Opinion ID: 2197524
Heading Depth: 2
Heading Rank: 2

Heading: Jurisdiction After the Exhaustion of Administrative Remedies

Text: There is a presumption of concurrent jurisdiction among federal and state courts over claims arising under federal law. Tafflin v. Levitt, 493 U.S. 455, 458-59, 110 S.Ct. 792, 794-95, 107 L.Ed.2d 887 (1990); Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 478, 101 S.Ct. 2870, 2875, 69 L.Ed.2d 784 (1981) (citations omitted). This presumption is rebutted only by a clear expression by Congress vesting federal courts with exclusive jurisdiction. Tafflin, supra, 493 U.S. at 459, 110 S.Ct. at 795; Gulf Offshore, supra, 453 U.S. at 478, 101 S.Ct. at 2875. The Supreme Court has observed that the presumption may be rebutted by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests. Gulf Offshore, supra, 453 U.S. at 478, 101 S.Ct. at 2875 (citations omitted). In support of their contention that federal courts enjoy exclusive subject-matter jurisdiction, the receivers rely on 12 U.S.C.A. § 1821(d)(6)(A) and (d)(13)(D) (1989). Subparagraph (6)(A) provides that after disallowance of a claim by the receiver, a complainant: may request administrative review of the claim ... or file suit on such claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the depository institution's principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim). 12 U.S.C.A. § 1821(d)(6)(A) (emphasis added). The receivers argue that the phrase continue an action commenced before the appointment of the receiver modifies the phrase district or territorial court of the United States and, therefore, a pending state court action may be continued only by newly filing it in a federal district court. Subparagraph (13)(D), which addresses judicial review, provides: [e]xcept 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 [RTC or FDIC] has been appointed receiver... or; (ii) any claim relating to any act or omission of such institution or Corporation as receiver. 12 U.S.C.A. § 1821(d)(13)(D) (emphasis added). The receivers claim that subparagraph (13)(D) is the source of the exclusive grant of federal court jurisdiction. On the other hand, Simard and Pickett maintain that the otherwise provided jurisdiction referred to in 12 U.S.C.A. § 1821(d)(13)(D) is found in 12 U.S.C.A. § 1821(d)(5)(F)(ii) and (d)(6)(A) (1989). Subparagraph (5)(F)(ii) provides that the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the receiver. Subparagraph (6)(A), as stated above, provides that, as one option, the claimant may ... continue an action commenced before the appointment of the receiver. The receivers, disputing the interpretation offered by Simard and Pickett, contend that 12 U.S.C.A. § 1821(d)(13)(D) divests the court of subject-matter jurisdiction and that no other provision of 12 U.S.C.A. § 1821(d) authorizes a state court to exercise jurisdiction. We conclude, however, that FIRREA does not, either explicitly or in its legislative history, rebut the presumption of concurrent jurisdiction over an action that was originally filed in a state trial court (or in the Superior Court of the District of Columbia) [9] before a receiver was appointed. The same result has been reached by the overwhelming majority of the twelve state courts that have decided whether FIRREA divests a state court of subject-matter jurisdiction after the appointment of a receiver. [10] FIRREA explicitly provides that after exhausting administrative remedies, a claimant may continue an action commenced before the appointment of the receiver. 12 U.S.C.A. § 1821(d)(6)(A). Courts in other jurisdictions have concluded that a complainant would be unable to continue a state court action if the state court is deprived of subject-matter jurisdiction. Therefore, they conclude that the term continue would have no meaning if a litigant was not permitted to resume an action in the state court. See Armstrong, supra note 10, 175 Ill.Dec. at 200, 599 N.E.2d at 1214; Berke, supra note 10, 483 N.W.2d at 714; Binford, supra note 10, 114 N.M. at 566, 844 P.2d at 816; Herbst, supra note 10, 607 N.E.2d at 444. In Berke, where the state court action was filed before the appointment of the receiver, the Minnesota Court of Appeals held that we cannot conclude state courts are deprived of all jurisdiction over disputes involving RTC. Berke, supra note 10, 483 N.W.2d at 714. The Berke court also relied on the continue language contained in 12 U.S.C.A. § 1821(d)(6)(A), observing that: [s]pecifically, a pre-receivership action filed in state court cannot be continued after receivership if it must be dismissed from state court and refiled in federal court. Dismissal of the state court action does not continue that action. Thus, references to which federal courts may entertain [a receivership] action must pertain to suits filed for the first time after the claim has been processed under FIRREA's administrative procedure. Id. at 714 (footnote omitted). Further support for continuing jurisdiction of pre-receivership claims is found in Armstrong, where the RTC, appointed receiver after the state action was filed, moved to dismiss the case on the ground the claimants had failed to exhaust FIRREA's administrative remedies. Armstrong, supra note 10, 175 Ill.Dec. at 198, 599 N.E.2d at 1212. The Armstrongs subsequently filed a claim with the RTC while that motion was pending, the trial court denied the motion to dismiss, and the RTC noted an appeal. Id. The Illinois Appellate Court held that the simultaneous pursuit of the administrative claim does not automatically strip the court of subject matter jurisdiction. Id. at 201, 599 N.E.2d at 1215. That court further held, citing FIRREA's removal provisions, that [s]ince FIRREA does not implicitly or explicitly grant exclusive jurisdiction to the federal courts, nor does the statute mandate removal, the state court had subject-matter jurisdiction. Id. at 202, 599 N.E.2d at 1216. On appeal to the Illinois Supreme Court, the RTC contended both that 12 U.S.C.A. § 1821(d)(13)(D) operates as a jurisdictional bar precluding judicial action until administrative remedies have been exhausted and that state courts do not have