FDIC v. Greenview Apartments, Ltd. , 157 F.3d 1292 ( 1998 )

United States Court of Appeals,
Eleventh Circuit.
No. 96-4118.
FEDERAL DEPOSIT INSURANCE CORP., as Receiver for Flagler Federal Savings and Loan
Association, Plaintiff-Counter-Defendant-Appellee.
v.
LACENTRA TRUCKING, INCORPORATED, a Florida corporation, Wenger Excavating,
Incorporated, an Ohio corporation, Mayfair Plumbing, Incorporated, a Florida corporation, KJK
Enterprises, Incorporated, a Florida corporation d.b.a. Mr. Electric, Defendants-Counter-Claimants-
Appellants,
Tarmac Florida, Incorporated, a Florida corporation, Defendant-Counter-Claimant.
Oct. 16, 1998.
Appeal from the United States District Court for the Southern District of Florida. (No. 92-6603-CIV-
KMM), K. Michael Moore, Judge.
ON PETITION FOR REHEARING
Before TJOFLAT and BARKETT, Circuit Judges, and GODBOLD, Senior Circuit Judge.
GODBOLD, Senior Circuit Judge:
I. History
This case involves a dispute over priority between holders of mechanics' liens filed against
a construction site and Resolution Trust Corporation (RTC)1, holder of a mortgage on that site. It
1
Pursuant to the Resolution Trust Corporation Completion Act, 12 U.S.C. § 1441a(m)(1), the
Resolution Trust Corporation ("RTC") was terminated not later than December 31, 1995 and the
Federal Deposit Insurance Corporation ("FDIC")succeeded it as conservator or receiver.
Accordingly, the FDIC is automatically substituted for the RTC as a party in this action. Fed.
R.App. P. 43. Initial pleadings were in the name of Flagler Federal Savings and Loan
Association. When Flagler went into receivership it was succeeded by RTC, and it in turn by
FDIC.
requires application of provisions of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA"), Pub.L. No. 101-73, 103 Stat. 1839, (codified as amended in scattered
sections of 12 U.S.C.). The Act provides for handling of claims of claimants to assets of failed
depository institutions and persons seeking a declaration of rights with respect to such assets. It
authorizes RTC as receiver to "determine [such] claims." 12 U.S.C. § 1821(d)(3)(A). Section
1821(d)(13)(D) provides that "no court shall have jurisdiction of [any such claim or action] "except
as otherwise provided in this subsection'." Id. § 1821(d)(13)(D). While not an explicit mandate for
exhaustion of administrative remedies these provisions are accepted by the cases and by Congress
as having that meaning. See Marquis v. FDIC, 965 F.2d 1148, 1151-52 (1st Cir.1992). In this case
we must consider the interplay between § 1821(d)(13)(D) and the jurisdiction of a court over a
pre-receivership claim that is pending in that court when receivership commences.
The district court held that the administrative exhaustion procedures of FIRREA apply to the
appellant lienors and that they had not complied with those procedures; therefore it granted
summary judgment to RTC. Flagler Federal Savings and Loan Association of Miami v. Greenview
Apts., Ltd., 897 F.Supp. 1431 (S.D.Fla.1995). This court affirmed in an unpublished opinion. 116
F.3d 1492 (11th Cir.1997). The appellants moved for rehearing.
We hold, first, that the district court erred in finding that appellants had not complied with
the requirements of FIRREA that their claims be presented to the receiver for administrative
processing. Second, we hold that, even if appellants' claims had not been presented, the district
Because of this succession of events the parties have usually referred to RTC as
the Plaintiff-Counter Defendant-Appellee, and we do the same.
We refer to the Defendants-Counter Claimants-Appellants as "appellants,"or
"claimants" and as "lienors".
2
court in which the pre-receivership claims were pending had jurisdiction over them and the receiver
had the option to invoke the process of administrative review or to have the claims litigated by the
court; the receiver chose the option of litigation and, having made that choice, it could not on the
eve of trial invoke the administrative process it had eschewed and thereby have the case dismissed
for failure to exhaust. In considering this first point, we hold that the jurisdiction of a federal court
over pre-receivership claims pending in a pre-receivership case is not terminated by the appointment
of a receiver. Next we address the interplay of the jurisdiction of the court over pending
pre-receivership claims and the administrative exhaustion requirements of FIRREA. We hold that
the receiver has the option of adjudicating the preexisting claims in the pending litigation or of
following the administrative claims procedures of the Act. And we hold that in this case RTC chose
to litigate the claims in the pending case, and having made that election, it could not on the eve of
trial invoke the administrative complaint procedures it had foregone to require that the case be
dismissed for want of jurisdiction. Additionally, we hold that the district court erred in holding that
the claimants had not complied with the requirements of presenting their claims to the receiver.
The motion of the plaintiffs for rehearing is GRANTED. The decision of this court is
VACATED, and this opinion is entered as the opinion of the court. The judgment of the district
court is REVERSED and the case is REMANDED to the district court for further proceedings.
II. Background
The liens held by claimants originated from construction of an apartment complex in
Broward County Florida by Greenview Apartments, Ltd. Under Fla. Stat. Ann. § 713.13(1)(a),
before "actually commencing" to improve real property an owner must file a Notice of
Commencement in the Office of the Clerk of the Circuit Court of the county in which the property
3
is located, and must post a copy thereof. Fla. Stat. Ann. § 713.13(1)(a) (West 1989). Under §
713.07 a lien for labor, services or materials furnished to the property attaches and takes priority at
the time of recording the Notice of Commencement. Id. § 713.07. The Notice is of no effect,
however, if the improvements described in the Notice are not commenced within 30 days after the
recording thereof, and it is not effectual after one year from the date of recording. Id. § 713.13(2)
& (5).
The events of this case are set out chronologically.
July 28, 1988: The Notice of Commencement for the Greenview site was recorded.
August 17, 1988: According to affidavits filed by the lienors in the summary judgment
record of the Florida state court, where this case began, on August 17, 1988 a surveying firm
performed work at the site consisting of surveying, staking, flagging, and verifying of property
boundary and monuments.
December 14, 1988: Greenview Apartments obtained a construction loan from Flagler
Federal Savings and Loan Association in the amount of $3,800,000 and executed a mortgage in
favor of Flagler which was recorded the same date.
III. The state court proceeding
April 1989: Flagler filed suit in Florida state court to foreclose its mortgage on the
construction site, alleging that the loan was in default. Flagler named as parties defendant some 16
entities that it alleged had supplied work or materials to the construction job, including the
appellants appearing in this appeal. Flagler alleged:
The following parties have been joined in these proceedings, since they may claim some
right, title, and interest in and to the subject property by virtue of being lienholders. Said
entries, if any, is [sic] junior and inferior to Plaintiff's Mortgage and Security Agreement.
4
Each of these appellants was alleged to have filed a claim of lien on the property. A copy of each
appellant's claim of lien, filed pursuant to Florida's mechanics' lien law, was attached to Flagler's
complaint. Each claim of lien was sworn to as required by Florida law. Each briefly described the
labor or services or materials supplied and the amount alleged to be unpaid. Each claim of lien had
been filed in the Office of Records of Broward County, Florida.
Flagler prayed that the court "adjudge the lien of the Plaintiff's Mortgage and Security
Agreement to be a valid first lien upon the property ... superior to the rights, claims and liens of all
Defendants to this cause." Flagler also asked for appointment of a receiver to secure and protect the
property with power to complete the improvements. In short, from the beginning of this case to the
present the lienholders have been identified persons or entities having claims against the property
that Flagler alleged to be junior to its claim. The nature of each claim, the amount claimed by each
lienor to be due, and the type of work out of which it arose have been known to Flagler (and to RTC
as its successor) from the claims of liens attached to Flagler's complaint.
October 16, 1989: Flagler moved for partial summary judgment of foreclosure on the ground
that the liens were void because improvements had not been commenced within 30 days of July 28,
1988, when the Notice of Commencement was filed. It later moved for final summary judgment.
