1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-1-1994

National Union Fire Ins. Co. v. City Savings, FSB

Precedential or Non-Precedential:

Docket 93-5587

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1994

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1994 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"National Union Fire Ins. Co. v. City Savings, FSB" (1994). 1994 Decisions. Paper 67.

http://digitalcommons.law.villanova.edu/thirdcircuit_1994/67
1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

 

Nos. 93-5587, 93-5595 & 93-5596 

 

NATIONAL UNION FIRE INSURANCE COMPANY 

OF PITTSBURGH, PA; GULF INSURANCE COMPANY, 

 National Union Fire Insurance 

 Company of Pittsburgh, PA 

 Appellant in Nos. 93-5595/5596 

 Gulf Insurance Company 

 Appellant in No. 93-5587 

v. 

CITY SAVINGS, F.S.B., In Receivership, 

RESOLUTION TRUST CORPORATION, as Receiver 

 

On Appeal from the United States District Court 

for the District of New Jersey 

(Civ. No. 92-cv-03408) 

 

Argued March 28, 1994 

Before: GREENBERG, COWEN and NYGAARD 

Circuit Judges

(Filed July 1, 1994) 

S. Gordon Elkins (argued) 

Samuel J. Arena, Jr. 

Pauline C. Scalvino 

Stradley, Ronon, Stevens & Young 

2600 One Commerce Square 

Philadelphia, PA 19103-7098 

Peter I. Broeman 

Bigham, Engler, Jones & Houston 
2 

One Gateway Center, Suite 527 

Newark, NJ 07102-5311 

 COUNSEL FOR APPELLANT 

 NATIONAL UNION FIRE INSURANCE COMPANY 

 OF PITTSBURGH, PA 

Thomas F. Quinn (argued) 

Wilson, Elser, Moskowitz, Edelman & Dicker 

One Gateway Center, Suite 1600 

Newark, NJ 07102 

 COUNSEL FOR APPELLANT 

 GULF INSURANCE COMPANY 

Gerald A. Liloia (argued) 

Robert J. Gilson 

Riker, Danzig, Scherer, Hyland 

& Perretti 

One Speedwell Avenue 

Headquarters Plaza 

Morristown, NJ 07962-1981 

 COUNSEL FOR APPELLEES 

 CITY SAVINGS, F.S.B., In Receivership, 

 THE RESOLUTION TRUST CORPORATION, As Receiver 

 

OPINION OF THE COURT

 

COWEN, Circuit Judge. 

 National Union Fire Insurance Company of Pittsburgh, 

Pennsylvania ("National Union") and Gulf Insurance Company 

("Gulf") filed a declaratory judgment action against City 

Savings, F.S.B., in Receivership ("City Savings") and the 

Resolution Trust Corporation, as Receiver ("RTC"). In the 

declaratory judgment action, National Union and Gulf sought to 

rescind insurance policies which they had issued and under which 

City Savings and the RTC were seeking coverage. The RTC filed a 
3 

motion to dismiss the declaratory judgment action and also filed 

a counterclaim. The district court held that under the Financial 

Institution Reform, Recovery and Enforcement Act of 1989 

("FIRREA"),0 12 U.S.C. § 1821(d)(3), (d)(13)(D), it lacked 

subject matter jurisdiction over National Union and Gulf's 

declaratory judgment action. The district court also held that 

under FIRREA, National Union and Gulf were jurisdictionally 

barred from raising certain affirmative defenses to the RTC's 

counterclaim. For the reasons stated below, we will affirm the 

district court's holding that under FIRREA the district court 

lacks subject matter jurisdiction over National Union and Gulf's 

declaratory judgment action. However, we will reverse the 

district court's holding that under FIRREA National Union and 

Gulf are barred from raising affirmative defenses to the 

counterclaim. 

I. BACKGROUND 

 Effective March 22, 1989, National Union and Gulf 

issued policies of insurance0 to CityFed Financial Corp. 

("CityFed") and its subsidiaries. The insurance policies provide 

coverage for losses sustained from, among other things, the 

dishonest or fraudulent acts of employees of CityFed and its 

 

0FIRREA, Pub. L. No. 101-73, 103 Stat. 183, (appears in scattered 

sections of the United States Code). 

0The parties have also called the insurance polices issued by 

National Union and Gulf respectively, "Financial Institution Bond 

No. 362 61 69" and "Excess Financial Institution Bond No. GA 

5355981 B". We will refer to these instruments collectively as 

"insurance policies." 
4 

subsidiaries. On October 27, 1989, City Federal Savings Bank 

("City Federal"), a subsidiary of CityFed, sent a letter to 

National Union and Gulf providing notice that City Federal might 

have suffered a loss covered by the insurance policies as a 

result of dishonest or fraudulent acts of City Federal employees. 

On December 7, 1989, City Federal put National Union and Gulf on 

notice of another potential claim involving the alleged dishonest 

and/or fraudulent acts of George E. Mikula, an Executive Vice 

President of City Federal. On January 4, 1990, City Federal 

placed National Union and Gulf on notice of a third potential 

claim arising from the alleged dishonest and/or fraudulent acts 

of Frank W. Allaben, a former Vice President of City Federal and 

City Federal Mortgage Corporation. 

 In the interim, by Order dated December 7, 1989, City 

Federal was declared insolvent by the Director of the Office of 

Thrift Supervision ("OTS") and ordered closed. By the same 

Order, the RTC was appointed Receiver of City Federal, succeeding 

to all rights, titles, powers, and interests of City Federal. 

Also on December 7, 1989, the Director of the OTS created City 

Savings Bank--a federally chartered mutual savings association--

to take over certain assets and liabilities of City Federal. The 

RTC was then appointed as Conservator for and took possession of 

City Savings Bank. 

 In accordance with FIRREA, 12 U.S.C. § 1821(d)(3)(B), 

the RTC then caused to be published notice to all creditors of 

City Federal that they had until March 17, 1990 to bring any 

claims against the assets of City Federal. In addition, the RTC 
5 

sent known creditors, i.e., those then appearing on City 

Federal's books, individual letters in December of 1989 informing 

them of the bar date. National Union was among those who were 

sent a letter notifying it of the RTC's appointment as Receiver 

and the bar date for the submission of claims. The RTC 

thereafter published the bar date in the newspaper on December 

17, 1989, January 21, 1990, and February 18, 1990. Gulf 

apparently received from the RTC information concerning the 

appointment of the RTC as Receiver, but never was sent 

information concerning the March 17, 1990 bar date. 

 On December 14, 1989 and February 22, 1990, 

respectively, Gulf and National Union informed the RTC that 

effective December 8, 1989--the takeover date of City Federal--

the insurance policies would be treated as canceled pursuant to 

the terms of these policies that they would automatically 

terminate upon the takeover of the insured by receiver, other 

liquidators, or other state or federal officials. Although both 

National Union and Gulf notified the RTC that they considered the 

policies canceled effective the date the RTC took over the 

operations of the bank, neither raised or asserted to the RTC a 

right to rescind the policies before the March 17, 1990 bar date. 

That is, prior to the March 17, 1990 bar date, neither National 

Union nor Gulf informed the RTC that it denied coverage under the 

polices for events occurring prior to the RTC's appointment as 

Receiver. 

 By an Order dated September 21, 1990, the Director of 

OTS closed City Savings Bank and appointed the RTC as its 
6 

Receiver. City Savings--a federally chartered mutual savings 

association--was then organized to take over the assets and 

liabilities of City Savings Bank. The RTC was appointed 

Conservator of City Savings and, accordingly, took possession and 

charge of this newly created entity. Thereafter, by Order dated 

January 11, 1991, the Director of the OTS closed City Savings and 

appointed the RTC as its Receiver. 

 On or about February 27, 1991, the RTC as Receiver for 

City Savings filed three proofs of loss totaling approximately 

$152 million with National Union and Gulf, claiming that the 

losses were covered by the insurance policies. The three claims 

were attributed to the alleged dishonest and/or fraudulent acts 

of City Federal employees. After investigating the RTC's claims, 

National Union and Gulf tendered the entire premiums paid for the 

insurance policies, plus interest, to the RTC on June 12th and 

26th, 1992, respectively, in an effort to rescind the insurance 

contracts. The RTC rejected the premium refunds. 

 On August 7, 1992, National Union and Gulf commenced 

the declaratory judgment action against the RTC, as Receiver of 

City Savings, asserting that National Union and Gulf had the 

right to rescind the insurance policies issued to CityFed. The 

RTC made a motion to dismiss the declaratory judgment action for 

lack of subject matter jurisdiction, and also filed a 

counterclaim. 

