Opinion ID: 774014
Heading Depth: 2
Heading Rank: 2

Heading: Standing of the FDIC

Text: 50 The FDIC, as successor in interest to the defunct Dixie, intervened in this case in order to assert Dixie's claims in the amounts of $641.9 million for its 1986 contributions to St. Bernard, and $32.3 million for the unamortized portion of Dixie's goodwill that had been created by the 1982 Assistance Agreement and then eliminated by FIRREA. The court awarded the FDIC $17.7 million in restitution for the breach of the 1986 contract because it found that to be the value of the benefit that Dixie had provided to the government. The court denied the FDIC's goodwill claim, finding that the FDIC had failed to prove the value of the lost goodwill. 6 51 Even if the FDIC were to have won a judgment for the entire amount it was seeking, however, none of the money paid by the government in satisfaction of such a judgment would leave the government. That is because the government holds a claim against Dixie for an even greater amount paid by the RTC to Dixie's depositors upon Dixie's liquidation. Nor would adjudication of the FDIC's claims affect Dixie's other creditors. For these reasons, the FDIC's claims do not give rise to an actual case or controversy because the FDIC and the government are not truly adverse as to the FDIC's claims. Therefore, the FDIC lacks standing, and its claims must be dismissed. 52 Article III, §§ 2 of the Constitution confines federal courts to the decision of 'Cases' or 'Controversies.' Arizonans for Official English v. Ariz., 520 U.S. 43, 64 (1997) (vacating judgment and remanding for dismissal of plaintiffs' claims because the case-or-controversy requirement had not been satisfied). Standing to sue or defend is an aspect of the case-or-controversy requirement. Id. In order for a plaintiff's claim to satisfy the case-or-controversy requirement, resolution of that claim must affect the legal relations of parties having adverse legal interests. Aetna Life Ins. v. Haworth, 300 U.S. 239, 240 (1937). The case-or-controversy requirement has not been satisfied because the FDIC is not adverse to the United States as to these particular claims. 53 Standing must exist at all stages of judicial proceedings, and we must determine the FDIC's standing anew on appeal. See Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477-78 (1990) (court must dismiss a suit as soon as the case/controversy is extinguished, even if a justiciable dispute existed when the complaint was first filed). Here, at no time were the FDIC and the United States truly adverse parties. Because the case-or-controversy requirement is a component of subject matter jurisdiction, it cannot be waived by the parties. See, e.g., Sosna v. Iowa, 419 U.S. 393, 398 (1975) (While the parties may be permitted to waive non-jurisdictional defects, they may not by stipulation invoke the judicial power of the United States in litigation which does not present an actual 'case or controversy.'). Thus, the failure of the government to assert the FDIC's lack of standing before the trial court is immaterial. Further, it is understandable that the trial court did not address this issue because there is no indication that the government raised it prior to its cross-appeal to this court. It also does not appear that the trial court was made aware of the circumstances by which the government's payment of a judgment to the FDIC would never leave the government, as discussed below. 54 The trial court issued a consolidated decision and order granting the FDIC's motion to intervene in 36 Winstar-related cases, including the instant case. The court granted intervention because the FDIC, as the failed thrifts' successor in interest, had the authority to bring suit on behalf of the thrifts, and was obligated by statute to pay out the proceeds of any judgment to the thrifts' creditors, which included private-party creditors. See Plaintiffs in All Winstar-Related Cases at the Court v. United States, 44 Fed. Cl. 3, 5-6, 8 (1999) ([S]tatutory provisions establish that the FDIC, as receiver . . . holds legal title to the assets (including claims) formerly owned by the failed thrifts and that any recovery . . . must be distributed [to the failed thrifts creditors] pursuant to the statutory order of priorities. (emphasis added)). The court's consolidated decision discusses the standing of the FDIC to bring claims against the government in general terms. The Court of Federal Claims has never addressed the standing of the FDIC to bring the specific claims at issue in this case. 55 It is undisputed that no private creditors could benefit even if the FDIC were to fully recover on its claims in this case. That is because, under the statutory scheme of priority for thrift creditors, the FDIC is obligated to completely satisfy the claim of the government, specifically that of the FSLIC Resolution Fund (FRF), against Dixie before distributing any proceeds to Dixie's other creditors. See 12 U.S.C. §§ 1821(d)(11) (1994). It is undisputed that Dixie owes the FRF over $1.5 billion for the advances that the FRF made to Dixie's depositors upon its liquidation. The claims asserted by the FDIC in this case total only $674.2 million. Thus, even if the FDIC were to fully recover, all proceeds from the judgment would be paid out of the FRF, and then distributed by the FDIC right back into the FRF. Critical to the issue of standing, then, is the fact that adjudication of the FDIC's claim cannot affect any party other than the government. 