1

United States Court of Appeals,

Fifth Circuit.

No. 93-5189.

FIRST AMERICAN BANK, Petitioner,

v.

RESOLUTION TRUST CORPORATION, in its Corporate Capacity,

Respondent.

Sept. 8, 1994.

Petition for Review of a Decision of the Resolution Trust

Corporation.

Before GARWOOD, SMITH, and STEWART, Circuit Judges.

STEWART, Circuit Judge:

Petitioner, First American Bank, seeks review of a final

determination of the Resolution Trust Corporation ("RTC") denying

federal deposit insurance coverage for funds deposited in the

now-defunct Spindletop Savings Association, F.A. Because the RTC's

decision was arbitrary and capricious, an abuse of discretion, and

not in accordance with law, we reverse.

I.

FACTS AND PROCEDURAL HISTORY

This case involves two certificates of deposit petitioner

purchased in 1989 and 1990 at Spindletop Savings Association and

its successor, Spindletop Savings Association, F.A., respectively.

At issue is whether each certificate of deposit ("CD") is entitled

to separate deposit insurance coverage. On April 18, 1989, First

American Bank ("FAB") purchased a certificate of deposit ("CD # 1")

from Spindletop Savings Association ("Old Spindletop"). This CD
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was in the amount of $98,000 and had a maturity date of September

14, 1990.

After the purchase of CD # 1, Old Spindletop failed. On

September 13, 1989, Old Spindletop was placed into receivership

with the RTC. On that same date, the Office of Thrift Supervision

chartered a new federal thrift, Spindletop Savings Association,

F.A. ("New Spindletop"). Thus, New Spindletop was chartered as a

separate entity from Old Spindletop, and it had a separate RTC

insurance number. Also on September 13, 1989, the RTC, as receiver

for Old Spindletop, entered into a pass-through purchase and

assumption agreement with New Spindletop, wherein Old Spindletop's

assets and outstanding deposits and secured liabilities were

transferred to New Spindletop. New Spindletop was simultaneously

placed in conservatorship, with the RTC being appointed

conservator.

On April 24, 1990, FAB purchased CD # 2 in the amount of

$99,000 from New Spindletop, with a maturity date of September 24,

1990.

On June 1, 1990, prior to the maturity date of either CD # 1

or CD # 2, New Spindletop was also closed and placed into

receivership with the RTC. At this time, the RTC entered into an

agreement with First City, Texas—Beaumont, N.A. ("First City"),

wherein certain assets and liabilities were transferred to and

assumed by First City. Through this transaction, the RTC in its

corporate capacity transferred the insured amount of each

depositor's accounts previously held by New Spindletop (including
 

1See 12 U.S.C. § 1821. 

3

the deposits that had come from Old Spindletop) to First City.

These insured deposits were immediately available at First City to

each former depositor of New Spindletop, even if the associated

certificates of deposits had not otherwise matured.

For each depositor, the maximum insured amount for each

transferred deposit was $100,000.1 The RTC claims that it

satisfied its $100,000 insurance obligation to FAB by transferring

CD # 2 to First City. Accordingly, the RTC did not transfer CD #

1 because the transfer of both certificates would have resulted in

a payment to FAB of more than the $100,000 insurance limit.

On June 8, 1990, FAB redeemed CD # 2 from First City without

incident. On August 3, 1990, FAB sought payment on CD # 1 from

First City. Payment was denied. FAB then presented a written

request to the RTC for deposit insurance on CD # 1. On June 22,

1993, the RTC made its final determination, denying FAB's claim.

FAB appeals this adverse determination pursuant to 12 U.S.C. §

1821(f)(4).

II.

GENERAL LEGAL PRINCIPLES

FAB contends that the RTC's denial of insurance coverage for

CD # 1 was arbitrary and capricious, an abuse of discretion and not

in accordance with law. FAB asserts that the insurance coverage

for CD # 1 is separate from any coverage afforded for CD # 2. It

argues that in denying this insurance coverage, the RTC misread the

clear and unambiguous language of 12 U.S.C. § 1818(q) and
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wrongfully relied on five unpublished FSLIC opinion letters

construing the applicable statutory language. We agree.

Pursuant to 12 U.S.C. § 1821(f)(4), a final determination of

the RTC is reviewable in accordance with the Administrative

Procedure Act. Under the Administrative Procedure Act, the RTC's

determination in this case may be set aside only if it is

arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with the law. 5 U.S.C. § 706. See also, Nimon v.

Resolution Trust Corp., 975 F.2d 240, 244 (5th Cir.1992).

Furthermore, the U.S. Supreme Court has held that, unless Congress

has directly spoken to the precise question at issue, considerable

weight should be accorded to an executive department's construction

of a statutory scheme it is entrusted to administer. Chevron, USA,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-

844, 104 S.Ct. 2778, 2781-2782, 81 L.Ed.2d 694 (1984). Thus, where

the agency's interpretation of the applicable deposit statute and

regulations is equally as persuasive as the claimant's, the

reviewing court should uphold the agency's decision. Hymel v.

