Tri-State Hotels, Inc. v. Federal Deposit Insurance Corp. ( 1996 )

___________
No. 94-3780
___________
Tri-State Hotels, Inc.; Davcor *
Motor Inns, Inc.; Elite Hotel *
Associates, Inc.; Turnpike *
Motor Inns, Inc.; HMS Property *
Management Group, Inc.; *
Commerce Hotels, Inc.; Toledo *
Motor Inns, Inc.; Ottawa Motor *
Inns, Inc.; Amarillo Hotel *
Associates, Inc.; Economy *
Lodging Systems, Inc.; W. David *
Temel; Frank Leonetti, Jr., *
*
Appellants, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
Federal Deposit Insurance *
Corporation, as Receiver for *
Merchants Bank Inc., and Metro *
North State Bank, Inc.; The *
Merchants Bank, Inc.; Metro *
North State Bank, Inc., *
*
Appellees, *
*
Eugene J. Pereira; Bradley W. *
Kreiger; Kirsten H. Mills; *
Marilyn J. Feingold, Co-Executor*
of the Estate and Last Will and *
Testament of Frank S. Morgan; *
Mark Morgan, Co-Executor of the *
Estate and Last Will and *
Testament of Frank S. Morgan; *
Thomas S. Morgan, Co-Executor *
of the Estate and Last Will and *
Testament of Frank S. Morgan; *
Jeff Johnson; David B. Feingold,*
*
Defendants, *
*
American Hotel Management *
Associates, Inc., *
*
Receiver, *
*
Richard K. Rousch; Nassau *
Communications, Inc., *
*
Proposed Parties. *
__________
Submitted: December 15, 1995
Filed: March 21, 1996
__________
Before MAGILL, BRIGHT, and MURPHY, Circuit Judges.
___________
MAGILL, Circuit Judge.
Tri-State Hotels and other appellants (collectively, Tri-State)
appeal the district court's1 dismissal of defendant Federal Deposit
Insurance Corporation (FDIC), as receiver for two failed banks, for lack
of subject matter jurisdiction due to Tri-State's failure to exhaust
administrative remedies. Because prior administrative review of claims
against the FDIC is a prerequisite to judicial review of such claims, see
the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA),
codified in relevant part at 12 U.S.C. § 1821(d)(3)-(13) (1994), we affirm.
I.
During the period from 1988 to 1992, Tri-State entered into various
agreements with Merchants Bank (Merchants) and Metro North State Bank
(Metro North) to purchase and finance certain distressed motel and hotel
properties. As part of the agreement, Merchants and Metro North assured
Tri-State that they would provide additional refinancing to Tri-State when
requested, and they agreed to limit Tri-State's liability in the event of
default on any loans
1
The Honorable Dean Whipple, United States District Judge
for the Western District of Missouri.
-2-
made in connection with the properties.
Merchants consolidated the loans, and in June 1992, it agreed to
invest an additional $1 million in equity in the arrangement and to
refinance $1.3 million of the loans. Merchants breached the agreement
during the summer of 1992 by failing to complete the refinancing and
failing to provide the promised funding, but it continued to assure Tri-
State that it would perform all of its obligations. Despite these
assurances, Merchants never fulfilled its obligations, and on December 2,
1992, Tri-State mailed notice to Merchants that it was revoking the
refinancing agreement due to Merchants' breach of the agreement.
Merchants went into receivership on November 20, 1992, and the FDIC
was appointed receiver.2 In December, January, and February, the FDIC
published notice in the Kansas City Star newspaper that creditors had until
March 16, 1993, to present to the FDIC any claims they had against
Merchants. The FDIC also mailed notice of the receivership to all
creditors of Merchants; however, because Tri-State is a debtor of
Merchants, notice was not mailed to Tri-State. Although Tri-State had
actual knowledge of the receivership, it did not file a timely claim with
the FDIC for the breach of contract by Merchants.
In August 1993, Tri-State and the FDIC began a review of Tri-State's
obligations under the agreements between Tri-State and Merchants. This
review consisted of face-to-face meetings and numerous phone calls and
correspondence between Tri-State and the FDIC. On February 17, 1994, the
FDIC finished its review and analysis of the agreements and concluded that
the loan agreements were enforceable. At no time did the FDIC inform Tri-
State that it must present its claims to the FDIC under a formal
administrative
2
The FDIC was also appointed receiver for Metro North, which
went into receivership on November 13, 1992.
