Opposition Brief — Hall v. Federal Financial Co.

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‘ (2) AL 31 1997

In The

Supreme Court of the United States

October Term, 1996

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MICHAEL T. HALL, TRUSTEE and MICHAEL T. HALL,

Petitioners,

v.

FEDERAL FINANCIAL CO.,

Respondent.

To The United States Court Of Appeals —_ —

RESPONTENT’S BRIEF IN OPPOSITION

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TABLE OF CONTENTS

Page

SOE Be RN 86ioc0 id coe ccewcccstodon ces i

pr eg ee eer ree ii

STATEMENT OF FACTS AND OF THE CASE...... 1

REASONS TO DENY THE WRIT .................. 1

I. THE FOURTH CIRCUIT PROPERLY APPLIED

THE LAW OF VIRGINIA .................... 2

Il. PETITIONER SEEKS REVIEW OF AN ISSUE

THAT THE COURT HAS PREVIOUSLY

eB ee 6

ET Sees ERB EN Gb a aceswedsccccesocveseese 7

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TABLE OF AUTHORITIES

Page

Cases Crrep

Atherton v. F.D.1.C., 519 U.S. ___, 117 S. Ct. 666, 136

et FT YF, ee eee pbidacetse® +

Cadle Co. II v. Lewis, 254 Kan. 158, 864 P.2d 718

(1993), cert. denied, 511 U.S. 1053, 114 S. Ct. 1613,

T2B L.BA2d SED CURE. «on ccccescesvestessases 2, 4, 6

Cadle Co. II v. Stamm, 633 So. 2d 45 (Fla. Dist. Ct.

Aspe. Tat Dat. BORED 2co0 scenesessncssnscesssiimssss 4

Central States Resource Corp. v. First National Bank,

243 Neb. 538, 501 N.W.2d 271 (1993)............... 4

F.D.1.C. v. Bledsoe, 989 F.2d 805 (Sth Cir. 1993)........ 6

Investment Co. of the Southwest v. Reese, 117 N.M.

GER, GIS BRE WES Ge wie ninkssnccandpecesecccc. 4

Jackson v. Thweatt, 883 S.W.2d 171 (Tex. 1994) ........ 4

Martin v. Pioneer Title Co. of Vada County, 1993 WL

381101 (Idaho Ct. App. 1993)................. pene

Michigan v. Long, 463 U.S. 1032, 103 S. Ct. 3469, 77

Ce BE GP cc neivinccucccduenueienedsa 5, 6

National Bank and Trust Company at Charlottesville

v. Castle, 196 Va. 686, 85 S.E.2d 228 (1955)......... 6

N.S.Q. Assoc. v. Beychok, 659 So. 2d 729 (La. 1995) ..... 4

O’Melveny & Meyers v. F.D.1.C., 512 US. 79, 114 S.

CO. SOG, 172 LEDS GO GIO] occ cccsccccesecs... +

ee Collection Consultants v. Hanada, 53

. App. 4th 1016, 62 Cal. Rptr. 2d 182 (1997)..... 4

Tivoli Ventures v. Bumann, 870 P.2d 1244 (Colo.

SUDO. «nck cknd0c0cscedeskaieaka eee 4

iii

TABLE OF AUTHORITIES - Continued

Page

Twenty First Century Recovery, Ltd. v. Mase, 279 Ill.

App.3d 660, 665 N.E. bf rere r 4

Union Recovery Ltd. Partnership v. Horton, 252 Va.

& ig & kh sey. rere 3, 4, 5, 6

Statutes CITED

Seep. Ct. BR. 10.2.2... cece cence ee esc ccc cccccceccces 1

Sup. Ct. R. 14(g)(ii)..... 2... 6. ee eee eee eee eee eee 1

12 U.S.C. § 1821(d)(14)(A) and (B) (1997)........... 3, 6

Oe ne onc scsaccurecsresssess 1

RESPONDENT'S BRIEF IN OPPOSITION

The Respondent, Federal Financial Co., an Illinois

general partnership (“FFC”) respectfully requests that the

Court deny the Petition of the defendants, Michael T. Hall

and Michael T. Hall, Trustee (“Petitioners”), seeking

review- of an Opinion of the United States Court of

Appeals for the Fourth Circuit.