 The district court granted the RTC's motion to dismiss 

the declaratory judgment action. The district court held that 

under § 1821(d)(3) and (d)(13)(D) of FIRREA, it lacked subject 
7 

matter jurisdiction over the declaratory judgment action seeking 

rescission. The district court also held that under FIRREA, 

National Union and Gulf were jurisdictionally barred from raising 

their rescission theory as an affirmative defense to the 

counterclaim brought by the RTC against them. 

II. DISCUSSION 

A. APPELLATE JURISDICTION 

 We first address whether we have appellate 

jurisdiction over the order of the district court dismissing 

appellant's complaint for lack of subject matter jurisdiction. 

Because the RTC brought a counterclaim which has not been finally 

adjudicated, the district court's dismissal of National Union and 

Gulf's Complaint for Declaratory Judgment would not ordinarily be 

considered a "final judgment," and we would not ordinarily have 

appellate jurisdiction under 28 U.S.C. § 1291. However, pursuant 

to Fed. R. Civ. P. 54(b), the district court entered a final 

judgment dismissing National Union and Gulf's Complaint for 

Declaratory Judgment.0 We therefore have appellate jurisdiction 

 

0Rule 54(b) of the Federal Rules of Civil Procedure provides, in 

relevant part: 

When more than one claim for relief is presented in an 

action, whether as a claim, counterclaim, cross-claim, 

or third-party claim . . . the court may direct the 

entry of a final judgment as to one or more but fewer 

than all of the claims . . . only upon an express 

determination that there is no just reason for delay 

and upon an express direction for the entry of 

judgment. 

Fed. R. Civ. P. 54(b). Rule 54(b) may be used to grant final 

judgment status over a declaratory judgment action which is part 
8 

over the district court's dismissal of the declaratory judgment 

complaint. 28 U.S.C. § 1291. 

 The parties did not raise the question of whether we 

have appellate jurisdiction to review that portion of the 

district court's Order entered May 27, 1993 which barred National 

Union and Gulf from raising affirmative defenses to any 

counterclaims brought by the RTC. Since appellate jurisdiction 

cannot be waived or consented to by the parties, Carpenters 

Health & Welfare Fund of Phila. & Vicinity v. Kenneth R. Ambrose, 

Inc., 665 F.2d 466, 468 (3d Cir. 1981), we must determine whether 

we have jurisdiction to review the district court's holding 

concerning the bar against affirmative defenses by National Union 

and Gulf. 

 The district court certified the entire Order dated May 

27, 1993 as final under Fed. R. Civ. P. 54(b), including its 

holding that National Union and Gulf could not raise their 

rescission theory as an affirmative defense to the counterclaim 

brought by the RTC. However, simply because a district court 

certifies a matter under Rule 54(b) does not automatically result 

in proper appellate jurisdiction. We first review a Rule 54(b) 

 

of a multi-claim litigation, so long as the declaratory judgment 

aspect of the litigation has in fact been brought to final 

judgment. See, e.g., Heasley v. Belden & Blake Corp., 2 F.3d 

1249, 1253 n.4 (3d Cir. 1993); Granite State Ins. Co. v. 

Degerlia, 925 F.2d 189, 191 (7th Cir. 1991); Horn v. Transcon 

Lines, Inc., 898 F.2d 589, 594 (7th Cir. 1990). Thus, the term 

"claim" as used in Rule 54(b) must be construed broadly so as to 

include declaratory judgment actions. Such a broad construction 

of the term "claim" is consistent with common legal usage. For 

example, Black's Law Dictionary defines "claim," in part, as "[a] 

cause of action." Black's Law Dictionary 247 (6th ed. 1990). 
9 

certification to determine whether the matter being certified was 

actually "final," and in this determination we exercise plenary 

review. Gerardi v. Pelullo, 16 F.3d 1363, 1368 (3d Cir. 1994). 

"Then, if we conclude[] that the judgment[] [was] final, we . . . 

consider whether the district court abused its discretion in 

determining that [it was] ready for appeal taking into account 

judicial administrative interests as well as the equities 

involved." Id. (internal quotations, modifications and citation 

omitted). 

 As to the first inquiry, the reason for us inquiring 

into whether a matter certified under Rule 54(b) is actually 

"final" is because Rule 54(b) allows certification of finality in 

situations where a claim or a party's interest is adjudicated to 

finality, but the claim or party happens to be a part of a 

continuing litigation presenting multiple claims or multiple 

parties. Rule 54(b) does not allow a claim which when viewed 

separately is not final to be considered final. In other words, 

Rule 54(b) only parses out final claims or parties whose claims 

are final from a multiclaim or multiparty litigation--it does not 

operate to magically deem a non-final claim "final." See id.

 We need only address the first inquiry, whether the 

Order barring National Union and Gulf from raising the 

affirmative defense of rescission was final. Clearly, it was 

not. The affirmative defense of rescission would have been a 

defense to the counterclaim brought by the RTC against National 

Union and Gulf. That counterclaim has not been finally 

adjudicated, and therefore any orders concerning the 
10 

counterclaim, including the district court's order that the 

affirmative defense of rescission could not be raised as an 

affirmative defense to the counterclaim, are not final orders. 

Thus, the portion of the Order barring National Union and Gulf 

from raising rescission as an affirmative defense, not being a 

final order, was not properly certified by the district court 

under Rule 54(b). 

 We nevertheless conclude that under the doctrine of 

pendent appellate jurisdiction, we have appellate jurisdiction to 

review the district court's Order which held that National Union 

and Gulf are barred from raising the affirmative defense of 

rescission in the counterclaim brought by the RTC. We have 

stated that "pendent appellate jurisdiction over an otherwise 

unappealable order is available only to the extent necessary to 

ensure meaningful review of an appealable order." Hoxworth v. 

Blinder, Robinson & Co., 903 F.2d 186, 209 (3d Cir. 1990).0 In 

 

0Our statement in Hoxworth was made in reliance on our holding in 

Kershner v. Mazurkiewicz, 670 F.2d 440 (3d Cir. 1982) (in banc). 

In Kershner we held "that a pendent class certification order is 

not appealable under section 1292(a)(1) unless the preliminary 

injunction issue cannot properly be decided without reference to 

the class certification question." Id. at 449. 

 In Hoxworth, we did not discuss the relevance of a decision 

in which we seemed to broaden the availability of pendent 

appellate jurisdiction. In United States v. Spears, 859 F.2d 284 

(3d Cir. 1988), we held that "[o]nce we have taken jurisdiction 

over one issue in a case, we may, in our discretion, consider 

otherwise nonappealable issues in the case as well, where there 

is sufficient overlap in the facts relevant to the appealable and 

nonappealable issues to warrant our exercising plenary authority 

over the appeal." Id. at 287 (internal quotations and brackets 

omitted). We went on in Spears to apparently limit the 

restrictive holding of Kershner to the preliminary injunction 

context. Id. at 288. 
11 

this case, in order for us to meaningfully determine whether 

National Union and Gulf may, consistent with due process, be 

barred from bringing their declaratory judgment action, it is 

necessary for us to address whether they would be able to raise 

rescission as a defense or affirmative defense in a proceeding 

against them. See infra typescript at pp. 26-34. Therefore, we 

properly have appellate jurisdiction over the order barring 

National Union and Gulf from raising rescission as an affirmative 

defense. 

B. ANALYSIS OF § 1821(d)(13)(D) 

 The issue presented is whether the district court 

properly determined that under FIRREA, 12 U.S.C. § 1821(d)(3) and 

(d)(13)(D), the district court lacked subject matter jurisdiction 

over National Union and Gulf's declaratory judgment action 

seeking rescission of the insurance policies in question. 

Furthermore, we must determine whether the district court 

correctly determined that under FIRREA, National Union and Gulf 

are barred from raising rescission as an affirmative defense to 

the RTC's counterclaim. The issue of whether the district court 

correctly interpreted § 1821(d)(3) and (d)(13)(D) of FIRREA 

concerning subject matter jurisdiction is a legal question over 

which we exercise plenary review. Cf. Federal Ins. Co. v. 

 

 In this case, we meet the more stringent test for the 

availability of pendent appellate jurisdiction as set forth in 

Kershner and Hoxworth. We therefore do not address the more 

liberal standard of pendent appellate jurisdiction as articulated 

in Spears. 
12 

Richard I. Rubin & Co., 12 F.3d 1270, 1282 (3d Cir. 1993), cert. 

denied, ___ U.S. ___, ___ S. Ct. ___ (U.S. May 23, 1994). 

 Section 1821(d)(13)(D) of FIRREA contains a 

jurisdictional bar which is central to this appeal. That section 

provides: 

 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. 

