Schettler v. Ralron Capital Corp.

• Decision Date: 03 May 2012
• Docket Number: No. 56508.,56508.
• Citation: 128 Nev. Adv. Op. 20,275 P.3d 933
• Parties: Vincent T. SCHETTLER; and Vincent T. Schettler, Trustee of Vincent T. Schettler Living Trust, Appellants, v. RALRON CAPITAL CORPORATION, A Nevada Corporation, Respondent.
• Court: Nevada Supreme Court

128 Nev. Adv. Op. 20

275 P.3d 933

Vincent T. SCHETTLER; and Vincent T. Schettler, Trustee of Vincent T. Schettler Living Trust, Appellants,

v.RALRON CAPITAL CORPORATION, A Nevada Corporation, Respondent.

No. 56508.

Supreme Court of Nevada.

May 3, 2012.

Feldman Graf and Rusty Graf, Las Vegas; White & Case, LLP, and Roberto J. Kampfner, Los Angeles, California, for Appellants.

Robison, Belaustegui, Sharp & Low and Mark G. Simons, Reno, for Respondent.

Before DOUGLAS, HARDESTY and PARRAGUIRRE, JJ.

OPINION

By the Court, HARDESTY, J.:

In this appeal, we consider whether the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1821 (2006), an act that governs the disposition of failed financial institutions' assets, divests a court of jurisdiction to consider any defense or affirmative defense not first adjudicated through FIRREA's claims process. As part of our inquiry, we must determine an issue of first impression in Nevada regarding whether FIRREA's jurisdictional bar extends to successors in interest to the Federal Deposit Insurance Corporation (FDIC). We conclude that while FIRREA's jurisdictional bar divests a district court of jurisdiction to consider claims and counterclaims asserted against a successor in interest to the FDIC not first adjudicated through FIRREA's claims process, it does not apply to defenses or affirmative defenses raised by a debtor in response to the successor in interest's complaint for collection.

FACTS AND PROCEDURAL HISTORY

On September 15, 2006, appellant Vincent T. Schettler and Silver State Bank executed a Business Loan Agreement (the Loan) and a Promissory Note (the Note), under which Silver State provided Schettler with a $2,000,000 revolving line of credit. Schettler agreed to pay interest on the loan monthly until the loan's maturity date, at which time he would be required to pay all outstanding principal and any remaining unpaid accrued interest. The original maturity date of the Loan and the Note was September 15, 2007. On that date, Schettler and Silver State entered into a Change in Terms Agreement that modified the maturity date to September 15, 2008. That same day, Schettler also executed a Commercial Guaranty in his capacity as Trustee for the Vincent T. Schettler Living Trust, guaranteeing to pay all of the Loan obligations. ¹ It is undisputed that the Loan, the Note, and the Commercial Guaranty (loan agreement) were valid and enforceable contracts at their inception.

According to Schettler, he and Silver State were in the process of again modifying the maturity date when, on August 14, 2008, Silver State notified Schettler by letter that it had frozen the remaining funds available on the line of credit because of a material change in Schettler's financial condition or, in Silver State's belief, his prospect of performance on the Note was impaired. Silver State also informed Schettler that it had decided “to cancel any current commitments” until Schettler cured the “[d]efaults,” but that “[u]ntil that time, [Schettler was] responsible for payment of interest on the loan.” At the time of the default notice, however, Schettler was current on his payments, and the loan had an outstanding principal balance of $1,114,000.

A few weeks later, on September 5, 2008, Silver State was placed into receivership, and the FDIC was appointed as receiver. That same day, the FDIC informed Schettler that it was the receiver for Silver State and that it expected Schettler to continue to abide by the terms and conditions of the Loan and the Note. The FDIC subsequently published notices in local Las Vegas newspapers that required all creditors having claims against Silver State to submit their claims to the FDIC by December 10, 2008, after which a creditor's claim would be barred. Schettler did not pay the outstanding principal and interest by the September 15 maturity date or file any administrative claims against Silver State with the FDIC by December 10.

In March 2009, respondent RalRon Capital Corporation acquired ownership of Schettler's loan agreement. The terms of RalRon's acquisition are not clear from the record. Shortly thereafter, RalRon notified Schettler that it owned the Loan and Note and “demand[ed] that payment of the full amount of principal, interest, and late fees ... be made within 10 days.” After nonpayment from Schettler, RalRon filed a complaint in the district court, asserting claims for breach of contract, contractual breach of the implied covenant of good faith and fair dealing, unjust enrichment, and breach of personal guaranty. Schettler filed an answer to RalRon's complaint, denying liability, and asserting several affirmative defenses and counterclaims against RalRon for breach of contract, breach of the implied covenant of good faith and fair dealing, and estoppel.

