Court Opinion

ID: 195317
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:37:26+00
Date Added: 2024-06-11T09:05:59.927823
License: Public Domain

UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                           

No. 92-1936

                          FLOYD V. HENO,

                      Plaintiff, Appellant,

                                v.

              FEDERAL DEPOSIT INSURANCE CORPORATION,

                       Defendant, Appellee.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

           [Hon. Robert E. Keeton, U.S. District Judge]
                                                      

                                           

                              Before

                       Breyer, Chief Judge,
                                          

                 Campbell, Senior Circuit Judge,
                                               

                     and Cyr, Circuit Judge.
                                           

                                           

     Robert G. Wilson IV, with whom Robert  G. Wilson III and Law
                                                                 
Offices of Robert G. Wilson III were on brief for appellant.
                               
     Robert  R.  Pierce,  with  whom Russell  F.  Conn  and Conn,
                                                                 
Kavanaugh, Rosenthal & Peisch were on brief for appellee.
                             

                                           
                          April 22, 1994
                                           

          CYR, Circuit Judge.   Plaintiff Floyd Heno appeals from
          CYR, Circuit Judge.
                            

a  district court  order dismissing  claims for  compensatory and

injunctive relief brought  against the Federal Deposit  Insurance

Corporation ("FDIC") under the Financial Institutions  Reform and

Recovery  Act ("FIRREA").   In  an earlier  opinion, see  Heno v.
                                                              

FDIC,  996 F.2d  429 (1st  Cir. 1993),  we affirmed  the district
    

court order  dismissing the claim for  injunctive relief pursuant

to Federal Rule of Civil Procedure 12(b)(6), but vacated its Rule

12(b)(1)  order dismissing  the  claim  for compensatory  relief.

Thereafter, we granted FDIC's petition for panel rehearing on the

claim  for compensatory  relief,  see Fed.  R.  App. P.  40,  and
                                     

allowed further  briefing, argument, and  supplementation of  the

appellate record relating to  the proper interpretation of FIRREA

  1821(d),  (e), 12 U.S.C.   1821(d),  (e).  We  now withdraw our

original opinion, and substitute the present opinion.

                                I

                            BACKGROUND
                                      

A.   The "Claim"
               

          We review a Rule  12(b)(6) dismissal de novo, crediting
                                                      

all  allegations  in the  complaint  and  drawing all  reasonable

inferences favorable to  the plaintiff.   Scheuer v. Rhodes,  416
                                                           

U.S. 232, 236 (1974); Rumford Pharmacy, Inc.  v. East Providence,
                                                                

970 F.2d 996, 997  (1st Cir. 1992).   Similarly, a Rule  12(b)(1)

dismissal is reviewed de novo  where, as here, the only issue  is
                             

the legal  sufficiency of  undisputed jurisdictional facts.   See
                                                                 

                                2

Eaton  v. Dorchester  Dev., Inc.,  692 F.2d  727, 732  (11th Cir.
                                

1982);  Mortensen v. First Fed. Sav. &  Loan Ass'n, 549 F.2d 884,
                                                  

891 (3d Cir. 1977).

          The complaint alleges that Heno sold Balcol Corporation

a 104-acre tract of real property  in 1986, for which Balcol gave

Heno  a  promissory  note secured  by  a  first  mortgage on  the

undeveloped property.  In September 1987, Balcol began to develop

the  property,   known  as   the  Prospect   Heights  residential

subdivision,  and obtained  construction  financing through  Home

National Bank of  Milford ("Bank").   Heno agreed to  subordinate

his  first mortgage to the Bank's construction loan mortgage.  In

return for the release of Heno's second mortgage lien as each lot

was  sold, Balcol and the  Bank promised to  release $19,125 from

the sale proceeds.

          By April 1990, Balcol  and Prospect Heights were exper-

iencing financial  difficulties, and the three  principal parties

entered into a recapitalization agreement.  Heno agreed to accept

$5,000 (rather  than $19,125)  per lot  for releasing  his second

mortgage  lien on the next nine lots  sold by Balcol.  Balcol and

the Bank agreed:   (1) to  transfer two additional  lots to  Heno

(Lots 82 and  111), free and clear  of the Bank's  first mortgage

liens, at the time Heno released his  second mortgage lien on the

ninth lot; and (2) to deposit the net proceeds from the nine lots

in  escrow with  the Bank.   The  escrow monies  were to  be used

exclusively for  immediate completion of roadwork  in the project

andto defray Balcol's firstmortgage interest paymentsto the Bank.
                                            

                                3

          Although  Balcol conveyed  Lots 82 and  111 to  Heno on

May 2, 1990, the Bank did not release its first mortgage liens on

the lots.  During April and  May 1990, seven of the nine original

lots were  sold by the  Bank after Heno  had released his  second

mortgage liens.   By June 1,  1990, more than  $232,000 had  been

deposited   in   escrow   with   the   Bank   pursuant   to   the

recapitalization  agreement  among  Heno, Balcol,  and  the Bank.