12 U.S.C. § 1821(d)(13)(D). The "[e]xcept as otherwise provided 

in this subsection" language quoted above refers to subsection 

(d) of § 1821. E.g., Marquis v. FDIC, 965 F.2d 1148, 1153 & n.5 

(1st Cir. 1992). "Subsection (d) . . . provides for de novo

district court jurisdiction only after the filing of a claim 

with, and the initial processing of that claim by, RTC pursuant 

to § 1821(d)(5) and (6)(A)." Rosa v. RTC, 938 F.2d 383, 391-92 

(3d Cir.), cert. denied, ___ U.S. ___, 112 S. Ct. 582 (1991).0

Thus, we have characterized the jurisdictional restriction 

contained 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 

 

0The RTC as receiver is subject to the same provisions of FIRREA 

as the FDIC, with some exceptions. 12 U.S.C. §1441a(b)(4)-(5). 
13 

administrative scheme for adjudicating claims detailed in 

§1821(d). Rosa, 938 F.2d at 391.0

 "When the RTC is appointed as receiver of a failed 

thrift institution, the RTC must promptly publish a notice to the 

institution's creditors to present their claims and proof by a 

specified date, which may not be less than 90 days after 

publication. 12 U.S.C. § 1821(d)(3)(B)(i). . . . In addition, 

the RTC must mail a similar notice to any creditor shown on the 

institution's books. 12 U.S.C. § 1821(d)(3)(C)." Althouse v. 

RTC, 969 F.2d 1544, 1545 (3d Cir. 1992). 

 The RTC provided such notice to National Union. On 

December 8, 1989, the RTC mailed to National Union and Gulf a 

letter of notification of the appointment of the RTC as Receiver. 

The RTC also notified National Union that it was required to 

submit to the RTC all claims by March 17, 1990.0 National Union 

 

0We have previously described in detail the administrative scheme 

for adjudicating claims under FIRREA, 12 U.S.C. § 1821(d). 

Althouse v. RTC, 969 F.2d 1544, 1545-46 (3d Cir. 1992); FDIC v. 

Shain, Schaffer & Rafanello, 944 F.2d 129, 131-32 (3d Cir. 1991). 

0Although Gulf received notice that the RTC was appointed 

Receiver, Gulf never received a notice in the mail concerning the 

March 17, 1990 bar date and the requirement that any claims 

against the failed institution had to be submitted to the RTC by 

that date. Gulf contends that given these facts, it did not 

receive proper notice under § 1821(d)(3)(B), and that therefore 

it cannot be bound by the requirement to exhaust the 

administrative remedies provided for under FIRREA. In light of 

our conclusion that § 1821(d)(13)(D) does not bar Gulf from 

raising rescission as an affirmative defense, we need not address 

the issue of proper notice as to the affirmative defense. As for 

our conclusion that Gulf's declaratory judgment action is 

jurisdictionally barred, we explain below why depriving Gulf of 

the right to bring a declaratory judgment action comports with 

due process, even assuming that Gulf did not receive proper 

notice. 
14 

and Gulf did not submit by March 17, 1990 any claim or assertion 

to the RTC that they had a right to rescind the insurance 

policies in question. Accordingly, we conclude that neither 

National Union nor Gulf exhausted the administrative remedies 

provided for under FIRREA. Thus, unless the jurisdictional bar 

contained in § 1821(d)(13)(D) is inapplicable, the district court 

lacked jurisdiction over National Union and Gulf's declaratory 

judgment action for rescission and their affirmative defenses of 

rescission. 

 We must carefully examine the jurisdictional bar 

contained in § 1821(d)(13)(D) to determine whether it deprived 

the district court of jurisdiction to hear National Union and 

Gulf's declaratory judgment action for rescission and their 

affirmative defenses of rescission. In so doing, we keep in mind 

cardinal rules of statutory interpretation: "The starting point 

for interpretation of a statute is the language of the statute 

itself." Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 

827, ___, 110 S. Ct. 1570, 1575 (1990) (internal quotations and 

citation omitted). "The plain meaning of legislation should be 

conclusive, except in the rare cases in which the literal 

application of a statute will produce a result demonstrably at 

odds with the intentions of its drafters." United States v. Ron 

Pair Enter. Inc., 489 U.S. 235, 242, 109 S. Ct. 1026, 1031 (1989) 

(internal quotations, brackets and citation omitted). 

1. Whether the Insurance Policies Are "Assets"

 Under § 1821(d)(13)(D)
15 

 As a preliminary matter, we consider whether the 

insurance polices issued by National Union and Gulf to CityFed 

and its subsidiaries are "assets" of City Savings as that term is 

used in § 1821(d)(13)(D)(i). Section 1821(d)(13)(D) provides 

that "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 . . . ." 

§1821(d)(13)(D)(i) (emphasis added). If the insurance policies 

are not assets of the bank, then National Union and Gulf's 

declaratory judgment action for and affirmative defenses of 

rescission of those insurance policies would not be barred under 

§ 1821(d)(13)(D). 

 FIRREA does not provide a definition of "assets" as 

that term is used specifically in § 1821(d)(13)(D)(i). In the 

absence of a specific definition, we refer to the definition of 

the term "assets" in common legal usage: 

Property of all kinds, real and personal, tangible and 

intangible . . . . The entire property of a person, 

association, corporation, or estate that is applicable 

or subject to the payment of his or her or its debts. 

Black's Law Dictionary 117 (6th ed. 1990). Insurance policies 

which a bank has purchased and under which it is an insured falls 

neatly within this definition of assets. Insurance policies 

obviously are important property interests of individuals and 

economic entities. Furthermore, we believe that business people 

consider an insurance policy to be an asset of the named insured, 

as the term "asset" is commonly used in the business world. 
16 

Finally, reported court decisions have assumed that insurance 

policies are assets of institutions which are holders of the 

policies. See, e.g., FDIC v. Aetna Casualty & Surety Co., 947 

F.2d 196, 199 (6th Cir. 1991); A.H. Robins Co. v. Piccinin, 788 

F.2d 994, 1001-02 & n.10 (4th Cir.), cert. denied, 479 U.S. 876, 

107 S. Ct. 251 (1986); FDIC v. Gulf Life Ins. Co., 737 F.2d 1513, 

1514-20 (11th Cir. 1984); Samuels v. Acme Market, 845 F. Supp. 

292, 294 (E.D. Pa. 1994); Holloway v. New Jersey, 566 A.2d 1177, 

1180 (N.J. Super. Ct. Law Div. 1989). 

 Whether City Savings will ultimately be entitled to 

collect under the insurance policies is not relevant to the 

threshold question of whether the insurance policies issued to 

CityFed and its subsidiaries are assets of the banks. An 

insurance policy is of value to the owner and named insured of 

the policy, even though it is possible that the owner and named 

insured will ultimately be found not to be entitled to a 

particular recovery under the policy. For all of the above 

reasons, we conclude that the plain meaning of the term "assets" 

contained in § 1821(d)(13)(D)(i) includes the insurance policies 

issued by National Union and Gulf to CityFed and its 

subsidiaries. 

 Having concluded that the insurance polices are assets 

of City Savings, we must examine the jurisdictional bar contained 

in § 1821(d)(13)(D) to determine whether it deprived the district 

court of jurisdiction to hear (1) National Union and Gulf's 

declaratory judgment action for rescission of the insurance 
17 

policies and (2) their affirmative defenses of rescission of the 

insurance policies. 

2. Application of Section 1821(d)(13)(D)

 to the Declaratory Judgment Action 

 We first address the jurisdictional bar as it applies 

to the declaratory judgment action. The language of 

§1821(d)(13)(D) appears to include a bar to declaratory judgment 

actions: "[N]o 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 

. . . ." § 1821(d)(13)(D)(i) (emphasis added). The plain 

meaning of the emphasized words quoted immediately above includes 

declaratory judgment actions: a declaratory judgment action is an 

"action seeking a determination of rights." Black's Law 

Dictionary defines "declaratory judgment," in relevant part, as 

follows: 

Statutory . . . remedy for the determination of a 

justiciable controversy where the plaintiff is in doubt 

as to his [or her] legal rights. A binding 

adjudication of the rights and status of litigants even 

though no consequential relief is awarded. 

Black's Law Dictionary 409 (6th ed. 1990). The same dictionary 

defines "action," in part, as "a lawsuit brought in a court; a 

formal complaint within the jurisdiction of a court of law." Id.

at 28. When one initiates a declaratory judgment, one brings a 

lawsuit in court and files a complaint. National Union and Gulf 

did exactly that in this case. An action for declaratory 
18 

judgment is plainly an "action." 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. Therefore, 

unless it appears that interpreting § 1821(d)(13)(D) would 

produce a result "demonstrably at odds" with the general purpose 

of FIRREA, Ron Pair Enter., 489 U.S. at 242, 109 S. Ct. at 1031, 

we will conclude that declaratory judgment actions are barred by 

§ 1821(d)(13)(D). 

