Opinion ID: 153508
Heading Depth: 2
Heading Rank: 1

Heading: Plaintiffs' claim for declaratory and injunctive relief.

Text: 12 In count one of their complaint, plaintiffs sought a declaratory judgment setting forth the applicable terms and conditions of the note and mortgage, enjoining Wendover from accelerating the remaining balance on the note, and enjoining Wendover from initiating foreclosure proceedings against the property. In reviewing this claim, the district court concluded that RTC, as holder of the note and mortgage, was an indispensable party to the action under Fed.R.Civ.P. 19(a). The court further concluded that RTC could not be joined in the action because of limitations on jurisdiction over claims against RTC set forth in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1811 et seq. Accordingly, the court granted summary judgment in favor of Wendover on count one of the complaint. 13 The section of FIRREA cited by the district court, 12 U.S.C. § 1821(d)(13)(D), contains a jurisdictional bar: 14 Except as otherwise provided in this subsection, no court shall have jurisdiction over-- 15 (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 [RTC] has been appointed receiver, including assets which [RTC] may acquire from itself as such receiver; or 16 (ii) any claim relating to any act or omission of such institution or [RTC] as receiver. 17 The [e]xcept as otherwise provided language refers in part to FIRREA's administrative claim procedure outlined in § 1821(d)(3)-(13). See National Union Fire Ins. Co. of Pittsburgh v. Midland Bancor, 869 F.Supp. 880, 884 (D.Kan.1994). Under this administrative claim procedure, the RTC must give notice to creditors of a financial institution upon appointment of a receivership. 12 U.S.C. § 1821(d)(3)(B). Creditors are then required to file a claim with RTC within a limited time frame. Id. After receiving a claim, RTC has 180 days in which to allow or disallow the claim. 12 U.S.C. § 1821(d)(5)(A)(i). If a claim is disallowed or not ruled on by RTC within 180 days, the claimant can seek judicial review. 12 U.S.C. § 1821(d)(6)(A). 18 In Homeland Stores v. Resolution Trust Corp., 17 F.3d 1269, 1273 (10th Cir.), cert. denied 115 S.Ct. 317 (1994), this court acknowledged the language of § 1821(d)(13)(D), standing alone, is very broad. However, proceeding on the assumption that Congress intended the claims barred by § 1821(d)(13)(D) to parallel those contemplated under the FIRREA administrative claims process, this court examined the overall structure of the administrative claims process. The court concluded that much of § 1821(d) indicates that in requiring administrative review--and in the meantime forbidding federal court jurisdiction--of 'claims,' Congress had in mind creditor and related claims arising before an institution enters receivership. Id. at 1274. The court further noted that the statutory provisions describing claim preferences put the claims process in the context of a conventional winding up of the debts accrued by an institution before entering receivership. Id. at 1275. Accordingly, the court concluded the term claim, as used in § 1821(d)(13)(D), did not include claims brought against RTC based on its own actions in managing the assets of a failed financial institution. 19 Based in part upon the analysis of the FIRREA administrative claim process in Homeland, we conclude that plaintiffs' claim for declaratory relief against RTC is not jurisdictionally barred by § 1821(d)(13)(D). 1 First, plaintiffs are debtors, not creditors, of RTC. Accordingly, as concluded in Homeland, their claims are not the type that Congress had in mind when it enacted FIRREA's administrative claim process. 17 F.2d at 1274; see also In re Parker North American Corp., 24 F.3d 1145, 1152 (9th Cir.1994) (holding FIRREA administrative claims process applies only to claims of creditors against RTC and not to challenges incident to RTC's claims against its debtors). Second, as debtors, plaintiffs would not have received any notice of receivership from RTC nor any notice that they needed to file claims against RTC via the administrative claims procedure. See 12 U.S.C. § 1821(d)(3)(B) (requiring RTC to promptly publish a notice to the depository institution's creditors). Third, even if plaintiffs had received notice of the receivership and of the administrative claims procedure, there would have been nothing to file because their claim for declaratory relief did not accrue until long after Provident was placed in receivership. Although plaintiffs focus heavily on the alleged wrongful conduct of Provident in 1987, the limited record on appeal suggests the dispute over the terms and conditions of the note and mortgage did not arise until IMCO began servicing the loan for RTC in late 1990. Further, it is arguable that the claim did not actually accrue until after Earl Colman's discharge in bankruptcy, at which time his retention of the property without reaffirmation of the debt called into question the terms of the agreement with RTC. Although we find it unnecessary to conclusively determine on appeal when the claim for declaratory relief accrued, we have little doubt that it did so after the time for filing administrative claims with RTC had expired. See 12 U.S.C. § 1821(d)(3)(B) and (d)(5)(C)(i) (providing administrative claims must be filed within ninety days after receiver publishes notice to creditors, and claims filed thereafter will be disallowed). 