1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-6-1995

Wujick v Dale & Dale

Precedential or Non-Precedential:

Docket 93-1853

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Recommended Citation

"Wujick v Dale & Dale" (1995). 1995 Decisions. Paper 5.

http://digitalcommons.law.villanova.edu/thirdcircuit_1995/5
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 No. 93-1853 

 

 PHYLLIS WUJICK and JOSEPH MATISKA, 

 Appellees 

v. 

 DALE & DALE, INC., DALE & DALE DESIGN & DEVELOPMENT, INC., 

t/d/b/a DALE & DALE HOMES, ATLANTIC FINANCIAL a/k/a 

ATLANTIC FINANCIAL FEDERAL, ESTATE OF FINANCIAL FEDERAL R.T.C., 

 

 Defendants, 

 RESOLUTION TRUST CORP., 

 in its capacity as Receiver for 

 Atlantic Financial Federal, 

 Appellant 

 

 

 Appeal from the 

 United States District Court 

 for the Eastern District of Pennsylvania 

 (D.C. Civil No. 93-1939). 

 

 Argued March 8, 1994 

 

 BEFORE: MANSMANN, LEWIS and SEITZ, Circuit Judges. 

 (Filed: October 13, 1994) 

 

William R. Thompson, Esquire 

Robert C. Seiger, Jr., Esquire 

Richard M. Beck, Esquire (Argued) 

Klehr, Harrison, Harvey, Branzburg & Ellrs 
1401 Walnut Street 

Philadelphia, Pennsylvania 19102 

 ATTORNEYS FOR APPELLANT
David P. Tomaszewski, Esquire (Argued) 

Kimberly D. Borland, Esquire 

Borland and Borland 

1100 PNC Bank Building 

Wilkes-Barre, Pennsylvania 18701 

 ATTORNEY FOR APPELLEES

 ____________________ 

 OPINION OF THE COURT 

 

SEITZ, Circuit Judge. 

 One of the defendants, Resolution Trust Corporation, in 

its capacity as Receiver for Atlantic Financial Federal, appeals 

an order of the district court remanding this action to the Court 

of Common Pleas of Luzerne County, Pennsylvania. The issues 

before us are whether the district court had subject matter 

jurisdiction under 12 U.S.C. § 1441a(l) (Supp. V 1993), which 

grants both jurisdiction to the federal courts and removal power 

to RTC. This Court has jurisdiction under 12 U.S.C. § 1441a(l)-

(3)(C) (Supp. V 1993), which empowers RTC to "appeal any order of 

remand entered by a United States district court." 

I. FACTS

 On January 11, 1990, the Office of Thrift Supervision, 

Department of the Treasury of the United States, appointed the 

Resolution Trust Corporation (RTC) as Receiver for the defendant, 

Atlantic Financial Federal ("Old Atlantic"), a savings and loan 

association. After accepting the appointment, RTC created a new 

federal savings association, Atlantic Financial Savings, F.A. 

("New Atlantic"), pursuant to 12 U.S.C. § 1821(d)(2)(A) (Supp. V 
1993), to assume such assets of the failed institution as RTCReceiver might deem appropriate. The Office of Thrift 

Supervision then appointed RTC as Conservator of New Atlantic. 

RTC-Receiver of Old Atlantic and New Atlantic executed a Purchase 

and Assumption Agreement, whereby New Atlantic purchased 

substantially all of the assets of Old Atlantic. Unsecured 

obligations to general creditors, however, remained with Old 

Atlantic. 

 Sometime prior to the takeover of Old Atlantic by 

Resolution Trust, the plaintiffs in this action had contracted 

with defendant Dale and Dale ("Dale & Dale") to build a home for 

them in Pennsylvania. Old Atlantic had financed the 

construction. Plaintiffs became dissatisfied with the 

construction and Old Atlantic's handling of the loan proceeds. 

Thereafter, the plaintiffs commenced this action in the Luzerne 

County Court of Common Pleas against Dale & Dale and, inter alia, 

RTC. They did so by filing a praecipe for a writ of Summons 

("Writ") with that court on April 12, 1990. 

 On April 16, 1990, the Luzerne County sheriff served the 

Writ at Atlantic Financial offices in Wilkes-Barre, Pennsylvania. 

The Writ named RTC as a defendant.1 On that date the WilkesBarre offices were owned and operated by RTC as Conservator for 

 

1. Plaintiffs-appellees designated this defendant as "Atlantic 

Financial, a/k/a Atlantic Financial Federal; Estate of Financial 

Federal R.T.C." RTC-Receiver substituted itself as a defendant 

in its later notice of removal. 
New Atlantic, not RTC as Receiver for Old Atlantic. The Writ was 

served without a complaint or any other indication of the 

subject-matter of the action. It merely recited that "the 

plaintiff(s) have commenced an action in law against you." The 

procedure was consistent with Pennsylvania practice.2

 Plaintiffs contend that on April 16, 1990, four days after 

they commenced the action in the Luzerne County court by filing 

the praecipe, they filed the statutorily required administrative 

claim with the RTC. They argue that RTC "ignored" the 

administrative claim. There is no documentary evidence of such a 

claim in the record. However, during oral argument, RTC's 

counsel stated that although it had no record of the claim, it 

conceded that the administrative claim was "constructively 

denied" because of RTC's inaction. Without understanding the 

logic of RTC's concession, we shall treat it as a judicial 

admission that plaintiffs filed such a claim. However, RTC did 

not concede that any such claim for administrative relief was 

timely filed. 