 An argument can be made that interpreting 

§1821(d)(13)(D) to include a bar to National Union and Gulf's 

declaratory judgment action produces an odd result when 

§1821(d)(13)(D) is not viewed in isolation, but with reference to 

the administrative claims procedure of FIRREA set out in 

§1821(d)(3), (d)(5) and (d)(6). This argument begins by pointing 

out that National Union and Gulf's declaratory judgment action is 

not a creditor's claim. Since National Union and Gulf will owe 

the RTC money if it is determined that the RTC may collect under 

the insurance policies, they are potential debtors, and their 

action seeking a declaration that the insurance policies are 

rescinded is therefore a potential debtor's claim, not a 

creditor's claim. The argument continues as follows: Section 

1821(d)(13)(D) acts as a jurisdictional bar to claims, but there 

is an exception to this jurisdictional bar in that claims which 

have been properly submitted through the administrative claims 

procedure may be tried de novo in federal court. §1821(d)(6)(A); 

Rosa, 938 F.2d at 391-92. Therefore, it is contended that since 
19 

the jurisdictional bar of § 1821(d)(13)(D) contains an exception 

for claims submitted through the administrative claims procedure, 

§ 1821(d)(13)(D) must be read and interpreted with reference to 

the administrative claims procedure contained in § 1821(d)(3), 

(d)(5) and (d)(6). Under 1821(d)'s administrative claims 

procedure, creditors, not debtors, are given notice to file 

claims with the receiver. §1821(d)(3)(B),(C). After a 

determination has been made with regard to a claim that has been 

submitted, the claimant may request administrative review of the 

claim or file suit in federal court. § 1821(d)(6)(A). Since 

under § 1821(d)(3)(B), (C), only creditors are given notice to 

submit claims to the RTC, the argument goes, the jurisdictional 

bar contained in §1821(d)(13)(D) could not have been intended to 

deprive jurisdiction for actions brought by non-creditors. In 

other words, the argument concludes, only holders of creditors' 

claims, for whom the statute provides notice and who may present 

their claims in the administrative claims procedure, are meant to 

be jurisdictionally barred by § 1821(d)(13)(D) if the claimant 

has not in fact exhausted the administrative remedies. 

 That § 1821(d)(13)(D)'s ouster of jurisdiction should 

be limited to suits otherwise governed by the administrative 

claims procedure set out in § 1821(d) is a position that has been 

advanced, or at least suggested, by several courts.0 National 

 

0Cf. Homeland Stores, Inc. v. RTC, 17 F.3d 1269, 1274 & n.5 (10th 

Cir. 1994); RTC v. Midwest Fed. Sav. Bank of Minot, 4 F.3d 1490, 

1496-97 (9th Cir. 1993); National Trust for Historic Preservation 

v. FDIC, 995 F.2d 238, 240 (D.C. Cir. 1993), vacated, 5 F.3d 567 

(D.C. Cir. 1993), reinstated in relevant part, 21 F.3d 469 (D.C. 

Cir. 1994); FDIC v. diStefano, 839 F. Supp. 110, 115-16 (D.R.I. 
20 

Union and Gulf advocate a version of that position in this 

appeal. They accurately point out that their declaratory 

judgment action is not a creditor's claim and therefore their 

action is not the type of "claim" for which FIRREA's 

administrative claims procedure was established. Furthermore, 

Gulf was never put on notice that it had to submit claims to the 

RTC by the March 17, 1990 bar date. Therefore, Gulf contends 

that it especially cannot be held to have been bound by the 

requirement to exhaust the administrative claims procedure as a 

prerequisite to federal court jurisdiction. Assuming that 

exhaustion of administrative claims procedure was not applicable 

to their action for declaratory judgment, National Union and Gulf 

conclude that the jurisdictional bar cannot apply. 

 However, we reject the suggestion that the broad bar to 

jurisdiction indicated by the plain language of § 1821(d)(13)(D) 

should be strained and limited by referring to the administrative 

claims procedure of § 1821(d)(3), (d)(5) and (d)(6). Although 

there is surely an interrelationship between the jurisdictional 

bar contained in § 1821(d)(13)(D) and the administrative claims 

procedure, this does not mean that the class of actions addressed 

by the jurisdictional bar is necessarily identical to the class 

of actions addressed by the administrative claims procedure. As 

explained below, even assuming that § 1821(d)(13)(D)'s ouster of 

jurisdiction affects actions not otherwise governed by the 

 

1993); In re Scott, 157 B.R. 297, 308-320 (Bankr. W.D. Tex. 

1993), vacated, 162 B.R. 1004 (Bankr. W.D. Tex. 1994); In re 

Continental Fin. Resources Inc., 154 B.R. 385, 387-88 (D. Mass. 

1993); In re Purcell, 150 B.R. 111, 113-16 (D. Vt. 1993). 
21 

administrative claims procedure, such a regime would not be at 

odds with the intentions of Congress in passing FIRREA. 

 The language barring jurisdiction over "any action 

seeking a determination of rights" contained in § 1821(d)(13)(D) 

would appear to cover a larger class of actions than does the 

language contained in § 1821(d)(3), (d)(5), and (d)(6), 

concerning the administrative claims procedure. For example, in 

the administrative claims procedure portion of FIRREA, 

§1821(d)(3)(B) and (C) require notice to be given only to claims 

of creditors, and § 1821(d)(5) and (d)(6) refer only to "any 

claim"; in contrast, the jurisdictional bar of § 1821(d)(13)(D) 

refers to "any action seeking a determination of rights," and 

does not limit such actions to actions concerning creditors' 

claims. In making this comparison, a definition of "claim" and 

"creditor" would be useful. Unfortunately, neither the text of 

FIRREA nor its legislative history provide an explicit definition 

of the term "claim" or "creditor" as they are used in FIRREA.0 In 

light of FIRREA's lack of definitions of these terms, the Court 

of Appeals for the District of Columbia Circuit has suggested 

that the Bankruptcy Code is a promising source to turn to in 

defining "claim" and "creditor" as those terms are used in 

FIRREA. Office & Professional Employees Int'l Union, Local 2 v. 

FDIC, 962 F.2d 63, 68 (D.C. Cir. 1992). Because the 

administrative claims procedure of FIRREA contained in § 1821 

 

0See generally Pub. L. No. 101-73, 103 Stat. 183 (1989); H.R. 

Rep. No. 101-54(I), 101st Cong., 1st Sess. 291 (1989), reprinted

in 1989 U.S.C.C.A.N. 86. 
22 

(d)(3), (d)(5) and (d)(6) addresses a debtor-creditor 

relationship, we agree with the D.C. Circuit in this regard, and 

in the absence of more specific legislative authority, in 

interpreting FIRREA we will apply the definition of "claim" and 

"creditor" contained in the Bankruptcy Code, 11 U.S.C. § 101(5), 

(10)(A).0 The Bankruptcy Code defines "claim" as follows: 

"claim" means-- 

(A) right to payment, whether or not such right is 

reduced to judgment, liquidated, unliquidated, fixed, 

contingent, matured, unmatured, disputed, undisputed, 

legal, equitable, secured, or unsecured; or 

(B) right to an equitable remedy for breach of 

performance if such breach gives rise to a right to 

payment, whether or not such right to an equitable 

remedy is reduced to judgment, fixed, contingent, 

matured, unmatured, disputed, undisputed, secured, or 

unsecured[.] 

11 U.S.C. § 101(5) (emphasis added). The term "creditor" is 

defined in relevant part as an "entity that has a claim against 

the debtor." § 101(10)(A). Hence a "claim" or a "creditor's 

claim" is essentially an action asserting a right to payment. In 

 

0We note that we interpret the term "claim" as used in Fed. R. 

Civ. P. 54(b) more broadly than we interpret that term as used in 

FIRREA. See supra note 3. The reason for this is that Rule 

54(b) of the Federal Rules of Civil Procedure is a procedural 

rule of general applicability, while the administrative claims 

procedure of FIRREA addresses the processing of claims in the 

particular context of insolvent thrift institutions. Because we 

borrow the definition of "claim" and "creditor" from the 

Bankruptcy Code, 11 U.S.C. § 101(5), (10), we acknowledge that in 

future cases under FIRREA, circumstances may justify straying 

from the Bankruptcy Code's definition of those terms. For 

instance, if the language of FIRREA or the legislative history of 

FIRREA spoke directly to a factual scenario, such direct 

authority would presumably trump any reliance on the Bankruptcy 

Code. 
23 

contrast, the phrase "any action"0 does not contain any 

limitations, and plainly denotes any affirmative action taken by 

a party to commence any suit in any court, whether or not such an 

action asserts a right to payment, and whether or not such an 

action is brought by a creditor or a debtor. 

