UNITED STATES COURT OF APPEALS
For the Fifth Circuit
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No. 97-60308
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JOHN HENDERSON, JR.,
Petitioner,
VERSUS
OFFICE OF THRIFT SUPERVISION, DEPARTMENT OF TREASURY,
Respondent.
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Petition for Review of an Order of the
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Office of Thrift Supervision
March 4, 1998
Before REYNALDO G. GARZA, DUHÉ, and STEWART, Circuit Judges.
REYNALDO G. GARZA, Circuit Judge:
This is an appeal from interlocutory rulings issued by an administrative law judge (“ALJ”)
and by the Director of the Office of Thrift Supervision (“OTS”) denying petitioner’s motion for
summary disposition of an OTS Notice of Charges against him. We find below that petitioner has
not brought a final administrative order before us to review. Accordingly, this Court is without
jurisdiction to reach the merits of petitioner’s arguments.
I. Factual and Procedural Background
On April 12, 1995, the OTS issued a Notice of Charges against John Henderson, Jr.,
former officer and director of Home Savings and Loan Association, Lufkin, Texas (“Home
Savings”), and Southland Savings Association, Longview, Texas (“Southland”), under 12 U.S.C.
§§ 1818(b) and (e) (1997). Home Financial Corporation (“HFC”), a savings and loan holding
company, owned Home Savings. A wholly owned subsidiary of Home Savings owned 96.8% of
the stock of Southland. The OTS is seeking an order prohibiting Henderson from further
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participation in the conduct of the affairs of any federally-insured depository institution. The OTS
is also seeking an order to cease and desist for, among other things, the payment of restitution to
the Savings Association Insurance Fund (“SAIF”) for losses incurred by Home Savings and
Southland as a result of certain unsound practices, violations, and breaches of fiduciary duty that
Henderson allegedly engaged in and committed while acting as an officer and director of Home
Savings and Southland.
According to Henderson, he served as President and Chairman of the Board of HFC until
July, 1987 and was the controlling shareholder of HFC until at least December 31, 1988.1
Henderson resigned his positions with Home Savings and Southland in June, 1987. The Federal
Savings and Loan Insurance Corporation (“FSLIC”) declared Home Savings and Southland
insolvent and placed them into receivership on December 22, 1988 and August 18, 1988,
respectively.
The OTS Notice of Charges alleged that Henderson engaged in unsafe and unsound
banking practices, violated laws and regulations, and breached his fiduciary obligations to Home
Savings and Southland. The Notice alleged that during the period from 1982 through 1986,
Henderson caused Home Savings to make a series of acquisition, development, and construction
loans (“ACD loans”) in reckless disregard of applicable regulations and the safety and soundness
of Home Savings. The Notice further alleged that after Home Savings acquired Southland in
1984 Henderson improperly caused Southland to use its assets to help fund Home Savings’ ACD
loans.
Previously, on August 16, 1991, the Federal Deposit Insurance Corporation (“FDIC”) had
sued Henderson in the United States District Court for the Eastern District of Texas for breach of
duties, gross negligence, and negligence concerning Henderson’s activities as an officer and
director of Home Savings and Southland, specifically including those activities related to Home
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The brief for OTS and the ALJ’s Order on Motion for Summary Disposition state that Henderson
personally owned approximately 55% of HFC’s stock, and the OTS Order on Respondent’s Motion
for Summary Disposition notes that Henderson owned or controlled 82% of the voting stock of HFC.
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Savings’ ACD loans. See Federal Deposit Ins. Corp. v. Henderson, 61 F.3d 421 (5th Cir. 1995)
[hereinafter F.D.I.C. v. Henderson]. At trial, a jury found that Henderson had been grossly
negligent and had breached his fiduciary duties to Home Savings and Southland, thereby causing
them to incur $7 million in damages ($5 million to Home Savings, $2 million to Southland). See
Henderson, 61 F.3d at 423. The jury also found, however, that the theory of adverse domination
did not toll the statute of limitations. Id. Based on this finding, the district court held all the
claims time-barred and entered a take-nothing judgment against the FDIC on March 31, 1994. Id.
On April 11, 1994, the FDIC filed a motion for a new trial or to alter or amend the judgment,
which the district court denied on April 18, 1994. Id. The FDIC appealed, and the Fifth Circuit
affirmed on August 21, 1995. Id. at 431.
On August 3, 1994, while the appeal in F.D.I.C. v. Henderson was pending, the OTS
agreed with the FDIC to issue and pursue the Notice of Charges involved in this case, provided
that the FDIC pay all attorney fees and costs. On January 4, 1995, the OTS and the FDIC
executed a supplemental agreement by which the FDIC also agreed to pay the OTS for its
investigators, field examiners, and supervisory examiners. The Acting OTS Chief Counsel also
noted: “We would anticipate basing any enforcement action we might bring on the FDIC lawsuit.”
