Resolution Trust Corp. v. Seale

• Court: Court of Appeals for the Fifth Circuit
• Decided: January 26, 1994
• Docket: 92-05273
• Status: Published

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 92-5273

RESOLUTION TRUST CORPORATION, as Receiver of Jasper Federal Savings & Loan Association, Plaintiff-Appellant,

versus

JOHN H. SEALE, ET AL., Defendants-Appellees.

Appeal from the United States District Court for the Eastern District of Texas

( January 26, 1994 )

Before HIGGINBOTHAM, DAVIS, and JONES, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

This case concerns whether the Resolution Trust Corporation

can sue three former directors of a savings and loan under

applicable federal and state statutes of limitations. We must

decide whether the Financial Institutions Reform, Recovery, and

Enforcement Act of 1989, Pub. L. 101-73, 103 Stat. 183 (Aug. 9,

1989), revives claims barred by state statutes of limitations, the

applicability of the general federal statute of limitations, and

whether in this case the doctrine of "adverse domination" tolls the

state statute of limitations. I.

On March 10, 1992, the RTC sued John Seale, Virgil Martindale,

and Richard Mays, former directors of Jasper Savings & Loan

Association. The RTC alleged breach of fiduciary duty of care,

gross negligence, and breach of fiduciary duty of obedience. The

allegations concern the "Vanderburg loan" and the "Neuhoff loan,"

transactions allegedly involving regulatory violations and grossly

negligent investments. No defendant served as the chairman of the

Jasper board when it approved or initially funded the projects.

The defendants did not constitute a voting majority of the Jasper

board at any time.

The Jasper directors, including Seale, Martindale, and Mays,

approved the Vanderburg loan on November 10, 1983 with initial

funding soon following. Jasper loaned $7,750,000 to Vanderburg &

Associates, a Texas joint venture, for the construction of office

buildings in Austin. The RTC alleges that the project was located

outside of Jasper's lending area, violated loan-to-one and

concentration regulations, and that the Jasper directors never

obtained a feasibility study.

The Jasper directors, including defendants, approved the

Neuhoff loan on January 12, 1984 and promptly funded the project.

Jasper purchased a participation of $3,000,000 from Western Gulf

Savings & Loan Association, the lead lender, who had made a

$13,000,000 loan for the development of a commercial tract in

Dallas. The RTC alleges that this project was also located outside

2 of Jasper's lending area, and that the Jasper directors failed to

assess properly the propriety of the investment.

Jasper became insolvent, and, around March 10, 1989, the

Federal Home Loan Bank Board appointed the Federal Savings & Loan

Insurance Corporation as conservator. On August 9, 1989, FIRREA

took effect, and the RTC became conservator. The RTC sued the

defendants on March 10, 1992. The district court granted summary

judgment, ruling that applicable statutes of limitations barred the

lawsuit. The RTC appealed. We affirm.

II.

The RTC sued for breach of fiduciary duty of care, gross

negligence, and breach of fiduciary duty of obedience. In Texas,

breach of a fiduciary duty of care is a tort subject to a two-year

limitations period. Gross negligence is subject to the same

statute. Breach of fiduciary "duty of obedience" also sounds in

tort and comes under the two-year rule. See Tex. Civ. Prac. & Rem.

Code § 16.003; Russell v. Campbell, 725 S.W.2d 739, 744 (Tex. App.-

-Houston [14th Dist.] 1987, writ ref'd n.r.e.).

For the purpose of applying the Texas statute of limitations,

the cause of action accrues when facts exist that authorize a

claimant to seek a judicial remedy. Murray v. San Jacinto Agency,

Inc., 800 S.W.2d 826, 828 (Tex. 1990). The most recent claims in

this case accrued when the Jasper directors approved and funded the

Neuhoff loan on January 12, 1984, which means that the last

limitations period expired on January 12, 1986. The RTC sued on

March 10, 1992. Under the Texas two-year statute, the RTC cannot

3 bring this case because it filed suit more than six years after

expiration of the limitations period.

The RTC argues that FIRREA's internal limitations period

revives claims barred by state statutes of limitations. The FIRREA

limitations provision states, in pertinent part:

Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Corporation as conservator or receiver shall be-- . . . .

(ii) in the case of any tort claim, the longer of--

(I) the 3-year period beginning on the date the claim accrues; or (II) the period applicable under State law.

12 U.S.C. § 1821(d)(14)(A). The FIRREA limitations provision also

states, in pertinent part:

For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such paragraph shall be the later of-- (i) the date of the appointment of the Corporation as conservator or receiver; or (ii) the date on which the cause of action accrues.

12 U.S.C. § 1821(d)(14)(B).

The RTC assumed the conservatorship on August 9, 1989, and the

FIRREA three-year limitations period started to run on that date.

12 U.S.C. § 1821(d)(14)(B)(i). The RTC sued on March 10, 1992,

less than three years after it assumed the conservatorship and the

limitations period started to run. Under FIRREA, then, the RTC

sued within the three-year limitations period. 12 U.S.C.