 With these definitions in mind, and for the purposes of 

argument, we will assume that the terms "claims" and 

"creditors['] . . . claims" as used in § 1821(d)(3) denote a 

smaller class of actions than does the "any action seeking a 

determination of rights" language of § 1821(d)(13)(D)(i).0 For 

 

0Black's Law Dictionary defines "action", in relevant part, as "a 

lawsuit brought in a court." Black's Law Dictionary 28 (6th ed. 

1990). 

0We make this assumption only for the purpose of argument. We 

leave for another day the issue of whether § 1821(d)(3), (d)(5) 

and (d)(6) requires or permits the RTC to consider claims not 

asserting a right to payment, such as National Union and Gulf's 

action for declaratory judgment of rescission, in the 

administrative claims procedure of FIRREA. Moreover, at least 

one court of appeals has indicated a willingness to defer to the 

receiver when it has interpreted the administrative claims 

procedure broadly to allow the receiver to make determinations 

over a larger class of claims than the plain language of FIRREA 

might suggest. Heno v. FDIC, 20 F.3d 1204, 1208-10 (1st Cir. 

1994). If the RTC accepted a declaratory judgment action in its 

administrative claims procedure and made a determination 

concerning such an action, it would appear that the exception to 

the jurisdictional bar contained in § 1821(d)(13)(D) would apply. 

As noted above, in this case neither National Union nor Gulf 

submitted the rescission theory through the administrative claims 

procedure by the March 17, 1990 bar date, so we need not address 

this issue. 

 In Rosa v. RTC, 938 F.2d 383 (3d Cir.), cert. denied, ___ 

U.S. ___, 112 S. Ct. 582 (1991), we indicated that there is an 

interrelationship between the jurisdictional bar contained in 

§1821(d)(13)(D) and the administrative claims procedure contained 

in § 1821(d)(3), (d)(5) and (d)(6) by characterizing the 

jurisdictional bar as a "statutory exhaustion requirement." 938 

F.2d at 391. Surely that characterization is accurate as to a 

"claim," i.e., an action asserting a right to payment. In the 
24 

instance, under these definitions, National Union and Gulf's 

declaratory judgment action for rescission of insurance policies 

which they issued would not be a "claim" addressed in the 

administrative claims procedure, but would be an "action" 

jurisdictionally barred by § 1821(d)(13)(D). Yet we do not see 

why a jurisdictional bar which might cover a larger class of 

actions than would be addressed by the administrative claims 

procedure would be inconsistent with the general goals of 

Congress in passing FIRREA. One of the important goals of FIRREA 

is to enable the receiver to efficiently determine creditors' 

claims and preserve assets of the failed institution without 

being burdened by complex and costly litigation.0 With this goal 

in mind, it would be perfectly consistent for Congress to provide 

a scheme wherein a holder of a claim for payment from the assets 

 

portion of the opinion characterizing the jurisdictional bar as 

an exhaustion requirement, the Rosa court addressed only 

"claims," as opposed to the "any action" language contained in 

§1821(d)(13)(D)(i), stating that "[s]ubsection (d) of § 1821 

provides for de novo district court jurisdiction only after the 

filing of a claim with, and the initial processing of that claim

by, RTC." 938 F.2d at 391-92 (emphasis added). But Rosa did not 

address or decide the interesting issue which is still an open 

question in this court: whether the class of actions addressed by 

the administrative claims procedure is smaller than the class of 

actions addressed by the jurisdictional bar. If it were decided 

that the administrative claims procedure covered a smaller class 

of actions than addressed by the jurisdictional bar, then for 

those actions addressed by the jurisdictional bar but not 

addressed in the administrative claims procedure the 

jurisdictional bar would not be an exhaustion requirement; rather 

the jurisdictional bar would be an independent and outright bar 

of jurisdiction. 

0"The primary purpose underlying FIRREA's exhaustion scheme is to 

allow RTC to perform its statutory function of promptly 

determining claims so as to quickly and efficiently resolve 

claims against a failed institution without resorting to 

litigation." Rosa, 938 F.2d at 396. 
25 

of the failed institution would be provided an administrative 

remedy and de novo court review, while the holder of a claim not 

asserting a right of payment and who wanted only a declaration of 

rights against the failed bank would be provided no 

administrative remedy or federal court access. 

 The rationale for this treatment of actions which do 

not seek payment from the assets of the failed institution would 

be that if the RTC leaves the party wishing to bring an action 

not seeking payment alone, that party should also leave the RTC 

alone. Accordingly, a party wishing to bring an action not 

seeking payment cannot summon the RTC into court to adjudicate a 

declaration of rights against the RTC. Rather, the party wishing 

to bring an action not for payment must instead wait and see if 

the RTC will sue her. If it does, then she will be able to 

defend herself against the RTC's action at that time. According 

to this rationale, the crisis facing failed banks is so extreme 

that the receiver is to focus on preserving the failed bank's 

assets, without the distraction and substantial cost of defending 

itself in court against declaratory judgment actions which do not 

seek a right to payment from the failed institution's assets. 

Indeed, since the RTC might never choose to sue the party wishing 

to obtain a declaratory judgment that it is not liable to the 

RTC, it may turn out that such declaratory judgment relief will 

be unnecessary. 

 It may be objected that such a scheme would be unfair 

to a party wishing to obtain a declaration of rights vis-a-vis 

the RTC. By stripping the party of its right to obtain a 
26 

declaratory judgment, the party must live indefinitely with the 

threat that litigation might at any time be commenced against it 

by the RTC. But FIRREA was in fact passed to give the receiver 

extraordinary powers. We acknowledge that the ability to obtain 

a declaratory judgment is a valuable right in that it enables a 

party to ascertain its rights and obligations sooner than would 

be possible if the party were forced to await a lawsuit by an 

opposing party. However, simply because the right to bring a 

declaratory judgment action is valuable does not mean that 

Congress cannot take it away consistent with due process. 

Congress apparently has determined that the societal benefits 

resulting from the right to bring actions for a determination of 

rights, including declaratory judgments, are outweighed by the 

societal benefits resulting from the RTC being able to avoid 

costly and perhaps unnecessary litigation.0 If the crisis facing 

failed institutions is so severe that Congress decides that it 

does not want the RTC spending limited time and resources 

processing declaratory judgment actions in its administrative 

claims procedure or defending declaratory judgment actions in 

court, it has the power to act accordingly. We believe that the 

broad jurisdictional bar contained in the plain language of 

§1821(d)(D)(13) reveals that Congress did in fact make this 

determination. 

 Congress could easily have limited § 1821(d)(13)(D)'s 

jurisdictional bar to "claims," thereby limiting the 

 

0See supra note 13. 
27 

jurisdictional bar to the same class of actions dealt with in the 

administrative claims procedure. But it did not. The 

jurisdictional bar goes further and, in addition to barring "any 

claim . . . for payment," § 1821(d)(13)(D)(i), it contains a bar 

against "any action seeking a determination of rights with 

respect to [] the assets of any depository institution for which 

the Corporation has been appointed receiver," id. "In construing 

a statute we are obliged to give effect, if possible, to every 

word Congress used," Reiter v. Sonotone Corp., 442 U.S. 330, 

339, 99 S. Ct. 2326, 2331 (1979), and without good reason, we 

will not assume that a portion of a statute is superfluous, void 

or insignificant, see 2A Norman J. Singer, Statutes and Statutory 

Construction § 46.06, at 119-20 (5th ed. 1992). 

 We therefore assume Congress meant what it said when it 

included a jurisdictional bar to "any action." The term "any 

action" includes actions by debtors as well as creditors, and is 

not limited to actions asserting a right to payment. "Absent a 

clearly expressed legislative intention to the contrary, [the 

statutory] language must ordinarily be regarded as conclusive." 

Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 

108, 100 S. Ct. 2051, 2056 (1980). Because a jurisdictional bar 

to declaratory judgment actions is consistent with Congress' 

intention in passing FIRREA, we give effect to the plain language 

of § 1821(d)(13)(D) and hold that it bars National Union and 

Gulf's declaratory judgment action, regardless of whether 

National Union and Gulf are characterized as creditors or 
28 

debtors, and despite the fact that National Union and Gulf do not 

assert a right to payment. 

 It could be argued that if Congress did in fact intend 

that actions seeking a determination of rights but which do not 

seek a right to payment, such as National Union and Gulf's 

declaratory judgment action for rescission, would be 

jurisdictionally barred from both administrative proceedings and 

courts of law, that this complete bar to administrative and court 

access would result in an unconstitutional deprivation of due 

process under the Fifth Amendment. If this objection were valid, 

we might eschew interpreting the "any action seeking a 

determination of rights" language of § 1821(d)(13)(D) so as to 

cover a larger class of actions than might be covered under the 

administrative claims procedure of § 1821(d)(3), (d)(5) and 

(d)(6). This is because "where an otherwise acceptable 

construction of a statute would raise serious constitutional 

problems, the [c]ourt will construe the statute to avoid such 

problems unless such construction is plainly contrary to the 

intent of Congress." Edward J. DeBartolo Corp. v. Florida Gulf 

Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575, 108 S. 

