Damiano v. Federal Deposit Insurance ( 1997 )

United States Court of Appeals,
Eleventh Circuit.
No. 94-4947.
Irene J. DAMIANO, Plaintiff-Appellant,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Amerifirst
Bank, A Federal Savings Bank, successor in interest to Amerifirst
Federal Savings and Loan Association, Defendant-Appellee.
Jan. 29, 1997.
Appeal from the United States District Court for the Southern
District of Florida. (No. 90-8415 CIV-DLG) Donald L. Graham, Judge.
Before EDMONDSON and BIRCH, Circuit Judges, and FOREMAN*, Senior
District Judge.
BIRCH, Circuit Judge:
This appeal presents the first impression issue in our circuit
of whether the plaintiff in a pre-receivership lawsuit must file an
administrative claim with the federal receiver of a failed
financial institution pursuant to 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.) when the receiver did not timely require
exhaustion of administrative remedies. The district court held
that it lacked subject matter jurisdiction over this
pre-receivership lawsuit and dismissed the case. Because we hold
that the receiver did not stay the action within ninety days of its
appointment as receiver and, thus, did not timely require
exhaustion of administrative remedies, we VACATE the district
*
Honorable James L. Foreman, Senior U.S. District Judge for
the Southern District of Illinois, sitting by designation.
court's dismissal and REMAND for further proceedings.
I. BACKGROUND
On September 27, 1990, plaintiff-appellant Irene J. Damiano
brought this action against her former employer, Amerifirst Federal
Savings and Loan Association ("Amerifirst"), for age discrimination
under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C.
§§ 621-634. After the district court denied Amerifirst's motion to
dismiss for failure to state a claim, Amerifirst filed an answer on
February 27, 1991. Less than three weeks later, on March 15, 1991,
Amerifirst was declared insolvent and the Resolution Trust
Corporation ("RTC") was appointed its receiver.1 On April 10,
1991, the RTC filed a motion to be substituted as the party
defendant in this case.
On March 24, 1991, the RTC published a notice to claimants in
local newspapers setting out an administrative claim procedure for
the winding down of Amerifirst pursuant to FIRREA, 12 U.S.C. §
1821(d)(3)(B).2 The notice advised Amerifirst's creditors that
1
On December 31 1985, the RTC dissolved and the Federal
Deposit Insurance Corporation ("FDIC") succeeded to the RTC as
receiver. 12 U.S.C. § 1441a(m). To avoid confusion, however, we
will consistently refer to the receiver as the RTC in this
opinion.
2
Section 1821(d)(3)(B) provides:
(B) Notice Requirements
The receiver, in any case involving the
liquidation or winding up of the affairs of a closed
depository institution shall—
(i) promptly publish a notice to the depository
institution's creditors to present their claims,
together with proof, to the receiver by a date
specified in the notice which shall not be less than 90
days after the publication of such notice; and
they should file their claims with the RTC at its claims department
in Tampa, Florida, within ninety days of the notice publication
(i.e., before June 22, 1996). The RTC, however, did not mail the
notice to Damiano or her lawyer as required by § 1821(d)(3)(C).3
(ii) republish such notice approximately 1 month
and 2 months, respectively, after the publication under
clause (i).
12 U.S.C. § 1821(d)(3)(B). The RTC complied with the
republication requirements of clause (ii).
3
Section 1821(d)(3)(C) provides:
(C) Mailing Required
The receiver shall mail a notice similar to the
notice published under subparagraph (B)(i) at the time
of such publication to any creditor shown on the
institution's books—
(i) at the creditor's last address appearing in
such books; or
(ii) upon discovery of the name and address of a
claimant not appearing on the institution's books
within 30 days after the discovery of such name and
address.
21 U.S.C. § 1821(d)(3)(C). Damiano was a known creditor to
the RTC by virtue of her pending suit and as evidenced by
the fact that the RTC substituted itself as party defendant
in April 1991.
Although Damiano mentioned in her brief that she did
not receive a mailed notice of the RTC's claims process, she
did not argue that the RTC's failure excused her from
exhausting her administrative remedies. See Greater Slidell
Auto Auction v. American Bank & Trust Co., 32 F.3d 939, 942
(5th Cir.1994) (holding "that failure to provide [the
plaintiffs] notice by mail violates their right to due
process")(citing Mullane v. Central Hanover Bank & Trust
Co., 339 U.S. 306, 317-20, 70 S.Ct. 652, 658-60, 94 L.Ed.
