Federal Deposit Insurance v. Sweeney

136 F.3d 216, 1998 WL 56351
CourtCourt of Appeals for the First Circuit
DecidedFebruary 17, 1998
DocketNos. 97-1383, 97-1417
StatusPublished
Cited by2 cases

This text of 136 F.3d 216 (Federal Deposit Insurance v. Sweeney) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Deposit Insurance v. Sweeney, 136 F.3d 216, 1998 WL 56351 (1st Cir. 1998).

Opinion

PER CURIAM.

Appellants Rhetta and John Sweeney are appealing a final’ judgment by the United States District Court for the District of Massachusetts which granted appellee Federal Deposit Insurance Corporation (“FDIC”) possession of certain properties in Hamilton, Massachusetts now occupied by the Swee-neys. Earlier litigation established that the Sweeneys had defaulted on the loans which were secured by the property occupied by the Sweeneys. See Sweeney v. Resolution Trust Corp., 16 F.3d 1 (1st Cir.1994).1 We affirm.

On appeal the Sweeneys raise three claims. None has merit. The Sweeneys argue that the United States District Court lacked subject matter jurisdiction over this case; that even if that court had jurisdiction, it was required 'to abstain; and that the district judge assigned to the ease erred when he refused to disqualify himself. The Sweeneys raised no defenses in the trial court to the merits of the action and they raise none here.

The background to this action is that Mrs. Sweeney, on August 27, 1987, granted a mortgage on real estate located at 776 Bay Road, Hamilton, Massachusetts, to Comfed Savings Bank. On August 27, 1987, Mrs. Sweeney, as Trustee of the Maple Leaf Realty Trust, granted a mortgage on real estate located at 24 Meyer Lane, Hamilton, Massachusetts, to Comfed. The mortgages secured a $1.6 million loan by the bank.

The Sweeneys do not, in this appeal, dispute that they had defaulted on théir obligation to pay the sums owed and that the lender, or its successor, was entitled to foreclose. A state court jury in March of 1990 awarded Comfed more than $2 million for the Sweeneys’ failure to pay the obligation secured by the mortgages. That case was removed to federal court when the Resolution Trust Company (“RTC”) took over Com-fed. The federal court then entered that state court jury verdict against the Sweeneys in a judgment. The Sweeneys appealed that judgment and lost. See id. Naturally enough, what usually happens — when mortgage payments have not been paid over some period and there is a judgment — happened here. There was a foreclosure. The RTC conducted the foreclosure because it was appointed first the conservator and then the receiver for Comfed. Comfed was one of many banks which failed in New England [218]*218during this period and was taken over by the RTC.

In this appeal, the Sweeneys do not dispute that the foreclosure proceedings were properly done. At the foreclosure, the RTC was the high bidder for the properties, bidding $455,000 for the 24 Meyer Lane property and $334,000 for the 776 Bay Road property. On December 12, 1994, the RTC executed and delivered to itself foreclosure deeds for the properties. On December 31, 1995, the FDIC succeeded the RTC as receiver for Comfed.

After the foreclosure, the FDIC, which became the receiver for Comfed, instituted this action for possession of the property. The federal court entered summary judgment for the FDIC. The Sweeneys appealed. This court, before it heard the appeal, ordered the parties to mediate. The mediator reported that the mediation had failed, and this appeal went forward.

In this appeal, the Sweeneys also do not dispute that the appointment first of the RTC and then the FDIC as the receiver of Comfed was proper. Nor do they dispute, and indeed they could not, that the FDIC is entitled to exercise the various rights Com-fed and the RTC had with respect to the property, including the right to take possession after a foreclosure sale.

Nevertheless, the Sweeneys have continued to occupy the properties despite then-having failed to meet their mortgage obligations and despite the foreclosure sale.

The thrust of the Sweeneys’ appeal is that only a state court and not a federal court may award possession of their property following their default and the foreclosure. This argument is constructed around several premises, all of which are simply wrong, as discussed below. This is not, as the Sweeneys would characterize it, simply a routine summary process eviction involving purely private persons and entities in which there is no interest on the part of the federal government. Once Comfed failed and the RTC and the FDIC stepped in, there was a federal interest. The FDIC attempts to protect the people who have put their money into banks when those banks fail and must do so by marshaling the property which rightfully belongs to the bank. See Massachusetts v. FDIC, 102 F.3d 615 (1st Cir.1996).

First, contrary to the Sweeneys’ contention, the federal district court did have jurisdiction to hear the case. The Sweeneys’ argument proceeds from their assertion that the FDIC only claimed that there was federal jurisdiction under 12 U.S.C. § 1819(b)(2)(A). That assertion is factually incorrect. In fact the FDIC alleged there was federal jurisdiction under 12 U.S.C. § 1819(b). That section provides that the FDIC is an “agency of the United States for purposes of section 1345 of Title 28” and § 1819(a) grants the FDIC the power “[t]o sue and be sued.” 28 U.S.C. § 1345 grants federal district courts jurisdiction over “all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress.” Since the FDIC commenced this action, the federal court had jurisdiction pursuant to 28 U.S.C. § 1345. See Federal Sav. & Loan Ins. Corp. v. Ticktin, 490 U.S. 82, 86-87, 109 S.Ct. 1626, 1628-29, 104 L.Ed.2d 73 (1989) (partybased jurisdiction of § 1345 applies to actions brought by agency and does not depend on federal subject matter jurisdiction). Not surprisingly, there is federal jurisdiction under the laws enacted by Congress.2

The Sweeneys’ second claim is that the district court should have abstained from exercising jurisdiction pursuant to the doctrine laid down in Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). In Burford, the Supreme Court decided that the federal courts should abstain from exercising federal jurisdiction in order not to disrupt a complex administrative [219]*219scheme created by the state of Texas to administer the .extraction of that state’s oil reserves. . .

The Burford abstention doctrine applies where a case involves both difficult; complex questions of state law and administration of state law by a scheme of state administrative agencies. When this is the ease, involvement by the federal courts may cause confusion, and disrupt the state’s efforts to establish a coherent, uniform policy to solve a complex local problem. The danger which Burford

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
136 F.3d 216, 1998 WL 56351, Counsel Stack Legal Research, https://law.counselstack.com/opinion/federal-deposit-insurance-v-sweeney-ca1-1998.