Ct. 1392, 1397 (1988). 

 However, we do not believe that barring jurisdiction 

over declaratory judgment actions not seeking a right to payment 

in both administrative proceedings and courts of law would 

violate the Due Process Clause. This is because it appears that 

whatever rights a party wishes to have announced in a declaratory 

judgment action may later be adjudicated in the administrative 
29 

claims procedure or in an action with the RTC. Thus, the party 

stripped of her right to bring a declaratory judgment action gets 

her chance for a hearing--her "opportunity to be heard"0--even 

though her hearing may be delayed. For instance, if the 

inability to have a court declare rights in advance leads to the 

RTC violating a party's rights causing actual damages, then that 

party will have a "claim"--a right to payment--which may be 

submitted in the administrative claims procedure.0 That this 

 

0Logan v. Zimmerman Brush Co., 455 U.S. 422, 429-30, 102 S. Ct. 

1148, 1154 (1982) (internal quotations and citation omitted). 

0We recognize that as a result of our holding, the following 

problem could arise: The RTC, having taken over as receiver, 

could subsequent to receivership cause injury to a party, giving 

rise to a cause of action. By the time the cause of action 

arose, however, the bar date by which time creditors were put on 

notice to bring claims might have passed. In such a situation, 

the RTC could argue that the claim based on the cause of action 

cannot be submitted to the administrative claims procedure 

because the bar date has passed. At the same time, the RTC could 

invoke the jurisdictional bar contained in § 1821(d)(13)(D) and 

argue that no court has jurisdiction over the claim because the 

administrative claims procedure has not been exhausted. In 

essence, this would forever deprive the claimant of a hearing. It 

appears that this result would violate the Due Process Clause of 

the Fifth Amendment. Cf. Coit Independence Joint Venture v. 

FSLIC, 489 U.S. 561, 583-87, 109 S. Ct. 1361, 1374-76 (1989); 

Logan v. Zimmerman Brush Co., 455 U.S. 422, 428-31, 102 S. Ct. 

1148, 1154 (1982); Boddie v. Connecticut, 401 U.S. 371, 375-80; 

91 S. Ct. 780, 784-87 (1971). 

 If a party were never given a reasonable opportunity to 

submit an action seeking a right to payment to the administrative 

claims procedure (and the concomitant right to judicial review), 

then the jurisdictional bar contained in § 1821(d)(13)(D) would 

result in an unconstitutional deprivation of due process as 

applied to that party. In other words, when a party presses an 

action not merely for a declaration of rights, but rather one 

seeking a right to payment, the teachings of Coit, Logan, and 

Boddie suggest that a complete bar of jurisdiction, in both 

administrative proceedings and courts of law, would as applied to 

that party constitute a deprivation of property without due 

process of law. 
30 

delay in obtaining relief does not violate the Due Process Clause 

is made clear from the teaching of the Supreme Court in Bob Jones 

University v. Simon, 416 U.S. 725, 94 S. Ct. 2038 (1974). 

 In Bob Jones University, the Supreme Court addressed a 

due process challenge to the Anti-Injunction Act of the Internal 

Revenue Code, 26 U.S.C. § 7421(a). The Anti-Injunction Act 

provides in part that "no suit for the purpose of restraining the 

assessment or collection of any tax shall be maintained in any 

court." Id. The Supreme Court held that § 7421(a) barred suit 

by Bob Jones University to enjoin the Internal Revenue Service 

("IRS") from revoking a favorable ruling letter concerning taxdeductible contributions which the IRS had previously issued. 416 

U.S. at 727-50, 94 S. Ct. 2041-52. The University argued that by 

barring suit for injunctive relief, it would either be forced to 

await assessment of taxes before being able to challenge the 

assessed taxes in administrative proceedings, or else it would 

have to pay income taxes and commence a refund proceeding. Id.

at 746-48, 94 S. Ct. at 2050-51. This delay in adjudicating 

whether the ruling letter should be revoked or not would 

allegedly cause serious financial harm to the University because 

revocation of the ruling letter would result in the loss of many 

donations from contributors who depend on tax deductible status 

 

 It therefore appears that if a party has not been given 

reasonable notice and an opportunity to be heard concerning an 

action for a right to payment in the administrative claims 

procedure of FIRREA, the jurisdictional bar contained in 

§1821(d)(13)(D) could not constitutionally apply to that party, 

and a court would have jurisdiction over that party's claim. See 

the discussion of this issue infra typescript at 32-37 and infra

note 22. 
31 

when making those contributions. The University contended that 

such serious financial hardship resulting from the jurisdictional 

bar resulted in a deprivation of due process. 

 The Supreme Court rejected the due process challenge: 

 This is not a case in which an aggrieved party has 

no access at all to judicial review. Were that true, 

our conclusion might well be different. . . . 

[Petitioner] may . . . petition the Tax Court to review 

the assessment of income taxes. Alternatively, 

petitioner may pay income taxes, . . . exhaust the 

Service's internal refund procedures, and then bring 

suit for a refund. These review procedures offer 

petitioner a full, albeit delayed, opportunity to 

litigate the legality of the Service's revocation of 

tax-exempt status . . . . 

 We do not say that these avenues of review are the 

best that can be devised. They present serious 

problems of delay, during which the flow of donations 

to an organization will be impaired and in some cases 

perhaps even terminated. . . . [A]lthough the 

congressional restriction to postenforcement review may 

place an organization claiming tax-exempt status in a 

precarious financial position, the problems presented 

do not rise to the level of constitutional infirmities, 

in light of the powerful governmental interests in 

protecting the administration of the tax system from 

premature judicial interference. 

Id. (emphasis added). Thus, even assuming that the 

jurisdictional bar contained in the Anti-Injunction Act would 

cause the University to suffer a delay in bringing its action, 

which delay in itself would result in substantial economic 

injury, the Supreme Court rejected the due process challenge to 

the limitation on court jurisdiction. 

 The holding in Bob Jones University indicates that no 

viable due process challenge can be made to the jurisdictional 

limitation contained in § 1821(d)(13)(D) as applied to National 

Union and Gulf's declaratory judgment action. Because National 
32 

Union and Gulf, as explained below, will have an opportunity to 

raise their right to rescission as an affirmative defense to the 

RTC's counterclaim, they too will have a full, although delayed, 

opportunity to litigate the rescission issue.0 In light of the 

important government interests in addressing the crisis of 

insolvent thrift institutions, even if declaratory judgment 

actions not asserting a right to payment were completely 

jurisdictionally barred from the administrative claims procedure 

and courts of law, this would not present a due process 

violation. In contrast, where an action is not merely 

declaratory in nature, but rather asserts a right to payment, a 

complete bar to such a right-to-payment action in administrative 

proceedings and in courts of law would appear to be an 

unconstitutional deprivation of due process, since the holder of 

the right to payment would never have an opportunity to be heard 

concerning property already allegedly owed her. See, e.g., id.; 

see also Coit Independence Joint Venture v. FSLIC, 489 U.S. 561, 

583-87, 109 S. Ct. 1361, 1374-76 (1989); Logan v. Zimmerman Brush 

Co., 455 U.S. 422, 429-30, 102 S. Ct. 1148, 1154 (1982); Mathews 

v. Eldridge, 424 U.S. 319, 332-49, 96 S. Ct. 893, 901-10 (1976); 

supra note 16. Cf. Lawrence Gene Sager, Foreword: Constitutional 

 

0Although Bob Jones University dealt with injunctive rather than 

declaratory relief, we find its holding to be authoritative as to 

actions concerning declaratory relief. This is especially 

because in another setting the Supreme Court itself has 

recognized that "there is little practical difference between 

injunctive and declaratory relief." California v. Grace Brethren 

Church, 457 U.S. 393, 408, 102 S. Ct. 2498, 2508 (1982). 
33 

Limitations on Congress' Authority to Regulate the Jurisdiction 

of the Federal Courts, 95 Harv. L. Rev. 17, 69-74 (1981). 

 Finally, we note that if a complete jurisdictional bar 

to actions not seeking a right to payment were deemed a violation 

of the Due Process Clause, then it must follow that litigants 

have a constitutional right to declaratory judgments. This 

conclusion is not feasible. Far from being constitutionally 

required, "for some years the Supreme Court had raised serious 

doubts about whether an action for a declaratory judgment was 

[permitted as] a 'case or controversy' within the jurisdiction of 

the federal courts," Charles Alan Wright, The Law of Federal 

Courts § 100, at 670 (4th ed. 1983), and "[a]ctions for 

declaratory judgments represent a comparatively recent 

development in American jurisprudence," id.

