United States Court of Appeals,
Fifth Circuit.
No. 93-5189.
FIRST AMERICAN BANK, Petitioner,
v.
RESOLUTION TRUST CORPORATION, in its Corporate Capacity,
Respondent.
Sept. 8, 1994.
Petition for Review of a Decision of the Resolution Trust
Corporation.
Before GARWOOD, SMITH, and STEWART, Circuit Judges.
STEWART, Circuit Judge:
Petitioner, First American Bank, seeks review of a final
determination of the Resolution Trust Corporation ("RTC") denying
federal deposit insurance coverage for funds deposited in the
now-defunct Spindletop Savings Association, F.A. Because the RTC's
decision was arbitrary and capricious, an abuse of discretion, and
not in accordance with law, we reverse.
I.
FACTS AND PROCEDURAL HISTORY
This case involves two certificates of deposit petitioner
purchased in 1989 and 1990 at Spindletop Savings Association and
its successor, Spindletop Savings Association, F.A., respectively.
At issue is whether each certificate of deposit ("CD") is entitled
to separate deposit insurance coverage. On April 18, 1989, First
American Bank ("FAB") purchased a certificate of deposit ("CD # 1")
from Spindletop Savings Association ("Old Spindletop"). This CD
1
was in the amount of $98,000 and had a maturity date of September
14, 1990.
After the purchase of CD # 1, Old Spindletop failed. On
September 13, 1989, Old Spindletop was placed into receivership
with the RTC. On that same date, the Office of Thrift Supervision
chartered a new federal thrift, Spindletop Savings Association,
F.A. ("New Spindletop"). Thus, New Spindletop was chartered as a
separate entity from Old Spindletop, and it had a separate RTC
insurance number. Also on September 13, 1989, the RTC, as receiver
for Old Spindletop, entered into a pass-through purchase and
assumption agreement with New Spindletop, wherein Old Spindletop's
assets and outstanding deposits and secured liabilities were
transferred to New Spindletop. New Spindletop was simultaneously
placed in conservatorship, with the RTC being appointed
conservator.
On April 24, 1990, FAB purchased CD # 2 in the amount of
$99,000 from New Spindletop, with a maturity date of September 24,
1990.
On June 1, 1990, prior to the maturity date of either CD # 1
or CD # 2, New Spindletop was also closed and placed into
receivership with the RTC. At this time, the RTC entered into an
agreement with First City, Texas—Beaumont, N.A. ("First City"),
wherein certain assets and liabilities were transferred to and
assumed by First City. Through this transaction, the RTC in its
corporate capacity transferred the insured amount of each
depositor's accounts previously held by New Spindletop (including
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the deposits that had come from Old Spindletop) to First City.
These insured deposits were immediately available at First City to
each former depositor of New Spindletop, even if the associated
certificates of deposits had not otherwise matured.
For each depositor, the maximum insured amount for each
transferred deposit was $100,000.1 The RTC claims that it
satisfied its $100,000 insurance obligation to FAB by transferring
CD # 2 to First City. Accordingly, the RTC did not transfer CD #
1 because the transfer of both certificates would have resulted in
a payment to FAB of more than the $100,000 insurance limit.
On June 8, 1990, FAB redeemed CD # 2 from First City without
incident. On August 3, 1990, FAB sought payment on CD # 1 from
First City. Payment was denied. FAB then presented a written
request to the RTC for deposit insurance on CD # 1. On June 22,
1993, the RTC made its final determination, denying FAB's claim.
FAB appeals this adverse determination pursuant to 12 U.S.C. §
1821(f)(4).
II.
GENERAL LEGAL PRINCIPLES
FAB contends that the RTC's denial of insurance coverage for
CD # 1 was arbitrary and capricious, an abuse of discretion and not
in accordance with law. FAB asserts that the insurance coverage
for CD # 1 is separate from any coverage afforded for CD # 2. It
argues that in denying this insurance coverage, the RTC misread the
clear and unambiguous language of 12 U.S.C. § 1818(q) and
1
See 12 U.S.C. § 1821.
3
wrongfully relied on five unpublished FSLIC opinion letters
construing the applicable statutory language. We agree.
Pursuant to 12 U.S.C. § 1821(f)(4), a final determination of
the RTC is reviewable in accordance with the Administrative
Procedure Act. Under the Administrative Procedure Act, the RTC's
determination in this case may be set aside only if it is
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law. 5 U.S.C. § 706. See also, Nimon v.
Resolution Trust Corp., 975 F.2d 240, 244 (5th Cir.1992).
Furthermore, the U.S. Supreme Court has held that, unless Congress
has directly spoken to the precise question at issue, considerable
weight should be accorded to an executive department's construction
of a statutory scheme it is entrusted to administer. Chevron, USA,
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-
844, 104 S.Ct. 2778, 2781-2782, 81 L.Ed.2d 694 (1984). Thus, where
the agency's interpretation of the applicable deposit statute and
regulations is equally as persuasive as the claimant's, the
reviewing court should uphold the agency's decision. Hymel v.
