Court Opinion

ID: 5437
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:05:55+00
Date Added: 2024-06-11T09:34:42.433175
License: Public Domain

United States Court of Appeals,

                                              Fifth Circuit.

                                              No. 92-7048.

              FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff-Appellee,

                                                    v.

   Evelyn Gretchen BELLI f/k/a Gretchen Riddell and Gretchen Riddel Ritchey, Defendant-
Appellant.

                                              Jan. 26, 1993.

Appeal from the United States District Court for the Southern District of Mississippi.

Before DAVIS, JONES, Circuit Judges, and PARKER1, District Judge.

          W. EUGENE DAVIS, Circuit Judge:

                                                    I.

          The FDIC sued Evelyn Gretchen Belli ("Belli") for the amount due on several personal

guarantees and a promissory note. Belli raised the affirmative defense that the FDIC's claims had

expired under the applicable statute of limitations. The district court rejected this defense, granted

the FDIC's motion for summary judgment and denied Belli's motion for summary judgment. 769

F.Supp. 969 (S.D.Miss.1991). Belli appealed. We REVERSE and REMAND.

                                                    II.

          From January 1981 through February 1983, Belli executed a series of continuing personal

guarantees. In those documents, she agreed to personally guarantee $916,293.54 of any indebtedness

owed by the Riddell Corporation to the Mississippi Bank of Jackson, Mississippi ("Bank"). In

September of 1982, Belli executed and delivered to the bank a promissory note for $98,500. Payment

under the guarantees and promissory note was due on demand. On August 8, 1983, the Bank made

demand on Belli for payment under the guarantees and the promissory note.

          On May 11, 1984, the FDIC was appointed receiver of t he bank. That same day, in its

corporate capacity, the FDIC purchased the notes and continuing guarantees. The FDIC filed suit

   1
       Chief Judge of the Eastern District of Texas, sitting by designation.
on May 7, 1990, seeking to recover the outstanding balance on the promissory note, as well as the

amount due on the continuing guarantees. The district court granted the FDIC's motion for summary

judgment, and denied Belli's motion for summary judgment, ruling that 28 U.S.C. § 2415(a) did not

bar the FDIC's suit. It then entered judgment in the amount of $945,614.37. Belli timely appealed.

                                                 III.

       This appeal requires us to interpret two statutes of limitations. The first, 28 U.S.C. § 2415(a),

applies generally to contractual claims asserted by the government. It bars such claims if they are not

"filed within six years after the right of action accrues...." The second statute, 12 U.S.C. §

1821(d)(14), part of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989

("FIRREA"), specifies that the statute of limitations on a contractual claim held by the FDIC runs

from the later of (1) the date on which the FDIC is appointed conservator or receiver; or (2) "the

date on which the cause of action accrues." Section 1821(d)(14) therefore favors the FDIC in a way

that § 2415(a) does not explicitly address.

       Because t he events giving rise to this suit occurred before the enactment of FIRREA,

however, both parties disagree, over § 1821(d)(14)'s applicability to this case. Belli argues that the

FDIC's claims had expired under § 2415(a) before the enactment of FIRREA. Therefore, she argues,

the statute of limitations in FIRREA could not revive the FDIC's claims. The FDIC argues that §

2415(a) did not bar its claims because the cause of action on those claims did not "accrue" until the

FDIC acquired them by assignment. In any event, argues the FDIC, § 1821(d)(14) applies

retroactively to revive its claims. We consider these arguments below.

                                                  A.

       Our first task is to decide when a cause of action "accrues" within the meaning of § 2415(a).

The parties disagree over the meaning of the word "accrues" in that statute, as applied to an FDIC

suit on a note. Belli argues that the word refers to the moment in which the payor on the note came

into breach. The FDIC contends that the word refers to the moment in which the government

acquired the right to sue on the note.

       Various circuits have taken conflicting positions on this issue. For example, the Tenth Circuit
applied § 2415(a) to an FDIC suit on a note, and held that the cause of action accrued on the date

the note matured. FDIC v. Galloway, 856 F.2d 112, 116 (10th Cir.1988). However, In FDIC v.

