Nimon v. Resolution Trust Corp.
| Decision Date | 21 October 1992 |
| Docket Number | No. 92-4361,92-4361 |
| Parties | W.H. NIMON, Bonnie K. Nimon, and W.H. Nimon, Trustee for Bonnie K. Nimon, Petitioners, v. RESOLUTION TRUST CORPORATION, Respondent. Summary Calendar. |
| Court | U.S. Court of Appeals — Fifth Circuit |
William B. Cullum, Dallas, Tex., for petitioners.
Donald W. Hill, Nigel F. Gant, Dallas, Tex., Gerald L. Jacobs, Gen. Counsel, Resolution Trust Corp., Washington, D.C., for respondent.
Carmen Sullivan, Regional Director, Resolution Trust Corp., Dallas, Tex., other interested parties.
Petition for Review of Decision of the Resolution Trust Corporation.
Before HIGGINBOTHAM, SMITH, and DeMOSS, Circuit Judges.
We visit again the plague of failures in the thrift industry. Petitioners W.H. Nimon and his wife, Bonnie K. Nimon, seek review of a decision of the Resolution Trust Corporation, denying federal deposit insurance coverage of funds deposited in the now-defunct Southwest Federal Savings and Loan Association. Because RTC's determination was not arbitrary and capricious, we uphold its decision. We also find that the procedures followed in this case provided the process due under the Fifth Amendment.
We are concerned with accounts and certificates of deposits petitioners maintained, in various capacities, in Southwest Federal Savings and Loan Association in Spring of 1991. The first two were certificates of deposit in the principal amount of $50,000 each. Certificate of deposit no. 14-120633-2, Certificate A, and certificate of deposit no. 14-120632-4, Certificate B, were both owned by Mr. and Mrs. Nimon, as joint tenants. Certificate A matured on May 14, 1991, with less than $200 accrued interest; Certificate B matured about June 3, 1991, with similar accrued interest. A third certificate of deposit, no. 14-138531-6, Certificate C, was in the name of W.H. Nimon, Trustee for Bonnie K. Nimon, and matured on May 14, 1991. The $98,000 from Certificate C were used to create a money market account on that date, with Mr. Nimon as trustee for Mrs. Nimon, the Trustee Account. Finally, there was another money market account, containing about $75,000, held in the name of Mr. Nimon, the Individual Account.
When Certificates A and B matured in May and early June, respectively, their funds remained idle. On or about June 21, an employee of Southwest attempted to contact Mr. Nimon regarding the disposition of these funds. When Mr. Nimon replied by telephoning Southwest on June 24, 1991, he orally approved the transfer of the funds from Certificates A and B to a money market account. Those funds, totalling just more than $100,000, were deposited in the Trustee Account on that date. Mr. Nimon claims that it was his understanding that the transfers he authorized would be to an account with deposit insurance covering the face amounts of Certificates A and B. After these transfers, however, the Trustee Account contained more than $198,000.
On July 26, 1991, the Office of Thrift Supervision closed Southwest and appointed RTC as receiver. On that date, only the Individual Account with $75,085 and the Trustee Account with $199,940 remained open.
In October, 1991, RTC notified the Nimons that some of their funds in Southwest were excess and uninsured. RTC initially stated that insurance coverage extended to the entire Individual Account and to the first $100,000 of the Trustee Account. RTC also stated that coverage would be extended to an additional $24,915 of the Trustee Account, because that amount of Mr. Nimon's individual coverage had not been exhausted by his individual account.
The Nimons requested RTC to reconsider this decision. They submitted a statement of facts for RTC's consideration, which maintained that the funds of Certificates A and B had been transferred to an account without adequate insurance coverage without their authorization.
RTC did reconsider its decision, finding that the Nimons were entitled to even less coverage. On December 4, 1991, RTC modified its decision and stated that only $100,000 in the Trustee Account were insured, and that its initial allowance of an additional $24,915 as part of Mr. Nimon's coverage had been mistaken. Once again, the Nimons sought to have RTC reconsider its decision. On February 6, 1992, RTC denied this application for reconsideration. RTC's letter of February 6 stated the reasons for its coverage decision, and stated that it was RTC's "final determination."
