United States Court of Appeals,
Eleventh Circuit.
No. 94-4908.
RPM INVESTMENTS, INC., a California Corporation, Homero Meruelo,
Plaintiffs-Appellants,
v.
RESOLUTION TRUST CORPORATION, as receiver for General Federal
Savings Bank f/k/a General Bank; Crystal Lake Village, a Florida
Corporation, Defendants-Appellees.
Feb. 16, 1996.
Appeal from the United States District Court for the Southern
District of Florida. (No. 93-2025-CIV-KMM), K. Michael Moore,
Judge.
Before KRAVITCH, ANDERSON and BARKETT, Circuit Judges.
PER CURIAM:
RPM Investments, Inc. ("RPM") and Homero Meruelo challenge the
district court's determination that, because they failed to file an
administrative claim with the Resolution Trust Corporation ("RTC"),
the district court lacked subject matter jurisdiction over their
claims against the RTC in its receivership capacity. The district
court's alternative holding, that the relief appellants
request—specific performance—is not available under 12 U.S.C. §
1821(j) of the Financial Institutions Reform and Recovery
Enforcement Act ("FIRREA"), is a sufficient basis upon which to
deny relief. We affirm on the ground that jurisdiction is lacking
because the district court is barred from granting the specific
performance sought by appellants.
I. Facts
The RTC was appointed receiver of General Federal Savings Bank
in 1989. At that time Crystal Lake Village, Inc., which had
pledged a condominium development to General Federal Savings Bank
as security for debts and mortgages, was in default on the loans
and mortgages in excess of $10 million. RTC instituted foreclosure
proceedings and was awarded a foreclosure judgment.
In its search for a purchaser for the foreclosure judgment and
loan documents, the RTC approached Homero Meruelo. According to
Meruelo, the RTC led him to believe that if he or an agent of RPM,
a company through which Meruelo sought to acquire the property,
would execute the purchase agreement and tender the requisite
escrow monies to the RTC, a deal would be struck between the RTC
and Meruelo in which Meruelo would purchase the foreclosure
judgment, RTC's rights to the property, the loan documents, and all
related rights of action (collectively the "foreclosure judgment").
Meruelo executed the purchase agreement and delivered the funds to
the RTC. The purchase agreement, however, required execution by
the RTC, which never occurred.
Nevertheless, it appeared to Meruelo and apparently to RTC's
local attorneys that a meeting of the minds was in place. Meruelo
and RPM were given due diligence rights of access to the property,
and they made certain expenditures to complete due diligence.
Before executing the contract, however, the RTC demanded
modification of the purchase agreement. When the appellants
rejected the modifications, the RTC refused to close on the
properties. RPM and Meruelo then filed this suit seeking specific
performance.1
1
Appellants' complaint has four counts. In Count I,
appellants seek specific performance on the theory that the
purchase agreement is valid and enforceable against the RTC. In
RTC filed a motion to dismiss on the ground that the district
court lacked subject matter jurisdiction because the appellants had
failed to exhaust administrative remedies as required under FIRREA,
12 U.S.C. § 1821(d), and on the additional ground that 12 U.S.C. §
1821(j) limits the district court's remedial jurisdiction by
prohibiting any action that would "restrain or affect" the RTC in
exercising its powers and functions as receiver of a failed
institution.
The magistrate judge to whom this case was referred
recommended that the motion to dismiss be granted on grounds that
the plaintiffs' claims were subject to the jurisdictional bar of §
1821(d) and also noted that § 1821(j) deprived the district court
of jurisdiction to grant the specific performance sought. The
Count II, appellants allege that they have an enforceable
unilateral contract and seek specific performance to enforce the
contract. Count III alleges that the RTC is estopped from
repudiating the purchase agreement and seeks enforcement of the
purchase agreement. Count IV seeks declaratory relief and
alleges that appellants' rights to the property are superior to
those of Crystal Lake pursuant to Florida law. Although these
are all state law claims, 12 U.S.C. § 1441a(a)(11) confers
original jurisdiction on the United States district courts to
hear cases involving the RTC.
Although appellants seek declaratory relief in Count
IV, were the district court to declare their rights to the
interests in the property at issue superior to the rights
and interests of Crystal Lake, the result would be
tantamount in effect to the specific performance sought in
the earlier counts. Thus, we treat Count IV as we do Counts
I through III, as a request for specific performance and as
such subject to the jurisdictional bar of § 1821(j). See
Carney v. Resolution Trust Corp., 19 F.3d 950, 957-58 (5th
Cir.1994) (refusing to grant declaratory relief where such
relief was sought to avoid § 1821(j)'s jurisdictional bar to
injunctive relief but would have the same effect as an
injunction). We do not mean to indicate that every claim
for declaratory relief against a failed institution would be
subject to the jurisdictional bar of § 1821(j).
district court adopted the magistrate judge's report and
recommendation. RPM and Meruelo then brought this appeal. Because
this is an appeal from a motion to dismiss, we accept the
allegations of the complaint as true and construe the facts alleged
in the complaint in the light most favorable to the appellants.
