IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 96-60596
FEDERAL DEPOSIT INSURANCE CORPORATION,
As Manager of the FSLIC Resolution Fund
Plaintiff-Counter
Defendant-Appellant,
versus
TOM B SCOTT, JR
Defendant-Counter Claimant-
Appellee.
Appeal from the United States District Court
For the Southern District of Mississippi
October 1, 1997
Before HIGGINBOTHAM, DUHÉ, and WIENER, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
Federal Deposit Insurance Corporation appeals summary judgment
granted to Tom Scott, Jr., on his indemnification claim against the
FDIC. We find that the district court lacked jurisdiction over
Scott’s counterclaim because he failed to exhaust his
administrative remedies with the FDIC, as required by the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
I.
This case arises out of the troubled history of a Mississippi
savings and loan association. On August 10, 1989, the Office of
Thrift Supervision appointed the Resolution Trust Corporation as
receiver for Unifirst Bank for Savings, F.A. The RTC
simultaneously organized Unifirst Bank for Savings, A Federal
Savings and Loan Association. As receiver for Old Unifirst, the
RTC then entered into a Purchase and Assumption Agreement with New
Unifirst for the purpose of transferring certain assets and
liabilities from the old entity to the new.
On June 15, 1990, the OTS appointed the RTC as receiver for
New Unifirst. The RTC then entered into a contract of sale with
its corporate alter ego, transferring to RTC Corporate all of the
rights, title, and interest in the claims of New Unifirst. On
December 31, 1995, pursuant to the Resolution Trust Corporation
Completion Act, 12 U.S.C. §§ 1441a(m)(1)-(2), RTC Corporate ceased
to exist. All of RTC Corporate’s assets, including its interest in
New Unifirst, were transferred to the FDIC as the manager of the
Federal Savings and Loan Insurance Corporation Resolution Fund.
On March 22, 1994, the RTC, in its capacity as receiver for
New Unifirst, filed a complaint seeking damages from Tom Scott,
Jr., the longtime president and chief executive officer of
Unifirst. The complaint alleged that Scott had breached various
duties to Unifirst in connection with his oversight of several
loans the institution had made.
Scott counterclaimed for indemnification. He asserted that an
indemnification resolution adopted by the Board of Directors of Old
Unifirst entitled him to recoup any award obtained against him, as
well as attorneys’ fees and expenses in defending against the
FDIC’s suit.
2
Thereafter, the FDIC1 moved to dismiss Scott’s counterclaim on
several grounds. First, it argued that the district court lacked
jurisdiction to hear Scott’s counterclaim because FIRREA required
Scott to exhaust his administrative remedies with the FDIC before
proceeding in court. Second, the FDIC asserted that Scott had no
grounds for seeking indemnification, either under the Old Unifirst
bylaws, OTS regulations, or the Purchase and Assumption Agreement.
In a long series of rulings, the district court disposed of
the FDIC’s and Scott’s claims. On April 18, 1995, the court denied
the FDIC’s jurisdictional defense to Scott’s counterclaim,
reasoning that Scott need not exhaust his administrative remedies
with the FDIC because the FDIC’s lawsuit against him demonstrated
official bias against his indemnification claim. At the same time,
the court ruled that the Purchase and Assumption Agreement was
ambiguous as to whether New Unifirst succeeded to Old Unifirst’s
obligation to indemnify Scott, thus requiring a trier of fact to
resolve the matter
Scott moved for summary judgment on the counterclaim, but the
district court denied his motion on July 1, 1995. After the
Mississippi legislature retroactively altered the state’s gross
negligence standard, he also moved for partial summary judgment on
four of the FDIC’s five breach-of-duty claims against him. On June
1
After the FDIC succeeded to the RTC’s interests in New
Unifirst, the district court entered an order replacing the “RTC”
as the plaintiff in this action with the “FDIC as Manager of the
FSLIC Resolution Fund.” We hereinafter refer to the plaintiff as
the “FDIC.”
