Court Opinion

ID: 9672412
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:54:29.353204+00
Date Added: 2024-06-11T18:16:15.900500
License: Public Domain

GONZALEZ, Justice,
concurring.
I concur with the Court’s opinion and judgment. I write separately, however, to address the FDIC’s contention that federal law exempts it from the award of exemplary damages imposed by the court of appeals.
The trial court rendered judgment n.o.v. in favor of Citizens National Bank of Den-ton, Texas, but the court of appeals reversed and rendered a $59,705 judgment in favor of Cockrell. The judgment included $15,000 in exemplary damages against the FDIC. The FDIC asserts that the court of appeals erred in rendering judgment for exemplary damages because federal law exempts it from liability for such damages. Cockrell replies that the FDIC should not be allowed to raise this “defense” for the first time on appeal.
We recently considered this issue in Larsen v. FDIC, 835 S.W.2d 66 (Tex.1992). In Larsen, the FDIC argued that 12 U.S.C. § 1821(d)(13)(B)1 allowed it to assert “D’Oench, Duhme defenses”2 on appeal. After noting that this section has been interpreted by federal circuit courts only as a standing statute giving the FDIC as conservator or receiver all the rights and remedies it enjoys in its corporate capacity, we held that § 1821 does not give the FDIC the absolute new substantive right to assert D’Oench, Duhme defenses for the first time on appeal. We noted that absent fundamental error a court of appeals has no discretion to reverse an error-free judgment based on a new argument raised for the first time on appeal. Larsen, 835 S.W.2d at 74.
In support of its contention that the FDIC may not assert its sovereign immunity defense to exemplary damages for the first time on appeal, Cockrell relies on several state and federal decisions. Specifically, Cockrell relies upon Olney Sav. & Loan Ass’n v. Trinity Banc Sav. Ass’n., 885 F.2d 266 (5th Cir.1989), Grubb v. FDIC, 868 F.2d 1151 (10th Cir.1989), Thurman v. FDIC, 889 F.2d 1441 (5th Cir.1989), and Federal Sav. and Loan Ins. Corp. v. Kennedy, 732 S.W.2d 1 (Tex.App.—Houston [1st Dist.] 1986, writ ref'd n.r.e.). Each of these cases is distinguishable.
The question presented in the present case is whether the court of appeals has jurisdiction to award punitive damages against the FDIC in a pending case absent a waiver of sovereign immunity. However, the question presented in each of the federal circuit cases, as in Larsen, concerned when the FDIC could assert D’Oench, Duhme defenses.
In Kennedy, the court of appeals considered and denied the FSLIC’s attempt to re-litigate issues decided by final judgment before the FSLIC’s appointment as receiver, holding that the FSLIC stands in the shoes of the insured depository institution with respect to that judgment. 732 S.W.2d at 3. The statute which gives the FDIC standing to assert rights as a receiver clearly requires the FDIC to abide by a judgment that has become final before it is appointed as receiver. 12 U.S.C. § 1821(d)(13)(A). Whether this provision would be construed as a waiver of sovereign immunity in a case where it was clear that the court would not have jurisdiction to render the judgment that has become final was not before that court and is not *468before us in' this case. The case before us today does not present a situation in which the FDIC is attempting to avoid the consequences of a prior final judgment.
It is well settled that agencies of the United States may not be held liable for punitive damages absent express Congressional authorization. Missouri Pac. R.R. v. Ault, 256 U.S. 554, 41 S.Ct. 593, 65 L.Ed. 1087 (1921); Bank One, Texas, N.A. v. Taylor, 970 F.2d 16, 33 (5th Cir.1992). Furthermore, if the judgment sought would expend itself upon the public treasury or domain or interfere with the public administration the suit will be construed as one against the United States requiring a waiver of sovereign immunity even if the United States was not a party in the original action. Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 1006, 10 L.Ed.2d 15 (1963). “Sovereign immunity is a jurisdictional prerequisite which may be asserted at any stage of the proceedings, either by the parties or by the court on its own motion.” Taylor, 970 F.2d at 34.
The Fifth Circuit has spoken recently on the power of the courts to award punitive damages against the FDIC. In Taylor, the district court awarded Taylor $5.2 million in punitive damages and additional damages under the treble damage provision of the Deceptive Trade Practices Act. On appeal, as a post-judgment intervenor, the FDIC maintained that sovereign immunity required a reversal of that award because the FDIC is an instrumentality of the United States. Taylor did not dispute the fact that the FDIC was immune from the suit but argued that the FDIC, as receiver of MBank, should not be permitted to assert new defenses unique to its status post-judgment. The court distinguished Olney and Grubb holding that punitive damages awards in those cases would not tax an agency of the United States nor offend sovereign immunity because the judgments would be satisfied out of supersedeas bonds which were never assets available to the FSLIC for distribution because the bonds were posted before the FSLIC was substituted. Taylor made no showing that an award of punitive damages would not affect the receivership estate; therefore, those cases were distinguishable. The court held that waiver of sovereign immunity was a jurisdictional prerequisite to an award of punitive damages requiring an express Congressional waiver that may be asserted at any stage of the proceedings. Id. 970 F.2d at 33-34.
The Taylor court noted that a different situation would have been presented, however, if the issue of sovereign immunity had been presented after a final unappeala-ble judgment had been rendered because of the provisions found in 12 U.S.C. § 1821(d)(13)(A) which require the FDIC as receiver to abide by any final unappealable judgment rendered before its appointment as receiver.
In the present case, the trial court rendered judgment n.o.v. in favor of the Bank. The FDIC was not a party to the action until it was added as an appellee after this case was submitted upon appeal. When the court of appeals reversed and rendered judgment on the verdict, including punitive damages, the FDIC raised the issue of sovereign immunity. The FDIC raised the issue immediately after the only judgment that contained an improper order of punitive damages. This judgment had become neither final nor unappealable.
Because Cockrell has failed to show that an award of punitive damages would not interfere with the public administration of the assets of the receivership estate and that such an award would not expend itself from the public treasury by increasing the loss to the insurance fund, such an award would require a waiver of sovereign immunity. A waiver of sovereign immunity cannot be implied but must be unequivocally expressed. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d 607 (1980). Furthermore, the government’s consent to be sued must be construed strictly in favor of the sovereign. United States v. Nordic Village, Inc., — U.S. -, -, 112 S.Ct. 1011, 1014-15, 117 L.Ed.2d 181, 188 (1992). Because no waiver is present in this case, the court of appeals erred in rendering a judgment which included punitive damages against the FDIC. This is an additional reason to *469reverse the judgment of the court of appeals.

. As amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA”), 12 U.S.C. § 1821(d)(13) provides in pertinent part:
(A) The Corporation [FDIC] shall abide by any final unappealable judgment of any court of competent jurisdiction which was rendered before the appointment of the Corporation as conservator or receiver.
(B) In the event of any appealable judgment, the Corporation [FDIC] as conservator or receiver shall
(i) have all the rights and remedies available to the insured depository institution (before the appointment of such conservator or receiver) and the Corporation in its corporate capacity ...

. D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942).