Resolution Tr. Corp. v. W.W. Dev. & Mgmt, Inc.

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
1-16-1996
Resolution Tr. Corp. v. W.W. Dev. & Mgmt, Inc.
Precedential or Non-Precedential:
Docket 95-1227
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 95-1227 and 95-1228
RESOLUTION TRUST CORPORATION IN ITS CAPACITY
AS CONSERVATOR FOR BELL FEDERAL SAVINGS BANK
v.
W.W. DEVELOPMENT & MANAGEMENT, INC.
W.W. Development and Management
Company,
Appellant
W.W. DEVELOPMENT & MANAGEMENT, INC.
v.
THE RESOLUTION TRUST CORPORATION, IN ITS CAPACITY
AS RECEIVER FOR BELL SAVINGS BANK, PaSA
W.W. Development and Management
Company,
Appellant
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action Nos. 91-3788 and 93-4210)
Argued December 5, 1995
BEFORE: GREENBERG and MCKEE, Circuit Judges, and
ACKERMAN, District Judge*
(Filed: January 16, l996)
1
*Honorable Harold A. Ackerman, Senior Judge of the United States
District Court for the District of New Jersey, sitting by
designation.
Edward H. Rubenstone
William Goldstein (argued)
Elliot Alan Kolodny
Groen, Laveson, Goldberg and
Rubenstone
Four Greenwood Square
Suite 200
P.O. Box 8544
Bensalem, PA 19020
Attorneys for Appellant
Michael R. Latowski (argued)
Saul, Ewing, Remick & Saul
3800 Centre Square West
Philadelphia, PA 19102
Sophia Ranalli
Resolution Trust Corporation
P.O. Box 1500
Valley Forge, PA 19482-1500
Douglas Konselman
1717 "H" Street N.W., Room 3116
Washington, D.C. 20434
Attorneys for Appellees
OPINION OF THE COURT
GREENBERG, Circuit Judge.
This case requires us to consider the application of
the jurisdictional bar in the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA") to the judicial
adjudication of claims when the claimant has not complied with
2
FIRREA's claims procedures.0 Bell Savings Bank, PaSA ("Bell")
confessed judgment in a Pennsylvania state court against W.W.
Development and Management Company ("W.W.") following W.W.'s
default on a $500,000 loan. After the Director of the Office of
Thrift Supervision, Department of the Treasury, declared Bell
insolvent and appointed the Resolution Trust Corporation ("RTC")
its conservator and then its receiver, W.W. filed: (1) a petition
to open the judgment, offering defenses and a counterclaim in the
state court action which the RTC subsequently removed to a
federal court and, after the administrative claims period passed,
(2) a separate action restating the same claims in federal court.
The district court denied the petition in the first case and
granted summary judgment to the RTC in the second case, as it
held that it lacked subject matter jurisdiction over W.W.'s
claims in both cases as a result of FIRREA's jurisdictional bar.
For reasons that we explain below, we will affirm the district
court's order as to its conclusion that it lacked subject matter
jurisdiction over the second lawsuit and over W.W.'s counterclaim
in the first. We, however, will vacate the district court's
order to the extent that it rejected jurisdiction over W.W.'s
defenses to liability in W.W.'s petition to open judgment.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The two cases arose from a loan and a loan commitment
agreement between Bell and W.W. for financing W.W.'s development
0
Pub. L. No. 101-73, 103 Stat. 183 (1989).
3
of a medical office condominium in Philadelphia, Pennsylvania.
W.W.'s App. 54. Initially, Bell loaned W.W. $500,000 on August
20, 1987. Id. at 45. In the loan documents, W.W. authorized
Bell to confess judgment against it in the amount of the loan
plus interest if W.W. defaulted. Id. at 43. On September 6,
1988, Bell agreed to loan W.W. $3,314,000 for further development
of the property. This commitment was valid until October 30,
1988. Id. at 121-28. W.W. planned to use part of this loan to
pay off the earlier loan of $500,000. Id. at 91. On October 3,
1988, the parties extended the commitment date on the $3,314,000
loan until April 30, 1989. Id. at 95. Bell, however, did not
make this additional loan to W.W. which then defaulted on the
earlier $500,000 loan. Bell then confessed judgment against W.W.
in the amount of $529,883.43 on June 13, 1990, in the Court of
Common Pleas of Philadelphia County. Id. at 40-50.
On March 15, 1991, the Director of the Office of Thrift
Supervision found that Bell was likely to incur losses as a
result of unsafe and unsound practices and appointed the RTC its
conservator.0 As a result, under 12 U.S.C. § 1821(d)(2)(A)(i),
the RTC succeeded to "[a]ll rights, titles, powers and
privileges" of Bell. Four days later, on March 19, 1991, the
director appointed the RTC Bell's receiver. The RTC then
published notice that all creditors having claims against Bell
0
Order No. 91-163. RTC's App. 4. After Bell Savings Bank was
taken over the RTC organized Bell Federal Savings Bank to acquire
Bell's assets. As a matter of convenience we refer simply to
Bell as a single institution.
4
must submit them by June 22, 1991, but it later extended this
time, at least as to W.W., until September 27, 1991.
