Resolution Tr. Corp. v. W.W. Dev. & Mgmt, Inc.

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit

1-16-1996

Resolution Tr. Corp. v. W.W. Dev. & Mgmt, Inc.
Precedential or Non-Precedential:

Docket 95-1227

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 95-1227 and 95-1228

RESOLUTION TRUST CORPORATION IN ITS CAPACITY
AS CONSERVATOR FOR BELL FEDERAL SAVINGS BANK

v.

W.W. DEVELOPMENT & MANAGEMENT, INC.

W.W. Development and Management
Company,

Appellant

W.W. DEVELOPMENT & MANAGEMENT, INC.

v.

THE RESOLUTION TRUST CORPORATION, IN ITS CAPACITY
AS RECEIVER FOR BELL SAVINGS BANK, PaSA

W.W. Development and Management
Company,

Appellant

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action Nos. 91-3788 and 93-4210)

Argued December 5, 1995

BEFORE: GREENBERG and MCKEE, Circuit Judges, and
ACKERMAN, District Judge*

(Filed: January 16, l996)

1
*Honorable Harold A. Ackerman, Senior Judge of the United States
District Court for the District of New Jersey, sitting by
designation.
Edward H. Rubenstone
William Goldstein (argued)
Elliot Alan Kolodny
Groen, Laveson, Goldberg and
Rubenstone
Four Greenwood Square
Suite 200
P.O. Box 8544
Bensalem, PA 19020

Attorneys for Appellant

Michael R. Latowski (argued)
Saul, Ewing, Remick & Saul
3800 Centre Square West
Philadelphia, PA 19102

Sophia Ranalli
Resolution Trust Corporation
P.O. Box 1500
Valley Forge, PA 19482-1500

Douglas Konselman
1717 "H" Street N.W., Room 3116
Washington, D.C. 20434

Attorneys for Appellees

OPINION OF THE COURT

GREENBERG, Circuit Judge.

This case requires us to consider the application of

the jurisdictional bar in the Financial Institutions Reform,

Recovery and Enforcement Act of 1989 ("FIRREA") to the judicial

adjudication of claims when the claimant has not complied with

2
FIRREA's claims procedures.0 Bell Savings Bank, PaSA ("Bell")

confessed judgment in a Pennsylvania state court against W.W.

Development and Management Company ("W.W.") following W.W.'s

default on a $500,000 loan. After the Director of the Office of

Thrift Supervision, Department of the Treasury, declared Bell

insolvent and appointed the Resolution Trust Corporation ("RTC")

its conservator and then its receiver, W.W. filed: (1) a petition

to open the judgment, offering defenses and a counterclaim in the

state court action which the RTC subsequently removed to a

federal court and, after the administrative claims period passed,

(2) a separate action restating the same claims in federal court.

The district court denied the petition in the first case and

granted summary judgment to the RTC in the second case, as it

held that it lacked subject matter jurisdiction over W.W.'s

claims in both cases as a result of FIRREA's jurisdictional bar.

For reasons that we explain below, we will affirm the district

court's order as to its conclusion that it lacked subject matter

jurisdiction over the second lawsuit and over W.W.'s counterclaim

in the first. We, however, will vacate the district court's

order to the extent that it rejected jurisdiction over W.W.'s

defenses to liability in W.W.'s petition to open judgment.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The two cases arose from a loan and a loan commitment

agreement between Bell and W.W. for financing W.W.'s development

0
Pub. L. No. 101-73, 103 Stat. 183 (1989).

3
of a medical office condominium in Philadelphia, Pennsylvania.

W.W.'s App. 54. Initially, Bell loaned W.W. $500,000 on August

20, 1987. Id. at 45. In the loan documents, W.W. authorized

Bell to confess judgment against it in the amount of the loan

plus interest if W.W. defaulted. Id. at 43. On September 6,

1988, Bell agreed to loan W.W. $3,314,000 for further development

of the property. This commitment was valid until October 30,

1988. Id. at 121-28. W.W. planned to use part of this loan to

pay off the earlier loan of $500,000. Id. at 91. On October 3,

1988, the parties extended the commitment date on the $3,314,000

loan until April 30, 1989. Id. at 95. Bell, however, did not

make this additional loan to W.W. which then defaulted on the

earlier $500,000 loan. Bell then confessed judgment against W.W.

in the amount of $529,883.43 on June 13, 1990, in the Court of

Common Pleas of Philadelphia County. Id. at 40-50.

On March 15, 1991, the Director of the Office of Thrift

Supervision found that Bell was likely to incur losses as a

result of unsafe and unsound practices and appointed the RTC its

conservator.0 As a result, under 12 U.S.C. § 1821(d)(2)(A)(i),

the RTC succeeded to "[a]ll rights, titles, powers and

privileges" of Bell. Four days later, on March 19, 1991, the

director appointed the RTC Bell's receiver. The RTC then

published notice that all creditors having claims against Bell

0
Order No. 91-163. RTC's App. 4. After Bell Savings Bank was
taken over the RTC organized Bell Federal Savings Bank to acquire
Bell's assets. As a matter of convenience we refer simply to
Bell as a single institution.

4
must submit them by June 22, 1991, but it later extended this

time, at least as to W.W., until September 27, 1991.