3
8, 1995, the court granted this motion, leaving only the FDIC’s
claim for gross negligence.
Scott then moved for summary judgment on the FDIC’s remaining
claim against him and on his indemnification counterclaim. On May
30, 1996, the district court granted summary judgment for Scott on
the FDIC’s last claim. Moreover, the court reversed its previous
decision on the indemnification issue, concluding that the
Partnership and Assumption Agreement was not ambiguous and that New
Unifirst had acquired Old Unifirst’s liability for indemnification.
Accordingly, it granted Scott’s motion for summary judgment on his
indemnification counterclaim, and it entered final judgment in the
case.
The FDIC timely appealed the district court’s indemnification
rulings only. On appeal, the FDIC again argues that FIRREA
withdraws jurisdiction from federal courts to hear Scott’s claim
until he exhausts his administrative remedies. Alternatively, it
contends that Scott is not owed indemnification because New
Unifirst never acquired Old Unifirst’s liability for
indemnification and because OTS regulations requiring
indemnification for thrift executives do not apply to Scott.
II.
As a threshold matter, we must first determine whether the
district court properly exercised jurisdiction. Because we find
that it did not, we need not reach the merits of Scott’s
indemnification counterclaim.
A.
4
In enacting FIRREA, Congress established a comprehensive
administrative procedure for the resolution of claims against a
failed financial institution held in receivership by the FDIC. All
creditors or other persons having such claims must first present
them to the receiver for an administrative determination of whether
they should be paid. 12 U.S.C. §§ 1821(3)-(13). Congress
explicitly deprived federal courts of subject matter jurisdiction
over claims not so presented:
(D) Limitation on judicial review
Except as otherwise provided in this subsection, no court
shall have jurisdiction over —
(i) any claim or action for payment from, or any
action seeking a determination of rights with
respect to, the assets of any depository
institution for which the Corporation has been
appointed receiver, including assets which the
Corporation may acquire from itself as such
receiver; or
(ii) any claim relating to any act or omission of
such institution or the Corporation as receiver.
12 U.S.C. § 1821(d)(13)(D). The other circuits have uniformly held
that in § 1821(d)(13)(D), Congress established an administrative
exhaustion requirement; before a litigant may bring a claim in
court against the receiver, the FDIC must first administratively
deny the claimant relief. See, e.g., Simon v. FDIC, 48 F.3d 53, 57
(1st Cir. 1995); RTC v. Elman, 949 F.2d 624, 627 (2d Cir. 1991);
RTC v. W.W. Dev. & Management, Inc., 73 F.3d 1298, 1304 (3d Cir.
1996); Brady Dev. Co., Inc. v. RTC, 14 F.3d 998, 1007 (4th Cir.
1994); Bueford v. RTC, 991 F.2d 481, 484 (8th Cir. 1993).
The classification of the exhaustion requirement in §
1821(d)(13)(D) as being of congressional or judicial origin is of
major consequence. See Information Resources, Inc. v. United
5
States, 950 F.2d 1122, 1126 (5th Cir. 1992). If Congress itself
imposes an exhaustion requirement, courts must enforce its express
terms. See Coit Indep. Joint Venture v. FSLIC, 489 U.S. 561, 579,
109 S. Ct. 1361, 1372, 103 L. Ed. 2d 602 (1989). In such cases,
failure by a claimant to exhaust deprives federal courts of
jurisdiction. Information Resources, 950 F.2d at 1126.
However, where Congress has not explicitly mandated
exhaustion, “courts are guided by congressional intent in
determining whether application of the [exhaustion] doctrine would
be consistent with the statutory scheme.” Patsy v. Board of
Regents, 457 U.S. 496, 502 n.4, 102 S. Ct. 2257, 2560 n.4, 73 L.
