The opinion
Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
12-29-1994
Hudson v. Chase Manhattan
Precedential or Non-Precedential:
Docket 93-5279
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 93-5729
___________
HUDSON UNITED BANK, as successor in interest
to HUB National Bank, formerly known as
Meadowlands National Bank,
Appellant
v.
CHASE MANHATTAN BANK OF CONNECTICUT, N.A.;
CONSOLIDATED ASSET RECOVERY CORPORATION;
FEDERAL DEPOSIT INSURANCE CORPORATION,
in its corporate capacity;
FEDERAL DEPOSIT INSURANCE CORPORATION,
as Receiver for Citytrust
_______________________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 92-cv-03515)
___________________
Argued July 20, 1994
Before: SCIRICA, LEWIS and SEITZ, Circuit Judges
(Filed December 29, 1994)
RICHARD W. MACKIEWICZ, JR., ESQUIRE (Argued)
Van Borkulo-Nuzzo & Mackiewicz
3100 Bergenline Avenue
Union City, New Jersey 07087
Attorney for Appellant
COLLEEN B. BOMBARDIER, ESQUIRE (Argued)
LAWRENCE H. RICHMOND, ESQUIRE
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429
JAMES T. DAVIS, II, ESQUIRE
STEPHEN R. FARBER, ESQUIRE
Brach, Eichler, Rosenberg, Silver,
Bernstein, Hammer & Gladstone
101 Eisenhower Parkway
Roseland, New Jersey 07068
Attorneys for Appellee
Federal Deposit Insurance Corporation,
as Receiver for Citytrust
SHERYL L. NEWMAN, ESQUIRE
McManimon & Scotland
One Gateway Center, Suite 1800
Newark, New Jersey 07102-5311
Attorney for Appellee
Consolidated Asset Recovery Corporation
GERALD T. FORD, ESQUIRE
SIFF ROSEN, ESQUIRE
One Gateway Center, Suite 500
Newark, New Jersey 07102-5311
Attorneys for Appellee
Chase Manhattan Bank of Connecticut, N.A.
__________________
OPINION OF THE COURT
__________________
SCIRICA, Circuit Judge.
There are two interrelated issues in this appeal.
First, whether the venue provision of the Financial Institution
Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), 12
U.S.C. § 1821(d)(6)(A) (Supp. II 1990),1 governs only actions
brought against the failed depository institution or whether it
also applies to actions against the institution's receiver.
Second, whether the claims procedures established in FIRREA, 12
U.S.C. § 1821(d), cover actions against the receiver as well as
actions against the failed institution.
This case arises out of the failure of a state bank,
Citytrust of Connecticut. Hudson United Bank brought suit in the
United States District Court for the District of New Jersey
against Chase Manhattan Bank of Connecticut, the Federal Deposit
Insurance Corporation, and Chase's wholly owned subsidiary,
Consolidated Asset Recovery Corporation, seeking a declaratory
judgment of its rights to certain funds as a result of its
participation interest in loans made by the failed bank. The
Federal Deposit Insurance Corporation, as receiver for the failed
bank, moved to transfer the action to the District of Connecticut
under 12 U.S.C. § 1821(d)(6)(A). The district court granted the
motion to transfer, holding that the claims procedures applied to
actions against the receiver and that a change of venue was
required under FIRREA. The court then certified the issue for
interlocutory appeal. Hudson United Bank v. Chase Manhattan
Bank, NA, 832 F. Supp. 881 (D.N.J.
1
. FIRREA, Pub. L. No. 101-73, 103 Stat. 183 (1989) (appears in
various sections of the United States Code). The current version
of § 1821(d) appears in 12 U.S.C. § 1821(d) (Supp. V 1993), but
there have been no material changes in the parts relevant to this
dispute. Unless otherwise noted, citations to 12 U.S.C. § 1821
will be to the 1990 version.
1993). We will affirm.
I.
Plaintiff/appellant Hudson United Bank ("Hudson") is a
New Jersey corporation.2 Defendant/appellee Chase Manhattan Bank
of Connecticut, NA ("Chase"), is a national association of the
state of Connecticut, with offices in Connecticut. Citytrust of
Connecticut ("Citytrust"), the failed bank now in receivership,
was a state bank licensed in Connecticut. Kleinberg Electric is
a New York corporation that was a customer of Citytrust and is
now in bankruptcy, allegedly as a result of actions of the
defendants. Paul and Carol Kleinberg, the guarantors on the
loan, were both New Jersey residents at the time the loan was
executed.