On March 26, 1991, W.W. filed a petition to open the

confessed judgment in the Philadelphia County Court of Common

Pleas, alleging that Bell's breach of its commitment on the

proposed $3,314,000 loan caused W.W. to default on the $500,000

loan. In addition, W.W. sought to assert a counterclaim for

damages from Bell's breach. W.W.'s App. 51-60.0

On April 24, 1991, the RTC removed the state court

proceedings, including the judgment and the petition to open the

judgment, to the United States District Court for the District of

Columbia pursuant to 28 U.S.C. §§ 1331 and 1441(a) and 12 U.S.C.

§ 1441a(l)(3).0 W.W.'s App. 96. Thus, we will refer to this

0
We accept W.W.'s representation that it was unaware that Bell
was in receivership at this time. We observe, however, that this
circumstance has no legal significance. We will refer to W.W.'s
defenses and counterclaim as if they have been filed even though
its petition merely sought permission to file them. W.W.'s Br.
at 6.
0
12 U.S.C. § 1441a(l)(3) reads:

(3) Removal and remand

(A) In general

The Corporation, in any capacity
and without bond or security, may remove
any action, suit, or proceeding from a
State court to the United States
district court with jurisdiction over
the place where the action, suit, or
proceeding is pending, to the United
States district court for the District
of Columbia, or to the United States
district court with jurisdiction over
the principal place of business of any
institution for which the Corporation
has been appointed conservator or

5
case as the removed case. On May 18, 1991, the District of

Columbia court transferred the removed case to the Eastern

District of Pennsylvania. W.W.'s App. 101.

On August 5, 1991, shortly before the deadline for the

filing of claims under FIRREA against the RTC as receiver for

Bell, counsel for W.W. wrote a letter to the RTC's counsel

advising him of the pending petition to open judgment and of

W.W.'s claims against the RTC. The letter stated:
As you are aware, . . . the Motion to Open
Judgment that is presently pending, in
addition to setting forth grounds to open the
judgment and defenses against that judgment,
includes claims for damages incurred as a
result of the subject breach by Bell of its
Agreement to loan sufficient funds to W.W.
Development. . . .

I assume that, given the fact that RTC is in
receipt of these claims, no further filings
are required by my client in order to permit
RTC to determine these claims pursuant to 12
U.S.C. Sec. 1821(d)(5). If this assumption is
incorrect, I would appreciate your prompt
advice and would further appreciate your

receiver if the action, suit or
proceeding is brought against the
institution or the Corporation as
conservator or receiver of such
institution. The removal of any such
suit or proceeding shall be instituted-

(i) not later than 90 days after
the date the Corporation is
substituted as a party, or

(ii) not later than 30 days after
service on the Corporation, if the
Corporation is named as a party in
any capacity and if such suit is
filed after August 9, 1989.

6
 providing me with any forms which should be
completed by my client in order to obtain
review and determination by RTC of these
claims. Your prompt advice would be most
appreciated and in the event I do not hear
from you to the contrary, I will assume that
the presentation of the claims of my client
in the Motion to Open Judgment are sufficient
to permit the RTC to administratively
determine such claims.

W.W.'s App. 156-157. There is some dispute as to whether the RTC

responded to this letter but we will assume in accordance with

W.W.'s contention that it did not.0 In any event, W.W. did not

file a formal claim with RTC within the period for filing claims

even as extended to September 27, 1991.

On September 15, 1992, almost one year after the time

to file a formal claim had expired, and after counsel suggested

that the proceedings in the removed case be postponed, the court

referred that case to a magistrate judge to explore settlement.

Upon joint request of the parties, the district court suspended

the proceedings on the petition to open the judgment for five

months on September 22, 1992. Id. at 108. Finally, on October

7, 1992, W.W. filed a formal proof of claim with the RTC. On

June 8, 1993, the RTC denied W.W.'s October 7, 1992

administrative claim on the ground that W.W. did not return an

official claim form before the deadline for filing claims. In

the letter denying the claim and explaining the bar, the RTC
0
W.W.'s counsel claims that he did not receive a reply to the
letter. RTC's counsel states that the RTC sent W.W. a claims
form on August 27, 1991, though W.W. did not return the completed
claims form until after the deadline. Our assumption does not
prejudice the RTC because the relief we are granting W.W., i.e.,
that it may assert its defenses to the complaint resulting in the
judgment by confession, does not depend on it.

7
stated that W.W. could file suit within 60 days from the date of

the letter. Id. at 174-75.

On August 5, 1993, within that 60-day period, W.W.

filed the second action, which we will call the federal case,

against the RTC in its capacity as receiver for Bell, alleging

that Bell's failure to adhere to its loan commitment caused W.W.

damages of $2,996,150. This federal case essentially restated

W.W.'s claims in its petition to open judgment. On June 20,

1994, the court transferred the petition to open judgment in the

removed case to its current docket. Id. at 109.

The RTC then moved for summary judgment in the federal

case, arguing that the district court lacked subject matter

jurisdiction under 12 U.S.C. § 1821(d)(5)(C)(i)0 since W.W. did

not file an official claim form until after the bar date of

September 27, 1991. W.W.'s App. 136. W.W. filed a cross-motion

for partial summary judgment declaring that it had filed a timely

administrative claim. The district court rejected the RTC's

argument, reasoning that the petition to open, filed on March 26,

1991, and served on the RTC in April 1991, coupled with W.W.'s

0
12 U.S.C. § 1821(d)(5)(C)(i) reads in relevant part:

(C) Disallowance of claims filed after end of
filing period

(i) In general

Except as provided in clause (ii), claims
filed after the date specified in the notice
published under paragraph (3)(B)(i) shall be
disallowed and such disallowance shall be
final.

