857 F.2d 995
12 Fed.R.Serv.3d 156
W.O. HENRY, Plaintiff-Appellant,
v.
INDEPENDENT AMERICAN SAVINGS ASSOCIATION; Independent
American Savings Association, FSLA; and
Independent American Real Estate, Inc.,
Defendants- Appellees.
SUNBELT SERVICE CORPORATION, Plaintiff-Appellant,
v.
INDEPENDENT AMERICAN SAVINGS ASSOCIATION and Independent
American Savings Association, FSLA, Defendants-Appellees.
Jeff BEAN, Individually and as Managing General Partner for
White Rock Texas Joint Venture, A Texas General
Partnership, Plaintiff-Appellant,
v.
INDEPENDENT AMERICAN SAVINGS ASSOCIATION, et al.,
Defendants-Appellees.
Nos. 87-1844, 87-1849 and 87-1961.
United States Court of Appeals,
Fifth Circuit.
Sept. 30, 1988.
Robert M. Greenberg, Greenberg, Fisk, Bush & Walker, Dallas, Tex., Ivan M. Scott, Jr., Bedford, Tex., for W.O. Henry.
Larry D. Carlson, Kenneth B. Tomlinson, Dallas, Tex., Colleen B. Bombardier, Office of Gen. Counsel, Washington, D.C., for amicus FSLIC.
C. Michael Moore, David P. Blanke, Martin Griffen, Locke, Purnell, Rain & Harrell, Dallas, Tex., for Independent American Sav. Assoc., et al.
Kathryn R. Wray, Baker & Botts, Dallas, Tex., for Federal Sav. & Loan Assoc. (FSLA).
John Bickel, William Brewer, Harold F. Marshall, Denise Gorges, Bickel & Brewer, Dallas, Tex., for Vineyard, Trustee for Estate of Independent American.
Richard Thornburg, Atty. Gen., Washington, D.C., Interested Person in 87-1844.
Mark R. Hall, David P. Stone, Moore & Peterson, Dallas, Tex., for Sunbelt Service Corp.
Edwin Meese, III, Atty. Gen., Washington, D.C., Interested Person in 87-1849.
Allan B. Diamond, Kim J. Askew, Hughes & Luce, Dallas, Tex., for Bean.
Appeals from the United States District Court for the Northern District of Texas.
Before BROWN, POLITZ, and HIGGINBOTHAM, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
The district court permitted removal of these three state-court suits against a now-defunct savings and loan association and its successor. The court held that removal was proper because the suits implicate, to varying degrees, receivership functions of the Federal Savings and Loan Insurance Corporation. After removal, however, the court dismissed all claims against the successor-institution on the basis of our decision in North Mississippi Savings & Loan Association v. Hudspeth. The court reasoned that these suits, like the one in Hudspeth, would impede the FSLIC's statutory power to resolve claims against a failed savings and loan association. We affirm the district court's ruling on the propriety of removal, but we reverse the court's ruling on the reach of Hudspeth and remand the cases for further proceedings.
* Independent American Savings Association, a Texas-chartered, federally-insured savings and loan, was declared insolvent and closed on May 20, 1987, by the Federal Home Loan Bank Board. The FHLBB immediately placed the closed association, which we will refer to as "Old IASA," in receivership with the Federal Savings and Loan Insurance Corporation. At the FSLIC's direction, substantially all of Old IASA's assets and liabilities were transferred to a newly created, federally-chartered institution, Independent American Savings Assn., F.S.L.A., or "New Federal." By virtue of a "Special Agreement," the FSLIC retained wide supervisory power over New Federal's daily operations. The FSLIC's approval was required for, among other things, the implementation of any "policy, goal or objective," the appointment or retention of any officer or director, the acceptance of any contract of employment, and the lease or purchase of any real estate.
The assets and liabilities assumed by New Federal included two commercial agreements that were the subject of pending state-court lawsuits, the Sunbelt and Henry cases. In Sunbelt, Old IASA had agreed to issue Sunbelt a letter of credit to secure a loan Sunbelt previously had made to a now-defunct affiliate of Old IASA. In Henry, Old IASA had provided Henry with financing for a real estate transaction. In their suits, Henry and Sunbelt alleged that Old IASA committed fraud and breach of contract in connection with the agreements. After the FSLIC's intervention, both plaintiffs amended their complaints to name New Federal as an additional defendant.
