Court Opinion

ID: 3018546
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:19:21.428219+00
Date Added: 2024-06-11T18:10:49.236012
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
     ___________

     No. 96-2091
     ___________

Steven D. Hanson,                     *
                                      *
           Appellant,                 *
                                      *
     v.                               *
                                      *
Federal Deposit Insurance             *
Corporation, as receiver for          *
the New Bank of New England,          *
N.A.,                                 *
                                      *
           Appellee.                  *

     ___________                          Appeals from the United States
                                          District Court for the
     No. 96-2514                          District of Minnesota.
     ___________

Federal Deposit Insurance             *
Corporation, as receiver for          *
the New Bank of New England,          *
N.C., substituted as plaintiff        *
for the New Bank of New England,*
N.A.,                                  *
                                       *
           Appellee,                   *
                                       *
     v.                                *
                                       *
Steven D. Hanson,                      *
                                       *
           Appellant.                  *
                                  ___________

                     Submitted:   March 10, 1997

                         Filed:   May 14, 1997
                                  ___________
Before MAGILL,1 JOHN R. GIBSON, and MURPHY, Circuit Judges.
                               ___________

MAGILL, Circuit Judge.

     This appeal arises from a collection action brought by the Bank of
New England (BNE) against Steven D. Hanson and Hanson Industries, Inc.
(Hanson Industries) for an alleged default on a revolving loan agreement.
Hanson appeals the district court’s2 grant of summary judgment to the
Federal Deposit Insurance Corporation (FDIC), as receiver for BNE, on
several lender liability counterclaims raised by Hanson in BNE’s collection
action.   Hanson also appeals the district court’s grant of summary judgment
to the FDIC, as receiver for the New Bank of New England (New BNE), in a
related constructive trust action brought by Hanson.     We affirm.

                                     I.

     On July 16, 1985, BNE and Hanson Industries, a Minnesota corporation
in which Hanson held a majority interest, entered into a revolving loan
agreement that was personally guaranteed by Hanson.      The loan was also
secured by a mortgage agreement granting BNE a second mortgage in real
property owned by Hanson.   In August 1986, BNE filed a claim in Minnesota
state court against both Hanson and Hanson Industries to collect on an
alleged default.   Denying the default, Hanson and Hanson Industries filed
several

     1
      The Honorable Frank J. Magill was an active judge at the
time this case was submitted and took senior status on April 1,
1997, before the opinion was filed.
     2
      The Honorable David S. Doty, United States District Judge
for the District of Minnesota.

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counterclaims against BNE, asserting tort and breach-of-contract claims
arising out of the alleged default.3

     In August 1987, First Brookdale State Bank (First Brookdale), another
of Hanson’s creditors, commenced foreclosure proceedings against a portion
of Hanson’s real property.   BNE was the second mortgagee of this property
pursuant to BNE’s revolving loan agreement with Hanson Industries and
Hanson.   BNE later redeemed this property from First Brookdale on August
17, 1988.     BNE then initiated proceedings in Minnesota state court to
obtain new certificates of title for the real property.

     On July 10, 1989, the Minnesota state court consolidated BNE’s August
1986 collection action and BNE’s August 1987 title action into a single
proceeding.    The state court then directed the Minnesota Examiner of
Titles, on November 13, 1989, to determine whether new certificates of
title for the property should be issued.   The Examiner recommended that new
certificates of title be issued to BNE.    Hanson objected that the issuance
of new certificates should be stayed pending resolution of Hanson’s
counterclaims against BNE.     Over Hanson’s objection, the state court
adopted the Examiner’s recommendation on July 13, 1990, and

     3
      The loans were made to both Hanson and Hanson Industries,
and both parties were named as defendants in BNE’s collection
action. In addition, both Hanson and Hanson Industries brought
counterclaims against BNE. On May 1, 1987, however, an
involuntary bankruptcy petition was filed against Hanson
Industries. Pursuant to an agreement reached during the
bankruptcy proceedings, Hanson Industries released any claims
that it might have had against BNE. As a result of this
agreement, only Hanson, in his individual capacity, remains a
party to this litigation. See Federal Deposit Ins. Corp. v.
Hanson, 799 F. Supp. 954, 955 n.1 (D. Minn. 1992), rev’d, 13 F.3d
1247 (8th Cir. 1994).