§ 1821(d)(14)(A)(ii). Thus, this suit is timely if we conclude

4 that the FIRREA three-year provision applies to claims barred when

FIRREA became effective.

III.

In interpreting statutes of limitations, we can presume that

the limitations period promotes the value of repose by protecting

citizens from stale and vexatious government claims, FDIC v. Belli,

981 F.2d 838, 842 (5th Cir. 1993); see also Guaranty Trust Co. v.

United States, 304 U.S. 126, 136 (1938), or we can view statutes of

limitations in a way that protects governmental claims by keeping

the courthouse doors open. Belli, 981 F.2d at 842; see also FDIC

v. Former Officers & Directors of Metropolitan Bank, 884 F.2d 1304,

1307-09 (9th Cir. 1989); FDIC v. Hinkson, 848 F.2d 432, 434 (3rd

Cir. 1988). We have styled these arguments as "interpretive rules

or policy inquiries" that need not be reached when a limitations

provision is unambiguous. Id.

Consistent with this approach, we follow the plain language of

the FIRREA limitations provision understood in light of

congressional intent. Our refusal to dwell on the purpose of

statutes of limitations in general does not prevent us from using

interpretive tools like legislative history; it simply keeps us

from philosophizing about the intrinsic properties of limitations

periods and how they relate to the value of repose and the

vindication of governmental interests. Put simply, we need not

look to general policy considerations where the particular policy

decisions, found in the text of the statute and the history of its

enactment, dispose of the case. Belli accommodates the competing

5 policies by invoking the doctrine of clear statement--Congress can

revive stale claims but must do so clearly.

We follow the plain language of federal statutes, abjuring a

literalist approaat does not serve but rather frustrates

congressional intent. Demarest v. Manspeaker, 111 S. Ct. 599, 604

(1991). FIRREA establishes new limitations periods for bringing

FIRREA claims, which seemingly enables the RTC to revive claims

that had lapsed under state limitations periods. 12 U.S.C.

§§ 1821(d)(14)(A), 1821(d)(14)(B). Logically, this approach would

permit the RTC to resurrect claims stale from the early twentieth

century. The evidence that Congress intended such a sweeping

recovery right is not persuasive.

Given this fact, we have followed other circuits in holding

that FIRREA does not revive claims that have lapsed under state

limitations periods. See, e.g., FDIC v. Shrader & York, 991 F.2d

216, 220 (5th Cir. 1993); FDIC v. Bledsoe, 989 F.2d 805, 808 (5th

Cir. 1993); FDIC v. Belli, 981 F.2d 838, 842-43 (5th Cir. 1993);

FDIC v. McSweeney, 976 F.2d 532, 534 (9th Cir. 1992) cert. denied,

113 S.Ct. 2440 (1993); FDIC v. Hinkson, 848 F.2d 432, 434 (3rd Cir.

1988). The FIRREA limitations period applies to claims that were

alive on August 9, 1989, when FIRREA took effect, but not to claims

that had expired before then. Shrader & York, 991 F.2d at 220;

Bledsoe, 989 F.2d at 808; Belli, 981 F.2d at 842. Under this

view, the expiration of the Texas two-year statute before the RTC

filed denies the RTC the more generous FIRREA limitations period.

6 This reading of the statutory provision comports with general

jurisprudence on limitations periods. New limitations periods

usually apply to pending cases and have retroactive effect, Fust v.

Arnar-Stone Lab., Inc., 736 F.2d 1098, 1100 (5th Cir. 1984), but

the federal government has no right to pursue a case after old

limitations periods have expired. Guaranty Trust Co. v. United

States, 304 U.S. 126, 142 (1938). Subsequent extensions of a

limitations period will not revive barred claims in the absence of

a clear expression of contrary legislative intent. Belli, 981 F.2d

at 842-43.

The legislative history of FIRREA indirectly mentions

resurrecting stale claims. Significantly, however, the legislative

record does not contain a clear statement in favor of revival.

Senator Donald Riegle, Chairman of the House-Senate Conference

Committee on FIRREA, stated that the statute sought "to maximize

potential recoveries by the Federal Government by preserving to the

greatest extent permissible by law claims that otherwise would have

been lost due to the expiration of hitherto applicable limitations

periods." 135 Cong. Rec. § 10205 (daily ed. Aug. 4, 1989). He

cited Electrical Workers v. Robbins & Myers, Inc., 429 U.S. 229,

243 (1976), and Chase Sec. Corp. v. Donaldson, 325 U.S. 304, 311-16

(1945).

Senator Riegle's reference to maximizing recoveries "to the

greatest extent permissible by law" that otherwise would have been

lost is not necessarily an insistence on revival of barred claims.

It might mean creating a new accrual date on all causes of action

against a particular thrift after the RTC assumes the conservatorship. This interpretation is plausible although Senator

Riegle cites to U.S. Supreme Court cases holding in part that a

legislature may constitutionally revive stale claims.