Meanwhile, on August 15, 1994, the OTS requested an agreement from Henderson to toll
the applicable limitations period. The OTS and Henderson executed a tolling agreement
suspending until December 22, 1994 any limitations periods that might prevent the OTS from
bringing an enforcement proceeding related to Henderson’s involvement with Home Savings and
Southland. The agreement also provided that it did not revive any claims that had already
expired. Subsequently, Henderson and the OTS extended the end date of the agreement through
April 15, 1995.
As stated, the OTS issued the Notice of Charges against Henderson on April 12, 1995.
Henderson filed his answer on May 1, 1995, asserting various affirmative defenses, including the
expiration of the applicable limitations provision and res judicata. On May 18, 1995, Henderson
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filed a Motion for Summary Disposition claiming that the limitations period and res judicata
barred the OTS’ administrative enforcement proceeding.
On May 13, 1996, an ALJ entered an order denying Henderson’s Motion for Summary
Disposition. The ALJ found that Henderson was an institution affiliated party (“IAP”) of both
Home Savings and Southland because Henderson was a controlling shareholder of Home Savings
and Southland by virtue of his status as HFC’s majority shareholder at least through December,
1988. The ALJ found, therefore, that Henderson was an IAP of Home Savings and Southland
within the six-year limitations period preceding Henderson’s execution of the tolling agreement
with the OTS in August 1994. See 12 U.S.C. § 1818(i)(3) (1997) (providing for six-year
limitations period beginning on date party ceases to be IAP with regard to relevant depository
institution). Finally, the ALJ concluded that res judicata did not bar the OTS proceeding,
deferring to the public policy embodied in the statutory scheme providing for proceedings by
receivers and by administrative agencies.
On May 23, 1996, Henderson moved for interlocutory review of the ALJ’s Summary
Disposition Order before the OTS Director. The Acting Director’s Order denied the motion on
the res judicata issue, but granted it with respect to the limitations issue. On April 4, 1997,
another OTS Director issued an order on Henderson’s Motion for Summary Disposition rejecting
Henderson’s limitations period challenge and affirming the ALJ’s denial of Henderson’s Motion
for Summary Disposition. On May 7, 1997, Henderson filed his Petition for Review with this
Court.
II. This Court is without jurisdiction to hear this appeal.
Neither the statutory scheme applicable to judicial review of OTS enforcement
proceedings nor the All Writs Statute provide this Court with jurisdiction to consider Henderson’s
appeal. Section 1818(h) of Title 12 of the United States Code does not provide this Court with
jurisdiction to hear this case because no final agency order with respect to the Notice of Charges
is at issue. Furthermore, we decline to invoke the All Writs Statute as a jurisdictional predicate
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because Henderson’s claims are not ripe for judicial review and no extraordinary circumstances
exist to justify application of the All Writs Statute in this case.
A. Section 1818(h)(2) does not confer jurisdiction in this case.
Section 1818(h)(2) provides in pertinent part:
Any party to any proceeding under paragraph (1) of this section may obtain review of any
order served pursuant to paragraph (1) of this subsection . . . by filing in the court of
appeals of the United States for the circuit in which the home office of the depository
institution is located . . . .
12 U.S.C. § 1818(h)(2). In turn, § 1818(h)(1) provides:
After [any hearing provided for in this section], and within ninety days after the
appropriate Federal banking agency . . . has notified the parties that the case has been
submitted to it for final decision, it shall render its decision . . . and shall issue and serve
upon each party to the proceeding an order or orders consistent with the provisions of this
section. Judicial review of any such order shall be exclusively as provided in this
subsection (h) of this section. . . .
12 U.S.C. § 1818(h)(1). As such, jurisdiction under § 1818(h)(2) turns on whether the orders
Henderson is appealing are the types of orders described in § 1818(h)(1), i.e., orders with respect
to a post-hearing final decision.
Section 1818(h)(2) does not support jurisdiction in this case because the rulings appealed
from do not represent a final decision after a hearing provided for by § 1818. The OTS issued the
Notice of Charges against Henderson pursuant to § 1818(b), which authorizes cease and desist
proceedings, and § 1818(e), which authorizes the OTS to prohibit an IAP’s further participation
in the conduct of the affairs of any insured depository institution. Both of these sections require a
hearing to establish the grounds set forth in the Notice of Charges. See 12 U.S.C. §§ 1818(b)(1),
(e)(4). The administrative evidentiary hearing authorized by §§ 1818(b) and (e) on the Notice of
Charges filed against Henderson is scheduled to commence on February 23, 1998.
Section 1818(h) authorizes review of orders issued after a hearing provided for by § 1818,
which in this case will not occur until February, 1998; therefore, § 1818(h) cannot confer
jurisdiction on this Court to review the rulings at issue. Section 1818(h)(2) authorizes review in
the court of appeals of “any order served pursuant to paragraph (1) of this subsection.” 12
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U.S.C. § 1818(h)(2) (emphasis added). Paragraph (1) of subsection 1818(h) deals with decisions
rendered and orders issued and served “within ninety days after the appropriate Federal banking
agency . . . has notified the parties that the case has been submitted to it for final decision,” and
after “any hearing provided for in this section,” such as those provided for in §§ 1818(b) and (e).