September 11, 1990: The Florida trial court granted summary judgment of foreclosure to
Flagler on the ground that no visible improvements had commenced on the project within the 30
days following the recording of the Notice of Commencement; therefore, it held Flagler's mortgage
had priority. Lienholders appealed.
September 25, 1991: The Florida District Court of Appeals, Fourth District, reversed the
judgment of foreclosure and remanded for trial. Lacentra Trucking, Inc. v. Flagler Sav. & Loan
5
Assoc. of Miami, 586 So.2d 474 (Fla.Dist.Ct.App.1991). The court characterized the dispute as a
familiar one, concerning priorities between a mortgagee and mechanics lienors, raising a precise
question not previously answered in any Florida decision: whether surveying, flagging and staking
a construction site for an improvement within 30 days of recordation of the Notice of
Commencement can constitute actual commencement within the meaning of Fla. Stat. Ann. §
713.13. Id. at 475. The court held that the trial court had mistakenly relied upon a prior version of
the mechanics' lien statute that had required "visible commencement" within 30 days of the Notice.
Applying the current statutory standard of "actual commencement," the court reversed:
There is no legal reason under the statute why the ascertainment of boundary
monuments and flagging and staking might not be the exact moment of a beginning. There
is some evidence in this record suggesting that this particular survey was for mortgage
financing, but there is other evidence suggesting that it might have been to lay out the
dimensions of the foundation of the apartment building. There is certainly nothing here
establishing that, for this kind of improvement, the process of physically altering the land
with a permanent structure can never begin when lines are denoted by stakes and flags on
the land itself. The mere fact that for some kinds of improvements it is always later does not
mean, as a matter of legal construction of the statute, that for this one and others it cannot
be earlier—e.g. when the stakes and flags are laid out. The essential meaning here is that
the issue is to be determined by the facts of the particular improvement and its construction.
....
We therefore conclude that a trial is required to establish what the facts are. As we
are reversing for a trial, we think that the parties should be given leave to file amended
pleadings with all of their precise legal claims and defenses, if they so desire.
Id. at 477. The case lay quiescent for six months until March 1992.
March 25, 1992: By letter, counsel for lienors submitted to counsel who had been appearing
for Flagler written confirmation of the amount claimed by each lienor. These amounts were said to
have been previously furnished to the addressee on February 21, 1992. Accrued interest was added
6
to each claim producing a total for each. Also, "as requested by Flagler" the letter submitted a
proposed compromise settlement figure for each claim.
March 26, 1992: RTC was appointed receiver for Flagler. Counsel for Flagler became
counsel for RTC and, on March 26, received the March 25 letter describing lienors' claims.
April 5, 1992: As provided by the Act, 12 U.S.C. § 1821(d)(3)(B), RTC began publishing
in local newspapers a notice to creditors of the institution to present claims to RTC as receiver
within 90 days of its appointment, which the notice identified as expiring July 6, 1992. The Act also
requires RTC to mail a similar notice to creditors as shown on the books of the institution, 12 U.S.C.
§ 1821(d)(3)(C). RTC failed to mail notices to lienors.2
April 13, 1992: According to the briefs, the parties agreed on this date to a 30-day stay of
the case. The record discloses no court order to this effect; apparently this stay was not officially
entered.
May 27, 1992: RTC moved to be substituted for Flagler as plaintiff in the state court
proceeding, and, pursuant to § 1821(d)(12)(A), requested a stay of litigation not to exceed 90 days.
The motion to stay made no reference to administrative exhaustion.
June 1, 1992: In state court RTC was substituted as plaintiff and the case stayed for 90 days.3
IV. Federal court proceedings
2
We do not apply it to this case, but there is authority that if the receiver fails to give proper
notice, the FIRREA claims process is not initiated, and the time period for filing claims only
begins to run after the receiver has properly complied with the notice requirements. FDIC v.
Updike Bros., Inc., 814 F.Supp. 1035, 1041 (D.Wyo.1993).
3
The period for filing claims set by RTC as receiver in the newspaper notice began April 5
and extended to July 6. It was not synchronized with the 90-day stay of litigation secured by
RTC as plaintiff in state court, which began June 1.
7
June 17 or 18, 1992: RTC removed the case to the United States District Court.4 During the
life of the 90-day stay the parties proceeded with the pending case as though the stay were not in
effect.
July 6, 1992: The time for filing claims as set by the RTC newspaper notices expired.
August 20, 1992: Pursuant to Federal Rules of Civil Procedures 26(f) and Local Rule 14 of
the United States District Court, counsel conducted a scheduling meeting. As later noted in their
Report of this meeting, they met, defined the issues for trial, exchanged documents, exchanged lists
of witnesses, and discussed a discovery schedule. They discussed the likelihood of settlement,
which they said they could not appraise until discovery was completed. They estimated trial time
as three days. They described the principal issue to be as of what date construction was actually
commenced within the meaning of the Florida statute, the issue remanded by the Florida District
Court of Appeals. Other issues were identified as whether RTC could foreclose; whether
defendants' liens were valid and perfected; whether fabrication of materials within 30 days of the
notice of commencement constituted actual commencement; whether work done on easements or
on appurtenant land constituted actual commencement; whether Flagler had funded the loan without
compliance with Florida law concerning recommencement of interrupted construction; whether
waiver, estoppel or the D'Oench doctrine barred the lienors from recovering on their claims.
August 29, 1992: The 90-day stay expired.
4
We need not address lienors' claim that RTC violated the stay by removing the case to
federal court.
8
October 21, 1992: As required by Rule 26, the parties filed their joint report of their
scheduling meeting. It set out the issues described above. It did not mention administrative
exhaustion.
December 17, 1992: The court set the case for trial on May 3, 1993. Dates were set for a
final pretrial conference, filing of discovery, and filing of pretrial motions. The parties were directed
to file proposed findings of fact and conclusions of law.
From December 1992 to December 1994: The parties engaged in a blizzard of amended
pleadings, briefs, reply briefs and supplemental briefs, interrogatories, depositions, objections and
protective orders, motions to continue, motions to produce, motions to strike and counter-motions,
requests for additional time, requests for status conference, and a panoply of other filings.
February 23, 1993: Around this time, seven months after the stay expired, counsel for RTC
orally called to the attention of an attorney for the lienholders that no claim had been filed with RTC
as provided by the statute. At no time previously had RTC notified the lienholders that, despite the
pending case, it was insisting on the use of administrative procedures. RTC had not furnished its
usual forms for filing claims or usual instructions. With leave, lienors filed their Fifth Amended
Answer, Affirmative Defenses and Counterclaim. They re-filed copies of their recorded claims of
liens, and by counterclaim, asked the court to adjudicate the priority of their liens and hold that,
because they had timely filed Notice of Commencement, their liens were prior to Flagler's mortgage.
Each claim was accompanied by a copy of the contract pursuant to which the work reflected by the
claims was done. By this stage of the case issues identified included claims of equitable
subordination of Flagler's mortgage to lienors' liens, waiver and estoppel by Flagler, whether offsite
fabrication of materials constituted actual commencement of improvements, failure of Flagler to
9
give statutory notice of recommencement of work after it was shut down, the effect of Flagler's
knowledge of inchoate liens when it closed its loan, alleged equitable liens, effect of title insurance,
the D'Oench doctrine, the effect of the Florida Court of Appeals decision on issues not
addressed—and more. Lienors attached to their pleadings copies of contracts under which they had
furnished labor and materials and additional copies of their sworn recorded claims of liens. The
amount alleged as owed to each lienor was shown and the nature of its work described.
Early March, 1993: Additional proceedings continued.
March 17, 1993: RTC filed a Reply to the Lienors' Affirmative Defenses and an Answer and
Affirmative Defenses to Lienors' Counterclaims, setting out eight affirmative defenses. Neither
FIRREA nor the matter of filing a claim was mentioned.
March 22, 1993: RTC moved to continue the trial.
On or about April 1, 1993: RTC announced readiness for trial.
April 2, 1993: A year after it was appointed receiver, ten months after it was substituted as
plaintiff and the 90-day stay entered, nine months after the date for filing claims expired on July 6,
1992 and seven months after the stay expired, RTC filed a supplemental motion to dismiss, asserting
for the first time that the district court had no jurisdiction of the case because the lienors had "failed
to allege compliance with FIRREA, or allege any reason why compliance with FIRREA is excused."