In 1987, Citytrust extended to Kleinberg Electric a $1
million term loan and a $1.25 million line of credit. Hudson
bought a 63% interest in Kleinberg Electric's term loan as part
of a Loan Participation Agreement. In 1991, Citytrust failed and
was placed under the control of the Federal Deposit Insurance
Corporation as receiver. Following standard procedure, the FDIC
sought a buyer for Citytrust and found Chase, which entered into
a Purchase and Assumption Agreement with the FDIC allowing Chase
to evaluate Citytrust's assets and "put" any unwanted assets back
2
. Hudson and its predecessor-in-interest, HUB National Bank,
formerly known as Meadowlands National Bank, are collectively
called "Hudson." All its employees with knowledge of this matter
reside in New Jersey.
to the receiver. Chase's subsidiary, Consolidated Asset Recovery
Corporation ("CARC"), was to manage (with FDIC supervision) any
Citytrust assets that were retained or reacquired by the FDIC.
Sometime after Citytrust's bankruptcy in August 1991
and the start of this new arrangement, Hudson ceased receiving
payments for its participation interest in the Kleinberg loan.
In addition, the Kleinberg line of credit was terminated,
apparently upon the closing of the FDIC's Purchase and Assumption
Agreement with Chase. Hudson, 832 F. Supp. at 883. Two months
later, Chase "put" the Kleinberg loans back to the receiver, to
be managed by CARC.
Hudson claimed it had not been notified of Citytrust's
bankruptcy and learned of it only in November 1991 when it
inquired about the discontinued loan payments. In January 1992
CARC accelerated the loans, allegedly causing Kleinberg to file
for bankruptcy. Even after filing for bankruptcy, Kleinberg
continued to make payments to CARC on the Citytrust loans, but
CARC allegedly failed to remit to Hudson its full share of those
payments. By early 1992 it appeared that Hudson was losing money
on the Kleinberg loan. In March 1992, however, Chase deposited
$476,176.80 into an account of Hudson's at Chase, and Hudson
withdrew that money as payment in full of the loan participation.
Chase then decided it had deposited the money by mistake and
asked for it back. Hudson responded by seeking a declaratory
judgment of its rights to the funds, punitive damages, and
litigation expenses. Hudson alleged breach of the Loan
Participation Agreement, breach of the duty of good faith, breach
of fiduciary duty, and fraudulent concealment. Chase
counterclaimed for the return of the money.
After filing its action, Hudson asked the FDIC receiver
whether administrative review of its claims was a necessary
prerequisite to bringing suit. The FDIC forwarded a claim notice
to Hudson, which Hudson filed. The FDIC then disallowed the
claim and moved to transfer the case to the District of
Connecticut under 28 U.S.C. § 1406(a) (1988)3 and 12 U.S.C. §
1821(d)(6)(A). The FDIC contended that New Jersey was the wrong
venue because
12 U.S.C. § 1821(d)(6)(A) specifies that a claimant can only
bring suit in the district where the failed depository
institution had its principal place of business or in the
District of Columbia. Because Citytrust's principal place of
business was in Connecticut, the FDIC asserted that the case
should be transferred there. Hudson opposed transfer, contending
§ 1821(d)(6)(A) only refers to claims against the failed
depository institution, not to claims based on actions taken by
the FDIC after the bank failed, which are actually against the
receiver, not the institution. The district court granted the
3
. Section 1406(a) provides:
The district court of a district in which is
filed a case laying venue in the wrong
division or district shall dismiss, or if it
be in the interest of justice, transfer such
case to any district or division in which it
could have been brought.
FDIC's motion to transfer and then certified the following
question for interlocutory appeal:4
Does the venue provision in [FIRREA],
12 U.S.C. § 1821(d)(6) apply to an action
which is brought against the receiver for
wrongs allegedly committed by the receiver
rather than the failed institution?
II.
We have plenary review over the district court's
conclusions of law. Tudor Dev. Group, Inc. v. United States
Fidelity & Guar. Co., 968 F.2d 357, 359 (3d Cir. 1992); Gregoire
v. Centennial Sch. Dist., 907 F.2d 1366, 1370 (3d Cir.), cert.
denied, 498 U.S. 899 (1990). We are not limited to the certified
question, but may rule on other issues relevant to the appeal.
