NW Bnk MN Natl Assn v. FDIC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 15, 2002 Decided December 10, 2002

No. 01-5435

Norwest Bank Minnesota National Association, et al.,
Appellees

v.

Federal Deposit Insurance Corporation,
Appellant

Appeal from the United States District Court
for the District of Columbia
(00cv01250)

Barbara R. Sarshik, Counsel, Federal Deposit Insurance
Corporation, argued the cause for appellant. With her on the
briefs was Colleen J. Boles, Senior Counsel.

Gloria B. Solomon argued the cause and filed the brief for
appellees.

 Before: Edwards, Randolph, and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: On summary judgment, the dis-
trict court ruled in favor of Norwest Bank Minnesota Nation-
al Association,1 holding that Norwest had overpaid insurance
premiums to the Federal Deposit Insurance Corporation and
awarding Norwest a refund of $2.8 million, with interest.
The overpayments resulted from what the court viewed as the
FDIC's misinterpretation of the Federal Deposit Insurance
Corporation Improvement Act of 1991. We hold that Nor-
west's complaint was filed after the expiration of the statute
of limitations. We therefore vacate the order of the district
court and remand with instructions to dismiss.

I.

In 1989, in response to the savings-and-loan crisis, Con-
gress reformed the national system of deposit insurance,
creating two insurance funds under the control of the FDIC:
the Bank Insurance Fund ("BIF") to insure banks; and the
Savings Association Insurance Fund ("SAIF") to insure
savings-and-loan associations. The funds were to be sepa-
rately funded and administered. Congress anticipated that
the BIF would be in stronger financial condition for some
time and strictly limited the ability of an insured institution to
transfer deposits from one fund to the other fund. An
exception was the Oakar Amendment, named after its spon-
sor, which allowed a member of one fund to acquire a
member of the other fund. A SAIF member, after being
acquired by a BIF member, would continue to have its
acquired deposits insured by the SAIF, while the acquirer's
deposits would remain insured by the BIF. The financial
institution paid the SAIF rate on part of its deposits and the
BIF rate on the remainder of its deposits.

__________
1 Plaintiff is now known as Wells Fargo Bank Minnesota National
Association. For the sake of consistency with the district court's
orders in this case, we will continue to refer to it as Norwest.

 To determine the portion of the deposits to be insured by
the SAIF, Congress required Oakar institutions to calculate
their adjusted attributable deposit amount ("AADA") by add-
ing three components. The first component was (and still is)
the amount of deposits acquired from the SAIF bank. 12
U.S.C. s 1815(d)(3)(C)(i). The second component was (and
still is) cumulative adjustments made over time using the
third component. 12 U.S.C. s 1815(d)(3)(C)(ii). The third
component, prior to the 1991 amendments, was the amount
the first two components would have increased at a rate of
growth equal to the greater of a 7% annual increase or the
actual annual rate of growth of deposits of the bank (exclud-
ing any deposits acquired by further acquisitions). 12 U.S.C.
s 1815(d)(3)(C)(iii) (Supp. II 1990).

On December 19, 1991, Congress enacted the Federal
Deposit Insurance Corporation Improvement Act, modifying
the formula for calculating the AADA. Section 501(a) of the
Act eliminated the portion of the third component that pro-
vided for a minimum annual increase of 7% and instead
provided that the actual annual growth of deposits would be
used in all cases. Federal Deposit Insurance Corporation
Improvement Act of 1991, Pub. L. No. 102-242, 105 Stat.
2236, 2389 (codified at 12 U.S.C. s 1815(d)(3)(C)(iii)). Section
501(b) provided that the amendment "shall apply with respect
to semiannual periods beginning after the date of the enact-
ment of this Act." Id., 105 Stat. at 2391; see also 12 U.S.C.
s 1815 note. The dispute over the proper amount of the
insurance assessment stems from the parties' disagreement
about the meaning of the effective date provision. The FDIC
believes that the amendment did not take effect for purposes
of calculating Norwest's insurance premiums until 1993.
Norwest contends that its actual 1991 growth rate should
have been applied to the calculation of premiums beginning in
January 1992.

Norwest owed premiums to both the BIF and the SAIF as
a result of its acquisition of First Minnesota Savings Bank,
FSB, in December 1990. In January 1992, it filed the
appropriate FDIC form calculating its AADA based on the
greater of 7% and its actual growth rate, which was -7%.

Applying the pre-1991 calculation method, Norwest calculat-
ed its AADA on the appropriate form supplied by the FDIC
based on the 7% growth rate, which resulted in an inflated
AADA, if Norwest is correct. There was no immediate effect
on the total amount of insurance premiums Norwest owed the
FDIC because at that time the insurance rates for the BIF
and the SAIF were equal.