April 15, 1993: Lienors moved for an order of court permitting them to file administrative
claims. They requested forms for filing proof of claims and asked for a stay of the action until
administrative procedures were completed. This was denied after the court's final order.
May 17, 1993: Lienors filed claims with RTC, ten months after the expiration date of July
6, 1992. These claims were never acted upon.
10
May 19, 1993: Pursuant to 12 U.S.C. § 1821(d)(6)(A) the lienors, relying on the May 17
filings, filed a motion to continue the pending action. We cannot determine that this was ever
denied.
September 10, 1993: RTC wrote one of the lienors noting that its records showed that 180
days from filing claims ( the time allowed for approval or disapproval) would expire November 17,
1993, which necessarily referred back to claims that had been filed May 17. RTC asked for an
extension of time to March 17, 1994 for it to allow or disallow the lienor's claim. According to the
briefs all lienors received the letter. The letter also represented that if the lienor did not agree to the
extension of time it could exercise its rights to judicial determination of its claim pursuant to §
1821(d)(6)(A).
July 5, 1995: More than three years after the case was remanded to the Florida trial court
and stayed, the district court struck lienors' affirmative defenses and counterclaims and granted
summary judgment to RTC on the ground that lienors had not complied with administrative
provisions that required them to present their claims to RTC. It held that RTC's failure to mail notice
to the lienors did not violate due process because the lienors had actual notice of the appointment
11
of RTC as receiver and of the 90-day stay.5 At the same time the district court acted on ten pending
motions.
Further litigation ensued over whether there should be a final order of foreclosure at which
Flagler, as holder of receiver's certificates from the 1994 foreclosure, would have first priority.
Lienors' efforts to obtain an accounting for interim rents and profits were denied.
January 9, 1996: Final judgment of foreclosure was entered in favor of RTC. By this time
the court proceedings comprised a 10-volume record. Lienors appealed.
V. The Statutory Structure
We examine the structure of the system put in place by the Act. Its purpose is set out in
H.R.Rep. No. 101-54(1), at 419 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 235: "the claims
determination procedure ... enables the FDIC [or RTC] to dispose of the bulk of claims against failed
financial institutions expeditiously and fairly.... Thus, the claim resolution process established in
this section should allow the FDIC [or RTC] to quickly resolve many of the claims against failed
financial institutions without unduly burdening the District Courts."
The Act requires the receiver to publish a notice to the institution's creditors to present their
claims, together with proof, within less than 90 days and to mail a notice to creditors. 12 U.S.C. §
5We do not address the due process issue. Courts are divided on whether failure by RTC to
give mail notice is a due process violation. See Greater Slidell Auto v. American Bank of Baton
Rouge, 32 F.3d 939, 942 (5th Cir.1994) ("The statutory requirement of mailed notice to
claimants who become known applies as a constitutional minimum to a claimant known by
reason of a law suit pending when the receiver is appointed."). To the same effect, Dule, J.,
concurring in Whatley v. Resolution Trust Corp., 32 F.3d 905, 911 (5th Cir.1994). In Damiano
v. FDIC, 104 F.3d 328, 335 n. 13 (11th Cir.1997), this court expressed its "serious constitutional
concerns" regarding failure to mail notice. See also Freeman v. FDIC, 56 F.3d 1394, 1403 n. 2
(D.C.Cir.1995)(expressing the same concerns even though plaintiff had actual knowledge of the
federal receivership).
12
1821(d)(3)(B) & (C).6 The receiver must allow or disallow the claim within 180 days. Id. §
1821(d)(5)(A). If a suit is pending concerning the claim the receiver may request a stay up to 90
days. Id. § 1821(d)(12)(A).
If the claim is disallowed the claimant may seek review. It may request administrative
review or file suit on the claim or "continue an action commenced before the appointment of the
receiver." Id. § 1821(d)(6)(A).
We address the merits of the complex issues before us on the assumption that the FIRREA
administrative claims procedure applies to this case. There is authority to the contrary. "[N]either
the exhaustion of remedies requirement nor the FIRREA administrative claims procedure applies
to actions the thrift itself commenced before it went under." Praxis Properties v. Colonial Sav.
Bank, 947 F.2d 49, 64 n. 14 (3d Cir.1991); see also Resolution Trust Corp. v. Love, 36 F.3d 972,
978 (10th Cir.1994) (holding that affirmative defenses are defensive responses and neither "claims"
nor "actions" within the provisions of § 1821, therefore they are not subject to the administrative
claims procedures); National Union Fire Ins. v. City Sav., 28 F.3d 376, 393 (3d Cir.1994)(holding
the same).
VI. The cases.
In Marquis v. F.D.I.C., 965 F.2d 1148, 1151 (1st Cir.1992), the First Circuit described
FIRREA as follows:
6
The lienors assert that they are not subject to the Act because they are not creditors. This has
no merit. The statute repeatedly refers to "claims" and "claimants," and these claimants are
persons "seeking a determination of rights with respect too, the assets of the depository
institution." 12 U.S.C. § 1821(d)(13)(E); see also Freeman v. FDIC, 56 F.3d 1394(D.C.Cir.1995).
13
FIRREA's text comprises an almost impenetrable thicket, overgrown with sections,
subsections, paragraphs, subparagraphs, clauses, and subclauses—a veritable jungle of
linguistic fronds and brambles. In light of its prolixity and lack of coherence, confusion over
its proper interpretation is not only unsurprising—it is inevitable.
.... Section 1821(d) ... is a relatively small piece of the statutory puzzle—but one
which exemplifies the larger interpretative problem: Section 1821(d) is comprised of
nineteen separately numbered fascicles, most with myriad subparts, occupying seven pages
of the United States Code. It is, in short, an avalanche of words.
The Eastern District of Louisiana has described it more succinctly: "[T]he statute makes the Internal
Revenue Code look like a first grade primer." Guidry v. Resolution Trust Corp., 790 F.Supp. 651,
653 (E.D.La.1992).
The statute has given rise to a sunburst of litigation with widely varying interpretations and
a wealth of conflicting decisions.7
RTC relies on the lienors' failure to exhaust by presentation of claims to the receiver prior
to July 6, 1992, the published cut-off date, thereby precluding jurisdiction under § 1821(d)(13)(D).
This ignores the central issue of whether jurisdiction of the federal court over the pre-receivership
claims remained viable and, if it did, the actions required of the receiver. The district court disposed
of these questions in a single sentence: "[T]he exhaustion requirement applies regardless of whether
[as is true in this case] a claimant has brought suit on its claim prior to the RTC's appointment as
receiver." This did not address the pre-existing jurisdiction. (Moreover, it was not adjusted to the
facts. The pre-receivership suit was brought by Flagler, not the claimants.) Some cases speak in
terms of the continued life of the pre-receivership case after a receiver is appointed, others of the
continued jurisdiction of the court in which that case is pending. However phrased, neither the
7
For example, see Annotation to Title 12 § 1821, in 1988 Supplementary Pamphlet to
U.S.C.A. §§ 1751-2280.
14
existence of a pre-receivership claim against the depository institution, nor the requirement of
presenting claims to the receiver, nor the actual presentation—none of these—strips away the
existing jurisdiction of the court over a pre-receivership claim. Nor is the court required to dismiss
the pre-receivership case.
In its supplemental motion to dismiss, filed with the district court, RTC acknowledged:
The effect of failing to comply with the administrative claims procedure while a suit is
already pending at the time the Receiver is appointed has resulted in conflicting decisions.
That acknowledgment is correct. But substantial authority agrees that jurisdiction of the court
continues over the pre-receivership claim.
[W]e think that subsections (d)(5)(F)(ii), (d)(8)(E)(ii), and (d)(12) coalesce to show
Congress' discernable intent to preserve jurisdiction over civil actions filed against failed
institutions prior to the FDIC's appointment as receiver.
Marquis v. FDIC, 965 F.2d 1148, 1153 (1st Cir.1992).