RalRon moved for summary judgment on its breach of contract and breach of personal guaranty claims ² and on Schettler's counterclaims. RalRon argued that there was no genuine issue of material fact for trial, that Schettler's counterclaims and “alleged defenses” were barred because Schettler failed to file any administrative claims with the FDIC as required by FIRREA, and that RalRon was a holder in due course immune from Schettler's defenses. Schettler opposed the motion and disputed RalRon's FIRREA argument. He also argued that there existed questions of fact for trial, that the FDIC's failure to mail Schettler notice of the bar date should have “allow[ed] the administrative process to begin anew,” and that Silver State anticipatorily breached the loan agreement before any default by Schettler. After a hearing, the district court granted summary judgment in favor of RalRon on its claims for breach of contract and breach of personal guaranty. In so doing, the district court barred Schettler's affirmative defenses and dismissed his counterclaims, reasoning that, because they were all essentially claims against the FDIC and Schettler had failed to follow the claims administration process, they were barred by FIRREA. The court further determined that Schettler received adequate notice of the bar date. Schettler filed a motion for reconsideration, which the district court denied. The district court subsequently entered judgment against Schettler for the outstanding principal and interest on the loan and for RalRon's attorney fees and costs. This appeal followed.

DISCUSSION

We begin with an overview of FIRREA and examine whether a successor in interest to a failed financial institution is entitled to benefit from FIRREA's jurisdictional bar. We conclude that the bar applies to claims or counterclaims asserted by a debtor who failed to file an administrative claim with the FDIC. We next address whether FIRREA's jurisdictional bar precludes a court's consideration of the debtor's assertion of defenses and affirmative defenses in response to a complaint for collection. After concluding that the bar does not apply to affirmative defenses, we address whether Schettler's answer raised affirmative defenses or, as RalRon argues on appeal, “claims” that the district court correctly refused to consider. Because we conclude that Schettler raised affirmative defenses not barred by FIRREA, we reverse the district court's grant of summary judgment in favor of RalRon precluding Schettler's affirmative defenses.

Because our analysis involves questions of law pertaining to statutory construction and a district court's subject matter jurisdiction, de novo review applies. See Hardy Companies, Inc. v. SNMARK, LLC, 126 Nev. ––––, ––––, 245 P.3d 1149, 1153 (2010) (explaining that statutory construction issues are “ ‘question[s] of law that this court reviews de novo’ ” (quoting A.F. Constr. Co. v. Virgin River Casino, 118 Nev. 699, 703, 56 P.3d 887, 890 (2002))); Ogawa v. Ogawa, 125 Nev. 660, 667, 221 P.3d 699, 704 (2009) (“Subject matter jurisdiction is a question of law subject to de novo review.”). Additionally, “[t]his court reviews a district court's grant of summary judgment de novo, without deference to the findings of the lower court.” Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005). “Summary judgment is appropriate ... when the pleadings and other evidence on file demonstrate that no ‘genuine issue as to any material fact [remains] and that the moving party is entitled to a judgment as a matter of law.’ ” Id. (second alteration in original) (quoting NRCP 56(c)).

Overview of FIRREA

“Congress enacted [FIRREA] to enable the federal government to respond swiftly and effectively to the declining financial condition of the nation's banks and savings institutions. The statute grants the FDIC, as receiver, broad powers to determine claims asserted against failed banks.” Henderson v. Bank of New England, 986 F.2d 319, 320 (9th Cir.1993) (citing 12 U.S.C. § 1821(d)(3)(A)). To enable the FDIC's powers, “Congress created a claims process for the filing, consideration[,] and determination of claims against insolvent banks” that encourages the FDIC to quickly resolve claims without overburdening the courts. Id. (citing 12 U.S.C. § 1821(d)(3)-(10)). Accordingly, “[i]f [a] financial institution has failed, ... subsequent claims must be presented first to the FDIC for an administrative determination on whether they should be paid.” Aber–Shukofsky v. JPMorgan Chase & Co., 755 F.Supp.2d 441, 445 (E.D.N.Y.2010).

To begin the administrative claims process, the FDIC must publish notice to creditors of the claims process and the date by which creditors must file their claims against the financial institution—the bar date. 12 U.S.C. § 1821(d)(3)(B). The FDIC must also mail such notice to any creditor shown on the institution's books and records or any creditor that the FDIC later discovers. Id. § 1821(d)(3)(C). “Once a claim is filed, the FDIC has 180 days to determine whether to allow or disallow the claim.” Henderson, 986 F.2d at 320 (citing 12 U.S.C. §...