Ed. 2d 172 (1982). If courts find that exhaustion would promote
both the Congressional goals in erecting a particular
administrative regime and judicial efficiency, they may exercise
their discretion and require claimants to exhaust administrative
remedies before proceeding in court. Coit, 489 U.S. at 579, 109 S.
Ct. at 1372 (“Where a statutory requirement of exhaustion is not
explicit, ‘courts are guided by congressional intent in determining
whether application of the doctrine would be consistent with the
statutory scheme.’”) (quoting Patsy, 457 U.S. at 502 n.4, 102 S.
Ct. at 2560 n.4). By the same token, courts can excuse such
exhaustion requirements of their own creation “where the interests
of the individual weigh heavily against requiring administrative
exhaustion.” McCarthy v. Madigan, 503 U.S. 140, 146, 112 S. Ct.
1081, 1087 (1992), 117 L. Ed. 2d 291 (1992). If an exhaustion
requirement is judicially implied, courts may decline to enforce it
6
if “requiring resort to the administrative remedy may occasion
undue prejudice to subsequent assertion of a court action,” id. 503
U.S. at 146-47, 112 S. Ct. at 1087, if there is some doubt as to
whether an agency is empowered to grant effective relief, id. 503
U.S. at 147, 112 S. Ct. at 1088, or if “an administrative remedy
may be inadequate where the administrative body is shown to be
biased or has otherwise predetermined the issue before it,” id. 503
U.S. at 148, 112 S. Ct. at 1088.
Despite the unanimity among the circuit courts in finding that
Congress in § 1821(d)(13)(D) explicitly mandated exhaustion, the
district court below construed the major Fifth Circuit case on the
issue, Meliezer v. RTC, 952 F.2d 879 (5th Cir. 1992), as holding
instead that courts have created FIRREA’s exhaustion requirement.
Accordingly, the district court concluded that it was free to
excuse exhaustion in the exercise of its judicial discretion. The
court waived exhaustion for Scott because it felt that Scott’s
administrative remedies within the FDIC would have been futile, as
the agency’s suit against Scott demonstrated that it was biased
against his indemnification counterclaim. We do not reach this
bias issue, because we disagree with the district court’s reading
of Meliezer.
In Meliezer, this court dismissed for lack of jurisdiction the
claims of two mortgage assumers who had brought suit against the
RTC but had not exhausted their administrative remedies under
FIRREA. We held that Congress unambiguously crafted an exhaustion
requirement in FIRREA:
7
Typically, exhaustion of administrative remedies is required
where Congress imposes such a requirement. If the statutory
language is not explicit, courts are guided by congressional
intent in determining whether exhaustion is required.
Although FIRREA does not explicitly mandate exhaustion of
administrative remedies before judicial intervention, the
language of the statute and indicated congressional intent
make clear that such is required. . . . [S]ection
1821(d)(13)(D) clearly establishes a statutory exhaustion
requirement.
Id. at 882 (citations omitted). The district court, pointing to
our phrase, “FIRREA does not explicitly mandate exhaustion,”
concluded that administrative exhaustion under FIRREA must be of
judicial rather than legislative origin. Relying on McCarthy, it
reasoned that the Meliezer court, in looking to congressional
intent and statutory language, must necessarily have been creating
an exhaustion requirement by judicial implication, not enforcing
one as mandated by congressional direction. See McCarthy, 503 U.S.
at 144, 112 S. Ct. at 1086 (“Where Congress specifically mandates,
exhaustion is required. But where Congress has not clearly
required exhaustion, sound judicial discretion governs.”)
(citations omitted).
