Lloyd v. FDIC

• Court: Court of Appeals for the First Circuit
• Decided: February 9, 1994
• Docket: 93-1445
• Status: Published

Opinion

USCA1 Opinion

February 8, 1994      [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

___________________

No. 93-1445

WILLIAM BART LLOYD,

                                Plaintiff, Appellant,

                                          v.

                        FEDERAL DEPOSIT INSURANCE CORPORATION,

                                 Defendant, Appellee.

__________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF RHODE ISLAND

                    [Hon. Ronald R. Lagueux, U.S. District Judge]
                                             ___________________

                                 ___________________

                                        Before

                                 Breyer, Chief Judge,
                                         ___________
                          Selya and Boudin, Circuit Judges.
                                            ______________

                                 ___________________

               William Bart Lloyd on brief pro se.
               __________________          ___ __
               Ann  S.  Duross,  Assistant   General  Counsel,  Richard  J.
               _______________                                  ___________
          Osterman, Jr., Senior Counsel, and Daniel H. Kurtenbach, Counsel,
          _____________                      ____________________
          on brief for appellee.

__________________

__________________

SELYA, Circuit Judge.   William Bart Lloyd  appeals from
                        _____________

            an order of the United States District Court for the District

            of  Rhode  Island  dismissing his  suit  against  the Federal

            Deposit  Insurance Corporation  (FDIC),  as receiver  for the

            failed   Capitol   Bank  and   Trust   Company,  of   Boston,

            Massachusetts (the Bank), for want of jurisdiction.

                                      Background
                                      Background
                                      __________

                 In  November  1990,  appellant  purchased  an  apartment

            building in Providence,  Rhode Island from  the Bank.   Under

            the  sales agreement, the Bank undertook to provide financing

            for both the  acquisition and the renovation  of the complex.

            At the closing,  appellant signed a promissory  note, secured

            by a mortgage on  the property.  In  December 1990, the  Bank

            failed.  The FDIC was appointed receiver.   In June 1991, the

            FDIC,  as receiver,  disaffirmed  the  original agreement  to

            finance renovations.

                 In due course, appellant filed a proof of claim with the

            FDIC.   The proof was not acted upon within the required 180-

            day  period, see 12 U.S.C.   1821(d)(5)(A)(i).  Nevertheless,
                         ___

            the  FDIC  notified  appellant  on March  4,  1992,  that  it

            intended to  foreclose.  On March 17,  appellant responded by

            filing this action in a Rhode Island  state court.  He sought

            to enjoin the FDIC from proceeding with the foreclosure, and,

            moreover, to reform  or cancel the sales agreement, note, and

            mortgage (based on an asserted mutual mistake).

-2-

On  March 30,  1992, the  FDIC removed  the case  to the

            United  States District Court  for the District  of Columbia.

            See  12  U.S.C.    1819(b)(2)(B)  (giving  FDIC  authority to
            ___

            remove  action "to  the  appropriate United  States  district

            court")  & 12  U.S.C.    1821(d)(6)(A)  (giving "district  or

            territorial  court  of  the United  States  for  the district

            within which the depository  institution's principal place of

            business is located or  the United States District Court  for

            the  District  of  Columbia"  jurisdiction   over  any  claim

            disallowed by  the FDIC).   On  April 2,  the  FDIC moved  to

            transfer the case to the United States District Court for the

            District  of Rhode Island  "[f]or the convenience  of parties

            and witnesses."   28  U.S.C.   1404(a).   The  district court

            transferred   the  case  on  April  23,  1992.    Appellant's

            administrative claim was finally denied on June 9, 1992.

                 Once the  case  had returned  north, the  FDIC moved  to

            dismiss  for  lack  of subject  matter  jurisdiction  and for

            failure to state a claim  upon which relief could be granted.