[W]e agree with other circuits that have addressed this issue and conclude that when claims
for monetary damages are brought before the RTC is appointed receiver, a court continues
to have subject matter jurisdiction over these issues.
Carney v. Resolution Trust Corp., 19 F.3d 950, 955 (5th Cir.1994).
[W]here a claimant files its action against a depository institution before the institution
becomes insolvent and is placed in receivership ... the failure of the thrift and the
appointment of RTC as receiver would appear not to divest the Federal Court of Jurisdiction,
for "[i]t is a firmly established rule that subject matter jurisdiction is tested as the time of the
filing of the complaint."
Praxis Properties v. Colonial Savings Bank, 947 F.2d 49, 63 n. 14 (3rd Cir.1991).
[T]he FDIC may stay a case that is pending at the time the FDIC takes over a failed financial
institution to allow the FDIC to analyze the case, but the court always retains jurisdiction....
If the court lost subject matter jurisdiction over the case the moment the FDIC took over the
Bank, then Congress would not have provided for a 90-stay for the FDIC to analyze the case.
U.S. v. Chorice, 857 F.Supp. 672, 674 (W.D.Mo.1994).
15
Section 1821(d)(6)(A) ... allows a claimant to "continue an action commenced before the
appointment of a receiver after the administrative review procedure has been completed....
The term "continue' implies that a party is proceeding forward in an ongoing case without
an interruption in the court's jurisdiction. A claimant could not "continue' an action over
which the court has been deprived of subject matter jurisdiction."
Coston v. Gold Coast Graphics, Inc., 782 F.Supp. 1532, 1535 (S.D.Fla.1992); see also Brady Dev.
Co. v. Resolution Trust Corp., 14 F.3d 998, 1003 (4th Cir.1994); Rosa v. Resolution Trust Corp.,
938 F.2d 383, 392 (3rd Cir.1991).
The issue we must decide concerns the interplay between the principles of law that govern
the court having jurisdiction of a pre-receivership claim and the limitations on jurisdiction imposed
by § 1821. The Eleventh Circuit, along with other courts, has addressed these questions. This court,
and others, construe FIRREA to provide two separate schemes for the disposition of pre-receivership
suits and post-receivership claims. See Damiano v. FDIC, 104 F.3d 328, 335 (11th Cir.1997);
Whatley v. Resolution Trust Corp., 32 F.3d 905, 908 (5th Cir.1994); Greater Slidell Auto Auction
v. American Bank & Trust Co., 32 F.3d 939, 941 (5th Cir.1994); Carney v. Resolution Trust Corp.,
19 F.3d 950, 956 (5th Cir.1994); Marquis v. FDIC, 965 F.2d 1148, 1153-54 (1st Cir.1992). Our
decision is controlled by Damiano. We adhere to it as precedent, and also we reaffirm it as a correct
decision that brings needed resolution to a confusing area of the law.
In Damiano this court drew on Whatley, which had addressed the relation between the
limitation of jurisdiction provisions of the Act and the vested jurisdiction of a district court over a
claim asserted in a pre-receivership suit. Damiano, 104 F.3d at 333. In Whatley plaintiff filed a
contract and tort suit against a savings institution, RTC intervened, removed to federal court and
stayed the proceedings. After this stay expired RTC was appointed as receiver and did not request
another stay. It initiated the administrative claims process by publishing notice in a newspaper but
16
did not give mail notice to the plaintiffs. After the time for filing administrative claims had expired
RTC filed a motion to dismiss the complaint for failure to exhaust. The district court dismissed for
lack of subject matter jurisdiction. The Court of Appeals held that subject matter jurisdiction is
tested as of the time of the filing of the complaint, therefore district courts presiding over actions
properly filed prior to the appointment of a receiver continue to be vested with jurisdiction.
Whatley, 32 F.3d at 907. The Fifth Circuit concluded that a separate scheme exists for the
disposition of lawsuits filed pre-receivership. Id. at 908. Those claims, based on valid federal
jurisdiction when filed, may be effected only through the stay provision.
Congress created a separate scheme for the handling of pre-receivership actions,
giving the receiver the privilege, but not the duty, to request a stay of judicial proceedings
so that it might first consider the pending claim administratively. Neither a request for a
stay nor the failure to request a stay deprives the district court of jurisdiction. Rather, if the
receiver requests a stay, the court will defer action temporarily. If the receiver does not
timely seek a stay, the judicial action will routinely proceed. This does not mean that the
judicial process runs concurrently with the administrative remedy. Congress has given the
receiver the option to either request a stay, and proceed administratively based on the
claimant's complaint or any substitute or supplemental filing it may request, or forego the
privilege of requesting a stay and thus proceed judicially. Should the receiver choose to
proceed administratively, it must request the stay within 90 days of its appointment;
thereafter no stay may be sought and the judicial action is to proceed. (footnote omitted)
Id. (emphasis added).
The court analyzed the language of the statute and the legislative history.
As in any case of statutory interpretation, we look to the plain language of the statute,
reading it as a whole and mindful of the linguistic choices made by Congress. The language
of subsection 1821(d) is clear: "The Corporation may as receiver, determine claims in
accordance with the requirements of this subsection." "After ... appointment ... [as receiver
for an insured depository institution, ... [it] may request a stay for a period not to exceed ...
90 days, ... in any judicial action or proceeding to which such institution is or becomes a
party.]" The term "may" is permissive; it neither indicates nor requires an exclusive means
of action—it is discretionary. Paragraph (3)(A) allows, but does not require, the receiver to
determine claims in accordance with FIRREA; paragraph (12)(A)(ii) grants the receiver the
privilege, should it choose to proceed administratively, to request a stay of judicial
17
proceedings. Neither provision is mandatory. The use of the term "shall" in other
paragraphs of subsection 1821(d) supports this analysis.
The language of subsection 1821(d), and its legislative history, lends support to our
conclusion. Absent a request for a stay pursuant to paragraph (12)(A)(ii), no provision of
the subsection exists by which the judicial proceeding may be stayed. As congressional
goals of efficiency and expediency would be prejudiced if administrative and judicial
processes were allowed to proceed simultaneously, Congress obviously intended to grant the
receiver the option to use initially either the administrative or judicial mechanism. If
Congress had intended the administrative procedure to be exclusive for pre-receivership
actions, it would not have provided for the permissive stay. It would have been a simple
matter to provide for an automatic, mandatory stay of all pending judicial actions. This
Congress did not do; this we will not do under the guise of statutory interpretation.
[Footnotes omitted.]
Id. at 909.
Finally, the court expressed its disapproval of the lack of fair play in what it considered the
sandbagging of valid claims by the receiver's allowing the time for a claim to expire without
proceeding administratively and then moving to dismiss the pending action. Id.
Our decision in Damiano followed on from Whatley. In Damiano, the plaintiff filed a
pre-receivership lawsuit against a savings and loan association, claiming age discrimination. The
association became insolvent, and RTC was appointed receiver and substituted as defendant. RTC
published a newspaper notice directed to claimants as provided by § 1821(d)(3)(C). And, as in the
present case, there was inconclusive discussion of settlement. Damiano made an offer of settlement
to the institution's counsel, but counsel was unable to predict when RTC would respond. Damiano
renewed her settlement proposal to new counsel for RTC and discussed with the new counsel a date
for trial. Subsequently, some eight months after RTC was appointed receiver, it moved to dismiss
for failure of the plaintiff to exhaust and alternatively moved for a stay pending exhaustion.
