Resolution Trust Corp. v. Schonacher

• Decision Date: 17 February 1994
• Docket Number: Civ. A. No. 93-2233-GTV.
• Citation: 844 F. Supp. 689
• Parties: RESOLUTION TRUST CORPORATION, as Conservator for Pioneer Federal Savings and Loan Association, Plaintiff, v. W.A. SCHONACHER, Jr. and Patricia Schonacher, Defendants.
• Court: U.S. District Court — District of Kansas

844 F. Supp. 689

RESOLUTION TRUST CORPORATION, as Conservator for Pioneer Federal Savings and Loan Association, Plaintiff, v. W.A. SCHONACHER, Jr. and Patricia Schonacher, Defendants.

Civ. A. No. 93-2233-GTV.

United States District Court, D. Kansas.

February 17, 1994.

Robert L. Hamann, David M. Bax, Hamann, Holman, South, McCollum & Hansen, P.C., Prairie Village, KS, Tonya L. O'Hern, Lenexa, KS, for plaintiff.

Cynthia Clark Campbell, The Campbell Law Firm, Kansas City, MO, Susan Ellmaker, Overland Park, KS, Donald E. Bucher, J. Bryan Allee, Kansas City, MO, for defendants.

MEMORANDUM AND ORDER

VAN BEBBER, District Judge.

This case comes before the court on plaintiff's motion to dismiss defendants' affirmative defenses for lack of subject matter jurisdiction (Doc. 17). In its motion, plaintiff asserts that defendants' affirmative defenses must be dismissed based on various provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Even if the FIRREA provisions are not violated, plaintiff contends that the defenses based on the Equal Credit Opportunity Act (ECOA) are barred by the D'Oench doctrine and 12 U.S.C. § 1823(e). For the reasons explained below, plaintiff's motion is granted in part and denied in part.

I. Factual Background

On March 16, 1993, Pioneer Savings and Loan Association (Pioneer) filed this action on a loan guaranty against defendants in the District Court of Johnson County, Kansas. Resolution Trust Corporation (RTC) was appointed receiver for Pioneer and conservator for Pioneer's successor entity, Pioneer Federal Savings and Loan Association on April 2, 1993. On that same date, RTC as receiver transferred to RTC as conservator certain assets, including the loan guaranty which is the subject of the present action. On April 12, 1993, RTC mailed to defendants and other creditors of Pioneer notice of the receivership and the claim procedure imposed by the FIRREA. Subsequently, on May 6, 1993, the District Court of Johnson County, Kansas, issued an order substituting RTC as plaintiff in the state court action. On June 6, 1993, RTC removed the state court action to this court.

Defendants filed an answer on April 19, 1993, and an amended answer on October 22, 1993. In their amended answer, defendants assert various affirmative defenses, including lack of consideration, waiver, estoppel, failure to state a cause of action, failure to join a contingently necessary party, and violation by plaintiff of the Equal Credit Opportunity Act (ECOA).

RTC's motion seeks to dismiss defendants' affirmative defenses on the grounds that the court lacks subject matter jurisdiction because defendants failed to comply with FIRREA's mandatory administrative claim procedure. Even if the administrative exhaustion requirement is found inapplicable, RTC contends that other FIRREA provisions bar defendants' claims for equitable relief and recoupment or set-off. Finally, RTC argues that defendants' ECOA defenses and claim for recoupment or set-off are barred by the doctrine set forth in D'Oench, Duhme and Company v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942) and by 12 U.S.C. § 1823(e).

Defendants contend that their affirmative defenses are not "claims" subject to the administrative exhaustion requirements of FIRREA. In the event that the defenses are found to be claims, defendants argue that the FIRREA administrative claims procedure is not mandatory with respect to lawsuits filed prior to RTC receivership. Finally, defendants argue that D'Oench and 12 U.S.C. § 1823(e) are inapplicable in this case since the affirmative defenses are not dependent on unwritten agreements between the parties.

II. Legal Standards

Although plaintiff styled its motion as a motion to dismiss, it should more properly have been brought as a motion to strike. Rule 12(f) of the Federal Rules of Civil Procedure provides that "the court may order stricken from any pleading any insufficient defense." A defense is insufficient if, as a matter of law, it cannot succeed under any circumstances. See In re Sunrise Sec. Litig., 818 F.Supp. 830, 840 (E.D.Pa.1993); Federal Deposit Ins. Corp. v. Isham, 782 F.Supp. 524, 530 (D.Colo.1992). The purpose of the rule is to minimize delay, prejudice, and confusion by narrowing the issues for discovery and trial. See Resolution Trust Corp. v. Scaletty, 810 F.Supp. 1505, 1515 (D.Kan.1992).

