Opinion ID: 2682323
Heading Depth: 3
Heading Rank: 2

Heading: Administrative Exhaustion

Text: ¶ 14 The doctrine of administrative exhaustion generally states that ―no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.‖29 ―The doctrine is applied in a number of different situations‖ and can be ―subject to numerous exceptions.‖30 We must look to the purposes of the doctrine and ―the particular administrative scheme involved‖ to determine if the doctrine is applicable to a particular claim.31 One purpose of the doctrine is ―the avoidance of premature interruption of the contain a clear and unequivocal withdrawal of state court jurisdiction, . . . state courts retain jurisdiction over cases against the [FDIC] which were pending when the [FDIC] was appointed receiver.‖ Holmes Fin. Assocs., Inc., 33 F.3d at 562. In this case, Plaintiffs filed suit in state court prior to the appointment of the FDIC as receiver. 26 12 U.S.C. § 1821(d)(6)(B). 27 Id. § 1821(d)(13)(D). 28 Office & Prof’l Emps. Int’l Union, Local 2 v. FDIC, 962 F.2d 63, 66 n.7 (D.C. Cir. 1992); see also id. 29McKart v. United States, 395 U.S. 185, 193 (1969) (internal quotation marks omitted). 30 Id. 31 Id. 8 Cite as: 2014 UT 28 Opinion of the Court administrative process‖ where the relevant agency ―is created for the purpose of applying a statute in the first instance.‖32 A closely related purpose is that the ―administrative agency is created as a separate entity and invested with certain powers and duties‖ and courts ―should not interfere with an agency until it has completed its action.‖33 ―Typically, exhaustion of administrative remedies is required where Congress imposes such a requirement.‖34 ¶ 15 The text of FIRREA creates ―a jurisdictional prerequisite by expressly providing that ‗no court shall have jurisdiction‘ over claims against the receiver outside the administrative claims process set forth in section 1821(d).‖35 Thus, we conclude that under the doctrine of administrative exhaustion, the failure to exhaust administrative remedies available through FIRREA deprives a court of subject matter jurisdiction over any action seeking a determination of rights with respect to assets of a failed bank that is in receivership. By tying timely claim application to jurisdiction, we join an overwhelming majority of federal circuits.36 This does not end our analysis, however, because the 32 Id. at 193–94. 33 Id. at 194. 34 Meliezer v. Resolution Trust Co., 952 F.2d 879, 882 (5th Cir. 1992) (citing Weinberger v. Salfi, 422 U.S. 749, 756–67 (1975)). 35 Thomas, 255 P.3d at 1080 (quoting 12 U.S.C. § 1821(d)(13)(D)). FIRREA does provide an exception allowing for payment of latefiled claims when a claimant does not receive notice of the receivership. See 12 U.S.C. § 1821(d)(5)(C). However, that exception still requires the claimant to file a claim through the administrative review process. Id. 36 See Farnik v. FDIC, 707 F.3d 717, 721–23 (7th Cir. 2013) (holding the administrative claims review process of FIRREA is mandatory for all parties bringing claims against the FDIC or RTC as receiver for a failed bank); accord Tellado, 707 F.3d at 279–80; Vill. of Oakwood v. State Bank & Trust Co., 539 F.3d 373, 386 (6th Cir. 2008); McMillian v. FDIC, 81 F.3d 1041, 1045 (11th Cir. 1996); Freeman v. FDIC, 56 F.3d 1394, 1400 (D.C. Cir. 1995); Brady Dev. Co. v. Resolution Trust Corp., 14 F.3d 998, 1006 (4th Cir. 1994); Intercontinental Travel Mktg., Inc. v. FDIC, 45 F.3d 1278, 1286 (9th Cir. 1994); Bueford v. Resolution Trust Corp., 991 F.2d 481, 484 (8th Cir. 1993); Marquis v. FDIC, 965 F.2d 1148, 1151 (1st Cir. 1992); con‘t. 9 SUMMERHAZE v. FDIC Opinion of the Court Plaintiffs‘ claim was pending in the district court at the time the Bank was placed in receivership. We now answer the question of whether exhaustion is required for a claim that is pursued before a bank is placed in receivership. C. Failure to Exhaust FIRREA’s Administrative Claims Process Divests a Court of Jurisdiction Over Prereceivership Claims ¶ 16 Plaintiffs filed their action against the Bank in the district court in February 2009, nearly three months before the FDIC was appointed receiver. Plaintiffs argue that FIRREA creates two statutory schemes, one for prereceivership claims, and another for postreceivership claims, and that administrative exhaustion is not required for prereceivership claims. We disagree. ¶ 17 We agree with those federal circuits that hold FIRREA‘s exhaustion requirements apply equally to both pre- and postreceivership claims.37 FIRREA states that a claimant may request administrative review, file suit, or ―continue an action commenced before the appointment of the receiver.