Hinkson, 848 F.2d 432, 434 (3rd Cir.1988) ("Hinkson"), in which the FDIC sued on a note, the Third

Circuit held that, for purposes of § 2415(a), the action accrued when the FDIC acquired the failed

bank's assets, including the note. And in an FDIC suit against former officers and directors of a failed

bank for breach of fiduciary and statutory duties, the Ninth Circuit held that the claims accrued under

§ 2415(a) when the FDIC acquired them by assignment. FDIC v. Former Officers & Directors of

Metropolitan Bank, 884 F.2d 1304, 1307-09 (9th Cir.1989) ("Metropolitan Bank ").

        The starting point in the Hinkson and Metropolitan Bank analysis is that the term "accrues"

is ambiguous. According to the Hinkson court, when a federal agency comes into possession of

claims by assignment, and where the actionable event occurs before that time, "accrual could begin"

either when "the actionable event occurs" or when "the cause of action is assigned to the federal

government." Hinkson, 848 F.2d at 435. Similarly, the Metropolitan Bank court said that "as an

analytical matter," the claims before it "could be deemed to accrue either when the faulty lending

practices occurred or when the FDIC acquired the claims by assignment." Metropolitan Bank, 884

F.2d at 1307.

        In our view, however, the term "accrues" does not admit of such an ambiguous construction.

Neither the FDIC nor the opinions on which it relies point to authority for the proposition that a

transfer from one party to another of a cause of action that has already accrued somehow effects a

new accrual for purposes of § 2415(a). To the contrary, the ordinary usage of the term "accrues" is

that a cause of action "accrues" when "it comes into existence." U.S. v. Lindsay, 346 U.S. 568, 569,

74 S.Ct. 287, 288, 98 L.Ed. 300 (1953). Assignment of a cause of action that has already accrued

does not ordinarily re-commence the limitations period.

        Although we will consider at greater length 12 U.S.C. § 1821(d)(14), it is worth noting here

that this provision reinforces our understanding of § 2415(a). In § 1821(d)(14)(A), Congress

adopted a statute of limitations that runs from "the date the claim accrues." In the next subsection,

however, Congress specified that the limitations period
       begins to run on the later of: (i) the date of the appoi ntment of the Corporation as
       conservator or receiver; or (ii) the date on which the cause of action accrues.

12 U.S.C. § 1821(d)(14)(B). Section 1821(d)(14) supports our reading of the word "accrues" in two

ways. First, it shows that Congress knows how to clearly specify that a statute of limitations runs

from the time that a government entity is appo inted receiver of a bank. The absence of similar

language in § 2415(a) suggests a contrary meaning. Second, in § 1821(d)(14)(B)(ii), Congress uses

the word "accrues" in a manner inconsistent with the government's reading of the word "accrues" in

§ 2415(a); to apply the FDIC's proposed definition of accrues to subsection (ii), above, would render

subsection (i) redundant.

       The FDIC argues that Congress, when it enacted § 1821(d)(14), merely intended to clarify

what it had meant all along in § 2415(a). It suggests that the existence of a circuit split over the

meaning of § 2415(a) gives rise to the inference that Congress intended to settle the issue. However,

the case on which the FDIC relies, NCNB Texas Nat'l Bank v. Cowden, 895 F.2d 1488, 1500-1501,

(5th Cir.1990) ("Cowden"), is distinguishable.

       In Cowden, we held that pre-FIRREA law authorized the FDIC to transfer the fiduciary

appo intments held by an insolvent bank to a federally created bridge bank. Cowden, 895 F.2d at

1490. After analyzing pre-FIRREA law, we found "additional support for our ho lding" because

FIRREA amendments to the bridge bank statute, codified at 12 U.S.C. § 1821(n), clearly gave the

FDIC the disputed authority. Cowden, 895 F.2d at 1500. We recognized that "reliance on

subsequent legislative actions to determine the meaning of an earlier statute is hazardous." Cowden,

895 F.2d at 1500. Nevertheless, "several considerations" led us to conclude that the FIRREA

amendments in question clarified, rather than changed, pre-FIRREA law. First, the new language in

FIRREA was not inconsistent with our reading of the old, pre-FIRREA, language. Cowden, 895 F.2d

at 1500. Second, the legislative history discussing the FIRREA amendments suggested "Congress

was primarily concerned with clarifying existing law." Cowden, 895 F.2d at 1500. And finally, the

existence of a circuit split on the issue may have suggested that "Congress was provoked to enact an

amendment to clarify rather than change the law." Cowden, 895 F.2d at 1501.