865 (1950)); Whatley v. RTC, 32 F.3d 905, 910 n. 1 (5th
Cir.1994) (Duhé, J., concurring) (suggesting "that the
receiver's very authority to determine claims
[administratively] hinges on its compliance with the notice
requirements"). Therefore, we do not address these
arguments. We find it necessary, nonetheless, to correct
the RTC's apparent ignorance of its statutory duties in this
Damiano did not comply with the administrative claim procedure
described in the RTC's notice. She did, however, contact opposing
counsel on several occasions in an effort to resolve her lawsuit
out of court. Damiano first sent a settlement proposal to
Amerifirst's counsel, David Rogero, on January 18, 1991. On March
28, 1991, Damiano sent a second letter to Rogero to confirm a
telephone conversation which took place on March 20, 1991, and
offered to provide any additional information that Rogero's
"client" (the RTC at that time, arguably) might require to review
the settlement proposal adequately. Rogero responded on April 11,
1991, and informed Damiano that the RTC had taken over Amerifirst
and that he could not predict when the RTC would review and respond
to her settlement proposal. Rogero later withdrew as defense
counsel in November 1991.
After the claims bar date of June 22, 1991 passed, Damiano was
informed that the RTC retained Jesse McCrary as its new counsel in
connection with her lawsuit. Damiano sent a letter to McCrary on
August 6, 1991, in which she reiterated her settlement proposal.
She sent another letter to McCrary on October 9, 1991, to discuss
case. The RTC boldly stated in its motion to dismiss filed
with the district court that
[n]otwithstanding any suggestion to the contrary ...,
it is not the RTC's burden to assure itself that
potential claimants find and follow the correct
administrative procedures. Rather, it is incumbent
upon would-be claimants and their legal counsel to
ascertain and comply with the necessary filing
requirements, as the first step in "exhausting
administrative remedies."
R1-45-7 (emphasis added). This statement is flatly
contradicted by the mandatory language of § 1821(d)(3)(C).
the trial schedule.
On November 21, 1991, the RTC filed a motion to dismiss or,
alternatively, for a stay pending exhaustion of administrative
remedies. Damiano failed to respond to this motion and, on
November 19, 1992, the district court dismissed the case without
prejudice because it did not know whether Damiano had attempted to
comply with the administrative process. Damiano filed a motion for
reconsideration and for reinstatement of the action on December 28,
1992. The district court granted Damiano's motion and reinstated
the action on April 8, 1993.4 On February 25, 1994, the court
placed the case on the trial calendar for June 27, 1994. The RTC
filed a new motion to dismiss for lack of subject matter
jurisdiction on June 16, 1994.
The district court dismissed the case. Citing Brady
Development v. RTC, 14 F.3d 998, 1006 (4th Cir.1994) and RTC v.
Mustang Partners, 946 F.2d 103, 106 (10th Cir.1991), the court held
4
The RTC argues on appeal that the district court lacked
subject matter jurisdiction to consider Damiano's motion because
it should be deemed a motion to alter or amend judgment which was
untimely under Fed.R.Civ.P. 59(e). See Hertz Corp. v. Alamo
Rent-A-Car, Inc., 16 F.3d 1126, 1129 (11th Cir.1994) (holding
that the district court lacked subject matter jurisdiction over a
motion to alter or amend judgment filed more than ten days after
entry of the final judgment in violation of the time limitation
of Rule 59(e)). We reject the RTC's argument because we conclude
that the district court could have treated Damiano's motion as a
motion for relief from judgment under Rule 60(b)(6), for which
there is no strict time limitation of a jurisdictional nature.
See Nisson v. Lundy, 975 F.2d 802, 806 (11th Cir.1992). Unlike
the motion at issue in Hertz, which asked the court to amend a
judgment of dismissal without prejudice to a dismissal with
prejudice, Damiano's motion squarely asked the court to relieve
it from the judgment in the interest of justice. The district
court accepted Damiano's explanation for failing to respond to
RTC's motion and reinstated the action. The district court did
not abuse its discretion in doing so.
that FIRREA created a mandatory administrative exhaustion
requirement for all claims, including those asserted in a
pre-receivership lawsuit. The court then found that Damiano's
correspondence with opposing counsel did not constitute compliance
with the administrative claims procedures set out in the RTC's
published notices5 and, thus, concluded that Damiano forfeited her
claim by failing to exhaust her administrative remedies. This
appeal followed.