We must disagree with this characterization of Meliezer. Our
statement in Meliezer, “FIRREA does not explicitly mandate
exhaustion,” was meant only to indicate that the statute did not
employ the express term, “administrative exhaustion.” Yet we did
not hesitate to recognize that FIRREA’s exhaustion requirement fell
into the first, jurisdictional category of exhaustion requirements,
as the structure of the statute evidences Congress’s intent to
erect an administrative exhaustion regime. See Meliezer, 952 F.2d
at 882 (“[T]he language of the statute and indicated congressional
8
intent make clear that [exhaustion] is required. . . . [S]ection
1821(d)(13)(D) clearly establishes a statutory exhaustion
requirement.”). Exhaustion requirements fall into the second,
judicially-created category when it is far less obvious that
Congress established an explicit system of administrative
exhaustion and it is necessary for courts to imply one to
effectuate the goals of a statute and promote judicial efficiency.
Thus, Meliezer, in finding an exhaustion requirement, found
one that was of intentional congressional design. Accordingly, we
lack jurisdiction to entertain Scott’s counterclaim against the
FDIC until Scott exhausts his administrative remedies. Although
Scott’s resort to administrative channels may be futile, we are
powerless to waive a congressionally-imposed exhaustion
requirement.
At oral argument, Scott advanced a new argument: the
administrative exhaustion requirement in the statute does not apply
to post-receivership claims that arise after FIRREA’s ninety-day,
statutory bar date for bringing actions against a receivership.
Although the statutory bar date in the case elapsed before Scott
brought his counterclaim, the FDIC has an internal claims procedure
that allows claimants to file “late claims” that arise after the
bar date. See Heno v. FDIC, 20 F.3d 1204, 1210-14 (1st Cir. 1994)
(publishing the FDIC procedures). We defer to the FDIC’s
reasonable interpretation of FIRREA as requiring administrative
exhaustion even for post-bar date claims. See Simon v. FDIC, 48
F.3d 53, 57-58 (1st Cir. 1995); Heno, 20 F.3d at 1208-10.
9
B.
Perhaps anticipating our response to the lower court’s
exhaustion ruling, Scott attempts to rescue jurisdiction by
escaping from the express language of 12 U.S.C. § 1821(d)(13)(D).
Section 1821(d)(13)(D) bars federal courts from entertaining any
“claim” made against a receiver, unless the claimant has exhausted
all administrative remedies. Scott contends that his action for
attorneys’ fees is not a “claim” under FIRREA and thus exhaustion
does not apply to him. We reject this argument as well.
Whether an indemnification action is a “claim” under FIRREA is
a matter of first impression for our circuit. The other courts
that have addressed the issue have divided over it. Compare RTC v.
Titan Fin. Corp., 22 F.3d 923, 927 (9th Cir. 1994) (holding that
attorney’s fees are not a “claim” under FIRREA), RTC v. Artley, No.
CV492-209 (S.D. Ga. Mar. 30, 1993) (same), and RTC v. Western
Techs., Inc., 877 P.2d 294, 299-304 (Ariz. Ct. App. 1994) (same),
with RTC v. Heiserman, 839 F. Supp. 1457, 1470 (D. Colo. 1993)
(holding that indemnification is a “claim” under FIRREA); and RTC
v. Youngblood, 807 F. Supp. 765, 770 (N.D. Ga. 1992) (holding that
a suit for attorney’s fees is a “claim” under FIRREA). Scott
employs a temporal argument, relying on the reasoning of Western
Technologies. According to Western Technologies, the word “claim”
means a “cause of action,” and an action for attorneys’ fees is not
an independent “cause of action,” but rather arises only after the
FDIC engages in litigation against the claimant. See Western
Techs., 877 P.2d at 300. Thus, indemnification must not be the
10
kind of “claim” contemplated by Congress in drafting FIRREA. The
Ninth Circuit employed similar analysis in Titan Financial,
reasoning that a defendant’s counterclaim against the FDIC is not
subject to the exhaustion requirement, if, prior to the present
litigation, (1) the defendant was not a creditor of the FDIC or its
predecessor-in-interests, and (2) the defendant had no independent
basis for filing a claim against either. Titan Fin. Corp., 22 F.3d
at 927.
