Opinion ID: 2001887
Heading Depth: 1
Heading Rank: 3

Heading: the set-off between the judgments awarded baychar and american

Text: The RTC next challenges the trial court's set-off of American's foreclosure judgment against Baychar's judgment. It first argues that the portion of Baychar's set-off reflecting her punitive damages award that attended her fiduciary duty judgment was erroneous since 12 U.S.C.A. § 1825(b)(3) (1989) renders the RTC immune from punitive damages. That provision, nestled under the general heading of exemption from taxation, recites that the RTC shall not be liable for any amounts in the nature of penalties or fines, including those arising from the failure of any person to pay any real property, personal property, probate or recording tax or any recording or filing fees when due. The language of this provision indicates that the RTC's immunity from penalties attaches solely in the context of taxation. The RTC cites no authority for the proposition that this immunity extends beyond this realm and shields it from the liability for those punitive damages from civil suits founded on the actions of the failed depository institutions for which it acts as receiver. [4] The RTC also challenges the setoff on the ground that 12 U.S.C.A. § 1821(d) (1989 & Supp.1992) divested the trial court of subject matter jurisdiction of Baychar's causes of action. [5] The RTC first contends that paragraph 6(A) of this subsection confers exclusive federal court jurisdiction over actions against financial institutions of which the RTC has assumed receivership. However, [i]n interpreting statutes ... courts must try to give them a harmonious, comprehensive meaning, giving effect, when possible, to all provisions. McCuin v. Secretary of Health and Human Services, 817 F.2d 161, 168 (1st Cir. 1987). We conclude that paragraph 6(A) does not divest state courts of jurisdiction, particularly when it has gained jurisdiction prior to an RTC receivership. The statutory language does not patently demand federal exclusivity. The interpretation urged by the RTC would render superfluous the removal provision in paragraph 13(B)(i), which allows but does not require that the RTC remove cases from the state court, and would conflict with the provision in paragraph 5(F)(ii) that proscribes any prejudice (such as dismissal for lack of jurisdiction) to those actions, such as the one before us, that were instituted prior to the RTC receivership. The RTC further argues that section 1821(d) provides for an automatic stay of actions against insolvent depository institutions taking effect immediately on an RTC receivership and suspending the action until the administrative claims process is exhausted. We find no such requirement in the language of the statute. Furthermore, to read an automatic stay provision into the statute would render the stay provision in paragraph 12(A)(ii) superfluous and contradict the anti-prejudice provision in paragraph 5(F)(ii) by delaying actions for a period of time longer than provided in paragraph 12(A)(ii). Finally, such an interpretation would present a court with a dilemma in cases that violated the timely continuance provision in paragraph 6(B) while waiting for administrative exhaustion: the court would be required to either dismiss the case in direct contravention of paragraph 5(F)(ii) or refrain from enforcing the paragraph 6(B) provision. Finally, the RTC argues that section 1821(d) divests the court of jurisdiction when a claimant fails to file a timely administrative claim. Nothing in the record before us, however, establishes Baychar's failure to file a timely claim. Section 1821(d) defines several periods of time within which a claimant may file a timely claim, including that provided in paragraph 5(C)(ii) of anytime if the claimant did not receive notice of the receivership and files a claim while the RTC is capable of paying it. The record before us does not reflect findings either that Baychar received notice of the receivership or that the RTC is currently unable to pay a claim should Baychar now file. Thus, since we cannot conclude that Baychar has failed to file a timely claim, the RTC's interpretation of section 1821(d) is of no effect. [6] The RTC presents us with additional arguments against the set-off not presented by American to the trial court. It is well established that when a party seeks to raise an issue for the first time on appeal for the purpose of attacking the judgment from which he appeals, he is held to have waived that issue for appellate review because he failed to submit it for decision at the trial level. Emerson v. Ham, 411 A.2d 687, 690 (Me.1980). Here, however, the RTC was not a party to this litigation at the trial level, nor was it in its capacity as receiver for Federal in privity with American. A party that intervenes in a pending action becomes a party to that action and, as a general rule, has the same rights and liabilities as the original parties. New England Whitewater Ctr. v. D.I.F.W., 550 A.2d 56, 59 (Me.1988). Thus, an intervenor assumes a derivative role by virtue of an action already shaped by the original parties. He takes the controversy as he finds it and may not introduce his own claims to restyle the action. Connecticut Water Co. v. Beausoleil, 204 Conn. 38, 526 A.2d 1329, 1334 (1987). See also Appeal of Municipality of Penn Hills, 519 Pa. 164, 546 A.2d 50, 52 (1988) (intervenor must raise claims in subordination to and in recognition of the propriety of the original action). Had the RTC intervened in this appeal, it would not have been empowered to raise defenses to the set-off in addition to those raised by American at trial. The RTC did not, however, intervene in this appeal, but sought and was granted substitution as the real party in interest. We do not intend this substitution to divest the RTC of rights it may have had absent substitution, nor do we intend it to confer on the RTC any additional rights. Therefore, in determining whether to entertain the defenses that the RTC raises for the first time on this appeal, we consider whether these defenses might have been raised by the RTC in a separate action. We conclude that the doctrine of res judicata would have barred the RTC in its capacity as receiver for Federal from challenging the set-off had they not been substituted herein. A successor in interest of property that is the subject of a pending action to which his transferor is a party is bound by and entitled to the benefits of the rules of res judicata to the same extent as his transferor, unless [inter alia] the successor was unaware of the pending action. Restatement (Second) of Judgments § 44 (1983). This principle is premised on the practical insight that if a transferee is aware of the litigation but does not join as a party, he acquiesces in the transferor's continuing, for purposes of the litigation, to be the apparent owner of the interest in the property. His doing so is in effect treating the transferor as his representative in the action. Id. at comment a. See also Bodnar v. Brinsfield, 60 Md.App. 524, 483 A.2d 1290, 1295 (1984) (persons who are directly interested in a suit and have knowledge of its pendency and refuse or neglect to appear and avail themselves of their rights are concluded by the proceedings as effectually as if they were named in the record) (quoting Williams v. Snelby, 92 Md. 9, 48 A. 43, 48 (1900)). Here, American held Baychar's note when she initiated this litigation in November of 1988. American thus properly pursued a counterclaim for foreclosure on that note. The RTC assumed receivership of American on January 10, 1990 and transferred Baychar's promissory note and mortgage to Federalfor which the RTC was the conservatorthe next day. Thereafter, American continued to pursue the foreclosure action through the trial and the entry of the judgments in November, 1990. Federal was first identified as the owner of Baychar's note and mortgage in April 1991 in the course of American's opposition to Baychar's motion for a set-off of the judgments. Federal never intervened in the foreclosure action and did not enter RTC receivership until September 13, 1991. By Federal's failure to intervene at any time in this litigation, it consented to American's prosecution of its case and is bound thereby. The RTC, as the receiver of and substituted party for Federal, may not now raise defenses that were not presented by American at the trial of this case.