                                   - 3 -
issued new certificates of title to BNE.          The state court set a hearing in
BNE’s collection action for February 11, 1991.

     On   January     6,   1991,   prior   to   the   hearing,    the    United   States
Comptroller     of   Currency   declared    BNE    insolvent     and    placed    BNE   in
receivership.    The FDIC was appointed receiver of BNE pursuant to 12 U.S.C.
§ 1821© (Supp. II 1990).        The FDIC established New BNE as a bridge bank,
pursuant to 12 U.S.C. § 1821(n) (Supp. II 1990), to purchase certain assets
of BNE, including the real property formerly owned by Hanson.

     Because BNE had been placed in receivership, BNE’s collection action,
including Hanson’s counterclaims, was removed to the district court on
January 30, 1991.     Pursuant to 12 U.S.C. § 1821(d)(12) (Supp. II 1990), the
FDIC received a stay of the collection action on March 29, 1991.                  Hanson
then filed his counterclaims with the FDIC as required under 12 U.S.C. §
1821(d)(3)-(13) (Supp. II 1990).
     On July 5, 1991, the FDIC mailed a letter to Hanson’s counsel,
informing him that the FDIC was denying Hanson’s counterclaims.                   In the
letter, the FDIC informed Hanson’s counsel that:

     If you wish to contest this decision, the sole available
     procedure for review of this determination is to file suit on
     such claim (or continue an action commenced before the
     appointment of the Receiver) in the United States District
     Court . . . . Such action must be commenced before the end of
     the 60-day period beginning on the date of this notice,
     pursuant to 12 U.S.C. § 1821(d)(6)(B). If such action is not
     taken by that date, the determination of the FDIC to disallow
     such claim shall be final, and there shall be no further rights
     or remedies with respect to such claim.

I J.A. at 222.

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     Notwithstanding the FDIC’s letter, Hanson did not file suit or
continue an action within sixty days.   Instead, on August 30, 1991, Hanson
requested that the FDIC provide administrative review of its denial of his
claim.   On September 12, 1991, the FDIC telephoned Hanson’s counsel and
informed him that the FDIC did not have any procedures in place for
administrative review.   The FDIC stated further that it would not perform
such a review.

     On November 18, 1991, Hanson filed an action against New BNE in the
district court, claiming that New BNE was unjustly enriched when it took
title to the real property that Hanson had formerly owned.4    Hanson asked
the district court to impose a constructive trust pursuant to Minnesota law
on the real property.

     In early 1992, the FDIC moved for summary judgment on Hanson’s
counterclaims from the collection action and for summary judgment in the
constructive trust action.      On September 21, 1992, the district court
granted the FDIC’s motions.    Federal Deposit Ins. Corp. v. Hanson, 799 F.
Supp. 954, 960 (D. Minn. 1992).      Hanson appealed the grant of summary
judgment on the constructive trust claim.   This Court reversed and remanded
on the ground that “the district court based its grant of summary judgment
on an overly broad interpretation of the D’Oench, Duhme [D’Oench, Duhme &
Co. v. Federal Deposit Ins. Co., 315 U.S. 447 (1942)] doctrine and its
statutory progeny . . . .”    Hanson v. Federal Deposit Ins. Corp., 13 F.3d
1247, 1253 (8th Cir. 1994).

     On March 28, 1996, the district court again granted the FDIC summary
judgment on the constructive trust claim, but this time the district court
held that Hanson’s constructive trust claim was

     4
      Because New BNE went into receivership soon thereafter, the
FDIC was substituted for New BNE as the defendant in this action.

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barred by issue preclusion.      Order (Mar. 28, 1996) at 10.         In addition, on
May 28, 1996, the district court entered a final judgment granting the FDIC
summary judgment on Hanson’s counterclaims in the collection action.               The
district court held that Hanson was barred from seeking judicial review
because he failed to seek review in the manner and time prescribed by 12
U.S.C. § 1821(d)(6).     See Order at 7 (citing Hanson, 799 F. Supp. at 959).
Hanson appeals.