4
. We must decide whether the district court had jurisdiction to
certify the question after it had ordered the transfer. The
general rule is that the transferor court loses jurisdiction when
the files in a case are physically transferred to the transferee
court. See, e.g., Wilson-Cook Medical, Inc. v. Wilson, 942 F.2d
247, 250 (4th Cir. 1991); Chrysler Credit Corp. v. Country
Chrysler, Inc., 928 F.2d 1509, 1516-17 (10th Cir. 1991); Robbins
v. Pocket Beverage Co., 779 F.2d 351, 355 (7th Cir. 1985).
In this case, the district court granted the motion to
transfer on September 17, 1993. On September 24, 1993, Hudson
served notice of a motion to certify the issue to this Court, and
on October 12, 1993, the district court granted a stay of the
transfer until it decided the motion to certify. Nothing in the
record indicates the district court had completed (or even begun)
the process of physically transferring the files. We assume the
district court delayed physical transfer of the files to allow
the parties time to file a motion for certification. Cf.
Chrysler Credit, 928 F.2d at 1517 & n.7 (observing this type of
delay is the "preferred approach"). The district court had
jurisdiction to certify the question we consider here.
Johnson v. Alldredge, 488 F.2d 820, 823 (3d Cir. 1973), cert.
denied, 419 U.S. 882 (1974).
The district court granted the motion to transfer venue
under FIRREA, 12 U.S.C. § 1821(d)(6)(A). The provision on venue
is entitled "Provision for agency review or judicial
determination of claims." 12 U.S.C. § 1821(d)(6). Subparagraph
(A) provides:
In general
Before the end of the 60-day period beginning
on the earlier of--
(i) the end of the period described
in paragraph (5)(A)(i) with respect
to any claim against a depository
institution for which the
Corporation is receiver; or
(ii) the date of any notice of
disallowance of such claim pursuant
to paragraph (5)(A)(i),5
the claimant may request administrative
review of the claim . . . or file suit on
such claim (or continue an action commenced
before the appointment of the receiver) in
the district or territorial court of the
United States for the district within which
5
. Section 1821(d)(5)(A)(i) provides:
(5) Procedures for determination of claims
(A) Determination period
(i) In general
Before the end of the 180-day period
beginning on the date any claim against a
depository institution is filed with the
Corporation as receiver, the Corporation
shall determine whether to allow or disallow
the claim and shall notify the claimant of
any determination with respect to such claim.
12 U.S.C. § 1821(d)(5)(A)(i).
the depository institution's principal place
of business is located or the United States
District Court for the District of Columbia
(and such court shall have jurisdiction to
hear such claim).
12 U.S.C. § 1821(d)(6)(A) (footnote supplied).
As we have noted, Hudson contends this subparagraph,
with its venue provision, applies only to claims against a
depository institution; that is, it applies only to claims
against Citytrust and not to claims against the FDIC. If true,
the FDIC as receiver cannot request a change of venue under
FIRREA. In addition, Hudson maintains the entire subsection (d)
is inapplicable to breach of contract actions like the present
dispute. Finally, Hudson asserts that under certain
circumstances application of the provisions in subsection (d)
would create an unconstitutional result.
A.
Hudson maintains that claims against the receiver
cannot be considered under § 1821(d)(6)(A),6 but must be analyzed
6
. The applicability of the venue provision is the principal
issue in this case, so it is helpful to locate the provision
within the statute and to describe the scope of the section in
which it occurs. Section 1821, entitled "Insurance Funds,"
covers all aspects of the FDIC's administration of insurance
funds. The two subsections at issue are: subsection (d), "Powers
and duties of Corporation as conservator or receiver" and
subsection (e), "Provisions relating to contracts entered into
before appointment of conservator or receiver." 12 U.S.C. §
1821(d), (e).
Subsection (d) relates to the powers and duties of the
Corporation ("The Corporation" refers in this context to the
FDIC), and is divided into 19 paragraphs. Those at issue are: ¶
(3), "Authority of the receiver to determine claims" (giving the
notice requirements for claimants, including timing); ¶ (5),
"Procedures for determination of claims" (setting out the period
under § 1821(d)(5)(C) ("Disallowance of claims filed after end of
filing period")7 or under § 1821(d)(6)(B) ("Statute of
(..continued)
during which claims will be decided); ¶ (6), "Provision for
agency review or judicial determination of claims" (establishing
review procedures, including the venue provision); and ¶ (13)
"Additional rights and duties" (including a jurisdictional
limitation on judicial review). 12 U.S.C. § 1821(d)(3), (5),
(6), (13). Subsection (e) deals with contracts made before
appointment of the receiver. Hudson discusses one of the 13
paragraphs in § 1821(e), ¶ (2), "Timing of repudiation."
