Resolution Trust Corp. v. Sloan

775 F. Supp. 326, 1991 U.S. Dist. LEXIS 14603, 1991 WL 201652
CourtDistrict Court, E.D. Arkansas
DecidedOctober 7, 1991
DocketLR-C-91-325
StatusPublished
Cited by8 cases

This text of 775 F. Supp. 326 (Resolution Trust Corp. v. Sloan) is published on Counsel Stack Legal Research, covering District Court, E.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Resolution Trust Corp. v. Sloan, 775 F. Supp. 326, 1991 U.S. Dist. LEXIS 14603, 1991 WL 201652 (E.D. Ark. 1991).

Opinion

MEMORANDUM AND ORDER

SUSAN WEBBER WRIGHT, District Judge.

This case presents the question of whether the Resolution Trust Corporation (RTC), as receiver of the American Savings and Loan Association, properly removed a foreclosure action from state court. For the reasons explained below, the Court denies the defendant’s motion to remand the case to the Chancery Court of Pulaski County, Arkansas.

The RTC originally filed its foreclosure complaint in chancery court on October 4, 1990, seeking to reduce to judgment an unpaid promissory note together with foreclosure of a mortgage on the defendant’s residence. On April 17,1991, the RTC filed an amended complaint, to which the defendant responded by filing a counterclaim and third-party complaint on April 29,1991. The counterclaim seeks rescission of the note and mortgage purchase contract under which the RTC brought its amended complaint.

The RTC filed a notice on May 28, 1991 removing the case to this Court under 12 U.S.C. § 1819(b)(2)(B) and 28 U.S.C. §§ 1441-50. It then moved for dismissal under Rule 12(b)(1) and (6) of the Federal Rules of Civil Procedure, contending in part that the counterclaim should be dismissed because Ms. Sloan failed to exhaust her administrative remedies under 12 U.S.C. § 1821(d)(3), the RTC is a holder in due course under federal common law, and the counterclaim is barred under the D’Oench, Duhme doctrine, see D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), and its statutory counterpart, 12 U.S.C. § 1823(e).

I.

On August 9, 1989, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIR-REA), Pub.L. No. 101-73, 103 Stat. 183, which created the RTC and abolished its predecessor, the Federal Savings and Loan Insurance Corporation (FSLIC). Section 501(a) of FIRREA contains language regarding jurisdiction and removal of cases by the RTC, which is now codified at 12 U.S.C. § 1441a(Z). 1 Ms. Sloan first objects to removal on the ground that the RTC used the wrong removal statute. She *328 points out that removal in this case is governed not by 12 U.S.C. § 1819(b)(2)(B), which applies to the Federal Deposit Insurance Corporation (FDIC), but by section 1441a(Z). Accordingly, she argues, the case should be remanded.

The Court disagrees. It is true that the RTC did not rely upon section 1441a(Z) in its notice of removal. Several courts have recognized that section 1441a(Z) governs removals by the RTC, rather than section 1819(b)(2). See, e.g., In re Resolution Trust Corp., 888 F.2d 57, 58-59 (8th Cir. 1989) (section 1441a(Z )(3) governs removals by RTC, while section 1819(b)(2) governs removal of FDIC cases); Matrix Ski Corp. v. FDIC, 734 F.Supp. 763, 764-65 (N.D.Tex.1990) (noting substantial differences between RTC and FDIC removal statutes); Resolution Trust Corp. v. Key, 733 F.Supp. 1086, 1090 n. 6, n. 7 (N.D.Tex.1990) (removal provisions in section 1819(b)(2)(B) do not apply to the RTC).

Perhaps on this ground alone the motion to remand should be granted, but the Court is not inclined to do so for two reasons. First, the RTC also invoked the general removal provisions of 28 U.S.C. §§ 1441-50 in its notice, and that is sufficient to cure the failure to mention section 1441a(Z) While section 1441a(Z) obviously governs removal by the RTC, “FIRREA does not expressly prohibit RTC from removing cases under 28 U.S.C. § 1441(a) and we therefore read its removal provisions to supplement, rather than to replace, those of § 1441(a).” RTC v. Lightfoot, 938 F.2d 65, 68 (7th Cir.1991). Accord Towns Real Estate & Appraisal Serv. v. RTC, 753 F.Supp. 914, 916-17 (N.D.Ala.1991) (FIR-REA removal provisions supplement general removal provisions in 28 U.S.C. § 1441(a)); First Northern Bank v. RTC, 750 F.Supp. 53, 55 (D.N.H.1990) (same). As explained below, the removal provisions of section 1441a(Z)(3) do not apply to the somewhat unusual facts in this case. The Court ultimately must look to the general removal statutes to decide whether removal in this case was proper, and the RTC removed pursuant to those provisions (along with section 1819(b)). Second, to remand a case that is otherwise removable because the RTC failed to cite section 1441a(Z) in its notice would elevate form over substance, something the Court is unwilling to do in this instance.

The Court will treat the removal under section 1819(b)(2)(B) as if it had been effected under the provisions of section 1441a(Z). This does not mean that the RTC can piek-and-choose between the two provisions, nor that the terms of section 1819(b) necessarily determine the outcome here.

II.

The section of FIRREA governing jurisdiction and removals by the RTC provides:

(Z) Power to remove; jurisdiction.
(1) In general. Notwithstanding any other provision of law, any civil action, suit, or proceeding to which the Corporation is a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction over such action, suit, or proceeding.
(2) Corporation [RTC] as party. The Corporation shall be substituted as a party in any civil action, suit, or proceeding to which its predecessor in interest was a party with respect to institutions which are subject to the management agreement dated February 7, 1989, among the Federal Savings and Loan Insurance Corporation, the Federal Home Loan Bank Board and the Federal Deposit Insurance Corporation.
(3) Removal and remand.

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Bluebook (online)
775 F. Supp. 326, 1991 U.S. Dist. LEXIS 14603, 1991 WL 201652, Counsel Stack Legal Research, https://law.counselstack.com/opinion/resolution-trust-corp-v-sloan-ared-1991.