On March 26, 1991, W.W. filed a petition to open the
confessed judgment in the Philadelphia County Court of Common
Pleas, alleging that Bell's breach of its commitment on the
proposed $3,314,000 loan caused W.W. to default on the $500,000
loan. In addition, W.W. sought to assert a counterclaim for
damages from Bell's breach. W.W.'s App. 51-60.0
On April 24, 1991, the RTC removed the state court
proceedings, including the judgment and the petition to open the
judgment, to the United States District Court for the District of
Columbia pursuant to 28 U.S.C. §§ 1331 and 1441(a) and 12 U.S.C.
§ 1441a(l)(3).0 W.W.'s App. 96. Thus, we will refer to this
0
We accept W.W.'s representation that it was unaware that Bell
was in receivership at this time. We observe, however, that this
circumstance has no legal significance. We will refer to W.W.'s
defenses and counterclaim as if they have been filed even though
its petition merely sought permission to file them. W.W.'s Br.
at 6.
0
12 U.S.C. § 1441a(l)(3) reads:
(3) Removal and remand
(A) In general
The Corporation, in any capacity
and without bond or security, may remove
any action, suit, or proceeding from a
State court to the United States
district court with jurisdiction over
the place where the action, suit, or
proceeding is pending, to the United
States district court for the District
of Columbia, or to the United States
district court with jurisdiction over
the principal place of business of any
institution for which the Corporation
has been appointed conservator or
5
case as the removed case. On May 18, 1991, the District of
Columbia court transferred the removed case to the Eastern
District of Pennsylvania. W.W.'s App. 101.
On August 5, 1991, shortly before the deadline for the
filing of claims under FIRREA against the RTC as receiver for
Bell, counsel for W.W. wrote a letter to the RTC's counsel
advising him of the pending petition to open judgment and of
W.W.'s claims against the RTC. The letter stated:
As you are aware, . . . the Motion to Open
Judgment that is presently pending, in
addition to setting forth grounds to open the
judgment and defenses against that judgment,
includes claims for damages incurred as a
result of the subject breach by Bell of its
Agreement to loan sufficient funds to W.W.
Development. . . .
I assume that, given the fact that RTC is in
receipt of these claims, no further filings
are required by my client in order to permit
RTC to determine these claims pursuant to 12
U.S.C. Sec. 1821(d)(5). If this assumption is
incorrect, I would appreciate your prompt
advice and would further appreciate your
receiver if the action, suit or
proceeding is brought against the
institution or the Corporation as
conservator or receiver of such
institution. 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.
6
providing me with any forms which should be
completed by my client in order to obtain
review and determination by RTC of these
claims. Your prompt advice would be most
appreciated and in the event I do not hear
from you to the contrary, I will assume that
the presentation of the claims of my client
in the Motion to Open Judgment are sufficient
to permit the RTC to administratively
determine such claims.
W.W.'s App. 156-157. There is some dispute as to whether the RTC
responded to this letter but we will assume in accordance with
W.W.'s contention that it did not.0 In any event, W.W. did not
file a formal claim with RTC within the period for filing claims
even as extended to September 27, 1991.
On September 15, 1992, almost one year after the time
to file a formal claim had expired, and after counsel suggested
that the proceedings in the removed case be postponed, the court
referred that case to a magistrate judge to explore settlement.
Upon joint request of the parties, the district court suspended
the proceedings on the petition to open the judgment for five
months on September 22, 1992. Id. at 108. Finally, on October
7, 1992, W.W. filed a formal proof of claim with the RTC. On
June 8, 1993, the RTC denied W.W.'s October 7, 1992
administrative claim on the ground that W.W. did not return an
official claim form before the deadline for filing claims. In
the letter denying the claim and explaining the bar, the RTC
0
W.W.'s counsel claims that he did not receive a reply to the
letter. RTC's counsel states that the RTC sent W.W. a claims
form on August 27, 1991, though W.W. did not return the completed
claims form until after the deadline. Our assumption does not
prejudice the RTC because the relief we are granting W.W., i.e.,
that it may assert its defenses to the complaint resulting in the
judgment by confession, does not depend on it.
7
stated that W.W. could file suit within 60 days from the date of
the letter. Id. at 174-75.
On August 5, 1993, within that 60-day period, W.W.
filed the second action, which we will call the federal case,
against the RTC in its capacity as receiver for Bell, alleging
that Bell's failure to adhere to its loan commitment caused W.W.
damages of $2,996,150. This federal case essentially restated
W.W.'s claims in its petition to open judgment. On June 20,
1994, the court transferred the petition to open judgment in the
removed case to its current docket. Id. at 109.
The RTC then moved for summary judgment in the federal
case, arguing that the district court lacked subject matter
jurisdiction under 12 U.S.C. § 1821(d)(5)(C)(i)0 since W.W. did
not file an official claim form until after the bar date of
September 27, 1991. W.W.'s App. 136. W.W. filed a cross-motion
for partial summary judgment declaring that it had filed a timely
administrative claim. The district court rejected the RTC's
argument, reasoning that the petition to open, filed on March 26,
1991, and served on the RTC in April 1991, coupled with W.W.'s
0
12 U.S.C. § 1821(d)(5)(C)(i) reads in relevant part:
(C) Disallowance of claims filed after end of
filing period
(i) In general
Except as provided in clause (ii), claims
filed after the date specified in the notice
published under paragraph (3)(B)(i) shall be
disallowed and such disallowance shall be
final.
