Sekula v. F.D.I.C., 93-3596
| Decision Date | 09 November 1994 |
| Docket Number | No. 93-3596,93-3596 |
| Citation | 39 F.3d 448 |
| Parties | Raymond SEKULA and L. Kathleen Sekula v. FEDERAL DEPOSIT INSURANCE CORPORATION; Resolution Trust Corporation, Raymond F. Sekula and L. Kathleen Sekula, Appellants. |
| Court | U.S. Court of Appeals — Third Circuit |
S. Michael Streib (argued), Pittsburgh, PA, for appellants.
Z. Scott Birdwell (argued), F.D.I.C., Washington, DC, for appellee, F.D.I.C.
Patricia A. Trujillo, Saul, Ewing, Remick & Saul, Philadelphia, PA, Mitchell Plave, Resolution Trust Corp., Washington, DC, for appellee, Resolution Trust Corp.
Before: SCIRICA, NYGAARD and ALDISERT, Circuit Judges.
This is a dispute over the interpretation of a regulation governing the amount of insurance coverage provided for federally insured joint accounts in a failed savings and loan association. At issue is whether the funds in joint accounts are insured as a single unit or as multiple units and, specifically, whether the two holders of several joint accounts are insured for up to $100,000 or for up to $200,000. Plaintiffs, Raymond and Kathleen Sekula, contend the regulation provides that each of them is insured for up to $100,000 for funds held in their joint accounts and that together they are insured for up to $200,000. Defendants, the Federal Deposit Insurance Corporation ("FDIC") and the Resolution Trust Corporation ("RTC"), maintain the regulation limits the insurance to an aggregated $100,000 maximum. The district court agreed with the FDIC/RTC (hereafter RTC), and granted summary judgment to the agency. 1 The Sekulas appealed. We will affirm the district court.
On November 15, 1991, the Office of Thrift Supervision declared Atlantic Financial Savings, F.A. insolvent and appointed the RTC as receiver. The RTC has the responsibility for resolving the financial affairs of failed savings and loan institutions. 12 U.S.C. Sec. 1441a(b)(3) (Supp. V 1993). In carrying out its duties, the RTC has the same powers the FDIC has under the Federal Deposit Insurance Act ("the Act"), 12 U.S.C. Sec. 1821 (Supp. V 1993). 2 It can approve or reject claims for insured deposits and determine the amount of insurance to which depositors are entitled under the Act. Under that authority, the RTC identified the eligible insured accounts at Atlantic Financial on the date it failed and paid insurance on what it calculated to be the insured portion of the accounts.
The Sekulas held six accounts at Atlantic Financial when the institution was declared insolvent. Each contained a signature card designated in the name of "Raymond F. Sekula or L. Kathleen Sekula" or "L. Kathleen Sekula or Raymond F. Sekula." No other persons had ownership interests in the accounts. The total amount in the six accounts was $169,717.52, distributed as follows:
Number Balance
00000132006597 $ 2,015.48
00000357968841 32,691.51
00000354131716 12,147.83
00000357236116 15,174.67
00000357658160 50,105.82
90000356560995 57,582.21
----------
Total 169,717.52
The RTC maintained that only $100,000 of the total $169,717.52 was insured, and that Raymond and Kathleen were therefore entitled to $100,000 in the aggregate, which it paid them. The Sekulas contended the entire amount was insured because they each were entitled to receive up to $100,000 for their loss from the insured accounts--up to an aggregate of $200,000. 3
On the date Atlantic Financial was declared insolvent, the relevant statute on aggregating deposits provided:
[I]n determining the amount due to any depositor there shall be added together all deposits in the depository institution maintained in the same capacity and the same right for his benefit either in his own name or in the names of others....
12 U.S.C. Sec. 1813(m)(1) (1988). 4 Congress gave the FDIC the power to promulgate regulations governing the determination of net amounts due to depositors for deposits in insured depository institutions:
For the purpose of clarifying and defining the insurance coverage under this subsection and subsection (i) of section 1817 ... the [FDIC] is authorized to define, with such classifications and exceptions as it may prescribe, terms used in those subsections ... and the extent of insurance coverage resulting therefrom.
12 U.S.C. Sec. 1813(m)(1) (1988). Accordingly, Congress delegated authority to the FDIC (and its successor the RTC) to define the Act in promulgating the regulations and to apply them. The RTC's determination of the Sekulas' deposit insurance coverage is governed by those regulations promulgated by the FDIC pursuant to 12 U.S.C. Sec. 1813(m)(1) (1988) 5 and set forth in 12 C.F.R. Part 330.