-3-
review process.
On February 18, 1994, Tri-State filed a complaint in the Western
District of Missouri against the FDIC, Merchants, Metro North, and several
officers of the banks (the Tri-State lawsuit). Tri-State sought three
different forms of relief: (1) declaratory relief adjudicating the
respective rights and obligations of the parties under the purchase
agreements and loan documents; (2) rescission of the purchase agreements
and loan documents; and (3) damages for breach of contract, breach of the
duty of good faith, breach of fiduciary obligations, and fraud.
On July 13, 1994, the district court dismissed the FDIC, Merchants,
and Metro North for lack of subject matter jurisdiction. The court noted
that under FIRREA, a claimant must exhaust the administrative review
process before a court has jurisdiction to hear the claims. 12 U.S.C.
§ 1821(d)(6)(A), (d)(13)(D). Because Tri-State did not present its claims
to the FDIC for administrative review during the ninety-day period ending
March 16, 1993, dismissal was appropriate.
On September 20, 1994, the FDIC filed suit in the Western District
of Missouri, FDIC v. Knights Lodging, Inc. (the KLI lawsuit), against
certain appellants, asserting a claim for failure to repay the debt
obligations and alleging that appellants had fraudulently transferred funds
to avoid paying the FDIC.
The district court consolidated the KLI lawsuit and the Tri-State
lawsuit on September 23, 1994. On October 18, 1994, the district court
dismissed the remaining defendants in the original Tri-State lawsuit.3 On
November 9, 1994, Tri-State appealed the
3
The KLI lawsuit, still pending before the district court,
was later transferred to the Northern District of Ohio on
December 12, 1994.
-4-
July 13 dismissal of the FDIC.4 It is this appeal that is presently before
the Court.
II.
The FDIC argues that this Court lacks jurisdiction to hear this
appeal under 28 U.S.C. § 1291 because the July 13 order dismissing the FDIC
as a defendant was not an appealable final order when appeal was taken on
November 9. The FDIC notes that the KLI lawsuit, which had been
consolidated with the Tri-State lawsuit, was still pending before the
district court when appeal was taken in the Tri-State lawsuit. The FDIC
contends that an open question in the consolidated suit still existed,
precluding appeal in the absence of Rule 54(b) certification.
We disagree with the FDIC. Only when "two actions [are] really
consolidated and merged into one," Mendel v. Production Credit Ass'n of the
Midlands, 862 F.2d 180, 182 (8th Cir. 1988), does the presence of an open
question in one of the formerly separate suits preclude appeal on any issue
in the consolidated suit. Id.; see also Soo Line R.R. v. Escanaba & Lake
Superior R.R., 840 F.2d 546, 548 (7th Cir. 1988). However, when "technical
consolidation into a single action [does] not occur, but rather [the
consolidation is] an arrangement for joint proceedings and hearings, for
convenience," Mendel, 862 F.2d at 182, then each suit retains its
individual nature, and appeal in one suit is not precluded solely because
the other suit is still pending before the district court. Id.; see also
Soo Line, 840 F.2d at 548.
4
Because the individual defendants in the Tri-State lawsuit
were not dismissed until October 18, the July 13 order dismissing
the FDIC, Merchants, and Metro North was not a final order for
purposes of 28 U.S.C. § 1291 appellate jurisdiction until October
18. Therefore, this appeal is timely. We note that Tri-State
moved to have the July 13 order certified as final and appealable
pursuant to Federal Rule of Civil Procedure 54(b), but this
motion was denied by the district court on August 5, 1994.
-5-
Although the district court did not clearly state whether the two
lawsuits were formally merged for all purposes, it appears that they were
merged for the purposes of convenience only and were not formally merged.5
While the district court grouped both suits under a single docket number,
this grouping appears to have been only to "simplify the filing process."
Order of Consolidation at 3 (reprinted in Appellee's Addendum at 8).
Further, the district court referred to future filings "in these two
suits," and it noted that consolidation "will best use scarce judicial
resources" and was to "accommodate the convenience of the parties." Id.6
Finally, in dismissing the remaining defendants in the Tri-State lawsuit
on October 18, 1994, the district court stated that there was "still other
related litigation pending with this same case number." Order of Dismissal
at 1 n.1 (reprinted in Appellee's Addendum at 9) (emphasis added). That
the district court termed the KLI lawsuit "related litigation" rather than
"other matters in this case" indicates that the two lawsuits, while
consolidated, were never merged for all purposes and they retained their
individual identity.
