fails dismally in several substantive respects (any one of which
would alone justify spurning FDIC's lame contention) .

To begin with, it is fundamental to statutory construction
that “a more specific statute will be given precedence over a
more general one” (see, e.g., Mosley v. Moran, 798 F.2d 182, 186
(7 Cir. 1986) (per curiam), quoting as its ultimate source Busic
yv. United States, 446 U.S. 398, 406 (1980)). And although Busic,
id. announced that proposition is applicable “regardless of their
temporal sequence,” the principle obviously applies with even
greater force when the more specific statute is enacted later.
Indeed, Section 2415(a) itself contemplated that Congress might
enact another limitations period to supersede its general rule in
specific situations--it expressly specified that its provisions
would apply “except as otherwise provided by Congress.” And
Congress did precisely that by enacting FIRREA, including its
special limitations period, over a quarter century later.

In partial response to FDIC's shift in position, defendants
have pointed to the decision in RTC’ v. Aycock, No. 92-0761, 1993
WL 534127, at *2 (E.D. La. Dec. 14) (citations--including Busic--

and quotation of Section 2415 omitted):

* As FDIC's just-tendered further amendment to the SAC sets
out, RTC was FDIC's predecessor in interest in the transactions
at issue here. That amendment, submitted in response to this
Court's September 6, 2002 order, is treated as part of the SAC to
which defendants' motions to dismiss and this opinion have
addressed themselves.


that was communicated to RTC's Contractor Ethics Program Manager
Martin Blumenthal (“Blumenthal”) during his July 20, 1994 meeting
with FBI and Department of Justice representatives fits the
standard admirably. Blumenthal's August 21, 2002 Declaration
(Ex. A to FDIC's most recent August 26 memorandum) acknowledges
his having been interviewed by those law enforcement personnel on
the subjects referred to in Opinion 23-24. Although the
Declaration is strangely silent on the subjects addressed during
that interview, they are undisputed--and there can be no question
that the interview had to alert Blumenthal (especially given his
role as the Contractor Ethics Program Manager) in a way that had
to trigger the commencement of the discovery time clock (or
alternatively put an end to any tolling period under Section
2416(c)). And neither Blumenthal nor FDIC is dug out of that
hole by his lame assertion (Declaration 48) that, even though he
had the authority to communicate that information to RTC's Office
of Inspector General (“OIG”), he failed to do so because he
“assumed that the OIG already knew about the matters discussed in
the interview” (Declaration 49). That essentially equates to
someone failing to cry “Fire!” because of the assumption that
someone else has heard an alarm.

Despite all of that, FDIC (which does not and cannot of
course dispute the facts that it has itself adduced) attempts to

urge an impermissibly crabbed compartmentalization of what it


2416--and the specific limitation period prescribed by FIRREA's
Section 1821(d) (14) (see 167 F.3d at 240-42). With all respect,
this Court does not find that the analysis in SMS Fin. really
establishes the propriety of that combination--and it is worth
observing that the issue was presented to the court there in all-
or-nothing terms: to choose either (1) the combination that it
ultimately selected or (2) Section 1821(d) (14) without any
potential for its extension because of special circumstances. In
sharp contrast, Opinion at 21-27 has viewed the matter in terms
of applying the federal discovery rule to extend the literal
FIRREA statutory time limit--a principle that is consistently
applied in federal jurisprudence.

So the alternatives to be considered here are really quite
different:

1. the FIRREA statute (acknowledged as applicable by
both sides), together with the federal common law of tolling
under discovery principles, or

2. the FIRREA statute plus a wholly separate statute
(Section 2416), which is made applicable by its own express
terms to a preempted statute (Section 2415) and not to the
FIRREA legislation as such.

In those terms this Court unhesitatingly opts for the former as
better supported by both logic and the principles of statutory

construction.


