Court Opinion

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Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

6-6-1994

Spring Garden Associates, L.P. v. Resolution Trust
Corp.
Precedential or Non-Precedential:

Docket 93-1323

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Recommended Citation
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                    UNITED STATES COURT OF APPEALS
                        FOR THE THIRD CIRCUIT

                             N0. 93-1323

                    SPRING GARDEN ASSOCIATES, L.P.,

                              Appellant

                                  v.

    RESOLUTION TRUST CORPORATION, IN ITS CAPACITY AS RECEIVER
             OF BELL FEDERAL SAVINGS BANK, PA S.A.;
        JAY M. GROSS; NATHANIEL D. GROSS; GARY L. WILSON

         On Appeal From the United States District Court
            For the Eastern District of Pennsylvania
                 (D.C. Civil Action No. 93-00205)

                       Argued February 28, 1994

          BEFORE:    STAPLETON and SCIRICA, Circuit Judges, and
                     SMITH, District Judge*

               (Opinion Filed      June 6, l994       )

* Honorable D. Brooks Smith, United States District Judge for the
  Western District of Pennsylvania, sitting by designation.

                                  1
                          Francis X. Clark (Argued)
                          John H. Kiefel
                          SILVERMAN, CLARK & VAN GALEN, P.C.
                          2000 Valley Forge Circle
                          Suite 109 West
                          King of Prussia, PA 19406
                          Attorneys for Appellant

                          P. Matthew Sutko (Argued)
                          Sheila Kraft Budoff
                          801 17th St., N.W.
                          Washington, D.C. 20434-0001

                          Cynthia Nimerichter
                          Northeast Consolidated Office
                          P.O. Box 1500
                          Valley Forge, PA 19482-1500

                          Bruce S. Haines
                          COHEN, SHAPIRO, POLISHER,
                          SHIEKMAN AND COHEN
                          2200 PFSF Building
                          12 S. 12th Street
                          Philadelphia, PA 19107

                          Attorneys for THE RESOLUTION
                          TRUST CORPORATION in its
                          capacity as Receiver of BELL
                          FEDERAL SAVINGS BANK, PA S.A.

                      OPINION OF THE COURT

STAPLETON, Circuit Judge:

          The Financial Institutions Reform, Recovery, and

Enforcement Act of 1989 ("FIRREA") authorizes the Resolution

Trust Corporation ("RTC") to remove certain actions from state

court to federal court:

                                2
               The Corporation, in any capacity and
          without bond or security, may remove any
          action, suit, or proceeding from a State
          court to the United States district court
          with jurisdiction over the place where the
          action, suit, or proceeding is pending, to
          the United States district court for the
          District of Columbia, or to the United States
          district court with jurisdiction over the
          principal place of business of any
          institution for which the Corporation has
          been appointed conservator or receiver if the
          action, suit, or proceeding is brought
          against the institution or the Corporation as
          conservator or receiver of such institution.
          The removal of any such suit or proceeding
          shall be instituted--

                    (i)not later than 90 days
               after the date the Corporation is
               substituted as a party, or

                    (ii) not later than 30 days
               after service on the Corporation,
               if the Corporation is named as a
               party in any capacity and if such
               suit is filed after August 9, 1989.

12 U.S.C. § 1441a(l)(3)(A).   This case requires us to review a

district court's application of FIRREA's RTC removal provision to

an action by a borrower against a savings bank (now under RTC

receivership) and its directors.       We find the district court's

result correct and will affirm.

                                  I.

          Spring Garden Associates ("Spring Garden") filed this

suit in the Montgomery County Court of Common Pleas against Bell

Saving Bank ("Bell") and its directors, following a dispute over

a $9 million loan from Bell to Spring Garden.      The five-count

complaint sought preliminary and permanent injunctive relief

                                  3
prohibiting Bell from foreclosing on the loan, specific

performance of the loan agreement, and damages for Bell's alleged

failure to extend credit under that agreement.0    The court of

common pleas entered a "Temporary Restraining Order"0 against all

of the defendants.