The regulation in question, 12 C.F.R. Sec. 330.7(b) (1991), directs how insurance is to be calculated for joint accounts. It provides:
(b) Determination of insurance coverage. All qualifying joint accounts owned by the same combination of individuals shall first be added together and insured up to $100,000 in the aggregate. The interests of each co-owner in all qualifying joint accounts, whether owned by the same or different combinations of persons, shall then be added together and the total shall be insured up to $100,000.
12 C.F.R. Sec. 330.7(b) (1991). 6 The RTC interpreted this regulation to limit the Sekulas' insured aggregate to $100,000.
The Sekulas raise two principal issues on appeal. First, they contend the proper interpretation of the language of the regulation provides each of them up to $100,000 insurance coverage on their jointly held accounts--and, consequently, that the entire amount on deposit in their joint accounts was insured. Second, they claim the RTC's interpretation of the regulation constitutes substantive rule-making and is invalid because it was not promulgated in accordance with the Administrative Procedures Act, 5 U.S.C. Sec. 553(b) and (c) (1988). They also claim that promulgation of an alleged substantive change affecting their rights without affording them notice and an opportunity for comment as required by the APA denied them due process of law.
Neither in their notice of appeal nor in their brief have the Sekulas explicitly contested the RTC's interpretation of the statute requiring aggregation of deposits. What the Sekulas have expressly challenged is the fidelity of the RTC's method of calculation to the language of its regulation. Nevertheless, it is apparent from the thrust of their argument that they also implicitly challenge the RTC's implementation of its statutory directive.
When reviewing an agency's construction of a statute, if the intent of Congress is clear, then we must give effect to that intent. Chevron, U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). If the statute is silent or ambiguous with respect to a specific issue, then a deference standard applies, and the question for the court becomes whether the agency's answer is based on a reasonable construction of the statute. Chevron, 467 U.S. at 843, 104 S.Ct. at 2781-82. In determining whether an agency's regulation complies with its congressional mandate, we look to see whether the regulation harmonizes with the plain language of the statute, its origin, and its purpose. National Muffler Dealers Ass'n v. United States, 440 U.S. 472, 477, 99 S.Ct. 1304, 1307, 59 L.Ed.2d 519 (1979). So long as the regulation bears a fair relationship to the language of the statute, reflects the views of those who sought its enactment, and matches the purpose they articulated, it will merit deference. National Muffler Dealers, 440 U.S. at 484, 99 S.Ct. at 1310-11.
The statute, 12 U.S.C. Sec. 1813(m)(1), does not explicitly provide that joint deposit account holders are to be treated and limited as a single depositor. Accordingly, we must examine whether the agency's regulation, and its interpretation, comport with the general congressional directive. Because congressional intent to aggregate jointly held deposits and limit insurance of that aggregate is apparent from the legislative history behind the enactment, the RTC's interpretation is based on a reasonable construction of the statute. 7
12 U.S.C. Sec. 1813(m)(1) directs the RTC to aggregate deposits:
'insured deposit' [or] net amount due to any depositor ... shall be determined according to such regulations as the [RTC] may prescribe, and in determining the amount due to any depositor there shall be added together all deposits in the depository institution maintained in the same capacity and the same right for his benefit either in his own name or in the names of others....
12 U.S.C. Sec. 1813(m)(1) (1988). The legislative history behind the subsection reveals that the incorporation of section 1813(m)(1) into the statute was intended to prevent a single depositor from exceeding the statutory ceiling on insurance coverage through other means. The notion that holders of a joint account would be insured as a single entity was integral to the deposit insurance scheme from the beginning. 8 By the mid-1960s, however, there were significant problems with the administration of the federal bank deposit insurance program. Depositors were becoming increasingly adept at evading the limits Congress had set on deposit insurance. 9 Accordingly, Congress overhauled the statute, directing the bank insurance agencies to develop regulations that:
would enable the insuring agencies to bar the use of devices such as numerous joint accounts in various combinations ... to obtain insurance far in excess of the limits established by Congress.
112 Cong.Rec. 26,472-73 (1966) (statement of Senator Robertson). See also 112 Cong.Rec. 25,007 (1966) (statement of Congressman Ashley) ("[T]he purpose of my amendment [subsection 1813(m)(1) ] is to clarify the power of the...
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