United States Court of Appeals,
Fifth Circuit.
No. 93-1253,
Summary Calendar.
Janet M. POOL, Plaintiff-Appellant,
v.
RESOLUTION TRUST CORPORATION, et al., Defendants,
Resolution Trust Corporation, Defendant-Appellee.
Feb. 10, 1994.
Appeal from the United States District Court for the Northern District of Texas.
Before GOLDBERG, JOLLY, and JONES, Circuit Judges.
PER CURIAM:
In its clean up of the massive fraud and misfeasance in the savings and loan industry, the
Resolution Trust Company ("RTC") must make difficult decisions about who will and who will not
be covered by deposit insurance. These determinations are generally left to the discretion of the RTC.
The RTC's conclusions are, however, reviewable under the Administrative Procedure Act, 5 U.S.C.
§ 706, permitting reversal where the decision is found to be "arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with the law." Nimon v. Resolution Trust Corp., 975 F.2d
240, 244 (5th Cir.1992).
In the present case, the RTC has interpreted the deposit insurance regulations relating to the
definition of joint accounts in accordance with the law and the result cannot be said to be an abuse
of discretion. Therefore, we refuse to grant appellant's petition for review.
I. Facts and Procedural History
Janet M. Pool, the appellant in this litigation, initiated this proceeding after the RTC's
summary denial of her claim for insurance coverage. Pool complains that when Resource Savings
Association ("Resource") became insolvent and was taken over by the RTC, the RTC wrongfully
refused to provide deposit insurance on a certificate of deposit worth $99,000 which Pool had
established with Resource.
The RTC bases its denial of insurance coverage on the Federal Savings and Loan Insurance
Corporation ("FSLIC") regulations that apply to deposits made prior to enactment of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). FIRREA states that prior
to its effective date, "any determination of the amount of any insured deposit ... shall be made in
accordance with the regulations and interpretations of the Federal Savings and Loan Insurance
Corporation ... which were in effect on the day before the date of the enactment of this Act." Pub.L.
No. 101-73, § 402(c)(1), 103 Stat. 183, 358 (1989).
The applicable FSLIC regulations declare that "[f]unds held in an account in the names of two
or more persons, each possessing equal withdrawal rights, shall be insured as a joint account...." 12
C.F.R. § 564.9(a) (1989). It is uncontested that Pool established, using her own funds, a certificate
of deposit that was held with her sister and parents "jointly with right of survivorship." Therefore,
the signature cards on Pool's account showed the names of Pool herself, her sister, and her parents,
and all of these people had equal rights of withdrawal. See 12 C.F.R. § 564.9(b) (rights of
withdrawal are deemed equal unless the institutions records specify otherwise).
Pool claims that she set up the account in this manner to ensure that the funds would pass to
her family immediately upon her death, thus avoiding the time and expense of probate. Pool argues
that because the certificate of deposit was established with her separate funds, under Texas law, she
was the sole owner of the account. See RepublicBank Dallas v. National Bank of Daingerfield, 705
S.W.2d 310, 311 (Tex.App.—Texarkana 1986) (sole ownership maintained even where other party
shared rights of withdrawal).
Janet Pool's sister, Katherine, also established a certificate of deposit at Resource in the
amount of $99,000. Katherine Pool similarly set up this account using her separately owned funds.
Katherine also arranged the deposit such that her parents and Janet were named on the signature card
and possessed equal rights of withdrawal.
The RTC, looking only at the withdrawal rights and signature cards, determined that Janet
and Katherine's certificates of deposit were joint accounts for purposes of § 564.9(a). The RTC
proceeded to apply 12 C.F.R. § 564.9(e)(1) which states that, "[a]ll qualifying joint accounts held by
the same combination of persons shall be added together and insured up to $100,000 in the
aggregate." The RTC concluded that the Pools were entitled to $100,000 aggregate coverage for
both Janet and Katherine's two certificates of deposit. The RTC determined that since these were
jointly owned accounts, the Pools would not be entitled to deposit insurance on funds in the amount
of $98,759.46.
Janet Pool requested redetermination by the RTC. The RTC evaluated Pool's request and
refused to increase the insurance coverage provided. Upon this denial, Janet Pool filed suit in the
Northern District of Texas. The district court transferred the petition for review to this court
pursuant to 28 U.S.C. § 1631. We have proper jurisdiction over this case under 12 U.S.C. §
1821(f)(4) giving courts of appeal jurisdiction to review final determinations by the RTC. See Nimon,
975 F.2d at 244 (Congress plainly intended the court of appeals to be "the fora of these reviews").
II. Analysis
Pool complains that the RTC wrongfully denied her insurance coverage on the certificate of
deposit. She argues that the actual ownership status of the deposit should control the determination
of joint ownership, not withdrawal rights and signature cards. In support of her contention, Pool
points to the Appendix to Section 564 which states that the rules in this section:
are predicated upon the assumption that invested funds are actually owned in the manner
indicated on the institution's records. If available evidence shows that ownership is different
from that on the institution's records, the Federal Savings and Loan Insurance Corporation
may pay claims for insured accounts on the basis of actual rather than ostensible ownership.
12 C.F.R. Part 564, Appendix at 482 (1989). Because it failed to inquire into the actual ownership
of the sisters' respective accounts, Pool asserts that the RTC mistakenly determined that the two
accounts were jointly held. Pool observes that other courts looking at the same section have
previously held that, "[t]his appendix makes it clear that insurance claims should be determined on
the basis of actual rather than ostensible ownership." Kayser v. Fed. Sav. and Loan Ins. Corp., 718
F.Supp. 815 (N.D.Cal.1989) (emphasis in original); Jugum v. Fed. Sav. and Loan Ins. Corp., 637
F.Supp. 1045 (W.D.Wash.1986).