Damiano did not respond. The case was dismissed, reinstated, set on the trial calendar, and a new
motion to dismiss was filed by RTC alleging lack of subject matter jurisdiction. The motion was
18
granted three years after RTC was appointed. This court reversed. Damiano, 104 F.3d at 335. It
joined with Whatley in holding that the statute establishes a scheme for lawsuits filed
pre-receivership that is different from that for post-receivership claims. Id. at 333. It recognized
that a court has no subject matter jurisdiction of a post-receivership claim until the claimant has
exhausted administrative remedies. Id. But, as we explained, subject matter jurisdiction is ordinarily
tested as of the time a complaint is filed; therefore a court in which a lawsuit was pending when
RTC was appointed remains vested with jurisdiction. Id. This conclusion, the court held, was
confirmed by the statute's provision for continuation, as opposed to the reinstatement, of
pre-receivership lawsuits after the appointment of the receiver, and by the fact that the statute does
not provide for an automatic stay of pre-receivership actions but gives the receiver the right but not
the duty to seek a stay of pending action. Id. at 333-34. We found that the statute did not intend
judicial and administrative processes to run concurrently but rather "intended to give the receiver
jurisdiction of deciding whether to require the claimant to exhaust its administrative remedies or to
allow the suit to proceed judicially." Id. at 334. We concluded:
The drafters of FIRREA explained that the purpose of "the stay [is to] give[ ] the [receiver]
a chance to analyze pending matters and [to] decide how best to proceed." H.R.Rep. No.
54(I), at 331, 1989 U.S.C.C.A.N., at 127 (emphasis added). Section 1821(d)(3)(A), which
sets out the receiver's authority to determine claims administratively, does not require the
receiver to subject all claimants to the administrative process. Instead, it is permissive,
providing that the RTC "may, as receiver, determine claims in accordance with the
requirements of this subsection [1821(d)]." 12 U.S.C. § 1821(d)(3)(A) (emphasis added).
We conclude that Congress intended for the receiver to decide whether to "proceed
administratively based on the claimant's complaint or any substitute or supplemental filing
it may request, or forego the privilege of requesting a stay and thus proceed judicially."
Whatley, 32 F.3d at 908.
Damiano, 104 F.3d at 334 (footnote and citations omitted)(emphasis added). Like the court in
Whatley we are concerned with RTC luring the claimant to assume that it is ready to deal with it as
19
a litigant while awaiting expiration of the administrative deadline after which it may dispose of the
claim favorably to itself without consideration of the merits. Also like the Whatley Court, we
concluded by noting that "[w]e neither find nor assign any such intent to Congress in the enactment
of FIRREA." Damiano, 104 F.3d at 335.
The purpose of the stay provision as explained by the drafters, "[is to] give the [receiver] a
chance to analyze pending matters and [to] decide how best to proceed." H.R.Rep. No.101-54(1),
at 331 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 127 (emphasis added). But it is not enough for
the receiver to obtain a stay. If RTC desired to insist on the use of its administrative process it was
required to make its position known to the claimant.
Thus, the RTC must satisfy two conditions to require the plaintiff in a pre-receivership
lawsuit to exhaust its administrative remedies before continuing the action:: (1) The RTC
must "insist on the use of its administrative processes," by staying the action and informing
the plaintiff that it is doing so pending exhaustion of the administrative remedies, and (2) it
must do so in a timely fashion, that is, within the ninety-day period specified in §
1821(d)(12). (Footnote omitted). (Emphasis added).
Damiano, 104 F.3d at 335.
In a case decided before Damiano the Ninth Circuit has disagreed with Whatley and Greater
Slidell. Intercontinental Travel Marketing, Inc. v. FDIC, 45 F.3d 1278, 1282-83 (9th Cir.1994)
holds that there is no separate statutory scheme for pre-receivership cases pending when a receiver
is appointed. We are, of course, bound by Damiano. Nevertheless, we are constrained to comment
upon Intercontinental. In our view it is not persuasive authority. The Ninth Circuit relied upon its
earlier decision in Henderson v. Bank of New England, 986 F.2d 319 (9th Cir.1993), as holding there
is no subject matter jurisdiction over a claim against an insolvent bank until claimant has exhausted
his remedies. But the claimant in Henderson had filed his suit after the receiver was appointed.
There was no pre-receivership claim. The Intercontinental Travel court simply extended the
20
Henderson holding to pre-receivership cases with a bare statement that it saw no reason not to do
so. 45 F.3d at 1282-83. The Ninth Circuit found that the statute does not create a separate scheme
for cases pending when a receiver is appointed. It did so without reference to cases holding that
jurisdiction over such pending cases continues. See e.g., Marquis, Carney, Praxis, Choice, Coston,
Brady, Rosa, noted at pp. 234-35, supra, and cases holding that the statute provides a separate
scheme for such pending cases. The Ninth Circuit also relied upon the holding in several cases that
Congress does not envision that administrative and judicial review may take place simultaneously.
This misses the point. Whatley/Slidell (and Damiano) do not hold or suggest that there can be
simultaneous review. Indeed, Whatley specifically recognizes that simultaneous review is not
permitted. 32 F.3d at 905. Rather the three cases all recognize that the receiver has an option
between the administrative or judicial mechanism and must choose between the two routes of review
and make its choice known.
In a note published two years before Damiano the Whatley/Slidell analysis is described as
a minority view, see Note, Resolving Pre-receivership Claims Against Failed Savings and Loans:
An Unnecessarily Exhausting Experience, 63 Fordham L.Rev. 2315 (1995). The commentator
concludes, however, that the Whatley/Slidell view of subject matter jurisdiction is "most consistent
with the intent of Congress." Id. at 2316 and 2327.
In the case before us RTC stayed the action. But it did not inform the plaintiff that it was
staying the case pending exhaustion of administrative remedies as required by Damiano. To the
contrary, after the stay expired the case resumed its life. RTC permitted the pre-receivership
litigation to proceed and participated freely in it, dealing with claimant's counsel as litigant. Not
only did the receiver not make known a choice to use administrative processes but for months it
21
pursued a course of action consistent only with litigation. It defined the issues for litigation. It
utilized the litigation to obtain information on the issues for the determination of which the case had
been remanded. The parties were exposed to months of litigation and major expense. The resources
of the district court were needlessly dissipated. Disposition of RTC's assets received from the
foreclosed property was delayed. Then, on the eve of trial, RTC invoked the administrative
processes it had theretofore eschewed as a vehicle to dispose of the case favorably to its position
without trial or hearing. This the receiver could not do. This case is the antithesis of the orderly and
prompt procedures contemplated by the statute. It stands the statute on its head. The choice given
RTC to choose between litigation and administrative process means little if the receiver does not
make known what its choice is so that the case, or the administrative process, can proceed
accordingly.8
The fact that RTC obtained a stay does not alter the result. The stay is for RTC's benefit to
allow it to analyze the case, determine its status, examine the merits of pending litigation, and decide
on its course of action. Brady Dev. Co. v. Resolution Trust Corp., 14 F.3d 998, 1004 (4th Cir.1994).
It can choose litigation or administrative processing. The stay neither affects the choice nor
diminishes the necessity to make a choice and reveal it. RTC chose litigation. It must abide by that
choice.9
8
For a different analysis of the proper handling of a pre-receivership suit, see FDIC v. Grillo,
788 F.Supp. 641, 647 (D.N.H.1992). Grillo holds that the claimant may pursue the court action
simultaneously with administrative claims resolution, or pursue only the administrative option,
or only the court process. The decision finds the Congressional history to provide selected
alternative remedies to the claimant and administrative adjudication to be neither exclusive nor
mandatory. Id.9
McMillian v. FDIC, 81 F.3d 1041 (11th Cir., 1996), did not address the issues of the present
case. It makes the usual statement that FIRREA makes administrative review mandatory. No
22
VII. Presentation of the Claim
The requirement of presenting a claim to the receiver puts the receiver on notice of the
existence of the claim and gives it the opportunity to analyze it and make a decision on whether to
allow or disallow. The statute contains no instructions for filing a claim but merely speaks in
numerous sections of "filing," see § 1821(d)(3)(B), of a notice to creditors to "present their claims,
together with proof," and in § 1821(d)(5)(C) of allowing "any claim received" on or before the
specified date. RTC was given rule making power by § 1821(d)(4), but the parties have not relied
on any such rules.
The facts of this case require a finding that lienors' claims were properly filed/presented. The
most compelling facts are, of course, that the claims were in the hands of Flagler from the beginning
of the controversy, and Flagler's suit was brought for the purpose of assigning a priority to the claims
that in practical effect would make them valueless (or, at least, substantially less valuable). RTC
became owner and manager of the suit, litigated it, and continues to do so. The policies underlying
a requirement of presentation have been vindicated. It defies common sense to urge that Flagler and
RTC have never been "presented" with the claims that have been in their hands since this
pre-receivership claim was pending, so the interplay between the FIRREA law and existent
jurisdiction was not an issue.