56 The FDIC argues that the case-or-controversy requirement is satisfied because it maintains two distinct funds within the FRF, and that a judgment would be paid out of one fund and into the other. Upon Congress' abolishment of the FSLIC, it created the FRF to receive and manage the assets of the former FSLIC. 12 U.S.C. §§ 1821a. When the RTC was abolished in 1995, its assets and liabilities were also transferred to the FRF. 12 U.S.C. §§1441a(m). Although not required to do so, the FDIC, as manager of the FRF, has maintained the two sets of assets and liabilities in two distinct funds, FRF-FSLIC and FRF-RTC. 61 Fed. Reg. 45,970, 45,971-73 (Aug. 30, 1996). Thus, because the FDIC is asserting Dixie's claim against the government--an asset of the FRF-RTC--any recovery will be paid into the FRF-RTC fund. Because the FSLIC was the governmental party to the alleged contract under which the FDIC has brought suit, the damages claim is an FSLIC liability, and any recovery will be paid out of the FRF-FSLIC fund. 12 U.S.C. §§1821a(d). Thus, the net effect is that the government would satisfy any judgment by simply transferring funds from FRF-FSLIC into FRF-RTC. 57 The existence of two distinct funds within the FRF could be relevant if depletion of one of the funds would either prevent third-party creditors from recovering on claims against the FRF, or increase the total amount of the government's liability. The FDIC, however, has not shown this to be the case. The Treasury is responsible for funding the FRF. The Secretary of the Treasury is required to disburse funds to the FRF as necessary to satisfy its liabilities. 12 U.S.C. §§ 1821a(c). If a surplus is generated within the FRF, then the Treasury would be the beneficiary. 12 U.S.C. §§ 1821a(f). Thus, even if the FRF-FSLIC fund were drained of all assets due to payment of damages for claims brought by the FDIC in the numerous Winstar-related cases, the government remains obligated to fully fund the FRF. Because the FRF will always be funded, recovery by the FDIC cannot prevent, or even affect, recovery by third-party creditors with claims against the FRF. Likewise, since Treasury would benefit from a surplus within the FRF-RTC, the FDIC has failed to show how transferring funds from FRF-FSLIC to FRF-RTC will have any net effect upon the government or any third-party. We hold, therefore, that upon the facts presented in this case, the FDIC has not established that its claims satisfy the justiciability requirements of Article III, §§ 2, because it has not shown that it and the government are adverse as to these claims. 58 It must be clearly stated that we are not holding that all claims by the FDIC against the government will fail to satisfy the case-or-controversy requirement. Rather, we hold that, in this case, where the FDIC has not asserted claims for recovery in excess of what the failed thrift owes to the government, the case-or-controversy requirement is not satisfied. 59 The fact that the FDIC's claims do not present an actual case or controversy does not, however, necessarily lead to the conclusion that we must dismiss the FDIC's claims. The FDIC intervened in this case. Whether an intervening party must satisfy the case-or-controversy requirement independently of the claims brought by the other plaintiffs is an open question. See Diamond v. Charles, 476 U.S. 54, 68-69 (1986) (We need not decide today whether a party seeking to intervene before a District Court must satisfy not only the requirements of [Federal] Rule [of Civil Procedure] 24(a)(2), but also the requirements of Art. III.). We conclude, however, that because the FDIC's claims are unrelated to those brought by Landmark, it would be improper to permit the FDIC to proceed given the lack of a justiciable controversy with respect to its claims. 60 The FDIC's claims raised upon intervention are unrelated to those brought by the original plaintiff, Landmark. Landmark's claims are distinct from those brought by the FDIC, and have been adjudicated without regard to them. Fully resolving Landmark's claims will not affect the resolution of the FDIC's claims. Because the actual controversy presented in this case--Landmark's claims--may be fully adjudicated without regard to the FDIC's claims, adjudication of the FDIC's claims would not be in accordance with the case-or-controversy requirement. Thus, the summary judgment of liability as to the FDIC's claims must be reversed, the damages judgment vacated as to the FDIC, and the case remanded for the trial court to dismiss the FDIC from the case.