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STATEMENT OF FACTS AND OF THE CASE

FFC notes the following inaccuracies and omissions

from the Petitioner’s statement of the case. The Petitioner

fails to note that the basis for federal jurisdiction over

this matter in the first place is diversity of citizenship

under 28 U.S.C. § 1332 (1997), as required by United

States Supreme Court Rule 14(g)(ii). Petitioner also pro-

vides a negative characterization of the decision of the

Fourth Circuit in its Statement of the Case. Petitioner’s

Brief at p.4. FFC asserts that the decision of the Fourth

Circuit speaks for itself. ‘

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REASONS TO DENY THE WRIT

Review on a Writ of Certiorari is not a matter of

right, but of judicial discretion, and a Writ of Certiorari is

granted only for compelling reasons. Sup. Ct. R. 10. Rule

10 gives examples of some of the general considerations

to be made by the Court in deciding whether or not to

grant a writ, such as whether a United States court of

appeals has entered a decision in conflict with the deci-

sion of another United States court of appeals on the

same matter, or with a decision of a state court of last

resort on an important federal issue. Id. The Petitioner

has not presented any compelling reason to grant the

writ. The Fourth Circuit properly applied the stated law

of Virginia in rendering its decision. The decision of the

Fourth Circuit in this matter does not conflict with any

other federal or state court decisions on the same issue or

with any ruling of this Court. It appears that the Peti-

tioner seeks to overturn the established law of Virginia

and ten other states on an issue that the Court has previ-

ously refused to review. See Cadle Co. II v. Lewis, 254 Kan.

158, 864 P.2d 718 (1993), cert. denied, 511 U.S. 1053, 114 S.

Ct. 1613, 128 L.Ed.2d 340 (1994).

I. THE FOURTH CIRCUIT PROPERLY APPLIED THE

LAW OF VIRGINIA.

Both the U.S. District Court for the Eastern District of

Virginia and the Fourth Circuit Court of Appeals were

sitting with diversity of citizenship as the basis for juris-

diction. The courts therefore applied the substantive state

law of Virginia, the jurisdiction in which the district court

was located and in which the promissory note at issue

was to be performed. The state law at issue is the applica-

tion of the relevant statute of limitations to FFC’s action

to collect on the promissory note. Because the original

noteholder was placed in receivership, and the Resolu-

tion Trust Corporation (“RTC”) appointed as receiver, the

Financial Institutions Reform and Recovery Act (“FIR-

REA”) applied, including its statute of limitations. 12

U.S.C. § 1821(d)(14)(A) and (B) (1997). There is no dispute

as to the interpretation of that federal statute.

The RTC is given six years from the date of receiver-

ship to bring its action. Id. The Petitioner does not dis-

pute that had the RTC retained the note in question, it

could have brought an action within the time set forth in

FIRREA. The dispute arises out of the application of this

limitations period to FFC, as assignee of the RTC. Because

FIRREA is silent as to the application of its limitations

period to assignees, there is no need for further inter-

pretation of the federal statute. Rather, the Fourth Circuit

properly looked to and applied the Virginia law of

assignments, which was recently announced in Union

Recovery Ltd. Partnership v. Horton, 252 Va. 418, 477 S.E. 2d

521 (1996). Virginia clearly applies the six-year statute of

limitations to assignees of the RTC.

Petitioner’s main argument is not a direct attack on

the decision of the Fourth Circuit. Petitioner contends

that the Fourth Circuit erred in relying on a decision of

the Virginia Supreme Court because the state court con-

strued a federal statute incorrectly. Petitioner’s Brief at p.

4. In effect, Petitioner’s argument is an attack directed at

the decision of the Virginia Supreme Court set forth in

Union Recovery. The decision in Union Recovery is in

agreement with decisions in several other states. There-

fore, Petitioner’s argument is also an attack on the estab-

lished law of Kansas, Florida, Nebraska, New Mexico,

Texas, Idaho, Louisiana, California, Illinois, and Colo-

rado.!

The Petitioner does not contend that the Fourth Cir-

cuit erred by applying state law standards as required by

the rule set forth in O’Melveny & Meyers v. F.D.I.C., 512

U.S. 79, 114 S. Ct. 2048, 172 L.Ed.2d 67 (1994) and in

Atherton v. F.D.I.C., 519 U.S. __, 117 S. Ct. 666, 136

L.Ed.2d 656 (1997). The Fourth Circuit applied state law

because there was no “specific showing that the use of

state law will create a significant conflict with, or threat

to, some federal policy or interest.” Atherton, 117 S. Ct. at

667. The Petitioner argues that the Fourth Circuit should

not have followed the state law established by Union

Recovery because the Virginia Supreme Court incorrectly

interpreted FIRREA as extending the six year statute of

limitations to assignees of the RTC. However, the Virginia

Supreme Court did not interpret FIRREA to reach its

conclusion. -

Petitioner’s argument misses the mark. Although the

Virginia Supreme Court's decision involved the statute of

1 See Cadle Co. II v. Lewis, 254 Kan. 158, 864 P.2d 718 (1993),

cert. denied 511 U.S. 1053, 114 S. Ct. 1613, 128 L.Ed.2d 340 (1994);

Cadle Co. II v. Stamm, 633 So. 2d 45 (Fla. Dist. Ct. App. 1st Dist.