          In March 1991, the Treasury Department's Office of

Thrift Supervision appointed the RTC conservator and, later,

receiver of Bell.    On January 12, 1993, the RTC filed a petition

for substitution with the court of common pleas.    This petition

was followed on January 14, 1993, by removal of the case to the

district court pursuant to 12 U.S.C. § 1441a(l)(3).    The RTC then

filed a motion in district court to vacate the state court

injunction, arguing that 12 U.S.C. § 1821(j) expressly prohibited

injunctions against the RTC.

          Before the district court ruled on the RTC's motion,

Spring Garden filed a motion to remand to state court.    Spring

Garden argued that the RTC had failed to file its notice of

removal within the time limit provided by 12 U.S.C.

§ 1441a(l)(3).   Spring Garden further urged that 12 U.S.C.

0
 Count I alleged breach of contract by Bell. Count II requested
preliminary and permanent injunctive relief against Bell to
prohibit foreclosure on the loan. Count III alleged intentional
or negligent misrepresentation by Bell and its directors. Count
IV alleged breach of fiduciary duty by Bell. Count V contained a
promissory estoppel claim against Bell and its directors.
0
 The order entered by the court of common pleas is more properly
termed a preliminary injunction than a temporary restraining
order. It was issued upon notice to all parties, following a
hearing, and was, by its terms, to be in effect for an indefinite
period.

                                 4
§ 1441a(l)(1), the statute conferring original jurisdiction on

the district courts in RTC cases,0 did not confer federal

jurisdiction over its claims against Bell's directors and,

accordingly, that the case had been improperly removed.

           The district court denied Spring Garden's motion to

remand and granted the RTC's motion to vacate the injunction. The

dissolution of the state court injunction was based on 12 U.S.C.

§ 1821(j), which substantially restricts the authority of a court

to enter an injunction against the RTC.0    Spring Garden now

appeals.

                               II.

           We begin by inquiring whether our appellate

jurisdiction extends to a review of the district court's order

dissolving the state court's injunction.    Under 28 U.S.C.

§ 1292(a)(1), this court has jurisdiction to review orders of

district courts "dissolving injunctions."    Spring Garden has

0
12 U.S.C. § 1441a(l)(1) provides:

               Notwithstanding any other provision of
          law, any civil action, suit, or proceeding to
          which the Corporation is a party shall be
          deemed to arise under the laws of the United
          States, and the United States district courts
          shall have original jurisdiction over such
          action, suit, or proceeding.
0
 12 U.S.C. § 1821(j) provides:

                Except as provided in this section, no
           court may take any action, except at the
           request of the Board of Directors by
           regulation or order, to restrain or affect
           the exercise of powers or functions of the
           Corporation as a conservator or a receiver.

                                5
challenged the portion of the order vacating the injunction, and

28 U.S.C. § 1292(a)(1) thus gives us appellate jurisdiction to

review that portion of the district court's order, even though

that order is not final.

          As for the district court's denial of a remand, neither

28 U.S.C. §§ 1291 nor 28 U.S.C. § 1292 expressly confers

jurisdiction on this court to review orders denying a remand to a

state court.   See Aberle Hosiery Co. v. American Arbitration

Ass'n, 461 F.2d 1005, 1006 (3d Cir. 1972); Albright v. R. J.

Reynolds Tobacco Co., 531 F.2d 132, 134 (3d Cir.), cert. denied,

426 U.S. 907 (1976).   In this case, nevertheless, we can review

the denial of a remand because that portion of the district

court's order is "closely intertwined" with the portion of that

order dissolving the injunction.     Ortiz v. Eichler, 794 F.2d 889,

892 (3d Cir. 1986).    We therefore conclude we have appellate

jurisdiction to review both portions of the district court's

order.

          In so concluding, we reject the RTC's contention that

28 U.S.C. § 1447(d) bars review of the order denying remand.

While § 1447(d) precludes an appeal of an order granting remand,
that statute does not prohibit appellate review of orders denying

remand.   See Aliota v. Graham, 984 F.2d 1350, 1353 (3d Cir.),

cert. denied, 114 S. Ct. 68 (1993) (28 U.S.C. § 1447(d) only

concerns appellate review of "[a]n order remanding a case to the

State court from which it was removed"); see also Doe v. American
Red Cross, 14 F.3d 196, 199 (3d Cir. 1993) ("It is axiomatic that

                                 6
remanding a case to state court terminates the jurisdiction of a

. . . district court over that case.").