Bean, the third case consolidated here, also arose out of a real estate financing agreement involving Old IASA and assumed by New Federal. However, because Bean did not bring suit until after the creation of New Federal, his complaint did not name Old IASA as a defendant. Rather, the suit was brought against New Federal and several individual defendants also alleged to be involved in the real estate deal, namely Tommy G. Lane; John Carpenter; and Poscher, Bond, Wilk & Allison, Inc. Bean's complaint also differed from Henry and Sunbelt's complaints because in addition to the state-law claims, Bean alleged that Old IASA violated a federal law against tying arrangements in credit transactions.
New Federal removed all three cases to federal district court, relying on a federal statute that permits removal of state-law claims brought against the FSLIC or a savings institution in receivership with the FSLIC. On motions to remand, the court determined that removal was proper in each case, notwithstanding the fact that Bean did not name Old IASA--the only party in FSLIC receivership--as a defendant. Likewise, the court would not permit Henry and Sunbelt to amend their complaints so as to eliminate Old IASA as a party and, in their view, render Sec. 1730(k)(1) inapplicable.
Bean moved for a preliminary injunction against the foreclosure of the properties subject to Bean's agreement with Old IASA. The district court denied the motion. The court then dismissed all three actions, finding the suits barred under the doctrine of North Mississippi Savings & Loan Association v. Hudspeth. The court determined that the pending actions would "restrain or affect" the FSLIC's exercise of receivership powers over Old IASA, which Hudspeth held to be prohibited by 12 U.S.C. Sec. 1464(d)(6)(C).
The plaintiffs in all three cases filed notices of appeal, Henry and Sunbelt from the dismissal and Bean from the denial of preliminary relief. Despite the pending appeals, the district court entered an order on January 7, 1988, inviting the government to file an amicus brief addressing the applicability of Hudspeth. After the FSLIC filed a brief contending that Hudspeth should not apply, the district court issued an order on February 2 vacating the December 17 order of dismissal.
Meanwhile, on December 23, 1987, Bean petitioned the Fifth Circuit for a preliminary injunction against foreclosure pending an appellate determination on the merits. We granted the motion in a published order, finding that Bean's suit was likely to succeed because the district court probably erred in applying Hudspeth to a claim against a savings institution not in FSLIC receivership.
II
At the threshold, New Federal argues that there is "some authority" that the district court's February 2 order vacating dismissal of these actions forecloses appellate review. In Oliver v. Home Indemnity Co., for example, the district court amended its "final judgment" on a Rule 60(b) motion after one of the parties filed a notice of appeal; because the amendment rendered the issues on appeal non-final, this court dismissed the appeal.
Nevertheless, most of our cases have recognized that "a district court is divested of jurisdiction upon the filing of the notice of appeal with respect to any matters involved in the appeal." As this court wrote in Brown v. United Insurance Co.:
While we may have sometimes allowed the district court to grant Rule 60(b) relief after notice of appeal and without appellate court permission, see Oliver [ ], such decisions, if we assume that they are consistent with prior and subsequent precedents of this Court, are explainable only as an aspect of the "dual jurisdiction" concept, rather than on the theory that the appellate court does not have jurisdiction.
Because this court had jurisdiction over the present appeal at the time of the February 2 order, we need not give force to the district court's order vacating the judgment.
III
Title 12 of the United States Code, section 1730(k)(1) deems all suits "to which the [FSLIC] shall be a party" to arise under federal law, thus permitting their removal to federal court. Although the FSLIC was not named as a party in Henry or Sunbelt, the complaints did name Old IASA, an institution in receivership with the FSLIC at the time of removal. As we explained in Hudspeth, even though the FSLIC has not been formally joined, it is a party in the contemplation of Sec. 1730(k)(1) when the FSLIC is present as receiver of a named defendant. As originally stated, then, the Henry and Sunbelt cases were removable because their claims against Old IASA arose under federal law.
Henry and Sunbelt argue that even if their cases were properly removed, the district court abused its discretion in denying them leave to drop Old IASA from the complaint, an action that they argue would have eliminated federal jurisdiction. The district court found that the amendment was merely a tactical maneuver to facilitate remand. The court also noted that it needed to retain jurisdiction in order to refer the claims to the FSLIC's administrative track, in accord with the district court's expansive reading of Hudspeth.