1994); Central States Resource Corp. v. First National Bank, 243

Neb. 538, 501 N.W.2d 271 (1993); Investment Co. of the Southwest

v. Reese, 117 N.M. 655, 875 P.2d 1086 (1994); Jackson v. Thweatt,

883 S.W.2d 171 (Tex. 1994); Martin v. Pioneer Title Co. of Vada

County, 1993 WL 381101 (Idaho Ct. App. 1993); N.S.Q. Assoc. v.

Beychok, 659 So. 2d 729 (La. 1995); Professional Collection

Consultants v. Hanada, 53 Cal. App. 4th 1016, 62 Cal. Rptr. 2d 182

(1997); Twenty First Century Recovery, Ltd. v. Mase, 279 Ill.

App.3d 660, 665 N.E. 2d 573 (1996); Tivoli Ventures v. Bumann,

870 P.2d 1244 (Colo. 1994).

limitations provisions found in FIRREA, the Petitioner’s

disagreement with the Union Recovery decision is not with

the application of that statute. The Virginia Supreme

Court correctly read and applied the statute to provide

the RTC with a six-year limitation period. Union Recovery,

252 Va. at 422. The Virginia Supreme Court's application

of FIRREA ended there. In the absence of a specific

provision related to assignees of the RTC, the Virginia

Supreme Court then applied the long standing Virginia

law of assignments to decide whether an assignee of the

RTC is also entitled to the six-year limitation period.

Union Recovery was the assignee of an entity that could

have enforced an instrument within a set amount of time.

FIRREA set forth the limitation period. Under established

Virginia law, as an assignee of that entity, Union Recovery

stepped into the shoes of its assignor. The Virginia

Supreme Court thus decided that, in Virginia, the state

courts should apply this well-settled Virginia principle to

the application of FIRREA’s limitation period. Union

Recovery, 252 Va. at 423. The same facts were before the

Fourth Circuit in this matter, and the Fourth Circuit prop-

erly followed Virginia law in rendering its decision.

| The Court should not undertake review of a state

court decision if that decision is based on adequate and

) separate state grounds and contains a “plain statement” iil

to that effect. Michigan v. Long, 463 U.S. 1032, 1041, 103 S.

Ct. 3469, 3476, 77 L.Ed.2d 1201, 1214 (1983). The Virginia

Supreme Court plainly states in Union Recovery that its

decision is based on Virginia law.

It is well established law in Virginia that an

assignee obtains his rights from the assignor,

and, thus, he is said to ‘stand in the shoes’ of the

ee

assignor when pursuing an action on the con-

tract or instrument assigned.

Union Recovery, 252 Va. at 423, citing, National Bank and

Trust Company at Charlottesville, v. Castle, 196 Va. 686,

692-93, 85 S.E.2d 228, 232 (1955).

Furthermore, the Virginia Supreme Court states that

the Virginia law of assignments mandates the application

of the longer limitations period to assignees of the RTC

without reference to the public policy considerations set —

forth in the other decisions that rely on the holding in

F.D.I.C. v. Bledsoe, 989 F.2d 805 (5th Cir. 1993). Union

Recovery, 252 Va. at 424. The Virginia Supreme Court

clearly and properly applied the Virginia law of assign-

ments in reaching its decision. There is no need for the

Court to render what would amount to an advisory opin-

ion on the issue. Michigan v. Long, 463 U.S. at 1042.

II. PETITIONER SEEKS REVIEW OF AN ISSUE

THAT THE COURT HAS PREVIOUSLY REFUSED

TO REVIEW.

The Petitioner’s second argument is that the “plain

meaning” of 12 U.S.C. § 1821(d)(14)(A) and (B) mandates

that the extended limitations period does not apply to

assignees of the RTC. This is an argument that has failed

before every appellate level court considering the issue.

Furthermore, it is an argument that has been presented to

the Court and denied in the past. See Cadle Co. II v. Lewis,

254 Kan. 158, 864 P.2d 718 (1993), cert. denied 511 U.S.

1053, 114 S. Ct. 1613, 128 L.Ed.2d 340 (1994). Since cer-

tiorari was denied in Cadle Co. II v. Lewis, there has been

no change in either FIRREA or otherwise in the status of

the law that would merit review of this issue now.

+

CONCLUSION

The Fourth Circuit properly applied the law of Vir-

ginia in making its decision. The Supreme Court of Vir-

ginia properly applied the law of assignments in Virginia

in making its decision on which the Fourth Circuit deci-

sion was based. The Court has previously denied cer-

tiorari on the issue presented and there has been no

change in the status of the law that would merit review of

the issue at this time.

The Respondent, Federal Financial Co., respectfully

requests that the Court deny a Writ of Certiorari and to

grant the Respondents its taxable court costs.

Respectfully Submitted,

JouHN E. RiInatpr

SEAN P. MCMULLEN

Counsel for Respondents

WatsH, Cotucci, STACKHOUSE,

EmricH, & Lusetey, P.C.

13663 Office Place

Suite 201

Woodbridge, Va. 22192