                                         II.

       Hanson   argues   that,   because    his   August    30,   1991   request   for
administrative review satisfied the jurisdictional requirements set forth
in 12 U.S.C. § 1821(d)(6)(B), the district court has jurisdiction to review
his counterclaims in the collection action.          We disagree.

       We review the district court’s grant of summary judgment to the FDIC
de novo.    See McCormack v. Citibank, N.A., 100 F.3d 532, 537 (8th Cir.
1996).   Summary judgment is appropriate only if the record, viewed in the
light most favorable to the nonmoving party, presents no genuine issues of
material fact and the moving party is entitled to judgment as a matter of
law.   Id.; see also Fed. R. Civ. P. 56(c).         Furthermore, “[w]e may affirm
on any ground supported by the record.”           Doe v. Norwest Bank Minnesota,
N.A., 107 F.3d 1297, 1301 (8th Cir. 1997).

       Hanson’s   appeal    turns   on     the    meaning   of    §    1821(d)(6)(B).
Specifically, § 1821(d)(6)(B) provides:

       If any claimant fails to--

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           (I) request administrative review of any claim in
     accordance with subparagraph (A) or (B) of paragraph (7); or

           (ii) file suit on such claim (or continue an action
     commenced before the appointment of the receiver),

     before the end of the 60-day period described in subparagraph
     (A), the claim shall be deemed to be disallowed (other than any
     portion of such claim which was allowed by the receiver) as of
     the end of such period, such disallowance shall be final, and
     the claimant shall have no further rights or remedies with
     respect to such claim.

12 U.S.C. § 1821(d)(6)(B) (emphasis added).

     Thus, the failure of a claimant to satisfy the requirements of §
1821(d)(6)(B) within the prescribed time period bars the claimant from
seeking judicial review of his claim.        See Capital Data Corp. v. Capital
Nat’l Bank, 778 F. Supp. 669, 674 (S.D. N.Y. 1991); cf. Praxis Properties,
Inc. v. Colonial Sav. Bank, 947 F.2d 49, 63 n.13 (3d Cir. 1991) (citing §
1821(d)(6)(B), to hold that “[i]f within 60 days the claimant fails to
pursue one of the above three routes authorized by § 1821(d)(6)(A) [and
again enumerated in § 1821(d)(6)(B)]” then the denial of his claim “becomes
a final determination”).    It is undisputed that Hanson did not file suit
or continue an action within the relevant 60-day period.         Thus, he did not
meet the requirements of § 1821(d)(6)(B)(ii).      Instead, Hanson argues that
his August 30, 1991 request for administrative review satisfied the
statutory requirements of § 1821(d)(6)(B)(I).             Hanson argues that by
satisfying § 1821(d)(6)(B)(I), he was able to satisfy the requirements of
§ 1821(d)(6)(B) as a whole and thereby preserve his right to judicial
review.

     We   conclude   that   Hanson    did    not   meet    the   requirement   of
§ 1821(d)(6)(B)(I) that his request for administrative review be

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“in accordance with subparagraph (A) or (B) of paragraph (7) . . . .”                   12
U.S.C. § 1821(d)(6)(B)(I).        Paragraph 7(A) provides that:

            If any claimant requests review under this subparagraph
      in lieu of filing or continuing any action under paragraph (6)
      and the Corporation agrees to such request, the Corporation
      shall consider the claim after opportunity for a hearing on the
      record.

12 U.S.C. § 1821(d)(7)(A) (emphasis added).

      Hanson did not meet the requirements of paragraph 7(A) because the
FDIC refused his request.        The FDIC specifically had already told Hanson
that it would not review his request for administrative review and had
already informed Hanson that his “sole available procedure for review” was
to   file   suit   on   his   claim   or   continue   an     action    commenced    before
appointment of the receiver.          I J.A. at 222.        Notwithstanding the FDIC’s
clear admonition to Hanson to proceed in the district court, Hanson did not
pursue judicial review, but instead chose to sit on his rights.               Moreover,
§ 1821(d)(7)(A) leaves to the FDIC the decision of whether to accept or
reject a claimant’s request for administrative review.                  Its decision to
deny Hanson’s claim and to thereby allow him to proceed with his claim in
the district court was well within its discretion.             Thus, because the FDIC
did not “agree[] to such request,” 12 U.S.C. § 1821(d)(7)(A), Hanson’s
request for review was not “in accordance with” paragraph 7(A) as required
by § 1821(d)(6)(B)(I).