In 1995, the FDIC reduced the BIF assessment rate. The
result was that if the FDIC had erroneously interpreted the
statute in 1992 to overstate Norwest's AADA, Norwest paid a
higher total premium than it should have in 1995 and later
years, because deposits that should have been assessed at the
preferential BIF rate were assessed at the higher SAIF rate.
The error, if any, was preserved by the second component of
the formula, s 1815(d)(3)(C)(ii), which carries forward an
increase in the AADA and does not allow an error in the
growth rate in a given year to be corrected by further
changes in a bank's deposit amounts in later years. In
addition, there were special assessments based on the amount
of deposits assessed at the SAIF rate. Norwest overpaid
these amounts as well if it incorrectly calculated its AADA.

Norwest disputed the alleged overcharge in a letter to the
FDIC dated May 7, 1998, requesting a refund of the overpay-
ment of assessments resulting from the artificially high
AADA. The FDIC's Division of Finance denied the request
on September 17, 1998, as did the Assessment Appeals Com-
mittee on June 2, 1999. Norwest then filed suit against the
FDIC in the district court on June 1, 2000, more than eight
years after the alleged miscalculation.

The district court found Norwest's action timely. Applying
the six-year limitations period in 28 U.S.C. s 2401(a),2 the
court measured from the date of the denial by the Assess-
ment Appeals Committee on June 2, 1999. Norwest Bank
Minnesota, N.A. v. FDIC, No. 00-1250, slip op. at 6 (D.D.C.

__________
2 "Except as provided by the Contract Disputes Act of 1978,
every civil action commenced against the United States shall be
barred unless the complaint is filed within six years after the right
of action accrues." 28 U.S.C. s 2401(a).

Nov. 7, 2000). In the alternative, the court applied the five-
year period of 12 U.S.C. s 1817(g),3 measured from the time
of the first alleged overpayment in June 1995. Id.

II.

Norwest and the FDIC agree that the proper statute of
limitations for refund claims is 12 U.S.C. s 1817(g), rather
than 28 U.S.C. s 2401(a). The six-year statute of limitations--
28 U.S.C. s 2401(a)--is a general, catchall provision for civil
actions against the United States. The five-year statute of
limitations--12 U.S.C. s 1817(g)--applies specifically to an
action for "the recovery of any amount paid to the [FDIC] in
excess of the amount due to it," which precisely describes
Norwest's complaint. When both specific and general provi-
sions cover the same subject, the specific provision will con-
trol, especially if applying the general provision would render
the specific provision superfluous, as it would here. See, e.g.,
Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445
(1987).

Statutes of limitations commonly begin the running of the
period from the date the cause of action accrued. 3M Co. v.
Browner, 17 F.3d 1453, 1460 (D.C. Cir. 1994); Note, Develop-
ments in the Law--Statutes of Limitations, 63 Harv. L. Rev.
1177, 1200 (1950). Section 1817(g) is no exception: the
triggering event is when "the right accrued for which the
claim is made." If, as the FDIC urges, the right of action
accrued in January 1992, the five-year period had already run
when Norwest sent its letter to the FDIC in May 1998 and
when it filed its suit in June 2000.

"A claim normally accrues when the factual and legal
prerequisites for filing suit are in place." 3M Co., 17 F.3d at
1460; see Bay Area Laundry & Dry Cleaning Pension Trust
Fund v. Ferbar Corp. of Cal., 522 U.S. 192, 195 (1997);

__________
3 "No action or proceeding shall be brought ... for the recovery
of any amount paid to the Corporation in excess of the amount due
to it, unless such action or proceeding shall have been brought
within five years after the right accrued for which the claim is
made...." 12 U.S.C. s 1817(g).

United States v. Lindsay, 346 U.S. 568, 569 (1954); Rawlings
v. Ray, 312 U.S. 96, 98 (1941); Oppenheim v. Campbell, 571
F.2d 660, 662 (D.C. Cir. 1978). Section 1817(g) governs not
only the time for an "action" in court, but also the time for a
"proceeding." We held in 3M with respect to another statute
of limitations that a "proceeding" included an administrative
proceeding. 3M Co., 17 F.3d at 1455-57. If we followed this
line, Norwest's claim accrued when the legal and factual
prerequisites for an administrative proceeding were in place.
In January 1992, when the alleged miscalculation of Nor-
west's AADA occurred, Norwest could have requested a
refund from the agency or it could have brought suit in court,
alleging that the miscalculation resulted in an overpayment to
the SAIF. In other words, the legal prerequisites for "an
action or proceeding" were then in place. Norwest maintains
that at that time a lawsuit or a complaint to the agency would
have booted it nothing. In January 1992 the assessment
rates for the SAIF and the BIF were the same. And so if
Norwest had prevailed in court or in the agency, the FDIC
likely would have responded by billing it for the identical
amount as an underpayment to the BIF.