8
letter of August 5, 1991, requesting notification if its
administrative claim was incomplete, constituted a sufficient and
timely administrative claim. Id. at 22-25. As a result, the
district court on July 15, 1994, denied the RTC's motion for
summary judgment and granted W.W.'s cross-motion for partial
summary judgment establishing that its claim was timely. Id. at
26.
The RTC then filed a motion for reconsideration on the
grounds that if W.W's claim was considered filed by August 5,
1991, as the district court had held, then under 12 U.S.C.
§1821(d)(5)(A)(i),0 the claim was deemed denied as a matter of
0
12 U.S.C. § 1821(d)(5)(A)(i) reads in relevant part:
(5) Procedures for determination of claims
(A) Determination period
(i) In General
Before the end of the 180-day
period beginning on the date any
claim against a depository
institution is filed with the
Corporation as receiver, the
Corporation shall determine whether
to allow or disallow the claim and
shall notify the claimant of any
determination with respect to such
claim.
(ii) Extension of time
The period described in clause
(i) may be extended by a written
agreement between the claimant and
the Corporation.
(iii) Mailing of notice sufficient
. . . .
9
law on February 3, 1992, the end of the 180-day period in which
the RTC should have acted on the claim. Thus, in the RTC's view,
W.W. was required to have filed its district court action within
60 days of February 3, 1992 (i.e., on or before April 4, 1992)
under 12 U.S.C. § 1821(d)(6)(B).0 The RTC argued that since W.W.
did not file the federal case until August 5, 1993, the district
court lacked subject matter jurisdiction over it. W.W.'s App.
31-34. The district court agreed and granted the RTC's motion
for summary judgment on November 17, 1994. Id. In the same
order, the district court denied W.W.'s petition to open judgment
in the removed case on the grounds that W.W. filed the petition
after Bell was placed in receivership. Consequently, the court
held that it lacked jurisdiction because W.W. did not properly
exhaust its claims administratively before filing the petition.
After the district court, on February 27, 1995, denied W.W.'s
(iv) Contents of notice of
disallowance
If any claim filed under
clause (i) is disallowed, the
notice to the claimant shall
contain-
(I) a statement of each reason
for the disallowance; and
(II) the procedures available
for obtaining agency review of
the determination to disallow
the claim or judicial
determination of the claim.
0
The RTC used the April 4, 1992 date in its brief. It appears
that the correct date was April 3, 1992. Of course, the
difference does not matter.
10
motion for reconsideration, W.W. appealed in both cases from the
orders of November 17, 1994, and February 27, 1995.
II. DISCUSSION
This court has jurisdiction pursuant to 28 U.S.C. §1291
because W.W. filed a timely notice of appeal on March 22, 1995.
Because the subject matter jurisdiction of the district court is
the central issue in the case, we discuss it below. We exercise
plenary review on this appeal. See Petruzzi's IGA Supermarket,
Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir.),
cert. denied, 114 S. Ct. 554 (1993).
Congress enacted FIRREA in 1989 in response to the
massive losses occurring in the nation's savings and loan
institutions and the deposit insurance fund protecting their
depositors. H.R. Rep. No. 101-54(I), 101st Cong., 1st Sess. 1,
302, reprinted in 1989 U.S.C.C.A.N. 86, 98. In its report on
FIRREA, Congress projected that the full cost of the thrift
crisis would be more than $335 billion, noting, to give some
perspective, that this expenditure would dwarf the $13.3 billion
cost of the entire post-World War II Marshall Plan to reconstruct
Europe. Id. at 514. Congress also expressed concern that
higher-than-expected costs for case resolution could boost that
figure. Id. at 515. To restore consumer confidence in the
failed savings and loan industry and resolve the crisis, Congress
granted the receivers of failed institutions broad powers to
administer a streamlined claims procedure designed to dispose of
the bulk of claims against failed savings and loans. Id. at 305,
11
419. Congress also designed FIRREA to be consistent with the
Supreme Court's holding in Coit Independence Joint Venture v.
FSLIC, 489 U.S. 561, 109 S. Ct. 1361 (1989), which dealt with the
procedure for filing claims against the Federal Savings and Loan
Insurance Corporation. H.R. Rep. No. 101-54(I) at 418-19.0
On this appeal, we are concerned with FIRREA's complex
and, in practice, draconian jurisdictional provisions which, as
we explain below, we must apply as written. In brief, Congress
requires the RTC to notify claimants to submit their claims on or
before a date at least 90 days from the date of publication of
the notice. Once they do so, the RTC has 180 days to allow or
disallow their claims. Claimants thereafter have 60 days from
the earlier of the end of the 180-day period or the notice of
denial of their claims to seek de novo judicial review. No court
has jurisdiction to hear any suit filed after this 60-day period
against the RTC as receiver for a failed thrift.
Actions filed prior to institution of FIRREA
proceedings may be stayed at the request of a conservator or
receiver. If a claimant then submits a claim and it is denied or
the 180-day period expires without a claim being allowed or
0
In Coit, the Court held that the Federal Savings and Loan
Insurance Corporation, the RTC's predecessor with respect to
failed thrifts, under pre-FIRREA law, did not have exclusive
authority to adjudicate claims filed against failed savings and
loan institutions and that a claimant was entitled to a de novo
review of the corporation's disposition of a claim in the
district court. 489 U.S. at 587, 109 S.Ct. at 1376. The Court
noted, however, that requiring exhaustion of the claim process
would be permissible if the claim process included a reasonable
time limit on the corporation's ability to postpone judicial
review. Id. at 584, 109 S.Ct. at 1374.
