Resolution Trust Corp. v. Miramon

• Decision Date: 27 June 1996
• Docket Number: Civil Action No. 92-2672.
• Parties: RESOLUTION TRUST CORPORATION v. Louis A. MIRAMON, Jr., et al.
• Court: U.S. District Court — Eastern District of Louisiana

935 F. Supp. 838

RESOLUTION TRUST CORPORATION v. Louis A. MIRAMON, Jr., et al.

Civil Action No. 92-2672.

United States District Court, E.D. Louisiana.

June 27, 1996.

COPYRIGHT MATERIAL OMITTED

John Thomas Nesser, III, Robert J. Burvant, Liane King Hinrichs, Margaret Mary Sledge, Nesser, King & LeBlanc, New Orleans, LA, Pinkie Carolyn Wilkerson, Pinkie C. Wilkerson, Grambling, LA, for Resolution Trust Corporation.

ORDER AND REASONS

FALLON, District Judge.

Before the Court is a motion in limine filed by the plaintiff and defendant in counterclaim, the Federal Deposit Insurance Corporation ("FDIC"), as statutory successor to the Resolution Trust Corporation ("RTC"). For the reasons that follow, the motion is GRANTED.

I. BACKGROUND: After a long and protracted litigation, the sole claims remaining before this Court are the counterclaims of defendants Louis A. Miramon, Jr. and Larry Englande. The RTC commenced this action in August 1992, bringing claims of negligence, breach of fiduciary duty, and gross negligence against several former directors and officers of the defunct South Savings & Loan Association ("SSLA"). The Court, by order of Judge Charles Schwartz, Jr., dated December 9, 1992, dismissed the claims of simple negligence and breach of fiduciary duty on grounds that neither Louisiana law nor federal law recognizes a cause of action against directors or officers of depository institutions for lesser breaches of duty than gross negligence. The Fifth Circuit affirmed this ruling. See RTC v. Miramon, 22 F.3d 1357 (5th Cir.1994).

Miramon and Englande, together with eight other directors sued by the RTC, brought counterclaims pursuant to Louisiana Revised Statute § 6:786(F), which provides that any person who unsuccessfully attempts to impose a higher standard of responsibility than gross negligence "may be liable for attorney's fees incurred in the defense of such an attempt and for damages." La.Rev. Stat.Ann. § 6:786(F) (West Supp.1996). On November 3, 1994, Judge Schwartz granted the director defendants' motion for summary judgment as to RTC's liability on these counterclaims. The RTC filed a motion for reconsideration on grounds that the § 6:786(F) counterclaims sounded in tort and were therefore subject to the limitations of the Federal Tort Claims Act ("FTCA"). 28 U.S.C. § 2671-2680. Judge Schwartz denied the motion, finding that § 6:786(F) does not give rise to liability sounding in tort but, rather, is a fee-shifting rule that "augments the Court's Rule 11 authority to impose monetary penalties and assess fees and costs so as to deter pointless litigation." See RTC v. Miramon, No. 92-2672, 1995 WL 6290 (E.D.La. January 6, 1995). The director defendants other than Englande and Miramon subsequently dismissed their counterclaims against the RTC.

II. ANALYSIS: The FDIC now brings this motion in limine seeking clarification from the Court regarding issues of sovereign immunity as well as the scope of liability pursuant to § 6:786(F). First, the FDIC asserts that if, as Judge Schwartz has held, § 6:786(F) is a fee-shifting rule and does not create a standard of care giving rise to tort liability, then the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412, provides the sole waiver of sovereign immunity for the imposition of such fee-shifting liability against the RTC. Although the EAJA waives sovereign immunity with respect to attorneys fees and expenses (under certain circumstances), it does not waive immunity for general damages for injuries such as embarrassment, loss of business opportunity, loss of reputation, etc. Thus, the FDIC seeks a ruling that this Court lacks subject matter jurisdiction over the counterclaimants' claim for general damages. Second, the FDIC argues that the entire counterclaim must be dismissed on grounds of sovereign immunity because the EAJA, the sole waiver of immunity for fee-shifting liability, is a limited waiver and does not encompass liability for attorneys fees under § 6:786(F). Finally, the FDIC maintains that if the counterclaimants are entitled to recover attorneys fees and costs, the scope of this recovery must be limited to the counterclaimants' efforts to dismiss the simple negligence and breach of fiduciary duty claims and should not include fees and costs incurred generally to defend the suit or to defend the gross negligence claim after the other two counts were dismissed.

The counterclaimants do not specifically counter the FDIC's arguments regarding the limited scope of the EAJA's waiver of sovereign immunity for fee-shifting liability. Rather, the counterclaimants suggest that the FDIC's sovereign immunity arguments should be rejected because of the previous rulings of Judge Schwartz and because of arguments made by the RTC in connection with previous motions. As the basis for the sovereign immunity arguments before the Court today are clearly different from those presented to Judge Schwartz, the crux of the counterclaimants' objection appears to be that the FDIC is estopped from raising its current sovereign immunity arguments now, when such arguments could have been raised in opposition to the counterclaimants' motion for summary judgment or in the RTC's motion for reconsideration on FTCA grounds.