II. DISCUSSION
We review de novo the district court's dismissal of the
action for lack of subject matter jurisdiction and its
interpretation of the statute. Sims v. Trus Joist MacMillan, 22
F.3d 1059, 1060 (11th Cir.1994). Damiano argues on appeal that the
RTC has elected to proceed with her claim judicially, rather than
administratively, by failing to timely request a stay of her
lawsuit pending exhaustion of the administrative process.6 See
5
The court ruled that: (1) Damiano's letter dated January
18, 1991, was sent before the RTC became receiver and therefore
could not qualify as an administrative claim; (2) Damiano's
letters dated August 6, 1991 and October 9, 1991 were both sent
after the claims bar date of June 22, 1991 and thus were
untimely; and (3) Damiano's March 28, 1991 letter, which
happened to have been sent within the administrative claims
period, "was merely a letter from Damiano's counsel to
Amerifirst's counsel discussing prior settlement offer
[and,therefore,] ... was not a claim sent to the address
specified in the published notices." R1-62-5.
6
The RTC urges us not to consider Damiano's statutory
argument because she raises it for the first time on appeal. The
principle, however, that an appellate court generally does not
consider arguments that were not presented to the trial court,
RTC v. Dunmar Corp., 43 F.3d 587, 598 (11th Cir.), cert. denied,
--- U.S. ----, 116 S.Ct. 74, 133 L.Ed.2d 33 (1995), is a rule of
practice, not a jurisdictional limitation. Dean Witter Reynolds,
Inc. v. Fernandez, 741 F.2d 355, 360 (11th Cir.1984). "[T]he
decision whether to consider an argument first made on appeal ...
Whatley v. RTC, 32 F.3d 905 (5th Cir.1994). We agree.
FIRREA is a complex statute.7 Understanding the process that
§ 1821(d) established for the liquidation of failed financial
institutions requires careful parsing through its myriad subparts.
Our previous review of the statutory scheme led us to conclude that
FIRREA created a statutory exhaustion requirement that generally
applies to postreceivership as well as pre-receivership claims.
Motorcity of Jacksonville, Ltd. v. Southeast Bank N.A., 39 F.3d
is left primarily to the discretion of the courts of appeals, to
be exercised on the facts of individual cases." Id. (internal
quotations and citations omitted) (omission in original). We
have identified certain exceptional circumstances under which we
will consider arguments first raised on appeal. See id. at 360-
61. Among them, we "will "consider an issue not raised in the
district court if it involves a pure question of law, and if
refusal to consider it would result in a miscarriage of justice.'
" id. (quoting Roofing & Sheet Metal Serv. v. La Quinta Motor
Inns, 689 F.2d 982, 989 (11th Cir.1982)). Damiano's argument
involves statutory interpretation, a pure question of law.
Moreover, we consider the dismissal of her potentially
meritorious complaint because she did not comply with an
administrative procedure of which she was not aware due to the
RTC's failure to notify her as required by statute to be a
miscarriage of justice. Therefore, we will exercise our
discretion and consider the argument.
7
The First Circuit described FIRREA as follows:
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 proxility 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 interpretive 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.
Marquis v. F.D.I.C., 965 F.2d 1148, 1151 (1st Cir.1992).
292, 296 & n. 4 (11th Cir.1994) (collecting cases), vacated for
reh'g en banc, 58 F.3d 589 (1995), reinstated in part, 83 F.3d
1317, 1323 n. 3 (1996) (en banc) (reinstating the relevant part of
the first opinion in which the panel construed the administrative
exhaustion requirement of FIRREA); see also Aguilar v. F.D.I.C.,
63 F.3d 1059, 1061 (11th Cir.1995) (per curiam) (recognizing that
FIRREA's administrative exhaustion requirement applies generally to
all claims against an institution in federal receivership). The
statute deals, however, with pre-receivership lawsuits differently
from post-receivership claims as it established "a separate scheme
... for the disposition of lawsuits filed pre-receivership."
Whatley, 32 F.3d at 908 (5th Cir.1994) (footnote and citations
omitted); see also Aguilar, 63 F.3d at 1061-62 (explaining the
applicability of the exhaustion requirement to pre-receivership
lawsuits) (citing Whatley, 32 F.3d at 907-08).