12
disallowed, claimants have 60 days to continue their pre-
receivership actions.0 With this plan, Congress hoped to promote
expeditious and fair adjudication of the many claims against the
failed thrifts.
The central issue in this case is whether W.W.'s
actions are jurisdictionally barred under FIRREA and thus whether
the district court's dismissal of the actions was proper.
I. The federal case
We first will consider whether the district court had
jurisdiction over the federal case which W.W. filed on August 5,
1993, after the RTC rejected its formal claim. We held in Rosa
v. RTC, 938 F.2d 383 (3d Cir.), cert. denied, 502 U.S. 981, 112
S. Ct. 582 (1991), that a district court has subject matter
jurisdiction over a claim under FIRREA only if the claimant
exhausts the statutory claim procedure. Id. at 391-92, 396-97.
See also Althouse v. RTC, 969 F.2d 1544, 1545-46 (3d Cir. 1992)
(holding that failure to file timely claim precludes jurisdiction
and de novo review by district court); FDIC v. Shain, Schaffer &
Rafanello, 944 F.2d 129, 132 (3d Cir. 1991) (holding that courts
have no jurisdiction over claims besides that specified in
FIRREA). Our conclusion in Rosa follows from 12 U.S.C.
§1821(d)(13)(D), which states:
(D) Limitation on Judicial Review
0
In Praxis Properties, Inc. v. Colonial Sav. Bank, 947 F.2d 46,
63 n.14 (3d Cir. 1991), we pointed out that FIRREA in some
respects is unclear as to its treatment of a claimant's action
filed before the institution of FIRREA proceedings. We need not
explore that problem here because W.W. filed its first pleading,
its petition to open judgment, after the RTC was appointed
receiver.
13
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; or
(ii) any claim relating to any act or
omission of such institution or the
Corporation as receiver.
To determine whether the district court has
jurisdiction over the controversy, we look to whether W.W.
followed the statutory claim procedure. This procedure is set
out at 12 U.S.C. § 1821(d)(6)(A), which reads:
(6) Provision for agency review or judicial
determination of claims
(A) In general
Before the end of the 60-day period
beginning on the earlier of-
(i)the end of the period described in
paragraph (5)(A)(i) with respect to any
claim against a depository institution
for which the Corporation is receiver;
or
(ii) the date of any notice of
disallowance of such claim pursuant to
paragraph (5)(A)(i),
the claimant may request administrative
review of the claim in accordance with
subparagraph (A) or (B) of paragraph (7) or
file suit on such claim (or continue an
action commenced before the appointment of
the receiver) in the district or territorial
court of the United States for the district
within which the depository institution's
14
principal place of business is located or the
United States District Court for the District
of Columbia (and such court shall have
jurisdiction to hear such claim).
The "period described in paragraph (5)(A)(i)" is the
180-day period during which the RTC is required to determine
whether to allow or disallow the claim and notify the claimant of
its determination. The parties can extend this period only upon
their written agreement.0 Absent written agreement to extend the
180-day period, a claimant must seek judicial review before the
earlier of 60 days from the determination of its claim or 240
days from the date its claim was filed (the 180 days of section
1821(d)(5)(A)(i), plus the 60 days of section 1821(d)(6)(A)) even
if, as in this case, the RTC fails to make a determination within
the statutorily required 180-day period specified in section
1821(d)(5)(A)(i).0 Astrup v. RTC, 23 F.3d 1419, 1420-21 (8th
Cir. 1994); Capitol Leasing Co. v. FDIC, 999 F.2d 188 (7th Cir.
1993); Henderson v. Bank of New England, 986 F.2d 319, 320 (9th
Cir., cert. denied, 114 S. Ct. 559 (1993).
In this case, treating W.W.'s petition to reopen in the
removed case and its counsel's August 5, 1991 letter to RTC's
counsel as together constituting a properly filed claim, W.W.
0
12 U.S.C. § 1821(d)(5)(A)(ii).
0
Congress clearly contemplated the possibility of the 180-day
period expiring without the RTC having resolved a claim, for
section 1821(d)(6)(A) states that a claimant has 60 days after
the expiration of the 180-day claim determination period or the
disallowance of a claim to seek administrative review or to
institute an action in court. If Congress had not contemplated
the possibility of the 180-day period expiring without the RTC
having resolved a claim, the first limitation period would have
been superfluous, since there never would be an instance in which
the 180-day period would expire without the resolution of a
claim.
15
failed to bring the federal case in the district court within the
statutorily-specified time period. The district court held that
W.W. provided the RTC with the information necessary to process
its claim in April 1991 when it served its March 26, 1991
petition to open (filed in the Philadelphia County Court of
Common Pleas) on the RTC. At the latest, treating these informal
filings, i.e., the petition and the letter, as satisfying the
requirement to file an administrative claim, the 240-day period
began in August, after W.W. sent the RTC the letter requesting
adjudication of its claim.0 Yet W.W. did not file the federal
case until August 5, 1993. Since more than 240 days elapsed
between the filing of the claim with RTC and the filing of the
federal case in the district court, the district court lacked
subject-matter jurisdiction over it.