8
letter of August 5, 1991, requesting notification if its

administrative claim was incomplete, constituted a sufficient and

timely administrative claim. Id. at 22-25. As a result, the

district court on July 15, 1994, denied the RTC's motion for

summary judgment and granted W.W.'s cross-motion for partial

summary judgment establishing that its claim was timely. Id. at

26.

The RTC then filed a motion for reconsideration on the

grounds that if W.W's claim was considered filed by August 5,

1991, as the district court had held, then under 12 U.S.C.

§1821(d)(5)(A)(i),0 the claim was deemed denied as a matter of

0
12 U.S.C. § 1821(d)(5)(A)(i) reads in relevant part:

(5) Procedures for determination of claims

(A) Determination period

(i) In General

Before the end of the 180-day
period beginning on the date any
claim against a depository
institution is filed with the
Corporation as receiver, the
Corporation shall determine whether
to allow or disallow the claim and
shall notify the claimant of any
determination with respect to such
claim.

(ii) Extension of time

The period described in clause
(i) may be extended by a written
agreement between the claimant and
the Corporation.

(iii) Mailing of notice sufficient
. . . .

9
law on February 3, 1992, the end of the 180-day period in which

the RTC should have acted on the claim. Thus, in the RTC's view,

W.W. was required to have filed its district court action within

60 days of February 3, 1992 (i.e., on or before April 4, 1992)

under 12 U.S.C. § 1821(d)(6)(B).0 The RTC argued that since W.W.

did not file the federal case until August 5, 1993, the district

court lacked subject matter jurisdiction over it. W.W.'s App.

31-34. The district court agreed and granted the RTC's motion

for summary judgment on November 17, 1994. Id. In the same

order, the district court denied W.W.'s petition to open judgment

in the removed case on the grounds that W.W. filed the petition

after Bell was placed in receivership. Consequently, the court

held that it lacked jurisdiction because W.W. did not properly

exhaust its claims administratively before filing the petition.

After the district court, on February 27, 1995, denied W.W.'s

(iv) Contents of notice of
disallowance

If any claim filed under
clause (i) is disallowed, the
notice to the claimant shall
contain-

(I) a statement of each reason
for the disallowance; and

(II) the procedures available
for obtaining agency review of
the determination to disallow
the claim or judicial
determination of the claim.
0
The RTC used the April 4, 1992 date in its brief. It appears
that the correct date was April 3, 1992. Of course, the
difference does not matter.

10
motion for reconsideration, W.W. appealed in both cases from the

orders of November 17, 1994, and February 27, 1995.

II. DISCUSSION

This court has jurisdiction pursuant to 28 U.S.C. §1291

because W.W. filed a timely notice of appeal on March 22, 1995.

Because the subject matter jurisdiction of the district court is

the central issue in the case, we discuss it below. We exercise

plenary review on this appeal. See Petruzzi's IGA Supermarket,

Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir.),

cert. denied, 114 S.Ct. 554 (1993).

Congress enacted FIRREA in 1989 in response to the

massive losses occurring in the nation's savings and loan

institutions and the deposit insurance fund protecting their

depositors. H.R. Rep. No. 101-54(I), 101st Cong., 1st Sess. 1,

302, reprinted in 1989 U.S.C.C.A.N. 86, 98. In its report on

FIRREA, Congress projected that the full cost of the thrift

crisis would be more than $335 billion, noting, to give some

perspective, that this expenditure would dwarf the $13.3 billion

cost of the entire post-World War II Marshall Plan to reconstruct

Europe. Id. at 514. Congress also expressed concern that

higher-than-expected costs for case resolution could boost that

figure. Id. at 515. To restore consumer confidence in the

failed savings and loan industry and resolve the crisis, Congress

granted the receivers of failed institutions broad powers to

administer a streamlined claims procedure designed to dispose of

the bulk of claims against failed savings and loans. Id. at 305,

11
419. Congress also designed FIRREA to be consistent with the

Supreme Court's holding in Coit Independence Joint Venture v.

FSLIC, 489 U.S. 561, 109 S.Ct. 1361 (1989), which dealt with the

procedure for filing claims against the Federal Savings and Loan

Insurance Corporation. H.R. Rep. No. 101-54(I) at 418-19.0

On this appeal, we are concerned with FIRREA's complex

and, in practice, draconian jurisdictional provisions which, as

we explain below, we must apply as written. In brief, Congress

requires the RTC to notify claimants to submit their claims on or

before a date at least 90 days from the date of publication of

the notice. Once they do so, the RTC has 180 days to allow or

disallow their claims. Claimants thereafter have 60 days from

the earlier of the end of the 180-day period or the notice of

denial of their claims to seek de novo judicial review. No court

has jurisdiction to hear any suit filed after this 60-day period

against the RTC as receiver for a failed thrift.