 Although it is possible to find elements of the 

declaratory judgment in ancient procedures, the remedy 

as it is now known has been recognized in the United 

States only since 1919 when legislatures began to adopt 

statutes similar to those still in effect authorizing 

the declaratory judgment. . . . 

 Constitutional doubts deterred adoption of a 

federal statute authorizing declaratory judgments but 

when these were quieted by the Supreme Court in 1933, 

Congress responded promptly by passing the Federal 

Declaratory Judgment Act in 1934. 

Charles Alan Wright et al., 10A Federal Practice and Procedure 

§2752, at 571-72 (2d ed. 1983) (footnotes omitted). In light of 

the history of the Declaratory Judgment Act,0 it seems that the 

right to bring a declaratory judgment action is not a 

 

0The Declaratory Judgment Act is codified at 28 U.S.C. §§2201, 

2202. 
34 

constitutional right, but rather a remedy provided as a matter of 

grace by the legislature; accordingly, the legislature has the 

power to abolish that form of remedy.0

 Since a complete bar of jurisdiction in the 

administrative claims procedure and courts of law over 

declaratory judgment actions not asserting a right to payment 

would comport with due process, National Union and Gulf's 

argument that they did not receive proper notice from the RTC 

concerning the submission of claims pursuant to the 

administrative claims procedure is irrelevant. That is, Congress 

need not have provided an administrative remedy as an alternative 

to its barring jurisdiction in courts of law over declaratory 

judgment actions not asserting a right to payment, so notice of 

any administrative remedies a fortiori is not required. 

 In holding that § 1821(d)(13)(D)'s ouster of 

jurisdiction is not necessarily limited to suits otherwise 

governed by the administrative claims procedure set out in 

§1821(d)(3), (d)(5) and (d)(6),0 we acknowledge that it is 

possible that in some factual settings the broad bar to 

jurisdiction contained in § 1821(d)(13)(D) could raise 

constitutional concerns. Such a situation could arise if the 

 

0The Supreme Court has characterized the Declaratory Judgment Act 

as a form of remedy, procedural in nature, rather than as a grant 

of jurisdiction. Aetna Life Ins. Co. of Hartford, Conn. v. 

Haworth, 300 U.S. 227, 240, 57 S. Ct. 461, 463 (1937). To this 

extent, some might find it preferable not to characterize 

§1821(d)(13)(D) as a jurisdictional bar to declaratory judgment 

actions, but rather as a limitation to the relief made available 

by the Declaratory Judgment Act. 

0See supra note 12. 
35 

holder of an action asserting a right to payment were not 

provided reasonable notice and opportunity to be heard in the 

administrative claims procedure. In such a setting, application 

of the broad jurisdictional bar, as stated above, would appear to 

be unconstitutional. But simply because § 1821(d)(13)(D)'s 

application in imaginary future cases would be unconstitutional 

is not a good reason to interpret its jurisdictional bar 

narrowly, as some courts have suggested.0 Rather, if and when 

the RTC seeks to use § 1821(d)(13)(D) unconstitutionally, it 

would seem that the courts should deem application of 

§1821(d)(13)(D) unconstitutional as applied in that case, and 

take jurisdiction over the case.0

 

0See supra note 8. 

0Courts routinely declare particular applications of a statute 

unconstitutional, while leaving the statute intact. E.g., 

Tennessee v. Garner, 471 U.S. 1, 11-12, 105 S. Ct. 1694, 1701 

(1985) ("The Tennessee statute is unconstitutional insofar as it 

authorizes the use of deadly force against . . . fleeing 

suspects. It is not, however, unconstitutional on its face. 

Where the officer has probable cause to believe that the suspect 

poses a threat of serious physical harm, either to the officer or 

to others, it is not constitutionally unreasonable to prevent 

escape by using deadly force. . . . As applied in such 

circumstances, the Tennessee statute would pass constitutional 

muster."); see also, e.g., Bowen v. Kendrick, 487 U.S. 589, 593-

622, 108 S. Ct. 2562, 2565-81 (1988) (statute did not violate 

Establishment Clause on its face, and case remanded to determine 

whether in particular cases statute was unconstitutional as 

applied); Boddie v. Connecticut, 401 U.S. 371, 379, 382-83, 91 S. 

Ct. 780, 787, 788-89 (1971). For a compelling argument that 

where a constitutionally flawed limitation of jurisdiction is 

announced by Congress, courts should assume that pertinent 

general grants of jurisdiction (e.g., 28 U.S.C. §§ 1331, 1343) 

remain intact, see Lawrence Gene Sager, Foreword: Constitutional 

Limitations on Congress' Authority to Regulate the Jurisdiction 

of the Federal Courts, 95 Harv. L. Rev. 17, 22-30 (1981). 
36 

 We conclude that § 1821(d)(13)(D) bars jurisdiction in 

any court over National Union and Gulf's declaratory judgment 

action, regardless of whether the declaratory judgment action 

could have been submitted to the RTC pursuant to the 

administrative claims procedure. Moreover, the language 

contained in § 1821(d)(13)(D) barring "any action seeking a 

determination of rights" is not limited in its application to 

actions brought by creditors; it applies to debtors as well, and 

applies regardless of whether the action is asserting a right to 

payment. It is therefore irrelevant that National Union and Gulf 

claim to be potential debtors of the RTC. Accordingly, we will 

affirm the district court's holding that it lacked jurisdiction 

to hear National Union and Gulf's declaratory judgment action.0

3. Application of Section 1821(d)(13)(D) to the

 Affirmative Defense of Rescission

 We now turn to consider whether the district court 

correctly determined that National Union and Gulf are 

jurisdictionally barred under § 1821(d)(13)(D) from raising an 

affirmative defense of rescission to the RTC's counterclaim. We 

believe that the plain meaning of the language contained in 

 

0Our holding is in accord with the weight of authority. See, 

e.g., Carney v. RTC, 19 F.3d 950, 956-58 (5th Cir. 1994) (12 

U.C.S. § 1821(j) deprives district courts of certain forms of 

declaratory relief); Deera Homes, Inc. v. Metrobank for Sav., 

FSB, 812 F. Supp. 375, 377-78 (E.D.N.Y. 1993) (§ 1821(d)(13)(D) 

bars action for declaratory relief); Chisim v. RTC, 783 F. Supp. 

361, 362-63 (N.D. Ill. 1991) (same). But see In re Continental 

Fin. Resources, Inc., 154 B.R. 385, 387-89 (D. Mass. 1993) (§ 

1821(d)(13)(D) does not divest jurisdiction over debtor's, as 

opposed to a creditor's, declaratory judgment action). 
37 

§1821(d)(13)(D) indicates that the statute does not create a 

jurisdictional bar to defenses or affirmative defenses which a 

party seeks to raise in defending against a claim. 

 Section 1821(d)(13)(D) limits jurisdiction as follows: 

 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 [RTC] has been appointed 

receiver, including assets which the [RTC] may 

acquire from itself as such receiver; or 

 (ii) any claim relating to any act or omission of 

such institution or the [RTC] as receiver. 

12 U.S.C. § 1821(d)(13)(D). The above language bars jurisdiction 

over four categories of actions: (1) claims for payment from 

assets of any depository institution for which the RTC has been 

appointed receiver; (2) actions for payment from assets of such 

depository institution; (3) actions seeking a determination of 

rights with respect to assets of such depository institution; and 

(4) a claim relating to any act or omission of such institution 

or the RTC as receiver. The issue is whether defenses or 

affirmative defenses to claims can be said to fall under any of 

the above four categories. 

 We think it is 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 

above four categories of actions. In the interest of clarity, we 

explain our position in detail. 
38 

 Black's Law Dictionary defines "defense," in relevant 

part, as follows: 

 That which is offered and alleged by the party 

proceeded against in an action or suit, as a reason in 

law or fact why the plaintiff should not recover or 

establish what he seeks. That which is put forward to 

diminish plaintiff's cause of action or defeat 

recovery. . . . 

 . . . 

 A response to the claims of the other party, setting 

forth reasons why the claims should not be granted. The 

defense may be as simple as a flat denial of the other 

party's factual allegations or may involve entirely new 

factual allegations. In the latter situation, the 

defense is an affirmative defense. 

Black's Law Dictionary 419 (6th ed. 1990) (emphasis added). 

"Affirmative defense" is defined in more detail as follows: 

 In pleading, matter asserted by defendant which, 

assuming the complaint to be true, constitutes a 

defense to it. A response to a plaintiff's claim which 

attacks the plaintiff's [legal] right to bring an 

action, as opposed to attacking the truth of claim. 

Under the Fed. Rules of Civil Procedure, and also under 

most state Rules, all affirmative defenses must be 

raised in the responsive pleading (answer) . . . . 