Ultimately,  the eighth  and ninth  lots were  sold, and  the net

proceeds, approximating $90,000, were  deposited with FDIC.1  The

complaint  alleges, hence  we must assume,  that $125,000  was to

have been devoted to roadwork at the project.2

          On June 1,  1990, the  Bank was declared  insolvent and

FDIC  was appointed receiver.  At an unspecified later date, FDIC

applied  the escrow monies  toward the principal  due on Balcol's
                                                

first  mortgage  loan  account with  the  Bank,  contrary  to the

express terms of the  recapitalization agreement.  Heno's counsel

thereafter held discussions with FDIC, and was informed by Balcol

that FDIC  would determine, after  obtaining an appraisal  of the

Prospect  Heights project,  whether to  release the  Bank's first

mortgage liens on  Lots 82 and  111, the two  additional lots  at

                    

     1The complaint  does not specify the date(s) of these sales,
but  the proceeds were deposited with FDIC on or about October 1,
1990.

     2At  oral  argument,  Heno's  counsel  represented  that the
roadwork was never performed.

                                4

issue  on  appeal.     On  December 13,   1990,3  and  again   on

February 19, 1991, Heno submitted  written requests for action by

FDIC, but to  no avail.4   Subsequently, FDIC  foreclosed on  the

Prospect Heights  subdivision, including  Lots 82  and 111.   The

escrow  monies were  neither redeposited  nor applied  toward the

purposes agreed upon under the recapitalization agreement.

          On October 18,  1991, Heno initiated the present action

to  enjoin FDIC's sale  of Lots  82 and 111  and to compel  it to

redeposit  the escrow  monies previously  misapplied to  Balcol's

first  mortgage  with  the  Bank.    The  complaint  demanded  an

equitable  accounting  of  the  escrow  monies, and  compensatory

                    

     3Heno's December 13 letter specifically requested release of
the Bank's  first mortgage liens  on Lots  82 and 111  and served
"notice of [Heno's] contingent interest in [the escrow account]."
The letter went on to say:

     Heno  should receive  either the  lot releases  or that
     portion  of  the  escrow account  attributable  to  his
     participation in the agreement.  Under well established
                                                            
     fiduciary and equitable principles,  if the FDIC is not
                                                            
     going to honor the purposes of the escrow account, that
                                                            
     portion  of the escrow  account attributable  to Heno's
                                                            
     participation should  be returned to him,  and not used
                                                            
     by the Receiver to reduce Balcol's obligation.
                                                  

(Emphasis  added.)     Heno's  complaint  demands   an  equitable
accounting  of  the escrow  monies,  and,  accordingly, does  not
specify  the  exact  amount  claimed.    However,  were  Heno  to
establish a  repudiation  of the  recapitalization agreement,  he
could  be expected to assert  a claim for  the difference between
the  $19,125 originally  agreed  upon, and  the  $5,000 he  later
agreed to accept under the recapitalization agreement for releas-
ing his second mortgage liens on the nine lots sold by Balcol (or
approximately $127,000).

     4The February 19, 1991, letter outlines, among other things,
the evidence relating to Heno's interest in the escrow monies and
certain  subdivision  lots,  and  makes  reference  to additional
letters not included in the appellate record.

                                5

relief for the loss  occasioned by FDIC's refusal to  release the

Bank's first  mortgage liens on Lots  82 and 111.   FDIC moved to

dismiss the  claim for compensatory  relief pursuant  to Fed.  R.

Civ. 12(b)(1), and  the claim for  injunctive relief pursuant  to

Fed. R.  Civ. P. 12(b)(6).   The  district court decided  that it

lacked jurisdiction to consider the claim for compensatory relief

by virtue  of 12 U.S.C.   1821(d)(13)(D)(i),  and that injunctive

relief was precluded by 12 U.S.C.   1821(j).

B.   The Original Panel Opinion
                               

          FIRREA   1821(d) regulates  the filing,  determination,

and  payment of  "claims"  against "assets"  of failed  financial

institutions after FDIC has been appointed receiver.  Subsections

1821(d)(3)(B)  and (C) require FDIC to publish and mail notice of

liquidation to  "any creditor  shown on the  institution's books"

and to allow at least ninety days for filing "claims."  12 U.S.C.

  1821(d)(3)(B),  (C).  As FDIC points out, anyone with a "claim"

against  the  assets of  the  failed institution  must  submit an

administrative  claim to  FDIC  within  the prescribed  statutory

period.     Id.     1821(d)(5)(C).     "[P]articipation  in   the
               

administrative  claims  review  process  [is] mandatory  for  all

parties asserting  claims  against failed  institutions  . . . ."