Actions filed prior to institution of FIRREA

proceedings may be stayed at the request of a conservator or

receiver. If a claimant then submits a claim and it is denied or

the 180-day period expires without a claim being allowed or

0
In Coit, the Court held that the Federal Savings and Loan
Insurance Corporation, the RTC's predecessor with respect to
failed thrifts, under pre-FIRREA law, did not have exclusive
authority to adjudicate claims filed against failed savings and
loan institutions and that a claimant was entitled to a de novo
review of the corporation's disposition of a claim in the
district court. 489 U.S. at 587, 109 S.Ct. at 1376. The Court
noted, however, that requiring exhaustion of the claim process
would be permissible if the claim process included a reasonable
time limit on the corporation's ability to postpone judicial
review. Id. at 584, 109 S.Ct. at 1374.

12
disallowed, claimants have 60 days to continue their pre-

receivership actions.0 With this plan, Congress hoped to promote

expeditious and fair adjudication of the many claims against the

failed thrifts.

The central issue in this case is whether W.W.'s

actions are jurisdictionally barred under FIRREA and thus whether

the district court's dismissal of the actions was proper.

I. The federal case

We first will consider whether the district court had

jurisdiction over the federal case which W.W. filed on August 5,

1993, after the RTC rejected its formal claim. We held in Rosa

v. RTC, 938 F.2d 383 (3d Cir.), cert. denied, 502 U.S. 981, 112

S.Ct. 582 (1991), that a district court has subject matter

jurisdiction over a claim under FIRREA only if the claimant

exhausts the statutory claim procedure. Id. at 391-92, 396-97.

See also Althouse v. RTC, 969 F.2d 1544, 1545-46 (3d Cir. 1992)

(holding that failure to file timely claim precludes jurisdiction

and de novo review by district court); FDIC v. Shain, Schaffer &

Rafanello, 944 F.2d 129, 132 (3d Cir. 1991) (holding that courts

have no jurisdiction over claims besides that specified in

FIRREA). Our conclusion in Rosa follows from 12 U.S.C.

§1821(d)(13)(D), which states:
(D) Limitation on Judicial Review

0
In Praxis Properties, Inc. v. Colonial Sav. Bank, 947 F.2d 46,
63 n.14 (3d Cir. 1991), we pointed out that FIRREA in some
respects is unclear as to its treatment of a claimant's action
filed before the institution of FIRREA proceedings. We need not
explore that problem here because W.W. filed its first pleading,
its petition to open judgment, after the RTC was appointed
receiver.

13
 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.

To determine whether the district court has

jurisdiction over the controversy, we look to whether W.W.

followed the statutory claim procedure. This procedure is set

out at 12 U.S.C. § 1821(d)(6)(A), which reads:
(6) Provision for agency review or judicial
determination of claims

(A) In general

Before the end of the 60-day period
beginning on the earlier of-

(i)the end of the period described in
paragraph (5)(A)(i) with respect to any
claim against a depository institution
for which the Corporation is receiver;
or

(ii) the date of any notice of
disallowance of such claim pursuant to
paragraph (5)(A)(i),
the claimant may request administrative
review of the claim in accordance with
subparagraph (A) or (B) of paragraph (7) or
file suit on such claim (or continue an
action commenced before the appointment of
the receiver) in the district or territorial
court of the United States for the district
within which the depository institution's

14
 principal place of business is located or the
United States District Court for the District
of Columbia (and such court shall have
jurisdiction to hear such claim).

The "period described in paragraph (5)(A)(i)" is the

180-day period during which the RTC is required to determine

whether to allow or disallow the claim and notify the claimant of

its determination. The parties can extend this period only upon

their written agreement.0 Absent written agreement to extend the

180-day period, a claimant must seek judicial review before the

earlier of 60 days from the determination of its claim or 240

days from the date its claim was filed (the 180 days of section

1821(d)(5)(A)(i), plus the 60 days of section 1821(d)(6)(A)) even

if, as in this case, the RTC fails to make a determination within

the statutorily required 180-day period specified in section

1821(d)(5)(A)(i).0 Astrup v. RTC, 23 F.3d 1419, 1420-21 (8th
Cir. 1994); Capitol Leasing Co. v. FDIC, 999 F.2d 188 (7th Cir.

1993); Henderson v. Bank of New England, 986 F.2d 319, 320 (9th

Cir., cert. denied, 114 S.Ct. 559 (1993).

In this case, treating W.W.'s petition to reopen in the
removed case and its counsel's August 5, 1991 letter to RTC's

counsel as together constituting a properly filed claim, W.W.
0
12 U.S.C. § 1821(d)(5)(A)(ii).
0
Congress clearly contemplated the possibility of the 180-day
period expiring without the RTC having resolved a claim, for
section 1821(d)(6)(A) states that a claimant has 60 days after
the expiration of the 180-day claim determination period or the
disallowance of a claim to seek administrative review or to
institute an action in court. If Congress had not contemplated
the possibility of the 180-day period expiring without the RTC
having resolved a claim, the first limitation period would have
been superfluous, since there never would be an instance in which
the 180-day period would expire without the resolution of a
claim.

