Wujick v. Dale & Dale

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
1-6-1995
Wujick v Dale & Dale
Precedential or Non-Precedential:
Docket 93-1853
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Recommended Citation
"Wujick v Dale & Dale" (1995). 1995 Decisions. Paper 5.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/5
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 93-1853
PHYLLIS WUJICK and JOSEPH MATISKA,
Appellees
v.
DALE & DALE, INC., DALE & DALE DESIGN & DEVELOPMENT, INC.,
t/d/b/a DALE & DALE HOMES, ATLANTIC FINANCIAL a/k/a
ATLANTIC FINANCIAL FEDERAL, ESTATE OF FINANCIAL FEDERAL R.T.C.,
Defendants,
RESOLUTION TRUST CORP.,
in its capacity as Receiver for
Atlantic Financial Federal,
Appellant
Appeal from the
United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 93-1939).
Argued March 8, 1994
BEFORE: MANSMANN, LEWIS and SEITZ, Circuit Judges.
(Filed: October 13, 1994)
William R. Thompson, Esquire
Robert C. Seiger, Jr., Esquire
Richard M. Beck, Esquire (Argued)
Klehr, Harrison, Harvey, Branzburg & Ellrs
1401 Walnut Street
Philadelphia, Pennsylvania 19102
ATTORNEYS FOR APPELLANT
David P. Tomaszewski, Esquire (Argued)
Kimberly D. Borland, Esquire
Borland and Borland
1100 PNC Bank Building
Wilkes-Barre, Pennsylvania 18701
ATTORNEY FOR APPELLEES
____________________
OPINION OF THE COURT
SEITZ, Circuit Judge.
One of the defendants, Resolution Trust Corporation, in
its capacity as Receiver for Atlantic Financial Federal, appeals
an order of the district court remanding this action to the Court
of Common Pleas of Luzerne County, Pennsylvania. The issues
before us are whether the district court had subject matter
jurisdiction under 12 U.S.C. § 1441a(l) (Supp. V 1993), which
grants both jurisdiction to the federal courts and removal power
to RTC. This Court has jurisdiction under 12 U.S.C. § 1441a(l)-
(3)(C) (Supp. V 1993), which empowers RTC to "appeal any order of
remand entered by a United States district court."
I. FACTS
On January 11, 1990, the Office of Thrift Supervision,
Department of the Treasury of the United States, appointed the
Resolution Trust Corporation (RTC) as Receiver for the defendant,
Atlantic Financial Federal ("Old Atlantic"), a savings and loan
association. After accepting the appointment, RTC created a new
federal savings association, Atlantic Financial Savings, F.A.
("New Atlantic"), pursuant to 12 U.S.C. § 1821(d)(2)(A) (Supp. V
1993), to assume such assets of the failed institution as RTC-
Receiver might deem appropriate. The Office of Thrift
Supervision then appointed RTC as Conservator of New Atlantic.
RTC-Receiver of Old Atlantic and New Atlantic executed a Purchase
and Assumption Agreement, whereby New Atlantic purchased
substantially all of the assets of Old Atlantic. Unsecured
obligations to general creditors, however, remained with Old
Atlantic.
Sometime prior to the takeover of Old Atlantic by
Resolution Trust, the plaintiffs in this action had contracted
with defendant Dale and Dale ("Dale & Dale") to build a home for
them in Pennsylvania. Old Atlantic had financed the
construction. Plaintiffs became dissatisfied with the
construction and Old Atlantic's handling of the loan proceeds.
Thereafter, the plaintiffs commenced this action in the Luzerne
County Court of Common Pleas against Dale & Dale and, inter alia,
RTC. They did so by filing a praecipe for a writ of Summons
("Writ") with that court on April 12, 1990.
On April 16, 1990, the Luzerne County sheriff served the
Writ at Atlantic Financial offices in Wilkes-Barre, Pennsylvania.
The Writ named RTC as a defendant.1 On that date the Wilkes-
Barre offices were owned and operated by RTC as Conservator for
1
. Plaintiffs-appellees designated this defendant as "Atlantic
Financial, a/k/a Atlantic Financial Federal; Estate of Financial
Federal R.T.C." RTC-Receiver substituted itself as a defendant
in its later notice of removal.
New Atlantic, not RTC as Receiver for Old Atlantic. The Writ was
served without a complaint or any other indication of the
subject-matter of the action. It merely recited that "the
plaintiff(s) have commenced an action in law against you." The
procedure was consistent with Pennsylvania practice.2
Plaintiffs contend that on April 16, 1990, four days after
they commenced the action in the Luzerne County court by filing
the praecipe, they filed the statutorily required administrative
claim with the RTC. They argue that RTC "ignored" the
administrative claim. There is no documentary evidence of such a
claim in the record. However, during oral argument, RTC's
counsel stated that although it had no record of the claim, it
conceded that the administrative claim was "constructively
denied" because of RTC's inaction. Without understanding the
logic of RTC's concession, we shall treat it as a judicial
admission that plaintiffs filed such a claim. However, RTC did
not concede that any such claim for administrative relief was
timely filed.