       However, the text and legislative history of § 1821(d)(14) do not support the conclusion that
it clarifies, rather than changes, § 2415(a). First, the new language in FIRREA is inconsistent with

the reading that the FDIC asks us to attach to § 2415(a); Congress's use of the term "accrues" in

FIRREA suggests that the term does not refer to the moment in which a private party assigns a cause

of action to the FDIC. See 12 U.S.C. § 1821(d)(14)(B)(ii). Second, the scant legislative history of

this section indicates that it was meant to modify existing law by lengthening the limitations period

applicable to the FDIC. For example, in a passage to which the FDIC refers, Senator Riegle said:

       Section 212 of the conference bill [codified at 12 U.S.C. § 1821] provides for extended
       statute of limitations periods for claims brought by the FDIC in its capacity as conservator or
       receiver of a failed institution.... Extending these limitations periods will significantly increase
       the amount of money that can be recovered by the Federal Government through litigation...."

135 Cong.Rec. 10,205 (1989) (emphasis added). Thus, instead of clarifying the reach of § 2415(a),

this passage reflects a congressional intent in § 1821(d)(14)(B) to lengthen the limitations periods

applicable to the FDIC. More generally, Representative Ortiz said: "I understand that this bill would

redefine and augment the powers of the [FDIC].... The powers set forth in this bill are, in many

respects, new...." 135 Cong.Rec. H 5003 (August 3, 1989). Third, while the existence of a circuit

split militates in favor of the FDIC's position, we are reminded that "individually" this consideration

"might not justify any conclusion as to Congress's intent." Cowden, 895 F.2d at 1501.

       The FDIC argues that two recent decisions of this Circuit compel us to adopt the position

taken by the Third and Ninth Circuits. We disagree. In the first case, FDIC v. Mmahat, 907 F.2d

546 (5th Cir.1990) ("Mmahat"), we held that an FDIC claim against former general counsel for a

then-defunct savings and loan had not prescribed. We held that the Louisiana limitations period was

tolled until the attorney-client relationship ended. Coincidentally, this relationship ended when the

FDIC took over the filed institution as receiver. Mmahat, 907 F.2d at 551. Footnote 5 of that

opinion cited § 2415(a) for the proposition that "[t]he FDIC gets the benefit of an extended period

which begins to run from the time it took over as receiver." Mmahat, 907 F.2d at 551. However,

given our holding, the footnote is dicta and we decline to rely on it.

       The second case, FDIC v. Wheat, 970 F.2d 124 (5th Cir.1992), is also inapplicable. Wheat

involved an FDIC suit against a bank's former director for negligence, breach of fiduciary duty, and

breach of contract. We held that the FDIC filed suit within the § 2415(a) limitations period because
the period "began to run when the FDIC was appointed receiver." Wheat, 970 F.2d at 128.

However, in Wheat, we did not need to analyze the term "accrues" in § 2415(a). Rather, we relied

on 28 U.S.C. § 2416(c), which excludes from the computation of the § 2415(a) limitations period

times during which "facts material to the right of action are not known and reasonably could not be

known by an official of the United States charged with responsibility to act in the circumstances...."

Wheat, 970 F.2d at 128. Because the loan that gave rise to Wheat had been made after an FDIC

inspection and before receivership, the FDIC co uld not reasonably have known about the loan.

Wheat, 970 F.2d at 128.

        In Wheat, we clearly stopped short of interpreting the term "accrues" in the manner here

suggested by the FDIC. Instead, we based our conclusion on § 2416's discovery rule, as applied to

a breach of fiduciary duty case. The FDIC has not argued that, and we do not see how, § 2416 could

apply in this case, where the causes of action are clear on the faces of the guarantees and promissory

note at issue. So our holding in Wheat does not apply here.