Id. at 60 (emphasis added). We have stated above that an action 

means "a lawsuit brought in a court." Id. at 28. In the above 

discussion we also stated, borrowing from the Bankruptcy Code, 

that as used in § 1821(d) the term "claim" essentially means "an 

action asserting a right to payment." 

 With the aid of these definitions, it is clear that a 

defense or affirmative defense is not properly called an "action" 

or a "claim" but is rather a response to an action or a claim. 

When a lawyer files a responsive pleading to an action or claim, 

she does not say that she is bringing an action or filing a 
39 

claim; instead, she says that she is answering, responding to, or 

defending against an action. The jurisdictional bar contained in 

§ 1821(d)(13)(D) therefore does not apply to defenses or 

affirmative defenses.0 

 Of course, if in addition to raising defenses or 

affirmative defenses to an action or claim, a party also raises 

counterclaims, such counterclaims would fall under 

§1821(d)(13)(D)'s jurisdictional bar, because a counterclaim is a 

"claim." Black's Law Dictionary defines counterclaim as "[a] 

claim presented by a defendant in opposition to or deduction from 

the claim of the plaintiff." Black's Law Dictionary 349 (6th ed. 

1990). Therefore, unless counterclaims were properly submitted 

to the administrative claims procedure of FIRREA, they would be 

subject to the jurisdictional bar of § 1821(d)(13)(D).0

 Whether an assertion is truly a defense, an affirmative 

defense, or a counterclaim is a question courts are competent to 

answer. As discussed above, a claim (or a counterclaim) is 

essentially an action which asserts a right to payment. Courts 

 

0There is a conflict among courts concerning whether affirmative 

defenses are jurisdictionally barred by §1821(d)(13)(D). See 

cases cited in RTC v. Schonacher, 844 F. Supp. 689, 692-94 (D. 

Kan. 1994). The only court of appeals to consider this issue has 

held that an affirmative defense of mutual mistake is not barred 

by § 1821(d)(13)(D). RTC v. Midwest Fed. Sav. Bank of Minot, 4 

F.3d 1490, 1494-97 (9th Cir. 1993). We agree with the outcome of 

Midwest Federal, but, as suggested in supra typescript at 20-37 

and note 8, our analysis does not mirror the reasoning of the 

Court of Appeals for the Ninth Circuit. 

0It appears that there is a forming consensus in the courts that 

counterclaims are jurisdictionally barred by §1821(d)(13)(D), 

unless administrative remedies are exhausted. See cases cited in 

Schonacher, 844 F. Supp. at 692-94. 
40 

should not allow parties to avoid the procedural bar of 

§1821(d)(13)(D) by simply labelling what is actually a 

counterclaim as a defense or affirmative defense. 

 We will assume that under the state and/or federal law 

which ultimately will govern this case, a defense of rescission 

is an "affirmative defense".0 The district court has 

characterized rescission as an affirmative defense, and we accept 

that characterization. National Union and Gulf are therefore not 

barred by § 1821(d)(13)(D) from raising rescission as an 

affirmative defense to the RTC's counterclaim. 

 Our interpretation of § 1821(d)(13)(D) is based on the 

plain meaning of the language of that section. However, we point 

out that even if it could be argued that the jurisdictional bar 

of § 1821(d)(13)(D) could be fairly interpreted to bar 

jurisdiction over defenses or affirmative defenses, we would not 

adopt this position. This is because interpreting the 

jurisdictional bar in such a manner would, in a substantial 

number of cases, and in this case in particular, result in an 

unconstitutional deprivation of due process. Property which one 

stands to lose as a result of a lawsuit is a property interest 

protected by the Due Process Clause, Logan, 455 U.S. at 428-30, 

102 S. Ct. at 1154, and the "Due Process Clause . . . prevent[s] 

. . . denying potential litigants use of established adjudicatory 

 

0We have found authority for the proposition that rescission is 

an affirmative defense, and none to the contrary. E.g., 

Intertech Assoc., Inc. v. City of Paterson, 604 A.2d 628, 632 

(N.J. Super. Ct. App. Div. 1992); Falcione v. Cornell Sch. Dist., 

557 A.2d 425, 428 (Pa. Super. Ct. 1989). 
41 

procedures, when such an action would be 'the equivalent of 

denying them an opportunity to be heard upon their claimed 

right[s],'" id. at 429-30, 102 S. Ct. at 1154. If parties were 

barred from presenting defenses and affirmative defenses to 

claims which have been filed against them, they would not only be 

unconstitutionally deprived of their opportunity to be heard, but 

they would invariably lose on the merits of the claims brought 

against them. Such a serious deprivation of property without due 

process of law cannot be countenanced in our constitutional 

system.0 "[W]here an otherwise acceptable construction of a 

statute would raise serious constitutional problems, the [c]ourt 

will construe the statute to avoid such problems unless such 

construction is plainly contrary to the intent of Congress." 

Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. 

Trades Council, 485 U.S. 568, 575, 108 S. Ct. 1392, 1397 (1988). 

Especially in light of the serious due process concerns which 

would unavoidably arise were we to interpret the jurisdictional 

bar of § 1821(d)(13)(D) as applying to defenses and affirmative 

defenses, we reject such an interpretation. 

 It may be argued that barring defenses and affirmative 

defenses in court would not be unconstitutional because under 

FIRREA parties could always file potential defenses and 

affirmative defenses in the administrative claims procedure 

provided for in § 1821(d)(3), (d)(5) and (d)(6). But this 

 

0In contrast, our holding above that Congress may divest the 

courts of jurisdiction over declaratory judgment actions would 

result only in a delay in adjudication, not a permanent 

deprivation of property without an opportunity to be heard. 
42 

suggestion is not tenable. For one thing, many of the parties 

who would be raising defenses to RTC-initiated lawsuits would not 

be creditors of the thrift institution in receivership and so 

would not receive notice of the time within which they would be 

required to present information to the administrative claims 

procedure, as provided for in § 1821(d)(3). Again, this would 

raise due process concerns. Moreover, even if parties received 

notice that they must submit potential defenses or affirmative 

defenses to the administrative claims procedure, such parties 

would often find it difficult if not impossible to do so. Since 

a party cannot know what her defense is until she hears the claim 

leveled against her, it seems that it would be nearly impossible 

for a party to submit future hypothetical defenses to the 

administrative claims procedure--defenses to lawsuits which may 

not yet have brought against her or which may never be brought at 

all. We agree with the court in RTC v. Conner, 817 F. Supp. 98 

(W.D. Okla. 1993), "that even if the plain language of 

§1821(d)(13)(D) were read or understood to include affirmative 

defenses, an exception to the plain meaning rule of statutory 

construction would apply because such a literal application of 

the statute . . . would lead to the patently absurd consequence 

of requiring presentment and proof to the RTC of all potential 

affirmative defenses that might be asserted in response to 

unknown and unasserted claims or actions by the RTC," id. at 102 

(internal quotations and citations omitted). 

 For the above reasons, we conclude that §1821(d)(13)(D) 

does not bar National Union or Gulf from raising any defense or 
43 

affirmative defense to the RTC's counterclaim. We will therefore 

reverse the district court's holding that National Union and Gulf 

were jurisdictionally barred from raising rescission as an 

affirmative defense. 

CONCLUSION 

 We hold that the jurisdictional bar contained in 

§1821(d)(13)(D) deprives the district court of jurisdiction to 

hear National Union and Gulf's declaratory judgment action for 

rescission of the insurance polices they issued, but that the 

jurisdictional bar does not apply to the same theory of 

rescission when raised as an affirmative defense. At first 

blush, it might seem hypertechnical for us to interpret 

§1821(d)(13)(D) as making a distinction between a rescission 

theory when asserted in a declaratory judgment action, and the 

same theory of rescission when raised as an affirmative defense, 

and to further hold that jurisdiction in the district court does 

not exist for the former, but exists for the latter. 

 Yet there is a principled and common sense rationale 

for this distinction, which is evidenced by the text of FIRREA 

and its legislative history: One cannot hale the RTC into court 

to obtain only a declaration of rights; rather, the RTC is to be 

left alone to preserve the assets of the thrift institution in 

receivership and efficiently process claims for payment for the 

institution's assets. However, if the RTC brings an action 

against a party, that party has a right to raise defenses in that 

action. This rationale is both sound and just. 
44 

 We will affirm the district court's holding that it 

does not have jurisdiction to hear National Union and Gulf's 

declaratory judgment action. However, we will reverse the 

district court's holding that the jurisdictional bar contained in 

§ 1821(d)(13)(D) prevents National Union and Gulf from raising 

the affirmative defense of rescission to the RTC's counterclaim. 

We will remand the case to the district court for proceedings 

consistent with this opinion. 
45