For post-receivership claims, the court has no subject matter
jurisdiction unless the claimant has exhausted the administrative
remedies. See 12 U.S.C. § 1821(d)(13)(D)8; McMillian v. F.D.I.C.,
81 F.3d 1041, 1045 (11th Cir.1996) (involving a post-receivership
8
Section 1821(d)(13)(D) provides:
Except as otherwise provided in this subsection
[1821(d) ], no court shall have jurisdiction over—
(i) any claim or action for payment from, or any
action seeking a determination of rights with respect
to, the assets of any depository institution for which
the [RTC] has been appointed receiver ...; or
(ii) any claim relating to any act or omission of
such institution or the [RTC] as receiver.
12 U.S.C. § 1821(d)(1)(D).
employee claim). The statutory scheme is more complex for claims
asserted in pre-receivership lawsuits. Subject matter jurisdiction
is ordinarily tested as of the time of filing the complaint. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 569 n. 4, 112 S.Ct. 2130,
2141 n. 4, 119 L.Ed.2d 351 (1992); Rosa v. RTC, 938 F.2d 383, 392
n. 12 (3d Cir.), cert. denied, 502 U.S. 981, 112 S.Ct. 582, 116
L.Ed.2d 608 (1991). Therefore, courts in which lawsuits were
pending when the RTC is appointed receiver remain vested with
jurisdiction. Whatley, 32 F.3d at 907. This is confirmed by the
statute's reference to the continuation, as opposed to the
reinstatement, of pre-receivership lawsuits after the appointment
of the receiver. See 12 U.S.C. § 1821(d)(5)(F)(ii). 9 Moreover,
the statute does not provide for an automatic stay of all
pre-receivership actions, pending exhaustion of the administrative
process. Cf. 11 U.S.C. § 362(a)(1) (automatic stay for all pending
lawsuits against debtor who files for bankruptcy). It specifically
gives the receiver the right, but not the duty, to stay a pending
action within the first ninety days of being appointed as a
receiver. 12 U.S.C. § 1821(d)(12); see Praxis Properties, Inc. v.
Colonial Sav. Bank, 947 F.2d 49, 71 (3d Cir.1991).
There are two possible explanations for the absence of an
9
12 U.S.C. § 1821(d)(5)(F)(ii) provides:
Subject to paragraph (12), the filing of a claim
with the receiver shall not prejudice any right of the
claimant to continue any action which was filed before
the appointment of the receiver.
12 U.S.C. § 1821(d)(5)(F)(ii) (emphasis added). Paragraph
(12) allows the RTC to request a ninety-day stay in the
litigation after its appointment as a receiver and requires
the court to grant such stay. 12 U.S.C. § 1821(d)(12).
automatic stay provision in FIRREA: either Congress intended for
the judicial and administrative processes to run concurrently; or
it 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. The first explanation is
inconsistent with FIRREA's aim of the "expeditious[ ] and fair[ ]"
resolution of claims against failed financial institutions in
federal receivership and its concern for conserving judicial
resources. See H.R.Rep. No. 54(I), 101st Cong., 1st Sess. 419
10
(1989) U.S.Code Cong. Admin.News pp. 86, 215. The second
explanation is supported both by the legislative history and the
language of the statute. 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.Code Cong. & Admin.News pp.
86, 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
10
The House report explains the purpose of FIRREA's
administrative procedure as follows:
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.
H.R.Rep. No. 54(I), at 419, U.S.Code Cong. & Admin. News
1989, p. 215.
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).11 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.
The procedure that we have described above is consistent with
the two cases involving pre-receivership lawsuits previously
decided by this circuit.12 Both in Motorcity and Aguilar, the
receiver requested a stay pending the submission by the plaintiff
of an administrative claim. See Aguilar, 63 F.3d at 1061;
Motorcity, 39 F.3d at 295. In Aguilar, we stated: "Where a
11
The use of the permissive "may" both in sections
1821(d)(3)(A) and 1821(d)(12) stands in stark contrast to the
many other instances in section 1821(d) where a mandatory "shall"
is used. See, e.g., 12 U.S.C. §§ 1821(d)(3)(B), (C).