                               III.

          We next look to whether the district court had

jurisdiction to enter its order.    See Employers Insurance of

Wausau v. Crown Cork & Seal Co. Inc., 905 F.2d 42, 45 (3d Cir.

1990) ("every federal appellate court has a special obligation to

satisfy itself not only of its own jurisdiction, but also that of

the lower courts in a cause under review").
          Section 1441a(l)(3) authorizes the RTC to remove any
"action, suit or proceeding from a state court to" a United
States district court "with jurisdiction over" designated places.
Section 1441a(l)(1) confers original jurisdiction on United
States district courts to hear cases involving the RTC:
          Notwithstanding any other provision of law, any civil
action, suit, or proceeding to which the Corporation is a party
shall be deemed to arise under the laws of the United States, and
the United States district courts shall have original
jurisdiction over such action, suit or proceeding.

          Both Spring Garden and the RTC accept the proposition

that § 1441a(l)(3) authorizes the RTC to remove cases over which

the district court would have original jurisdiction under

§ 1441a(l)(1).   They then part ways.   The RTC insists that

§ 1441a(l)(1) confers original federal jurisdiction over all the

claims asserted in Spring Garden's state court action.    Spring

Garden, on the other hand, argues that this section confers

original federal jurisdiction only over the claims against Bell

and not over its claims against Bell's directors.

                                7
          We confess that we have some difficulty understanding

Spring Garden's legal analysis of the removal jurisdiction issue.

Spring Garden contends in its brief that (1) 12 U.S.C.

§ 1441a(l)(1) "only states that federal question jurisdiction is

applicable to any claim to which the RTC is a party," (Brief, p.

12) (emphasis added); (2) under the general removal statute, 28

U.S.C. § 1441, district courts can exercise jurisdiction over

pendent claims as well as federal question claims, but "the

district court could not invoke pendant jurisdiction over Spring

Garden's action against the officers of Bell" who would be

impermissible pendant parties (Brief, p. 18); (3) the only

situation in which a suit including both removable claims and

non-removable claims can be removed to a district court is the

one described in subsection (c) of the general removal statute,

28 U.S.C. § 1441(c)0, and, under that subsection, removal can

occur only if the removable claim is "separate and independent"

of the non-removable claims; and (5) since Spring Garden's claim

against Bell is not "separate and independent" of its claims

against the officers of Bell, there was no authority to remove

any of the claims asserted in the state court and the district

0
28 U.S.C. § 1441(c) provides:

               (c) Whenever a separate and independent
          claim or cause of action within the
          jurisdiction conferred by section 1331 of
          this title is joined with one or more
          otherwise non-removable claims or causes of
          action, the entire case may be removed and
          the district court may determine all issues
          therein, or, in its discretion, may remand
          all matters in which State law predominates.

                                8
court had no removal jurisdiction.   (Brief, pp. 18-20.)      We have

a number of difficulties with Spring Garden's analysis, but it

will suffice for present purposes to indicate that we find its

first step fatally flawed.

           The proper starting point of our inquiry is, of course,

the language of 28 U.S.C. § 1441a(l)(1) itself.      See Smith v.

Fidelity Consumer Discount Co., 898 F.2d 907, 909-10 (3d Cir.

1990) ("'[t]here is, of course, no more persuasive evidence of

the purpose of a statute than the words by which the legislature

undertook to give expression to its wishes.'")      Section

1441a(l)(1) does not confer original federal jurisdiction over

"any claim" asserted by or against the RTC, as Spring Garden

insists.   Rather, it confers original federal jurisdiction over

"any action, suit or proceeding to which the [RTC] is a party."

We believe the commonly understood meaning of the wording of that

phrase encompasses the entirety of any case to which the RTC is a

party and not just those claims in such a case brought by or

against the RTC.

           Cases from two other Courts of Appeal agree with our

common parlance reading of § 1441a(l)(1).      In People of State of

Cal. By and Through Lungren v. Keating, 986 F.2d 346 (9th Cir.