23
controversy began.10 Our concern is not with art form but with the rights of parties who have
furnished goods and services and are entitled to qualify to be paid.
Pretermitting whether Flagler's suit, by itself, met the requirement of presentation (or, indeed,
made the statute inapplicable, see note 9, supra ), we turn to technical grounds asserted by RTC to
presentation. RTC asserts that amounts were not stated, claims were not sworn to, and work was
not identified. To the contrary, we find that the claims of liens, in the possession of Flagler and
attached to its complaint, were sworn to, the amount claimed by each lienor was stated, and the
nature of the work done was identified, though tersely. Amounts were re-identified in the March
25, 1992 letter of lienors' counsel to counsel for Flagler (who immediately thereafter became counsel
for RTC). Subsequently, in amended pleadings, lienors re-filed their claims of liens and with them
filed the underlying contracts for the work done, and re-stated the amounts of claims.
RTC objects that the claims were not set out on its forms or in the manner required by its
instructions for filing. But it not only failed to give mail notice; it did not furnish forms or
instructions. Compare Capital Data Corp. v. Capital Nat'l Bank, 778 F.Supp. 669, 674
(S.D.N.Y.1991) in which FDIC gave proper notice to claimant by mail as required by the statute and
included a proof of claim form and directions that it had to be "completed in full, signed by a
10
We are troubled by RTC's insistence that lienors' claim had to be submitted to it for
allowance or disallowance when Flagler had brought the suit (to which RTC is successor) that
would in effect disallow those very claims. Moreover, it utilized the litigation to obtain
discovery on the issues remanded and to be tried. In FDIC v. diStefano, 839 F.Supp. 110(D.R.I.1993), FDIC sued the defendant for a deficiency on a foreclosed mortgage. Defendant
counterclaimed, alleging breach of contract, torts and constitutional claims. FDIC moved to
dismiss for failure to administratively file the claims. The court held that FDIC's action in
bringing the case was a de facto denial of defendant's claims, accordingly the jurisdictional bar
of FIRREA did not apply at all. Id. at 119.
24
properly authorized signatory, notarized and returned along with supporting documents ... or [the]
claim [would] be forfeited." Lienors in this case received no such information.
The motion of the plaintiffs for rehearing is GRANTED. The decision of this court is
VACATED, and this opinion is entered as the opinion of the court. The judgment of the district
court is REVERSED and the case is REMANDED to the district court for further proceedings.
BARKETT, Circuit Judge, concurring:
I concur fully in the majority opinion because I believe Damiano clearly controls this case.
Damiano explicitly reads the permissive stay provision of § 1821(d)(12)(A) to mean that Congress
"intended to give the receiver the discretion of deciding whether to require the claimant to exhaust
its administrative remedies or to allow the suit to proceed judicially." Damiano, 104 F.3d 328, 334
(11th Cir.1997). Quoting Whatley v. RTC, 32 F.3d 905, 908 (5th Cir.1994) to the same effect, the
Damiano Court stated that "Congress intended for the receiver to decide whether to "proceed
administratively based on the claimant's complaint or any substitute or supplemental filing it may
request, or forego the privilege of requesting a stay and thus proceed judicially.' " Damiano, 104
F.3d at 334. The dissent inexplicably reads this statement to create options for claimants. However,
this misreads Damiano. Damiano put the burden on the receiver to decide whether to proceed
administratively or judicially. It is the receiver's election to go the administrative route—not the
claimant's response to this election—that may be "based on the claimant's complaint or any
substitute or supplemental filing it may request." Damiano, 104 F.3d at 334. In this case, just as
in Damiano, the receiver did not make known its choice to proceed administratively and so inform
the claimant. To the contrary, in both cases, all of the actions of the receiver throughout were
consistent with the choice of the judicial route.
25
Nor does the RTC's request of a stay in the present case change the analysis. The permissive
stay created by FIRREA is intended to give the receiver a chance to analyze the case and decide how
best to proceed. See H.R. Rep., quoted at 104 F.2d 334. Although RTC requested a stay in the
present case, it never made known to the claimants that it had opted to require them to proceed
administratively. Damiano is clear that compliance with § 1821(d)(12) requires receivers who have
opted to stay the action to "inform[ ] the plaintiff that it is doing so pending exhaustion of the
administrative remedies." id at 335. This RTC failed to do. Moreover, it continued vigorously to
proceed with litigation. It cannot now claim that plaintiffs were on notice that it was the
administrative route, and not the judicial one, that RTC intended to pursue.
The dissent also suggests that the language of § 1821(d)(5)(F)(ii), to wit, "the filing of a
claim with a receiver will not prejudice any right of a claimant to continue any [pre-receivership]
action [filed in court]" necessarily requires that the claimant file a claim with the receiver. This
conclusion likewise flows from the misperception that it is the claimant and not the receiver that has
the option. Once it is recognized that the obligation to elect to require claimants to file an
administrative claim or to allow the judicial action to proceed is vested in receivers, it becomes clear
that this provision is designed to protect claimants who are required to file administrative claims,
not to require them to do so in cases where receivers have opted for a judicial disposition of the
claim.
Finally, in Damiano, for purposes of the requirement of administrative exhaustion, this Court
found FIRREA to differentiate between claims filed pre-receivership and those filed
post-receivership. Given that claims filed in the courts prior to the appointment of receivers will be,
by definition, at different stages of resolution, this reading is consistent with "FIRREA's aim of the
26
"expeditious and fair [ ]' resolution of claims ... and its concern for conserving judicial resources."
Damiano, 104 F.3d at 334 (quoting H.R.Rep. No. 54(I), 101st Cong., 1st Sess. 419 (1989), reprinted
in 1989 U.S.C.C.A.N. 86, 215).
TJOFLAT, Circuit Judge, dissenting:
The issue before us today is surprisingly simple—whether to give deference to the statutory
scheme designed by Congress to handle the problems associated with failed financial institutions
or to ignore that scheme and apply rules of "common sense" and equity to enforce "the rights of
parties who have furnished goods and services and are entitled to qualify to be paid." Ante at ----.
Unfortunately, the majority chose the latter course.
Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(FIRREA), Pub.L. No. 101-73, 103 Stat. 183 (codified as amended in scattered sections of 12
U.S.C.), to establish a regulatory scheme by which the FDIC could "dispose of the bulk of claims
against failed financial institutions expeditiously and fairly ... without unduly burdening the District
Courts." H.R.Rep. No. 101-54(I), at 419 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 215. In
carrying out these goals, Congress created a very complex statutory scheme—one that some have
called "an almost impenetrable thicket ...—a veritable jungle of linguistic fronds and brambles."
Marquis v. FDIC, 965 F.2d 1148, 1151 (1st Cir.1992). The mere complexity of the statute, however,
does not give this court leave to abdicate its responsibility to determine what Congress intended.
As I find nothing in the statute or its legislative history that would support the interpretation the
majority adopts today, I respectfully dissent.
I.
27
The procedure for handling a claim under FIRREA is fairly simple. Once the RTC/FDIC
has been appointed as receiver, it must "promptly publish notice to the depository institution's
creditors to present their claims." 12 U.S.C. § 1821(d)(3)(B) (1994). The RTC/FDIC is also
required to mail notice to all known creditors of the institution. See 12 U.S.C. § 1821(d)(3)(C). The
notification required by section 1821(d)(3)(B) begins a ninety-day window within which creditors
must file claims with the FDIC.1
Once a claim is filed with the RTC/FDIC, the receiver must determine the validity of the
claim, and must notify the creditor of its determination within 180 days of the filing. See 12 U.S.C.
§ 1821(d)(5)(A). Should the receiver require more time, it may request an extension from the
creditor. See id. Regardless of whether the receiver requests additional time, however, a sixty-day
window of time opens—at the earlier of (1) notification of denial of the claim, or (2) the end of the
180-day period that begins when the creditor files a claim—in which the creditor either may request
administrative review of the receiver's determination or may "file suit on such claim (or continue
an action commenced before the appointment of the receiver)." 12 U.S.C. § 1821(d)(6)(A).
