Resolution Trust Corp. v. Westgate Partners, Ltd.

• Decision Date: 27 June 1991
• Docket Number: No. 90-1033,90-1033
• Citation: 937 F.2d 526
• Parties: RESOLUTION TRUST CORPORATION, as Conservator for American Savings & Loan Association of Colorado; Resolution Trust Corporation, as Receiver for American Federal Savings and Loan Association of Colorado, successors in interest to the Federal Savings and Loan Insurance Corporation, Plaintiffs-Appellants, v. WESTGATE PARTNERS, LTD., a Colorado limited partnership, and Westgate Corporation, a Colorado corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 526

937 F.2d 526

60 USLW 2049

RESOLUTION TRUST CORPORATION, as Conservator for American Savings & Loan Association of Colorado; Resolution Trust Corporation, as Receiver for American Federal Savings and Loan Association of Colorado, successors in interest to the Federal Savings and Loan Insurance Corporation, Plaintiffs-Appellants, v. WESTGATE PARTNERS, LTD., a Colorado limited partnership, and Westgate Corporation, a Colorado corporation Defendants-Appellees.

No. 90-1033.

United States Court of Appeals Tenth Circuit.

June 27, 1991.

Ann S. Duross, Asst. General Counsel, Joan E. Smiley, Sr. Counsel, and Daniel H. Kurtenbach, Sr. Atty., Federal Deposit Ins. Corp., Washington, D.C., for plaintiffs-appellants.

George V. Chesteen and James A. Halpin of Chesteen & Halpin, Littleton, Colo., for defendants-appellees.

Before TACHA, and EBEL, Circuit Judges, and VAN BEBBER, District Judge. ^*

EBEL, Circuit Judge.

The issue we decide is whether the Resolution Trust Corporation ("RTC"), acting as receiver for a failed savings institution in a case in which it replaced the Federal Savings and Loan Insurance Corporation ("FSLIC") as the plaintiff, properly removed the case to the federal district court in the district where the institution's principal place of business was located ("local federal district court"). The district court held that under the applicable removal statute, removal to the local federal district court was improper. We agree with the district court's interpretation of the statute and, therefore, AFFIRM.

FACTS

On April 5, 1989, the Federal Home Loan Bank Board appointed the FSLIC as conservator for American Federal Savings and Loan Association of Colorado ("American Federal"). On June 21, 1989, the FSLIC, acting on behalf of American Federal, filed suit in the District Court for Jefferson County, Colorado, against Westgate Partners, Ltd. and Westgate Corporation (collectively "Westgate"), the defendants-appellees. The gravamen of the complaint against Westgate was that Westgate had defaulted on a $8,700,000 note owed to American Federal.

On August 9, 1989, the RTC replaced the FSLIC as conservator. ¹ On September 27, 1989, the RTC was appointed receiver for American Federal. Simultaneously, the RTC was appointed conservator for a newly created institution, American Savings of Colorado ("American Savings"). On September 28, 1989, American Savings purchased substantially all the assets of American Federal.

On October 10, 1989, the RTC filed a notice of removal of its suit on behalf of American Savings against Westgate to the United States District Court for the District of Colorado. The United States District Court remanded the case on the grounds that removal in this case was proper only to the United States District Court for the District of Columbia. 726 F.Supp. 807. 726 F.Supp. 807. The RTC appeals the district court's remand order.

DISCUSSION

We begin with the language of the relevant statutory provision:

POWER TO REMOVE; JURISDICTION.--

(1) IN GENERAL.--Notwithstanding any other provision of law, any civil action, suit, or proceeding to which the Corporation ² is a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction over such action, suit, or proceeding.

(2) CORPORATION AS PARTY.--The Corporation shall be substituted as a party in any civil action, suit, or proceeding to which its predecessor in interest was a party with respect to institutions which are subject to the management agreement dated February 7, 1989, among the Federal Savings and Loan Insurance Corporation, the Federal Home Loan Bank Board and the Federal Deposit Insurance Corporation.

(3) REMOVAL AND REMAND.--The Corporation may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States District Court for the District of Columbia, or if the action, suit, or proceeding arises out of the actions of the Corporation with respect to an institution for which a conservator or a receiver has been appointed, the United States district court for the district where the institution's principal business is located. The removal of any action, suit, or proceeding shall be instituted--

(A) not later than 90 days after the date the Corporation is substituted as a party, or

(B) not later than 30 days after the date suit is filed against the Corporation, if such suit is filed after August 9, 1989 [the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989].