15
failed to bring the federal case in the district court within the

statutorily-specified time period. The district court held that

W.W. provided the RTC with the information necessary to process

its claim in April 1991 when it served its March 26, 1991

petition to open (filed in the Philadelphia County Court of

Common Pleas) on the RTC. At the latest, treating these informal

filings, i.e., the petition and the letter, as satisfying the

requirement to file an administrative claim, the 240-day period

began in August, after W.W. sent the RTC the letter requesting

adjudication of its claim.0 Yet W.W. did not file the federal

case until August 5, 1993. Since more than 240 days elapsed

between the filing of the claim with RTC and the filing of the

federal case in the district court, the district court lacked

subject-matter jurisdiction over it.

0
The RTC contends that service of the petition did not constitute
a properly filed claim and that FIRREA bars W.W.'s action because
it did not file an appropriate claim form within 90 days of
receiving notice to do so, as required by 12 U.S.C.
§1821(d)(5)(C)(i). If the RTC is correct so that W.W.'s
petition, either independently or accompanied by its letter of
August 5, 1991, did not constitute a claim, the district court
would have lacked jurisdiction because W.W. would not have
followed the proper administrative procedures.

Nevertheless, since we find that even if a pleading can
constitute a claim under FIRREA, the district court lacked
jurisdiction over this claim, we need not address this issue. We
therefore assume without deciding that the procedures W.W.
followed in 1991 constituted compliance with the FIRREA claims
procedure. Of course, the petition could not be an adequate
claim in the removed case itself, because FIRREA contemplates an
administrative claim procedure independent of a judicial
proceeding. Treating the petition as an adequate administrative
filing to support jurisdiction in the removed case would
frustrate the two-step process FIRREA contemplates.

16
 W.W. argues that the court possessed jurisdiction over

the federal case because there was a written agreement, pursuant

to 12 U.S.C. § 1821(d)(5)(A)(ii), to extend the 180-day period in

which the RTC was required to resolve W.W.'s claims. W.W. argues

that: (i) motions to the district court to stay the removed case

constitute written agreements between the RTC and W.W., and (ii)

that the RTC's denial of W.W.'s October 7, 1992 claim on June 8,

1993, in explicitly granting W.W. 60 days to appeal, also

constitutes a written agreement, albeit a retroactive one, to

extend the 180-day period for consideration of its 1991 claim.

Thus, in W.W.'s view, its action filed August 5, 1993, was

timely. Alternatively, W.W. argues that material written by the

RTC after the expiration of the 180-day period should extend

retroactively the 180-day period.0

0
W.W. cites a letter to the district court dated February 9,
1993, which states:

On or about October 5, 1992, after the case
was placed in the suspense file, defendant
W.W. Development & Management, Inc. submitted
an administrative claim to the Resolution
Trust Corporation pursuant to 12 U.S.C.
§1821(d)(5). Pursuant to Section 1821(d) the
claim must be decided within 180 days of
filing (i.e., on or about April 3, 1993).
Accordingly, we request that the matter
remain in the suspense file until April or
until the claim has been decided, whichever
is earlier. Of course if the claim is
decided before April 3, we will promptly
notify the Court. Edward Rubenstone, counsel
for defendant, joins in this request.

W.W.'s App. 173.

When the RTC denied W.W.'s claim on June 8, 1993, its letter to
W.W. stated:

17
 To support its contentions, W.W. points out that

section 1821(d)(5)(A)(ii) provides that the 180-day period, "may

be extended by a written agreement between the claimant and the

Corporation." On June 24, 1991, the RTC filed a motion to stay

all legal proceedings in the removed case. It read in part:
For the reasons set forth in the following
Memorandum of Law, substituted plaintiff
Resolution Trust Corporation, in its capacity
as Conservator for Bell Federal Savings Bank,
moves the Court for an Order staying
consideration of defendant's Motion to Open
Judgment pending exhaustion of administrative
remedies.

W.W.'s App. 106-07. On August 14, 1991, W.W. filed a Memorandum

of Law in response which argued, in part, that the district court

should stay further proceedings for 180 days so that

administrative procedures could be exhausted. It read in part:

"under the facts of this case . . . the issuance by this Court of

a stay for 180 days as to the prosecution of such claims is

appropriate." W.W.'s App. 197.

W.W. further argues that Congress intended the deadline

provisions to constrain only the RTC and it suggests that

Congress drafted them in response to the concerns raised by the

Supreme Court in Coit Independence Joint Venture v. FSLIC, 489
U.S. at 582-83, 109 S.Ct. at 1373, where the Court noted that the

Pursuant to 12 U.S.C. Section 1821(d)(6), if
you wish to contest this disallowance, then,
within sixty (60) days from the date of this
letter you must file suit on your claim
against the Receiver in the United States
District Court for the Eastern District of
Pennsylvania . . . .

Id. at 175.

18
lack of deadline periods enabled the Federal Savings and Loan

Insurance Corporation to delay judicial review indefinitely. W.W.

argues that the legislative history offers no support for the

RTC's use of the deadline procedures to defeat a claim. It

further argues that allowing the RTC to evaluate claims even

after the 180-day period has elapsed would serve the purpose of

FIRREA.0

When a statute is clear, however, our role in

interpretation is at an end, absent a clearly expressed

legislative intention that contradicts the plain language of the

statute. Consumer Product Safety Comm'n v. GTE Sylvania, Inc.,

447 U.S. 102, 108, 100 S.Ct. 2051, 2056 (1980); Sacred Heart

Medical Center v. Sullivan, 958 F.2d 537, 545 (3d Cir. 1992).

