Opinion ID: 697608
Heading Depth: 2
Heading Rank: 2

Heading: Jurisdictional Bar of 12 U.S.C. Sec. 1821(d)

Text: 18 The FDIC next contends that the district court lacked jurisdiction to hear any of the Freemans' claims, including claims for compensatory damages, because 12 U.S.C. Sec. 1821(d) bars any court from hearing claims against, or actions to determine rights with respect to, the assets of a failed bank held by the FDIC as receiver unless the claimant first exhausts his administrative remedies by filing claims under the FDIC's administrative claims process. 19 FIRREA's section 212, 12 U.S.C. Sec. 1821, creates an administrative claims process for claims against the assets of failed banks held by the FDIC as receiver. 12 U.S.C. Sec. 1821(d)(3)-(13). The FDIC is authorized to decide such claims under a process established by the statute and FDIC regulations. 12 U.S.C. Secs. 1821(d)(3)(A), 1821(d)(4). When liquidating a failed bank's assets, the FDIC must publish a notice to the depository institution's creditors specifying a date by which claims must be presented, not less than 90 days after publication, 12 U.S.C. Sec. 1821(d)(3)(B), and in addition must mail a similar notice to any creditor shown on the institution's books, 12 U.S.C. Sec. 1821(d)(3)(C). The FDIC has 180 days after a claim is filed to allow or disallow it. 12 U.S.C. Sec. 1821(d)(5)(A). Claims not timely filed must be disallowed unless the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date; in that case, a late-filed claim may be considered by the receiver, provided the claim is filed in time to permit payment. 12 U.S.C. Sec. 1821(d)(5)(C). Finally, 20 [e]xcept as provided in this subsection, no court shall have jurisdiction over-- 21 (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; or 22 (ii) any claim relating to any act or omission of such institution or the Corporation as receiver. 23 12 U.S.C. Sec. 1821(d)(13)(D). 24 Thus no court has jurisdiction to hear any claim or action for payment from or action seeking a determination of rights with respect to any asset of a failed bank for which the FDIC is receiver, with one relevant exception. Under Sec. 1821(d)(6), both the United States District Court for the District of Columbia and the district court for the district where the financial institution has its principal place of business have jurisdiction to review de novo claims filed with, and processed by, the FDIC under its administrative claims process. See Rosa v. Resolution Trust Corp., 938 F.2d 383, 391-92 (3d Cir.), cert. denied, 502 U.S. 981, 112 S.Ct. 582, 116 L.Ed.2d 608 (1991). Such an action must be filed in district court within 60 days after the administrative claim is disallowed, or within 60 days after the expiration of the 180-day period allowed for processing the administrative claim, whichever comes first. 12 U.S.C. Sec. 1821(d)(6). 25 The effect of these provisions, read together, is to require anyone bringing a claim against or seeking a determination of rights with respect to the assets of a failed bank held by the FDIC as receiver to first exhaust administrative remedies by filing an administrative claim under the FDIC's administrative claims process. Office and Professional Employees Int'l Union, Local 2 v. FDIC, 962 F.2d 63, 65-66 (D.C.Cir.1992). As the First Circuit explained, FIRREA makes participation in the administrative claims review process mandatory for all parties asserting claims against failed institutions, and where a claimant has ... failed to initiate an administrative claim within the filing period, the claimant necessarily forfeits any right to pursue a claim against the failed institution's assets in any court. Marquis v. FDIC, 965 F.2d 1148, 1151-52 (1st Cir.1992) (citation omitted). Section 1821(d)(13)(D) thus acts as a jurisdictional bar to claims or actions by parties who have not exhausted their Sec. 1821(d) administrative remedies. Brady Development Co., Inc. v. Resolution Trust Corp., 14 F.3d 998, 1003 (4th Cir.1994). Accord, Bueford v. Resolution Trust Corp., 991 F.2d 481, 484 (8th Cir.1993); Henderson v. Bank of New England, 986 F.2d 319, 320-21 (9th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 559, 126 L.Ed.2d 459 (1993); Meliezer v. Resolution Trust Corp., 952 F.2d 879, 882 (5th Cir.1992); Resolution Trust Corp. v. Elman, 949 F.2d 624, 627 (2d Cir.1991); Rosa v. Resolution Trust Corp., 938 F.2d at 392. See also H.R.REP. NO. 101-54(I), 101st Cong., 1st Sess. 418 (1989), reprinted in U.S.C.C.A.N. 86, 214 (Resort to ... the District Courts ... is available only after the claimant has first presented its claim to the FDIC.). 26 Although each of the Freemans' claims is based upon a distinct legal theory, each ultimately seek[s] a determination of rights with respect to an asset of a failed bank for which the FDIC serves as receiver--specifically, Madison's $740,000 loan to the Freemans upon which the FDIC seeks to foreclose. It is undisputed that the Freemans did not file any of these claims through the administrative claims process prior to their filing of this lawsuit. On its face, then, Sec. 1821(d) bars any court from hearing the Freemans' claims. 