear that, pursuant to the provisions of section 1821(d)(13)(D), "no court shall have jurisdiction over any claim or action" within subsections (i) and (ii) of that statutory language. Thus, there is no basis in this case for the Court to continue to exercise substantive jurisdiction over the counterclaim pursuant to section 1821(d)(6)(A).

Next, the argument that somehow sections 1821(d)(12)(A) and (B) save the jurisdiction of this Court over the counterclaim herein by requiring the Court to grant a request for a stay made by the FDIC as Receiver as to claims within the scope of sections 1821(d)(13)(D)(i) and (ii) is without merit as a predicate to argue against dismissal of such claims without prejudice. Here, the FDIC's motion specifically states:

The FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), as Receiver of MAINE NATIONAL BANK ("Bank") moves for a stay only of the counterclaim pursuant to 12 U.S.C. § 1821(d)(3), (5), (6), and (13)(D), such stay to remain in effect unless and until the claim against Bank has been presented to and disallowed by the FDIC as Receiver.

Motion of Counterclaim Defendant for a Stay of Proceedings, 2/5/91 (Docket No. 4) at 1 (emphasis in original). Further, the prayer for relief in the motion "moves that the counterclaim herein be stayed...." Id. at 2 (emphasis in original). This Court has consistently endorsed such motions by the FDIC made in all cases subject to the provisions of FIRREA as "DENIED" for lack of any jurisdiction in the Court.⁴ The Court's theory in doing so is that if, "no court shall have jurisdiction over" the specified claims, this Court has no jurisdiction even to issue a stay of those claims under that provision of the Act. Accordingly, the stay provision created by sections 1821(d)(12)(A) and (B), which is specifically for discrete periods of duration, is intended to relate to claims as to which the Court is not divested of jurisdiction by section 1821(d)(13)(D) (e.g., claims of the failed Bank or the FDIC as Receiver against other parties).

The clear purpose of such stays is to permit the FDIC, where it comes newly into an existing case or dispute, a limited period without court action, at its own request, so that it will not be jeopardized in its litigating position by unfamiliarity with, or lack of preparation for, the case which is not the result of any fault on the Receiver's part. The provision is not intended to be a basis to require an indefinite stay of proceedings by the Court over claims in a case as to which it has no substantive jurisdiction in any event. The Court's position is simply that the statutory language of sections 1821(d)(13)(D)(i) and (ii) divests the Court of substantive jurisdiction over claims of the specified nature pending the working out of the administrative claims process provided for by the statute or until the lapse of the designated time provided therefor.

Defendants' argument overlooks a very significant point, which is that the provisions of section 1821(d)(13)(D) divest the Court of jurisdiction over only two categories of claims: (1) "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 corporation has been appointed receiver, including assets which the corporation may acquire from itself as such receiver" and (2) "any claim relating to any act or omission of such institution or the corporation as receiver." 12 U.S.C. §§ 1821(d)(13)(D)(i) and (ii). Nowhere does section 1821 divest the Court of jurisdiction over the claims of the failed Bank or of the FDIC as Receiver therefor in the litigation which is subject to removal pursuant to the FIRREA provisions. Thus, the Court retains jurisdiction over those principal claims of the Bank and the FDIC as Receiver and may act upon them in the ongoing course of the litigation subsequent to the impact of the stay provision of sections 1821(d)(12)(A) and (B). The stay provided for in section 1821(d)(12)(B) is, in the view of the Court as a matter of statutory construction, intended only to relate to claims as to which the Court is not divested of jurisdiction by section 1821(d)(13)(D).⁵ The Court may not take substantive action on any claim within in the two categories specified in ...