Nothing that W.W. cites is "a written agreement between the

0
The legislative history explains that the claims procedure set
forth in FIRREA was designed:

[To enable] the FDIC to dispose of the bulk
of claims against failed financial
institutions expeditiously and fairly. The
exhaustion requirements should lead to a
large number of claims being resolved without
resort to further procedures. In addition,
the administrative procedures, including
review procedures, created by the FDIC, if
made sufficiently attractive to claimants,
should lead to a large number of claimants
agreeing to present their claims through
these forums rather than in court. Thus, the
claim resolution process established in this
section should allow the FDIC to quickly
resolve many of the claims against failed
financial institutions without unduly
burdening the District Courts.

H.R. Rep. No. 101-54 (I) at 419.

19
claimant and the Corporation" to extend the 180-day period.

Furthermore, W.W. cannot point to "a clearly expressed

legislative intention" that contradicts the plain language of the

statute and thus would allow us to treat the items to which it

points as an agreement for an extension of the 180-day claim

consideration period. GTE Sylvania, 447 U.S. at 108, 100 S.Ct.

at 2056. Consequently, we cannot find that the 180-day claim

period was extended to permit the district court to exercise

jurisdiction over the federal case.0

We recognize that our result is harsh. The RTC

disallowed the claim on the basis of untimeliness despite W.W.'s

good faith efforts and request for guidance from the RTC to

comply with the new and confusing statute. In addition, the

RTC's actions encouraged W.W. to believe that its claim was under

serious administrative consideration as the statutory period for

judicial review expired. Furthermore, we acknowledge that "[t]he

statute arguably encourages the RTC to avoid making

determinations and, in so doing, catch creditors dozing." Astrup,

0
Of course, the claim W.W. filed on October 7, 1992, was late so
even if there had been a written agreement to extend the time for
the receiver to allow or disallow the claim to June 8, 1993, when
the RTC disallowed the claim, which as far as we are aware there
was not, the district court would have granted the RTC summary
judgment properly as W.W. filed the claim long after the bar
date. We must say, however, that we are at a loss to understand
why the RTC in its June 8, 1993 letter advised W.W. that it could
file suit within 60 days, inasmuch as the RTC denied the October
7, 1992 claim long after 180 days following its submission. It
would seem that the RTC was attempting to give the district court
jurisdiction which the court did not have. It may be that on
this basis as well the district court, notwithstanding the June
8, 1993 letter, did not have jurisdiction. But we do not reach
that point.

20
23 F.3d at 1421. But our hands are tied under the statutory

scheme. See also National Union Fire Ins. Co. v. City Sav. Bank,

F.S.B., 28 F.3d 376, 388 (3d Cir. 1994) ("FIRREA was . . .

passed to give the receiver extraordinary power."). We therefore

hold that the district court did not have jurisdiction over the

federal case.

II. The removed case

W.W. also argues that the district court had

jurisdiction in the removed case over the petition to open the

judgment and to allow it to assert defenses and a counterclaim.

The relevant facts are that Bell filed its action for confession

of judgment before the RTC was appointed receiver for Bell but

that W.W. filed its petition after that appointment.

FIRREA, though allowing the RTC to remove state cases

to a federal court, does not generally divest courts of

jurisdiction in pre-receivership cases. This is clear from 12

U.S.C. § 1821(d)(5)(F)(ii), which provides, with an exception

dealing with stays, that filing a claim with a receiver does not

prejudice the right of a claimant to continue an action filed

before the receiver's appointment. It necessarily follows from

this section that the institution of a proceeding under FIRREA

does not oust a court of the jurisdiction it otherwise would have

over an action involving a thrift institution. Accordingly, in

Praxis Properties, Inc. v. Colonial Sav. Bank, 947 F.2d 49, 63

n.14 (3d Cir. 1991), we explained that if an action is filed

before a thrift is placed in receivership, jurisdiction over the

21
matter is not lost by the subsequent insolvency of the thrift and

takeover by the RTC. Id.

Bell commenced the removed action by confessing

judgment against W.W.0 In National Union, 28 F.3d 393, we held

that section 1821(d)(13)(D)'s statutory bar does not apply to

either defenses or affirmative defenses to a claim brought by the

RTC because:
We think it plain enough that a defense or an
affirmative defense is neither an 'action'
nor a 'claim,' but rather is a response to an
action or a claim, and that therefore
defenses and affirmative defenses do not fall
under any of the [categories of action barred
by § 1821(d)(13)(D)].

See also Praxis, 947 F.2d 49, 64 n.14 (Neither exhaustion
requirement nor administrative claims procedure apply to actions

the thrift commenced before it failed.).

Consequently, we must decide whether the petition to

open the judgment was a separate claim against the RTC or whether

it should be regarded as defense and therefore not barred by

section 1821(d)(13)(D). Because the petition to open judgment
includes both a defense to liability in the action commenced

before the FIRREA proceedings (though not a conventional defense

as in an action in which process is served at the outset), and a

counterclaim against RTC, we will bifurcate the petition and

separately consider the defenses and the counterclaim.0 This
0
Of course, the district court had jurisdiction over the judgment
and could have entertained enforcement proceedings for its
collection. Thus, we deal with W.W.'s pleadings, not those of
the RTC.
0
The petition itself is broken into three sections. Section I is
headed:

22
procedure is consistent with that which we followed in National

Union, 28 F.3d at 383-95, where we separately considered whether

FIRREA barred affirmative defenses and declaratory judgment

actions even when both were based on the same legal grounds. We

find that the defenses offered in the petition to open judgment

are not subject to FIRREA's statutory bar, but that the

counterclaim in the petition is jurisdictionally barred by

FIRREA.