12
The RTC contends that Whatley 's result, which we adopt
here, is contrary to the cases relied upon by this court in
Motorcity, 39 F.3d at 296 n. 4. None of these cases, however,
considered the specific question of statutory interpretation that
we have considered here. Only the Ninth Circuit has considered
Whatley 's result. Without evaluating Whatley 's reasoning in
detail, the Ninth Circuit rejected its result because it
conflicts with that court's interpretation of the claims bar date
set out in the receiver's published notices as a jurisdictional
requirement. See Intercontinental Travel Mktg. v. F.D.I.C., 45
F.3d 1278, 1284 (9th Cir.1994). This interpretation stems from §
1821(d)(5)(C)(i), which provides that, except in certain narrow
circumstances (not applicable here), "claims filed after the date
specified in the notice published under paragraph (3)(B)(i) shall
be disallowed and such disallowance shall be final." 12 U.S.C. §
1821(d)(5)(C)(i). Our holding, however, is that Damiano is not
required to file an administrative claim at all, not that the RTC
must consider an untimely claim. Therefore, our holding is not
inconsistent with § 1821(d)(5)(C)(i).
lawsuit against a financial institution is pending when the [RTC]
is appointed receiver and the [RTC] timely insists on the use of
its administrative processes, the court action will be suspended,
but only suspended[,] ... while the plaintiff exhausts the
administrative remedies." 63 F.3d at 1061 (emphasis added). Thus,
the RTC must satisfy two conditions to require the plaintiff in a
prereceivership 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,13 and (2) it must do so in a timely
fashion, that is within the ninety-day period specified in §
1821(d)(12).
13
The RTC also should fulfill its statutory duty of mailing
a copy of the published notice setting out the administrative
claims process and the claims bar date to the plaintiff. See 12
U.S.C. § 1821(d)(3)(C). Failure to do so raises serious
constitutional concerns regarding the sufficiency of notice under
the Due Process Clause, see Freeman v. F.D.I.C., 56 F.3d 1394,
1403 (D.C.Cir.1995), even if the plaintiff knew that the failed
financial institution it previously sued is now in federal
receivership. Cf. Mennonite Bd. of Missions v. Adams, 462 U.S.
791, 800, 103 S.Ct. 2706, 2712, 77 L.Ed.2d 180 (1983) (holding
that "a mortgagee's knowledge of [a mortgagor's] delinquency in
the payment of taxes is not equivalent to notice that a tax sale
is pending" and thus does not relieve the government from the
requirement of mailing such notice to the mortgagee); City of
New York v. New York, N.H. & H.R. Co., 344 U.S. 293, 297, 73
S.Ct. 299, 301, 97 L.Ed. 333 (1953) (holding that, under the old
bankruptcy code, a creditor who knew that the debtor commenced
bankruptcy proceedings was not under a duty to inquire about the
claims bar date established by the bankruptcy court and was,
thus, entitled "to assume that the statutory "reasonable notice'
will be given them before their claims are forever barred");
Spring Valley Farms, Inc. v. Crow (In re Spring Valley Farms,
Inc.), 863 F.2d 832, 835 (11th Cir.1989) ("The language in City
of New York clearly is not grounded in goals unique to the former
bankruptcy act. The Court's emphasis on notice and opportunity
to be heard underlines a due process concern.").
Although the RTC filed a motion to be substituted as the party
defendant in Damiano's suit less than one month after its
appointment as Amerifirst's receiver, it did not request a stay
pending the exhaustion of administrative remedies until November
21, 1991, more than eight months, or about 240 days, after its
appointment as a receiver. Therefore, it has elected to proceed
with this lawsuit judicially by failing to timely insist on the use
of its administrative processes.14 To hold otherwise would be to
allow the RTC to ignore a lawsuit of which it clearly was aware and
in which it had intervened, thus luring the claimant to assume that
the RTC is ready to deal with it as a litigant, while "[i]n
reality, ... the receiver lies in ambush, awaiting expiration of
the administrative deadline so that it may dispose of the claim
without consideration of its merits." Whatley, 32 F.3d at 908.
Like the Fifth Circuit, "[w]e neither find nor assign any such
intent to Congress in its enactment of FIRREA." Id.
III. CONCLUSION
Damiano appeals the district court's dismissal of her lawsuit
for lack of subject matter jurisdiction. The district court held
that Damiano forfeited her pre-receivership claim against a failed
financial institution in federal receivership by failing to exhaust
her administrative remedies. Because the RTC did not timely
request a stay of the action within ninety days of its appointment
as receiver, it has elected to allow Damiano's suit to proceed
14
Because we conclude that the RTC elected to proceed with
Damiano's suit judicially, we need not review the district
court's ruling that Damiano's correspondence with opposing
counsel during the claims period did not constitute compliance
with FIRREA's administrative process, see supra note 5.
judicially. We therefore VACATE the district court's judgment and
REMAND for further proceedings consistent with this opinion.