Subsection (e), unlike (d), sets out no specific review
procedures for claimants to follow. 12 U.S.C. § 1821(e).
7
. Section 1821(d)(5)(C) provides:
(5) Procedures for determination of claims
. . . .
(C) Disallowance of claims filed after end of
filing period
(i) In general
Except as provided in clause (ii),
claims filed after the date specified in
the notice published under paragraph
(3)(B)(i) shall be disallowed and such
disallowance shall be final.
(ii) Certain exceptions
Clause (i) shall not apply with
respect to any claim filed by any
claimant after the date specified in the
notice published under paragraph
(3)(B)(i) and such claim may be
considered by the receiver if--
(I) the claimant did not
receive notice of the appointment
of the receiver in time to file
such claim before such date; and
(II) such claim is filed in
time to permit payment of such
claim.
12 U.S.C. § 1821(d)(5)(C).
Limitations").8 Hudson points out that § 1821(d)(13)(D)9
8
. Section 1821(d)(6)(B) provides:
(6) Provision for agency review or judicial
determination of claims
. . . .
(B) Statute of limitations
If any claimant fails to--
(i) request administrative
review of any claim in accordance
with subparagraph (A) or (B) of
paragraph (7); or
(ii) file suit on such claim
(or continue an action commenced
before the appointment of the
receiver),
before the end of the 60-day period described
in subparagraph (A), the claim shall be
deemed to be disallowed (other than any
portion of such claim which was allowed by
the receiver) as of the end of such period,
such disallowance shall be final, and the
claimant shall have no further rights or
remedies with respect to such claim.
Id. § 1821(d)(6)(B).
9
. Section 1821(d)(13)(D) provides:
(13) Additional rights and duties
. . . .
(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
specifically provides for claims against the receiver while §
1821(d)(6)(A), which contains the venue provision, does not.
From this Hudson concludes that the venue provision (§
1821(d)(6)(A)) if read literally applies only to claims against
the depository institution, not to claims against the receiver.
The FDIC disagrees, contending Congress intended § 1821(d)(6)(A)
to include claims against the receiver. The district court
agreed with the FDIC.
The district court acknowledged that Hudson's argument
had some force if § 1821(d)(6)(A) were read without reference to
the related parts of FIRREA that establish claims procedures.
But the district court rejected Hudson's interpretation because
it found that applying the claims procedures' venue provision to
all claims (including claims against the receiver) was more
consistent with the statutory structure and the purposes of
FIRREA. Following the approach we employed in Rosa v. Resolution
Trust Corp., 938 F.2d 383 (3d Cir.), cert. denied, 112 S. Ct. 582
(1991),10 the district court looked to the other sections of
(..continued)
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.
Id. § 1821(d)(13)(D).
10
. Hudson reminds us that in Rosa we construed § 1821(d)(13)(D)
of FIRREA literally, holding that it did not apply to entities
unless they were explicitly included. Rosa, 938 F.2d at 393-94.
In Rosa, we held 12 U.S.C. § 1821(d)(13)(D) parts (i) and (ii)
applied only to the claims specified. See supra note 9 for the
text of this subparagraph. Thus, with respect to this two-part
subsection, we held (i) applied only to claims against failed
FIRREA that detail the claims process for guidance in
understanding the scope of the venue provision.11
(..continued)
institutions while (ii) applied to claims against failed
institutions specified in (i) as well as to claims against the
receiver of such institutions. Rosa, 938 F.2d at 393-94.
Hudson argues that application of Rosa's literal
approach to § 1821(d)(6)(A) is proper and leads to the conclusion
that § 1821(d)(6)(A) excludes claims against receivers since they
are not mentioned. But § 1821(d)(13)(D), which we interpreted in
Rosa, differs from the one under consideration in that it
comprises two parts, one of which addresses claims relating to
the institution and the other which pertains to claims relating
to either the depository institution or the receiver.
This structure made us confident in Rosa that the
failure to mention claims against the receiver in the first part
was not just careless drafting. Where Congress took care in part
(ii) to include claims relating to the receiver as well as the
depository institution, we could assume that Congress intended in
part (i) to include only claims against the institution and to
exclude those against the receiver. Section 1821(d)(6)(A),
however, contains no analogous divisions, and thus the import of
the language is not as clear as it was for us in Rosa. Hudson's
argument that we should read § 1821(d)(6)(A) literally, as we did
§ 1821(d)(13)(D), fails because of the difference in structure of
the two subparagraphs.