Prior to the enactment of FIRREA, the applicable
statute of limitations was unquestionably that
contained in section 2415. The question presented by
this case is whether that statute has any application
in light of the specific limitations provisions
contained in FIRREA. The Court concludes that FIRREA
provides the exclusive statute of limitations
applicable to the RTC's claims. First, FIRREA was
enacted more than twenty years after the enactment of
section 2415. Had Congress wished to give the RTC the
benefit of that section it was certainly able to do so.
Instead it chose to enact a specific statute of
limitations for FIRREA claims. Allowing the RTC to mix
and match section 2415 and FIRREA would undermine the
Congressional scheme.

Second, section 2415 is simply the general statute of
limitations applicable to tort claims by the United
States. FIRREA is a more specific statute dealing with
the management of the affairs of insolvent banks and
thrifts and should be applied to the instant claim.
Section 2415 clearly was not intended to apply to
claims for which Congress has enacted specific
limitations periods. Rather, Congress intended section
2415 to provide the limitation period for claims,
brought by the United States, in the absence of a
controlling federal statute. By enacting 12 U.S.C.
§1821(d) (14) (a) Congress effectively preempted section
2415 in its entirety, with respect to claims arising
under FIRREA.

Even though it is non-precedential (as is true of every District
Court opinion), that statement seems a convincing application of
the universal principle of looking to the specific rather than to
the general where statutes are at issue (in that respect, cf. RIC
v. Seale, 13 F.3d 850, 854 (5 Cir. 1994)).

For its part, FDIC seeks to invoke the decision in SMS Fin.
L.L.C. v. ABCO Homes, Inc., 167 F.3d 235 (5% Cir. 1999), which
did cobble together a combination of a specific tolling provision

of Section 2415(a)--not the tolling period under Section


§2415(a) indicates Congress was motivated in part by
notions of fairness and equity in government dealings
with private litigants, and further motivated to reduce
the costs of record keeping and encourage prompt agency
actions on claims. S.Rep. No. 2438, 89th Cong.2d Sess.
reprinted in 1966 U.S.C.C.A.N. 2502, 2503, 2513.

* * *

To satisfy Congressional intent, district courts should
not view a failure to exercise reasonable diligence,
inconvenience, and even some hardship on the part of
government as grounds for tolling the limitations
period. We agree with the Eleventh Circuit which said
"Congress could not...be completely forgiving of
government delay and still be true to its motives in
enacting a statute of limitations.” [United States
v.]Kass, 740 F.2d [1493,] 1497 [(11TM Cir. 1984)].

That approach tracks precisely with our own Court of Appeals'
explanation of the common law discovery rule in United States v.
Duke, 229 F.3d 627, 630 (7% Cir. 2000) (emphasis in original):

The federal common law rule on when a statute of
limitations begins to run is that it is when the
plaintiff discovers, or by exercise of due diligence
would have discovered, that he has been injured and who
caused the injury.

* * *

The discovery rule does not permit the victim of an
alleged wrong to postpone the running of the statute of
limitations by willfully closing his eyes, ostrich-
like, to a known probability that he has been injured,
even if he is not certain. A plaintiff who either knew
that he was injured or should have known is deemed to
have “discovered” the injury for purposes of the
statute of limitations.

When the relevant standard is denuded of FDIC's
gratuitously-injected and misleading “all material facts”

requirement in favor of the actual statutory language, the input


Nye Order Form 40697)

