Court Opinion

ID: 991951
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:44:21.509938+00
Date Added: 2024-06-11T15:25:35.198854
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: LANDMARK LAND COMPANY OF
CAROLINA, INCORPORATED, a
Delaware corporation; LANDMARK
LAND COMPANY OF OKLAHOMA,
INCORPORATED, an Oklahoma
corporation; LANDMARK LAND
COMPANY OF FLORIDA, INCORPORATED,
a Delaware corporation; LANDMARK
LAND COMPANY OF LOUISIANA,
INCORPORATED, a Louisiana
corporation; LANDMARK LAND
COMPANY OF CALIFORNIA,
INCORPORATED, a Delaware
corporation; CLOCK TOWER PLACE
INVESTMENTS, LIMITED, a California
corporation,
                                     No. 96-1404
Debtors.

GLORIA ROBINSON, as Plan
Administrator of the Landmark
Insurance Group Plan and
Landmark 501(c)(9) Trust
Agreement for the Landmark Group
and as a participant of the
Landmark Group Insurance Program
and the 501(c)(9) Trust Agreement
for the Landmark Group; MICHAEL
WELCH, Trustee of the 501(c)(9)
Trust Agreement for the Landmark
Group and as a participant of the
Landmark Group Insurance Program
and the 501(c)(9) Trust Agreement
for the Landmark Group;
V. JACKSON CARNEY, as Trustee of
the 501(c)(9) Trust Agreement for
the Landmark Group and as a
participant of the Landmark Group
Insurance Program 501(c)(9) Trust
Agreement for the Landmark Group
and as persons entitled to receive
benefits under the Landmark
501(c)(9) Trust,
Plaintiffs-Appellants,

v.

RESOLUTION TRUST CORPORATION, a
Conservator for Oak Tree Federal
Savings Bank in Receivership and
its successor the FEDERAL DEPOSIT
INSURANCE CORPORATION; LANDMARK
LAND COMPANY OF FLORIDA,
INCORPORATED; LANDMARK LAND
COMPANY OF OKLAHOMA,
INCORPORATED; LANDMARK LAND
COMPANY OF CAROLINA,
INCORPORATED; LANDMARK LAND
COMPANY OF LOUISIANA,
INCORPORATED; LANDMARK LAND
COMPANY OF CALIFORNIA,
INCORPORATED; NORTHERN CALIFORNIA
RANCH, INCORPORATED, formerly
known as Carmel Valley Ranch, a
California corporation,
Defendants-Appellees,

                 2
CLOCK TOWER PLACE INVESTMENTS,
LIMITED,
Defendant & Third Party
Plaintiff-Appellee,

v.

TRUST AGREEMENT FOR THE
LANDMARK GROUP, V. Jackson
Carney, Gloria Robinson and
Michael Welch are
trustees/administrators of the
"Trust,"
Third Party Defendant.

Appeal from the United States District Court
for the District of South Carolina, at Charleston.
Falcon B. Hawkins, Chief District Judge.
(CA-95-4005-2-1, CA-91-3287-2-1, BK-91-5814,
CA-91-3286-2-4-1, BK-91-5815, CA-91-3291-2-1, BK-91-5816,
CA-91-3290-2-1, BK-91-5817, CA-91-3289-2-1, BK-91-5819,
CA-91-3288-2-1, BK-91-5818)

Argued: March 7, 1997

Decided: April 7, 1997

Before WILLIAMS, MICHAEL, and MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed and remanded by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Brett Dean Sanger, BROWN & SANGER, P.C., Okla-
homa City, Oklahoma, for Appellants. Gregory Evan Gore, FED-