0
The RTC contends that service of the petition did not constitute
a properly filed claim and that FIRREA bars W.W.'s action because
it did not file an appropriate claim form within 90 days of
receiving notice to do so, as required by 12 U.S.C.
§1821(d)(5)(C)(i). If the RTC is correct so that W.W.'s
petition, either independently or accompanied by its letter of
August 5, 1991, did not constitute a claim, the district court
would have lacked jurisdiction because W.W. would not have
followed the proper administrative procedures.
Nevertheless, since we find that even if a pleading can
constitute a claim under FIRREA, the district court lacked
jurisdiction over this claim, we need not address this issue. We
therefore assume without deciding that the procedures W.W.
followed in 1991 constituted compliance with the FIRREA claims
procedure. Of course, the petition could not be an adequate
claim in the removed case itself, because FIRREA contemplates an
administrative claim procedure independent of a judicial
proceeding. Treating the petition as an adequate administrative
filing to support jurisdiction in the removed case would
frustrate the two-step process FIRREA contemplates.
16
W.W. argues that the court possessed jurisdiction over
the federal case because there was a written agreement, pursuant
to 12 U.S.C. § 1821(d)(5)(A)(ii), to extend the 180-day period in
which the RTC was required to resolve W.W.'s claims. W.W. argues
that: (i) motions to the district court to stay the removed case
constitute written agreements between the RTC and W.W., and (ii)
that the RTC's denial of W.W.'s October 7, 1992 claim on June 8,
1993, in explicitly granting W.W. 60 days to appeal, also
constitutes a written agreement, albeit a retroactive one, to
extend the 180-day period for consideration of its 1991 claim.
Thus, in W.W.'s view, its action filed August 5, 1993, was
timely. Alternatively, W.W. argues that material written by the
RTC after the expiration of the 180-day period should extend
retroactively the 180-day period.0
0
W.W. cites a letter to the district court dated February 9,
1993, which states:
On or about October 5, 1992, after the case
was placed in the suspense file, defendant
W.W. Development & Management, Inc. submitted
an administrative claim to the Resolution
Trust Corporation pursuant to 12 U.S.C.
§1821(d)(5). Pursuant to Section 1821(d) the
claim must be decided within 180 days of
filing (i.e., on or about April 3, 1993).
Accordingly, we request that the matter
remain in the suspense file until April or
until the claim has been decided, whichever
is earlier. Of course if the claim is
decided before April 3, we will promptly
notify the Court. Edward Rubenstone, counsel
for defendant, joins in this request.
W.W.'s App. 173.
When the RTC denied W.W.'s claim on June 8, 1993, its letter to
W.W. stated:
17
To support its contentions, W.W. points out that
section 1821(d)(5)(A)(ii) provides that the 180-day period, "may
be extended by a written agreement between the claimant and the
Corporation." On June 24, 1991, the RTC filed a motion to stay
all legal proceedings in the removed case. It read in part:
For the reasons set forth in the following
Memorandum of Law, substituted plaintiff
Resolution Trust Corporation, in its capacity
as Conservator for Bell Federal Savings Bank,
moves the Court for an Order staying
consideration of defendant's Motion to Open
Judgment pending exhaustion of administrative
remedies.
W.W.'s App. 106-07. On August 14, 1991, W.W. filed a Memorandum
of Law in response which argued, in part, that the district court
should stay further proceedings for 180 days so that
administrative procedures could be exhausted. It read in part:
"under the facts of this case . . . the issuance by this Court of
a stay for 180 days as to the prosecution of such claims is
appropriate." W.W.'s App. 197.
W.W. further argues that Congress intended the deadline
provisions to constrain only the RTC and it suggests that
Congress drafted them in response to the concerns raised by the
Supreme Court in Coit Independence Joint Venture v. FSLIC, 489
U.S. at 582-83, 109 S.Ct. at 1373, where the Court noted that the
Pursuant to 12 U.S.C. Section 1821(d)(6), if
you wish to contest this disallowance, then,
within sixty (60) days from the date of this
letter you must file suit on your claim
against the Receiver in the United States
District Court for the Eastern District of
Pennsylvania . . . .
Id. at 175.
18
lack of deadline periods enabled the Federal Savings and Loan
Insurance Corporation to delay judicial review indefinitely. W.W.
argues that the legislative history offers no support for the
RTC's use of the deadline procedures to defeat a claim. It
further argues that allowing the RTC to evaluate claims even
after the 180-day period has elapsed would serve the purpose of
FIRREA.0
When a statute is clear, however, our role in
interpretation is at an end, absent a clearly expressed
legislative intention that contradicts the plain language of the
statute. Consumer Product Safety Comm'n v. GTE Sylvania, Inc.,
447 U.S. 102, 108, 100 S. Ct. 2051, 2056 (1980); Sacred Heart
Medical Center v. Sullivan, 958 F.2d 537, 545 (3d Cir. 1992).