Marquis v. FDIC, 965 F.2d 1148, 1151 (1st Cir. 1992).  Failure to
               

participate   in   the  administrative   claims   review  process

(hereinafter  "ACRP")  is  a  "jurisdictional  bar"  to  judicial

review.  Id.; see also 12 U.S.C.   1821(d)(13)(D); FDIC v. Shain,
                                                                 

Schaffer & Rafanello, 944 F.2d 129, 132 (3d Cir. 1991) ("Congress
                    

                                6

expressly withdrew jurisdiction from all courts over any claim to

a  failed bank's assets that are [sic] made outside the procedure

set forth in section  1821.").5  The subsection 1821(d)  bar date

for  filing  administrative  claims   in  the  present  case  was

September 6,  1990.    Since  neither  letter  detailing   Heno's

"claims" predated  the bar date,  see supra  notes 3  and 4,  the
                                           

district  court ruled  that Heno  could no  longer file  a timely

administrative  claim  under  subsection 1821(d),  and  that  his

"claims" therefore were not entitled to judicial review.

          Heno  consistently  has  advanced  two  contentions  on

appeal.   First,  he argues  that neither  FIRREA    1821(j), see
                                                                 

infra note 8, nor the ACRP established under  subsection 1821(d),
     

applies to "non-creditors"    including Heno    who assert claims

to  property, such as  the alleged escrow  account, which, though

held by the failed bank, is held "in trust" for third parties and
       

                    

     5Section 1821(d)(13)(D) provides:

          (D)  Limitation on judicial review

               Except  as otherwise provided  in this subsection,
          no court shall have jurisdiction over   

               (i)  any claim or action for payment from, or
                    any  action  seeking a  determination of
                    rights  with respect  to, the  assets of
                    any depository institution for which the
                    Corporation has been appointed receiver,
                    including  assets which  the Corporation
                    may   acquire   from   itself  as   such
                    receiver; or

               (ii) any   claim  relating  to   any  act  or
                    omission  of  such  institution  or  the
                    Corporation as receiver.

12 U.S.C.   1821(d)(13)(D).

                                7

is not  a bank  "asset."6   See,  e.g., Purcell  v.  FDIC (In  re
                                                                 

Purcell), 141 B.R. 480 (Bankr. D. Vt. 1992), aff'd, 150 B.R. 111,
                                                  

113-15  (D.  Vt. 1993).   Second,  and  in the  alternative, Heno

contends  that his claim for  compensatory relief should not have

been  dismissed for  failure  to comply  with the  administrative

claim procedure established under subsection 1821(d).

          The "task of interpretation begins with the text of the

statute  itself,  and statutory  language  must  be accorded  its

ordinary  meaning."   Telematics  Int'l,  Inc.  v. NEMLC  Leasing
                                                                 

Corp.,  967 F.2d  703, 706 (1st  Cir. 1992)  (interpreting FIRREA
     

  1821(j))  (emphasis added) (citations  omitted).   The original

panel opinion  rejected FDIC's contention that  Heno was required

to file an administrative  claim before the bar date  even though
                                       

the "claim" was grounded in a pre-receivership agreement with the
                                              

Bank  and remained executory and unrepudiated both at the time of

FDIC's appointment  and throughout  the entire 90-day  bar period

prescribed in subsections 1821(d)(3)(B)(i)  and 1821(d)(5)(C)(i).

                    

     6At reargument,  Heno urged  that   1821(d)(13)(D)  be ruled
wholly inapplicable for this reason, suggesting that the issue is
ripe  for appellate  review  because it  might  affect any  later
district court decision as to the scope of Heno's damages remedy.
We decline the invitation  for two reasons.  First,  given FDIC's
blanket concession at reargument, the "asset" issue is  no longer
essential  to  proper resolution  of  the  question of  appellate
jurisdiction.    Second, the  district  court  has  yet  to  make
findings  as to  whether (or  which) Bank  records may  have been
lost.   On remand, therefore, Heno may confront a serious problem
of proof.  See D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942);
                                           
see also 12  U.S.C.   1823(e).   Thus, though  the D'Oench  Duhme
                                                                 
document  requirement is  not  jurisdictional, and  Heno will  be
entitled to reasonable discovery, see generally Tuxedo Beach Club
                                                                 
Corp. v.  City Fed.  Sav.  Bank, 749  F. Supp.  635, 644  (D.N.J.
                               
1990), he may not be able to overcome certain FDIC defenses which
could obviate any issue relating to damages.

                                8

As our opinion pointed out, FIRREA   1821(d) prescribes a  single

exception to  the pre-bar  date filing  requirement:   it permits

late-filed claims only if "the claimant did not receive notice of
                         

the appointment of the receiver in time to file such claim before

such  date; and  . . .  such claim  is filed  in  time to  permit

payment of such claim."  12  U.S.C.   1821(d)(5)(C)(ii).  Because

Heno    no doubt like  many others who assert claims  arising out

of executory  contracts  with a  failed  bank     concededly  had

actual notice  of FDIC's appointment,  but held no  assertable or
                                                  

provable  "claim" until  after the bar  date, the  original panel
                              

opinion  reasoned  that  the  ACRP  established under  subsection

1821(d)  rationally  could not  have  been  intended to  preclude

judicial review of  post-receivership "claims" which  arise after
                                                                 

the expiration  of the 90-day administrative-claim filing period.