Federal Deposit Ins. Corp., 925 F.2d 881 (5th Cir.1991).

However, where an agency has promulgated a regulation or

adopted an interpretation that is in conflict with a statute's

plain meaning, the reviewing court is not required to give

deference to the agency's interpretation. K Mart Corp. v. Cartier,

Inc., 486 U.S. 281, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988). "If

the statute is clear and unambiguous, "that is the end of the

matter, for the court, as well as the agency, must give effect to
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the unambiguously expressed intent of Congress.' ... The

traditional deference courts pay to agency interpretations is not

to be applied to alter the clearly expressed intent of Congress."

K Mart, supra, 486 U.S. at 291, 108 S.Ct. at 1817, quoting Chevron,

supra, 467 U.S. at 842-843, 104 S.Ct. at 2781-2782, 81 L.Ed.2d 694.

In a statutory construction case, the beginning point must be

the language of the statute, and when a statute speaks with clarity

to an issue, judicial inquiry into the statute's meaning, in all

but the most extraordinary circumstance, is finished. Estate of

Cowart v. Nicklos Drilling Co., --- U.S. ----, ----, 112 S.Ct.

2589, 2594, 120 L.Ed.2d 379 (1992), citing Demarest v. Manspeaker,

498 U.S. 184, 188, 111 S.Ct. 599, 603, 112 L.Ed.2d 608 (1991).

The governing statutory language in this case is codified at

12 U.S.C. § 1818(q), which provides in pertinent part as follows:

Assumption of liabilities

Whenever the liabilities of an insured depository

institution for deposits shall have been assumed by another

insured depository institution or depository institutions,

whether by way of merger, consolidation, or other statutory

assumption, or pursuant to contract (1) the insured status of

the depository institution whose liabilities are so assumed

shall terminate on the date of receipt by the Corporation of

satisfactory evidence of such assumption; (2) the separate

insurance of all deposits so assumed shall terminate at the

end of six months from the date such assumption takes effect

or, in the case of any time deposit, the earliest maturity

date after the six-month period....

12 U.S.C. § 1818(q) (emphasis added).

III.

DISCUSSION

A. Contentions of the parties

Petitioner, FAB, contends that the language of 12 U.S.C. §
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1818(q) supports its view that the RTC is required to provide

insurance coverage for the deposits of a failed institution that is

separate from the insurance coverage for the deposits of the

succeeding association, and that the separate coverage for a time

deposit such as a CD should extend until such time deposit matures.

Because CD # 1 never reached its maturity date, FAB maintains that

it should have been separately insured for up to $100,000 under the

statute.

The RTC responds by asserting that the statute should apply

only when the separate deposit insurance existed for the deposit

account of an individual depositor at both institutions prior to

the assumption of the deposit liabilities of one institution by the

other. In support of this position, the RTC argues that the

purpose of the statute is to protect depositors from suddenly

becoming uninsured through no fault of their own as the result of

a savings and loan merger. In this case, FAB purchased CD # 2 from

New Spindletop after New Spindletop assumed Old Spindletop's

deposits. Thus, the RTC argues that no "separate" protection

should be extended since the purchase of CD # 2 was a new

investment decision on the part of FAB and thus FAB voluntarily

acted to cause more than $100,000 to be on deposit at New

Spindletop, in contrast to depositors who end up with more than

$100,000 at a single institution through no act of their own, such

as through a merger. The RTC contends that the statute should only

protect those who do not voluntarily cause excess deposits to end

up in a single institution. In particular, the RTC argues that
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Congress' use of the term "separate insurance" evidences a

legislative intent which supports its view that the individual

depositor must have deposits in both the old institution and the

new one at the time of merger in order to have separate insurance

for each deposit. Additionally, the RTC asserts that Congress

would not have used the word "separate" in § 1818(q) had it not

intended to require that other deposits already be in existence at

the time of merger, consolidation, pass-through, etc., because a

thing cannot be "separate" unless it is considered with reference

to something else. Thus, in the RTC's view there can be no

"separate" insurance unless FAB had at least two "separate"

accounts when New Spindletop assumed Old Spindletop's deposits at

the time of merger.

B. Statutory Interpretation of § 1818(q)

The statute provides that when the deposits of one insured

depositing institution have been assumed by another, "the separate

insurance of deposits so assumed shall terminate" at the end of the

prescribed grace period. The statute focuses on the assumed

deposits, and does not require that each depositor have a duplicate

deposit in the assuming institution at the time of assumption in

order to take advantage of the separate insurance coverage.

