Parker North American Corp., In re

• Decision Date: 19 May 1994
• Docket Number: Nos. 92-55790,92-55804,s. 92-55790
• Citation: 24 F.3d 1145
• Parties: , 25 Bankr.Ct.Dec. 1083, Bankr. L. Rep. P 75,889 In re PARKER NORTH AMERICAN CORPORATION, Debtor. PARKER NORTH AMERICAN CORPORATION, Plaintiff-Appellee, v. RESOLUTION TRUST CORPORATION, as Receiver for Sooner Federal Savings and Loan Assoc., Defendant-Appellant. PARKER NORTH AMERICAN CORPORATION, Plaintiff-Appellee, v. RESOLUTION TRUST CORPORATION, as Receiver for Sooner Federal Savings and Loan Assoc., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1145

24 F.3d 1145

62 USLW 2742, 25 Bankr.Ct.Dec. 1083,

Bankr. L. Rep. P 75,889

In re PARKER NORTH AMERICAN CORPORATION, Debtor.

PARKER NORTH AMERICAN CORPORATION, Plaintiff-Appellee, v. RESOLUTION TRUST CORPORATION, as Receiver for Sooner Federal

Savings and Loan Assoc., Defendant-Appellant.

PARKER NORTH AMERICAN CORPORATION, Plaintiff-Appellee, v. RESOLUTION TRUST CORPORATION, as Receiver for Sooner Federal

Savings and Loan Assoc., Defendant-Appellant.

Nos. 92-55790, 92-55804.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 7, 1993.

Decided May 19, 1994.

G. Patrick Watson, Powell, Goldstein, Frazer & Murphy, Atlanta, GA, Ira H. Parker and P. Matthew Sutko, Resolution Trust Corp., Washington, DC, for defendant-appellant.

Marc J. Winthrop and Alan J. Friedman, Lobel, Winthrop & Broker, Irvine, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before: FLETCHER, PREGERSON, and HALL, Circuit Judges.

Opinion by Judge HALL; Concurrence by Judge FLETCHER

CYNTHIA HOLCOMB HALL, Circuit Judge:

The Resolution Trust Corporation, as receiver for Sooner Federal Savings and Loan Association, appeals a district court order reversing the bankruptcy court's holding that it lacked subject-matter jurisdiction over chapter 11 debtor Parker North American Corporation's action to recover preferential transfers. We affirm and remand to the bankruptcy court for a hearing on the merits.

I.

In 1988, Parker North American Corporation ("PNA") and Sooner Federal Savings and Loan Association ("Old Sooner") executed a sale and leaseback agreement under which Old Sooner lent $10 million to PNA. In March 1989, after repaying $4.65 million to Old Sooner, PNA filed a petition under chapter 11 of the Bankruptcy Code (the "Code"), 11 U.S.C. Secs. 101-1330. Shortly thereafter, PNA commenced in bankruptcy court an adversary proceeding against Old Sooner to recover the $4.65 million as a preferential transfer under Sec. 547(b) of the Code. Old Sooner subsequently filed proofs of claim against PNA for the balance of the $10 million and for other sums arising from the sale and leaseback transaction. In sum, Old Sooner sought approximately $14 million from PNA's bankruptcy estate.

In November 1989, the Office of Thrift Supervision ("OTS") declared Old Sooner insolvent and, pursuant to the newly-enacted Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), appointed the Resolution Trust Corporation ("RTC") as receiver for the institution. See 12 U.S.C. Sec. 1464(d)(2). The OTS subsequently transferred some of the assets and liabilities of Old Sooner to a new entity, Sooner Federal Savings Association ("New Sooner"), and appointed the RTC as conservator. See id. Under the OTS transfer agreement, New Sooner received all of Old Sooner's claims against PNA but none of the potential liability represented by PNA's preference action. ¹ See id. Sec. 1821(d)(2)(G).

The RTC subsequently sent notice to Old Sooner's creditors instructing them to file claims with the receiver prior to February 21, 1990. See id. Sec. 1821(d)(3). PNA never received the notice and never filed a claim. ² PNA did, however, continue to pursue its preference action in bankruptcy court, where the RTC actively participated in the chapter 11 case. Eventually, the RTC filed a summary judgment motion against PNA, asserting PNA's failure to file a claim as an affirmative defense to the preference action. The RTC did not dispute that Old Sooner had received a preference and, in fact, stipulated that the bankruptcy court should grant summary judgment for PNA in the event that none of its affirmative defenses were successful.

The bankruptcy court granted the RTC's summary judgment motion on different grounds, holding sua sponte that PNA's failure to exhaust FIRREA's claim procedures deprived it of subject-matter jurisdiction over the preference action. 131 B.R. 452 (Bankr.C.D.Cal.1991) (PNA I ). The district court reversed, concluding that Sec. 106(a) of the Code, which waives sovereign immunity for claims arising from the same transaction or occurrence as a claim filed by a governmental unit, provided the bankruptcy court with independent jurisdiction over PNA's action. 148 B.R. 925 (C.D.Cal.1992) (PNA II ). ³ In so holding, the district court relied on Sullivan v. Town & Country Nursing Servs. (In re Town & Country Nursing Servs.), 963 F.2d 1146 (9th Cir.1992), in which we determined that Sec. 106(a) created bankruptcy court jurisdiction over claims against the Department of Health and Human Services despite the debtor's failure to exhaust administrative remedies under the Medicare Act. Id. at 1154-55.