2
. The Pennsylvania rule provides:
Rule 1007. Commencement of Action
An action may be commenced by filing with
the prothonotary
(1) a precipe for a writ of summons,
(2) a complaint, or
. . . .
PA. STAT. ANN. tit. 42, § 1007 (1987).
No further pertinent action appears to have taken place
until January 19, 1993, when the plaintiffs filed a complaint in
the Luzerne County action. On March 23, 1993, it was served on
RTC-Receiver in Norristown, Pennsylvania. RTC then removed the
case to the United States District Court for the Eastern District
of Pennsylvania on April 12, 1993. Based on 28 U.S.C. § 1447(c)
(Supp. V 1993),3 plaintiffs made a timely motion for remand to
the state court which was granted. RTC now appeals that order
which has been stayed.
II. SUBJECT MATTER JURISDICTION
The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA") confers original subject
matter jurisdiction on United States district courts to hear
cases involving RTC. 12 U.S.C. § 1441a(l)(1).4 Section
3
. As the Fifth Circuit has pointed out: "FIRREA imposes no time
limit on motions to remand. In the absence of specific contrary
provisions, we look to the general removal statute, 28 U.S.C.
§ 1447(c) . . . ." Resolution Trust Corp. v. Sonny's Old Land
Corp., 937 F.2d 128, 131 (5th Cir. 1991).
4
. FIRREA provides:
(l) Power to Remove; jurisdiction
(1) In general
Notwithstanding any other provisions of law,
any civil action, suit, or proceeding to which the
Corporation is a party shall be deemed to arise
under the laws of the United States, and the
district courts shall have original jurisdiction
over such action, suit, or proceeding.
12 U.S.C. § 1441a(l)(1) (Supp. V 1993).
1441a(l)(3) of the Act permits RTC to remove any suits, to which
it is a party, to the district court within certain time frames.5
In the present case, the district court concluded that RTC had
not timely removed the state action. RTC argues that the state
action was timely removed because 1) the April 16, 1990 service
was improper and 2) a Writ is not a document which initiates the
thirty-day removal provision.
Compliance with the procedures for removal, e.g.
timeliness of removal, are procedural issues to be distinguished
from subject matter jurisdiction in the district court. See
Medlin v. Boeing Vertol Co., 620 F.2d 957, 960 (3d Cir. 1980);
see also Spring Garden Assoc., L.P. v. Resolution Trust Corp., 26
F.3d 412, 415 (3d Cir. 1994); In re Digicon Marine, Inc., 966
5
. The section reads:
(l) Power to Remove; jurisdiction (3)
Removal and remand
(A) In general
. . . .
The removal of any such suit or
proceeding shall be instituted
(i) not later than 90 days after the
date the Corporation is substituted as a
party, or
(ii) not later than 30 days after
service on the Corporation, if the
Corporation is named as a party in any
capacity and if such suit is filed after
August 9, 1989.
12 U.S.C. § 1441a(l)(3) (Supp. V 1993).
F.2d 158, 160 (5th Cir 1992); Nolan v. Boeing Co., 919 F.2d 1058,
1063 n.6 (5th Cir. 1990) ("The time limitation for removal is not
jurisdictional; it is merely ``modal and formal and may be
waived.'").
This Court has stated, "[E]very federal appellate court
has a special obligation to satisfy itself not only of its own
jurisdiction, but also that of the lower courts in a cause under
review." Spring Garden, 26 F.3d at 415 (quoting Employers Ins. of
Wausau v. Crown Cork & Seal Co., 905 F.2d 42 (3d Cir. 1990)).
Therefore, we shall put aside addressing the procedural problems
presented by the parties and address directly the subject matter
jurisdiction of the district court with respect to RTC. This
Court exercises plenary review in determining whether the lower
courts had subject matter jurisdiction. National Union Fire Ins.
Co. v. City Savings, F.S.B., 28 F.3d 376, 383 (3d Cir. 1994).
Exhaustion of Administrative Remedies
Since our Court has an independent obligation to determine
the subject matter jurisdiction of the district court, we proceed
to that task. Although the district court did not address the
issue of its subject matter jurisdiction, we conclude that the
ends of judicial economy dictate that we resolve this legal issue
because the facts relevant to its disposition are not in dispute.
Plaintiffs commenced their suit in state court by filing a
praecipe for a writ of summons on April 12, 1990. However, they
did not file their administrative claim with RTC until April 16,
1990, some four days after the filing of this suit in state
court. The critical question is whether the state action is
jurisdictionally infirm under FIRREA because it was filed by the
plaintiffs against RTC, etc., prior to exhaustion of their
administrative remedies. We turn now to the pertinent provisions
of FIRREA.