Federal Deposit Ins. Corp., 925 F.2d 881 (5th Cir.1991).
However, where an agency has promulgated a regulation or
adopted an interpretation that is in conflict with a statute's
plain meaning, the reviewing court is not required to give
deference to the agency's interpretation. K Mart Corp. v. Cartier,
Inc., 486 U.S. 281, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988). "If
the statute is clear and unambiguous, "that is the end of the
matter, for the court, as well as the agency, must give effect to
4
the unambiguously expressed intent of Congress.' ... The
traditional deference courts pay to agency interpretations is not
to be applied to alter the clearly expressed intent of Congress."
K Mart, supra, 486 U.S. at 291, 108 S.Ct. at 1817, quoting Chevron,
supra, 467 U.S. at 842-843, 104 S.Ct. at 2781-2782, 81 L.Ed.2d 694.
In a statutory construction case, the beginning point must be
the language of the statute, and when a statute speaks with clarity
to an issue, judicial inquiry into the statute's meaning, in all
but the most extraordinary circumstance, is finished. Estate of
Cowart v. Nicklos Drilling Co., --- U.S. ----, ----, 112 S.Ct.
2589, 2594, 120 L.Ed.2d 379 (1992), citing Demarest v. Manspeaker,
498 U.S. 184, 188, 111 S.Ct. 599, 603, 112 L.Ed.2d 608 (1991).
The governing statutory language in this case is codified at
12 U.S.C. § 1818(q), which provides in pertinent part as follows:
Assumption of liabilities
Whenever the liabilities of an insured depository
institution for deposits shall have been assumed by another
insured depository institution or depository institutions,
whether by way of merger, consolidation, or other statutory
assumption, or pursuant to contract (1) the insured status of
the depository institution whose liabilities are so assumed
shall terminate on the date of receipt by the Corporation of
satisfactory evidence of such assumption; (2) the separate
insurance of all deposits so assumed shall terminate at the
end of six months from the date such assumption takes effect
or, in the case of any time deposit, the earliest maturity
date after the six-month period....
12 U.S.C. § 1818(q) (emphasis added).
III.
DISCUSSION
A. Contentions of the parties
Petitioner, FAB, contends that the language of 12 U.S.C. §
5
1818(q) supports its view that the RTC is required to provide
insurance coverage for the deposits of a failed institution that is
separate from the insurance coverage for the deposits of the
succeeding association, and that the separate coverage for a time
deposit such as a CD should extend until such time deposit matures.
Because CD # 1 never reached its maturity date, FAB maintains that
it should have been separately insured for up to $100,000 under the
statute.
The RTC responds by asserting that the statute should apply
only when the separate deposit insurance existed for the deposit
account of an individual depositor at both institutions prior to
the assumption of the deposit liabilities of one institution by the
other. In support of this position, the RTC argues that the
purpose of the statute is to protect depositors from suddenly
becoming uninsured through no fault of their own as the result of
a savings and loan merger. In this case, FAB purchased CD # 2 from
New Spindletop after New Spindletop assumed Old Spindletop's
deposits. Thus, the RTC argues that no "separate" protection
should be extended since the purchase of CD # 2 was a new
investment decision on the part of FAB and thus FAB voluntarily
acted to cause more than $100,000 to be on deposit at New
Spindletop, in contrast to depositors who end up with more than
$100,000 at a single institution through no act of their own, such
as through a merger. The RTC contends that the statute should only
protect those who do not voluntarily cause excess deposits to end
up in a single institution. In particular, the RTC argues that
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Congress' use of the term "separate insurance" evidences a
legislative intent which supports its view that the individual
depositor must have deposits in both the old institution and the
new one at the time of merger in order to have separate insurance
for each deposit. Additionally, the RTC asserts that Congress
would not have used the word "separate" in § 1818(q) had it not
intended to require that other deposits already be in existence at
the time of merger, consolidation, pass-through, etc., because a
thing cannot be "separate" unless it is considered with reference
to something else. Thus, in the RTC's view there can be no
"separate" insurance unless FAB had at least two "separate"
accounts when New Spindletop assumed Old Spindletop's deposits at
the time of merger.
B. Statutory Interpretation of § 1818(q)
The statute provides that when the deposits of one insured
depositing institution have been assumed by another, "the separate
insurance of deposits so assumed shall terminate" at the end of the
prescribed grace period. The statute focuses on the assumed
deposits, and does not require that each depositor have a duplicate
deposit in the assuming institution at the time of assumption in
order to take advantage of the separate insurance coverage.