United States District Court, Northern District of Illinois

Wipf? of Assignea Judge i Sitting Judge if Other
or Magistrate Judge Milton I. Shadur than Assigned Judge
7
CASE NUMBER 01 C 8674 DATE 9/24/2002
CASE Federal Deposit Insurance vs. David J. Wabick, et al
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) im) Filed motion of [ use listing in “Motion” box above.]
(2) im) Brief in support of motion due
(3) oO Answer brief to motion due . Reply to answer brief due.
(4) o Ruling/Hearing on set for at
(5) o Status hearing[held/continued to] [set for/re-set for] on set for at.
(6) Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) a Trial[set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
DFRCP4(m) (Local Rule 41.1 OOFRCP41(a)(1) OO FRCP41(a)(2).
do) i [Other docket entry] Enter Memorandum Opinion and Order. FDIC’s remaining claims - -
advanced in Sac Count I (breach of contract) and Count IJ (unjust enrichment) - - were untimely pursued
for the reasons stated here. Those two counts are therefore also dismissed (this order involves the
granting of all defendants’ pending motions to dismiss - - Dkt. 27-1, 28-1, 29-2 and 36-1). Hence this
entire action has been and is dismissed on limitations grounds, making it unnecessary to address
defendants’ other possible bases for dismissal.
a1) gf [For further detail see order attached to the original minute order.]
No notices required, advised in open court. Document
No noti ired. Number
'o notices required. number of notices ;
wv | Notices mailed by judge’s staff.
Notified counsel by telephone. S EP 2.
Docketing to mail notices.
Mail AO 450 form. cocbeidh Hey nis
Copy to judge/magistrate judge. nog JSRISta sa
2002
date mailed notice
courtroom vibra 7
SN deputy’s pay 9 ow
initials
Date/time received in
central Clerk's Office mailing deputy initials



36-15). Hence this entire action has been and is dismissed on

limitations grounds, making it unnecessary to address defendants’
other possible bases for dismissal.

Milton I. Shadur
Senior United States District Judge

Date: September 24, 2002

5 Wabick defendants' motion to strike (Dkt. 29-1), included
in their motion to dismiss, is denied as moot.

il


means to bring knowledge home to the government. But defendants
are correct in analogizing the situation to that posed in United

States v. Boeing Co., 845 F.2d 476, 482 (4 Cir. 1988), rev'd on

other grounds, 494 U.S. 152 (1990). Like the agency there, which
had knowledge of impropriety but failed to pass that knowledge
along to the Department of Defense, Blumenthal had not only the
authority but the responsibility to apprise the OIG of the
information conveyed to him. And that scotches FDIC's effort to
permit the government to play ostrich.

In sum, then, FDIC must fail in its efforts to take itself
out of the corner into which the Blumenthal meeting far back in
mid-1994 has painted it, whether the situation is examined in
terms of the federal common law rule of discovery or in terms of
Section 2416(c) (when properly read). Either way, the FIRREA time
clock began to tick at a sufficiently early date so that this
2001 lawsuit came too late to advance FDIC's breach of contract
and unjust enrichment claims.

Conclusion

FDIC's remaining claims--advanced in SAC Count I (breach of
contract) and Count III (unjust enrichment) --were untimely
pursued for the reasons stated here. Those two counts are
therefore also dismissed (this order involves the granting of all

defendants' pending motions to dismiss--Dkt. 27-1, 28-1, 29-2 and

10


But suppose instead that FDIC's less tenable position were
to be accepted. Its counsel then proceed to engage in an
impermissible sleight of hand, inserting a nonexistent and more
demanding term into Section 2416 to distort its standard for
tolling. Here is the portion of Section 2416 that FDIC would
seek to invoke:

For the purpose of computing the limitations periods

established in Section 2415, there shall be excluded
all periods during which--

* * *

(c) facts material to the right of action
are not known and reasonably could not be known by
an official of the United States charged with the
responsibility to act in the circumstances....
But in FDIC's hands that becomes transformed in this fashion (in
its current Mem. 3, emphasis added):

By contrast, under Section 2416(c) the cause of action

accrues only when an official of the FDIC with

responsibility for acting had actual or constructive
knowledge of all of the facts that are material to its
claims.

That strained reading is not supported by the caselaw,
including FDIC's reference to Phillips Petroleum Co. v. Lujan, 4
F.3d 858 (10° Cir. 1993). That case itself speaks of the
government's burden, once it is in possession of facts that put
it on notice of a claim, in terms wholly consonant with the
general federal discovery rule (4 F.3d at 863):

Clearly, the government should not be able to postpone

litigation due to a lack of efficiency or diligence on
its part. The legislative history in support of


FIRREA clock, questions still remained as to whether the
application of the discovery rule could have deferred the ticking
of that time clock. Accordingly the Opinion concluded by
allowing FDIC the opportunity to address the merits of its
opponents! supplemental arguments on that facet of the problem
(Opinion at 26-27).

