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GREEN v. RESOLUTION TRUST CORP

May 15, 1992

ARLETHA CHAPPELLE GREEN, Plaintiff,
v.
RESOLUTION TRUST CORP, as receiver for Perpetual Savings Bank, F.S.B., et al.



The opinion of the court was delivered by: GEORGE H. REVERCOMB

 Plaintiff, as personal representative of the estate of her deceased father, sued the Perpetual Savings Bank on January 6, 1992, in the Superior Court for the District of Columbia, Civil Action 92-CA00192, alleging that Perpetual negligently allowed the unauthorized withdrawal of some $ 72,000 from the decedent's bank accounts. Four days later, on January 10, 1992, the Office of Thrift Supervision appointed the Resolution Trust Corporation (RTC) as receiver for Perpetual. The RTC removed the action to this Court on January 31, 1992, pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), 12 U.S.C. 1441a(1)(3), and by this Court's Order of February 24, 1992, it substituted itself as a party defendant for Perpetual, as mandated by 12 U.S.C. 1441a(1)(2).

 As RTC makes clear, Memo Supporting Dismissal at 2-3, FIRREA created a comprehensive administrative procedure for adjudicating claims asserted against failed depository institutions. Section 1821(d)(3)(B) requires a claimant to file his or her claim within 90 days after the federal receiver publishes notice to creditors that an institution is in receivership. Section 1821(d)(5)(A) then gives RTC 180 days to consider the claim. If RTC denies or fails to act on a claim within this time, the claimant has, under Section 1821(d)(6)(A), 60 days to (1) request an administrative review, (2) file suit on the claim, or (3) "continue an action commenced before the appointment of the receiver." Commencing or continuing a judicial proceeding without administrative review of RTC's determination leads to de novo review in the district court. FIRREA expressly restricts a claimant's ability to circumvent the administrative procedures, providing in Section 1821(d)(13)(D) a strict limitation on judicial review, such that

 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, . . . or (ii) any claim relating to any act or omission of such institution or Corporation as receiver.

 See Office and Professional Employees Int'l Union v. FDIC, 962 F.2d 63 (D.C. Cir. 1992).

 In opposing RTC's motion to dismiss, plaintiff argues that Section 1821(d)(13)(D)'s limitation on judicial review does not apply to her suit because, "as otherwise provided in" Subsection 1821(d) -- specifically at Sections 1821(d)(5)(F)(ii) and (d)(8)(E)(ii)

 subject to paragraph (12) [allowing the receiver to request a stay of legal actions to which the financial institution is or becomes a party], the filing of the claim with a receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the receiver.

 (emphasis added). Plaintiff contends that "the administrative procedures established by [FIRREA] apply equally [to] actions [that] have been commenced prior to the appointment of RTC. However, they provide for pending actions to continue." Memo in Opposition at 2-3.

 In Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103 (10th Cir. 1991), the United States Court of Appeals for the Tenth Circuit considered and rejected precisely this argument. In Mustang, the Court of Appeals affirmed the district court's grant of summary judgment in favor of plaintiff-RTC on defendant's counterclaims, holding that

 a thorough reading of the applicable provisions of FIRREA fails to produce any language which could be construed to support [defendant-counterclaimant's] argument that the claim procedures can be dispensed with in cases where suit was filed prior to the appointment of the receiver. We also concur with RTC-receiver's argument that the language of FIRREA, allowing parties with claims to file suit "or continue an action commenced before the appointment of the receiver" in the event the claim is disallowed, serves to controvert [defendant's] argument. 12 U.S.C. 1821(d)(6)(A) (emphasis added). The statute clearly requires that each creditor file a claim. 12 U.S.C. 1821(d)(3)(B)(i). In the event the claim is disallowed, the creditor can then file suit or continue to pursue the suit already filed. No interpretation is possible which would excuse this requirement for creditors with suits pending, or allow the filing of suit to substitute for the claim process.

 this provision cannot be construed in any way to support [defendant's] contention that its counterclaims survive its failure to comply with FIRREA's claim requirements. On the contrary, we conclude that [defendant's] right to continue its pending lawsuit is dependent upon its compliance with FIRREA's claims provisions. See 12 U.S.C. 1821(d)(6)(B).

 The plaintiff also relies on Coit Independence v. FSLIC, 489 U.S. 561, 103 L. Ed. 2d 602, 109 S. Ct. 1361 (1989), a pre-FIRREA Supreme Court decision, to argue that the administrative procedures set forth in Section 1821(d) do not divest federal courts of subject matter jurisdiction to determine the validity of claims against institutions under federal receivership. The Court finds, however, that RTC's reliance on the district court's holding in Circle Industries v. City Federal Sav. Bank, 749 F. Supp. 447 (E.D.N.Y 1990), aff'd 931 F.2d 7 (2d Cir. 1991), is well ...


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