We fail to see, however, how the temporal character of an
indemnification action affects the exhaustion question. True,
Scott’s basis for indemnity did not originate until after he was
sued by the FDIC. Recently, however, we held in Home Capital
Collateral, Inc. v. FDIC, 96 F.3d 760 (5th Cir. 1996), that
FIRREA’s exhaustion requirement applies even to claims that arise
post-receivership from the actions of the receiver, id. at 763.
Here, the fact that the FDIC created Scott’s claim for
indemnification through its own activities should not change the
nature of his cause of action, for Home Capital instructs us that
such claims are still subject to § 1821(d)(13)(D).
Admittedly, Scott’s counterclaim for indemnity is related to
the litigation that the counterdefendant, the FDIC, initiated. Yet
that relationship does not alter the fact that Scott’s request for
indemnity is an independent claim. In the end, Scott is suing to
enforce his rights under Old Unifirst’s bylaws. This indemnity
suit, therefore, is an independent claim for relief, not an
11
affirmative defense or the like.2 See A & B Constr., Inc. v. Atlas
Roofing & Skylight Co., 867 F. Supp. 100, 105 (D.R.I. 1994)
(“Indemnity . . . is an independent cause of action.”); FDIC v.
Niblo, 821 F. Supp. 441, 456 (N.D. Tex. 1993) (“[I]ndemnity is not
an affirmative defense within the purview of Federal [Rule of Civil
Procedure] 8(c), but rather a claim for recovery which must be pled
and proved”). If, for example, a third party had sued Scott for
his actions as president of Unifirst, he would be entitled to bring
a claim for indemnification against the FDIC as a separate suit,
should the FDIC refuse to pay his attorneys’ fees.3 Here, the
hypothetical third party and the FDIC are one and the same, but the
principle is no different: Scott’s counterclaim is an independent
claim, whether against a plaintiff or a third-party defendant.
2
Other courts have divided on the issue of whether affirmative
defenses are subject to FIRREA’s exhaustion requirement. Compare
RTC v. Midwest Federal Sav. Bank, 36 F.3d 785, 793 (9th Cir. 1993)
(holding that affirmative defenses are not subject to exhaustion),
and National Union Fire Ins. Co. v. City Sav., F.S.B., 28 F.3d 376,
393 (3d Cir. 1994) (same), with FSLIC v. McGinnis, Juban, Bevan,
Mullins & Patterson, P.C., 808 F. Supp. 1263, 1280-81 (E.D. La.
1992) (holding that some affirmative defenses are subject to
exhaustion); FSLIC v. Shelton, 789 F. Supp. 1367, 1370-71 (M.D. La.
1992) (same). We need not resolve the controversy here, for we
find that Scott’s action for indemnification is in the nature of a
counterclaim, not an affirmative defense. Courts have uniformly
held that parties must exhaust their administrative remedies under
FIRREA before proceeding on a counterclaim. See National Union, 28
F.3d at 394 n.25 (“It appears that there is a forming consensus in
the courts that counterclaims are jurisdictionally barred by §
1821(d)(13)(D), unless administrative remedies are exhausted.”);
McGinnis, 808 F. Supp. at 1280 (“Courts have, with one voice, held
that § 1821(d)(13)(D)’s jurisdictional limits apply to
counterclaims against the FDIC . . . .”).
3
Because we dispose of this matter on jurisdictional grounds,
however, we do not express an opinion on the merits of any
indemnification claim that might be brought by Scott.
12
Accordingly, Scott was obliged to present this indemnification
claim, like all others, to the FDIC for administrative review. See
National Union Fire Ins. Co. v. City Sav., F.S.B., 28 F.3d 376, 394
(3d Cir. 1994) (holding that an action “which asserts a right to
payment” is a claim subject to exhaustion under FIRREA).