                   3
ERAL DEPOSIT INSURANCE CORPORATION, Washington,
D.C., for Appellees. ON BRIEF: H. Blanton Brown, BROWN &
SANGER, P.C., Oklahoma City, Oklahoma; Thomas S. Tisdale, Jr.,
Timothy W. Bouch, Stephen P. Groves, YOUNG, CLEMENT, RIV-
ERS & TISDALE, L.L.P., Charleston, South Carolina; Gerald P.
Green, PIERCE, COUCH, HENDRICKSON, BAYSINGER &
GREEN, Oklahoma City, Oklahoma, for Appellants. Ann S. DuRoss,
Assistant General Counsel, Thomas L. Hindes, Senior Counsel,
Thomas Bolt, FEDERAL DEPOSIT INSURANCE CORPORATION,
Washington, D.C.; Rex Veal, G. Patrick Watson, POWELL, GOLD-
STEIN, FRAZER, MURPHY, Atlanta, Georgia; C. E. Hardin, Jr.,
James A. Merritt, Jr., BERRY, ADAMS, QUACKENBUSH & DUN-
BAR, P.A., Columbia, South Carolina, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

In this case, participants in an employee benefit plan seek to
recover certain funds from and enjoin certain actions of the plan spon-
sor, a subsidiary of a failed banking institution now under the control
of the Federal Deposit Insurance Corporation ("FDIC"). The district
court held that the anti-injunction provision of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"),
12 U.S.C. § 1821(j) (1994), prohibits the participants' claims for
injunctive relief; therefore, it dismissed those claims for lack of sub-
ject matter jurisdiction. We affirm and remand.

I.

Gloria Robinson, V. Jackson Carney, and Michael Welch are par-
ticipants in an employee welfare benefit plan (the Plan) established by
the Landmark companies. The Landmark companies developed,

                    4
owned, and managed a large portfolio of resort residential communi-
ties. Landmark Land Co. v. RTC (In re Landmark Land Co.), 973
F.2d 283, 286 (4th Cir. 1992). Clock Tower Place Investments, Lim-
ited was a holding company for the Landmark companies and Oak
Tree Savings Bank was the sole owner of Clock Tower.

In October 1991, Clock Tower and its subsidiaries petitioned for
Chapter 11 relief. In order to ensure adequate funding for the Plan,
a voluntary employees' beneficiary association trust ("the Trust") was
created in accordance with 26 U.S.C. § 501(c)(9) (1994).

Immediately following the bankruptcy of Clock Tower and its sub-
sidiaries, the Office of Thrift Supervision placed Oak Tree in receiv-
ership and appointed the Resolution Trust Corporation ("RTC") as its
receiver. Upon the dissolution of the RTC, the FDIC took its place.
Thus the FDIC now controls Oak Tree and all its subsidiaries, includ-
ing Clock Tower.

The Trust Agreement provides that no funds may "be used for, or
diverted to, purposes other than to provide the benefits contemplated
under the Plan for the exclusive benefit of covered employees and
their dependents, except [taxes and administrative expenses]." How-
ever, between 1988 and 1994, the Plan paid more than $900,000 of
medical benefits to certain non-employees (including independent
contractor golf pros and insurance agents). The benefits were paid
because of misrepresentations by former Landmark corporate officers
and Plan fiduciaries. Although Appellants all served as upper level
management for Clock Tower or its subsidiaries, Appellants claim
that they did not know of these misrepresentations until 1995.

Appellants further assert that counsel for Clock Tower told them
that unless the Trust was reimbursed for these improper payments, it
could lose its tax-exempt status. In November 1995, Carney wrote a
"case memorandum" to the RTC's Senior Credit Review Committee,
requesting that Clock Tower's budget be amended so that the com-
pany would pay an additional $2.1 million (the original payment plus
interest) into the Trust. In December 1995, the RTC conditionally
rejected the case memorandum's proposal but recommended that the
FDIC review it (because the RTC would cease to exist as of January

                    5
1, 1996). Appellants did not file a formal administrative claim with
the RTC or the FDIC.

Instead, purportedly concerned about their personal liability as
fiduciaries of the Plan, Appellants proceeded to file this action, in
their fiduciary and participatory capacities, against Clock Tower, its
subsidiaries, the RTC, and the FDIC. Appellants sought an injunction
prohibiting termination of the Plan, seizure of the Trust assets, dis-
charge of Appellants and an injunction and/or damages resulting in a
$2.1 million transfer from Clock Tower to the Trust, as well as addi-
tional damages. Clock Tower and the FDIC moved to dismiss these
claims for lack of subject matter jurisdiction and filed numerous
counterclaims as well as a third party complaint.