FIRREA has created a comprehensive administrative
procedure for adjudicating claims against a failed depository
institution. RTC as Receiver initiates the administrative
process by notifying the failed institution's creditors to
present their claims to RTC Receiver. 12 U.S.C.
§ 1821(d)(3)(B)(i) (Supp. V 1993). Once a creditor timely
presents its claim, the RTC-Receiver has 180 days to consider the
claim and determine whether it will be allowed or disallowed, and
to notify the claimant of its disposition. 12 U.S.C.
§ 1821(d)(5)(A)(i) (Supp. V 1993).
Section 1821(d)(6)(A) provides for judicial review only
for suits brought within sixty days after the claim has been
disallowed by the RTC-Receiver or the 180-day statutory period
has expired without action on the claim by the Receiver. The
statute provides:
(D) Limitation on judicial review
Except as otherwise provided in this subsection,
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 Corporation has been
appointed receiver, including assets which the
Corporation may acquire from itself as such
receiver . . . .
12 U.S.C. § 1821(d)(13)(D) (Supp. V 1993).6 This Court has very
recently stated:
[W]e have characterized the jurisdictional restric-
tion in § 1821(d)(13)(D) as a statutory exhaustion
requirement: in order to obtain jurisdiction to
bring a claim in federal court, one must exhaust
administrative remedies by submitting the claim to
the receiver in accordance with the administrative
scheme for adjudicating claims detailed in
§ 1821(d).
National Union Fire Ins. Co., 28 F.3d at 383 (citing Rosa v.
Resolution Trust Corp., 938 F.2d 383, 391 (3d Cir.), cert.
denied, 112 S. Ct. 582 (1991)) (footnote omitted). Therefore, a
court would lack subject matter jurisdiction unless the
administrative procedures set out in FIRREA were exhausted. See
id.; Althouse v. Resolution Trust Corp., 969 F.2d 1544, 1545-46
(3d Cir. 1992); Praxis Properties, Inc. v. Colonial Sav. Bank,
S.L.A., 947 F.2d 49, 63 (3d Cir. 1991); FDIC v. Shain, Schaffer &
Rafanello, 944 F.2d 129, 132 (3d Cir. 1991).
At the time plaintiffs filed the praecipe with the Luzerne
County, Pennsylvania court seeking a Writ, no court had subject
matter jurisdiction over the suit because plaintiffs had failed
to exhaust the administrative remedies mandated by section
1821(d)(13)(D) of FIRREA. In their later letter brief to this
6
. The provisions of 12 U.S.C. § 1821 are made applicable to RTC
by 12 U.S.C. § 1441a(b)(4)(A).
Court, as well as in the briefs originally filed in this Court,
plaintiffs argue a "no-harm, no-foul" rule. They contend that
"the end result would be the same whether the Plaintiff waited to
file the Writ of Summons after the one hundred and eighty (180)
day period." Letter Brief of Appellee at 3, Wujick v. Dale &
Dale, Inc., et. al., No. 93-1939 (Feb. 25, 1994). Plaintiffs'
argument is incompatible with controlling law.
As this Court has stated, "Congress expressly withdrew
jurisdiction from all courts over any claim to a failed bank's
assets made outside the procedures set forth in section 1821."
Shain, Schaffer & Rafanello, 944 F.2d at 132. In addition, the
United States Supreme Court, in interpreting the exhaustion
provision of the Federal Tort Claims Act, firmly rejected the "no
harm, no foul" reasoning and held that where Congress has imposed
an administrative exhaustion requirement by statute, the
exhaustion of those procedures is mandatory. See McNeil v. United
States, 113 S. Ct. 1980 (1993).
Finally, plaintiffs say that RTC never responded to their
administrative claim once it was filed on April 16, 1990. Under
the statutory scheme, however, that argument is irrelevant
because their administrative claim was initiated after their
state action was commenced in 1990. Since plaintiffs did not
timely exhaust their administrative claim, the district court
lacked subject matter jurisdiction of the action. Since the
state court also lacked subject matter jurisdiction for the same
reason, a remand by the district court would be a vacuous act.
We will therefore direct the district court to dismiss the claims
against RTC.
III. OTHER CLAIMS
Plaintiffs' state court complaint named certain other
defendants, e.g., Dale & Dale. On the present record, we are not
in a position to dispose of the claims against the other
defendants. Consequently, we will, therefore, remand the case as
to such claims to afford those parties an opportunity to present
their positions to the district court for appropriate
disposition.
IV. CONCLUSION
The order of the district court remanding this action
against RTC to the state court will be reversed with a direction
to dismiss the claim against it.
So much of the order of the district court as remands the
claims against the defendants other than RTC will be vacated and
the claims remanded to the district court for appropriate
disposition.