The legislative record is even more mixed because evidence for

the revival approach can be found in a draft Senate bill on FIRREA.

The House-Senate Conference Committee rejected a provision in the

draft providing that FIRREA could not revive stale claims. The

draft Senate bill stated, in pertinent part:

COMPUTATION OF LIMITATIONS. Notwithstanding any other provision of law, for the purpose of computing whether the applicable limitations period has expired prior to the Corporation's acquisition of the claim, in addition to the item excluded under any other applicable tolling rules, there shall be excluded:

(1) as to any other action against a director or officer, all periods during which any culpable director or officer continues in such capacity;

(2) as to any action against an accountant, attorney, appraiser or other person providing services to the insured institution, all periods during which such party continues to provide services to the insured institution.

If a claim is not already time-barred at the time the corporation acquires it, the [applicable limitations period], shall start anew at the time the corporation acquires the claim.

S. Rep. No. 101-19, 101st Cong., 1st Sess. (1989). The rejected

draft prevented the RTC from suing on a claim that had already

lapsed before the RTC acquired it. The final version of FIRREA

does not contain similar language on the limitations issue.

In short, there is some support in the legislative history for

the revival approach, but neither Senator Riegle's statement nor

the draft Senate bill supplies the clear statement needed to revive

8 expired limitations statutes. See Belli, 981 F.2d at 842-43. As

a result, this case falls under the Texas two-year provision. The

Texas limitations statute started to run on November 10, 1983 and

January 12, 1984 respectively, but the RTC did not sue until March

10, 1992, well after the two years had expired.

IV.

A general statutory rule usually does not govern if a more

specific rule covers the case. Green v. Bock Laundry Mach. Co.,

490 U.S. 504, 524 (1989). Under this view, we should apply the

more specific FIRREA limitations provision rather than the more

general federal limitations statute. The latter states, in

pertinent part:

Subject to the provisions of section 2416 of this title, and except as otherwise provided by Congress, every action for money damages brought by the United States or an officer or agency thereof which is founded upon a tort shall be barred unless the complaint is filed within three years after the right of action first accrues.

28 U.S.C. § 2415(b). In Belli, however, we gave effect to both

FIRREA and Section 2415. Belli, 981 F.2d at 842. Even if Section

2415 were to apply to this case, the question would remain whether

that provision revives claims that had lapsed under state

limitations statutes.

Section 2415 cannot revive claims barred under a state

limitations period when the RTC takes over after the claims have

been barred under state law. Randolph v. RTC., 995 F.2d 611, 619

& n.7 (5th Cir. 1993); FDIC v. Wheat, 970 F.2d 124, 128 n.7 (5th

Cir. 1992); United States v. Sellers, 487 F.2d 1268, 1269-70 (5th

Cir. 1973). Section 2415 could have been applied when the RTC

9 assumed the conservatorship in 1989, see Wheat, 970 F.2d at 128,

but, by that time, the Texas two-year limitations period that had

started running in 1984 had lapsed, meaning that the latest claim

open to the RTC had already been barred. Thus, the RTC cannot sue

under the Section 2415 limitations period.

V.

The doctrine of adverse domination tolls the Texas limitations

period until wrongdoing officers and directors relinquish control

of the corporation. We review de novo a district court finding of

no adverse domination, treating the issue as a ruling on the law

rather than an exercise of equitable discretion. FDIC v. Dawson,

4 F.3d 1303, 1308 (5th Cir. 1993). We also use state rather than

federal equitable tolling principles. Id. at 1308-09. State law

asks whether a majority of Jasper's board was more than negligent

during the state limitations period. Id. at 1309-13; Allen v.

Wilkerson, 396 S.W.2d 493, 500, 501 (Tex. Civ. App.--Austin 1965,

writ ref'd n.r.e.).

Accepting the RTC's proof, we have only that the Jasper board

unanimously approved the Neuhoff and Vanderburg loans, and that

Seale, Martindale, and Mays did not dissent. The RTC has not

created any fact issues of regulatory violations or fraud,

concealment, or other illegal activity amounting to more than

negligence. The RTC argued gross negligence, but provided no more

than conclusory assertions in support. It offered nothing to

support a finding that a majority controlled the Jasper board in a

more than negligent way.

10 On the other hand, defendants submitted affidavits stating

that a majority did not adversely control the Jasper board at

anytime during the tolling period. To be sure, these affidavits

did not refute the regulatory violation allegations, but the RTC

offered no proof on that front. The affidavits do suffer from

breezy denials of wrongdoing, but given the limited submission by

the RTC, they adequately respond to the adverse domination charge.

Defendants challenged the RTC to prove regulatory violations

and adverse domination. They argued that naked assertions would

not suffice, and cited In re Lewisville Properties, Inc., 849 F.2d

946 (5th Cir. 1988) (citing Anderson v. Liberty Lobby, Inc., 477

U.S. 242 (1986)), and Celotex Corp. v. Catrett, 477 U.S. 317

(1986). These cases demonstrate that the RTC did not meet its

burden.

AFFIRMED.