1993), the Court of Appeals for the Ninth Circuit held that,

notwithstanding the fact that the general removal statute would

not have permitted any of the claims in the complaint to be

removed to federal court, the addition of the RTC as a party

"transforms the entire action into one that 'arises under' the

laws of the United States."   Id. at 347-48.    The court determined

                                9
that "[t]he words 'action, suit, or proceeding' are not limited

to specific claims, but are synonymous with the term 'case' in

the constitutional sense."   Id. at 348.

          In Kansas Pub. Employees Retirement Sys. v. Reimer &

Koger Assocs., Inc., 4 F.3d 614 (8th Cir. 1993), the Court of

Appeals for the Eighth Circuit agreed with the Keating court's

interpretation of § 1441a(l)(1).     The court was there required to

address whether a state court had violated the Constitution's

Supremacy Clause by severing the case before it in order to

preclude the RTC from removing the entire case.     Id. at 618.   The

court of appeals held that because "the RTC had the right to

remove 'the entire case' to federal court," id. (citing Keating,

986 F.2d at 348-49), the state court's actions had run afoul of

the Supremacy Clause, id. at 619.0

          Further support of our reading of § 1441a(1)(1) is

provided by cases that have addressed the similar language0 of 12

U.S.C. § 1819(b)(2)(A), which provides:
          . . . all suits of a civil nature at common
          law or in equity to which the [FDIC], in any

0
 While the issue raised here by Spring Garden has never before
been argued to this court, we have expressed views in passing
similar to those of the Courts of Appeals for the Ninth and
Eighth Circuits. In Adams v. Madison Realty & Dev., Inc., 937
F.2d 845, 855 (3d Cir. 1991), we stated: "Under 12 U.S.C.
§ 1441a(l)(1), any civil action in which the RTC is a party is
deemed to arise under federal law." And in Resolution Trust
Corp. v. Nernberg, 3 F.3d 62, 68 n.3 (3d Cir. 1993), we remarked
on the broad scope of 28 U.S.C. § 1441a(l)(1): "The language of
the statute thus allows Resolution Trust to remove routine
collection and foreclosure cases to the already overburdened
federal courts."
0
 See Resolution Trust Corp. v. Nernberg, 3 F.3d 62, 66 n.2 (3d
Cir. 1993) (noting "close parallel" between enabling statutes of
RTC and FDIC).

                                10
           capacity, is a party shall be deemed to arise
           under the laws of the United States.

In National Union Fire Ins. Co. of Pittsburgh v. Baker &
McKenzie, 997 F.2d 305 (7th Cir. 1993), an insurer, seeking a

declaration that it was not liable under a malpractice policy,

sued three lawyers whom it had insured, their law firm, and the

FDIC, which was now a receiver for one of their former clients.

The court noted that the FDIC's "presence as a party conferred

federal jurisdiction over the suit" pursuant to § 1819(b)(2)(A).

Also helpful is Walker v. F.D.I.C., 970 F.2d 114 (5th Cir. 1992),

in which developers sued a savings and loan and its directors in

state court after the savings and loan failed to provide a loan.

After the savings and loan became insolvent, the FSLIC was

appointed receiver and added as a party to the lawsuit.    The FDIC

was later substituted for the FSLIC and the action was removed to

federal court under § 1819(b)(2)(A).   The court approved of the

removal, noting that "where the FDIC is a party, federal question

jurisdiction exists and removal by the FDIC is proper."    Id. at
118.   The court also noted that settlement of the developers'

claims against the FDIC did not oust the federal court of

jurisdiction to consider the developers' claims against the

directors.   Id. at 119.0
0
 See also Buckner v. F.D.I.C., 981 F.2d 816, 819 (5th Cir. 1993)
("as the FDIC is a party to a civil suit, that suit is
conclusively presumed to arise under the laws of the United
States, and thus is within the original subject matter
jurisdiction of the proper federal district court"); Matter of
Meyerland Co., 960 F.2d 512, 515 (5th Cir. 1992) (in banc), cert.
denied, 113 S. Ct. 967 (1993) ("Access to federal courts in all
actions to which it is a party allows the FDIC to develop and
rely on a national and uniform body of law . . ."); cf. American

                                11
          Further and finally, we find support for our reading of

the relevant statute in the Supreme Court's decision in Finley v.