      Nor   was    Hanson’s   request      “in   accordance    with”    paragraph    7(B).
Paragraph 7(B) empowers the FDIC to handle claims against a financial
institution in receivership, like the claim filed by Hanson, by means of
alternative dispute resolution processes.             See

                                           - 8 -
12 U.S.C. § 1821(d)(7)(B)(I).        Here, however, the FDIC did not choose to
handle Hanson’s claim against BNE by means of such a process, but instead
informed Hanson that his “sole available procedure for review” was to file
suit on his claim or continue an action commenced before appointment of the
receiver.    I J.A. at 222.

       Because Hanson failed to meet the requirements of either paragraph
7(A)   or   paragraph   7(B),   he   failed    to   meet   the   requirements   of   §
1821(d)(6)(B)(I), and as a result, Hanson failed to meet the requirements
of § 1821(d)(6)(B) as a whole.       Thus, because Hanson sat on his rights, he
is now precluded under § 1821(d)(6)(B) from seeking judicial review.
Accordingly, the district court did not have jurisdiction to hear Hanson’s
counterclaims, and summary judgment on those claims was therefore proper.

                                        III.

       The FDIC argues for the first time on appeal that 12 U.S.C. § 1821(j)
(Supp. II 1990) bars the district court from hearing Hanson’s constructive
trust claim.5   We agree.

       5
      Section 1821(j) limits the subject matter jurisdiction of
federal and state courts by providing that, except under certain
circumstances, “no court may take any action . . . .” 12 U.S.C.
§ 1821(j) (Supp. II 1990) (emphasis added). Because § 1821(j)
limits subject matter jurisdiction, we can consider for the first
time on appeal the FDIC’s argument that, pursuant to § 1821(j),
the district court does not have subject matter jurisdiction to
hear Hanson’s constructive trust claim. See Preferred Risk Mut.
Ins. Co. v. United States, 86 F.3d 789, 793 (8th Cir. 1996)
(“[Q]uestions of subject-matter jurisdiction may be raised at any
time and may not be waived.”), cert. denied, 117 S. Ct. 1245
(1997).

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        Section 1821(j), which was enacted as part of § 212(a) of        the
Financial     Institutions Reform, Recovery, and Enforcement Act of 1989
(FIRREA), Pub. L. No. 101-73, 103 Stat. 183, provides:

        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
        powers or functions of the [FDIC] as a conservator or a
        receiver.

12 U.S.C. § 1821(j).     Section 1821 does not provide any exceptions that
would    apply to the present action, nor has the Board of Directors
requested, by means of regulation or order, that the district court take
action to impose a constructive trust.        Hanson instead argues that a
constructive trust would not “restrain or affect the exercise of powers or
functions of the [FDIC] as a conservator or a receiver,” 12 U.S.C. §
1821(j), because, according to Hanson, a constructive trust would merely
reduce the price of the real property.        Thus, according to Hanson, §
1821(j) does not bar the district court from hearing his constructive trust
claim.

        Section 1821(j), however, “effect[s] a sweeping ouster of courts’
power to grant equitable remedies . . . .”   Freeman v. Federal Deposit Ins.
Corp., 56 F.3d 1394, 1399 (D.C. Cir. 1995); accord Tri-State Hotels v.
Federal Deposit Ins. Corp., 79 F.3d 707, 715 (8th Cir. 1996) (quoting
Freeman).    As the Circuit Court for the District of Columbia has explained:

        Although [§ 1821(j)’s] 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.

                                    - 10 -
Freeman, 56 F.3d at 1398.