11
. The district court properly followed the "cardinal rule that
a statute is to be read as a whole, . . . since the meaning of
statutory language, plain or not, depends on context." King v.
St. Vincent's Hosp., 112 S. Ct. 570, 574 (1991) (citation
omitted). As the Supreme Court has stated: "Statutory
construction . . . is a holistic endeavor. A provision that may
seem ambiguous in isolation is often clarified by the remainder
of the statutory scheme . . . because only one of the permissible
meanings produces a substantive effect that is compatible with
the rest of the law . . . ." United Sav. Ass'n v. Timbers of
Inwood Forest, 484 U.S. 365, 371 (1988) (citations omitted); see
also Smith v. United States, 113 S. Ct. 2050, 2056-57 (1993)
(construing scope of statutory language by reading various
provisions together); Trathen v. United States, 198 F.2d 757, 760
(3d Cir. 1952) (observing "[t]he meaning of any given word in a
statute is properly determined by reading the language in
question together with other sections of the act").
The district court first considered § 1821(d)(5)(A),12
which outlines the claims procedures of FIRREA. See Praxis
Properties, Inc. v. Colonial Sav. Bank, S.L.A., 947 F.2d 49, 62-
63 (3d Cir. 1991) (reviewing FIRREA's administrative claims
procedures). Noting that the venue provision (§ 1821(d)(6)(A))
defines the claims to which it applies by express reference to §
1821(d)(5)(A), the district court concluded that § 1821(d)(5)(A)
and § 1821(d)(6)(A) applied to the same claims. Both
subparagraphs apply by their terms to "any claim against a
depository institution" for which the FDIC is the receiver.
Having linked § 1821(d)(6)(A) to § 1821(d)(5)(A), the
district court then considered whether claims against the
receiver were covered under § 1821(d)(5), because if so, §
1821(d)(6)(A) would have to cover them as well. The district
court first observed that we have routinely assumed that §
1821(d)(5) applies to claims against the receiver. See Rosa, 938
F.2d at 395-96; Althouse v. Resolution Trust Corp., 969 F.2d
1544, 1545-46 (3d Cir. 1992); Praxis Properties, 947 F.2d at 62-
64. The district court then looked to § 1821(d)(13)(D) to
explain why claims against the receiver had to be within the
scope of § 1821(d)(5) and therefore within the scope of §
1821(d)(6)(A).
12
. The relevant part of 12 U.S.C. § 1821(d)(5)(A) appears supra
note 5.
Section 1821(d)(13)(D)13 bars judicial review except as
otherwise provided in § 1821(d). The jurisdictional bar of §
1821(d)(13)(D) extends explicitly to claims against the receiver
as well as to those against the depository institution. Thus,
unless § 1821(d)(5) allows administrative review of claims
against the receiver, there would be no mechanism to review those
claims--they would be barred from judicial review by §
1821(d)(13)(D) and there would be no provision for review
elsewhere. The district court reasoned that if the paragraphs on
administrative and judicial review of claims (§ 1821(d)(6)(A) and
§ 1821(d)(5)(A)) did not apply to claims against the receiver,
then § 1821(d)(13)(D) would compel a complete bar of review of
claims against the receiver because no grant of jurisdiction
exists elsewhere in § 1821(d). As the district court reasoned:
"Logic dictates that the claims barred by paragraph (13)(D) must
coincide with those that may be filed under the administrative
procedures of paragraph (5). Otherwise, paragraphs (5) and
(13)(D) would bar relief in the district court without providing
relief elsewhere, and FIRREA would become a source of immunity
for the Receiver." Hudson United Bank v. Chase Manhattan Bank,
NA, 832 F. Supp. 881, 886 (D.N.J. 1993). The district court
found that Congress did not intend FIRREA's claims process to
immunize the receiver, but rather wanted to require exhaustion of
13
. For the text of § 1821(d)(13)(D), see supra note 9.
the receivership claims process before going to court.14 Id. at
885-86.
On appeal, Hudson tries to answer this argument by
finding implicit jurisdiction for claims against the receiver in
§ 1821(d)(5)(C) and (d)(6)(B) which refer to "any claims."15 But
neither section addresses claims against the receiver explicitly,
and Hudson's attempt to find a grant of jurisdiction in them is
strained.16 We find the district court's reading of § 1821(d)
14
. As this is a matter of statutory construction, consideration
of legislative history would be appropriate. But neither party
has cited material relevant to this venue dispute, and our own
research has failed to uncover any.
