Opinion ID: 564786
Heading Depth: 2
Heading Rank: 2

Heading: preliminary injunction against appellants other than rtc

Text: IN ITS CORPORATE CAPACITY 70 RTC contends that a provision of FIRREA, 12 U.S.C.A. Sec. 1821(j) (West 1989), prohibited the district court's injunction in all its respects except as to RTC in its corporate capacity. Section 1821(j) reads: 71 Except as provided in this section, no court may take any action, except at the request of the Board of Directors by regulation or order, to restrain or affect the exercise of powers or functions of the Corporation as a conservator or a receiver. 72 RTC concedes that this provision does not affect orders running against it in its corporate capacity. Here again we note that, to the extent of a conflict between this provision and provisions of ERISA authorizing relief, Sec. 1821(j) controls. 73 Before confronting RTC's contention, we initially address plaintiffs' and PBGC's broad challenge to the applicability of Sec. 1821(j) to the district court's order. We understand their argument to be that, while RTC as conservator and receiver is authorized to run the affairs of a troubled institution, including its personnel relation affairs, it is only authorized to run them in a legal manner. Thus, because the termination of the plan was illegal under ERISA, that termination was not among the powers or functions of the Corporation as a conservator or a receiver. 74 We find no such limitation in the language of Sec. 1821(j). Furthermore, plaintiffs' and PBGC's interpretation would undermine the purpose of the statute, namely, to permit RTC as conservator or receiver to function without judicial interference that would restrain or affect the exercise of its powers. See infra at 399-400. We therefore reject plaintiffs' and PBGC's broad challenge and move on to address RTC's contention as to the applicability of Sec. 1821(j) to the district court's order. 75 RTC's argument first requires that we identify the powers of RTC as conservator and receiver. These powers are defined by FIRREA and for the most part are found at 12 U.S.C.A. Sec. 1821(d)(2) (West 1989) which provides in part as follows: 76 (A) Successor to institution 77 The Corporation shall, as conservator or receiver, and by operation of law, succeed to-- 78 (i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution; ... 79 .... 80 (B) Operate the institution 81 The Corporation may, as conservator or receiver-- 82 (i) take over the assets of and operate the insured depository institution with all the powers of the members or shareholders, the directors, and the officers of the institution and conduct all business of the institution; 83 .... 84 (iv) preserve and conserve the assets and property of such institution. 85 .... 86 (D) Powers as conservator 87 The Corporation may, as conservator, take such action as may be-- 88 (i) necessary to put the insured depository institution in a sound and solvent condition; and 89 (ii) appropriate to carry on the business of the institution and preserve and conserve the assets and property of the institution. 90 (E) Additional powers as receiver 91 The Corporation may, as receiver, place the insured depository institution in liquidation and proceed to realize upon the assets of the institution, having due regard to the conditions of credit in the locality. 92 The quoted statutory powers given the conservator and receiver are quite broad, in keeping with the emergent objectives of the statute. We must determine whether the terms of the preliminary injunction requiring City Savings and its conservator to make payments to the plan restrain or affect the exercise of those powers. 93 The injunction orders City Savings and its conservator to make the contributions due and owing to the trustee and to continue to make timely contributions to the trustee as required by the plan. We think these provisions impinge on the statutory powers of RTC as conservator of City Savings (and now as receiver) to preserve and conserve the assets and property of such institution. Id. Sec. 1821(d)(2)(B)(iv). We say this because implementation of the injunctive provisions would clearly require distribution of the assets of City Savings and thereby encroach on the power of the conservator (now receiver) to preserve and dispose of the assets within its control. Indeed, implementation of these provisions of the injunction could result in forcing City Savings to accord the trustee, and therefore the beneficiaries of the plan, a preference over other creditors. 94 Thus, to the extent the district court's injunctive order required City Savings, and its conservator or receiver, to pay money from its assets, it violated Sec. 1821(j) and must be reversed. 