In March 1996, the district court granted the FDIC's and Clock
Tower's motions to dismiss. The court found that§ 1821(j), the anti-
injunction provision of FIRREA, barred the requested injunctive
relief. With respect to the damages claim, the court found that Appel-
lants had failed to exhaust their administrative remedies. The district
court stayed determination of the counterclaims and the third party
complaint pending appeal of its order dismissing Appellants' claims.

Appellants moved for a stay of that order and noted an immediate
appeal to this court. However, they failed to file a petition for permis-
sion to appeal their interlocutory damages claim; instead, they simply
filed an appellate brief addressing both injunctive relief and damages.
In April 1996, we denied their motion for a stay pending appeal. In
August 1996, we granted the FDIC's motion to dismiss the appeal of
the damages issue, as interlocutory.1
_________________________________________________________________
1 In November 1996, Appellants filed a new action in the district court,
alleging inter alia that (1) they have now exhausted their administrative
remedies because they filed an administrative claim with the FDIC, to
which the FDIC failed to respond within the required 180 days and (2)
the FDIC has removed all three Appellants from their positions as Plan
Administrator and Trustees, replacing them with former FDIC employ-
ees. Appellants' damages claim will, of course, be dealt with by the dis-
trict court in due course and is not presently before us. The FDIC and
Clock Tower filed two motions to dismiss the parties in their fiduciary
capacities, noting that Appellants are no longer Plan fiduciaries and the
newly appointed fiduciaries unsurprisingly do not wish to pursue the
appeal. However, because Appellants concededly retain standing to bring
this appeal as Plan participants, we need not, and do not, reach these
related motions to dismiss in part.

                    6
II.

The anti-injunction provision of FIRREA states:

          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 pow-
          ers or functions of the Corporation as a conservator or a
          receiver.

12 U.S.C. § 1821(j) (1994). This statute steers all review of FDIC
actions into damages claims, which are examined through the admin-
istrative claims process. See Gross v. Bell Sav. Bank PaSA, 974 F.2d
403, 408 (3d Cir. 1992) (finding it "implicit from the broad language
of § 1821(j) [that] Congress has crafted a damages remedy for those
who allege harm from the RTC"). "The comprehensive scheme of
FIRREA indicates Congress' intent to allow the RTC full rein to exer-
cise its statutory authority without injunctive restraints imposed by
bankruptcy courts or district courts in other proceedings." Landmark
Land Co. v. RTC (In re Landmark Land Co.), 973 F.2d 283, 290 (4th
Cir. 1992). Judicial exceptions to anti-injunctive statutes, as created
in South Carolina v. Regan, 465 U.S. 367 (1984), cannot be applica-
ble when, as here, adequate alternative remedies exist. Nevertheless,
Appellants claim that § 1821(j) does not bar the injunctive relief that
they seek.

A.

Appellants initially argue that § 1821(j) has been superseded by the
subsequent amendment of § 106 of the Bankruptcy Code. The new
§ 106 provides:

          (a) Notwithstanding an assertion of sovereign immunity,
          sovereign immunity is abrogated as to a governmental
          unit to the extent set forth in this section with respect
          to the following:

            (1) Sections 105, 106, . . . 502, 503, 1107, . . . 1141
          [and] 1142 . . . of this title.

                    7
            (2) The court may hear and determine any issue aris-
          ing with respect to the application of such sec-
          tions to governmental units.

            (3) The court may issue against a governmental unit
          an order, process, or judgment under such sec-
          tions or the Federal Rules of Bankruptcy Proce-
          dure, including an order or judgment awarding a
          money recovery . . . .