United States, 490 U.S. 545 (1989).   The court there examined 28

U.S.C. § 1346(b), the jurisdictional provision of the Federal

Tort Claims Act ("FTCA").   In interpreting the reach of the FTCA

to include only claims against the United States and not any suit

in which such a claim is asserted, the court wrote:
          The FTCA, § 1346(b), confers jurisdiction
          over "civil actions on claims against the
          United States." It does not say "civil
          actions on claims that include requested
          relief against the United States," nor "civil
          actions in which there is a claim against the
          United States" -- formulations one might
          expect if the presence of a claim against the
          United States constituted merely a minimum
          jurisdictional requirement, rather than a
          definition of the permissible scope of the
          FTCA actions. Just as the statutory
          provision "between . . . citizens of
          different States" has been held to mean
          citizens of different states and no one else,
          . . . so also here we conclude that "against
          the United States" means against the United
          States and no one else.

Id. at 552.

National Red Cross v. S.G., __ U.S. __, 112 S. Ct. 2465 (1992)
(holding "sue and be sued" provision of Red Cross charter to
confer original federal jurisdiction over all cases to which Red
Cross is a party and finding such jurisdictional grants to be
well within Article III limits); Kirkbride v. Continental
Casualty Co., 933 F.2d 729, 731-32 (9th Cir. 1991) ("the grant of
subject matter jurisdiction contained in [the] FDIC's removal
statute evidences Congress' desire that cases involving [the]
FDIC should generally be heard and decided by the federal
courts").

                                12
          The statutory language of § 1441a(l)(1) differs from

that of § 1346(b) in much the same way as the hypothetical

statutory text in the Finley court's analysis differs from

§ 1346(b) --   "civil actions, suits, or proceedings to which the

Corporation is a party" is very close to "civil actions in which

there is a claim against the United States."   The common usage

reading of § 1346(b) in Finley thus supports the conclusion that

the language Congress chose in § 1441a(l)(1) evidences an intent

to confer original jurisdiction on the federal courts over the

entire case to which the RTC has become a party.

          As Spring Garden apparently concedes, if 12 U.S.C.

§ 1441a(l)(1) does in fact provide federal jurisdiction over all

the claims contained in a case, as we believe it does, there is

no need to inquire as to pendent jurisdiction or pendant parties.

Accordingly, we hold that 12 U.S.C. §§ 1441a(l)(1) and (3)

authorized removal of the entire case.

                                IV.

          Under 12 U.S.C. § 1441a(l)(3)(A)(i), the RTC may remove

a suit from a state court to a federal court "not later than 90

days after the date [it] is substituted for a party."

"Substitution" is defined for this purpose as the time when

either: (1) the RTC or another party files a copy of the order

appointing the RTC as conservator or receiver with the court in

which the suit is pending, or (2) the RTC or another party files

another pleading with the court in which the suit is pending

informing the court that the RTC has been appointed.    12 U.S.C.

                                13
§ 1441a(l)(3)(B).   See Resolution Trust Corp. v. Bakker, 801 F.

Supp. 706, 707 (S.D. Fla. 1992) (pursuant to amended version of

§ 1441a(l)(3)(B), substitution occurred when RTC filed notice of

substitution, not when it was appointed receiver).

           On January 12, 1993, the RTC filed a notice of

substitution with the state court.   Two days later, on January

14, 1993, the RTC removed the case to the district court.   We

therefore conclude that the RTC removed the action in a timely

fashion under 12 U.S.C. §§ 1441a(l)(3)(A) and (B).   Since Spring

Garden does not challenge before us the district court's

conclusion that the state court's injunction was inconsistent

with the provisions of 12 U.S.C. § 1821(j), it follows that the

order appealed from must be sustained in all respects.

                                V.

           The RTC's removal was timely and the district court

properly exercised jurisdiction over all claims against all

parties to this suit pursuant to 12 U.S.C. §§ 1441a(l)(1) and

(3).   We therefore will affirm the district court's order of

March 16, 1993.

                                14