Rather, inasmuch as FDIC received two post-bar date requests from

Heno that it either affirm or repudiate the alleged reaffirmation

agreement   within  a   "reasonable  period   following  [FDIC's]

appointment," see 12 U.S.C.   1821(e)(2); supra notes 3 and 4, we
                                               

held Heno's claim for contract repudiation subject instead to the

more flexible  time constraints established in  FIRREA   1821(e).

See,  e.g., Ceguerra v. Secretary of Health and Human Servs., 933
                                                            

F.2d  735, 742 (9th Cir.  1991) ("[W]hen an administrative agency

interprets  its  governing  statute  to require  such  an  absurd

result, we owe that interpretation no deference.")7  

                    

     7Subsection 1821(e) provides, in pertinent part:

     (e)  Provisions  relating  to  contracts  entered  into

                                9

C.   The Petition for Rehearing
                               

          The petition for rehearing  represents that but for the

fact  that these  claims  were never  considered claims  based on

contract repudiation, FDIC would have invoked its extant internal
                                                        

agency manual procedures for processing such post-bar date claims

(hereinafter:   "internal manual procedures").  Accordingly, FDIC

urged remand to  permit the district  court to determine  whether

Heno  had  complied with  the  internal  manual procedures  first

disclosed in FDIC's petition for  rehearing.  At reargument, FDIC

withdrew its request for  remand, as unnecessary, after conceding

                    

          before appointment of conservator or receiver

     (1)  Authority to repudiate contracts

          In addition  to any other rights  a conservator or
     receiver may have, the  conservator or receiver for any
     insured   depository   institution  may   disaffirm  or
     repudiate any contract or lease   

          (A)  to which such institution is a party;

          (B)  the  performance of which  the conservator or
               receiver, in the conservator's  or receiver's
               discretion, determines to be burdensome; and

          (C)  the disaffirmance or repudiation of which the
               conservator  or  receiver determines,  in the
               conservator's or  receiver's discretion, will
               promote  the  orderly  administration of  the
               institution's affairs.

     (2)  Timing of repudiation

          The  conservator  or  receiver  appointed  for any
     insured  depository  institution  in   accordance  with
     subsection (c) of this section  shall determine whether
     or not to exercise the rights of repudiation under this
     subsection  within a  reasonable period  following such
     appointment.

12 U.S.C.   1821(e)(1), (2).

                                10

that Heno's detailed letter requests to FDIC in December 1990 and

February 1991,  see supra notes 3 and 4, placed FDIC on notice of
                         

the  existence and  nature  of Heno's  post-bar date  claims well

within the time allotted under FDIC's internal manual procedures.

                                II

                            DISCUSSION
                                      

          Given the concession  that Heno's post-bar  date claims

were timely  filed under  FDIC's internal manual  procedures, the

one remaining question is  whether judicial deference is  due the

FDIC   interpretation   of   subsections  1821(d)(5)(C)(ii)   and

1821(d)(13) implicit in its internal manual procedures.8

          The  guidelines governing deference to an administering

agency's interpretation of its enabling statute are well settled:

          First,  always,  is   the  question   whether
          Congress  has directly spoken  to the precise
          question at issue.  If the intent of Congress
          is clear, that is the  end of the matter; for

                    

     8We  need  not  reconsider  our  earlier  holding  that  the
district  court  lacked   jurisdiction  over  Heno's   claim  for
injunctive relief,  a claim expressly barred  by   1821(j), which
provides in part:

     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 Corporation
                                         
     as a conservator or a receiver.
                                   

12 U.S.C.    1821(j) (emphasis added); see  Telematics Int'l, 967
                                                            
F.2d at 707 ("holding that the district court  lacks jurisdiction
to  enjoin FDIC  when FDIC  is acting  pursuant to  its statutory
          
powers as receiver") (emphasis added).

                                11

          the court,  as well as the  agency, must give
          effect to the unambiguously  expressed intent
          of Congress.   If, however, the  court deter-
          mines Congress has not directly addressed the
          precise question at issue, the court does not
          simply impose  its  own construction  on  the
          statute, as would be necessary in the absence
                                                       
          of an administrative interpretation.  Rather,
                                             
          if the  statute is silent  or ambiguous  with
          respect to a specific issue, the question for
          the court is  whether the agency's  answer is
          based  on a  permissible construction  of the
          statute.

Chevron U.S.A., Inc. v.  Natural Resources Defense Council, Inc.,
                                                                

467  U.S.  837,  842-43  (1984)  (emphasis  added).    Under  the

statutory   interpretation  implicit   in  its   internal  manual

procedures,   FDIC  construes  the   pivotal  statutory  bar-date

exception in  subsection 1821(d)(5)(C)(ii)     "the claimant  did

not receive notice of  the appointment of the receiver in time to

file  such claim  before [the  bar] date"     as  permitting late

filing even by claimants who were on notice of FDIC's appointment
                                                                 

but  could not  file their  claim because  it did  not come  into

existence  until after  the  bar date  prescribed in  subsections

1821(d)(3)(B)(i) and 1821(d)(5)(C)(i).