20 There is an additional basis for concluding plaintiffs' claim for declaratory relief is not subject to the FIRREA administrative process. Although neither the parties nor the district court gave consideration to the impact of Earl Colman's bankruptcy, we believe this event is significant. Under Chapter 7 of the Bankruptcy Code, if an individual debtor has consumer debts secured by property of the estate, the debtor must file a statement of intent with respect to such property. More specifically, the debtor must state whether he or she intended to retain or surrender the property, whether it will be claimed exempt, whether the debtor intends to redeem the property, and whether the debtor intends to reaffirm the debt secured by the property. See 11 U.S.C. §§ 522 (exemptions), 722 (redemption), 524(c), (d) (reaffirmation). Some courts have held that a debtor must choose between surrender, reaffirmation, or redemption of collateral, while others, including this court, have held a debtor may continue making payments and retain collateral without redemption or reaffirmation if the debtor has remained current on the obligation. See Matter of Edwards, 901 F.2d 1383, 1387 (7th Cir.1990) (debtor must reaffirm or redeem to keep property); contra In re Belanger, 962 F.2d 345, 347-48 (4th Cir.1992); Lowry Federal Credit Union v. West, 882 F.2d 1543, 1546-47 (10th Cir.1989) (debtor can continue to make payments without reaffirmation or redemption and creditor has no grounds to recover property). Here, because none of the bankruptcy pleadings were included in the record on appeal, we do not know whether Earl Colman filed a statement of intent with respect to the real property at issue. Regardless, it does not appear that he reaffirmed his debt with RTC/Wendover; instead, he simply continued to make payments during the pendency of his bankruptcy, and has continued to do so. Because Earl Colman did not reaffirm, there appears to be a significant question as to the terms of his agreement with RTC/Wendover. In particular, are they the same as the initial agreement or the 1987 modification, or did the bankruptcy wipe away part of the underlying debt and result in a new obligation? Moreover, has Wendover's acceptance of lower payments effectively resulted in an agreement consistent with the 1987 modification? Although this court's decision in Lowry may authorize the course of action that Earl Colman has taken, it does not answer the question of what effect such actions had on the terms of the underlying obligation. Finally, there is some question as to whether Lowry is applicable because of the late loan payments. In light of these difficult issues of bankruptcy law, we conclude it is appropriate to have the matter decided in the first instance by the district court, not RTC. See Parker, 24 F.3d at 1153 (noting RTC has no special skill in determining bankruptcy questions); see also In re Miraj and Sons, 192 B.R. 297, 310 (Bankr.D.Mass.1996) (citing and agreeing with cases holding FIRREA administrative claims process does not apply to claims that arise incidentally to a bankruptcy court's determination of FDIC's claim against a debtor). 21 Finally, we note the parties' supplemental appellate briefs have raised a serious question concerning who is the actual holder of the note and mortgage. The parties were directed to file supplemental briefs addressing several questions unanswered in their initial briefs. In particular, the parties were asked to confirm whether Federal Deposit Insurance Corporation (FDIC), the successor to RTC, is the current holder of the note and mortgage. See 12 U.S.C. § 1441a(m) (terminating RTC as of December 31, 1995, and appointing FDIC as successor). Surprisingly, we were informed the note and mortgage had been transferred by RTC to Magnolia Federal Bank in Hattiesburg, Mississippi, on June 23, 1994, approximately five months prior to the time Wendover filed its motion for summary judgment and approximately one year prior to the entry of summary judgment in favor of Wendover. According to plaintiffs, they were not informed of this alleged transfer. 22 Because Wendover failed to inform the district court of the alleged transfer of the note and mortgage, 2 we do not fault the district court for relying upon the information presented by the parties and finding that RTC was the holder of the note and mortgage. The basis for our reversal on this claim is the district court's ruling regarding the joinder of RTC as an indispensable party, and not these newly alleged facts. Nevertheless, in light of these new factual allegations (which we note have not yet been corroborated by any documents or other properly admitted evidence), it is necessary that the district court conclusively determine on remand who is the current holder of the note and mortgage and whether that person or entity can and should be added as a party to this case.