Summertree Venture III v. Federal Sav. & Loan Ins. Corp.

Decision Date05 November 1987
Docket NumberNo. C14-86-924-CV,C14-86-924-CV
Citation742 S.W.2d 446
PartiesSUMMERTREE VENTURE III, Neil Block and Jon E. Anderson, Appellants, v. FEDERAL SAVINGS & LOAN INSURANCE CORPORATION, Receiver for Mainland Savings Association, Appellee. (14th Dist.)
CourtTexas Court of Appeals

Scott Douglas Cunningham, Houston, for appellants.

Lee R. Larkin, Scott A. Brister, J. Scott Carothers, Houston, for appellee.

Before JUNELL, SEARS and DRAUGHN, JJ.

OPINION

DRAUGHN, Justice.

The issue dispositive of this appeal is whether the Federal Savings & Loan Insurance Corporation (FSLIC), in its capacity as a receiver for an insolvent, insured, state-chartered savings and loan association, is susceptible to the subject matter jurisdiction of the courts of the State of Texas. We hold that Congress has not given the FSLIC the exclusive power to adjudicate appellants' claims. The trial court does have subject-matter jurisdiction. We reverse and remand so that appellants may pursue their causes of action.

On March 26, 1986, appellants filed a civil action against Mainland Savings Association (MSA) and Mainland Building & Development Corporation (MBDC), a wholly owned subsidiary of MSA. Appellants sought a temporary restraining order to block a foreclosure sale posted for April 1, 1986, and alleged multiple causes of action against MSA and its subsidiary in connection with the negotiation and administration of a 3.5 million dollar construction loan and workout on an apartment project in Harris County. After MSA and MBDC agreed to pass the posted foreclosure, appellants withdrew their application for injunctive relief.

On April 4, 1986, the Federal Home Loan Bank Board declared Mainland Savings Association insolvent and appointed the FSLIC receiver responsible for liquidation of the association. The FSLIC intervened in this cause and attempted removal to federal court, but the case was remanded. After remand, neither MSA nor the FSLIC answered the state court suit by the answer date. Appellants abandoned by nonsuit all claims against MBDC and their claims for monetary recovery against MSA and the FSLIC. (They still seek equitable remedies of voidance and cancellation of the loan, Deed of Trust and personal guarantees.) A default judgment against MSA and the FSLIC was granted. MSA and the FSLIC timely filed a motion to set aside the default judgment, and alternatively, a motion for new trial. After a hearing, the court set aside the default judgment. In a later hearing the court heard appellant's motion to reconsider the order setting aside the default judgment and the FSLIC's motion to dismiss for lack of subject matter jurisdiction.

In two points of error appellants complain of the trial court's actions in dismissing their case and setting aside the default judgment. The FSLIC defends the trial court's dismissal by arguing that the state court was stripped of its subject matter jurisdiction when the Federal Home Loan Bank Board (Bank Board) made the FSLIC receiver of the defendant savings and loan association, and that only the FSLIC now has the power to initially adjudicate appellants' claims.

The FSLIC's assertions rest first on 12 U.S.C. § 1464(d)(6)(C) (1982). It reads:

Except as otherwise provided in this subsection, no court may take any action for or toward the removal of any conservator or receiver, or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a conservator or receiver.

(Emphasis added.) The FSLIC asserts that judicial adjudication of appellants' claims would "restrain or affect" the exercise of its receivership powers in violation of this statutory command.

However, section 1464(d)(6)(C) does not set out or describe what powers or functions the FSLIC as receiver has been given. Those powers are described in 12 U.S.C. § 1729(d) (1982). It reads 1:

In connection with the liquidation of insured institutions, the Corporation shall have power to carry on the business of and to collect all obligations to the insured institutions, to settle, compromise, or release claims in favor of or against the insured institutions, and to do all other things that may be necessary in connection therewith, subject only to the regulation of the Federal Home Bank Board, or, in cases where the Corporation has been appointed conservator, receiver, or legal custodian solely by a public authority having jurisdiction over the matter other than said Board, subject only to the regulation of such public authority.

Several courts have accepted the FSLIC's position. The leading case is North Mississippi Savings & Loan Ass'n v. Hudspeth, 756 F.2d 1096 (5th Cir.1985), cert. denied, 474 U.S. 1054, 106 S.Ct. 790, 88 L.Ed.2d 768 (1986). The Fifth Circuit reaffirmed the Hudspeth holding that all claims against the FSLIC must be made first through the administrative process in Chupik Corp. v. FSLIC, 790 F.2d 1269, 1270 (5th Cir.1986), and in Coit Independence Joint Venture v. First South, F.A., 829 F.2d 563 (5th Cir.1987). See also : Lyons Savings & Loan Ass'n v. Westside Bank Corporation, 828 F.2d 387 (7th Cir.1987). District court opinions following Hudspeth are too numerous to cite.

