Opinion ID: 619531
Heading Depth: 2
Heading Rank: 7

Heading: FDIC motion to dismiss

Text: Finally, events following the district court's entry of judgment did not deprive either this court, or the district court, of jurisdiction, as contended in the motion to dismiss filed by defendant Federal Deposit Insurance Corporation (FDIC), the receiver for Washington Mutual. After briefing was completed on this appeal, on September 25, 2008, the Office of Thrift Supervision closed Washington Mutual Bank and appointed the FDIC receiver. On October 21, the FDIC filed a motion to substitute itself as receiver in the appeal and to stay the proceedings for 90 days pursuant to 12 U.S.C. § 1821(d)(12)(A)(ii), part of the Financial Institution Reform, Recovery, and Enforcement Act (FIRREA). This court granted the motion, and ordered a stay until December 25, 2008. The FIRREA allows a receiver to make use of an administrative claims process, the requirements of which are outlined in § 1821(d)(3)-(13), to determine claims against the banking institutions the receiver represents. The FDIC mailed notice and instructions regarding the administrative claims process to the Moloskys on February 11, 2009. On March 6, 2009, the FDIC filed two motions with this court seeking (1) a stay of proceedings until the administrative claims process was completed under the FIRREA, and (2) a continuance or postponement of oral argument. The first of these two motions requested us to stay proceedings until: (i) the date on which the FDIC-Receiver makes a determination on any administrative claim filed by the Moloskys; (ii) the expiration of the 180-day period following the filing of a claim by the Moloskys; or (iii) May 12, 2009, if the Moloskys fail to file an administrative claim by that date. We granted the motions on March 17 and 19, 2009, and directed counsel to advise the Clerks Office when the stay of appeal is ready to be lifted. The Moloskys filed a claim under the FIRREA claims procedure on May 5, 2009, to which they received no response. The case then lay dormant for 17 months until December 6, 2010, when this court ordered counsel for FDIC to update the court as to when the appeal can be scheduled for oral argument. On December 13, 2010, FDIC counsel filed the report, as well as a motion to dismiss the case for lack of jurisdiction. The motion argued that under 12 U.S.C. § 1821(d), the Moloskys were required to take affirmative action in order to continue their judicial action within the statute of limitations laid out in § 1821(d)(6)(B)(ii). According to the FDIC, because the Moloskys had not so continued their action, their claim was disallowed and all courts were stripped of subject matter jurisdiction under § 1821(d)(13)(D). It is not entirely clear whether the FDIC was seeking dismissal of the appeal for lack of our jurisdiction, thereby leaving the district court judgment intact, or seeking an exercise of our jurisdiction to direct the district court to dismiss for lack of subject matter jurisdiction. In either event, the motion must be denied, as the jurisdiction-stripping provisions of §§ 1821(d)(6)(B)(ii) and (13)(D) do not apply. Section 1821(d) states that a claimant may request administrative review or else 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 and adds that such court shall have jurisdiction to hear such claim. § 1821(d)(6)(A). The claimant may file or continue within 60 days of either (i) a notice of disallowance of the claim, or (ii) 180 days from when the claim was first filed, whichever is earlier. § 1821(d)(6)(A). If a claimant fails to take such action within the 60-day period, the claim shall be deemed to be disallowed . . ., such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim. § 1821(d)(6)(B). Section 1821(d)(13)(D) in turn states: Except 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 Corporation has been appointed receiver . . .; or (ii) any claim relating to any act or omission of such institution or the Corporation as receiver. In other words, failure to comply with the claims process will remove jurisdiction. The preclusion does not apply, however, because on the particular facts of this case, the court claim has been continued. An appeal over which we had jurisdiction was pending. The FDIC sought a stay of definite duration in order to permit an administrative proceeding. The FDIC did not respond to the administrative filing of the plaintiff, and the stay expired. No further action was required by rule or order of this court to continue the appeal, and appellant did not move to dismiss the appeal. The appellant therefore continued the appeal for purposes of § 1821(d)(6). This conclusion is supported by the reasoning and holding of Aguilar v. Fed. Deposit Ins. Corp., 63 F.3d 1059 (11th Cir. 1995). In that case the Eleventh Circuit held that  where the district court entered a stay of definite duration, claimants need not take affirmative action to `continue' a suit that was filed before the appointment of the receiver: the suit goes on when the stay expires. Id. at 1062. The facts of Aguilar resemble those of this case. There, as here, after being appointed receiver to a bank in an ongoing action, the FDIC requested a stay until the plaintiffs had exhausted their administrative remedies. Id. at 1061. There, as here, a significant period of time (six months in Aguilar ) elapsed after the expiration of the stay before the court held a status conference, at which point the FDIC moved to dismiss because the plaintiffs did not take some action to continue the case. Id. The Eleventh Circuit held that [n]one of the plain language of section 1821(d)(6) requires an affirmative act in a case like this one; the statute does not say what a claimant must do to `continue,' that is, to go on with, an action. Id. at 1062. Therefore, once the court-ordered stay expires, the action continues. As the Eleventh Circuit pointed out, this interpretation of § 1821(d)(6) is consistent with the purpose of FIRREAquick and efficient processing of claims[:] [Although] Congress was clear in providing the FDIC with the opportunity to settle claims on its own before federal judicial intervention . . . nothing in the statute explicitly provides the FDIC with the additional benefit of requiring a claimant to take additional affirmative steps to let the FDIC and the federal court know the claimant is serious about it preexisting (but temporarily suspended) lawsuit[.] Id. Our holding in this regard is based on the facts that there was an appeal from a final judgment pending when the receiver was appointed, and the receiver filed and was granted a motion for a stay of definite duration, which then expired without further action by the receiver on the administrative claim. To hold that under such a situation a further affirmative action is required for the action to continue does not make 12 U.S.C. § 1821(d)(6) a dead letter, as contended by the district court in First Union Nat'l Bank of Fla. v. Royal Trust Tower, Ltd., 827 F.Supp. 1564, 1567 (S.D.Fla.1993), but rather declines to place an additional burden on a claimant who has admirably followed the claims process in the face of inaction by the receiver. We take no position on the different situations presented in cases relied upon by the FDIC with regard to the meaning of continue as applied to district court proceedings. In Hanson v. Fed, Deposit Ins. Corp., 113 F.3d 866 (8th Cir. 1997), there was further action by the receiver after the expiration of the stay; the FDIC sent Hanson a letter denying his claims and warning him that he would need to continue his action within the next 60 days. See id. at 868. In Lakeshore Realty Nominee Trust v. Fed. Deposit Ins. Corp., No. 91-55-B, 1994 WL 262913 (D.N.H. May 25, 1994), the claimant appears to have initiated the stay, and to have repeatedly claimed that the stay should be continued, so that he had the responsibility to take action to lift it.