Reding v. Federal Deposit Ins. Corp., 91-1046

• Decision Date: 21 August 1991
• Docket Number: No. 91-1046,91-1046
• Citation: 942 F.2d 1254
• Parties: James A. REDING; Terrance W. Votel, Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of Oak Park Bank, d/b/a Oak Park Heights State Bank, Appellant. Rodney M. SKOGEN, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of the Oak Park Bank, d/b/a Oak Park Heights State Bank, Appellant. David J. FISHER, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of Oak Park Bank, d/b/a Oak Park Heights State Bank, Appellant. John E. WALSH, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of Oak Park Bank, d/b/a Oak Park Heights State Bank, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1254

942 F.2d 1254

60 USLW 2162

James A. REDING; Terrance W. Votel, Appellees, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of Oak

Park Bank, d/b/a Oak Park Heights State Bank, Appellant.

Rodney M. SKOGEN, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of the Oak

Park Bank, d/b/a Oak Park Heights State Bank, Appellant.

David J. FISHER, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of Oak

Park Bank, d/b/a Oak Park Heights State Bank, Appellant.

John E. WALSH, Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION as receiver of Oak

Park Bank, d/b/a Oak Park Heights State Bank, Appellant.

No. 91-1046.

United States Court of Appeals Eighth Circuit.

Submitted June 10, 1991.

Decided Aug. 21, 1991.

Brian E. Palmer, Minneapolis, Minn., argued (Amy Farr Robertson, Minneapolis, Minn., and Ann S. DuRoss, Joan E. Smiley and E. Whitney Drake, Washington, D.C., on brief), for appellant.

Gerald S. Duffy, Minneapolis, Minn. and Terrance W. Votel, St. Paul, Minn., for appellee.

Before LAY, Chief Judge, RONEY, ^* Senior Circuit Judge, and WOLLMAN, Circuit Judge.

LAY, Chief Judge.

The FDIC was sued as receiver of a failed state bank in Minnesota state court and thereafter removed the plaintiffs' suit from state to federal court. The district court, pursuant to 12 U.S.C. § 1819 (1989), found that it lacked subject-matter jurisdiction and remanded the case back to state court. We reverse the decision of the district court, and remand the case for further proceedings.

BACKGROUND

In April, 1986, James Reding, Terrance Votel, Rodney Skogen, David Fisher, and John Walsh (collectively "debtors") executed identical promissory notes in favor of Oak Park Bank ("Bank") of Stillwater, Minnesota. Following the failure of the Bank, the FDIC was appointed receiver by the Minnesota Commissioner of Commerce, pursuant to 12 U.S.C. § 1821(c) (1989), and Minn.Stat. § 49.05 subd. 5. In its capacity as receiver ("FDIC-receiver"), the FDIC sold the debtors' notes to the FDIC in its corporate capacity ("FDIC-corporate"). Prior to its failure, the Bank had instituted a collection action against the debtors in state court. FDIC-corporate was substituted for the Bank and it removed the case to federal district court. The debtors raised numerous defenses to the collection action, including fraudulent inducement, misrepresentation, lack of consideration, accord and satisfaction, novation, misappropriation, and conversion. The district court granted the FDIC's motion for summary judgment, holding that the debtors' defenses were barred by 12 U.S.C. § 1823(e) (1989) ¹ and While the FDIC's motion for summary judgment was pending before the district court in Fisher I, the debtors filed this lawsuit in state court against FDIC-receiver, alleging the same claims the debtors were asserting as defenses in the collection action by FDIC-corporate. All of these were state law claims. Relying on the removal provision of 12 U.S.C. § 1819(b)(2)(B) (1989), the FDIC removed the case to federal court and moved for dismissal under Fed.R.Civ.P. 12(b)(6) or in the alternative for summary judgment. The debtors moved to remand the case, arguing that the district court lacked federal jurisdiction. They relied on section 1819(b)(2)(D), which provides that the FDIC cannot remove cases and federal jurisdiction does not exist when certain conditions are present.

                the doctrine embodied in D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942). 2  FDIC v. Fisher, 727 F.Supp. 1306, 1309-10 (D.Minn.1989) ("Fisher I ").   This finding has never been challenged
                

The district court acknowledged that the debtors' recycled claims had already been decided against them in Fisher I, but found that this fact did not affect the jurisdictional issue in this case. The court rejected as "bootstrapping" any suggestion that removal power and federal jurisdiction were created merely because the claims had been presented previously in an action between the FDIC in its corporate capacity and the debtors. Fisher v. Oak Park Bank, 1990 WL 134408 at * 4 (D.Minn., Sept. 13, 1990) ("Fisher II "). The district court then recognized that jurisdiction, under the provisions of section 1819, would be proper unless the debtors fell within the exceptions in section 1819(b)(2)(D). All the parties acknowledged that the first two exceptions were met, but disagreed about whether subpart (iii) requiring that only state law issues be present was met. Without explicitly stating so, the district court applied the "well-pleaded complaint" rule, and held that section 1819(b)(2)(D)(iii) could not be interpreted to mean that federal law was injected into the controversy when the FDIC would be relying on federal law as a defense. The district court then ordered the case remanded to state court. The FDIC appeals the remand order ³ and also asks this court to grant the FDIC summary judgment or to dismiss the debtors' claims.