          Although we concur in FDIC's candid assessment that its

proposed interpretation is  far from the most  natural reading of

subsection 1821(d)(5)(C)(ii) itself, we cannot  say that it  does

not represent  a "permissible" reading of  an ambiguous provision

viewed in the broader context of the statute as a whole under the

deferential standard  required by Chevron.  See Chevron, 467 U.S.
                                                       

at  844 (agency construction  is "permissible" unless "arbitrary,

capricious,  or manifestly  contrary  to the  statute") (emphasis
                          

                                12

added).  In this vein, neither we nor the parties  have found any

other FIRREA provision governing  agency treatment of claims that
                                                  

do not  arise  until more  than 90  days after  the claimant  has

notice of FDIC's appointment as receiver.  Additionally, Congress

has  delegated to  FDIC the  authority to  "prescribe regulations

regarding the allowance or disallowance of claims by the receiver

and  providing  for  administrative determination  of  claims and

review  of such  determination."   12  U.S.C.   1821(d)(4).   The

extant  FDIC  internal  manual procedures  applicable  to  Heno's

claims  comport  with  the  FDIC's interpretation  of  subsection

1821(d)(5)(C)(ii), by explicitly dispensing with  any requirement
                                           

   intrinsic to the pre-bar date ACRP    that holders of post-bar

date claims  establish that  they had  no actual or  constructive

notice of FDIC's appointment.  Compare infra Appendix, Exhibits G
                                            

and 4-F with Exhibit 5-K.
            

          Further, FDIC advances sound policy grounds for afford-

ing it an  opportunity to  evaluate post-bar date  claims in  the

first instance, including contract repudiation claims that do not

arise within  the initial  ninety-day period following  notice of

its appointment as  receiver.   For one thing,  a reasonably  de-

signed and fairly administered post-bar date ACRP should optimize

prospects  for expeditious  resolution  of  these claims  against

failed  banks, make  maximum  use of  FDIC's cumulative  adminis-

trative  expertise,  and minimize  burdensome  litigation  in the

federal courts.  See  Marquis, 965 F.2d at 1152  ("Quite plainly,
                             

Congress  intended the ACRP  to provide a  streamlined method for

                                13

resolving most  claims against  failed institutions in  a prompt,

orderly fashion, without lengthy  litigation.") (citing H.R. Rep.

No.  101-54(I),  101st  Cong.,  1st  Sess.,  at  418-19  (1989)).

Lastly, absent a clear  signal from Congress to the  contrary, we

must credit an administering agency's reasoned interpretation  of

its enabling statute.  See Chevron, 467 U.S. at  843 n.11 (noting
                                  

that judicial deference is not dependent on a determination "that

the agency  construction was  the only one  it permissibly  could
                                      

have  adopted to uphold the construction, or even the reading the

court  would have reached if the question initially had arisen in

a judicial setting");  see also FDIC v.  Philadelphia Gear Corp.,
                                                                

476  U.S. 426, 439 (1986) (according  Chevron deference to estab-
                                             

lished FDIC administrative practice, even though FDIC had not yet

reduced  its statutory interpretation  to "specific regulation");

cf.  Colorado ex  rel. Colorado  State Banking Bd.  v. Resolution
                                                                 

Trust Corp., 926  F.2d 931,  944 (10th Cir.  1991) ("[T]he  RTC's
           

expert  'judgments about the way  the real world  works . . . are

precisely the kind that agencies are better equipped to make than

the courts.'") (citation omitted).

          Since  FDIC  concedes  that  its  treatment  of  Heno's

administrative requests that his alleged capitalization agreement

with the Bank be assumed by FDIC was tantamount to administrative

review under FDIC's internal  manual procedures,9 and consequent-

                    

     9We expressly  refrain from considering whether the adminis-
trative "mistake" conceded by  FDIC lay in its failure  to notify
Heno of  its post-bar date ACRP within  30 days after it received
the  December 1990  and February  1991  letters, i.e.,  after the
                                                     
dates  of FDIC's "discovery" of  Heno's claims, or whether Heno's

                                14

ly that  the district  court  had jurisdiction  to review  Heno's

claims,  we have  no  occasion to  determine  the sufficiency  of

FDIC's internal manual procedures.  These matters must await some

future  occasion when FDIC asserts  a jurisdictional bar to judi-

cial review  under FIRREA   1821(d)(13)(D) based  on a claimant's

alleged failure to comply with the internal manual procedures. 

          At the same  time, however, we  note that though  amply

invested  with  rulemaking  authority  to  promulgate regulations

under subsection 1821(d)(4),  FDIC has  not done so,  nor has  it

taken  reasonable steps  to forewarn  potential claimants  of the

existence  of its  internal manual  procedures for  filing "late"
         

claims, thus contributing indispensably to the convoluted  travel

of this case.  Cf., e.g., Lawson v. FDIC, 3 F.3d 11, 14 (1st Cir.
                                        

1993) (noting  that  FDIC's "litigating  style has  some role  in

[creating] confusion"  in the  district courts).10   Accordingly,

the FDIC internal manual procedures are appended to this opinion,

see infra Appendix,  to lessen the likelihood that  future claim-
         

ants experience a similar ordeal. 