The statute does not distinguish between claims filed in court prior to receivership and those
that arise after the receiver is appointed. The statute does provide for a stay of ninety days in any
action that is pending at the time of the receiver's appointment; such a stay is to be granted
automatically by the court upon a motion by the receiver. See 12 U.S.C. § 1821(d)(12)(A) & (B).
The majority today argues that section 1821(d)(12) somehow indicates that Congress intended to
create a different statutory scheme for handling pre-receivership claims. I agree that section
1
In Damiano v. FDIC, 104 F.3d 328, 331 (11th Cir.1997), for instance, the published
notification required that all claims be filed with RTC's claims department in Tampa, Florida,
within ninety days of publication.
28
1821(d)(12) indicates that a newly-appointed receiver must decide whether to proceed with pending
litigation or proceed administratively, and that administrative exhaustion is not mandatory. See
Brady Dev. Co. v. RTC, 14 F.3d 998, 1003-04 (4th Cir.1994). I do not agree, however, with the
court's holding that a different scheme exists for the handling of pre-receivership claims—a scheme
that relaxes the requirement that a creditor file an administrative claim with the receiver. After
discussing the authority on which the majority relies, I will outline a more reasonable interpretation
of the statute.
II.
The majority argues that a district court's jurisdiction continues over pre-receivership claims
after the appointment of a receiver, citing specific sections of the United States Code as support.
See 12 U.S.C. §§ 1821(d)(5)(F)(ii) ("Subject to paragraph (12), the filing of a claim with the receiver
shall not prejudice any right of the creditor to continue any action which was filed before the
appointment of the receiver." (emphasis added)); 1821(d)(6)(A) ("[Before the end of the sixty-day
window] the claimant may request administrative review of the claim ... or file suit on such claim
(or continue an action commenced before the appointment of the receiver )." (emphasis added)).
The majority also cites authority from this circuit and others supporting its assertion that jurisdiction
over pre-receivership claims continues upon the appointment of a receiver. I agree that jurisdiction
continues even upon the appointment of a receiver; however, if the receiver requests a stay and thus
chooses to proceed administratively, continued jurisdiction is dependent on the creditor exhausting
all administrative remedies—and none of the cases the majority cites in support of its jurisdictional
argument suggest anything different.
29
The majority cites Damiano v. FDIC, 104 F.3d 328 (11th Cir.1997), as "controlling" in this
case. The holding in Damiano, however, addressed a different question—whether a receiver may
disregard the requirements of section 1821(d)(12)(A) by not requesting a stay within the specified
ninety-day period. See Damiano, 104 F.3d at 335.2 The receiver in that case waited eight months
before it requested a stay pending the exhaustion of administrative remedies. See id. Because the
receiver did not make a timely motion to stay, "[t]herefore, it has elected to proceed with the lawsuit
judicially by failing to insist on the use of its administrative process." Id. The receiver in our case,
however, moved for a stay within two months of being appointed receiver, well within the
prescribed ninety-day window. The holding in Damiano, therefore, is distinguishable from this case.
The Damiano panel did address the provisions of the statute in question here. Citing support
from the Fifth Circuit, the panel reasoned that two separate schemes existed, depending on whether
the creditor had filed a pre-receivership suit. See Damiano, 104 F.3d at 333-34 (citing Whatley v.
RTC, 32 F.3d 905, 908 (5th Cir.1994)). For post-receivership claims, administrative exhaustion is
mandatory. For pre-receivership claims, however, the burden shifts to the receiver to
satisfy two conditions [in order to] require the plaintiff in a pre-receivership lawsuit to
exhaust its administrative remedies before continuing the action: (1) The RTC must "insist
on the use of its administrative processes," by staying the action and informing the plaintiff
that it is doing so pending exhaustion of the administrative remedies, and (2) it must do so
in a timely fashion, that is, within the ninety-day period specified in § 1821(d)(12).
Id. at 335 (citation omitted). Damiano further relies on Whatley, 32 F.3d at 908, for its assertion that
a receiver that decides to proceed administratively on a pre-receivership claim proceeds "based on
2
The Fifth Circuit has argued that § 1821(d)(12)(A) requires a receiver to move for a stay
within the first 90 days of appointment. See Praxis Properties, Inc. v. Colonial Sav. Bank, 947
F.2d 49, 67-71 (3d Cir.1991). I leave for another day the discussion of whether that court's
interpretation of the statutes and legislative history are correct, as my intention here is only to
distinguish Damiano from the present case.
30
the claimant's complaint or any substitute or supplemental filing it may request." Damiano, 104
F.3d at 334 (quoting Whatley, 32 F.3d at 908) (internal quotation marks omitted) (emphasis added).
In other words, the Damiano panel stated that a creditor who has filed a prereceivership claim
against the financial institution in court may proceed administratively on the complaint filed in
court, without making any further filing with the administrative arm of the receiver. This language
in Damiano, and its reliance on Whatley, is not necessary to support its holding that a receiver must
either request a stay within ninety days of its appointment or forego the opportunity to proceed
administratively. The statement therefore constitutes dicta. To the extent that the statement creates
a heightened burden on the receiver or relieves the creditor of its duty to file its claim
administratively, it is an incorrect interpretation of the statute.
The majority relies on Marquis v. FDIC, 965 F.2d 1148, 1153 (1st Cir.1992), for the
proposition that courts "preserve jurisdiction over civil actions filed against failed institutions prior
to the FDIC's appointment as receiver," a point which I do not dispute. That same court, however,
noted that "[w]e think that FIRREA makes participation in the administrative claims review process
mandatory for all parties asserting claims against failed institutions, regardless of whether lawsuits
to enforce those claims were initiated prior to the appointment of a receiver." Id. at 1151. That
court further states that, "where a claimant has been properly notified of the appointment of a federal
insurer as receiver, and has nonetheless failed to initiate an administrative claim within the filing
period, the claimant necessarily forfeits any right to pursue a claim against the failed institution's
assets in any court." Id. at 1152 (citations omitted) (emphasis added). This language supports the
idea that the creditor must satisfy the requirements of the administrative process, and may not rely
31
on Whatley 's assertion that filing a prereceivership action in an Article III court fulfills FIRREA's
requirement that a creditor file a claim with the FDIC.
The majority cites Carney v. RTC, 19 F.3d 950, 955 (5th Cir.1994), as further support for
the rule that appointment of a receiver does not divest a court of jurisdiction over a claim against the
underlying failed institution. Again, I agree, except that any jurisdiction (and continuation of the
case) is subject to completion of the administrative process with respect to the claim. The court in
Carney cites language from a House Report discussing the legislation, which states:
Any suit (or motion to renew a suit filed prior to appointment of the receiver ) must be
brought by the claimant within 60 days after the denial of the claim. Resort to either the
District Courts or administrative process is available only after the claimant has first
presented its claim to the FDIC.
Id. at 956 (citing H.R.Rep. No. 101-54(I), at 418 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 214)
(emphasis in original). That language suggests that even pre-receivership claims filed in court may
be resumed within sixty days only after administrative denial of the claim, thus requiring creditors
to exhaust their administrative remedies if the receiver requests a stay. In short, the majority's
support for the proposition that a court does not lose jurisdiction of a pre-receivership claim upon
the appointment of a receiver is insubstantial; even those cases relied upon by the majority generally
recognize that the creditor must satisfy the administrative requirements prior to proceeding with or
32
continuing legal action in court.3 Without this support, the majority's interpretation is left wanting.
I therefore offer a more reasonable interpretation of the statute.
III.
For some reason, the majority interprets the statutory language permitting a receiver to
request a stay in court proceedings involving a pre-receivership claim to create a different statutory
scheme for pre-receivership claims than for post-receivership claims. I agree with the majority that
the statute permits the receiver to request the stay, but does not require such a request. In no way,
however, does this language create a separate scheme for handling prereceivership claims. On the
contrary, this language permits the receiver either to continue with the litigation or to proceed under
the same administrative scheme set up for post-receivership claims. The legislative history of
FIRREA supports this interpretation.