12 U.S.C. § 1818(h)(1). The orders that Henderson is appealing are interlocutory rulings, as
opposed to final agency decisions resulting from the hearings provided for by §§ 1818(b) and (e);
therefore, § 1818(h)(2) does not confer jurisdiction on this Court to review those orders.
B. The All Writs Statute does not confer jurisdiction in this case.
The All Writs Statute provides that “[t]he Supreme Court and all courts established by Act
of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and
agreeable to the usages and principles of law.” 28 U.S.C. 1651(a). Henderson cites Mississippi
Valley Barge Line Co. v. United States, 273 F. Supp. 1 (E.D. Mo. 1967), aff’d Osbourne v.
Mississippi Valley Barge Line Co., 389 U.S. 579 (1968), and Gregris v. Edberg, 645 F. Supp.
1153 (W.D. Pa. 1986), for the proposition that:
It is well settled that the courts of the United States have the inherent and statutory (28
U.S.C.A. § 1651) power and authority to enter such orders as may be necessary to
enforce and effectuate their lawful orders and judgments, and to prevent them from being
thwarted and interfered with by force, guile, or otherwise.
Mississippi Valley Barge Line, 273 F. Supp. at 6; cf. Gregris, 645 F. Supp. at 1156. The United
States Supreme Court stated, in United States v. New York Tel. Co., 434 U.S. 159 (1977), that
“[t]his Court has repeatedly recognized the power of a federal court to issue such commands
under the All Writs Act as may be necessary or appropriate to effectuate and prevent the
frustration of orders it has previously issued in its exercise of jurisdiction otherwise obtained . . .
.” 434 U.S. at 173.
Nevertheless, courts rely upon the All Writs Statute infrequently, because writs are
“drastic” remedies which a court should invoke only in “extraordinary situations.” See, e.g., Kerr
v. United States District Court, 426 U.S. 394, 402 (1976); see also Lewis v. Reagan, 660 F.2d
124, 128 (5th Cir. 1981) (“It is well established that courts should interrupt the orderly flow of
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administrative proceedings only under extraordinary circumstances . . . .”). In the context of an
interlocutory administrative order, this rule is particularly consistent with the requirement of
exhaustion of administrative remedies. It is a fundamental principle of administrative law that “no
one is entitled to judicial relief for a supposed or threatened injury until the prescribed
administrative remedies are exhausted.” Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41,
50-51 (1938). “The exhaustion requirement avoids premature interruption of the administrative
process and allows the administrative agency to utilize its discretion, apply its expertise, correct
its own errors, and handle its business expeditiously.” Lewis, 660 F.2d at 127.
Henderson’s claims are not ripe for judicial review, which belies Henderson’s argument
that this is an extraordinary situation appropriate for review under the All Writs Statute. See
Caprock Plains Fed. Bank Ass’n v. Farm Credit Admin., 843 F.2d 840, 844 (5th Cir. 1988)
(stating that factors relevant to the ripeness inquiry include whether challenged agency action
constitutes final agency action). The interlocutory ruling by the OTS Director simply is not the
OTS’ final say in the enforcement proceeding and, therefore, is not final agency action for
purposes of the ripeness inquiry. The logic of that proposition is evident because the
administrative hearing on the Notice of Charges against Henderson has not even occurred yet.
Invoking the All Writs Statute at this point of the proceedings would fly in the face of the
exhaustion requirement by preventing the OTS from utilizing its discretion, applying its expertise,
correcting its own errors, and handling its business expeditiously. See Lewis, 660 F.2d at 127. In
In re Willy, 831 F.2d 545 (5th Cir. 1987), this Court noted that “it is usually ‘more efficient for
the administrative process to go forward without interruption than it is to permit the parties to
seek aid from the courts at various intermediate stages.’” 831 F.2d at 549 (quoting McKart v.
United States, 395 U.S. 185, 194 (1969)). Although the petitioner in In re Willy had not yet
appealed the interlocutory ruling to the relevant agency’s highest official, as Henderson did here,
the Court nevertheless noted that “[i]f the petitioner loses and appeals from the final
administrative order, this court may consider the entire case at one time, thus avoiding piecemeal
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review.” Id. Similarly, and in accordance with the policy of requiring exhaustion of
administrative remedies, this case does not justify the drastic measure of invoking jurisdiction
under the All Writs Statute.
Conclusion
Section 1818(h) does not authorize this Court to review the OTS’ interlocutory rulings
because those rulings are not final agency decisions resulting from the hearing provided for by §§
1818(b) and (e), pursuant to which the OTS issued a Notice of Charges against Henderson.
Furthermore, the incomplete and unripe administrative posture of this case counsels against taking
the drastic measure of invoking the All Writs Statute as a basis for jurisdiction. As such, this
Court is without jurisdiction over the case, and we hereby remand the matter to the OTS for
completion of the administrative process.
REMANDED.
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