That Scott’s indemnification claim is subject to FIRREA’s
exhaustion requirement is made clear by the language of the
statute. FIRREA withdraws jurisdiction, absent exhaustion, from
district courts for any claim or action for payment from the assets
of the receivership. 12 U.S.C. § 1821(d)(13)(D)(i). Were Scott to
prevail on his counterclaim, his attorneys’ fees would come from
the receivership’s assets. Although Scott also advances an
argument premised on OTS regulations, he bases his primary claim
for indemnification upon a bylaw that Old Unifirst’s Board of
Directors approved in 1984, providing for indemnification for Old
Unifirst’s officers and directors. We liken this bylaw to a
contractual provision for indemnity between two parties, as Scott
has the power to enforce it. As we held in Interfirst Bank
Abilene, N.A. v. FDIC, 777 F.2d 1092, 1097 (5th Cir. 1985),
generally, parties cannot recover attorneys’ fees against the
assets of a failed bank because doing so would violate the rule
that the assets of a failed institution should be ratably
distributed amongst its creditors holding approved or adjudicated
claims. This rule does not apply, however, where “recovery of
attorneys’ fees is [] specified in the parties’ contract or where
there is [a] collateral fund from which they can be recovered.”
13
Id. If attorneys’ fees are provided for contractually, parties may
seek them from the receivership’s assets. See RTC v. Heinhold
Commodities, Inc., 803 F. Supp. 1342, 1347 (N.D. Ill. 1992); Royal
Bank v. FDIC, 733 F. Supp. 1091, 1099 (N.D. Tex. 1990).
Furthermore, FIRREA denies jurisdiction to federal courts over
“any claim relating to any act or omission” of the receivership.
§ 1821(d)(13)(D)(ii). Here, Scott’s claim arises from an “act” of
the FDIC in its capacity as receiver — its lawsuit against him.
Thus, the plain language of the statute dictates that Scott must
first bring his claim administratively.
Scott contends, however, that classifying attorneys’ fees as
a “claim” under the statute would lead to wasteful and inefficient
piecemeal litigation. See Western Techs., 977 P.2d at 303
(“Requiring parties to pursue ‘claims’ for attorneys’ fees
administratively through RTC thus would serve only to frustrate and
delay the process. Such a requirement would be antithetical to the
statute’s purpose to ‘quickly and efficiently resolve claims
against a failed institution without resorting to litigation.’”)
(quoting Meliezer, 952 F.2d at 883). Yet subjecting an
indemnification request to the administrative process is no more
inefficient than doing the same for any other type of counterclaim.
Other courts have uniformly held that counterclaims are subject to
§ 1821(d)(13)(D). See, e.g., RTC v. W.W. Dev. & Management, Inc.,
73 F.3d 1298 (3d Cir. 1996); Heno v. FDIC, 20 F.3d 1204, 1209 (1st
Cir. 1993); FSLIC v. McGinnis, Juban, Bevan, Mullins & Patterson,
P.C., 808 F. Supp. 1263, 1280-81 (E.D. La. 1992); FSLIC v. Shelton,
14
789 F. Supp. 1367, 1372-73 (M.D. La. 1992). With all other
counterclaims, therefore, defendants must first make an
administrative demand on the FDIC before proceeding with their
cases, even if they are in the middle of litigation. We see no
reason why claims for attorneys’ fees should be any different.
III.
We recognize that our holding today makes for an inefficient
FDIC claims process. Although we do not decide the issue, counsel
at oral argument instructs us that once this appeal is disposed of,
Scott is not barred from making his administrative demand, seeing
it get rejected, and then promptly refiling his claim. Before long
we may find both parties back before this court, once again asking
us to resolve the merits of Scott’s indemnification claim.
Congress intended to create an efficient system for resolving
claims arising from the disastrous failure of savings and loan
companies. However, the statute here makes waste. Regardless, it
is not within our province to rewrite statutes simply to make them
more efficient.
For the foregoing reasons, we VACATE the judgment of the
district court and REMAND the case to the district court with
instructions to dismiss for want of jurisdiction.
15