The RTC filed a timely appeal, necessitating our determination of whether FIRREA precludes bankruptcy court jurisdiction over a preference action against an institution for which the RTC, in its capacity as receiver, has filed a proof of claim arising from the same transaction as the alleged preference. ⁴ We review de novo this jurisdictional question, e.g., Piombo Corp. v. Castlerock Properties (In re Castlerock Properties), 781 F.2d 159, 161 (9th Cir.1986), and "note at the outset that the question we must resolve ... is not one on which we owe deference to the [RTC]. Congress did not commit questions of court access ... to the Corporation." Office & Professional Employees Int'l Union v. FDIC, 962 F.2d 63, 65 (D.C.Cir.1992) (internal citation omitted).

II.

District courts have original jurisdiction over bankruptcy cases "[n]otwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts." 28 U.S.C. Sec. 1334(b). Actions to recover preferential transfers are core proceedings, id. Sec. 157(b)(2)(F), and are therefore "squarely within [the bankruptcy court]'s subject matter jurisdiction." FDIC v. Tamposi (In re Tamposi Family Inv. Properties), 159 B.R. 631, 634 (Bankr.D.N.H.1993). "[B]y filing a claim against the bankruptcy estate the creditor triggers the process of 'allowance and disallowance of claims'.... If the creditor is met, in turn, with a preference action from the trustee, that action becomes part of the claims-allowance process.... In other words, the creditor's claim and the ensuing preference action by the trustee become integral to the restructuring of the debtor-creditor relationship." Langenkamp v. Culp, 498 U.S. 42, 44, 111 S.Ct. 330, 331, 112 L.Ed.2d 343 (1990) (internal quotation omitted). See Katchen v. Landy, 382 U.S. 323, 328-40, 86 S.Ct. 467, 472-78, 15 L.Ed.2d 391 (1966) (creditors consent to the bankruptcy court's summary jurisdiction over preference actions by filing a claim against the bankruptcy estate).

Through FIRREA, however, Congress granted the RTC broad power to hear and determine claims against insolvent thrifts. See 12 U.S.C. Secs. 1821(d)(3)-(d)(14). ⁵ FIRREA's "receivership claims process 'allow[s] the [RTC] to quickly resolve many of the claims against failed financial institutions without unduly burdening the District Courts.' " Henderson v. Bank of New England, 986 F.2d 319, 320 (9th Cir.) (quoting H.R.Rep. No. 54(I), 101st Cong., 1st Sess. 419, reprinted in 1989 U.S.C.C.A.N. 86, 215), cert. denied, --- U.S. ----, 114 S.Ct. 559, 126 L.Ed.2d 459 (1993).

In fact, FIRREA "strips all courts of jurisdiction over claims made outside the administrative procedures." Id. Specifically, FIRREA provides that "no court shall have jurisdiction over ... 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 [RTC] has been appointed receiver." 12 U.S.C. Sec. 1821(d)(13)(D)(i) (emphasis added). Claimants may seek review in district court only after the RTC has disallowed a claim or after 180 days have elapsed without a determination. Id. Secs. 1821(d)(5)(A); 1821(d)(6).

Claimants must exhaust these administrative remedies before seeking district or bankruptcy court review. RTC v. Midwest Fed. Sav. Bank, 4 F.3d 1490, 1495 (9th Cir.1993); Henderson, 986 F.2d at 321. "The statute bars judicial review of any non-exhausted claim, monetary or nonmonetary, which is susceptible of resolution through the claims procedure." Midwest Fed. Sav. Bank, 4 F.3d at 1495 (emphasis added) (internal quotations omitted). FIRREA "divests the district court of jurisdiction over both claims and counterclaims against the RTC until the claimants have exhausted the administrative procedures." Id.

The question before us, therefore, is whether PNA's preference action is "susceptible of resolution through the claims procedure." If it is, bankruptcy court jurisdiction does not exist because PNA failed to exhaust its administrative remedies under FIRREA. ⁶ If it is not, bankruptcy court jurisdiction exists and PNA is free to litigate the preference complaint there.

Analogous questions recently have generated significant litigation in the lower courts. After the bankruptcy court decision in this case, the first to discuss the issue, at least thirteen bankruptcy and district courts have addressed some form of the problem. See All Season's Kitchen, 145 B.R. at 393 n. 2 ("[T]he Bankruptcy Judge's grapevine has buzzed with news of the same theory being advanced [by the RTC] ... from the Canadian border to the Mexican border and from coast to coast.... [W]e are witnessing a regulatory campaign [by the RTC] to change the law."). Unfortunately, the dispositions rendered by the lower courts are inconsistent in analysis and result. ⁷ In reaching our decision, we canvass the relevant caselaw and draw on what we perceive to be the best reasoned and most persuasive cases.

Ultimately, we conclude that the district court erred by relying on Sec. 106(a). Nevertheless, we hold that FIRREA's claims process does not apply to PNA's preference action. We therefore affirm on grounds other than those set forth by the district...