Nothing that W.W. cites is "a written agreement between the
0
The legislative history explains that the claims procedure set
forth in FIRREA was designed:
[To enable] the FDIC to dispose of the bulk
of claims against failed financial
institutions expeditiously and fairly. The
exhaustion requirements should lead to a
large number of claims being resolved without
resort to further procedures. In addition,
the administrative procedures, including
review procedures, created by the FDIC, if
made sufficiently attractive to claimants,
should lead to a large number of claimants
agreeing to present their claims through
these forums rather than in court. Thus, the
claim resolution process established in this
section should allow the FDIC to quickly
resolve many of the claims against failed
financial institutions without unduly
burdening the District Courts.
H.R. Rep. No. 101-54 (I) at 419.
19
claimant and the Corporation" to extend the 180-day period.
Furthermore, W.W. cannot point to "a clearly expressed
legislative intention" that contradicts the plain language of the
statute and thus would allow us to treat the items to which it
points as an agreement for an extension of the 180-day claim
consideration period. GTE Sylvania, 447 U.S. at 108, 100 S.Ct.
at 2056. Consequently, we cannot find that the 180-day claim
period was extended to permit the district court to exercise
jurisdiction over the federal case.0
We recognize that our result is harsh. The RTC
disallowed the claim on the basis of untimeliness despite W.W.'s
good faith efforts and request for guidance from the RTC to
comply with the new and confusing statute. In addition, the
RTC's actions encouraged W.W. to believe that its claim was under
serious administrative consideration as the statutory period for
judicial review expired. Furthermore, we acknowledge that "[t]he
statute arguably encourages the RTC to avoid making
determinations and, in so doing, catch creditors dozing." Astrup,
0
Of course, the claim W.W. filed on October 7, 1992, was late so
even if there had been a written agreement to extend the time for
the receiver to allow or disallow the claim to June 8, 1993, when
the RTC disallowed the claim, which as far as we are aware there
was not, the district court would have granted the RTC summary
judgment properly as W.W. filed the claim long after the bar
date. We must say, however, that we are at a loss to understand
why the RTC in its June 8, 1993 letter advised W.W. that it could
file suit within 60 days, inasmuch as the RTC denied the October
7, 1992 claim long after 180 days following its submission. It
would seem that the RTC was attempting to give the district court
jurisdiction which the court did not have. It may be that on
this basis as well the district court, notwithstanding the June
8, 1993 letter, did not have jurisdiction. But we do not reach
that point.
20
23 F.3d at 1421. But our hands are tied under the statutory
scheme. See also National Union Fire Ins. Co. v. City Sav. Bank,
F.S.B., 28 F.3d 376, 388 (3d Cir. 1994) ("FIRREA was . . .
passed to give the receiver extraordinary power."). We therefore
hold that the district court did not have jurisdiction over the
federal case.
II. The removed case
W.W. also argues that the district court had
jurisdiction in the removed case over the petition to open the
judgment and to allow it to assert defenses and a counterclaim.
The relevant facts are that Bell filed its action for confession
of judgment before the RTC was appointed receiver for Bell but
that W.W. filed its petition after that appointment.
FIRREA, though allowing the RTC to remove state cases
to a federal court, does not generally divest courts of
jurisdiction in pre-receivership cases. This is clear from 12
U.S.C. § 1821(d)(5)(F)(ii), which provides, with an exception
dealing with stays, that filing a claim with a receiver does not
prejudice the right of a claimant to continue an action filed
before the receiver's appointment. It necessarily follows from
this section that the institution of a proceeding under FIRREA
does not oust a court of the jurisdiction it otherwise would have
over an action involving a thrift institution. Accordingly, in
Praxis Properties, Inc. v. Colonial Sav. Bank, 947 F.2d 49, 63
n.14 (3d Cir. 1991), we explained that if an action is filed
before a thrift is placed in receivership, jurisdiction over the
21
matter is not lost by the subsequent insolvency of the thrift and
takeover by the RTC. Id.
Bell commenced the removed action by confessing
judgment against W.W.0 In National Union, 28 F.3d 393, we held
that section 1821(d)(13)(D)'s statutory bar does not apply to
either defenses or affirmative defenses to a claim brought by the
RTC because:
We think it plain enough that a defense or an
affirmative defense is neither an 'action'
nor a 'claim,' but rather is a response to an
action or a claim, and that therefore
defenses and affirmative defenses do not fall
under any of the [categories of action barred
by § 1821(d)(13)(D)].
See also Praxis, 947 F.2d 49, 64 n.14 (Neither exhaustion
requirement nor administrative claims procedure apply to actions
the thrift commenced before it failed.).
Consequently, we must decide whether the petition to
open the judgment was a separate claim against the RTC or whether
it should be regarded as defense and therefore not barred by
section 1821(d)(13)(D). Because the petition to open judgment
includes both a defense to liability in the action commenced
before the FIRREA proceedings (though not a conventional defense
as in an action in which process is served at the outset), and a
counterclaim against RTC, we will bifurcate the petition and
separately consider the defenses and the counterclaim.0 This
0
Of course, the district court had jurisdiction over the judgment
and could have entertained enforcement proceedings for its
collection. Thus, we deal with W.W.'s pleadings, not those of
the RTC.