15
. For the text of these paragraphs, see supra notes 7 and 8,
respectively.
16
. Hudson also claims Congress intended to exclude claims
against the receiver from the ambit of § 1821(d)(6)(A) by
establishing two different procedures for processing claims, one
for claims against the failed institutions (treated in §
1821(d)(6)(A) and (d)(5)(A)) and another for claims against the
receiver (treated in § 1821(d)(6)(B) and (d)(5)(C)), but without
making that distinction explicit in the statute.
A look at the titles of the various parts of the
statute supports the district court's view that Congress intended
to establish a single set of procedures in § 1821(d). See, e.g.,
INS v. National Ctr. for Immigrants' Rights, Inc., 112 S. Ct.
551, 556 (1991) (noting title of statute or section can aid
interpretation of statute's meaning); House v. Commissioner, 453
F.2d 982, 987 (5th Cir. 1972) (observing the propriety of using
section headings to determine a statute's meaning). The general
title of § 1821(d)(6) is "Provision for agency review or judicial
determination of claims," and the title of § 1821(d)(6)(A), which
contains the venue provision, is "In general." This leads to the
natural inference that procedures contained in the "In general"
part apply to all cases of agency review or judicial
determination of claims absent explicit exceptions. 12 U.S.C. §
1821(d)(6)(A).
No such inference suggests a separate set of procedures
in either § 1821(d)(6)(B) entitled "Statute of limitations" or §
more convincing and consistent with congressional purpose as well
as with our opinion in Rosa.
It is true that FIRREA is awkwardly written and
difficult to interpret.17 But as the district court noted, the
purpose of § 1821(d)(5)(A) and (d)(13)(D) was to force plaintiffs
with claims against failed depository institutions to file their
claims under FIRREA's administrative claims procedures before
filing them in federal court. H.R. Rep. No. 54(I), 101st Cong.,
1st Sess. 291, 418-19 (1989), reprinted in 1989 U.S.C.C.A.N. 86,
214-15. The purpose was not to immunize certain claims from
review. The district court also found application of the venue
provision to claims against the receiver consistent with the
claims process's purpose of promoting efficiency. Treating
claims against the receiver differently from claims against the
institution would foster inefficiency by forcing the FDIC to
"defend actions at various locations throughout the country, with
the attendant disruption of the Bank's records and personnel,
[and] the defendant's task would become further complicated."
Hudson, 832 F. Supp. at 887 (citation omitted).
(..continued)
1821(d)(5)(C) "Disallowance of claims filed after end of filing
period." Further, there is no mention there of separate
procedures for claims against the receiver. We do not believe
Congress intended to establish separate procedures in such an
indirect and disjointed manner. 12 U.S.C. § 1821(d)(6)(B),
(d)(5)(C).
17
. As one court lamented when faced with the task of
interpreting § 1821(d): "FIRREA's text comprises an almost
impenetrable thicket . . . . [C]onfusion over its proper
interpretation is not only unsurprising--it is inevitable."
Marquis v. FDIC, 965 F.2d 1148, 1151 (1st Cir. 1992).
Accordingly, we hold that the venue provision in 12
U.S.C. § 1821(d)(6)(A) applies to claims against the receiver.
This holding answers the question we expressly left open in
National Union Fire Insurance Co. v. City Savings, F.S.B., 28
F.3d 376, 387 n.12 (3d Cir. 1994), as to the reach of §
1821(d)(13)(D). By deciding that the administrative claims
procedures and the jurisdictional bar have concurrent scope, we
avoid the possibility raised in National Union that §
1821(d)(13)(D) could become "an independent and outright bar of
jurisdiction" rather than a mere exhaustion requirement if §
1821(d)(13)(D) were to have broader reach than the administrative
claims procedures. National Union, 28 F.3d at 387 n.12.
B.
Hudson's second statutory construction argument is that
because this action involves the receiver's repudiation of a
contract, it falls within § 1821(e) rather than § 1821(d). We
will consider this issue even though Hudson did not present it to
the district court. Merican, Inc. v. Caterpillar Tractor Co.,
713 F.2d 958, 962 n.7 (3d Cir. 1983), cert. denied, 465 U.S. 1024
(1984) (on interlocutory appeal, court can consider all grounds
which might require reversal).