Pool additionally points out that in the Federal Deposit Insurance Corporati on ("FDIC")
context, this circuit has interpreted the joint ownership provisions of the bank deposit insurance
regulations to require that where two accounts are actually separately owned (i.e. separately owned
for state law purposes), the accounts will be considered to be individually owned for purposes of
deposit insurance coverage. See Spawn v. Western Bank-Westheimer 925 F.2d 885 (5th Cir.1991);
Palermo v. Federal Deposit Ins. Corp., 981 F.2d 843 (5th Cir.1993). Bank deposits can be
separately insured even where the accounts evince equal rights of withdrawal and the signature cards
reciprocally name the parties. Spawn, at 888 (withdrawal rights and signature cards irrelevant if
actual ownership is in fact separate); Palermo, at 846-7 (same).
While these courts were willing to construe the deposit insurance regulations broadly in favor
of depositors, in this case, the regulations do not permit such a beneficent interpretation. A close
look at the preamble to the appendix relied upon by Pool reveals that this section is merely a general
introduction which does not rise to the level of mandatory pronouncements obligating the RTC. In
addition, the cases which Pool cites do not apply to the present circumstances where the regulation's
definition of joint accounts unambiguously states that withdrawal rights and signature cards are
sufficient for a finding of joint account status.
While it is true that the appendix generally states that the RTC should look to actual
ownership in making the determination of insurance coverage, a specific section of the Appendix
follows this statement which explains that "[s]tate law is not determinative of the amount of joint
account insurance coverage." 12 C.F.R. Part 564, Appendix at 488 (1989). In the context of deposit
insurance regulations, we have previously applied the principle of interpretation that more specific
language in a regulation will control over more general statements of policy. See Spawn, 925 F.2d
at 889. Therefore, the specific joint account section of the appendix exempts the RTC from looking
to state law in making the determination and thereby precludes this court from following the language
pointed to by Pool.
We also note that the language relied on by Pool cannot be given decisive force because to
do so, we would have to decide that all determinations of insurance coverage would require that the
RTC look beyond the records of the financial institution in all deposit insurance determinations in a
search for the actual ownership status of all deposits. This is so because the appendix refers to the
entire code section on determinations of insurance coverage. See 12 C.F.R. Part 564, Appendix at
482 (1989) (Title of Appendix "Examples of Insurance Coverage Afforded Accounts in Institutions
Insured By the Federal Savings and Loan Insurance Corporation"). Interpreting the appendix as
urged by Pool would thereby directly contradict the basic intent of much RTC jurisprudence
permitting the RTC to rely exclusively on deposit records in salvaging failed savings and loans. See
Abdulla Fouad & Sons v. Federal Deposit Ins. Corp., 898 F.2d 482 (5th Cir.1990) (setting out
various policy rationales for allowing the RTC to depend solely on a bank's deposit records in
determining the extent of deposit insurance). To give such a strong effect to the words of the
appendix would essentially cripple an important tool employed in the RTC's rescue of failed savings
and loans.
Turning to the Spawn and Palermo decisions, we note that these cases are simply not relevant
to the present situation because cases applied regulations covering the FDIC, not the FSLIC. The
particular regulations which govern in the instant case differ in a crucial respect from those under
scrutiny in those decisions. Both Spawn and Palermo were based on 12 C.F.R. § 330.9(b), a
regulation which governs the deposit insurance of banks. The regulation states that a joint certificate
of deposit need not be evidenced by signature cards or joint withdrawal rights, "but such a deposit
must in fact be jointly owned." 12 C.F.R. § 330.9(b) (1989). The court based its holding on the
requirement of "in fact" ownership, compelling the FDIC to look to Texas law in order to determine
whether the certificates of deposit under consideration were jointly owned for purposes of deposit
insurance. Spawn, 925 F.2d at 888; Palermo, 981 F.2d at 845. We held in Palermo that the "in fact"
jointly owned language in the regulation was sufficient to override an inconsistent provision declaring
that joint ownership would be presumed in the face of signature cards and equal rights of withdrawal.
Id. at 846.
The language of the regulation which must be applied to this case will not admit of the sort
of pro-depositor interpretation propounded by this circuit in Spawn and Palermo. The regulation
applicable to this case specifically states that where an account is established in the names of more
than one person each possessing equal withdrawal rights, the account, "shall be insured as a joint
account, unless the account records disclose that the named persons are holding funds in a different
capacity." 12 C.F.R. § 546.9(a) (1989). By different capacity, the regulations are referring to an
agency, custodial or trust relationship. Because there is no allegation that the funds were held in any
such capacity, the regulations are clear that Pool's certificates of deposit are jointly owned and that
actual or "in fact" ownership is simply not relevant to the determination.
Because the regulation under question in the present case lacks any of the "in fact jointly
owned" language of these other decisions, or any other reference to state law ownership, the holding
of those cases does not apply. The regulation in this case does not even evidence the ambiguity and
inconsistency of language which allowed the court in Palermo to construe the regulation in the
depositor's favor. It is clear for our purposes that the FSLIC regulations on insurance coverage
require joint account status for all accounts which show the names of more than one person on the
signature card and in which each person possesses equal withdrawal rights.
The RTC has complied with the letter of the FSLIC regulations in this case, and thus no
complaint for abuse of discretion or arbitrary or capricious administrative activity will lie.
III. Conclusion
For the preceding reasons, the petition for review is DENIED.