‖38 This language reflects express statutory intent to conditionally recognize the viability of claims filed before a receiver is appointed. The condition for viability is that the claim must conform to FIRREA‘s procedural mandates. FIRREA contains no ―language which could be construed to support [the] argument that the claim procedures can be dispensed with in cases where suit was filed prior to the appointment of the receiver.‖39 Nevertheless, Plaintiffs attempt to point to such language. Meliezer, 952 F.2d at 883; Praxis Props., Inc. v. Colonial Sav. Bank, S.L.A., 947 F.2d 49, 63 (3d Cir. 1991); Resolution Trust Corp. v. Elman, 949 F.2d 624, 627 (2d Cir. 1991); Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103, 106 (10th Cir. 1991). 37 See, e.g., Brady Dev. Co., 14 F.3d at 1005–06 (holding FIRREA‘s exhaustion requirement is mandatory for both pre- and postreceivership claims); accord Intercontinental Travel Mktg., Inc., 45 F.3d at 1282–84; Bueford, 991 F.2d at 485; Marquis, 965 F.2d at 1151; Mustang Partners, 946 F.2d at 106. 38 12 U.S.C. § 1821(d)(6)(A)(ii). 39 Mustang Partners, 946 F.2d at 106. 10 Cite as: 2014 UT 28 Opinion of the Court ¶ 18 Plaintiffs cite 12 U.S.C. § 1821(d)(5)(F)(ii) in support of their argument that FIRREA contains two statutory schemes, one for suits brought before a bank is placed in receivership and another for after receivership. We disagree. Section 1821(d)(5)(F)(ii) states, ―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.‖ The plain language of section 1821(d)(5)(F)(ii) forecloses Plaintiffs‘ argument, because it applies when a claimant has filed a claim, thus presuming the administrative claims review process was followed.40 Although section 1821(d)(5)(F)(ii) states that an existing action is not prejudiced by the filing of an administrative claim and may be ―continue[d],‖ it does not address the failure to file a claim, nor does it imply the claims process need not be followed.41 Instead, this provision is consistent with section 1821(d)(6), which permits a claimant to file suit or continue a previously filed action after exhausting the administrative claims process. ―Congress plainly intended the administrative claims process to provide a streamlined method for resolving most claims against failed institutions in a prompt and orderly fashion, without lengthy litigation.‖42 ¶ 19 FIRREA creates one scheme for both pre- and postreceivership cases under which a court retains jurisdiction. This is not to say that the mere appointment of a receiver divests a court of jurisdiction. Rather, ―FIRREA expressly allows for preexisting actions to be stayed‖ and states that ―such actions may be ‗continue[d]‘ following completion of the administrative claims process.‖43 Thus, FIRREA allows a court to suspend, rather than dismiss, suits, ―subject to a stay of [the] proceedings as may be appropriate to permit exhaustion of the administrative review process as it pertains to the underlying claims.‖44 None of the provisions diminish the importance of the statutory claim review 40 See Thomas, 255 P.3d at 1079. 41 Id. at 1079–80. 42 Id. at 1080 (internal quotation marks omitted). 43 Id. (alteration in original) (citing 12 U.S.C. §§ 1821(d)(12), (d)(5)(F)(ii), (d)(6)(A)(ii)). 44 Id. (internal quotation marks omitted). 11 SUMMERHAZE v. FDIC Opinion of the Court process. A district court acquires or retains jurisdiction only after claimants avail themselves of the administrative claims review process. ¶ 20 There is no dispute that Plaintiffs failed to file a claim by the August 5, 2009 deadline. Plaintiffs submitted their claim on October 8, 2009, sixty-five days after the deadline. The Plaintiffs‘ failure to file a claim by the administrative claims review deadline deprived the district court of subject matter jurisdiction. ¶ 21 We now turn to Plaintiffs‘ alternative arguments that (1) they are excused from the mandatory administrative claims review process and (2) the dismissal of their claims violates due process of the law.