Because the two lawsuits were merged for the sake of
5
Our appellate consideration would be made considerably
easier if the district court could regularly state on the record
whether consolidated cases have been "formally merged, for all
purposes," or whether the consolidation is "informal, for
convenience only." Such a statement would provide a very useful
bright line in this area. See, e.g., Ivanov-McPhee v. Washington
Nat'l Ins. Co., 719 F.2d 927, 930 n.2 (7th Cir. 1983) (requesting
that district courts state on the record whether consolidated
cases have been merged "for all purposes").
6
The district court did mention that both suits involve the
determination of rights of the parties with regard to the same
properties. Order of Consolidation at 2-3 (reprinted in
Appellee's Addendum at 7-8). The FDIC argues that this language
implies that the court intended to formally merge the two related
litigations into one suit. However, we believe that the district
court offered the fact of similarity between the cases merely as
support for its consolidation for convenience.
-6-
convenience, the Tri-State lawsuit was immediately appealable on October
18, 1994, when the remaining defendants in that suit were dismissed.
Accordingly, we have jurisdiction under 28 U.S.C. § 1291 to hear this
appeal.
III.
Under FIRREA, Congress established a comprehensive claims review
process for claims against the assets of failed banks held by the FDIC as
receiver. See 12 U.S.C. § 1821(d)(3)-(13). Claimants must initially
7
submit their claims to the FDIC for review, thus "enabl[ing] the FDIC to
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), 101st Cong., 1st Sess., at 418-19,
reprinted in 1989 U.S.C.C.A.N. 86, 215.
Judicial review of claims governed by FIRREA is contingent on the
completion of this administrative review process. Section 1821(d)(13)(D)
states that, except as otherwise provided, no court shall have jurisdiction
over
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 [FDIC] has been appointed
receiver . . . .
7
Under this review process, the FDIC must first publish a
notice "to the depository institution's creditors" specifying a
date by which claims must be presented for review, not less than
90 days after publication. 12 U.S.C. § 1821(d)(3)(B). In
addition, the FDIC must mail a "similar" notice to "any creditor
shown on the institution's books." 12 U.S.C. § 1821(d)(3)(C).
The FDIC has 180 days after a claim is filed to allow or disallow
it. 12 U.S.C. § 1821(d)(5)(A). Claims not timely filed must be
disallowed unless "the claimant did not receive notice of the
appointment of the receiver in time to file such claim before
such date"; in that case, a late-filed claim "may be considered
by the receiver," provided the claim is "filed in time to permit
payment." 12 U.S.C. § 1821(d)(5)(C).
-7-
The only exception is found in § 1821(d)(6)(A), which provides that courts
have jurisdiction over claims that have first been presented to the FDIC
under its administrative review process. Read together, these two
provisions mandate that "administrative exhaustion is required before any
court acquires subject matter jurisdiction over a claim" against the FDIC
as receiver for a failed thrift. Bueford v. Resolution Trust Corp., 991
F.2d 481, 484 (8th Cir. 1993).
Tri-State did not submit its claims to the FDIC for formal review.
Nevertheless, Tri-State argues that the jurisdictional bar is not
applicable because (1) Tri-State's claims arose postreceivership, as a
result of management decisions made by the FDIC, and so the claims are not
covered by this section, and (2) this section applies only to creditors
with monetary claims and not to debtors, especially those seeking
declaratory and rescissory relief.
Further, Tri-State contends that if administrative review was
required, the failure to undergo such review is excused because (1) the
extensive prelitigation discussions and negotiations between Tri-State and
the FDIC satisfies this requirement because the FDIC has undertaken the
review process contemplated by 12 U.S.C. § 1821(d), and (2) the FDIC's
failure to provide proper notice, and the FDIC's actions in affirmatively
misleading Tri-State regarding the notice procedures, amounts to a waiver
by the FDIC, estopping the FDIC from asserting the jurisdictional bar.
None of these contentions has merit.
A.
Tri-State contends that the administrative review requirement does
not apply to it because its claims against Merchants and the FDIC arose
postreceivership, as a result of management decisions made by the FDIC.