In arguing this point in its brief, Hudson relied
almost entirely on Heno v. FDIC, 996 F.2d 429 (1st Cir. 1993)
("Heno I"), withdrawn and superseded by 20 F.3d 1204 (1994)
("Heno II"). By the time of oral argument, the Court of Appeals
for the First Circuit had withdrawn Heno I and replaced it with
Heno II. At oral argument, counsel for Hudson announced that it
still wished to rely on the reasoning of Heno I.
Heno had an executory contract with a bank that failed.
Although it had notice of the FDIC's appointment as receiver
before the expiration of the time for filing claims under §
1821(d), it had no claim until after the bar date because the
FDIC had not yet repudiated the contract and so it remained
executory. Therefore, Heno had no claim to file and no claim
subject to administrative review. Absent prior administrative
review, the court lacked jurisdiction to hear Heno's claim. 12
U.S.C. § 1821(d)(13)(D). Heno had sent the FDIC two post-bar
date letters requesting that the FDIC inform Heno of its position
on the contract. Under § 1821(d), however, the letters could not
provide the court with jurisdiction because Heno had not filed a
claim before the bar date. In Heno I, the court of appeals
reasoned Congress did not intend the administrative review
procedures established under § 1821(d) to apply to preclude
judicial review of post-receivership claims arising after the 90-
day filing period. 12 U.S.C. § 1821(d)(3)(B). Instead, the
"reasonable period" time bar of 12 U.S.C. § 1821(e)(2)18 would
18
. Section 1821(e)(2) provides:
(e) Provisions relating to contracts entered
into before appointment of conservator or
receiver
. . . .
(2) Timing of repudiation
The conservator or receiver . . . shall
determine whether or not to exercise the
govern Heno's claim. Heno II, 20 F.3d at 1208 (discussing Heno
I).
The court of appeals withdrew Heno I after realizing
that Heno's claim was in fact not barred under § 1821(d) once the
FDIC's internal agency manual procedures for processing such
post-bar date claims were properly applied. The FDIC, in its
petition for rehearing and then at reargument, represented that
if it had considered Heno's claims as contract repudiation
claims, Heno's letters would have been sufficient under its
internal procedures to avoid the time bar. Id. This implied
that the FDIC would allow administrative review and thereby
remove the bar to judicial review. Under those circumstances,
the court did not find it necessary to treat Heno's contract
claim against the receiver under § 1821(e) and went on to
consider the parties' arguments under § 1821(d). Id. The
internal agency manual procedures persuaded the court of appeals
that resort to the application of § 1821(e) in breach of contract
actions against the receiver was not routinely necessary to avoid
an irrational result. See id. at 1210-14 (setting forth the
internal manual procedures in an appendix to the opinion).
In the present case, § 1821(d) will not apply to bar
judicial review because of untimely filing for administrative
review. Hudson's claim has already been subjected to
(..continued)
rights of repudiation under this subsection
within a reasonable period following . . .
appointment.
12 U.S.C. § 1821(e)(2).
administrative review and the district court had jurisdiction
over it. Nevertheless, Hudson argues that § 1821(d) is generally
inappropriate for breach of contract actions, relying on the
reasoning of Heno I. Insofar as the rationale of Heno I depended
on the agency's refusal to review Heno's claim, Hudson's argument
must fail as no such agency refusal occurred here. If Hudson's
argument is based on the notion that Heno I made the more general
statement that contract claims against the receiver are not
subject to administrative review, it is inconsistent with Heno II
and also with our opinion in Rosa, in which we held that all
claims for monetary relief arising out of the receiver's alleged
breach of a contract were subject to the administrative review
procedures of § 1821(d). Rosa, 938 F.2d at 392-93. Furthermore,
we find unconvincing the other case on which Hudson relies,
Homeland Stores, Inc. v. Resolution Trust Corp., 17 F.3d 1269,
1275 (10th Cir.), cert. denied, 115 S. Ct. 317 (1994), which
explicitly differs from Rosa on this point.
C.
Finally, Hudson contends the application of the time
constraints imposed by 12 U.S.C. § 1821(d)(6)(A), combined with
the time bar contained in § 1821(d)(3)(B) (which sets the cut-off
date for claims submitted to administrative review), could in
some cases raise significant constitutional problems of improper
delegation of authority, denial of due process, and taking under
the Fifth Amendment. Hudson maintains this could result where
the receiver causes injury to a party, giving rise to a cause of
action after the date has passed by which creditors were to bring
their claims under 12 U.S.C. § 1821(d)(3)(B).19 The receiver,
which has discretion to hear some late claims under 12 U.S.C. §
1821(d)(5)(C), could exercise its discretion against hearing the
claim.20 This failure to go through the administrative review
19
. Section 1821(d)(3)(B) provides:
(3) Authority of receiver to determine claims
. . . .