ICA Constr. Corp. v. Reich, 60 F.3d 1495, 1497 (11th Cir.1995).
II. Application of 12 U.S.C. § 1821(j)
As noted above, RPM and Meruelo seek only equitable relief in
the form of specific performance of their contract. Our
jurisdiction is limited by § 1821(j), which states:
Except as provided in this section, no court may take any
action, except at the request of the Board of Directors by
regulation or order, to restrain or affect the exercise of
powers or functions of the Corporation as a conservator or a
receiver.
Section 1821(d)(2)(E) grants the receiver the power to dispose
of the assets of a failed banking institution. In disposing of a
foreclosure judgment which was the property of the failed
institution (or choosing not to sell the judgment to a particular
prospective buyer as the case was here), the RTC was exercising a
receivership function. See National Trust for Historic
Preservation v. F.D.I.C., 995 F.2d 238, 240 (D.C.Cir.1993) ("In
disposing of the assets of a bank, the FDIC is performing a routine
"receivership' function...."), modified and reinstated in relevant
part on rehearing, 21 F.3d 469 (D.C.Cir.), cert. denied, --- U.S.
----, 115 S.Ct. 683, 130 L.Ed.2d 615 (1994).2
2
The "exceptions" to § 1821(j)'s jurisdictional bar are
extremely limited. See Abbott Bldg. Corp., Inc. v. United
States, 951 F.2d 191 (9th Cir.1991) (concluding that the
predecessor of § 1821(j), 12 U.S.C. § 1464(d)(6)(C), did not
preclude court from issuing an injunction in order to determine
The only remaining question, therefore, is whether ordering
specific performance in this case would "restrain or affect" the
exercise of this function. Courts have determined that various
equitable remedies "restrain or affect" the exercise of the RTC's
powers and are, thus, prohibited by § 1821(j). For example, courts
have held that § 1821(j) renders district courts without authority
to issue against the Corporation injunctions that would interfere
with the exercise of its statutory powers. See, e.g., Tillman v.
Resolution Trust Corp., 37 F.3d 1032 (4th Cir.1994); Carney v.
Resolution Trust Corp., 19 F.3d 950 (5th Cir.1994); Telematics
Int'l, Inc. v. NEMLC Leasing Corp., 967 F.2d 703 (1st Cir.1992);
Rosa v. Resolution Trust Corp., 938 F.2d 383, 397-400 (3d
Cir.1991), cert. denied, 502 U.S. 981, 112 S.Ct. 582, 116 L.Ed.2d
608 (1991). At least one court has held that "[l]ike injunction,
rescission is a "judicial restraint' that is barred by 1821(j)."
Ward v. Resolution Trust Corp., 996 F.2d 99, 104 (5th Cir.1993).
Another circuit concluded that the district court had no power
under § 1821(j) to rescind an asset transfer made by the RTC
pursuant to its powers under § 1821(d)(2)(G)(i)(II). United
Liberty Life Ins. Co. v. Ryan, 985 F.2d 1320, 1328-29 (6th
Cir.1993). Like rescission, injunctions, and orders rescinding
whether foreclosure law was followed where property allegedly was
deeded to the receivership by someone without authority to do
so); Sierra Club, Lone Star Chapter v. FDIC, 992 F.2d 545 (5th
Cir.1993) (holding that where FDIC acts in its corporate capacity
rather than as receiver, court is not subject to jurisdictional
limitations of § 1821(j)). Some courts have also held that
automatic bankruptcy stays against the RTC in its receivership
capacity are not barred by § 1821(j) because such actions are
"imposed by Congressional mandate and not by court order." In re
Colonial Realty Co., 980 F.2d 125 (2d Cir.1992).
asset transfers, the specific performance requested in this case
would "restrain or affect" the RTC in the exercise of its statutory
powers.
The appellants' allegations that the RTC breached a contract
does not affect our holding. Even claims seeking to enjoin the RTC
from taking allegedly unlawful actions are subject to the
jurisdictional bar of 1821(j). In National Trust v. F.D.I.C., 995
F.2d at 240, the D.C. Circuit concluded that "[i]n disposing of the
assets of a bank, the FDIC is performing a routine "receivership'
function that § 1821(j) unequivocally removes from judicial
restraint." Thus, the court refused to enjoin a real estate
transaction even though plaintiffs alleged that the sale would
violate the National Historic Preservation Act. And, in a case
similar to the case at bar, Volges v. Resolution Trust Corp., 32
F.3d 50 (2d Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 2618,
132 L.Ed.2d 860 (1995), the Second Circuit held that a breach of
contract claim did not give the district court jurisdiction to
grant an injunction against the RTC. The plaintiff in that case
alleged that the RTC breached a contract to sell him certain
mortgages, and he sought to enjoin the RTC from selling or
otherwise transferring the mortgages. The district court granted
injunctive relief over the RTC's argument that the court lacked
subject matter jurisdiction to grant such relief. Id. at 51.