          The  district court order dismissing appellant's claims
                                                                 

for compensatory relief is vacated.  The case is remanded  to the
                                                                 

district  court for  further  proceedings  consistent  with  this
                                                                 

                    

letters were proper administrative claims implicitly "disallowed"
when FDIC failed to respond within 180 days after their receipt.

     10For example, as recently  as reargument, FDIC continued to
urge  a remand for  administrative exhaustion,  finally conceding
its "mistake" in failing to apply its internal  manual procedures
to Heno's claim only  when it was pressed to  explain the utility
of such a remand.

                                15

opinion.   In  all other  respects, the  district court  order is
                                                                 

affirmed.   Finally, the present opinion is to be substituted for
                                                                 

our original opinion published at 996 F.2d 429.  So ordered.
                                                           

                                16

                             APPENDIX
                                     

                            EXHIBIT 1

Revised Exhibit 5-K.

FORM:     NOTICE TO CREDITOR  TO FILE A  CLAIM; CREDITOR NOT  AP-
          PEARING IN  BOOKS AND  RECORDS AND/OR  DISCOVERED AFTER
          INITIAL PUBLICATION NOTICE AND [sic] HAS BEEN SENT

Use:      Upon  discovery  of a  claimant  not  appearing on  the
          institution's books and records, a similar notice is to
          be sent within 30  days of discovery of  creditor under
          12 U.S.C.   1821(d)(3)(C)(ii).  Use for claims which do
          not appear  on the institution's books  and are discov-
          ered after the appointment  of the receiver and initial
          publication notice  and letters  to creditors  have al-
          ready been sent.  This form should also be utilized for
          claims discovered after expiration of the bar date.

          Complete  Affidavits of  Mailing, modified  to indicate
          creditor(s) discovered after closing and initial notic-
          es.

[DATE]
[NAME OF CLAIMANT]
[ADDRESS]

SUBJECT:  FIN - Name of Financial Institution
          City, State - in receivership
          NOTICE TO  DISCOVERED CREDITOR  OR CLAIMANT -  PROOF OF
                                                                 
          CLAIM
               

Dear Sir/Madam:

On  [date of  appointment], the  [name of  financial institution]
located at (full  street address  of main office]  was closed  by
[the supervisory  authority], and  the Federal  Deposit Insurance
Corporation was appointed Receiver.  Notice of the appointment of
the receiver has been published as required by law.

The Receiver has discovered that you may have a claim against the
[name of financial institution] or the Receiver.

By published notice, the Receiver  has established [bar date]  as
the last date for filing claims (the "bar date").  Under applica-
ble law, the Receiver must disallow claims which are not filed by
the  bar date,  except the  Receiver may  consider a  claim filed
                      
after  the bar  date if  it is  shown that  the claimant  did not
receive notice of the appointment of the receiver in time to file
such claim before the bar  date, and such claim is filed  in time
to permit payment of the claim.

                                i

It  is  within the  sole discretion  of  the receiver  whether to
consider claims which are filed after the bar date.

If you wish  to file a  claim, please complete  and sign the  en-
closed Proof of Claim Form.  If your claim is for more than $500,
your claim  form must  be  signed and  sworn to  before a  notary
public.   If  you believe  that you  did not  have notice  of the
appointment of the receiver in time to file your claim by the bar
date,  then you must also file a written statement specifying any
facts  or  circumstances  demonstrating  that you  did  not  have
knowledge of the appointment of the Receiver in time to file your
claim by the bar date.  Please include any documentation support-
ing your claim and your  lack of knowledge of the  appointment of
the Receiver.

                        MAILING YOUR CLAIM
                                          

Please mail your Proof of Claim form and written statement to:

                           Claims Agent
              Federal Deposit Insurance Corporation
              Receiver of Name of Failed Institution
                                                    
            c/o Federal Deposit Insurance Corporation
                             Address
                                    
                      City, State, Zip Code
                                           

                    HAND-DELIVERING YOUR CLAIM
                                              

You may hand-deliver your Proof of Claim form to the Claims Agent
at the address stated  herein between 8:00 a.m. and 5:00  p.m. on
weekdays (excluding federal holidays).

                   [address for hand-delivery]

If you are filing your claim after the bar date, and you wish the
receiver to consider  your claim,  your Proof of  Claim form  and
written statement  must be  POSTMARKED OR HAND-DELIVERED  TO (AND
                                                                 
RECEIVED BY) the Receiver no later than 90 days from  the date or
            
post-mark [sic] of this letter, whichever is later.

Upon receipt  of your claim, the  Receiver has up to  180 days to
review and determine whether to allow or disallow your claim.  If
the  Receiver notifies you of the disallowance of your claim, and
you wish to seek  judicial determination of your claim,  you must
file  a lawsuit (or continue  any prior pending  lawsuit) on your
claim, within  60 days after the later of the date or postmark of
                                                                 
any notice of disallowance,  in the United States  District Court
                          
for  the  district in  which  [name  of financial  institution]'s
principal place of business  was located or in the  United States

                                ii

District Court for the District of Columbia or your claim will be
barred.