            At the same time, the FDIC also argued that appellant's claim

            for injunctive  relief was  barred by  12 U.S.C.    1821(j).1

____________________

            1.  Subsection 1821(j) 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.
                      _________________________

                                         -3-

The  district   court  dismissed   the  case   for  want   of

            jurisdiction.  This appeal followed.2 

                                      Discussion
                                      Discussion
                                      __________

                 A  "district court lacks jurisdiction to enjoin the FDIC

            when the FDIC  is acting pursuant to its  statutory powers as

            receiver."   Telematics Int'l,  Inc. v. NEMLC  Leasing Corp.,
                         ______________________     ___________________

            967  F.2d 703,  707 (1st  Cir. 1992);  see  also 12  U.S.C.  
                                                   ___  ____

            1821(j).  The FDIC has the  power as receiver to foreclose on

            the property  of a  debtor.  See  12 U.S.C.    1821(d)(B)(ii)
                                         ___

            (giving  FDIC power to "collect all obligations and money due

            the [failed]  institution").   Thus, the  district court  was

            without jurisdiction to grant the injunctive relief appellant

            seeks.   See 281-300 Joint Venture v.  Onion, 938 F.2d 35, 39
                     ___ _____________________     _____

            (5th Cir. 1991) (injunction against receiver's foreclosure of

            appellants'  property barred by   1821(j)), cert. denied, 112
                                                        ____  ______

            S.Ct. 933 (1992).

____________________

            12 U.S.C.    1821(j) (emphasis  supplied).  According  to the
            FDIC, none  of the statutory exceptions  authorize injunctive
            relief of the kind sought by appellant.

            2.  The  district judge determined  that the suit  was barred
            both because  the court  lacked jurisdiction  pursuant to  12
            U.S.C.    1821(d)(6)(A) and  because it  had no  jurisdiction
            over  a case removed from a state  court which itself did not
            have jurisdiction over the original  case.  While it was once
            settled law that  a federal court's removal  jurisdiction was
            derived  from the state  court's jurisdiction, this  rule has
            been abolished by statute.   See 28 U.S.C.    1441(e).  Thus,
                                         ___
            we address  only the effect  of 12 U.S.C.    1821(d)(6)(A) on
            the district court's jurisdiction.

                                         -4-

Appellant's  claims  for  equitable  reformation  and/or

            cancellation of  the contract fare  no better.   These claims

            lie  in  the  maw  of  the statute,  for,  in  the  statutory

            parlance, the plaintiff's complaint "seeks a determination of

            rights with  respect  to  []  the assets  of  a[]  depository

            institution  for  which  the Corporation  has  been appointed

            receiver."   12 U.S.C.    1821(d)(13)(D).  By its  terms, the

            statute limits federal court jurisdiction over such claims to

            those  instances  "otherwise  provided"  in section  1821(d).

            Id.; see also Marquis v. Federal Deposit Ins. Corp., 965 F.2d
            __   ___ ____ _______    _________________________

            1148, 1153 (1st Cir. 1992).  We  understand this to mean that

            the federal  courts are  barred  from asserting  jurisdiction

            over  claims   against  the   assets  of  failed   depository

            institutions except as expressly  or impliedly permitted, see
                                                                      ___

            Marquis, 965 F.2d  at 1153 (suggesting  that, in addition  to
            _______

            its  express  grants of  jurisdiction,  section  1821(d) also

            implies   the    existence   of    jurisdiction   in    other

            circumstances),  by  virtue  of  the  various  subsections of

            section 1821(d).  See Resolution Trust Corp. v. J.F. Assocs.,
                              ___ _____________________     ___________

            813 F.Supp. 951, 954 (N.D.N.Y.  1993); see also Landmark Land
                                                   ___ ____ _____________

            Co.  v. Office  of Thrift Supervision,  948 F.2d  910, 912-13
            __      _____________________________

            (5th Cir.  1991) (interpreting similarly worded  provision in

            12 U.S.C.   1818(i)(1) as limiting jurisdiction).  We further

            understand the specific  jurisdictional provision of  section

            1821(d)(13)(D)   to    control   over   the    more   general

-5-

jurisdictional  grant found  in 12  U.S.C.    1819(b)(2)(A).3

            See Gozlon-Peretz v. United States,  498 U.S. 395, 407 (1991)
            ___ _____________    _____________