As we explain in part IV of this opinion, the district court erred in its second conclusion. Because the court denied leave to amend based on its understanding of Hudspeth--an understanding we now reject--we leave it to the district court to reconsider its decision on remand. We note however that "a plaintiff's voluntary amendment to a complaint after removal to eliminate the federal claim upon which removal was based will not defeat federal jurisdiction." If it allows plaintiffs to drop Old IASA as a defendant, thus eliminating the original basis for federal removal jurisdiction, the district court may consider whether to remand the action to state court under the principles laid out in Carnegie-Mellon University v. Cohill.
Unlike Henry and Sunbelt, Bean never named Old IASA as a defendant; thus, the case properly could have been removed only on the basis of Bean's federal-law claim under the National Housing Act. Bean objects to this result because the petition for removal was brought only by New Federal and was not joined by the other named defendants. Although failure of all defendants to join is usually a bar to removal, if one defendant's removal petition is premised on removable claims "separate and independent" from the claims brought against other defendants, consent of the other defendants is not required. "For if consent were required in such a case, a plaintiff might be able to prevent removal of a federal claim by joining an unrelated claim against a different defendant, and this would reduce the effectiveness of section 1441(c) in making separate and independent claims a basis for removal."
Although the district court did not reach the issue, it could have correctly concluded that Bean's Housing Act claim against New Federal is separate and independent from Bean's state-law claims against the other defendants. The Housing Act claim is premised on an alleged "tying" arrangement in Old IASA's lending policy, a claim for which only the lending institution itself may be held liable. Hence, even without the consent of other defendants, New Federal could remove the Housing Act claim, potentially taking the state-law claims into federal court as well.
This assumes, however, that the district court properly could have exercised jurisdiction over the Bean defendants other than New Federal, a proposition never tested by the district court. Although Bean's state-law claims against New Federal could have been removed under the doctrine of pendent jurisdiction, no federal claim against the other defendants would support removal of the state-law claims that Bean brought against them. It is possible that these claims could be removed under a theory of "pendent-party" jurisdiction, a doctrine this circuit has accepted under some circumstances. We leave it to the district court to determine on remand whether pendent-party jurisdiction is appropriate in this case, given the controlling factors we have identified: the factual relationships between the claims, judicial economy, convenience, and the plaintiff's ability to litigate his federal claim within a consolidated state-court action.
IV
Even in cases properly removable, another statute, 12 U.S.C. Sec. 1464(d)(6)(C), limits the power of a court to interfere with the FSLIC's administrative determination of claims against a failed institution:
Except as otherwise provided in this subsection, no court may take any action for or toward the removal of any conservator or receiver, or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a conservator or receiver.
The district court held that this statute required dismissal of the plaintiffs' state-law claims against New Federal because New Federal is the remnant of an institution in FSLIC receivership and remains under the FSLIC's control.
The district court based its decision on our opinion in North Mississippi Savings & Loan Association v. Hudspeth. In that case, the FSLIC was appointed receiver for the Old North Mississippi Savings & Loan. In exercising this authority, the FSLIC transferred all the assets and liabilities from Old North to a newly chartered institution, New North, with the exception of an existing employment contract between Hudspeth and Old North. Prior to the assumption-and-transfer transaction, Old North filed a state-court complaint seeking a declaration that the employment agreement was unenforceable; Hudspeth counterclaimed for breach of contract. After the FSLIC's intervention, Hudspeth amended his counterclaim to name New North as defendant, and the FSLIC removed the case to federal court. The district court then dismissed the suit on the basis of the FSLIC's primary jurisdiction to resolve such claims as receiver.
This court determined that the case could be removed to federal court under 12 U.S.C. Sec. 1730(k)(1), insofar as Old North, an institution in FSLIC receivership, was a party. We also affirmed the district court's dismissal of the case, finding that an action against New North would restrain the FSLIC's exercise of its powers as receiver of Old North and thus was precluded by Sec. 1464(d)(6)(C). We reasoned as follows:
Hudspeth's attempt to charge New North with Old North's debt, despite the FSLIC's failure to transfer that liability, crosses the line drawn by the relevant statutes. The FSLIC, in working out the terms of the transfer between Old North and New North, essentially acted as a liquidator. It allocated the demands of competing claimants to Old North's limited assets by, in effect, relegating two classes of claimants--Old North stockholders, and Hudspeth--to second-priority status, leaving for satisfaction of their claims only the right of Old North to reacquire from New North any claims for officer malfeasance.
