Opinion ID: 687339
Heading Depth: 2
Heading Rank: 2

Heading: ITM's Failure to Exhaust FIRREA's Claims Process

Text: 8 Section 1821(d)(3)(A) of FIRREA provides the FDIC, acting in its capacity as receiver, with the authority to determine claims against a failed depository institution. If a claimant submits a timely claim to the FDIC, it must determine within 180 days whether to allow or disallow the claim. 5 If the FDIC fails to determine the claim or disallows the claim, then, under Sec. 1821(d)(6)(A), the claimant has 60 days to request administrative review or file or continue suit on such claim in the district court. 6 No court has jurisdiction over the claim until the exhaustion of this administrative process. 7 9 In Henderson v. Bank of New England we held that no jurisdiction exists if a claimant does not exhaust FIRREA's administrative process. 986 F.2d 319, 320-21 (9th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 559, 126 L.Ed.2d 459 (1993). The claimant in Henderson filed his complaint against the bank in district court before exhausting his administrative remedies but after the FDIC was appointed as receiver for the bank. We held that the district court lacked subject matter jurisdiction because FIRREA contains no provision granting federal jurisdiction to claims filed after a receiver is appointed but before administrative exhaustion and [s]ection 1821(d)(13)(D) strips all courts of jurisdiction over claims made outside the administrative procedures of section 1821. Id. at 320 (citing Meliezer v. Resolution Trust Corp., 952 F.2d 879, 882 (5th Cir.1992)). 10 The present case differs from Henderson because the claimant in Henderson filed his action after the FDIC was appointed as receiver. Nonetheless, we see no reason, in Sec. 1821(d) or any other source, why that holding should not apply to cases in which the claimants filed their action before the FDIC was appointed as receiver, and we extend Henderson's holding accordingly. Because ITM failed to properly exhaust the statutorily mandated exhaustion requirements of Sec. 1821(d), no jurisdiction exists over its action. 11 ITM argues that it should not have to exhaust under FIRREA because the word continue in Sec. 1821(d)(5)(F)(ii) 8 means that claimants who file suit before the FDIC's appointment as receiver are exempt from FIRREA's exhaustion requirement. We disagree. We find that Sec. 1821(d)(5)(F)(ii) merely means that filing a claim with the FDIC will not prejudice claimants who decide to continue an action in district court after having complied with the administrative process. This provision neither creates a separate scheme for cases pending at the time of the FDIC's appointment as receiver, nor allows claimants to pursue administrative and judicial remedies simultaneously. See Carney v. Resolution Trust Corp., 19 F.3d 950, 955-56 (5th Cir.1994) (allowing a claimant simultaneously to pursue administrative and judicial remedies would thwart Congress' purpose in enacting FIRREA); Brady Dev. Co. v. Resolution Trust Corp., 14 F.3d 998, 1003 (4th Cir.1994) (Congress clearly envisioned that administrative and judicial review of claims could not take place simultaneously.). 12 Our holding is in accord with decisions from other circuits. 9 For example, in Bueford v. Resolution Trust Corp., 991 F.2d 481, 485 (8th Cir.1993), the Eighth Circuit rejected the claimant's allegation that applying the administrative requirements of FIRREA to a pending case was an improper retroactive application of the statute. Relying on Sec. 1821(d)(6)(B)(ii), which provides for the final disallowance of cases if claimants fail to continue an action commenced before the appointment of the receiver within 60 days after the end of the FDIC's period of review, the court concluded that FIRREA applies to pending actions. Applying the exhaustion procedures, the court upheld the district court's dismissal of the claimant's action for lack of subject matter jurisdiction, since the claimant failed to file a claim with the FDIC. Bueford, 991 F.2d at 485; see also Carney, 19 F.3d at 955 (FIRREA makes participation in the administrative claim review process mandatory, regardless of whether the claims were filed before or after the [FDIC] was appointed receiver of the failed institution.); Brady Dev., 14 F.3d at 1004-05 (In an action involving a pre-receivership claim, the court stated that [o]nly after the [FDIC] denies a claim or fails to act within 180 days after receiving the claim may judicial review be sought or a previously filed action continued.) 10 ; Resolution Trust Corp. v. Mustang Partners, 946 F.2d 103, 106 (10th Cir.1991) (No interpretation [of FIRREA] is possible which would excuse this requirement for creditors with suits pending, or allow the filing of suit to substitute for the claim process.... Mustang's right to continue pursuing its pending lawsuit is dependent upon its compliance with FIRREA's claims provisions.). 13 We recognize that some courts, addressing the issue of jurisdiction over actions pending at the time of the FDIC's appointment as receiver, have stayed, not dismissed, the actions. We agree that a stay may be appropriate where the district court examines jurisdiction when the claimant still has time to file an administrative claim with the FDIC before the administrative bar date passes. Dismissal may not be appropriate in such a case because the claimant still can comply with FIRREA's exhaustion requirement. The district court technically does not lose jurisdiction over the case until the claimant fails to file a timely administrative claim. See, e.g., Marquis v. FDIC, 965 F.2d 1148, 1154-55 (1st Cir.1992) (observing that FIRREA's purpose, the efficient processing of claims against failed banks, would be disserved by forcing the courts to dismiss all pending litigation, only to have the cases refiled when and if administrative settlement proved impracticable); Carney, 19 F.3d at 955 (reversing district court's dismissal for lack of subject matter jurisdiction and approving of Marquis' language that a court should stay an action to permit exhaustion); Coston v. Gold Coast Graphics, 782 F.Supp. 1532, 1536 (S.D.Fla.1992) (deciding that a court should grant a stay until claimants comply with FIRREA when the case was pending before the FDIC's appointment as receiver). However, the present case is distinguishable because ITM's claims bar date has already passed. 14 We also recognize that the holdings in two recently decided Fifth Circuit cases contradict our holding here. In Whatley v. Resolution Trust Corp., the Fifth Circuit held that, where a creditor files a claim before the debtor goes into receivership, the receiver may elect to remain in court or request a stay and institute administrative proceedings. If the receiver fails to act, it is deemed to have chosen to remain in court. 32 F.3d 905, 910 (5th Cir.1994). In Greater Slidell Auto Auction v. American Bank & Trust of Baton Rouge, the panel majority held that, where the creditor's suit is pending at receivership and the receiver fails to give notice of the procedure for filing an administrative claim, the receiver must consider the pending suit an administrative claim. 32 F.3d 939, 941 (5th Cir.1994). This result prevents the exhaustion requirement from precluding the lawsuit. 15 Our reading of FIRREA indicates otherwise. We read the claims bar date to be a jurisdictional requirement. As the next section shows, we do not attach the same significance as the Fifth Circuit to the FDIC's failure to provide notice of the bar date: This is particularly true in a case where, as here, the receiver properly published notice and Appellants received actual notice of the receivership by the FDIC's stipulation agreement. Id., 38 F.3d 180, 182 (5th Cir.1994) (Aldisert, J., dissenting). In these circumstances we choose to follow the persuasive reasoning expressed in Brady, Bueford, and Mustang Partners, and even in the Fifth Circuit in Carney. The district court properly found FIRREA's exhaustion requirement mandatory and dismissed ITM's case for lack of subject matter jurisdiction. 16