Tri-State concedes that the underlying breach of
-8-
contract and fraud that led to this lawsuit occurred before the FDIC took
over as receiver. However, Tri-State contends that its claims arose only
after the FDIC, as receiver, refused to honor the refinancing agreements.
Tri-State relies on Homeland Stores, Inc. v. Resolution Trust Corp.,
17 F.3d 1269 (10th Cir.), cert. denied, 115 S. Ct. 317 (1994), which held
that the jurisdictional bar of § 1821(d)(13)(D) does not apply to claims
arising out of management actions of the Resolution Trust Corporation (RTC)
after taking over a depository institution.8 In Homeland Stores, the RTC,
as part of its receivership, took over management of Belmont Square
shopping center. Homeland Stores, a tenant in the shopping center, was
guaranteed in its lease that the anchor tenant of the center would be of
a specific character and would be "acceptable" to Homeland. In selecting
a new, impermissible anchor tenant, RTC breached this lease agreement with
Homeland. The court accepted jurisdiction, noting that when claims arise
solely from RTC's management of the receivership asset and bear no relation
to the failed institution for which the RTC was receiver, FIRREA does not
apply. Id. at 1275. The court reasoned that such actions, because they
could arise at any time after the RTC takes over as receiver (and possibly
well after the claims bar date), were not susceptible to the standard
administrative review provided for by FIRREA.
Homeland Stores does not apply to the situation presented in this
case. Although Tri-State, in an attempt to come under the Homeland Stores
jurisdictional exception, asserts that it is solely
8
We note that at least one other circuit has reached a
conclusion contrary to Homeland Stores, holding that FIRREA's
jurisdictional bar does encompass a claim arising from
postreceivership actions of the RTC. See Rosa v. RTC, 938 F.2d
383, 392 (3d Cir.), cert. denied, 502 U.S. 981 (1991). Because
these cases are distinguishable from the instant case, we need
not here decide which of our sister circuits has correctly
resolved this issue.
-9-
challenging the management decisions of the FDIC (that the FDIC, in
managing the failed banks, did not remedy the breach of contract and fraud
and did not honor the loan obligations), the genesis of its claim is the
prereceivership misconduct by the failed banks. Unlike in Homeland Stores,
in this case the actions taken by the FDIC as receiver cannot be separated
from the underlying prereceivership misconduct by the failed banks.9
Because Tri-State asserts prereceivership claims against the assets of
Merchants, arising out of the misconduct of Merchants, Tri-State was
required to submit its claims to the FDIC for administrative review.
B.
Tri-State next contends that the administrative review process is not
applicable to it because this process only applies to creditors with claims
against the assets of the failed institutions and not to debtors,
especially those seeking declaratory and rescissory relief. We reject this
contention.
The great weight of authority holds that FIRREA requires debtors as
well as creditors to undergo the administrative review process. See, e.g.,
Freeman v. FDIC, 56 F.3d 1394, 1401-02 (D.C. Cir. 1995) (noting that the
jurisdictional bar applies to "all manner of 'claims' and 'actions seeking
a determination of rights
9
Permitting Tri-State to recharacterize its claims as such
would, as appellees note, effectively eviscerate the claims
process, because every plaintiff could (and would) simply
challenge the FDIC's failure to reverse the failed bank's
fraudulent actions rather than challenge the bank's fraudulent
actions directly. Thus, in order to effectuate the stated
congressional purpose in enacting FIRREA, namely "enabl[ing] the
FDIC to dispose of the bulk of claims against failed financial
institutions expeditiously and fairly," H.R. Rep. No. 101-54(I),
at 418-19, reprinted in 1989 U.S.C.C.A.N. at 215, courts should
look to the underlying substance of the challenged events. If
plaintiff brings an action against the assets of the failed
institution, then FIRREA's exhaustion requirement is applicable,
regardless of how plaintiff styles its claim.
-10-
with respect to' the assets of failed banks, whether those claims and
actions are by debtors, creditors, or others"); National Union Fire Ins.
Co. v. City Sav., F.S.B., 28 F.3d 376, 389 (3d Cir. 1994) (noting that the
bar against "any action" in § 1821(d)(13)(D) "includes actions by debtors
as well as creditors"); Lloyd v. FDIC, 22 F.3d 335, 337 (1st Cir. 1994)
(suit by debtor seeking equitable reformation or cancellation of mortgage
agreement is a "determination of rights with respect to an asset" subject
to the jurisdictional bar).