After further consideration, we remain convinced of the conclusion we reached tentatively in the Bean preliminary-injunction order. There we distinguished Hudspeth from the present situation because court proceedings do not permit a "bypass of administrative remedies" where the FSLIC has explicitly determined that a new institution--one not in receivership with the FSLIC--will shoulder the failed institution's liabilities.
Because FSLIC arranges for the assumption of a closed institution's liabilities and contractual relationships by a new institution and transfers substantially all of the closed institution's assets to that institution, there is no necessity for a formal claims process to determine the validity and priority of creditors' claims or to oversee the distribution of the proceeds of the liquidation of the institution's assets. Instead, the business of the closed institution is continued by the "purchasing and assuming" institution, which deals with contract obligations and creditor claims in the courts as a private litigant.
New Federal urged the district court to examine the substantive effect of the assumption-and-transfer transaction, contending that although the FSLIC may not have declared itself New Federal's "receiver," the FSLIC exercises such powers by virtue of the "Special Agreement." Moreover, New Federal contended that under the FSLIC's long-term plan, this transaction is merely the first step in New Federal's eventual liquidation. As such, the argument goes, New Federal deserves protection from court suits under a functional reading of Sec. 1464(d)(6)(C). The flaw in this argument is that regardless of the FSLIC's future intentions, the FSLIC still has not set any priorities for those with claims against the institution. Until plaintiffs have claims against an institution in receivership, there simply is no administrative remedy to pursue. Even if the court took judicial notice that assumption-and-transfer transactions are often measures taken prior to liquidation, we still could not conclude that the FSLIC's actions are in any way "restrained" or "affected" until actual liquidation has begun. For this reason, the district court erred in dismissing the actions.
AFFIRMED in part, REVERSED in part, and REMANDED.
PATRICK E. HIGGINBOTHAM, Circuit Judge, specially concurring:
The district court's decision in this case reflects the uncertainty of the developing law surrounding failed thrift institutions having its genesis in our opinion in North Mississippi Savings & Loan Association v. Hudspeth. Given the present difficulties of the savings and loan industry, the holding in Hudspeth, and predictably so, has been both defended and attacked with equally predictable mixed judicial responses. The Supreme Court recently granted certiorari in one of our circuit's cases following Hudspeth. I am persuaded that this circuit should adhere to our holding in Hudspeth, although I am not in full agreement with the way Hudspeth has been read. I write separately to explain why. I do so because, in my view, the rationale of Hudspeth 's holding informs our rejection of this effort to expand its reach.
The principal opinion details Hudspeth 's facts. Essentially, we faced a suit against the FSLIC as receiver of a failed savings and loan. We affirmed the district court's dismissal of the suit "because Hudspeth's claims [could] be judicially reviewed only after their presentation to the Federal Home Loan Bank Board...." We determined that "[t]he statutory scheme ... route[d] [Hudspeth's action] to the administrative process...." Hudspeth holds no more than that one must pursue a claim against a failed savings and loan in FSLIC receivership by initially following the administrative procedures laid out in FHLBB regulations. We did not address the validity of the decision making process required by those regulations. Neither did we decide the effect the FSLIC's decision would have or the standards to be employed by a reviewing court.
In Hudspeth, we obeyed an explicit command of Congress:
Except as otherwise provided in this subsection, no court may take any action for or toward the removal of any conservator or receiver, or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a conservator or receiver.
We noted that Congress gave the receiver the function of distributing assets. To the extent that courts became involved in resolving the merits of claims against the institution in receivership, asset distribution would be delayed. We considered this delay a "restraint," precluded by the statute.
We were "fortified by the existence of FHLBB regulations setting forth procedures for FSLIC payment of creditor claims." Congress gave the FHLBB broadly worded "power to make rules and regulations for the reorganization, consolidation, liquidation, and dissolution of associations ... and for the conduct of conservatorships and receiverships...." Thus, since the FHLBB was "the enforcing agency for the relevant banking statutes," we deferred to its opinion that "the FSLIC is empowered to decide claims as part of its receivership function."
The Hudspeth doctrine, itself a statutory rule, draws upon the judge-made doctrine of primary jurisdiction. Both Hudspeth and the doctrine of primary jurisdiction are the results of judicial attempts to effectuate Congressional intent with respect to a regulatory scheme. Primary jurisdiction is "concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties." "That doctrine requires judicial abstention in cases where protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme. Court jurisdiction is not thereby ousted, but only postponed." The primary jurisdiction doctrine acknowledges the need for uniformity of certain types of administrative decisions and gives play to the expert and specialized knowledge of regulatory agencies.