III. Discussion

RTC argues that this court lacks subject matter jurisdiction to adjudicate any of defendants' affirmative defenses. Specifically, RTC contends that defendants should have exhausted their administrative remedies under 12 U.S.C. § 1821(d) prior to asserting the defenses in court.

Section 1821(d)(13)(D) provides:

Limitation on judicial review. Except as otherwise provided in this subsection, no court shall have jurisdiction over —

(i) 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 Corporation has been appointed receiver, including assets which the Corporation may acquire from itself as such receiver; or

(ii) any claim relating to any act or omission of such institution or the Corporation as receiver.

12 U.S.C. § 1821(d)(13)(D).¹

This section was enacted as part of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). FIRREA provides an administrative scheme for adjudicating claims against failed institutions for which RTC has become receiver. Under that scheme, RTC is given primary authority to determine claims asserted against failed financial institutions. 12 U.S.C. § 1821(d)(3). This includes the power to disallow "any claim by a creditor or claim of security, preference, or priority which is not proved to the satisfaction of' RTC. See 12 U.S.C. § 1821(d)(5)(D).

RTC, as receiver of a failed institution, must publish and mail to "creditors shown on the institution's books," notice of the liquidation, providing at least 90 days for filing "claims." 12 U.S.C. § 1821(d)(3)(B) and (C). RTC must act on the claim within six months, and, if the claim is disallowed, the claimant may either seek an administrative review of that decision, file "a suit on such claim" in federal district court, or continue a judicial action commenced prior to the appointment of the receiver. 12 U.S.C. § 1821(d)(6). If, however, an administrative claim is not filed within the applicable time period, that claim "shall be disallowed and such disallowance shall be final." 12 U.S.C. § 1821(d)(5)(C)(i). FIRREA contains no section generally defining what constitutes a "claim" or "action" or who may be a "creditor" or "claimant."

The first question to be answered is whether the defendants complied with the administrative claims requirement. It is undisputed that RTC complied with the notice requirement to defendants on April 12, 1993. RTC further contends that defendants have not availed themselves of the administrative claims procedure within the applicable filing period which expired on July 10, 1993. Defendants claim, however, that they complied with the FIRREA claims requirements by filing their first answer in this lawsuit on April 19, 1993.

Defendants acknowledge that this argument has been rejected by the Tenth Circuit in Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103 (10th Cir.1991). In that case, the defendant argued that "because the suit was pending at the time RTC was named receiver, RTC-receiver had ample notice of defendant's counterclaims, and no further notice of defendant's claims was required." Id. at 106. In rejecting this argument, the court found no statutory provision that would exempt a creditor from adhering to the administrative claim procedure merely because a suit was filed pre-receivership. Id. Rather, the creditor must submit the claim to the RTC for administrative resolution first, and then may file suit or continue to pursue an already filed suit if the claim is disallowed. Id.; see also Bruce J. Pierce & Assoc., Inc. v. Resolution Trust Corp., 987 F.2d 663, 664 (10th Cir.1993).

This court is not persuaded by defendants' argument that the administrative claims procedure should not be mandatory for claims brought via a lawsuit prior to receivership. This contention is simply not supported by any case law.² As a result, this court concludes that failure to comply with the administrative claims procedure can serve as a basis for dismissing claims brought against the RTC, even if those claims are part of a lawsuit instituted prior to receivership.

The next question to be resolved is whether defendants' affirmative defenses against RTC are "claims" or "actions" within the meaning of Section 1821(d)(13)(D). Courts are in unanimous agreement that Section 1821(d)(13)(D) establishes a mandatory administrative claim exhaustion requirement. See Marquis v. Federal Deposit Ins. Corp., 965 F.2d 1148, 1151 (1st Cir.1992); Office and Professional Employees Int'l Union, Local 2 v. Federal Deposit Ins. Corp., 962 F.2d 63, 64-65 (D.C.Cir.1992); Meliezer v. Resolution Trust Corp., 952 F.2d 879, 882 (5th Cir.1992); Resolution Trust Corp. v. Elman, 949 F.2d 624, 627 (2d Cir.1991); Praxis Properties, Inc. v. Colonial Sav. Bank, 947 F.2d 49, 63 (3d Cir.1991); Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103, 106 (10th Cir.1991); Federal Deposit Ins. Corp. v. Shain, Schaffer & Rafanello, 944 F.2d 129, 132 (3d Cir.1991); Rosa v. Resolution Trust Corp., 938 F.2d 383, 391 (3d Cir.), cert. denied, ___ U.S. ___, 112 S.Ct. 582, 116 L.Ed.2d 608 (1991). As a result, if the affirmative defenses are "claims" or "actions" encompassed by Section 1821(d)(13)(D), this court has no jurisdiction to hear them, and they must be stricken.

Courts are divided over whether the terms "claim" and "action" as described in this statute apply to affirmative defenses. Many courts have held that Section 1821(d)(13)(D) divests co...