If you  do not  receive a  notice of  disallowance of  your claim
within 180 days of its filing with the  Receiver and the Receiver
and you have  not agreed, in  writing, to extend the  initial 180
day determination  period, your claim will  be deemed disallowed,
pursuant  to 12 U.S.C.   1821(d)(6)(A).   If this  occurs and you
wish  to file suit on your claim to obtain judicial determination
of  your claim, you must file your  suit within 60 days after the
                                                                 
expiration  of the 180 day  period in the  United States District
                                  
Court for the district in which [name of financial institution]'s
principal place of business  was located or in the  United States
District Court for the District of Columbia or your claim will be
barred.

The statutory provisions governing  this claims process are found
in section 1821(d)(3)-(13) of Title 12 of the United States Code.

If  you  have  any questions  please  contact  [contact  name] at
[contact phone number].

Sincerely,

Claims Agent(s)
Federal Deposit Insurance Corporation,
 as Receiver for [name of financial institution]

                               iii

Revised  Exhibit  4-F.    FDIC-DAS  Settlement  Procedures Manual
Sample

Disaffirmance Letter

Certified Mail
Return Receipt Requested

                                   Date

Name
Address
City, State Zip Code

Subject:  FIN #, Name of Closed Financial Institution
          City, State - In Receivership
          Account # (Reference, etc.)
          CONTRACT DISAFFIRMANCE
                                

To Whom It May Concern:

On [date  of appointment]  the [name of  failed institution],  in
[city  and state), was closed  by the [supervisory authority) and
the Federal Deposit Insurance Corporation  was appointed Receiver
("Receiver").    Under applicable  federal  law  the Receiver  is
responsible  for winding up the affairs of [name of failed insti-
tution) as quickly as possible.  To achieve this goal the Receiv-
er has the right,  pursuant to 12 U.S.C.   1821(e),  to disaffirm
contractual obligations of the failed institution.

The  purpose of  this  letter is  to  advise-you [sic]  that  the
Receiver has elected to disaffirm the above-referenced contract.

* Arrangements may  be made  to pick up  any leased equipment  by
contacting (Name) at (telephone number).

If  you  believe that  you have  any  claim against  the Receiver
resulting  from this action, you  may file a  proof of claim with
the  Receiver, using  the  enclosed form,  and the  Receiver must
receive it  on or  before [90  days] from  the date  or post-mark
[sic]  of this letter, whichever is later.   If your claim is for
more  than $500,  your  claim form  must be  signed and  sworn to
before a Notary  Public.  YOUR FAILURE TO  TIMELY FILE YOUR CLAIM
ON  OR BEFORE [90 days] FROM THE  DATE OR POST-MARK [SIC] OF THIS
LETTER, WHICHEVER  IS LATER, WILL  RESULT IN THE  DISALLOWANCE OF
YOUR CLAIM.

Please mail your Proof of Claim form to:

                           Claims Agent

                                iv

              Federal Deposit Insurance Corporation
              Receiver of Name of Failed Institution
                                                    
            c/o Federal Deposit Insurance Corporation
                             Address
                                    
                       City State, Zip Code
                                           

Or  you may hand-deliver your  Proof of Claim  form to the Claims
Agent at the  address stated  herein between 8:00  a.m. and  5:00
p.m. on weekdays (excluding federal holidays).

Your  Proof of Claim form must be POSTMARKED OR HAND-DELIVERED TO
                                                                 
(AND RECEIVED BY) the  Receiver on or  before the [90 days]  from
                 
the date or post-mark [sic] of this letter, whichever is later.

Upon receipt  of your claim, the  Receiver has up to  180 days to
review and determine whether to allow or disallow your claim.  If
the  Receiver notifies you of the disallowance of your claim, and
you wish to seek a judicial determination of your claim, you must
file suit (or  continue any  prior pending suit)  on your  claim,
within 60  days after the  later of the  date or postmark  of any
                                                                 
notice of disallowance,  in the United States  District Court for
                      
the district in which [name of financial institution]'s principal
place  of business was located  or in the  United States District
Court for the District of Columbia or your claim will be barred.

You are  further advised that if  you do not receive  a notice of
disallowance of your claim within 180 days of its filing with the
Receiver and the Receiver and you have not agreed, in writing, to
extend the  initial 180 day determination period, your claim will
be  deemed disallowed, pursuant to 12 U.S.C.   1821(d)(6)(A).  If
this occurs and you wish to file suit on your claim  to obtain de
novo adjudication, you must  file your suit within 60  days after
the expiration  of the 180  day period in the  United States Dis-
trict Court for the district in which [name of financial institu-
tion]'s  principal place of business was located or in the United
States  District Court for the District of Columbia or your claim
will be barred.

The statutory provisions governing  this claims process are found
in section 1821(d)(3)-(13) of Title 12 of the United States Code.

If  you  have any  questions  please  contact  [contact name]  at
[contact phone number].