 

2. The Pennsylvania rule provides: 

 Rule 1007. Commencement of Action

 An action may be commenced by filing with 

the prothonotary 

 (1) a precipe for a writ of summons, 

 (2) a complaint, or 

 . . . . 

PA. STAT. ANN. tit. 42, § 1007 (1987). 
 No further pertinent action appears to have taken place 

until January 19, 1993, when the plaintiffs filed a complaint in 

the Luzerne County action. On March 23, 1993, it was served on 

RTC-Receiver in Norristown, Pennsylvania. RTC then removed the 

case to the United States District Court for the Eastern District 

of Pennsylvania on April 12, 1993. Based on 28 U.S.C. § 1447(c) 

(Supp. V 1993),3 plaintiffs made a timely motion for remand to 

the state court which was granted. RTC now appeals that order 

which has been stayed. 

 II. SUBJECT MATTER JURISDICTION

 The Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 ("FIRREA") confers original subject 

matter jurisdiction on United States district courts to hear 

cases involving RTC. 12 U.S.C. § 1441a(l)(1).4 Section 

 

3. As the Fifth Circuit has pointed out: "FIRREA imposes no time 

limit on motions to remand. In the absence of specific contrary 

provisions, we look to the general removal statute, 28 U.S.C. 

§ 1447(c) . . . ." Resolution Trust Corp. v. Sonny's Old Land 

Corp., 937 F.2d 128, 131 (5th Cir. 1991). 

4. FIRREA provides: 

 (l) Power to Remove; jurisdiction 

 (1) In general

 Notwithstanding any other provisions of law, 

any civil action, suit, or proceeding to which the 

Corporation is a party shall be deemed to arise 

under the laws of the United States, and the 

district courts shall have original jurisdiction 

over such action, suit, or proceeding. 

12 U.S.C. § 1441a(l)(1) (Supp. V 1993). 
1441a(l)(3) of the Act permits RTC to remove any suits, to which 

it is a party, to the district court within certain time frames.5 

In the present case, the district court concluded that RTC had 

not timely removed the state action. RTC argues that the state 

action was timely removed because 1) the April 16, 1990 service 

was improper and 2) a Writ is not a document which initiates the 

thirty-day removal provision. 

 Compliance with the procedures for removal, e.g. 

timeliness of removal, are procedural issues to be distinguished 

from subject matter jurisdiction in the district court. See

Medlin v. Boeing Vertol Co., 620 F.2d 957, 960 (3d Cir. 1980); 

see also Spring Garden Assoc., L.P. v. Resolution Trust Corp., 26 

F.3d 412, 415 (3d Cir. 1994); In re Digicon Marine, Inc., 966 

 

5. The section reads: 

 (l) Power to Remove; jurisdiction (3) 

Removal and remand

 

 (A) In general

 . . . . 

 The removal of any such suit or 

proceeding shall be instituted

 (i) not later than 90 days after the 

date the Corporation is substituted as a 

party, or 

 (ii) not later than 30 days after 

service on the Corporation, if the 

Corporation is named as a party in any 

capacity and if such suit is filed after 

August 9, 1989. 

12 U.S.C. § 1441a(l)(3) (Supp. V 1993). 
F.2d 158, 160 (5th Cir 1992); Nolan v. Boeing Co., 919 F.2d 1058, 

1063 n.6 (5th Cir. 1990) ("The time limitation for removal is not 

jurisdictional; it is merely `modal and formal and may be 

waived.'"). 

 This Court has stated, "[E]very federal appellate court 

has a special obligation to satisfy itself not only of its own 

jurisdiction, but also that of the lower courts in a cause under 

review." Spring Garden, 26 F.3d at 415 (quoting Employers Ins. of 

Wausau v. Crown Cork & Seal Co., 905 F.2d 42 (3d Cir. 1990)). 

Therefore, we shall put aside addressing the procedural problems 

presented by the parties and address directly the subject matter 

jurisdiction of the district court with respect to RTC. This 

Court exercises plenary review in determining whether the lower 

courts had subject matter jurisdiction. National Union Fire Ins. 

Co. v. City Savings, F.S.B., 28 F.3d 376, 383 (3d Cir. 1994). 

Exhaustion of Administrative Remedies

 Since our Court has an independent obligation to determine 

the subject matter jurisdiction of the district court, we proceed 

to that task. Although the district court did not address the 

issue of its subject matter jurisdiction, we conclude that the 

ends of judicial economy dictate that we resolve this legal issue 

because the facts relevant to its disposition are not in dispute. 