The RTC cites the legislative history of 12 U.S.C. § 1728(a)
in support of its position that Congress intended to provide
separate insurance only in cases where deposits existed in both
institutions prior to merger. This statute was the Federal Savings
and Loan Insurance Corporation ("FSLIC") counterpart to § 1818(q)
7
and was repealed when the FSLIC was abolished through the enactment
of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA"). It contained language very similar to that in
§ 1818(q). However, because we find that the language of § 1818(q)
clearly states the congressional intent, we need not resort to the
legislative history of a repealed statute in order to resolve the
issue at hand.
We find the RTC's argument untenable in light of our reading
of the statute. We construe § 1818(q) to mean exactly what it
says: that any assumed time deposit shall be accorded separate
deposit insurance during the statutory grace period. As used in §
1818(q) the word "separate" means apart from and in addition to any
other deposit insurance that may or may not exist at the time of
assumption. The assumed time deposit, CD # 1, was issued before
its assumption by New Spindletop and, upon assumption, it remained
insured. The existence of this insurance did not depend on whether
FAB had any other deposits at the time of assumption or that it may
have made after the assumption. In this case, § 1818(q) placed no
restriction upon separate insurance coverage other than the
statutory grace period. Insurance on CD # 1 was automatically
maintained during the statutory grace period. According to the
statute, FAB also had an additional $100,000 coverage for any new
deposits. Consequently, both CD # 1 and CD # 2 were covered for up
to $100,000 each. To hold otherwise would be to read into §
1818(q) an exception or limitation that simply is not there.
We interpret § 1818(q) to mean that CD # 1 was insured for up
8
to $100,000 during the statutory grace period. This insurance
coverage was separate and apart from and in addition to the
$100,000 coverage that was applicable to CD # 2 because it was a
new time deposit made at the assuming institution, New Spindletop,
after its assumption of Old Spindletop's liabilities.
The RTC urges that we give Chevron deference to its decision.
It argues that we are obligated to regard as controlling a
reasonable, consistently applied interpretation construing the
statute by the government. Nimon, supra, 975 F.2d at 245.
Accordingly, we must note any relevant agency opinion of the
statute at issue. The RTC offers five unpublished opinion letters
of the now-abolished FSLIC in support of its position that the
FSLIC has consistently interpreted the separate insurance
provisions as applying only to deposits held by an individual at
the time of merger.2 Assuming, arguendo, that any authority of
these five opinion letters survived the demise of the FSLIC, we
conclude that they are not persuasive in view of their direct
contradiction to the text of § 1818(q). Chevron and its progeny do
not require courts to defer to agency opinions which are
incongruent with statutory text.
2
The five letters range in date from 1985 to 1988, and each
appears to have been issued in response to a specific inquiry
about separate deposit insurance coverage under § 1728(a), which
was the FSLIC counterpart to § 1818(q). Four of the letters were
signed by the director of the insurance division of FSLIC. One
was signed by the director of the regulations and legislation
division at FSLIC. The letters indicate FSLIC's position was
that, in the case of an acquisition or merger, accounts in an
acquiring institution were afforded separate coverage only if
they were opened prior to such acquisition or merger.
9
While we do not reach the issue of whether unpublished FSLIC
opinion letters might constitute valid precedent in other cases, we
decline to defer to them in this case because the FSLIC's
interpretation of the applicable statutory language as espoused in
the five opinion letters is so clearly contrary to the plain and
unambiguous language of the statute.
In direct contrast to the FSLIC letters, the FDIC previously
has concluded in a published opinion letter that deposits made in
a new institution after the time of merger are covered by separate
insurance. Thus, the FDIC has interpreted § 1818(q) in the same
way we do today. In FDIC Advisory Opinion 89-11, dated March 21,
1989,3 nineteen failed banks in Texas were merged into a newly
formed "Bridge Bank" (not unlike the situation with Old Spindletop
and New Spindletop), and the FDIC specifically stated that "all of
the deposits assumed from the insolvent [banks] will be separately
insured from any new deposits established by the same customer(s)
with the Bridge Bank."
FAB argues that FDIC Advisory Opinion 89-11 should control
this case. The RTC argues that we should defer to the FSLIC
interpretations of the statutory language, citing FDIC Advisory
Opinion 90-03 (dated January 9, 1990) for the proposition that
FIRREA requires that FSLIC interpretations govern in this case
rather than FDIC interpretations. While we are not required to
resolve the issue of whether FSLIC or FDIC interpretations would
3
This FDIC advisory opinion predates the creation of the RTC
on August 7, 1989, pursuant to FIRREA.
10
govern in the event of a statutory ambiguity, we note that FDIC
Advisory Opinion 89-11 is consistent with our interpretation of the
statute. We hold that CD # 1 was afforded separate insurance
coverage under the clear language of § 1818(q) and that the RTC's
determination to the contrary was arbitrary, capricious, an abuse
of discretion, and not in accordance with law. For the foregoing
reasons, the final determination of the RTC is REVERSED.
REVERSED.
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