Hudspeth rested on such concerns. We explained that
Congress wanted the FSLIC to be able to act quickly and decisively in reorganizing, operating, or dissolving a failed institution, and intended that the FSLIC's ability to accomplish these goals not be interfered with by other judicial or regulatory authorities.
Further, we reasoned that
resolution of even the facial merits of claims outside of the statutory reorganization process would delay the receivership function of distribution of assets: the FSLIC would not be able to determine how much to pay other claimants until the termination of the parallel litigation.
Thus, we dismissed Hudspeth's claim to protect the integrity of a regulatory scheme enacted by Congress in outline form and given content by the FHLBB regulations.
Since litigation expenses deplete the limited pool of assets available, all creditors have an interest in expeditious and inexpensive resolution of claims against a failed institution. To the extent that FSLIC must litigate claims in state or federal court, distribution will be delayed and the pro rata recovery of each claimant will decrease. The administrative process allows the FSLIC to settle many claims without judicial intervention. In the administrative process, the agency can use its specialized knowledge concerning the assets of and claims against a failed institution, as well as its experience with prior receiverships, to arrive at a reasonable assessment of the value of a particular claim. The administrative process also imposes an element of uniformity, since the FSLIC can treat similar claims the same way. The success of this administrative process can be demonstrated by the fact that in the three years since Hudspeth, this circuit has not yet faced an appeal from a FSLIC determination.
However, even in those cases where a party remains dissatisfied after administrative review and seeks again to pursue its claim in a United States district court or in a state court, the administrative process can reduce litigation costs and delays. The need for additional discovery will often be obviated, and the disputed issues may well be narrowed by the time a court gets involved. Thus, even where a court must ultimately address such claims, the undergirding policy of the doctrine of primary jurisdiction will be vindicated.
Congress in Sec. 1464(d)(6)(C) expressly instructed courts to refrain from interfering in FSLIC proceedings, but did not directly express an intent to displace their jurisdiction. Those statutory signals are the foundation for our holding in Hudspeth. Indeed, the doctrine of primary jurisdiction might itself have justified our holding in Hudspeth even if Congress had not added Sec. 1464(d)(6)(C) to its regulatory scheme. It follows that the Congressional decision to do so is a virtual, if limited, codification of the primary jurisdiction doctrine.
Admittedly, at least one later decision of this court described a Hudspeth-type dismissal in terms of subject matter jurisdiction. I do not consider 12 U.S.C. Sec. 1464(d)(6)(C) sufficiently explicit to override the general grant of subject matter jurisdiction in 28 U.S.C. Sec. 1331. Rather, under Hudspeth, we have invoked principles of primary jurisdiction, deferring the exercise of our jurisdiction in order to protect the Congressional regulatory scheme. As the Supreme Court stated in Philadelphia National Bank, "[c]ourt jurisdiction is not thereby ousted, but only postponed" until completion of the administrative process. The rationale of Bonfanti aside, no holding of any Fifth Circuit case is changed by resting it on the FSLIC's primary jurisdiction. In every case, we have dismissed the action only temporarily, pending completion of the administrative process.
Two cases reject Hudspeth for supposedly granting the FSLIC receivership a full scale power of "adjudication." In Morrison-Knudsen v. CHG Int'l, Inc., the Ninth Circuit interpreted Hudspeth as holding "that FSLIC had exclusive original jurisdiction to adjudicate creditors' claims, subject only to judicial review under the Administrative Procedure Act." The court then argued that "adjudication" has never been among the ordinary functions of a receivership and, after an exhaustive examination of the governing statutes, found that Congress had granted no such power in this case. Similarly, the Texas Supreme Court in Federal Savings & Loan Insurance Corp. v. Glen Ridge I Condominiums, Ltd., determined that "[n]either the 'powers or functions' language in Sec. 1464(d)(6)(C) nor the 'all things that may be necessary' provision in Sec. 1729(d) includes the power to adjudicate claims."