The Ninth Circuit has declined to follow Hudspeth, and has concluded that nothing in the pertinent statutes, or in the legislative histories to those statutes, indicates that the FSLIC, as a receiver authorized to liquidate an institution, has the power to adjudicate disputed claims. Morrison-Knudsen Co., Inc. v. CHG International, Inc., 811 F.2d 1209 (9th Cir.1987), cert. pending.

The question of subject matter jurisdiction in this instance is clearly a matter of federal law; its answer depends upon interpretation of federal statutes. Texas appellate courts, when deciding issues of federal law, generally look to "applicable federal decisions." Port Terminal Railroad Ass'n v. Ross, 155 Tex. 447, 289 S.W.2d 220, 226 (1956). Rights conferred by federal statute and regulation "should be governed by the federal court's construction of the statute and regulation." Olson v. Holmes, 571 S.W.2d 211, 213 (Tex.Civ.App.--Austin 1978), writ ref'd n.r.e., 587 S.W.2d 678 (Tex.1979) (expressly approving Austin court's reasoning on this point).

In this case the federal court decisions construing the pertinent statutory provisions are in conflict, and the United States Supreme Court has not yet decided the issue. 2 Must we follow the Fifth Circuit?

At least one Texas appellate court has stated (without discussion or citation of authority) that when faced with conflicting decisions issued by the Fifth Circuit and another federal circuit court of appeals, it would follow the Fifth Circuit Court of Appeals, "if required to choose." Deep South Oil Co. v. Texas Gas Corp., 328 S.W.2d 897, 906 (Tex.Civ.App.--Beaumont 1959, writ ref'd n.r.e.).

However, in Woodard v. Texas Department of Human Resources, 573 S.W.2d 596, 598 (Tex.Civ.App.--Amarillo 1978, writ ref'd n.r.e.), the court, in answering a federal constitutional question stated:

Respectful consideration is due a lower federal court decision ...; yet ... state courts are not concluded by a lower federal court decision on an identical question of law which arises in a later unrelated case. The rationale expressed is that while the state courts and lower federal courts are subject to the supervisory jurisdiction of the United States Supreme Court as the final arbiter on all questions of federal constitutional law, there is a parallelism, but not a paramountcy, for both the state courts and the lower federal courts in passing on federal constitutional questions.

Id., followed in In re H.D.O., 580 S.W.2d 421, 423-24 (Tex.Civ.App.--Eastland 1979, no writ). See also Olvera v. State, 725 S.W.2d 400, 404 (Tex.App.--Houston [1st Dist.] 1987, no pet.) (refusing to follow federal district court decisions holding a Texas statute unconstitutional). See generally, Annotation, Duty of State Courts to Follow Decisions of Federal Courts, Other than the Supreme Court, on Federal Questions, 147 A.L.R. 857 (1943).

Corpus Juris Secundum states:

Decisions of the Lower federal courts on federal questions which have not been passed on by the supreme court of the United States should, according to some authorities, be followed by the state courts, although it has also been considered that such decisions, while persuasive, are not binding on the state courts, and a conflict between decisions of the federal court leaves the state courts free to decide the question themselves.

21 C.J.S. Courts § 206 (1940).

The Texas Court of Criminal Appeals has repeatedly stated that it is not bound by decisions of the lower federal courts. E.g., Stewart v. State, 686 S.W.2d 118, 121 (Tex.Crim.App.1984); Blackmon v. State, 642 S.W.2d 499, 500 (Tex.Crim.App.1982).

We conclude that we are not bound by the Hudspeth decision nor by the district court decisions following it. We will look independently at the statutes, regulations, and legislative history to determine the issue.

Hudspeth and many of the cases following it make reference to isolated portions of legislative histories to the origin of sections 1464 and 1729 and their amendments. We think it is helpful to look into the entire history of these and other provisions before analyzing the arguments before us.

In 1933 Congress created the Federal Home Loan Bank Board and empowered it to organize, charter, and regulate federal savings and loan associations. See Home Owners' Loan Act of 1933, Pub.L. No. 73-43, 48 Stat. 128 (codified as amended at 12 U.S.C. §§ 1461 to 1468 (1982 & Supp.1985)). Included in the Bank Board's powers was the "power to appoint a conservator or receiver to take charge of the affairs" of federal associations. 1933 Act § 5(d).

In 1934, Congress created the Federal Savings and Loan Insurance Corporation to insure the accounts of both federal savings and loan associations and state-chartered building and...

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