Sweeney v. Resolution Trust Corp.

• Decision Date: 31 January 1994
• Docket Number: 93-1613,Nos. 93-1427,s. 93-1427
• Citation: 16 F.3d 1
• Parties: Rhetta B. SWEENEY, et al., Plaintiffs, Appellants, v. RESOLUTION TRUST CORPORATION, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 1

16 F.3d 1

Rhetta B. SWEENEY, et al., Plaintiffs, Appellants, v. RESOLUTION TRUST CORPORATION, et al., Defendants, Appellees.

Nos. 93-1427, 93-1613.

United States Court of Appeals, First Circuit.

Submitted Nov. 15, 1993.

Decided Jan. 31, 1994.

Rhetta B. Sweeney, on brief pro se.

Paul R. Gupta, Joseph F. Shea and Nutter, McClennen & Fish, Boston, MA, on brief for appellees.

Before BREYER, Chief Judge, SELYA and CYR, Circuit Judges.

PER CURIAM.

Appellants Rhetta Sweeney, individually and as trustee of the Maple Leaf Realty Trust and of the Canadian Realty Trust, and John Sweeney [the Sweeneys] appeal the final judgment entered by the United States District Court of the District of Massachusetts for appellees Resolution Trust Corporation [RTC], in its capacity as receiver of ComFed Savings Bank, ComFed Mortgage Company, Inc. and Comfed Advisory Company, Inc. [collectively "ComFed"], and Dennis Furey, an employee of ComFed Mortgage Company, Inc. The Sweeneys also appeal the district court award to the RTC of attorneys' fees incurred in responding to what the court found a frivolous motion to remand. We affirm.

Background

In 1987, the Sweeneys borrowed $1,600,000 from ComFed for construction of single family homes and other work on their property in Hamilton, Massachusetts. The obligation is evidenced by a promissory note, a loan agreement and a construction loan agreement, all dated August 27, 1988. The Sweeneys allege that ComFed also agreed to an additional $900,000 in construction financing. ComFed denies that it made any agreement as to a further loan. The Sweeneys defaulted on the note and, in November 1988, ComFed initiated foreclosure proceedings.

In April 1989, the Sweeneys filed a nine count complaint in Middlesex Superior Court asserting various lender liability claims against ComFed and Furey. ComFed filed a counterclaim seeking a determination of the Sweeney's liability to ComFed under the terms of the $1,600,000 note on which the Sweeneys had allegedly defaulted. In October 1989, the superior court issued an injunction barring ComFed from foreclosing on the Sweeney's mortgaged property.

In March 1990, after a twelve day trial, a superior court jury returned a special verdict awarding ComFed $2,069,586.33 for the Sweeneys' breach of the note, and Rhetta Sweeney $65,000 for intentional infliction of emotional distress. The court reserved to itself judgment on two counts: ComFed's alleged violation of Mass.Gen.L. ch. 93A and the claim for specific performance of an alleged agreement by ComFed to a partial release of the mortgage.

On December 13, 1990, the RTC was appointed conservator of Comfed and, on January 11, 1991, removed the case to the United States District Court for the District of Massachusetts. ¹ No judgment had yet been entered on the two counts tried to the superior court. However, on January 30, 1991, the superior court purported to enter judgment on those two counts. The court purported to find for the Sweeneys on their chapter 93A claim in the amount of $2,998,931.44, plus interest and costs, and attorneys' fees of $97,704. No copies or notices of this opinion were mailed to the parties by the court clerk.

On January 31, 1991, counsel for the RTC learned of the purported opinion when he went to the Middlesex Superior Court Clerk's office to transport the record to the federal district court. ² Believing the opinion to be a nullity, counsel contacted the Massachusetts Attorney General's Office to urge that the opinion be withdrawn. The superior court refused to do so and instead released the opinion to the Sweeneys on February 25, 1991. Counsel for the RTC then filed the opinion with the district court under seal and moved to expunge it from the record. On March 1, the Sweeneys filed a motion to remand the case to the superior court on the ground that the district court lacked jurisdiction.

After a series of evidentiary hearings, the district court determined that the case had been removed on January 11, 1991 and found that the Sweeneys' objection, which was in the court's view an objection to venue not jurisdiction, was untimely. On January 9, 1992, the RTC moved that the district court enter the superior court jury verdict in its entirety and grant the RTC summary judgment on the two counts which had been tried to the superior court. On April 14, 1992, the district court entered the jury verdict and granted summary judgment to the RTC. On April 27, 1992, the court vacated the superior court injunction. Final judgment was entered on February 9, 1993. On February 13, 1993, Rhetta Sweeney, purporting to act on behalf of all the plaintiffs, filed a third motion to remand the case to the superior court. Finding that the motion made no new factual or legal argument, the district court allowed the RTC's request, pursuant to Fed.R.Civ.P. 11, for attorneys' fees incurred in responding to this motion. The Sweeneys now appeal both the final order of the court and the grant to the RTC of attorneys' fees.