We reject Tri-State's contention that, because the notice provisions10
of FIRREA apply only to creditors, § 1821(d)(13)(D)'s exhaustion
requirement should be similarly limited to creditors bringing claims.
While the notice provisions do apply only to creditors, such limiting
language is conspicuously absent in the jurisdictional bar provision.
Rather than mention creditors or limit its application to creditors,
§ 1821(d)(13)(D) bars "any claim or action for payment from, or any action
seeking a determination of rights with respect to the failed institution's
assets" (emphasis added), unless administrative remedies have been
exhausted. Thus, "FIRREA's very text appears to contemplate claims beyond
those by 'creditor[s] . . . on the . . . books' to whom statutory notice
must be sent." Office & Professional Employees Int'l Union, Local 2 v.
FDIC, 962 F.2d 63, 67 (D.C. Cir. 1992). We "assume Congress meant what it
said when it included a jurisdictional bar to 'any action,'" National
Union, 28 F.3d at 389, and thus we conclude that § 1821(d)(13)(D) was
intended to
10
For example, § 1821(d)(3)(B)(i) requires that the receiver
publish "notice to the depository institution's creditors to
present their claims," and § 1821(d)(3)(C) requires the receiver
to "mail a notice . . . to any creditor shown on the
institution's books . . . ."
-11-
apply to debtors as well as creditors.11 Therefore, Tri-State's damages
action for fraud and the breaches of contract, duty of good faith, and
fiduciary obligations is barred because Tri-State did not exhaust
administrative remedies.
Tri-State's request for declaratory relief likewise does not render
the exhaustion requirement inapplicable. Section 1821(d)(13)(D) bars any
action seeking a determination of rights with respect to the assets of any
depository institution. As noted by the Third Circuit,
a declaratory judgment action is an "action seeking a
determination of rights." . . . No reasonable argument can be
offered that the plain meaning of the "any action seeking a
determination of rights" language of § 1821(d)(13)(D) does not
include complaints requesting declaratory relief.
National Union, 28 F.3d at 385; see also id. at 385-92 (discussing, in
depth, application of § 1821(d)(13)(D) to declaratory judgment actions).
Thus, declaratory judgment actions are covered by
11
In so holding, we reject Tri-State's reliance on a line of
bankruptcy cases holding that debtors are not covered by FIRREA.
The Ninth Circuit, after reviewing FIRREA's legislative history,
held that, in bankruptcy proceedings, "a 'claim' under FIRREA
means an obligation owed by the failed institution, and not an
obligation owing to it," and debtors are thus not covered by
FIRREA. In re Parker North Am. Corp., 24 F.3d 1145, 1153 (9th
Cir. 1994) (quoting Scott v. RTC, 157 B.R. 297, 310-11 (Bankr.
W.D. Tex. 1993) (withdrawn at request of the parties, 162 B.R.
1004 (Bankr. W.D. Tex. 1994))).
Although the construction placed upon § 1821(d)(13)(D) by
the Parker court does not "quite square[] with the statutory
text," Freeman, 56 F.3d at 1401, we have no need in this case to
decide the applicability of FIRREA to bankruptcy cases. Assuming
arguendo that Parker was correctly decided, we decline to extend
this approach to nonbankruptcy court contexts. Such an extension
to nonbankruptcy cases "would not advance the purposes of the
Bankruptcy Code, while it would undercut Congress' core purpose
in enacting FIRREA." Id.
-12-
FIRREA.12
Plaintiff further requests that the court rescind the purchase
agreements and loan documents. However, under FIRREA's anti-injunction
provision, 12 U.S.C. § 1821(j), "[e]xcept as otherwise provided, no court
may take any action . . . to restrain or affect that exercise of the powers
or functions of the [FDIC] as a conservator or receiver." Because FIRREA
grants the FDIC the power to "collect all obligations and money due the
institution," 12 U.S.C. § 1821(d)(2)(B)(ii), rescinding the agreements
would act as an impermissible restraint on the ability of the FDIC to
exercise its powers as receiver. See Freeman, 56 F.3d at 1399 (§ 1821(j),
which is "a sweeping ouster of courts' power to grant equitable remedies,"
prevents the courts from granting "nonmonetary remedies, including
injunctive relief, declaratory relief, and rescission of [a] promissory
note."); see also Ward v. Resolution Trust Corp., 996 F.2d 99, 104 (5th
Cir. 1993) ("Like injunction, rescission is a 'judicial restraint' that is
barred by 1821(j)."). This Court therefore lacks jurisdiction to grant the
requested equitable relief.