27 The Freemans nonetheless contend that Sec. 1821(d) applies only to claims for payment by creditors of the failed institution. They insist that as debtors they are not Madison's creditors and therefore are not subject to the Sec. 1821(d) jurisdictional bar. This contention, however, does not comport with the statutory language. The statute expressly bars courts from hearing any claim or action for payment from or action seeking a determination of rights with respect to the assets of a failed bank held by the FDIC as receiver, unless the administrative claims process is exhausted. 12 U.S.C. Sec. 1821(d)(13)(D). As the First Circuit explained in Marquis, this jurisdictional bar applies to three distinct kinds of claims or actions:  all claims seeking payment from the assets of the affected institutions; all suits seeking satisfaction from those assets; and all actions for the determination of rights vis-a-vis those assets. Marquis, 965 F.2d at 1152. Nor does the statutory text suggest that the jurisdictional bar applies only to creditors; on its face, it applies to anyone with a claim for payment or action seeking a determination of rights with respect to the failed institution's assets. See Lloyd v. FDIC, 22 F.3d at 337. Concededly, the notice provisions of Secs. 1821(d)(3)(B) and (C) require that the FDIC give notice of the claims period to a failed financial institution's creditors, but as we noted in OPEIU, Local 2, 962 F.2d at 67, FIRREA's very text appears to contemplate claims beyond those by 'creditor[s] ... on the ... books' to whom statutory notice must be sent. For example, 12 U.S.C. Sec. 1821(d)(13)(D) says that any claim relating to an act or omission of the institution or the Corporation as receiver is subject to the Sec. 1821(d) exhaustion requirement. 28 Our sister circuits have broadly applied the Sec. 1821(d) jurisdictional bar to all manner of claims and actions seeking a determination of rights with respect to the assets of failed banks, whether those claims and actions are by debtors, creditors, or others. See, e.g., Lloyd v. FDIC, 22 F.3d at 337 (suit by debtor seeking equitable reformation or cancellation of mortgage agreement to prevent foreclosure is a determination of rights with respect to an asset subject to Sec. 1821(d)(13)(D) jurisdictional bar); Henderson v. Bank of New England, 986 F.2d at 321 (claims by unsuccessful credit card applicant for monetary damages and discovery of derogatory credit information are subject to Sec. 1821(d)(13)(D) jurisdictional bar); Meliezer v. Resolution Trust Corp., 952 F.2d at 883 (mortgagor's claim that failed institution was negligent in allowing mortgagor to assume insufficient insurance is subject to Sec. 1821(d)(13)(D) jurisdictional bar); Resolution Trust Corp. v. Elman, 949 F.2d at 629 (law firm's defensive assertion of retaining lien to retain custody of legal files of its former client, a failed bank under RTC receivership, is subject to Sec. 1821(d)(13)(D) jurisdictional bar). And in Local 2, OPEIU, 962 F.2d at 67, we held that the Sec. 1821(d) administrative claims process is not limited to claims by creditors, so that a union local could pursue an administrative claim on behalf of its members for payment of certain employment benefits, and under Sec. 1821(d)(6) had recourse to de novo judicial review of the FDIC's denial of that claim. But see Homeland Stores, Inc. v. Resolution Trust Corp., 17 F.3d 1269 (10th Cir.) (construing Sec. 1821(d)(13)(D) jurisdictional bar narrowly, so as not to bar claims arising after deadline for filing administrative claims), cert. denied, --- U.S. ----, 115 S.Ct. 317, 130 L.Ed.2d 279 (1994). 29 The Freemans do garner some support for their position from a handful of recent decisions in bankruptcy cases holding that both the Sec. 1821(d) administrative claims process and the Sec. 1821(d)(13)(D) jurisdictional bar apply only to claims by creditors and therefore bankruptcy courts retain jurisdiction over claims by debtors. See In Re Parker North American Corp., 24 F.3d 1145, 1152-53 (9th Cir.1994) and cases cited therein. The concern underlying these cases is clear: if bankruptcy courts are ousted of jurisdiction over a broad class of claims under the Sec. 1821(d) jurisdictional bar, the unity of the bankruptcy process may be fractured and some bankruptcy-related claims would be determined, at least in the first instance, by FDIC administrative tribunals, which (it is argued) have little expertise in bankruptcy matters. Id. at 1153. For the reasons stated above, we do not think this construction of the Sec. 1821(d)(13)(D) jurisdictional bar quite squares with the statutory text. But even if Sec. 1821(d)(13)(D) is narrowly construed as a limitation on bankruptcy courts' jurisdiction in order to effectuate the purposes of the Bankruptcy Code, id. at 1155-56, we decline to extend that approach to nonbankruptcy court contexts. To do so would not advance the purposes of the Bankruptcy