Noting that selling assets of the failed institution is squarely
within the RTC's power as a receiver, the Second Circuit concluded
that "the fact that the RTC's actions might violate some other
provision of law does not render the anti-injunction provision
inapplicable." Id. at 52.
III. The Administrative Claims Procedure
The appellants also presented the following issue: whether 12
U.S.C. § 1821(d)(13)(D) requires exhaustion of the administrative
process provided for under § 1821(d)(3)-(13) as a jurisdictional
prerequisite in this case. We need not reach this issue.3
3
Section 1821(d) sets forth the procedures through which
those with potential rights to the assets of a failed institution
may present administrative claims to the RTC. Section
1821(d)(13)(D) then provides that
[e]xcept 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....
(ii) any claim relating to any act or omission of such
institution or the Corporation as receiver.
Courts have largely construed this to mean that they have no
jurisdiction to adjudicate claims to institutional assets
unless such claims were first passed through the
administrative claims process provided for in the remainder
of § 1821(d).
Courts have generally held that claims arising from
actions taken by a failed institution before the RTC's
appointment as receiver are subject to the exhaustion
requirement. Capitol Leasing Co. v. F.D.I.C., 999 F.2d 188
(7th Cir.1993) (pre-insolvency breach of lease); Meliezer
v. Resolution Trust Corp., 952 F.2d 879 (5th Cir.1992)
(pre-insolvency negligence); F.D.I.C. v. Shain, Schaffer &
Rafanello, 944 F.2d 129, 136 (3d Cir.1991) (attorney's fees
incurred before insolvency). Some circuits have required
exhaustion even where the RTC's own actions in the course of
managing the assets of failed institutions gave rise to the
claims at issue. See, e.g., Rosa, 938 F.2d 383 (where
employees brought monetary claims for RTC's failure as
receiver to make payments to pre-insolvency pension plan).
At least two circuits, however, declined to apply the
exhaustion requirement where parties brought claims to
institutional assets arising from the RTC's receivership
actions. See Resolution Trust Corp. v. Titan Financial
Even if, as appellants allege, their claims were not
susceptible to the administrative claims process and thus should
not be subject to the jurisdictional bar set forth in the
administrative exhaustion requirement, the court does not have
jurisdiction to grant the remedy appellants seek because § 1821(j)
bars such relief. Courts have held that § 1821(j)'s bar applies
even in cases where the claim before the court was not susceptible
to the administrative claims process. See Rosa, 938 F.2d at 395,
398-400. Such a rule might seem extreme because it potentially
leaves plaintiffs without a remedy against the RTC acting as a
receiver, and the appellants argue as much. The Rosa court,
however, did not hold that an order restraining or affecting the
RTC's exercise of its powers as receiver or conservator could never
issue. Id. at 400. Rosa alludes to the possibility that such an
order might issue where the RTC lacked any cognizable grounds for
an action taken or where plaintiffs had no alternative remedy. Id.
An exception to § 1821(j) need not be invoked in this case,
however, because the appellants had a potential alternative remedy:
they could have filed a claim for monetary damages.
Corp., 22 F.3d 923 (9th Cir.1994) (attorney's fees claim
against institutional assets resulting from F.D.I.C. action
but based on terms of pre-insolvency guaranty); Homeland
Stores, Inc. v. Resolution Trust Corp., 17 F.3d 1269 (10th
Cir.) (where RTC allegedly violated terms of pre-insolvency
lease of property to retailer), cert. denied, --- U.S. ----,
115 S.Ct. 317, 130 L.Ed.2d 279 (1994). The case at bar
presents a situation where, as in Homeland Stores and Titan,
the RTC as receiver, not the insolvent institution, took the
action being challenged. And, unlike Homeland Stores and
Titan, here the RTC as receiver created the contract at
issue, potentially further complicating the exhaustion
analysis. As noted in the text, we need not reach this
issue.
IV. Conclusion
Section 1821(j) limits our jurisdiction such that we cannot
grant relief that would restrain or affect the RTC's exercise of
its statutory powers. As noted earlier, 12 U.S.C. § 1821(d)(2)(E)
grants the Corporation acting as receiver the power to dispose of
the assets of a failed banking institution. Thus, the RTC was
acting within its statutory powers in disposing of the mortgage
judgment at issue (and, in the course of doing so, choosing not to
sell the judgment to appellants). Although the limitation on the
court's jurisdiction in this case "may appear drastic, it fully
accords with the intent of Congress at the time it enacted FIRREA"
in that it allows the RTC "to expeditiously wind up the affairs of
literally hundreds of failed financial institutions throughout the
country." Freeman v. F.D.I.C., 56 F.3d 1394 (D.C.Cir.1995) (citing
as support H.R.Rep. No. 101-54(I), 101st Cong., 1st Sess. 291, 307,
reprinted in 1989 U.S.C.C.A.N. 86, 87, 103).
AFFIRMED.