Opinion ID: 697608
Heading Depth: 2
Heading Rank: 1

Heading: Bar Against Judicial Restraints: 12 U.S.C. Sec. 1821(j)

Text: 10 The FDIC asserted a defense below based on section 212(j) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub.L. No. 101-73, codified at 12 U.S.C. Sec. 1821(j), which states: 11 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 the powers or functions of the Corporation as a conservator or receiver. 12 12 U.S.C. Sec. 1821(j). 13 The FDIC argues that this provision broadly deprives any court of power to take any action that has the effect of restraining the FDIC, acting in its capacity as receiver, from conducting a nonjudicial foreclosure sale of assets acquired from a failed bank, whether the restraint is by injunction, rescission of a contract, or declaratory judgment. We said in National Trust for Historic Preservation v. FDIC, 21 F.3d 469 (D.C.Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 683, 130 L.Ed.2d 615 (1994), that Sec. 1821(j) does indeed bar courts from restraining or affecting the exercise of powers or functions of the FDIC as a conservator or a receiver ... unless it has acted or proposed to act beyond, or contrary to, its statutorily prescribed, constitutionally permitted, powers or functions. Id. at 472 (Wald, J., concurring) (internal quotation and citation omitted). Accord, Lloyd v. FDIC, 22 F.3d 335, 336 (1st Cir.1994); Ward v. Resolution Trust Corp., 996 F.2d 99, 103 (5th Cir.1993); Gross v. Bell Savings Bank, 974 F.2d 403, 407 (3d Cir.1992). Although this limitation on courts' power to grant equitable relief may appear drastic, it fully accords with the intent of Congress at the time it enacted FIRREA in the midst of the savings and loan insolvency crisis to enable the FDIC and the Resolution Trust Corporation (RTC) to expeditiously wind up the affairs of literally hundreds of failed financial institutions throughout the country. See H.R.REP. No. 101-54(I), 101st Cong., 1st Sess. 291, 307, reprinted in 1989 U.S.C.C.A.N. 86, 87, 103. 14 In the present case, the FDIC is unquestionably acting in its capacity as receiver, and as such is authorized by statute to exercise all rights, titles, powers, and privileges of the insured depository institution ... with respect to ... the assets of the institution. 12 U.S.C. Sec. 1821(d)(2)(A)(i). This includes the power to collect all obligations and money due the institution, 12 U.S.C. Sec. 1821(d)(2)(B)(ii), to place the ... institution in liquidation and proceed to realize upon the assets of the institution, 12 U.S.C. Sec. 1821(d)(2)(E), to transfer any asset or liability of the institution, 12 U.S.C. Sec. 1821(d)(2)(G)(i)(II), and to exercise ... such incidental powers as shall be necessary to carry out these express powers, 12 U.S.C. Sec. 1821(d)(2)(I)(i). The exercise of these powers may not be restrained by any court, regardless of the claimant's likelihood of success on the merits of his underlying claims. Ward, 996 F.2d at 102. In particular, the FDIC's broad powers as receiver include the power to foreclose on the property of a debtor held by the failed bank as collateral, and no court may enjoin the exercise of that power. Lloyd, 22 F.3d at 336-37; 281-300 Joint Venture v. Onion, 938 F.2d 35, 39 (5th Cir.1991), cert. denied, 502 U.S. 1057, 112 S.Ct. 933, 117 L.Ed.2d 105 (1992). 15 Section 1821(j) does indeed effect a sweeping ouster of courts' power to grant equitable remedies to parties like the Freemans. Not only does it bar injunctive relief, but in the circumstances of the present case where appellants seek a declaratory judgment that would effectively restrain the FDIC from foreclosing on their property, Sec. 1821(j) deprives the court of power to grant that remedy as well. See National Trust, 21 F.3d at 471 n. 2; Carney v. Resolution Trust Corp., 19 F.3d 950, 957-58 (5th Cir.1994). For the same reason, Sec. 1821(j) also bars the court from granting the Freemans' plea for rescission of the underlying transaction. See Ward v. Resolution Trust Corp., 996 F.2d at 104 (Like injunction, rescission is a 'judicial restraint' that is barred by 1821(j).). 16 We conclude that under 12 U.S.C. Sec. 1821(j) the district court could not have granted the Freemans' pleas for nonmonetary remedies, including injunctive relief, declaratory relief, and rescission of the promissory note. Nonetheless, as we noted in National Trust, serious due process concerns would be implicated if parties aggrieved by the FDIC's actions as receiver were left entirely without remedies. In many cases, however, aggrieved parties will have opportunities to seek money damages or other relief through the administrative claims process provided in 12 U.S.C. Sec. 1821(d), and their claims are ultimately subject to judicial review. National Trust, 21 F.3d at 472. It is to that provision that we next turn. 17