11 U.S.C. § 106(a) (1994), as amended by Bankruptcy Reform Act of
1994, Pub. L. No. 103-394, § 113, 108 Stat. 4106, 4117-18. Gener-
ally, a court assumes that a later-enacted, more specific statute super-
sedes a more general, earlier statute. See Landmark, 973 F.2d at 289-
90 (finding persuasive "the proposition that general statutory lan-
guage of the Bankruptcy Code is superseded by the more specific
anti-injunctive language found in [FIRREA]"). See also Parker North
Am. Corp. v. RTC (In re Parker North Am. Corp.), 24 F.3d 1145,
1152 (9th Cir. 1994) (same).

However, the amendment of § 106 does not affect the outcome
here because we address no bankruptcy claim at this time. Appellants
are not debtors nor yet even creditors. At the time of filing this action,
they had not lodged a bankruptcy claim against the Landmark debt-
ors, despite claiming in their briefs that they"were proceeding in the
District Court under Sections 105, 502, 503, 1141, and 1142 . . . ."
Brief of Appellants at 18. Although Appellants have, since the time
of the district court order, filed a motion for leave to file a proof of
claim out of time, no bankruptcy claim is properly before us at pres-
ent.

B.

Appellants also maintain that the terms of Landmark's bankruptcy
reorganization plan authorized the district court to retain jurisdiction
over the Landmark entities to address any bankruptcy-related dis-
putes. In the reorganization plan, Clock Tower agreed that:

          [T]he Court shall retain such jurisdiction over the Cases
          after the Effective Date as is legally permissible until the
          Plan Termination Date, including jurisdiction to:

                     8
          1. Allow, disallow, determine, liquidate . . . any
          Claim, including the resolution of any request for
          payment of any Administrative Claim and the res-
          olution of any and all objections to the allowance
          or priority of Claims . . . .

Appellants assert that this provision prevents the FDIC from relying
on § 1821(j). As noted above, any potential bankruptcy claim the
Appellants have is still pending below; accordingly, we cannot reach
the merits of such a claim at this juncture.

C.

Finally, Appellants assert that § 1821(j) does not bar their claims
for injunctive relief because the assets at issue in this case are not
assets of a failed financial institution, and thus not subject to the
FDIC's control under FIRREA. See 12 U.S.C.§ 1821(d) (1994). Spe-
cifically, Appellants maintain that the FDIC has attempted to assert
authority over Trust assets, which belong not to the failed banking
institution or its subsidiaries but to the participants and beneficiaries
of the Plan.2

Section 1821(j) only bars a federal court from acting "to restrain
or affect the exercise of powers or functions of the [FDIC]." (empha-
sis added). If asserting authority over the Trust assets is indeed
beyond the FDIC's "powers or functions" as receiver for a failed
banking institution, the anti-injunction provision of § 1821(j) would
not apply. See Gross, 974 F.2d at 407 (holding that "federal courts
have the ability to restrain the RTC where the Corporation is acting
clearly outside its statutory powers"); Landmark, 973 F.2d at 289 n.3
_________________________________________________________________
2 To the extent Appellants seek a mandatory injunction requiring the
FDIC to pay the Trust $2.1 million assertedly owed by Clock Tower, we
addressed and rejected this argument in Elmco Props., Inc. v. Second
Nat'l Fed. Sav. Assn., 94 F.3d 914 (4th Cir. 1996). In that case, the plain-
tiffs also claimed that the assets at issue were not assets of the failed
bank because the bank wrongfully possessed them. We found this posi-
tion "meritless, because, even if [plaintiff's] claim to the funds succeeds
on the merits, satisfaction of the claim must necessarily be paid out of
[the failed bank]'s assets." Id. at 920 n.5.

                     9
(distinguishing cases where an injunction could issue because "plain-
tiff alleged that the RTC was acting beyond the scope of its statutory
authority as receiver or conservator").