On August 26--right on time--FDIC filed a memorandum that
was quite frankly astonishing. For the first time it contended
that the FIRREA statute of limitations did not alone provide the
rule of decision, but that this Court should instead also address
the general statutes of limitation applicable to lawsuits by a
federal agency, 28 U.S.C. §§2415 and 2416.3 Such a total change
of position in the face of FDIC's three previous memoranda, not
one of which had contained even a hint of the purported
applicability of those generalized provisions, smacks somewhat of
the same type of litigation conduct that triggers application of
the “mend the hold” doctrine to preclude the later assertion of a
new legal position (see, e.g., cases cited in United States v.
Newell, 239 F.3d 917, 922 (7% Cir. 2001)). But leaving aside
any such technical grounds for potentially dispatching FDIC's

belated effort to rescue a long-belated lawsuit, that effort

3 Those statutes will also be cited here as “Section --,”
without further reference to Title 28. No confusion should
result, given the substantial difference in section numbering
between those provisions and the FIRREA limitations provision.

3


exhausted the subject, addressed their respective arguments and
concluded (Opinion at 7-8) that the special limitations period
prescribed by the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (“FIRREA”)--12 U.S.C. §1821(d) (14) (A)
(“Section 1821(d) (14) (A)”)--controlled. Indeed, all parties had
agreed that FIRREA governed FDIC's claims (Opinion at 7).? And
the Opinion's extended ensuing analysis led to the ultimate
conclusion that the SAC Count II (common law fraud) and Count IV
(conspiracy to commit fraud) claims had, under any permissible
view of the facts, become stale (Opinion at 12-15, 20-21).

As to the SAC Count I (breach of contract) and Count III
(unjust enrichment) claims, even though this lawsuit had been

filed well past the expiration of the time specified by the

2 More than that, the parties had agreed not only as to
FIRREA's general applicability, but more specifically that its
limitations provisions controlled here. Here is what this Court
said in its brief July 3, 2002 order that directed both sides to
provide supplemental filings to address a decision that neither
side had spoken to:

Both sides agree that FDIC’s claims are governed by the
limitations period specified in the Financial
Institutions Reform, Recovery and Enforcement Act of
1989 (“FIRREA”): the longer of (1) six years for
contract actions and three years for tort actions and
(2) “the period applicable under State law” (12 U.S.C.
§1821(d) (14) (A)). FDIC contends that Illinois’ choice-
of-law rules properly determine which state provides
the alternative limitations period under FIRREA, while
defendants counter that federal common law determines
the choice-of-law rule used to answer that question.

FDIC's July 15 memorandum did not dispute that in any respect.

\
2


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FEDERAL DEPOSIT INSURANCE
CORPORATION, etc.,

Plaintiff,

Vv. No. 01 C 8674

DOCKETED

DAVID J. WABICK, toal.,
“8 SEP 2 5 2097

)
)
)
)
)
)
)
)
)
Defendants. )
MEMORANDUM OPINION AND ORDER
This Court's August 2, 2002 memorandum opinion and order
(“Opinion,” 2002 WL 1781128') dealt in painstaking--some might
say excruciating--detail with the issue of timeliness of this
lawsuit, brought by Federal Deposit Insurance Corporation
(“FDIC”) some nine years after the events forming the gravamen of
its claims. Because the timeliness question was thus so obvious
as figuratively to leap off the pages of FDIC's Second Amended
Complaint (“SAC”), this Court had ordered the parties to address
the subject, and they had responded with extensive written
memoranda--on FDIC's part, a separate five-page February 1, 2002
memorandum, 16 pages of its 26-page May 8 response to defendants'
motions to dismiss the SAC and then a four-page July 15

memorandum.

This Court, justifiably viewing the parties as having

+ Because the current Westlaw printout mysteriously
contains no * pagination as well as understandably omitting any
citations to the yet-to-be-published F.Supp.2d version, all page
references here are to the slip Opinion.