The Corporation may appeal any order of remand entered by a United States district court.

FIRREA, 103 Stat. at 389-90 (1989) (codified 12 U.S.C.A. Sec. 1441a(l ) (West 1989 & Supp.1991)). ³

The controlling language is contained in the third paragraph. Paragraph three contains references to two different federal district courts--the United States District Court for the District of Columbia and the local federal district court. The reference to the United States District Court for the District of Columbia is found in the first clause of paragraph three, which states that "[t]he Corporation may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States District Court for the District of Columbia...." Sec. 1441a(l )(3) (emphasis added). "[S]uch action, suit, or proceeding" must refer to the preceding paragraph in the statute, Sec. 1441a(l )(2), which provides for the substitution of the RTC in ongoing litigation in which its predecessor in interest was a party. Thus, when read together, the first clause of paragraph three provides that the RTC may remove a case to the District of Columbia federal court when the RTC has been substituted as a party in a "civil action, suit, or proceeding" where the FSLIC was its predecessor in interest ("substitution case").

The reference to the local federal district court is found in the second clause in paragraph three, which states, "or if the action, suit, or proceeding arises out of the actions of the Corporation with respect to an institution for which a conservator or a receiver has been appointed, [then removal is proper to] the United States District Court for the district where the institution's principal business is located." Id. (emphasis added). Thus, pursuant to this second clause of paragraph three, the RTC can remove a case to the local federal district court if two conditions are met: (1) the "action, suit, or proceeding" must arise out of the actions of the RTC; and (2) the RTC must be acting in a conservatorship or receivership capacity with respect to the failed institution ("RTC actions case").

Clearly, the statute does not permit the RTC to remove a substitution case to the local federal district court under the second clause of paragraph three because such an "action, suit, or proceeding" cannot possibly have arisen out of the actions of the RTC; all such suits would predate the entry of the RTC, and the RTC would come into the suit only as a substituted party for its predecessor in interest. Similarly, the RTC could not remove an RTC actions case to the District of Columbia because in those cases where the "action, suit, or proceeding" does arise out of the RTC's actions, the RTC will be an initial party and not merely a substituted party as required to invoke the first clause of paragraph three. In other words, for purposes of removal under Sec. 1441a(l )(3), the substitution cases and the RTC actions cases are mutually exclusive. ⁴

The RTC argues that we should abandon this plain language interpretation of Sec. 1441a(l )(3), and should adopt, in its place, a reading that would allow it to remove this substitution case to the local federal district court. Specifically, the RTC urges us to adopt a broad interpretation of the word "arises" such that even though the RTC was substituted for the FSLIC in this case after the suit was filed, the "action, suit, or proceeding" could still be said to "arise[ ] out of the actions of the Corporation." No ordinary or customary definition of the words used has been advanced in support of that interpretation nor are any such definitions apparent to us. It is not just the word "arises" that stands in the way of the RTC's argument; the immediately following phrase, "actions of the Corporation with respect to an institution," presents similar difficulties to the RTC. This phrase specifically limits the word "actions" to actions of the RTC; actions completed by the institution before the RTC became substituted as a party would not appear to satisfy the literal language of that phrase. The exceptions to our obligation to interpret a statute according to its plain language are few and far between. See, e.g., United States v. Ron Pair Enterprises, 489 U.S. 235, 242, 109 S.Ct. 1026, 1031, 103 L.Ed.2d 290 (1989) ("The plain meaning of legislation should be conclusive, except in the rare cases in which the literal application of a statute will produce a result demonstrably at odds with the intention of its drafters." (quotations and brackets omitted)); United States v. Brown, 333 U.S. 18, 27, 68 S.Ct. 376, 381, 92 L.Ed. 442 (1948) (a court can reject the plain language interpretation of a statute if such an interpretation would lead to "patently absurd consequences"); Love v. Thomas, 858 F.2d 1347, 1354 (9th Cir.1988), cert. denied, 490 U.S. 1035, 109 S.Ct. 1932, 104 L.Ed.2d 403 (1989) (when two provisions whose meanings, if examined individually, are clear, but whose meanings, when read together, conflict, it is up to the court to interpret the provisions so that they make sense).

In support of its interpretation, the RTC seeks to invoke the "absurdity" exception to the plain meaning rule of statutory construction. See Public Citizen v. United States Dep't of Justice, 491 U.S. 440, 454-55, 109 S.Ct. 2558, 2566-67, 105 L.Ed.2d 377 (1989); Brown, 333 U.S. at 27, 68...