Undoubtedly, these cases are wary of Northern Pipeline Construction Co. v. Marathon Pipe Line Co., declaring the Bankruptcy Act of 1978 unconstitutional to the extent that it conferred Article III adjudicative power on bankruptcy judges who lacked life tenure and salary protection. The Ninth Circuit in Morrison-Knudsen in its view was construing the governing statutes to avoid the Northern Pipeline problem. In Texas, the Court of Civil Appeals declared the statutory scheme violative of Article III. The Supreme Court of Texas in Glen Ridge ruled that the lower court should have avoided the Article III question by construing the statutes more narrowly.
But the "adjudication" of Hudspeth is not the "adjudication" implicating Article III. We noted in Hudspeth that
[u]nder [the FHLBB] regulations, the FSLIC gives notice to creditors to present their claims, and then may disallow claims 'not proven to its satisfaction.' Any disallowed claims are submitted to the FHLBB for review.
The Ninth Circuit conceded that these regulations validly fell within the power conferred on the FHLBB by Sec. 1464(d)(11). "They do not, however, confer on FSLIC the power to adjudicate." In the Ninth Circuit's view, "the Fifth Circuit ... concluded, that this administrative process embraces adjudication of claims."
Deciding the merits of a claim against a savings and loan in receivership is not necessarily an "adjudication" implicating the Article III concerns of Northern Pipeline. When a federal agency is a party to litigation, it must evaluate the claims of its adversaries to develop a trial strategy, certainly no violation of Article III. Similarly, evaluating the merits of a claim against a failed thrift clearly constitutes a receivership function of the FSLIC. Congress directed the FSLIC to pay "all valid credit obligations" of the institution in receivership. Necessarily, the FSLIC must make some decision regarding which claims are valid. Further, the FSLIC has power "to settle, compromise, or release claims in favor of or against the insured institution[ ]...." Congress could hardly have intended the FSLIC to settle or compromise claims without considering their merits. Given that such an evaluation falls within the receivership functions of the FSLIC, then the FHLBB almost certainly could develop an administrative process for the systematic consideration of claims. After all, Congress directed the FSLIC to "liquidate [the institution's] assets in an orderly manner."
Only when an agency's decision on a claim carries added weight in any later judicial review does it implicate Article III. Thus, it would be difficult to see an Article III restriction upon FSLIC decisionmaking followed by de novo federal court review on both the facts and the law. For instance, when a federal magistrate rules on an issue disputed by the litigants, no violation of Article III occurs provided the district court has de novo power to make the ultimate decision. As the standard of review began to require more deference, the agency action would begin to take on more of the characteristics of an Article III adjudication. Indeed, this appears to be the meaning which the Ninth Circuit attributes to the term adjudicate:
FSLIC and the Board must be permitted to exercise some judgment before paying a claim against a thrift institution. Paying or refusing to pay, however, is not an adjudication of a claim. The language of the regulation does not purport to give FSLIC the power to enter conclusive factual and binding legal findings.... The administrative process that the regulation prescribes authorizes FSLIC and the Board, by disallowance of a claim and notice to the claimant, to determine whether a dispute exists. It does not empower FSLIC to resolve the dispute with the force of law.
If the character of an agency decision for purposes of applying Northern Pipeline depends on the deference given to the decision on review, then, by definition, Hudspeth did not address whether the FSLIC may "adjudicate" claims within the meaning of Article III. Any attempt to do so, or to lay out the standards to be employed by a reviewing court, would have been pure dicta, unnecessary to the holding of the case. Indeed, this circuit still has not considered these questions, since no one has appealed to us from the FSLIC's administrative process or filed a suit asserting exhausted claims. Instead, and quite properly, we have refused to decide the constitutional issues raised by Northern Pipeline until we actually face them. Apparently, then, the Ninth Circuit firmly disagrees with us on an issue we have not yet addressed.
I am not persuaded by any of the attacks upon the essential holding of Hudspeth. When a court faces an action against the FSLIC in its capacity as the receiver of an insolvent savings and loan, the action should be dismissed until the claimant completes the administrative process required by the FHLBB regulations. That process will allow the receiver to settle or compromise outstanding claims against the institution. In that way, all creditors will benefit from an earlier and higher pro rata pay out of the assets. Even if some claims remain after completion of the administrative process, the pool of assets will presumably suffer a smaller loss from litigation expenses and the FSLIC will be able to pay off at least those creditors with a priority higher than the outstanding claims. At that point, if a litigant attempts to pursue in court his claims including those against the failed thrift, the court will decide the deference due the results of the administrative process applying the principles of primary jurisdiction cognizant of Article III and the seventh amendment as well.