       As a receiver, the FDIC has substantial powers over New BNE’s assets,
which include the real property formerly owned by Hanson.           Under 12 U.S.C.
§ 1821(d)(2)(A)(I), the FDIC, as a receiver, succeeds to “all rights,
titles, powers, and privileges of the insured depository institution . .
. .”   12 U.S.C. § 1821(d)(2)(A)(I) (Supp II. 1990).          In addition, the FDIC,
as receiver, may “place the insured depository institution in liquidation
and proceed to realize upon the assets of the institution,” 12 U.S.C. §
1821(d)(2)(E) (Supp II. 1990), “transfer any asset or liability of the
institution,” 12 U.S.C. § 1821(d)(2)(G)(I)(II) (Supp II. 1990), and
“exercise . . . such incidental powers as shall be necessary to carry out
[its stated] powers.”     12 U.S.C. § 1821(d)(2)(J)(I) (Supp II. 1990).           “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.”    Freeman, 56 F.3d at 1399.
       Imposition of a constructive trust would necessarily “restrain or
affect the exercise of powers or functions of the [FDIC] as a conservator
or a receiver.”      12 U.S.C. § 1821(j).   Under Minnesota law, a constructive
trust arises “[w]here a person holding title to property is subject to an
equitable duty to convey it to another on the ground that he would be
unjustly enriched if he were permitted to retain it . . . .”            Thompson v.
Nesheim, 159 N.W.2d 910, 917 (Minn. 1968).                “A court of equity, in
decreeing a constructive trust, is bound by no unyielding formula, but is
free   to   effect   justice   according    to   the   equities   peculiar   to   each
transaction wherever a failure to perform a duty to convey would result in
unjust enrichment.”     Id. at 916.   By imposing a constructive trust on the
real property now held by New BNE, the district court would therefore make
Hanson the beneficial owner of that property.           See

                                      - 11 -
id. at 916-17 (citing Knox v. Knox, 25 N.W.2d 225, 226 (Minn. 1946).

     Making Hanson the beneficial owner of the property would necessarily
restrain (1) the FDIC’s rights to title over New BNE’s assets, (2) the
FDIC’s rights to realize upon New BNE’s assets, and (3) the FDIC’s rights
to transfer New BNE’s assets.   As a result, pursuant to § 1821(j), the
district court is barred from hearing Hanson’s constructive trust claim,
and summary judgment was therefore proper.6

                                   IV.

     For the foregoing reasons, we affirm the district court’s grant of
summary judgment to the FDIC on Hanson’s counterclaims in

     6
      Our conclusion is bolstered by the numerous decisions in
which this Court and others have held that § 1821(j) precludes
jurisdiction. See, e.g., Sahni v. American Diversified
Partnerships, 83 F.3d 1054, 1058-59 (9th Cir. 1996) (holding that
§ 1821(j) bars suit to rescind the FDIC’s sale of Department of
Housing and Urban Development partnerships because the
partnerships were part of the receivership estate of the failed
financial institution), cert. denied, 117 S. Ct. 765 (1997); Tri-
State Hotels v. Federal Deposit Ins. Corp., 79 F.3d 707, 715 (8th
Cir. 1996) (holding that § 1821(j) bars suit to rescind purchase
agreements and loan documents because suit would be inconsistent
with the FDIC’s power, as a receiver, to collect obligations and
money due to a failed financial institution); Freeman v. Federal
Deposit Ins. Corp., 56 F.3d 1394, 1399 (D.C. Cir. 1995) (holding
that § 1821(j) bars suit for injunctive relief, declaratory
relief, and rescission where relief would restrain FDIC’s power
to foreclose); Lloyd v. Federal Deposit Ins. Corp., 22 F.3d 335,
336 (1st Cir. 1994) (holding that § 1821(j) bars suit for
injunctive relief because suit would restrain FDIC’s power to
foreclose); Carney v. Resolution Trust Corp., 19 F.3d 950, 956-57
(5th Cir. 1994) (per curiam) (agreeing that § 1821(j) bars suit
for injunctive relief because suit would restrain FDIC’s power to
collect all obligations and money due and to preserve the assets
of a failed financial institution).

                                 - 12 -
the collection action.   We also affirm the district court’s grant   of
summary judgment to the FDIC on Hanson’s constructive trust claim.

     A true copy.

           Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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