In fact, almost all of the FDIC acts that the Appellants have sought
to enjoin were easily within the FDIC's statutory powers. The RTC,
and now the FDIC, has broad "control over all of[a failed] thrift's
assets." Landmark, at 290. Because the FDIC succeeds to "all rights,
titles, powers, and privileges of the insured depository institution," 12
U.S.C. § 1821(d)(2)(A)(i) (1994), we must examine Oak Tree's pow-
ers to control the Plan. As Clock Tower's whole owner, Oak Tree
may take any action available to Clock Tower under the Trust Agree-
ment. Therefore, under this Agreement, Oak Tree could terminate the
Plan, replace the Trustees, and generally exercise significant control
over Trust assets. Consequently, a federal court cannot enjoin the
FDIC from taking these actions on Oak Tree's behalf. See Rosa v.
RTC, 938 F.2d 383, 398-99 (3d Cir. 1991) (finding that because the
failed institution's Board of Directors had the right to terminate a ben-
efit plan, the court could not enjoin the RTC from doing so). Thus,
the district court was clearly correct in holding that § 1821(j) barred
it from issuing an injunction prohibiting the FDIC from terminating
the Plan and replacing Appellants as Trustees.

However, under the present terms of the Trust Agreement, neither
Clock Tower nor Oak Tree could have seized the Trust's assets.
While the Agreement may be amended, it provides that"[n]o such
amendment shall authorize or permit any part of the Trust Fund to
revert to or become the property of [Clock Tower]." This provision
presumably was necessary to allow the Trust to obtain tax-exempt sta-
tus. See 26 C.F.R. § 1.501(c)(9)-4 (1996) (Absent certain exceptions,
"if . . . on dissolution [the association's] assets will be distributed to
its members' contributing employers, . . . the association is not
described in section 501(c)(9).").

The mere fact that an action of the FDIC may violate state contract
law, federal tax law, or ERISA does not entitle a federal court to
enjoin the FDIC, because "[e]ven claims seeking to enjoin the [FDIC]
from taking allegedly unlawful actions are subject to the jurisdictional
bar of §1821(j)." RPM Invs., Inc. v. RTC , 75 F.3d 618, 621 (11th Cir.
1996) (refusing to enjoin alleged breach of contract). See also

                     10
National Trust for Historic Preservation v. FDIC, 21 F.3d 469 (D.C.
Cir. 1994) (refusing to enjoin sale of property in alleged violation of
National Historic Preservation Act); Rosa, 938 F.2d at 397-99 (refus-
ing to enjoin allegedly illegal termination of ERISA plan); Ward v.
RTC, 996 F.2d 99 (5th Cir. 1993) (finding sale of real estate belong-
ing to failed bank within the scope of RTC's function, even if done
illegally); Gross, 974 F.2d at 407-08 ("[W]here the RTC performs
functions assigned it under the statute, injunctive relief will be denied
even where the RTC acts in violation of other statutory schemes . . . .
We find here that the availability of injunctive relief does not hinge
on our view of the proper exercise of otherwise-legitimate powers.")
(citations omitted).

While the illegality of the FDIC's actions would not render the
§ 1821(j) anti-injunction bar inapplicable, if the FDIC acted beyond
the scope of its statutory powers § 1821(j) would nevertheless not
apply because the FDIC's immunity from a court's equitable powers
is confined to actions within the scope of the FDIC's authority. FIR-
REA grants the FDIC power over "assets of the[failed banking] insti-
tution." See 12 U.S.C. § 1821(d) (1994). If it were beyond the power
of the FDIC as articulated in § 1821(d) to seize the Trust assets, a fed-
eral court could enjoin that action. To date, however, the FDIC has
not attempted to seize these assets. Moreover, in its appellate brief,
the FDIC has expressly stated that it has "never contended that the
assets of the Trust belong to the receivership estate." Brief of Appel-
lees at 20. Counsel for the FDIC repeatedly made a similar concession
at oral argument. In light of these uncontroverted representations, it
would be speculative for us to determine if the FDIC would be acting
outside the scope of its authority if it did seize the assets of the Trust.
We refuse to engage in such speculation.

III.

The district court's order dismissing Appellants' claims for injunc-
tive relief for lack of subject matter jurisdiction is affirmed. The case
is remanded for further proceedings consistent with this opinion.

AFFIRMED AND REMANDED

                     11