The Court agrees that the FDIC/ RTC's failure to raise earlier the issue of 28 U.S.C. § 2412 is regrettable in that it has caused delay and further expense of judicial resources, as well as further expense to the counterclaimants. Sovereign immunity, however, "is a jurisdictional prerequisite which may be asserted at any stage of the proceedings,"¹ and "the government is not subject to assertions of waiver or estoppel when it raises the defense."² Consequently, the Court simply cannot ignore arguments, however belated, that call into doubt the Court's authority to exercise jurisdiction over this matter.

Whenever a party brings suit against an agency or instrumentality of the United States, the specter of sovereign immunity is roused. Despite its myriad and sometimes questionable underpinnings, federal sovereign immunity remains an entrenched tenet of our law — "`a point of departure unquestioned.'" United States v. Horn, 29 F.3d 754, 761 (1st Cir.1994) (quoting Cunningham v. Macon & Brunswick R.R., 109 U.S. 446, 451, 3 S.Ct. 292, 296, 27 L.Ed. 992 (1883)). Because both the FDIC and the RTC (acting in its corporate capacity) are agencies of the United States,³ sovereign immunity is necessarily implicated by the counterclaimants' § 6:786(F) claim.⁴

Only Congress has the power to waive a federal agency's sovereign immunity, and it "must `unequivocally express' its desire to do so."⁵ Such waivers "must appear on the face of the statute" and "must be strictly construed."⁶ The terms of the government's consent to be sued defines the Court's jurisdiction over the claim at issue — with regard to "the general subject of the suit" as well as "specific items of award."⁷

With the Financial Institutions Reform Recovery & Enforcement Act of 1989 ("FIRREA"), Congress created the RTC with the power to "sue and be sued"⁸ and "carried forward the FDIC's `sue and be sued' clause."<sup>9</sup> "Agencies authorized to `sue and be sued' are presumed to have fully waived immunity unless, as to particular types of suits, there is clearly a contrary legislative intent."¹⁰ "Sue-and-be-sued waivers are to be `liberally construed'" and "cannot be limited by implication unless there has been a `clear showing that certain types of suits are not consistent with the statutory or constitutional scheme, that an implied restriction of the general authority is necessary to avoid grave interference with the performance of a governmental function, or that for other reasons it was plainly the purpose of Congress to use the "sue and be sued" clause in a narrow sense.'" FDIC v. Meyer, 510 U.S. 471, 480, 114 S.Ct. 996, 1003, 127 L.Ed.2d 308 (1994) (quoting FHA v. Burr, 309 U.S. 242, 245, 60 S.Ct. 488, 490, 84 L.Ed. 724 (1940)) (alterations in original).

With regard to fee liability, however, no case need be made for an implied limitation on the RTC's and/or FDIC's sue-and-be-sued waivers, for Congress has limited such liability specifically by statute. See 28 U.S.C. § 2412.¹¹ Section 2412 of the Judicial Code, 28 U.S.C. § 2412, "authorizes the recovery of costs against the United States or any agency thereof."¹² "Prior to the implementation of the EAJA, 28 U.S.C. § 2412 barred an award of attorneys' fees to the prevailing party in any civil action brought by or against the United States government, unless specifically provided for by statute." Knights of the Ku Klux Klan v. East Baton Rouge Parish Sch. Bd., 679 F.2d 64, 66 (5th Cir.1982).¹³ A "sue and be sued" clause, such as those with which the FDIC and RTC are endowed, was not sufficient "to override the general bar of 28 U.S.C. § 2412." NAACP v. Civiletti, 609 F.2d 514, 529 n. 12 (D.C.Cir.1979) (SBA's sue-and-be-sued clause did not overcome barrier of § 2412 because it "neither directly nor expressly authorized an award of fees.").¹⁴

In 1981, the EAJA amended 28 U.S.C. § 2412, creating two exceptions to the ban on awarding fees and expenses against the government. These exceptions are contained in 2412(b) and (d) and are addressed below.¹⁵ However, section 2412 "still retains a general provision barring attorneys' fees and expenses against the federal government, except as otherwise specifically provided by statute," and the language of this provision remains essentially unchanged from its pre-EAJA form.¹⁶ Knights of the Ku Klux Klan, 679 F.2d at 66. Thus, under 28 U.S.C. § 2412, as amended, federal agencies are susceptible to liability for attorneys fees and expenses only where Congress has "specifically provided by statute" for fee liability against the government¹⁷ or as permitted pursuant to § 2412(b) and (d).

FIRREA's sue-and-be-sued clauses are not sufficient "to override the general bar of 28 U.S.C. § 2412" because they "neither...