0
The petition itself is broken into three sections. Section I is
headed:
22
procedure is consistent with that which we followed in National
Union, 28 F.3d at 383-95, where we separately considered whether
FIRREA barred affirmative defenses and declaratory judgment
actions even when both were based on the same legal grounds. We
find that the defenses offered in the petition to open judgment
are not subject to FIRREA's statutory bar, but that the
counterclaim in the petition is jurisdictionally barred by
FIRREA.
A. The defenses
We first consider the defenses to the confessed
judgment included in the petition to open the judgment. In
deciding whether or not FIRREA bars jurisdiction over this part
of the petition, we are guided by the Supreme Court's recent
holding in O'Melveny & Myers v. FDIC, 114 S. Ct. 2048 (1994),
which explained that "matters left unaddressed" in FIRREA "are
As a Result of Bell's Breach of Contract and
Other Wrongful Conduct, Petitioner has
Numerous Bona Fide, Good Faith Defenses to
Bell's Claims, Thereby Warranting the Opening
of the Subject Judgment by Confession.
W.W.'s App. 54.
Section II is headed:
Defendant has Incurred Substantial Damages as
a Direct Result of Plaintiff's Breach of
Contract, Thereby Entitling it to Assert a
Counterclaim in this Action.
Id. at 57-59.
Section III requests an order staying the execution of the
confessed judgment. Id. at 59-60.
23
presumably left subject to the disposition provided by state
law." Id. at 2054. We thus consider how the petition would be
viewed under Pennsylvania law.
In Pennsylvania, a petition to open a judgment is
integral to the process of determining the debtor's and
creditor's rights.0 See Davis v. Woxall Hotel, Inc., 577 A.2d
0
Pa. R. Civ. P. 2959 governs the procedure on a petition to open
a judgment. While W.W. characterized its petition as a motion,
inasmuch as that section refers to a petition, we have called the
pleading a petition. The rule reads:
Rule 2959. Striking Off or Opening Judgment;
Pleadings; Procedure
(a) Relief from a judgment by confession
shall be sought by petition. All grounds for
relief, whether to strike off the judgment or
to open it, must be asserted in a single
petition. The petition may be filed in the
county in which the judgment was originally
entered, in any county to which the judgment
has been transferred or in any other county
in which the sheriff has received a writ of
execution directed to him to enforce the
judgment.
(b) If the petition states prima facie
grounds for relief the court shall issue a
rule to show cause and may grant a stay of
proceedings. After being served with a copy
of the petition the plaintiff shall file an
answer on or before the return day of the
rule. The return day of the rule shall be
fixed by the court by local rule or special
order.
(c) A party waives all defenses and
objections which he does not include in his
petition or answer.
(d) The petition and the rule to show cause
and the answer shall be served as provided in
Rule 440.
24
636, 638 (Pa. Super. Ct. 1990) ("[A] challenge to the accuracy of
such amounts should be resolved by a petition to open the
judgment."). Passed as part of the same chapter as the provision
governing a confession of judgment, a petition to open a judgment
is the sole means by which the defendant in a confession of
judgment action can assert a defense. If the party against whom
judgment is confessed pleads prima facie grounds for relief, the
court must open the judgment, and "may grant a stay of
proceedings." Pa. R. Civ. P. 2959(b). The use of the word
"proceedings" suggests that the petition should be understood as
part of the same action as the underlying confession of judgment.
This interpretation is strengthened by the Pennsylvania Superior
Court's discussion:
A petition to strike and a petition to open
are two forms of relief with separate
remedies; each is intended to relieve a
different type of defect in the confession of
judgment proceedings. . . . [A] petition to
open the judgment offers to show that the
defendant can prove a defense to all or part
of the plaintiff's claim.
(e) The court shall dispose of the rule on
petition and answer, and on any testimony,
depositions, admissions and other evidence.
The court for cause shown may stay
proceedings on the petition insofar as it
seeks to open the judgment pending
disposition of the application to strike off
the judgment. If evidence is produced which
in a jury trial would require the issues to
be submitted to the jury the court shall open
the judgment.
(f) The lien of the judgment or of any levy
or attachment shall be preserved while the
proceedings to strike off or open the
judgment are pending.
25
Manor Bldg. Corp. v. Manor Complex Assocs., LTD., 645 A.2d 843,
845 n.2 (Pa. Super. Ct. 1994) (emphasis added). The court's
reference to the petition to open as "a defense" in "confession
of judgment proceedings" indicates that a defense to liability in
a petition to open is part of an overall confession of judgment
procedure and not an independent action.
Moreover, the Pennsylvania courts have noted the
importance of a petition to open a judgment in satisfying due
process in the confession of judgment procedure. North Penn
Consumer Discount Co. v. Shultz, 378 A.2d 1275, 1277-78 (Pa.
Super. Ct. 1977).0 We find, therefore, that the defenses alleged
in the petition to open judgment are part of a pre-receivership
action and thus under sections 1821(d)(5)(F)(ii) and
1821(d)(13)(D) the district court may entertain them without
regard for the jurisdictional bar in the latter section.
In reaching our result, we also point out that section
1821(d)(13)(D) bars jurisdiction only 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
0
We note that the Pennsylvania confession of judgment procedure
has raised serious due process issues in the past. See Jordan v.
Fox, Rothschild, O'Brian & Frankel, 20 F.3d 1250 (3d Cir. 1994).
The existence of the opportunity to present a defense provided by
the petition to open judgment may well be crucial to the
constitutionality of the procedure. See Girard Trust Bank v.