Finally, we write to address one concern raised at oral argument:
if we prevent Tri-State from obtaining declaratory and rescissory relief
in this case, then Tri-State will be defenseless
12
The National Union Court declined to decide whether
declaratory judgment actions could be submitted for
administrative review under § 1821(d)(6)(A). If not, then
§ 1821(d)(13)(D)'s inclusion of declaratory judgment actions is a
jurisdictional bar rather than an exhaustion requirement. See
National Union, 28 F.3d at 387 n.12. While we do not have
occasion to decide this issue (Tri-State's failure to submit the
issue for administrative review divests the court of subject
matter jurisdiction in any event), we do note that the Third
Circuit appears to have resolved this issue. In Hudson United
Bank v. Chase Manhattan Bank of Conn., 43 F.3d 843, 849-50 (3d
Cir. 1994), the court held that the administrative claims
procedures and the jurisdictional bar have concurrent scope,
which suggests that declaratory judgment actions could be raised
in the administrative forum.
-13-
in the KLI lawsuit if the FDIC attempts to enforce the loan agreements.
This is not true. In National Union, supra, the Third Circuit held that,
while petitioner was barred from offensively bringing a declaratory
judgment action or suit for rescissory relief, it could still raise any
affirmative defenses it had against the RTC in any suit by the RTC to
enforce the loan obligations. National Union, 28 F.3d at 392-395;13 see
also RTC v. Midwest Fed. Sav. Bank, 36 F.3d 785, 792 (9th Cir. 1993)
(§ 1821(d)(13)(D) applies to "claims" and "actions" and not to "defenses").
We agree with the Third and Ninth Circuits that true affirmative defenses
may still be asserted by Tri-State in the KLI lawsuit.
C.
Tri-State next argues that, even if the exhaustion requirement is
applicable, the extensive discussions and negotiations between Tri-State
and the FDIC regarding the financing and debt agreements at issue satisfies
this requirement because the FDIC has undertaken the review process
contemplated by 12 U.S.C. § 1821(d). Tri-State relies on Praxis Properties
v. Colonial Sav. Bank, 947 F.2d 49, 64
13
In support of this proposition, the Third Circuit noted
that § 1821(d)(13)(D) bars "any claims" seeking payment or "any
action seeking a determination of rights"; thus, affirmative
defenses, which technically are "responses" and not "claims" or
"actions," are not covered by FIRREA and need not first be
submitted for administrative review. National Union, 28 F.3d at
393.
Further, this interpretation finds support in the policies
undergirding FIRREA. In barring declaratory judgment actions,
"Congress apparently . . . determined that the societal benefits
resulting from the right to bring . . . declaratory judgment
actions, are outweighed by the societal benefits resulting from
the RTC being able to avoid costly and perhaps unnecessary
litigation." Id. at 388. However, when the FDIC has completed
its administrative review, and has chosen a judicial forum in
which to prosecute its rights, the policy of avoiding unnecessary
litigation is no longer applicable, and the party's Due Process
rights to defend the claims in the FDIC's lawsuit become
paramount. Id. at 394.
-14-
(3d Cir. 1991), which allowed prolonged negotiations between the parties
to substitute for formal review and thus provide the court with
jurisdiction.
Praxis is distinguishable from the present case. Praxis arose during
the nascent stages of FIRREA. FIRREA was enacted on August 9, 1989, and
when the RTC was appointed receiver in that case on November 9, 1989, it
"lacked a fully developed, standardized claims process." Id. Praxis
informally presented its claims to the RTC and engaged in extensive
discussions with the RTC. Given the RTC's lack of standardized procedures,
the court determined that "under the circumstances Praxis did all it could
do to exhaust its administrative remedies." Id.
However, the Praxis court intimated that, had the case arose when the
RTC had such standardized procedures in place, the informal negotiations
would not have been sufficient to provide the court with jurisdiction. Id.
("We do not mean to imply, however, that under today's regime [of
formalized claims procedures], a mere breakdown of negotiations between RTC
and a claimant would entitle the claimant to proceed in court."). Of
course, the claims in the present case arose several years after the
enactment of FIRREA, at a time when the FDIC had formalized procedures for
claims review. Tri-State cannot rely on Praxis to excuse its failure to
formally present its claims to the FDIC.