Discussion

The Sweeneys contend first that the district court erred in denying their motion to have the case remanded to the superior court. According to appellants, removal to the United States District Court for the District of Massachusetts was improper since 12 U.S.C. Sec. 1441a(l )(3) allows for removal only to the United States District Court for the District of Columbia. ³ Construing this as an objection to venue, the district court denied the motion on the ground that it had been filed more than thirty days after removal. See 28 U.S.C. Sec. 1447(c). The Sweeneys argue that this period should have been tolled because of the RTC's "bad faith" in withholding from them a copy of the superior court's purported judgment, the existence of which the Sweeneys discovered only on February 25, 1991. ⁴

Even if we grant arguendo that venue in the United States District Court for the District of Massachusetts was improper pursuant to Sec. 1441a(l )(3) and that appellants' motion is subject to equitable tolling, we still find no error in the district court's denial of appellants' motion to remand. 28 U.S.C. Sec. 1441(a) provides that

[e]xcept as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction may be removed ... to the district court of the United States for the district and division embracing the place where such action is pending. (emphasis added)

Since nothing in 12 U.S.C. Sec. 1441a(l )(3) expressly limits venue, the general venue provision of 28 U.S.C. Sec. 1441(a) is applicable to this case. See Hellon & Assoc., Inc. v. Phoenix Resort Corp., 958 F.2d 295, 298 (9th Cir.1992) (removal proper under Sec. 1441(a) since "[n]othing in the statutory language provides that RTC is limited to the specific removal provision found in section 1441a(l)(3)"); Resolution Trust Corp. v. Lightfoot, 938 F.2d 65, 68 (7th Cir.1991) (finding removal provision of 12 U.S.C. Sec. 1441a(l )(3) "to supplement, rather than to replace, those of Sec. 1441(a)"). Given that the RTC removed this case to the district court of the United States where the action was pending, venue was proper pursuant to 28 U.S.C. Sec. 1441(a) and appellants' motion to remand was properly denied.

The Sweeneys next contend that the district court erred in not entering the purported judgment of the superior court in their favor. However, the district court supportably found that this case had been removed to the federal court on January 11, 1991. "At that point, the jurisdiction of the state court 'absolutely ceased, and that of the [federal court] immediately attached,' " Hyde Park Partners, L.P. v. Connolly, 839 F.2d 837, 841 (1st Cir.1988) (quoting Steamship Co. v. Tugman, 106 U.S. (16 Otto) 118, 122, 27 L.Ed. 87 (1882)), and the state court was under an obligation to "proceed no further unless and until the case [wa]s remanded," 28 U.S.C. Sec. 1446(e); see also Tugman, 106 U.S. (16 Otto) at 122 (once case removed, state court had "duty ... to proceed no further"). Consequently, the purported judgment of the state court was "void ab initio," Hyde Park Partners, 839 F.2d at 842, and the district court committed no error in refusing to enter judgment in accord with it.

The Sweeneys' third contention is that the district court improperly granted summary judgment to the RTC on the Sweeneys' claim under chapter 93A Sec. 2(a). ⁵ Appellants argue that the district court erred when it found that their claim relied on alleged promises not in writing and hence was barred by the doctrine enunciated in D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942) and codified at 12 U.S.C. Sec. 1823(e).

The Sweeneys' principal claim under chapter 93A is that the closing loan documents were "misleading, oppressive, and unconscionable" in that they led the Sweeneys to understand that ComFed would provide them with construction financing in addition to the $1,600,000 loan actually provided. According to appellants, ComFed knew that without the additional financing the Sweeneys would be forced to default on the original agreement, as in fact happened.

The D'Oench doctrine applies to the RTC when it acts, as in the instant case, in its capacity as receiver, see 12 U.S.C. Sec. 1441a(b)(4)(A), and extends to the financial interests of any wholly owned subsidiaries of a failed institution, see Oliver v. Resolution Trust Corp., 955 F.2d 583, 585-86 (8th Cir.1992) (citing cases). ⁶ It bars affirmative claims, whether sounding in contract or tort, when they are premised on an unwritten agreement. Timberland Design, Inc. v. First Service Bank for Sav., 932 F.2d 46, 50 (1st Cir.1991) (citing cases). To satisfy the strictures of D'Oench and Sec. 1823(e) appellants must show an agreement in writing to provide the additional loans. The mere fact that the appellants relied in good faith on an...