The RTC cites the legislative history of 12 U.S.C. § 1728(a)

in support of its position that Congress intended to provide

separate insurance only in cases where deposits existed in both

institutions prior to merger. This statute was the Federal Savings

and Loan Insurance Corporation ("FSLIC") counterpart to § 1818(q)
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and was repealed when the FSLIC was abolished through the enactment

of the Financial Institutions Reform, Recovery, and Enforcement Act

of 1989 ("FIRREA"). It contained language very similar to that in

§ 1818(q). However, because we find that the language of § 1818(q)

clearly states the congressional intent, we need not resort to the

legislative history of a repealed statute in order to resolve the

issue at hand.

We find the RTC's argument untenable in light of our reading

of the statute. We construe § 1818(q) to mean exactly what it

says: that any assumed time deposit shall be accorded separate

deposit insurance during the statutory grace period. As used in §

1818(q) the word "separate" means apart from and in addition to any

other deposit insurance that may or may not exist at the time of

assumption. The assumed time deposit, CD # 1, was issued before

its assumption by New Spindletop and, upon assumption, it remained

insured. The existence of this insurance did not depend on whether

FAB had any other deposits at the time of assumption or that it may

have made after the assumption. In this case, § 1818(q) placed no

restriction upon separate insurance coverage other than the

statutory grace period. Insurance on CD # 1 was automatically

maintained during the statutory grace period. According to the

statute, FAB also had an additional $100,000 coverage for any new

deposits. Consequently, both CD # 1 and CD # 2 were covered for up

to $100,000 each. To hold otherwise would be to read into §

1818(q) an exception or limitation that simply is not there.

We interpret § 1818(q) to mean that CD # 1 was insured for up
 

2The five letters range in date from 1985 to 1988, and each

appears to have been issued in response to a specific inquiry

about separate deposit insurance coverage under § 1728(a), which

was the FSLIC counterpart to § 1818(q). Four of the letters were

signed by the director of the insurance division of FSLIC. One

was signed by the director of the regulations and legislation

division at FSLIC. The letters indicate FSLIC's position was

that, in the case of an acquisition or merger, accounts in an

acquiring institution were afforded separate coverage only if

they were opened prior to such acquisition or merger. 

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to $100,000 during the statutory grace period. This insurance

coverage was separate and apart from and in addition to the

$100,000 coverage that was applicable to CD # 2 because it was a

new time deposit made at the assuming institution, New Spindletop,

after its assumption of Old Spindletop's liabilities.

The RTC urges that we give Chevron deference to its decision.

It argues that we are obligated to regard as controlling a

reasonable, consistently applied interpretation construing the

statute by the government. Nimon, supra, 975 F.2d at 245.

Accordingly, we must note any relevant agency opinion of the

statute at issue. The RTC offers five unpublished opinion letters

of the now-abolished FSLIC in support of its position that the

FSLIC has consistently interpreted the separate insurance

provisions as applying only to deposits held by an individual at

the time of merger.2 Assuming, arguendo, that any authority of

these five opinion letters survived the demise of the FSLIC, we

conclude that they are not persuasive in view of their direct

contradiction to the text of § 1818(q). Chevron and its progeny do

not require courts to defer to agency opinions which are

incongruent with statutory text.
 

3This FDIC advisory opinion predates the creation of the RTC

on August 7, 1989, pursuant to FIRREA. 

10

While we do not reach the issue of whether unpublished FSLIC

opinion letters might constitute valid precedent in other cases, we

decline to defer to them in this case because the FSLIC's

interpretation of the applicable statutory language as espoused in

the five opinion letters is so clearly contrary to the plain and

unambiguous language of the statute.

In direct contrast to the FSLIC letters, the FDIC previously

has concluded in a published opinion letter that deposits made in

a new institution after the time of merger are covered by separate

insurance. Thus, the FDIC has interpreted § 1818(q) in the same

way we do today. In FDIC Advisory Opinion 89-11, dated March 21,

1989,3 nineteen failed banks in Texas were merged into a newly

formed "Bridge Bank" (not unlike the situation with Old Spindletop

and New Spindletop), and the FDIC specifically stated that "all of

the deposits assumed from the insolvent [banks] will be separately

insured from any new deposits established by the same customer(s)

with the Bridge Bank."

FAB argues that FDIC Advisory Opinion 89-11 should control

this case. The RTC argues that we should defer to the FSLIC

interpretations of the statutory language, citing FDIC Advisory

Opinion 90-03 (dated January 9, 1990) for the proposition that

FIRREA requires that FSLIC interpretations govern in this case

rather than FDIC interpretations. While we are not required to

resolve the issue of whether FSLIC or FDIC interpretations would
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govern in the event of a statutory ambiguity, we note that FDIC

Advisory Opinion 89-11 is consistent with our interpretation of the

statute. We hold that CD # 1 was afforded separate insurance

coverage under the clear language of § 1818(q) and that the RTC's

determination to the contrary was arbitrary, capricious, an abuse

of discretion, and not in accordance with law. For the foregoing

reasons, the final determination of the RTC is REVERSED.

REVERSED.