Our jurisdiction, the first question, turns on the proper construction of 12 U.S.C. § 1821(f). This section was among those rewritten by FIRREA in 1989. The statute, governing the payment of deposit insurance by the Federal Deposit Insurance Corporation or, as here, RTC, reads in pertinent part:
(3) Resolution of disputes
In the case of any disputed claim relating to any insured deposit or any determination of insurance coverage with respect to any deposit, the Corporation may resolve such disputed claim in accordance with regulations prescribed by the Corporation establishing procedures for resolving such claims.
If the Corporation has not prescribed regulations establishing procedures for resolving disputed claims, the Corporation may require the final determination of a court of competent jurisdiction before paying any such claim.
(4) Review of corporation's determination
Final determination made by the Corporation shall be reviewable in accordance with chapter 7 of Title 5 by the United States Court of Appeals for the District of Columbia or the court of appeals for the Federal judicial circuit where the principal place of business of the depository institution is located.
FDIC and RTC have not prescribed regulations governing deposit insurance coverage disputes. RTC policy has been to resolve disputes on a informal basis.
RTC argues that this review of its decision should be in the federal district court, not the court of appeals. This has practical merit but, unhappily relies upon a flawed reading of section 1821(f).
First, RTC correctly notes that subsection 1821(f)(3)(A) has no application, because no regulations governing coverage disputes have been prescribed. RTC then concludes that subsection (f)(3)(B) requires that a "final determination" reviewable by this court must be made by a court of competent jurisdiction, instead of by RTC. This ignores that by the statute RTC may require a court determination--it does not require RTC to do so. That is, the statute permits RTC to itself render a final determination, even though there are no regulations formalizing its procedures. In this case, although RTC followed informal procedures, its last pronouncement denying the Nimons' request for reconsideration is for all effects and purposes--and as its own terms state--the "final determination" of this dispute. See Abrams v. Federal Deposit Ins. Corp., 938 F.2d 22, 25 (2d Cir.1991) (). 1
Once there has been a final determination of the coverage dispute by RTC, subsection 1821(f)(4) provides for review by the court of appeals. This provision controls, regardless of the fact, which RTC emphasizes, that the pre-FIRREA statutory scheme provided for initial review of FDIC and FSLIC insurance coverage determinations in federal district court. See e.g. Patrick A. Hymel, CLU, & Assoc. v. FDIC, 925 F.2d 881 (5th Cir.1991) (); Spawn v. Western Bank-Westheimer, 925 F.2d 885 (5th Cir.1991) (same).
RTC identifies a practical reason why the district court might be a better forum for the initial review of RTC coverage decisions. Because RTC has no formalized procedures to resolve disputes, no formal fact finding has taken place. Contrast appellate court review of FDIC enforcement cases under 12 U.S.C. § 1818(h). Procedural regulations exist for the administrative determination of those cases, see 12 C.F.R. Part 308, so that a record with findings of fact and conclusions of law results for the court of appeals to review. In this case, RTC has neither verified nor denied the asserted facts on which the Nimons rely. Although RTC contends here that the truthfulness of those assertions is irrelevant, there may be cases where there are disputed facts, not found in the depository institution's records, and critical to the outcome of the review. 2 Nonetheless, we agree with the Second Circuit in concluding that Congress used plain language in 12 U.S.C. § 1821(f)(4) which specifies that the courts of appeal will be the fora of these reviews. See Abrams, 938 F.2d at 25.
Petitioners contend that RTC's denial of insurance coverage to excess funds in the Trustee Account was error, caused in part by RTC's refusal to consider the circumstances surrounding the transfer of funds to that account. In reaching this decision, RTC was acting as an insurer of deposits, and thus as an authority of the government of the United States. See Hymel, 925 F.2d at 883 (). Therefore, as 12 U.S.C. § 1821(f)(4) recognizes, this decision is reviewed according to the Administrative Procedure Act and may only be set aside if found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. Hymel, 925 F.2d at 883; see also Abdulla Fouad & Sons v. Federal Deposit Ins. Corp., 898 F.2d 482, 483 (5th Cir.1990) ().
In deciding whether an insuring agency's decision was arbitrary and capricious, this court considers whether the agency followed its governing regulations. In Abdulla Fouad, we found that the FDIC acted reasonably when looking to bank deposit records alone, as the regulations require, and refusing to consider extrinsic evidence of account ownership. 898 F.2d at 484...
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