            ("[a]  specific provision controls  over one of  more general

            application") (citing  Crawford Fitting Co.  v. J.T. Gibbons,
                                   ___________________      _____________

            Inc., 482 U.S. 437, 445 (1987)).  
            ___

                 Appellant  seeks to  find  safe  haven  in  the  statute

            itself:  after all,  section 1821(d)(6)(A)  expressly confers

            jurisdiction  upon federal  courts to  entertain suits  based

            upon disallowed claims.  The district court did not buy these

            wares.  Rather,  Judge Lagueux, adopting a position  urged by

            the  FDIC  below,  ruled  that  the  only  courts  which  had

            jurisdiction  over  appellant's   claims  were  the   federal

            district  court  for  the  district  where  the  failed  bank

            maintained   its   principal   place   of   business   (here,

            Massachusetts)  and  the  federal   district  court  for  the

            District  of  Columbia,  see  12   U.S.C.     1821(d)(6)(A).4
                                     ___

____________________

            3.  Subsection 1819(b)(2)(A) provides, in part, that:

                 all  suits .  . . to  which the  [FDIC] is  a party
                 shall  be deemed  to  arise under  the laws  of the
                 United States.

            12 U.S.C.   1819(b)(2)(A).

            4.  The statute provides,  in relevant part, that  a claimant
            may:

                 file  suit on  such claim  (or  continue an  action
                 commenced before  the appointment of  the receiver)
                 in the district  court or territorial court  of the
                 United  States for  the district  within  which the
                 depository   institution's   principal   place   of
                 business is  located or the United  States District

                                         -6-

Lloyd's  appeal attacks  this  ruling.    And  appellant  has

            acquired a rather surprising ally:   reversing its field, the

            FDIC  now  contends  that  section  1821(d)(6)(A)  is  not  a

            jurisdictional limitation,  but is instead  a venue provision

            that can  be waived (and  which the  FDIC has waived  in this

            instance).   We  think  the  FDIC was  right  the first  time

            around.

                 For   one  thing,   the   plain   language  of   section

            1821(d)(6)(A)  indicates  that it  is a  jurisdictional grant

            limited  to the federal district court for the district where

            the institution has  its principal place of  business and the

            United  States District Court  for the District  of Columbia.

            See  id.  (providing  that  either  such  court  "shall  have
            ___  __

            jurisdiction to hear such claim").  Accord J.F.  Assocs., 813
                                                ______ ____________

            F.Supp. at  958.  For  another thing, while the  reasoning of

            the only  court  that, to  our knowledge,  has found  section

            1821(d)(6)(A) to be a venue provision supports the FDIC's new

            position, the reasoning is not persuasive--and the holding is

            not  inconsistent, simpliciter, with reading the section as a
                               ___________

            jurisdictional  provision.    In Vinton  v.  Trustbank, Sav.,
                                             ______      ________________

            F.S.B., 798  F.Supp. 1055 (D.Del. 1992), the  court held that
            _____

            section  1821(d)(6)(A)   was  not   a  grant   of  "exclusive

____________________

                 Court  for the District of Columbia (and such court
                 shall have jurisdiction to hear such claim).

            12 U.S.C.   1821(d)(6)(A).

                                         -7-

jurisdiction" to the two listed  courts and did not deprive a

            third  court  of   jurisdiction  which   it  had   previously

            obtained.5   Id.  at 1065. But  section 1821(d)(6)(A)  can be
                         __

            read  as a  grant of  jurisdiction to  two designated  courts

            without  being read as a completely  exclusive grant.  Accord
                                                                   ______

            J.F.  Assocs., 813  F.Supp.  at  955.   As  we interpret  it,
            ____________

            section 1821(d)(6)(A) does not extend jurisdiction beyond the

            two  specified courts--but,  by the  same token, it  does not

            deprive a court  of jurisdiction  where, as  in Vinton,  that
                                                            ______

            jurisdiction   has   a    source   independent   of   section

            1821(d)(6)(A).  See Marquis, 965 F.2d at 1152-54 (determining
                            ___ _______

            that  subsections  of  section  1821(d)  other  than  section

            1821(d)(6)(A) permit federal courts to retain jurisdiction in

            circumstances  where   a   bank's   failure   postdates   the

            institution of the action).  