(B) Notice requirements
The receiver, in any case involving the
liquidation or winding up of the affairs of a
closed depository institution, shall--
(i) promptly publish a notice
to the depository institution's
creditors to present their claims,
together with proof, to the
receiver by a date specified in the
notice which shall be not less than
90 days after publication of such
notice; and
(ii) republish such notice
approximately 1 month and 2 months,
respectively after the publication
under clause (i).
Because the receiver must publish notice "promptly," the bar date
will fall approximately 6 months after it is appointed. Claims
filed after the bar date are disallowed, with certain exceptions,
under § 1821(d)(5)(C).
20
. The text of § 1821(d)(5)(C) appears supra note 7. In fact,
the discretion of the receiver to hear late claims is limited,
and would not apply to many of the post-closing claims against
the receiver that Hudson describes. Claims that are filed late
where the claimant had timely notice of the appointment of the
receiver but the claim did not arise before the end of the cut-
off date would not qualify as exceptions under
§ 1821(d)(5)(C)(ii). That was the case in Heno v. FDIC, 20 F.3d
1204, 1207-08 (1st Cir. 1994), in which the complainant
concededly had actual notice of the FDIC's appointment but held
no claim to assert until after the cut-off date.
procedure would in turn create a bar to judicial review under §
1821(d)(13)(D).21 Rosa v. Resolution Trust Corp., 938 F.2d 383,
391-92 (3d Cir.), cert. denied, 112 S. Ct. 582 (1991). A
plaintiff whose claim the receiver had declined to review as
untimely would therefore be left with no remedy for the alleged
wrong.
We recently recognized that due process might be
violated where a party that had no reasonable opportunity to
submit a claim for administrative review had its claim barred
from judicial review. National Union Fire Ins. Co. v. City Sav.,
F.S.B., 28 F.3d 376, 389-90 n.16 (3d Cir. 1994). Hudson argues
that to prevent the possibility of this unconstitutional result
each claim arising from the acts or omissions of the receiver
must proceed not under 12 U.S.C. § 1821 (d)(6)(A), but instead
under § 1821(d)(5)(C), which treats disallowance of claims filed
after the end of the filing period. The time constraint in §
1821(d)(6)(A) for filing for administrative review of claims
against the receiver would then not apply to the claims, nor
would the venue provision. Hudson would also have us read the
permissive language of § 1821(d)(5)(C)22 as mandatory. See FDIC
v. diStefano, 839 F. Supp. 110, 118 (D.R.I. 1993) (reading the
"may" in § 1821(d)(5)(C) as "must"); Scott v. Resolution Trust
Corp. (In re Scott), 157 B.R. 297, 318 (Bankr. W.D. Tex. 1993)
21
. For the text of this subparagraph, see supra note 9.
22
. That language is "and such claim may be considered by the
receiver." 12 U.S.C. § 1821(d)(5)(C).
(same), withdrawn, 162 B.R. 1004 (Bankr. W.D. Tex. 1994). This,
Hudson states, would relieve the due process concerns raised by
the FDIC having discretion not to hear certain claims, which, if
exercised, could operate to bar jurisdiction in the courts.
Hudson reads the due process requirements too broadly.
We did not suggest in National Union or elsewhere that due
process mandates two separate claims procedures. Rather, we
stated that where the jurisdictional bar contained in §
1821(d)(13)(D) could not constitutionally be applied, a court
would have jurisdiction over the claim. National Union, 28 F.3d
at 389-90 n.16, 393 n.22. Where the statute does not otherwise
direct or suggest the recognition of two separate claims
procedures, we decline to apply the jurisdictional bar where it
would yield an unconstitutional result. A single claims
procedure is more consistent with our decision in Rosa, which
held that claims against the receiver, as well as claims against
the failed institution, were subject to the "statutory exhaustion
requirement" of administrative review before the courts had
jurisdiction over them. 938 F.2d at 392-93. Thus, it would
appear there is no constitutional infirmity. But we need not
decide that here. The possibility of a jurisdictional bar does
not arise under the facts of this case because the administrative
review process was completed.
III.
For the reasons set forth, the judgment of the district
court will be affirmed.