One might say--the FDIC does--that even if Norwest
succeeded in 1992 and wound up with no net recovery, it still
would have brought about a determination of the proper
construction of the 1991 statutory amendment and the FDIC
would have readjusted SAIF and BIF accounts accordingly,
not only for Norwest but also for all the other institutions in a
similar position. (The FDIC's Assessment Appeals Commit-
tee estimated that 75 of the 800 Oakar institutions would be
directly affected.) That would have had a future financial
impact for the regulated institutions if and when BIF assess-
ment rates were lowered, and it might also have affected
when the BIF became fully funded. On the other hand, it is
doubtless true that Norwest had no immediate financial in-
centive to raise the issue in 1992. But the action or proceed-
ing could have been brought then, and it has long been
settled that statutes of limitations begin running when the
wrong has been committed, even if at the time "no more than
nominal damages may be proved, and no more recovered; but

on the other hand, it is perfectly clear, that the proof of actual
damage may extend to facts that occur and grow out of the
injury, even up to the day of the verdict." Wilcox v. Plum-
mer, 29 U.S. (4 Pet.) 172, 182 (1830).4

Although the analogy is not perfect, Norwest's complaint is
like a claim "for restitution of money paid through mistake."
John P. Dawson, Mistake and Statutes of Limitation, 20
Minn. L. Rev. 481, 495 (1936). In such cases, courts generally
regard the statutory period to begin to run when the payment
is made. "Since the payment of money is ordinarily regarded
as final, the defendant-payee will probably change his position
in reliance upon a reasonable belief that the money is proper-
ly his...." Note, 63 Harv. L. Rev. at 1214. That, according
to the FDIC, is what happened here.

One of the policies underlying statutes of limitations is
repose. 3M Co., 17 F.3d at 1457. Yet if Norwest's cause of
action accrued when BIF and SAIF assessment rates di-
verged, and gave rise to a claim for each overpayment going
back five years from the date of filing the claim--which is
Norwest's position5--then the FDIC's books would never
close. In turn, the integrity and accuracy of the information
used to determine the aggregate assessment bases, and

__________
4 We have recognized, as have other courts, limited exceptions to
the general rule that the statute of limitations begins to run at the
time of the wrong. If the injuries are latent, as for example after
an exposure to toxic chemicals, the right to sue is deemed to accrue
when the wrong manifests itself in injury to the plaintiff. We
adopted this "discovery rule" in Connors v. Hallmark & Son Coal
Co., 935 F.2d 336, 342 (D.C. Cir. 1991). But here nothing prevented
Norwest from learning in 1992 that its AADA may have been
overstated, thus resulting in an overpayment to the SAIF. As we
stated in Connors, "if the injury is such that it should reasonably be
discovered at the time it occurs, then the plaintiff should be charged
with discovery of the injury, and the limitations period should
commence, at that time." Id.

5 Norwest argues that each overpayment creates a new cause of
action, and so long as a suit for a particular overpayment is
commenced within five years after overpayment, it is timely. Br. of
Appellee at 28-29.

therefore the financial health of the insurance systems, would
be placed in doubt.

Suppose the BIF and SAIF rates remained equal until
2030, then diverged. If Norwest's cause of action would not
accrue until then, a suit in 2034 would still be timely. The
FDIC would be forced to reallocate retroactively the assess-
ment base by increasing the amount for the BIF and decreas-
ing that of the SAIF for each year of the period, and for each
institution affected.

The statutory structure--which provides for independence
of the two funds6--does not treat transfers from one fund to
another as insignificant bookkeeping entries. An overpay-
ment to one fund, and the interest on the overpayment in the
fund, result in greater reserves for that fund, which inure to
the benefit of its member institutions. They pay less in
insurance assessments because less money is required to
maintain the designated reserve ratio (1.25% of the insured
deposits of that fund). 12 U.S.C. s 1817(b)(2)(A)(iv). On the
other hand, the members of the fund that is paid too little
because of an error might face a special assessment or an
increased insurance rate if the fund dips below the designated
reserve ratio.

A system that allowed a revision many years or decades
after an error would cast doubt on all of the data. The FDIC
could never be certain it was properly safeguarding the
financial health of the funds. Uncertainty might result in
overly cautious projections (keeping extra reserves on hand
just in case) or other problems for the FDIC, and therefore
its regulated financial institutions and their customers.