Very truly yours,

Name
Title
Federal Deposit Insurance Corporation,
as Receiver for [name of financial institution]

(Refer to site policy for signature guidelines)

                                v

cc:  Refer to site policy for copy distribution guidelines.
     *(Use only if applicable)

Revised Exhibit G.   FDIC-DAS Settlement Procedures Manual Sample
Disaffirmance on Prepaid Contract Letter

Certified Mail
Return Receipt Requested

                               Date

Name
Address
City, State Zip Code

Subject:  FIN #, Name of Closed Financial Institution
          City, State - In Receivership
          Account # (Reference, etc.)
          CONTRACT   DISAFFIRMANCE  AND  REQUEST  FOR  RETURN  OF
PREPAID        FUNDS
                    

To Whom It May Concern:

On [date  of appointment]  the [name of  failed institution],  in
[city  and state], was closed  by the [supervisory authority] and
the Federal Deposit Insurance Corporation  was appointed Receiver
("Receiver").    Under applicable  federal  law  the Receiver  is
responsible  for winding up the affairs of [name of failed insti-
tution] as quickly as possible.  To achieve this goal the Receiv-
er has the right, pursuant to  12 U.S.C.   1821(e), to  disaffirm
contractual obligations of the failed institution.

The purpose of this letter is to advise you that the Receiver has
elected to disaffirm the above-referenced contract.

An examination of your prepaid  contract revealed that there  are
    unused  days remaining from the date of this notice until the
   
expiration of said contract.  The number of days multiplied by $ 
                                                                 
per day, would indicate a credit of $    .  It is requested  that
                                         
you  forward a  check made  payable to the  FDIC, as  Receiver of
(Name of  closed Financial  Institution), for the  aforementioned
credit to:

              Federal Deposit Insurance Corporation
              Receiver of Name of Failed Institution
                                                    
            c/o Federal Deposit Insurance Corporation
                             Address
                                    
                       City, State Zip Code
                                           
                        Attention:  [Name]

*Arrangements  may be  made to  pick up  any leased  equipment by
contacting (Name) at (telephone number).

                                vi

If  you  believe that  you have  any  claim against  the Receiver
resulting from  this action, you may  file a proof  of claim with
the  Receiver, using  the enclosed  form, and  the Receiver  must
receive it  on or  before [90  days] from  the date  or post-mark
[sic] of this  letter, whichever is later.  If  your claim is for
more than  $500, your  claim  form must  be signed  and sworn  to
before a Notary Public.   YOUR FAILURE TO TIMELY  FILE YOUR CLAIM
ON OR BEFORE  [90 days] FROM THE DATE OR  POST-MARK [sic] OF THIS
LETTER,  WHICHEVER IS LATER,  WILL RESULT IN  THE DISALLOWANCE OF
YOUR CLAIM.

Please mail your Proof of Claim form to:

                           Claims Agent
              Federal Deposit Insurance Corporation
              Receiver of Name of Failed Institution
                                                    
            c/o Federal Deposit Insurance Corporation
                             Address
                                    
                       City State, Zip Code
                                           

Or you may  hand-deliver your Proof of  Claim form to the  Claims
Agent at the  address stated  herein between 8:00  a.m. and  5:00
p.m. on weekdays (excluding federal holidays).

Your  Proof of Claim form must be POSTMARKED OR HAND-DELIVERED TO
                                                                 
(AND RECEIVED  BY) the Receiver on  or before the [90  days] from
                 
the date or post-mark [sic] of this letter, whichever is later.

Upon receipt  of your claim, the  Receiver has up to  180 days to
review and determine whether to allow or disallow your claim.  If
the  Receiver notifies you of the disallowance of your claim, and
you wish to seek a judicial determination of your claim, you must
file suit (or  continue any  prior pending suit)  on your  claim,
within 60 days  after the later  of the date  or postmark of  any
                                                                 
notice of disallowance,  in the United States  District Court for
                      
the district in which [name of financial institution]'s principal
place  of business was located  or in the  United States District
Court for the District of Columbia or your claim will be barred.

You are  further advised that if  you do not receive  a notice of
disallowance of your claim within 180 days of its filing with the
Receiver and the Receiver and you have not agreed, in writing, to
extend the initial  180 day determination period, your claim will
be  deemed disallowed, pursuant to 12 U.S.C.   1821(d)(6)(A).  If
this occurs and  you wish to file suit on your claim to obtain de
novo adjudication, you must  file your suit within 60  days after
the expiration of the  180 day period in  the United States  Dis-
trict Court for the district in which [name of financial institu-
tion]'s  principal place of business was located or in the United
States  District Court for the District of Columbia or your claim
will be barred.

                               vii

The statutory provisions governing  this claims process are found
in section 1821(d)(3)-(13) of Title 12 of the United States Code.

If  you  have  any questions  please  contact  [contact name]  at
[contact phone number].

Very truly yours

Name
Title
Federal Deposit Insurance Corporation,
as Receiver for [name of financial institution]

(Refer to site policy for signature guidelines)

cc:    Refer to  site  policy for  copy  distribution guidelines.
*(Use     only if applicable)

*(Use only if applicable)

                               viii