Martin, 557 F.2d 386 (3d Cir.), cert. denied, 434 U.S. 985, 98
S. Ct. 612 (1977) (construing D.H. Overmyer Co. v. Frick Corp.,
405 U.S. 174, 92 S. Ct. 775 (1972), to seem to require that "there
be some procedure by which debtor against whom judgment is
confessed may test the validity of the judgment against him").
These concerns also support construing a petition to open
judgment as part of the same action as a confession of judgment.
26
which the Corporation has been appointed receiver." Id.
(emphasis added). We regard the defenses offered by W.W. in the
petition to open judgment as pertaining to its assets, not those
of Bell, because a judgment has value only insofar as it can be
the basis for a recovery from a debtor's assets.
Finally, on this point we observe that at oral argument
counsel for the RTC acknowledged that if a thrift filed an action
before the Office of Thrift Supervision instituted proceedings to
take it over under FIRREA, a defendant in that case after the
initiation of the FIRREA proceedings could assert defenses
without exhausting administrative procedures, so long as it did
not seek affirmative relief. In view of our conclusions
regarding the nature of a petition to reopen under Pennsylvania
law, this concession essentially means that the RTC agrees that
W.W. should be able to assert its defenses in the removed case.
B. The counterclaim
The counterclaim for damages included in the petition
to open stands on a different footing. Unless a claimant
exhausts the statutory claim procedure, FIRREA divests courts of
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 Corporation
has been appointed receiver . . . ." Section 1821(d)(13)(D).
While defenses to Bell's confession of judgment action pertain to
the assets of W.W., the counterclaim clearly asserts a claim over
Bell's assets. "[I]f in addition to raising defenses or
affirmative defenses to an action or a claim, a party also raises
27
counterclaims, such counterclaims would fall under section
1821(D)(13)(D)'s jurisdictional bar." National Union, 28 F.3d at
394. We must decide, then, whether a counterclaim should escape
section 1821(d)(13)(D)'s jurisdictional bar because it should be
regarded as a continuation of a pre-receivership lawsuit under
section 1821(d)(5)(F)(ii).
Congress's express purpose in creating the claims
determination procedure embodied in FIRREA was to:
[E]nable[] the FDIC to dispose of the bulk of
claims against failed financial institutions
expeditiously and fairly. The exhaustion
requirements should lead to a large number of
claims being resolved without resort to
further procedures. . . . Thus, the claim
resolution process established in this
section should allow the FDIC to quickly
resolve many of the claims against failed
financial institutions without unduly
burdening the District Courts.
H.R. Rep. No. 101-54(I) at 419. The counterclaim brought by
W.W., in contrast to its defenses to the confessed judgment, is a
"claim[] against [a] failed financial institution," precisely the
kind of post-receivership claim that Congress wanted resolved
"expeditiously and fairly," through the administrative claims
process. A holding that a counterclaim is not barred would
permit a litigant, as the district court observed, to "convert
its claim to a pre-receivership claim merely by making it a part
of litigation which predates the receiver's takeover." W.W.'s
App. 38. This procedure would enable a claimant in a pending
pre-receivership action effectively to evade FIRREA's strictures
and thereby subvert Congress's express purpose to "allow the FDIC
28
to quickly resolve many of the claims without unduly burdening
the district courts." H.R. Rep. No. 101-54(I) at 419.
Consequently, we find that a post-receivership counterclaim is
subject to section 1821(d)(13)(D)'s jurisdictional bar, at least
if, as here, the counterclaim is asserted as a basis for relief
beyond defeating the complaint.0
As a result, the Philadelphia Court of Common Pleas
lacked jurisdiction over the counterclaim when it was filed,
because it was filed after RTC's appointment as receiver of Bell.
Consequently, the district court never possessed subject matter
jurisdiction over W.W.'s counterclaim, and properly dismissed
this part of the removed action.
III. CONCLUSION
We find that the district court properly granted
summary judgment to the RTC in the federal case, No. 93-4210, as
the court lacked subject matter jurisdiction over it. The
district court erred, however, in entirely denying the petition
to open judgment in the removed case, No. 91-3788. Accordingly,
we will affirm the district court's summary judgment in favor of
the RTC No. 93-4210 and will affirm the district court's denial
of the petition to open judgment in No. 91-3788 with respect to
the counterclaim raised in the petition. We will vacate the
district court's denial of the petition to open judgment in No.
0
We observe that interpreting FIRREA to preclude jurisdiction
over a post-receivership counterclaim raises none of the due
process concerns raised by interpreting FIRREA to prevent W.W.
from raising a defense to a judgment confessed against it.
29
91-3788 with respect to the defenses to the confessed judgment
raised in W.W.'s petition, and will remand the case to the
district court for proceedings consistent with this opinion.
Thus, we will affirm in part and will vacate in part the district
court's orders of November 17, 1994, and February 29, 1995. On
the remand, the district court should consider the petition to
open judgment without regard for the FIRREA jurisdictional bar,
but only insofar as W.W. seeks to assert defenses to the
complaint. Of course, we express no opinion on whether the court
should grant W.W. relief on its petition as we limit our opinion
to the jurisdictional issues. The parties will bear their own
costs on this appeal.
30
31
32