                 In the instant  case, section 1821(d)(6)(A) provides  no

            basis  for jurisdiction in  the United States  District Court

            for the District of Rhode  Island.  Nor has appellant  or the

            FDIC  indicated any source of federal jurisdiction in section

            1821(d) other than section 1821(d)(6)(A).  Consequently, even

            though,  viewed simply  from the  perspective  of policy,  it

            might seem sensible  to allow for  suits of  this sort to  be

____________________

            5.  In  Vinton,  the  United States  District  Court  for the
                    ______
            District  of Delaware had obtained jurisdiction over the case
            before   the  Resolution  Trust   Corporation  took  over  as
            receiver.

                                         -8-

tried in  the district  where the  transactions occurred  and

            where  the court  is  likely  to be  most  familiar with  any

            applicable local law, the statutory language, especially that

            of    1821(d)(13)(D), compels  us, absent  a more  persuasive

            argument to  the contrary, to  find that  the district  court

            appropriately  determined  that  it   lacked  subject  matter

            jurisdiction over Lloyd's suit.   See Massachusetts Financial
                                              ___ _______________________

            Services, Inc. v. Securities  Investor Protection, Corp., 545
            _____________     _____________________________________

            F.2d 754, 756 (1st  Cir. 1976), ("a statute's  plain language

            is  the primary indicator of its meaning"), cert. denied, 431
                                                        ____  ______

            U.S. 904 (1977).6

                 The  normal remedy in  these circumstances would  be for

            the  district court to dismiss this case  (as it did).  Here,

            however,  a dismissal  seems unfair  since  it would  deprive

            Lloyd,  who  is in  effect  a  victim  of  the  FDIC-inspired

            transfer to  the  District Court  for the  District of  Rhode

            Island,  of  any   means  of  redress.    See   12  U.S.C.   
                                                      ___

            1819(d)(6)(B)   (unless    claimant   requests    review   of

            disallowance  of  claim  within  60  days  of  determination,

            "disallowance shall be final, and  the claimant shall have no

____________________

            6.  We note that, liberally  construed, appellant's complaint
            also invokes  12 U.S.C.    1821(e), a statute  which provides
            that the FDIC may repudiate contracts entered into before its
            appointment as receiver, but affords an injured party a right
            to compensatory relief.  See, e.g., Howell v. Federal Deposit
                                     ___  ___   ______    _______________
            Ins.  Corp., 986 F.2d  569, 571 (1st  Cir. 1993).   We do not
            __________
            decide  whether the  district court  would  have jurisdiction
            under this section because appellant has explicitly disavowed
            any intention of pursuing a breach of contract claim.

                                         -9-

further  rights or  remedies with  respect  to such  claim").

            Since the  transferor court  was not  empowered to  order the

            transfer  of  this action  to  a court  which  lacked subject

            matter   jurisdiction  over  it,  see  28  U.S.C.     1404(a)
                                              ___

            (transfer may only  be to a district where  the action "might

            have been  brought"),  we  think it  more  prudent  that  the

            district  court retransfer this  action to the  United States

            District  Court for  the District  of Columbia on  the ground

            that the transfer was  improvidently granted.  See  Turner v.
                                                           ___  ______

            Kelley,  411 F.Supp. 1331 (D. Kan. 1976) (retransferring case
            ______

            to   transferor  court   because   transferee  court   lacked

            jurisdiction under  5 U.S.C.   552(a)); Majewski  v. New York
                                                    ________     ________

            C. R. Co., 227 F.Supp.  950 (W.D. Mich. 1964) (retransferring
            ________

            case  to transferor  court  because  transferee court  lacked

            jurisdiction).

                 The  dismissal is therefore  vacated for the  purpose of
                                              _______

            allowing  the district  court to  enter  such an  order.   No

            costs.

-10-