Further, the plaintiff in Praxis presented its claims informally to
the RTC during the ninety-day presentation period mandated by FIRREA. In
the present case, while Tri-State mailed a letter to the FDIC in December
1992 apprising them of the existence of the claims, negotiations did not
begin until August 1993, several months after the expiration of the claims
presentation period, which ended on March 16, 1993, for Merchants.
Therefore, even if informal negotiations could satisfy the exhaustion
requirement--a proposition we reject--such informal negotiations in
-15-
this case were untimely.
D.
Tri-State's final argument is that the FDIC's failure to provide
proper notice, and the FDIC's actions in affirmatively misleading Tri-State
regarding the notice procedures, amounts to a waiver by the FDIC, estopping
the FDIC from asserting the jurisdictional bar. This contention is without
merit, for several reasons.
First, the mailed-notice provisions under § 1821(d)(3)(B)-(C) do not
apply to Tri-State. These provisions provide that the FDIC must publish
written notice (which it did) and also mail notice to all creditors listed
on the books of the failed bank. Because Tri-State is not a creditor, and
is not listed on the books of Merchants as a creditor, it was not entitled
to receive notice by mail.
Second, even supposing that the notice provisions applied to Tri-
State, this Circuit has expressly held that receivers under FIRREA cannot
be estopped from asserting the jurisdictional bar. In Bueford, this Court
stated:
Lack of subject matter jurisdiction, unlike many other
objections to the jurisdiction of a particular court, cannot be
waived. . . . FIRREA contains an exhaustion requirement as a
pre-requisite for suit in any court, and the statute contains
no waiver provision. Therefore, the RTC cannot, by its own
conduct or otherwise, be estopped from raising the issue of
subject matter jurisdiction.
Bueford, 991 F.2d at 485 (citation omitted). Thus, the FDIC's failure to
provide proper notice "does not relieve the claimant of the obligation to
exhaust administrative remedies, because the statute does not provide for
a waiver or exception under those
-16-
circumstances." Freeman, 56 F.3d at 1402 (citing Meliezer v. RTC, 952 F.2d
879, 882-83 (5th Cir. 1992)); see also Intercontinental Travel Mktg. v.
FDIC, 45 F.3d 1278, 1284-85 (9th Cir. 1994) (FDIC's failure to mail notice
does not exempt claimant from administrative review requirement). The only
exception to the strict requirement of exhaustion of remedies, where the
claimant does not receive notice of the appointment of the receiver in time
to file his claim, see 12 U.S.C. § 1821(d)(5)(C), is inapplicable here
because Tri-State had actual knowledge of the receivership.
Finally, the FDIC did not affirmatively mislead Tri-State into
foregoing the required administrative review. Although under Bueford we
question whether the FDIC's affirmative misconduct could estop it from
asserting jurisdictional bar,14 we need not decide this issue today because
in this case the FDIC did not affirmatively mislead Tri-State into
believing that the claims review process did not apply to it.
The FDIC stated that it would not mail notice to Tri-State because
it did not consider Tri-State to be a creditor or claimant. However, the
FDIC never mentioned that it believed that the jurisdictional bar, a
completely separate and independent subsection of FIRREA, did not apply to
Tri-State. Tri-State may have misinterpreted the FDIC's statement that the
notice provisions were not applicable to mean that administrative
exhaustion was not required. However, this error by Tri-State does not
amount to evidence that the FDIC affirmatively misled Tri-State.
14
Bueford's language that "the RTC cannot, by its own
conduct or otherwise, be estopped from raising the issue of
subject matter jurisdiction," 991 F.2d at 485, seems to support
the proposition that the FDIC's affirmative misconduct is
irrelevant, although Bueford was not an affirmative misconduct
case. One court has intimated that the FDIC's affirmative
misconduct could, in appropriate circumstances, toll the ninety-
day bar date. See Intercontinental, 45 F.3d at 1285.
-17-
V.
The district court's order of July 13, 1994 dismissing the FDIC for
lack of subject matter jurisdiction became final on October 18, 1994, and
we have jurisdiction to hear this appeal under 28 U.S.C. § 1291. Because
Tri-State failed to exhaust the mandatory administrative remedies before
filing suit, the district court's order is affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
-18-