 Plaintiffs commenced their suit in state court by filing a 

praecipe for a writ of summons on April 12, 1990. However, they 
did not file their administrative claim with RTC until April 16, 

1990, some four days after the filing of this suit in state 

court. The critical question is whether the state action is 

jurisdictionally infirm under FIRREA because it was filed by the 

plaintiffs against RTC, etc., prior to exhaustion of their 

administrative remedies. We turn now to the pertinent provisions 

of FIRREA. 

 FIRREA has created a comprehensive administrative 

procedure for adjudicating claims against a failed depository 

institution. RTC as Receiver initiates the administrative 

process by notifying the failed institution's creditors to 

present their claims to RTC Receiver. 12 U.S.C. 

§ 1821(d)(3)(B)(i) (Supp. V 1993). Once a creditor timely 

presents its claim, the RTC-Receiver has 180 days to consider the 

claim and determine whether it will be allowed or disallowed, and 

to notify the claimant of its disposition. 12 U.S.C. 

§ 1821(d)(5)(A)(i) (Supp. V 1993). 

 Section 1821(d)(6)(A) provides for judicial review only 

for suits brought within sixty days after the claim has been 

disallowed by the RTC-Receiver or the 180-day statutory period 

has expired without action on the claim by the Receiver. The 

statute provides: 

 (D) Limitation on judicial review

 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 . . . . 

12 U.S.C. § 1821(d)(13)(D) (Supp. V 1993).6 This Court has very 

recently stated: 

 [W]e have characterized the jurisdictional restriction 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 administrative 

scheme for adjudicating claims detailed in 

§ 1821(d). 

National Union Fire Ins. Co., 28 F.3d at 383 (citing Rosa v. 

Resolution Trust Corp., 938 F.2d 383, 391 (3d Cir.), cert. 

denied, 112 S. Ct. 582 (1991)) (footnote omitted). Therefore, a 

court would lack subject matter jurisdiction unless the 

administrative procedures set out in FIRREA were exhausted. See

id.; Althouse v. Resolution Trust Corp., 969 F.2d 1544, 1545-46 

(3d Cir. 1992); Praxis Properties, Inc. v. Colonial Sav. Bank, 

S.L.A., 947 F.2d 49, 63 (3d Cir. 1991); FDIC v. Shain, Schaffer & 

Rafanello, 944 F.2d 129, 132 (3d Cir. 1991). 

 At the time plaintiffs filed the praecipe with the Luzerne 

County, Pennsylvania court seeking a Writ, no court had subject 

matter jurisdiction over the suit because plaintiffs had failed 

to exhaust the administrative remedies mandated by section 

1821(d)(13)(D) of FIRREA. In their later letter brief to this 

 

6. The provisions of 12 U.S.C. § 1821 are made applicable to RTC 

by 12 U.S.C. § 1441a(b)(4)(A). 
Court, as well as in the briefs originally filed in this Court, 

plaintiffs argue a "no-harm, no-foul" rule. They contend that 

"the end result would be the same whether the Plaintiff waited to 

file the Writ of Summons after the one hundred and eighty (180) 

day period." Letter Brief of Appellee at 3, Wujick v. Dale & 

Dale, Inc., et. al., No. 93-1939 (Feb. 25, 1994). Plaintiffs' 

argument is incompatible with controlling law. 

 As this Court has stated, "Congress expressly withdrew 

jurisdiction from all courts over any claim to a failed bank's 

assets made outside the procedures set forth in section 1821." 

Shain, Schaffer & Rafanello, 944 F.2d at 132. In addition, the 

United States Supreme Court, in interpreting the exhaustion 

provision of the Federal Tort Claims Act, firmly rejected the "no 

harm, no foul" reasoning and held that where Congress has imposed 

an administrative exhaustion requirement by statute, the 

exhaustion of those procedures is mandatory. See McNeil v. United 

States, 113 S. Ct. 1980 (1993). 

 Finally, plaintiffs say that RTC never responded to their 

administrative claim once it was filed on April 16, 1990. Under 

the statutory scheme, however, that argument is irrelevant 

because their administrative claim was initiated after their 

state action was commenced in 1990. Since plaintiffs did not 

timely exhaust their administrative claim, the district court 

lacked subject matter jurisdiction of the action. Since the 

state court also lacked subject matter jurisdiction for the same 
reason, a remand by the district court would be a vacuous act. 

We will therefore direct the district court to dismiss the claims 

against RTC. 

 III. OTHER CLAIMS

 Plaintiffs' state court complaint named certain other 

defendants, e.g., Dale & Dale. On the present record, we are not 

in a position to dispose of the claims against the other 

defendants. Consequently, we will, therefore, remand the case as 

to such claims to afford those parties an opportunity to present 

their positions to the district court for appropriate 

disposition. 

 IV. CONCLUSION

 The order of the district court remanding this action 

against RTC to the state court will be reversed with a direction 

to dismiss the claim against it. 

 So much of the order of the district court as remands the 

claims against the defendants other than RTC will be vacated and 

the claims remanded to the district court for appropriate 

disposition.