A. The defenses

We first consider the defenses to the confessed

judgment included in the petition to open the judgment. In

deciding whether or not FIRREA bars jurisdiction over this part

of the petition, we are guided by the Supreme Court's recent

holding in O'Melveny & Myers v. FDIC, 114 S.Ct. 2048 (1994),

which explained that "matters left unaddressed" in FIRREA "are

As a Result of Bell's Breach of Contract and
Other Wrongful Conduct, Petitioner has
Numerous Bona Fide, Good Faith Defenses to
Bell's Claims, Thereby Warranting the Opening
of the Subject Judgment by Confession.

W.W.'s App. 54.

Section II is headed:

Defendant has Incurred Substantial Damages as
a Direct Result of Plaintiff's Breach of
Contract, Thereby Entitling it to Assert a
Counterclaim in this Action.

Id. at 57-59.

Section III requests an order staying the execution of the
confessed judgment. Id. at 59-60.

23
presumably left subject to the disposition provided by state

law." Id. at 2054. We thus consider how the petition would be

viewed under Pennsylvania law.

In Pennsylvania, a petition to open a judgment is

integral to the process of determining the debtor's and

creditor's rights.0 See Davis v. Woxall Hotel, Inc., 577 A.2d

0
Pa. R. Civ. P. 2959 governs the procedure on a petition to open
a judgment. While W.W. characterized its petition as a motion,
inasmuch as that section refers to a petition, we have called the
pleading a petition. The rule reads:

Rule 2959. Striking Off or Opening Judgment;
Pleadings; Procedure

(a) Relief from a judgment by confession
shall be sought by petition. All grounds for
relief, whether to strike off the judgment or
to open it, must be asserted in a single
petition. The petition may be filed in the
county in which the judgment was originally
entered, in any county to which the judgment
has been transferred or in any other county
in which the sheriff has received a writ of
execution directed to him to enforce the
judgment.

(b) If the petition states prima facie
grounds for relief the court shall issue a
rule to show cause and may grant a stay of
proceedings. After being served with a copy
of the petition the plaintiff shall file an
answer on or before the return day of the
rule. The return day of the rule shall be
fixed by the court by local rule or special
order.

(c) A party waives all defenses and
objections which he does not include in his
petition or answer.

(d) The petition and the rule to show cause
and the answer shall be served as provided in
Rule 440.

24
636, 638 (Pa. Super. Ct. 1990) ("[A] challenge to the accuracy of

such amounts should be resolved by a petition to open the

judgment."). Passed as part of the same chapter as the provision

governing a confession of judgment, a petition to open a judgment

is the sole means by which the defendant in a confession of

judgment action can assert a defense. If the party against whom

judgment is confessed pleads prima facie grounds for relief, the

court must open the judgment, and "may grant a stay of

proceedings." Pa. R. Civ. P. 2959(b). The use of the word

"proceedings" suggests that the petition should be understood as

part of the same action as the underlying confession of judgment.

This interpretation is strengthened by the Pennsylvania Superior

Court's discussion:
A petition to strike and a petition to open
are two forms of relief with separate
remedies; each is intended to relieve a
different type of defect in the confession of
judgment proceedings. . . . [A] petition to
open the judgment offers to show that the
defendant can prove a defense to all or part
of the plaintiff's claim.

(e) The court shall dispose of the rule on
petition and answer, and on any testimony,
depositions, admissions and other evidence.
The court for cause shown may stay
proceedings on the petition insofar as it
seeks to open the judgment pending
disposition of the application to strike off
the judgment. If evidence is produced which
in a jury trial would require the issues to
be submitted to the jury the court shall open
the judgment.

(f) The lien of the judgment or of any levy
or attachment shall be preserved while the
proceedings to strike off or open the
judgment are pending.

25
Manor Bldg. Corp. v. Manor Complex Assocs., LTD., 645 A.2d 843,

845 n.2 (Pa. Super. Ct. 1994) (emphasis added). The court's

reference to the petition to open as "a defense" in "confession

of judgment proceedings" indicates that a defense to liability in

a petition to open is part of an overall confession of judgment

procedure and not an independent action.

Moreover, the Pennsylvania courts have noted the

importance of a petition to open a judgment in satisfying due

process in the confession of judgment procedure. North Penn

Consumer Discount Co. v. Shultz, 378 A.2d 1275, 1277-78 (Pa.

Super. Ct. 1977).0 We find, therefore, that the defenses alleged

in the petition to open judgment are part of a pre-receivership

action and thus under sections 1821(d)(5)(F)(ii) and

1821(d)(13)(D) the district court may entertain them without

regard for the jurisdictional bar in the latter section.