Code, while it would undercut Congress' core purpose in enacting FIRREA, which was to ensure that the assets of a failed institution are distributed fairly and promptly among those with valid claims against the institution, Local 2, OPEIU, 962 F.2d at 68, and to expeditiously wind up the affairs of failed banks, id. at 64. Cf. Coit Independence Joint Venture v. FSLIC, 489 U.S. 561, 584-85, 109 S.Ct. 1361, 1374-75, 103 L.Ed.2d 602 (1989) (to liquidate a failed institution's assets in an orderly manner, the receiver would require timely notice of the entire array of claims against an insolvent institution and an initial opportunity to consider them in a centralized claims process in order to make rational and consistent judgments regarding which claims to allow or contest or to settle ... without resort to costly litigation). 30 We therefore hold that the Sec. 1821(d) jurisdictional bar is not limited to claims by creditors, but extends to all claims and actions against, and actions seeking a determination of rights with respect to, the assets of failed financial institutions for which the FDIC serves as receiver, including debtors' claims. The Freemans' claims fall within the scope of that provision. 31 Finally, the Freemans contend that they were not required to exhaust their administrative remedies because they never received notice of the period within which claims were to be filed, as required by Sec. 1821(d)(3)(C) which provides: The receiver shall mail a notice [of the period within which claims are to be filed] ... to any creditor shown on the institution's books.... 12 U.S.C. Sec. 1821(d)(3)(C). The FDIC produced an affidavit from an FDIC official stating that the required notices had been mailed to creditors listed on Madison's books, including the Freemans, but the Freemans deny having received such a notice. Even if the Freemans never received the required Sec. 1821(d)(3)(C) notice, however, they were still obliged to exhaust their administrative remedies as a condition of obtaining access to the district court. 32 The Fifth Circuit squarely addressed this question in Meliezer, 952 F.2d at 882-83, and concluded that the receiver's failure to mail the notice required under 12 U.S.C. Sec. 1821(d)(3)(C) does not relieve the claimant of the obligation to exhaust administrative remedies, because the statute does not provide for a waiver or exception under those circumstances. Accord, Intercontinental Travel Marketing, Inc. v. FDIC, 45 F.3d 1278, 1285 (9th Cir.1994); but cf. Whatley v. Resolution Trust Corp., 32 F.3d 905, 910 & n. 1 (5th Cir.) (Duhe, J., concurring) (suggesting that failure to mail Sec. 1821(d)(3)(C) notice would deprive the receiver of authority to determine administrative claims and relieve the claimant of its obligation to exhaust administrative remedies), reh'g and reh'g in banc denied, 38 F.3d 760 (5th Cir.1994). In our view, Meliezer and Intercontinental Travel Marketing correctly interpret the statute. The only statutorily-specified exemption from the strict requirements of the administrative claims process is provided if the claimant did not receive notice of the appointment of the receiver in time to file ... [a] claim, 12 U.S.C. Sec. 1821(d)(5)(C) (emphasis added), and even in that case the only consequence is that the FDIC may consider a late-filed claim, provided the claim is filed in time to permit payment. But cf. Heno v. FDIC, 20 F.3d 1204 (1st Cir.1994) (deferring to FDIC's interpretation of Sec. 1821(d)(5)(C) as also authorizing FDIC to process late-filed claims that accrue after the bar date). That Sec. 1821(d)(5)(C) expressly provides for a partial exemption for failure to provide notice undercuts appellants' argument that we should find an implicit total exemption from the claims process for failure to provide notice in Sec. 1821(d)(3)(C); had Congress intended to provide such a broad exemption, it surely would have said so. See Intercontinental Travel Marketing, 45 F.3d at 1285. 33 Here, it is undisputed that the Freemans did have timely notice of the appointment of the FDIC as receiver, whether or not they received the specific notice required to be mailed under Sec. 1821(d)(3)(C). The FDIC sent a certified letter to the Freemans, dated April 8, 1992, explicitly stating that the FDIC had been appointed receiver, demanding payment on both the $740,000 and the $150,000 notes, and warning that the Freemans' residence may be foreclosed upon if payment is not made. Because they received notice of the appointment of FDIC as receiver, the Freemans were not relieved of their obligation to proceed through the normal administrative claims process. 34 We conclude that under Sec. 1821(d)(13)(D), the district court lacked jurisdiction to hear any of the Freemans' claims. The district court would have jurisdiction only to review de novo the FDIC's determination of their administrative claims. The Freemans were thus required to exhaust their administrative remedies before bringing their claims to court, and by failing to do so, deprived the court of jurisdiction.