concurrent jurisdiction pursuant to the test set forth in Gulf Offshore, supra, 453 U.S. at 478, 101 S.Ct. at 2875. Armstrong, supra note 10, 191 Ill.Dec. at 49, 623 N.E.2d at 294. Concerning the first contention, the Illinois Supreme Court held that Congress did not intend to preclude all judicial review before the statutory claims process has been completed. Id. at 51, 623 N.E.2d at 296. The court explained that it was impossible to reconcile the RTC's interpretation of 12 U.S.C.A. § 1821(d)(13)(D) with FIRREA's stay provisions, observing that if a case was automatically dismissed upon the entry of the receiver as a party then there would be no need for a stay. Id. at 50, 623 N.E.2d at 295. The court further observed that such an interpretation would prejudice a claimant's right to continue an action pursuant to 12 U.S.C.A. § 1821(d)(5)(F)(ii). Id. at 51, 623 N.E.2d at 296. The court then held, applying the Gulf Offshore test, that federal courts do not have exclusive jurisdiction, observing that there is no exclusive grant of jurisdiction to the federal district courts and that had Congress intended to grant the sweeping exclusive jurisdiction claimed by RTC, it could have simply done so. Id. The court also observed that there is no implication in FIRREA's legislative history that federal courts have exclusive jurisdiction. Id. Lastly, the court observed that there is both no incompatibility between State-court jurisdiction of pre-receivership claims and Federal interests ... [and] no inherent detriment or prejudice to the RTC in litigating in State court. Id. at 52, 623 N.E.2d at 297. Thus, it concluded that we fail to see how it would be more efficient and economical to blindly strip the State court of jurisdiction after potentially lengthy pretrial and trial proceedings have already occurred. Id. In our view, the receivers' interpretation of 12 U.S.C.A. § 1821(d)(6)(A) would render the continue language a nullity because dismissal of the state court action, after exhausting the administrative remedy, followed by a filing in a federal district court is not the more natural meaning of continuing the original action that was filed in the state court before appointment of a receiver. Moreover, we agree with the observation of the Armstrong court that requiring a claimant to refile an action in federal district court would not advance FIRREA's goal of expeditiously resolving claims against receivership assets. See id. That point was also made by the United States Court of Appeals for the First Circuit: FIRREA was designed to create an efficient administrative protocol for processing claims against failed banks. This objective would be disserved by forcing the courts to dismiss all pending litigation, only to have the cases filed when and if administrative settlement proved impracticable. It is difficult to conceive of anything less efficient than dismissing a suit that has been, say, two years in process, only to have an identical suit started afresh some six months later. Marquis, supra, 965 F.2d at 1154. FIRREA also provides that after exhaustion of remedies under the statute, the filing of the claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the receiver. 12 U.S.C.A. § 1821(d)(5)(F)(ii). Requiring a claimant to refile in federal court would certainly, at least, prejudice the right to continue the claim in state court. See generally Warmann, supra note 10, 859 S.W.2d at 951; Binford, supra note 10, 114 N.M. at 565, 844 P.2d at 815; Herbst, supra note 10, 607 N.E.2d at 445. What could be more prejudicial to a claimant's right `to continue' a pending action than the outright dismissal of the action? Marquis, supra, 965 F.2d at 1153. Moreover, FIRREA's removal provision supports the conclusion that federal courts do not enjoy exclusive subject-matter jurisdiction over a pre-receivership claim. Congress did not mandate that all state actions be removed to a federal district court. Herbst, supra note 10, 607 N.E.2d at 443. Rather, 12 U.S.C.A. § 1819(b)(2)(B) (1994 Supp.) grants the receiver discretion to remove the case to federal court. Id. If Congress intended to grant exclusive federal court jurisdiction there would be no need for a provision granting the receiver the right to remove an action to federal court. See id. at 444; Armstrong, supra note 10, 175 Ill.Dec. at 202, 599 N.E.2d at 1216. We conclude that the cited provisions of FIRREA, considered together, permit retention of jurisdiction over a pre-receivership, pending action by the state courts, subject only to the receiver's discretion to seek either removal to a federal district court or a stay. See 12 U.S.C.A. §§ 1819(b)(2)(B), 1821(d)(12)(A); see also Hessey v. District of Columbia Board of Elections & Ethics, 601 A.2d 3, 7 (D.C.1991) (en banc) (court interprets legislative scheme as a whole). Our conclusion that state courts maintain jurisdiction over pre-receivership actions is in accord with Congress' intent to establish organizations and procedures to ... resolve failed thrift cases and to dispose of the assets of these institutions. H.R.REP. No. 101-54(I), 101st Cong., 1st Sess., 307 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 103. In creating these procedures, Congress intended to expedite the resolution of claims against receivership assets. That goal would be impeded, however, if state courts were automatically divested of subject-matter jurisdiction over an action that was pending before the appointment of the receiver and the claimants were required to refile in a federal court. Marquis, supra, 965 F.2d at 1154; Herbst, supra note 10, 607 N.E.2d at 445. Under these circumstances, having considered the principles set out in Tafflin and Gulf Offshore, we hold that 12 U.S.C.A. § 1821(d) does not divest the court of subject-matter jurisdiction over the instant actions that were pending since 1989 and 1990, respectively, before the appointment of the receivers because there is no clear expression in FIRREA, or any implicit direction in its language or legislative history, that subject-matter jurisdiction lies exclusively with the federal district courts. Accordingly, we turn to the merits of each appeal.