3
The majority also cites Brady Dev. Co. v. RTC, 14 F.3d 998 (4th Cir.1994); Praxis
Properties, Inc. v. Colonial Sav. Bank, 947 F.2d 49 (3d Cir.1991); Rosa v. RTC, 938 F.2d 383(3d Cir.1991); United States v. Chorice, 857 F.Supp. 672 (W.D.Mo.1994); and Coston v. Gold
Coast Graphics, Inc., 782 F.Supp. 1532 (S.D.Fla.1992). Each of these cases, however, also
recognizes that the creditor must satisfy the administrative requirements before proceeding with
or continuing a lawsuit. See Brady, 14 F.3d at 1005 (endorsing the Tenth Circuit's interpretation
of this statute and stating: "On the contrary, we conclude that [plaintiff's] right to continue
pursuing its pending lawsuit is dependent upon its compliance with FIRREA's claims
provisions."); Praxis, 947 F.2d at 63 n. 14 (recognizing, but expressing no position on, the fact
that some courts had "inferred from § 1821(d)(3)-(8) and (13) a right to a 180-day stay of the
pending judicial proceeding, requiring the claimant to exhaust the administrative review process
before returning to court"); Rosa, 938 F.2d at 391-92 ("Subsection (d) of § 1821 provides for de
novo district court jurisdiction only after the filing of a claim with, and the initial processing of
that claim by, RTC pursuant to § 1821(d)(5) and (6)(A)." (citation omitted)); Chorice, 857
F.Supp. at 675 ("However, the court will lose jurisdiction if the claimant does not timely file a
claim with the FDIC."); Coston, 782 F.Supp. at 1536 (concluding that "Congress intended to
stay actions against an insolvent bank filed prior to the FDIC's appointment as receiver until the
claimants have complied with the FDIC's administrative review process.").
33
In House Report 101-54(I), Congress laid out the framework for handling claims with a
receiver. See H.R.Rep. No. 101-54(I), at 418-19 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 214-
15.4 The Report's statement that a "motion to renew ... must be brought ... within 60 days after the
denial of the claim," when followed by its statement that "[r]esort to the [courts] ... is available only
after [exhaustion]," discounts any inference of Congress' intent to create separate statutory schemes.
Furthermore, nothing in the language or legislative history of FIRREA leads to the conclusion that
a creditor who has filed a pre-receivership action is relieved from filing an administrative claim with
the receiver. Section 1821(d)(5)(F)(ii) does state that "the filing of a claim with the receiver shall
not prejudice any right of the claimant to continue any [pre-receivership] action [filed in court]."
That language, however, necessarily requires that the creditor file a claim with the receiver.
Moreover, section 1821(d)(6)(A) permits the creditor to "continue an action commenced before the
appointment of the receiver;" the creditor may continue that proceeding, however, only after the
4
The House Report states:
The reported bill directs the FDIC to promulgate rules and regulations
establishing a variety of administrative procedures and systems to determine
contested claims. These procedures will apply to proceedings conducted by the
FDIC and to those conducted by the RTC. After exhaustion of streamlined
administrative procedures, a claimant has a choice to either bring the claim de
novo in the District Court in which the insured institution had its principal place
of business or have the claim determination reviewed by one or more
administrative processes. The agency's determination whether to allow a claim
must be made within 180 days after the claim is timely filed, unless both parties
agree to extend that time period. A notice of disallowance becomes final unless
the claimant files an objection within 30 days of the mailing of such notice. Any
suit (or motion to renew a suit filed prior to appointment of the receiver) must be
brought by the claimant within 60 days after the denial of the claim. Resort to
either the District Courts or administrative process is available only after the
claimant has first presented its claim to the FDIC.
H.R.Rep. No. 101-54(I), at 418 (1989), reprinted in 1989 U.S.C.C.A.N. at 214.
34
initial administrative procedures have taken their course and resulted either in the disallowance of
the claim or the running of the 180-day period for making such a determination. Neither provision,
and nothing in the legislative history, suggests that any of the administrative procedures may be
avoided by a creditor who has a pending pre-receivership lawsuit.5
For its interpretation of the statute, the majority relies heavily on the Fifth Circuit's opinion
in Whatley,6 in which the court stated that "Congress has given the receiver the option to either
request a stay, and proceed administratively based on the claimant's complaint or any substitute or
supplemental filing it may request, or forego the privilege of requesting a stay and thus proceed
judicially." Whatley, 32 F.3d at 908. Unfortunately, the court in Whatley provided no support for
this "bare statement." At the same time, the majority here dismisses the holding of Intercontinental
Travel Marketing, Inc. v. FDIC, 45 F.3d 1278 (9th Cir.1994),—calling it a "bare
statement"—because that court failed to support its holding that pre-receivership claims should be
treated the same as post-receivership claims. I find it interesting that the majority is willing to
accept some "bare statements" while dismissing others.
5
See RTC v. Mustang Partners, 946 F.2d 103, 106 (10th Cir.1991). That court noted:
The statute clearly requires that each creditor file a claim. In the event the claim
is disallowed, the creditor can then file suit or continue to pursue a suit already
filed. No interpretation is possible which would excuse this requirement for
creditors with suits pending, or allow the filing of suit to substitute for the claim
process.
Id. (citation omitted) (emphasis added).
6
Whatley, like Damiano, is distinguishable from our case. While the receiver in Whatley
failed to seek the stay permitted under § 1821(d)(12)(A), the receiver in our case timely sought a
90-day stay. Whatley, therefore, is inapposite.
35
In my view, Intercontinental provides the most reasonable interpretation. In
Intercontinental, the court found that the "no prejudice" language of section 1821(d)(5)(F)(ii) merely
meant that "filing a claim with the FDIC will not prejudice claimants who decide to continue an
action in the district court after having complied with the administrative process." Intercontinental,
45 F.3d at 1283. The court in Intercontinental concluded that section 1821(d)(6)(A) clearly
indicated Congress' intent to apply FIRREA to pending judicial actions. See id. at 1282-83. Finally,
the court held that filing suit could in no way permit a creditor to avoid the administrative process
set forth by FIRREA. See id. at 1283.
The court in Intercontinental acknowledged Whatley 's interpretation of the statutory scheme
but dismissed it. The Whatley court was concerned that requiring pre- and post receivership claims
to be treated the same would allow the receiver to "lie[ ] in ambush, awaiting expiration of the
administrative deadline so that it [could] dispose of the claim without consideration of its merits."
Whatley, 32 F.3d at 908. The Intercontinental, court, on the other hand, placed less emphasis on the
notice requirements of section 1821(d)(3)(C). The court also noted that the receiver did publish
notice in the required fashion under section 1821(d)(3)(B), and that the creditor had actual notice
of the receiver's intent to follow the administrative procedures because of the requested stay in the
judicial proceedings. See Intercontinental, 45 F.3d at 1281, 1285-86. I favor the Intercontinental
approach. The receiver in our case complied with the notice publication requirements, and the
creditors received actual notice on May 27, 1992, when RTC moved for a ninety-day stay under
36
section 1821(d)(12)(A).7 Those actions were sufficient to put the creditors on notice that the
receiver intended to proceed administratively.
The strict statutory requirements of section 1821(d) and the internal procedures of the
receiver, along with the requirement of notice to all creditors, highlight the need for creditors to file
administratively in accordance with the set procedures. When a creditor fails to follow these
procedures, its claim is lost and judicial review is barred. Having received actual notice, the
creditors here should have filed administratively with the RTC. Because they failed to follow the
administrative procedures, their claims should be lost and further judicial action should be barred.
For the foregoing reasons, I respectfully dissent.
7
The majority emphasizes that the publication of notice and the filing for a stay were not
simultaneous, and that the request for a stay did not mention "administrative exhaustion." These
facts are of no consequence, because the creditors did not file an administrative claim within
either 90-day period. Furthermore, the mere fact that the motion for stay did not mention
exhaustion did not relieve the creditor of responsibility to seek administrative remedies. The
very fact that the receiver sought the stay under the statutory provisions of FIRREA indicates its
intention to proceed administratively.
37