Further, an Oakar bank could hold onto the knowledge that
its AADA had been improperly enhanced, and choose to sue

__________
6 For example, 12 U.S.C. s 1821(a)(4)(A)(ii) provides that the
funds shall be "maintained separately and not commingled." The
FDIC is required to set the insurance rates such that the reserve
ratio of 1.25% (or a higher percentage as may be determined) is
maintained for each fund to cover future failures of financial institu-
tions insured by that fund. See 12 U.S.C. s 1817(b)(2)(A)(i), (iv).

years later if the rates went in the direction that disadvan-
taged it (in this case, SAIF assessment rates higher than
those of the BIF). If the rates diverged in the other di-
rection (BIF higher than SAIF), it would be able to choose
not to sue and benefit from the previous error. The Oakar
bank would be in a no-lose situation, to the detriment of the
BIF members whose assessments would be too high each
semiannual period.

As against this, Norwest will suffer "damage" indefinitely
into the future, so long as the SAIF assessment rates remain
higher than BIF rates, and so long as it does not divest itself
of the former savings-and-loan institution it acquired. Each
payment, by its lights, will be an overpayment because the
error in 1992 will remain embedded in its adjusted attribut-
able deposit amount. One response, although perhaps not
entirely satisfactory, is that Norwest is in the same position
as a person permanently disabled from an automobile acci-
dent who fails to sue within the period of limitations. That
person too will suffer continuing injury that cannot be recom-
pensed because the limitations period has run. Still, we
recognize that the result we reach may be seen as strict. But
we must also recognize the time-honored standard that "limi-
tations and conditions upon which the Government consents
to be sued must be strictly observed." Soriano v. United
States, 352 U.S. 270, 276 (1957).

As we have mentioned, Norwest argues that since each
assessment is a separate payment, it may recover all pay-
ments made within the preceding five-year period, a position
that would effectively suspend the running of the limitations
period. In support, Norwest invokes Keefe Co. v. Americable
Int'l, Inc., 219 F.3d 669 (D.C. Cir. 2000) (per curiam). Keefe
decided a certified question of District of Columbia law in the
context of a private dispute. It did not interpret a federal
statute of limitations. At issue were a series of installment
payments (equaling a percentage of subscriber revenues) due
as compensation for prior assistance obtaining cable television
contracts for U.S. military bases. There was no single event
that resulted in all future damages. See Keefe Co. v. Ameri-
cable Int'l, Inc., 755 A.2d 469, 476 (D.C. 2000). The District

of Columbia Court of Appeals held that the local statute of
limitations did not bar an action to recover installment pay-
ments that accrued within the limitations period. See id. at
478 (answering the certified question); see also Bay Area
Laundry & Dry Cleaning Pension Trust Fund, 522 U.S. at
195 ("[E]ach missed payment creates a separate cause of
action with its own six-year limitations period."). In contrast,
here the alleged miscalculation in 1992 of Norwest's AADA
was the cause of all of the future overpayments. The D.C.
Court of Appeals, in deciding the certified question in Keefe,
recognized that the outcome might have been different if
there had been a dispute over the interpretation of the
contract that would "govern throughout the life of the con-
tract." Id. at 477 (quoting Air Transp. Ass'n of Am. v.
Lenkin, 711 F. Supp. 25, 27 (D.D.C. 1989), aff'd per curiam
on other grounds, 899 F.2d 1265 (D.C. Cir. 1990)). In Len-
kin, the district court, interpreting District of Columbia law,
held that the limitations period for a tenant's claim of over-
payment of rent based on the landlord's alleged misinterpre-
tation of a lease provision commenced when the tenant first
received notice of the landlord's interpretation. Lenkin, 771
F. Supp. at 27. The statute of limitations barred the com-
plaint even though further payments would be incorrectly
inflated, if the tenant's interpretation was correct. Id.

Norwest also seeks to extend the period of limitations on
the ground that the six-year period of limitations in the
general statute (28 U.S.C. s 2401(a)) only started running in
1999, after the FDIC finally rejected its refund claim, so that
if it sued for a refund within six years of that date it was
entitled to recover all overpayments within six years of its
suit. This cannot possibly be right. Norwest initiated no
administrative action until May 1998, when it requested a
refund in a letter to the FDIC. By then the limitations
period had already expired. If Norwest's claim was untimely,
as we have determined it was, the FDIC's rejection of the
claim could not make it timely. Norwest relies upon Sendra
Corp. v. Magaw, 111 F.3d 162 (D.C. Cir. 1997), for the
proposition that when an agency reopens a matter it creates a
right of judicial review. But we cannot see how the FDIC

Assessment Appeals Committee's decision to treat the claim
for a refund on the merits, while noting in a footnote that it
appeared to be untimely under s 1817(g), somehow waived
the statute of limitations defense in judicial proceedings.

The district court's judgment in favor of Norwest cannot
stand because the complaint was filed after the expiration of
the five-year statute of limitations provided by 18 U.S.C.
s 1817(g). The judgment of the district court is vacated and
the case is remanded with instructions to dismiss because the
action was untimely.

So ordered.