95 We now turn to the injunction as it provides nonmonetary relief against all appellants other than RTC in its corporate capacity. This portion of the order essentially bars appellants from taking any action to terminate the plan. 18 96 The plan established by City Federal provided at section 15.1(a) that City Federal's Board of Directors reserves the right at any time to amend, suspend or terminate the Plan ... for any reason and without the consent of any ... Participant [or] Beneficiary.... Under Sec. 1821(d)(2)(A)(i) the receiver for City Federal succeeded to the termination rights contained in the original plan. Further, the assumption did not alter this provision of the plan, and thus under the plan RTC, as conservator or receiver for City Savings Bank, reserved the same right to terminate. 19 Under these circumstances the nonmonetary provisions of the order prohibiting City Federal and City Savings Bank from taking steps to terminate the plan encroached on the exercise of statutory power residing in RTC as receiver and conservator. 97 This analysis is not inconsistent with the Supreme Court's recent decision in Coit, 489 U.S. 561, 109 S.Ct. 1361. In that case, which was decided prior to the enactment of FIRREA, a savings institution was sued for damages and declaratory relief for breach of contract and other state law claims. After FSLIC was appointed receiver of the institution and removed the case to federal court, FSLIC sought to have the action dismissed. FSLIC argued that 12 U.S.C. Sec. 1464(d)(6)(C), a statute similar to Sec. 1821(j), 20 barred the relief on the ground that resolution of the suit would restrain and affect the exercise of its powers as receiver. The Court disagreed and permitted the suit to continue. 98 The Court stated that the statutory language prohibits courts from restraining or affecting FSLIC's exercise of those receivership 'powers or functions' that have been granted by other statutory sources. 489 U.S. at 574, 109 S.Ct. at 1369. Because the Court had ruled that FSLIC was not granted the statutory authority to adjudicate claims, judicial resolution of those claims did not impinge on its powers. In contrast to the situation in Coit, we have determined that the order does impinge on the exercise of powers granted by statute. 99 This brings us to that aspect of the district court's order prohibiting City Savings from terminating the plan. In contrast to City Savings Bank, City Savings did not assume the plan, and in fact the plan was returned to City Federal prior to City Savings' coming into existence. Thus, as to it this portion of the injunction has no meaning or effect because City Savings had no authority with respect to the plan. 100 In light of the foregoing we conclude that in granting monetary relief against City Savings, and in prohibiting City Federal and City Savings Bank from terminating the plan, the injunction contravenes the provisions of Sec. 1821(j). 21 Further, in prohibiting City Savings from terminating the plan the injunction has no force or effect. On these bases the district court's order granting monetary relief against City Savings and nonmonetary relief against all appellants other than RTC in its corporate capacity must be reversed. 101 In reaching our conclusion that some portions of the district court's order were prohibited by Sec. 1821(j), we emphasize that the effect of that section in this case is solely to prevent a particular remedy in the interest of allowing RTC as receiver or conservator promptly to perform its important functions in dealing with the savings and loan crisis. It does not deprive plaintiffs, if wronged, of any other remedy that would not restrain or affect the exercise of the receiver's or conservator's powers or functions. We naturally express no opinion as to the alleged wrongfulness of RTC's conduct. 102 Moreover, we do not mean to be understood as saying that an order restraining or affecting RTC's exercise of its powers as receiver or conservator could never issue. Indeed, courts have recognized exceptions to provisions worded even more broadly than Sec. 1821(j). See, e.g., South Carolina v. Regan, 465 U.S. 367, 378, 104 S.Ct. 1107, 1114, 79 L.Ed.2d 372 (1984) (provision prohibiting courts from enjoining collection of taxes does not prohibit injunction where Congress has provided plaintiff with no alternative remedy); Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7, 82 S.Ct. 1125, 1129, 8 L.Ed.2d 292 (1962) (prohibition of tax injunction statute might not apply where it is apparent that at time of suit, under most liberal view of facts and law, government cannot establish claim). However, we are not asked to invoke any such exception to the statutory language. 103