In reaching our result, we also point out that section

1821(d)(13)(D) bars jurisdiction only over "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
0
We note that the Pennsylvania confession of judgment procedure
has raised serious due process issues in the past. See Jordan v.
Fox, Rothschild, O'Brian & Frankel, 20 F.3d 1250 (3d Cir. 1994).
The existence of the opportunity to present a defense provided by
the petition to open judgment may well be crucial to the
constitutionality of the procedure. See Girard Trust Bank v.
Martin, 557 F.2d 386 (3d Cir.), cert. denied, 434 U.S. 985, 98
S.Ct. 612 (1977) (construing D.H. Overmyer Co. v. Frick Corp.,
405 U.S. 174, 92 S.Ct. 775 (1972), to seem to require that "there
be some procedure by which debtor against whom judgment is
confessed may test the validity of the judgment against him").
These concerns also support construing a petition to open
judgment as part of the same action as a confession of judgment.

26
which the Corporation has been appointed receiver." Id.

(emphasis added). We regard the defenses offered by W.W. in the

petition to open judgment as pertaining to its assets, not those

of Bell, because a judgment has value only insofar as it can be

the basis for a recovery from a debtor's assets.

Finally, on this point we observe that at oral argument

counsel for the RTC acknowledged that if a thrift filed an action

before the Office of Thrift Supervision instituted proceedings to

take it over under FIRREA, a defendant in that case after the

initiation of the FIRREA proceedings could assert defenses

without exhausting administrative procedures, so long as it did

not seek affirmative relief. In view of our conclusions

regarding the nature of a petition to reopen under Pennsylvania

law, this concession essentially means that the RTC agrees that

W.W. should be able to assert its defenses in the removed case.

B. The counterclaim

The counterclaim for damages included in the petition

to open stands on a different footing. Unless a claimant

exhausts the statutory claim procedure, FIRREA divests courts of

jurisdiction over "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 . . . ." Section 1821(d)(13)(D).

While defenses to Bell's confession of judgment action pertain to

the assets of W.W., the counterclaim clearly asserts a claim over

Bell's assets. "[I]f in addition to raising defenses or

affirmative defenses to an action or a claim, a party also raises

27
counterclaims, such counterclaims would fall under section

1821(D)(13)(D)'s jurisdictional bar." National Union, 28 F.3d at

394. We must decide, then, whether a counterclaim should escape

section 1821(d)(13)(D)'s jurisdictional bar because it should be

regarded as a continuation of a pre-receivership lawsuit under

section 1821(d)(5)(F)(ii).

Congress's express purpose in creating the claims

determination procedure embodied in FIRREA was to:
[E]nable[] the FDIC to dispose of the bulk of
claims against failed financial institutions
expeditiously and fairly. The exhaustion
requirements should lead to a large number of
claims being resolved without resort to
further procedures. . . . Thus, the claim
resolution process established in this
section should allow the FDIC to quickly
resolve many of the claims against failed
financial institutions without unduly
burdening the District Courts.

H.R. Rep. No. 101-54(I) at 419. The counterclaim brought by

W.W., in contrast to its defenses to the confessed judgment, is a

"claim[] against [a] failed financial institution," precisely the

kind of post-receivership claim that Congress wanted resolved
"expeditiously and fairly," through the administrative claims

process. A holding that a counterclaim is not barred would

permit a litigant, as the district court observed, to "convert

its claim to a pre-receivership claim merely by making it a part

of litigation which predates the receiver's takeover." W.W.'s

App. 38. This procedure would enable a claimant in a pending

pre-receivership action effectively to evade FIRREA's strictures

and thereby subvert Congress's express purpose to "allow the FDIC

28
to quickly resolve many of the claims without unduly burdening

the district courts." H.R. Rep. No. 101-54(I) at 419.

Consequently, we find that a post-receivership counterclaim is

subject to section 1821(d)(13)(D)'s jurisdictional bar, at least

if, as here, the counterclaim is asserted as a basis for relief

beyond defeating the complaint.0

As a result, the Philadelphia Court of Common Pleas

lacked jurisdiction over the counterclaim when it was filed,

because it was filed after RTC's appointment as receiver of Bell.

Consequently, the district court never possessed subject matter

jurisdiction over W.W.'s counterclaim, and properly dismissed

this part of the removed action.

III. CONCLUSION

We find that the district court properly granted

summary judgment to the RTC in the federal case, No. 93-4210, as

the court lacked subject matter jurisdiction over it. The

district court erred, however, in entirely denying the petition

to open judgment in the removed case, No. 91-3788. Accordingly,

we will affirm the district court's summary judgment in favor of

the RTC No. 93-4210 and will affirm the district court's denial

of the petition to open judgment in No. 91-3788 with respect to

the counterclaim raised in the petition. We will vacate the

district court's denial of the petition to open judgment in No.

0
We observe that interpreting FIRREA to preclude jurisdiction
over a post-receivership counterclaim raises none of the due
process concerns raised by interpreting FIRREA to prevent W.W.
from raising a defense to a judgment confessed against it.

29
91-3788 with respect to the defenses to the confessed judgment

raised in W.W.'s petition, and will remand the case to the

district court for proceedings consistent with this opinion.

Thus, we will affirm in part and will vacate in part the district

court's orders of November 17, 1994, and February 29, 1995. On

the remand, the district court should consider the petition to

open judgment without regard for the FIRREA jurisdictional bar,

but only insofar as W.W. seeks to assert defenses to the

complaint. Of course, we express no opinion on whether the court

should grant W.W. relief on its petition as we limit our opinion

to the jurisdictional issues. The parties will bear their own

costs on this appeal.

30
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