        Belli and the FDIC have also raised nontextual arguments to support their respective readings

of § 2415(a). Belli contends that we must construe any ambiguities in § 2415(a) in her favor, because

Congress enacted that statute to protect citizens against whom the government brings stale claims.

See Guarantee Trust Co. v. United States, 304 U.S. 126, 136, 58 S.Ct. 785, 790, 82 L.Ed. 1224

(1938) (A statute of limitations "is a statute of repose, designed to protect the citizens from stale and

vexatious claims, and to make an end to the possibility of litigation after the lapse of a reasonable

time."); United States v. Cardinal, 452 F.Supp. 542, 544 (D.Vt.1978) (The purpose of § 2415(a)

"is to increase fairness to private litigants dealing with the Government."). The FDIC responds that

the Third and Ninth Circuits rejected the reasoning of Cardinal, opting instead for a rule of

construction that courts should presume that a statute of limitations does not bar a suit brought by

the government. The FDIC also raises the policy argument that Belli's reading of § 2415(a) would

disadvantage the FDIC by giving it a sho rt period in which to file suit. Because § 2415(a) is

unambiguous, we need not resort to interpretive rules or policy inquiries. So we decline to address

these arguments.
                                                  B.

        Because we have decided that § 2415(a) barred the FDIC's suit, we must decide the extent

to which § 1821(d)(14) applies retroactively. We agree with the FDIC that § 1821(d)(14) applies

to claims held by the FDIC that were alive on August 9, 1989, FIRREA's effective date. Statutory

changes that relate only to procedure or remedy usually apply immediately to pending cases. United

States v. Vanella, 619 F.2d 384, 386 (5th Cir.1980). And statutes of limitations are considered to

be procedural rather than substantive. Fust v. Arnar-Stone Labs, Inc., 736 F.2d 1098, 1100 (5th

Cir.1984) ("Fust"). In Fust, we said: "Statutes of limitation, being procedural and remedial in nature,

are generally accorded retroactive effect, unless they are unconstitutionally cast." Fust, 736 F.2d at

1100.

        However, § 1821(d)(14) does not revive claims that had expired before August 9, 1989. In

an analogous case, we held that a Louisiana statutory suspension of prescription did not revive a

cause of action that had prescribed before the statute's effective date. Trizec Properties, Inc. v.

United States Mineral Products Company, 974 F.2d 602, 606-08 (5th Cir.1992) ("Trizec") (applying

Louisiana law). We based our conclusion on the fact that the statute "contains no language of revival

of an expired (i.e. prescribed) cause of action." Trizec, 974 F.2d at 606. The Seventh Circuit

followed the same approach when it construed 42 U.S.C. § 3613(a)(1)(A). It said: "In the absence

of evidence of a contrary legislative purpose, "subsequent extensions of a statutory limitation period

will not revive a claim previously barred.' " Village of Bellwood v. Dwivedi, 895 F.2d 1521, 1527

(7th Cir.1990) (citations omitted). Because § 1821(d)(14) also lacks a clearly expressed intent to the

contrary, we hold that it does not revive claims that expired before its effective date. We note that

at least one other court has expressed an unwillingness to allow § 1821(d)(14) to revive stale claims.

See Resolution Trust Corp. v. Krantz, 757 F.Supp. 915, 922 (N.D.Ill.1991).

        The FDIC's causes of action under the guarantees and promissory note accrued on or before

August 8, 1983, the date the Bank demanded payment. Therefore the six year limitations period

under § 2415 expired before August 9, 1989, FIRREA's effective date. So FIRREA's extended

statute of limitations did not revive any of the FDIC's claims against Belli.
                                             IV.

       For the foregoing reasons, we REVERSE the dist rict court's denial of Belli's motion for

summary judgment; we also REVERSE the order granting the FDIC's motion for summary judgment

and render judgment in favor of Belli.

       REVERSED and RENDERED.