ANALYSIS

I. SECTION 1819(b)(2)(D)(iii)

A.

Whether the FDIC had the power to remove this case, and whether the federal courts have jurisdiction over this lawsuit, turns upon the interpretation of 12 U.S.C. § 1819(b)(2)(D)(iii). While this suit was pending, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), which amended section 1819 and section 1823. The district court held that the amendments to section 1819 affect jurisdiction and thus should be applied retroactively. See FDIC v. Kasal, 913 F.2d 487, 493 (8th Cir.1990) (applying FIRREA amendments to section 1819 retroactively), cert. denied, --- U.S. ----, 111 S.Ct. 1072, 112 L.Ed.2d 1178 (1991); see also In re Resolution Trust Corp., 888 F.2d 57, 58 (8th Cir.1989) (stating that new statutes changing procedural or jurisdictional rules are applied retroactively). As amended, section 1819 ⁴ gives the FDIC increased power to remove cases from state court and grants federal jurisdiction over cases in which the FDIC is a party unless three limited exceptions exist. Subparagraph (A) states that all actions in which the FDIC is a party are "deemed to arise under the laws of the United States" unless the three exceptions in subparagraph (D) are fulfilled. In relevant part, section 1819(b)(2)(D) states:

any action--

(i) to which the Corporation, in the Corporation's capacity as receiver of a State insured depository institution by the exclusive appointment by State authorities, is a party other than as a plaintiff;

(ii) which involves only the preclosing rights against the State insured depository institution, or obligations owing to, depositors, creditors, or stockholders by the State insured depository institution; and

(iii) in which only the interpretation of the law of such State is necessary,

shall not be deemed to arise under the laws of the United States.

12 U.S.C. § 1819(b)(2)(D) (1989). The parties agree that subparts (i) and (ii) are satisfied, but dispute whether the debtors have proved that subpart (iii) is met.

The FDIC argues that disposition of this action does not depend only on the interpretation of state law because it has raised federal law as a defense to the suit. The FDIC contends that section 1823(e) and the federal common law doctrine of D'Oench bars this suit, and that to decide the case a court must interpret federal law.

The debtors assert that their claims are entirely premised upon state law and that a court must look only to their complaints to decide whether the exception in subpart (iii) applies. The debtors' argument is essentially that the "well-pleaded complaint" rule controls the interpretation of section 1819(b)(2)(D)(iii). The judicially created well-pleaded complaint rule states that the basis of federal jurisdiction must appear on the face of the plaintiff's complaint and that removal to federal court is improper if federal jurisdiction is premised solely upon a plaintiff's allegation of an anticipated defense or upon a defendant's responsive pleading. See Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808, 809 & n. 6, 106 S.Ct. 3229, 3233 & n. 6, 92 L.Ed.2d 650 (1986); Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10, 103 S.Ct. 2841, 2846-2847, 77 L.Ed.2d 420 (1983). Two federal circuits and one district court have recently rejected the same argument pressed by the debtors here.

In Capizzi v. FDIC, 937 F.2d 8 (1st Cir.1991), the court held that the language of section 1819(b)(2)(D)(iii) evidences Congress' intent that courts must look beyond the plaintiff's complaint to any defenses in order to determine if only state law issues are present. Id. at 9. In addition, the court found the history of section 1819 and the general purpose of the statute supported the conclusion that the well-pleaded complaint rule did not apply in these circumstances. Id. The First Circuit concluded by recognizing that district courts must look to the defenses raised to determine what they are and "their likely significance" to the case. Id. at 11.

Likewise, in Lazuka v. FDIC, 931 F.2d 1530 (11th Cir.1991), the court held that section 1819 creates a "rebuttable presumption" of federal jurisdiction for cases involving the FDIC and that the wording of the amendments to section 1819 shows Congress' intent to nullify the well-pleaded complaint rule when interpreting the exception in subpart (iii). Id. at 1535. ⁵ The Eleventh Circuit reasoned that by "deeming" actions to arise under federal law, Congress placed the burden of defeating federal jurisdiction on the plaintiff and eliminated the requirement that the basis for federal jurisdiction appear on the face of the plaintiff's complaint. Id. The court concluded that when the FDIC raises federal law as a defense to a plaintiff's state law claim, a plaintiff will not have satisfied the exception in subpart (iii) and the case cannot be remanded to state court.

Finally, in Perini Corp. v. FDIC, 754 F.Supp. 235 (D.Mass.1991),...