F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
OCT 7 2004
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
In re:
FRANKLIN SAVINGS
CORPORATION,
No. 03-3239
Debtor.
FRANKLIN SAVINGS
CORPORATION; FRANKLIN
SAVINGS ASSOCIATION,
Plaintiffs-Appellants,
v.
UNITED STATES OF AMERICA;
FEDERAL DEPOSIT INSURANCE
CORPORATION,
Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
(D.C. No. 03-CV-2040-JWL)
Submitted on the briefs:
Jonathan A. Margolies of McDowell, Rice, Smith & Buchanan, Kansas City,
Missouri, for Plaintiffs-Appellants.
Peter D. Keisler, Assistant Attorney General, Eric F. Melgren, United States
Attorney, and Christopher Allman, Assistant United States Attorney, Kansas City,
Kansas, and Mark B. Stern and Dana J. Martin, Attorneys, Appellate Staff, Civil
Division, United States Department of Justice, Washington, D.C., for
Defendants-Appellees.
Before TACHA , Chief Judge, MURPHY , Circuit Judge, and CAUTHRON , *
Chief District Judge.
MURPHY , Circuit Judge.
Franklin Savings Association (FSA), formerly a state chartered savings and
loan association, and its parent, debtor Franklin Savings Corporation (FSC),
a Kansas corporation, (collectively, Franklin), appeal the dismissal of their
adversary complaint against the United States and the Federal Deposit Insurance
Corporation (FDIC). This is the latest in a long string of lawsuits Franklin has
brought against the government asserting claims in connection with the
government’s seizure, conservation and liquidation of FSA by the Resolution
Trust Corporation (RTC) and its successor-in-interest, the FDIC. 1 The
*
The Honorable Robin J. Cauthron, Chief District Judge, United States
District Court for the Western District of Oklahoma, sitting by designation.
1
See Franklin Sav. Ass’n v. Dir., Office of Thrift Supervision , 934 F.2d 1127
(10th Cir. 1991) (holding that administrative record supported decision by Office
of Thrift Supervision (OTS) to appoint RTC as FSA’s conservator) [ Franklin I ];
Franklin Sav. Ass’n v. Office of Thrift Supervision , 35 F.3d 1466 (10th Cir. 1994)
(continued...)
-2-
bankruptcy court granted the government’s motion to dismiss, finding the claims
were barred by the doctrine of claim preclusion. The district court affirmed. We
conclude Franklin’s claims are time-barred and, therefore, affirm the dismissal. 2
I. BACKGROUND
The complete history of Franklin’s litigation against the government is set
forth in numerous published opinions, see n.1, supra, and we briefly describe
only the factual background necessary to resolve this appeal. The RTC was
appointed conservator of FSA in 1990. The RTC’s function was converted
from conservator to receiver in 1992, and the RTC liquidated FSA. The FSC,
1
(...continued)
(holding OTS’s decision to change the RTC’s function from conservator to
receiver was not subject to judicial review) [ Franklin II ]; Franklin Sav. Corp. v.
United States , 180 F.3d 1124 (10th Cir. 1999) (holding that Franklin’s negligence
and breach of fiduciary duty claims against the RTC and the FDIC were barred
by the discretionary function exception to the Federal Tort Claims Act) [ Franklin
III ].
FSC also filed suit in the Court of Federal Claims, “essentially reiterating
the same facts previously litigated in Franklin I, II, III , . . . this time asserting an
action under the Tucker Act, 28 U.S.C. § 1491 (2000), for breach of contract,
breach of fiduciary duty, and a taking under the Fifth Amendment to the United
States Constitution.” Franklin Sav. Corp. v. United States, 56 Fed. Cl. 720, 722
(Fed. Cl. 2003), aff’d , 97 Fed. Appx. 331 (Fed. Cir. May 11, 2004). These claims
were also dismissed. Id. ; Franklin Sav. Corp. v. United States, 46 Fed. Cl. 533
(Fed. Cl. 2000) (dismissing the taking claim).
2
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
-3-
which owns 94% of FSA’s stock, then filed for Chapter 11 bankruptcy
protection.
A. The Franklin III Litigation
In 1993, Franklin filed an adversary complaint against the RTC in
bankruptcy court seeking damages under the Federal Tort Claims Act (FTCA)
for negligence, breach of fiduciary duty, and conversion by the RTC while acting
as conservator of FSA. See Franklin III, 180 F.3d at 1127; Franklin Sav. Corp.
v. United States, 970 F. Supp. 855, 860 (D. Kan. 1997). Franklin claimed that
the RTC, while acting as a conservator, negligently failed to protect the assets
and economic viability of FSA, in violation of certain directives and in breach of
its fiduciary duty. See Franklin III, 180 F.3d at 1131. The district court
withdrew the reference from the bankruptcy court, and Franklin amended its
complaint to name the FDIC as the RTC’s successor-in-interest. Id. at 1127.
The government moved to dismiss all claims for lack of subject matter
jurisdiction, asserting the discretionary function exception to the FTCA’s waiver
of sovereign immunity applied. 3 Because resolution of the jurisdictional issue of
3
The United States may not be sued absent a waiver of its sovereign
immunity. United States v. Mitchell , 445 U.S. 535, 538 (1980). The FTCA
waives sovereign immunity for actions against the United States resulting from
injuries caused by the negligent acts of governmental employees while acting in
the scope of their employment. 28 U.S.C. § 1346(b)(1). The United States can be
held liable “in the same manner and to the same extent as a private individual
(continued...)
-4-
whether the discretionary function exception applied was so intertwined with the
merits of the case, the district court treated the government’s motion to dismiss as
one for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Id. at 1129. The
district court granted the motion to dismiss.
On appeal to this court, Franklin argued for the first time that the
government had waived its discretionary-function immunity under Bankruptcy
Code § 106, 11 U.S.C. § 106, when it filed a claim in bankruptcy against FSC’s
estate. Franklin III, 180 F.3d at 1129. This court held that Franklin had waived
reliance on Bankruptcy Code § 106 by failing to assert that jurisdictional basis in
its complaint, seeking leave to amend its complaint to do so, or in any way
raising it in the district court. Id. at 1128-29.
This court affirmed the dismissal of Franklin’s claims, holding that they
were barred by the discretionary function exception because all of Franklin’s
allegations against the government involved discretionary conduct. Id. at
1133-39. The Supreme Court denied Franklin’s petition for certiorari review.
Franklin Sav. Corp. v. United States, 528 U.S. 964 (1999).
3
(...continued)
under like circumstances.” Id. § 2674. Excluded from the FTCA’s waiver of
immunity, however, are claims “based upon the exercise or performance or the
failure to exercise or perform a discretionary function or duty” by a federal
agency or a federal employee. Id. § 2680(a).
-5-
B. The Franklin IV Complaint
1. Franklin Refiles Franklin III
Three months after the Supreme Court denied review of Franklin III,
Franklin filed another adversary complaint, Franklin IV. The new complaint,
at issue herein, “is virtually identical to [the] complaint filed in Franklin III with
respect to the actual parties, allegations, and legal claims.” Franklin Sav. Corp.
v. United States (In re Franklin Sav. Corp. ), 296 B.R. 521, 524 (Bankr. D. Kan.
2002) (comparing claims in Franklin IV with those in Franklin III).
The same plaintiffs have filed suit – FSA and FSC. The same
defendants have been named, the United States and the FDIC as
successor-in-interest to the RTC. The factual allegations are exactly
the same, restated from the second amended complaint in Franklin
III virtually verbatim. Each of the claims the district court dismissed
in the prior action are restated in the instant complaint, also
verbatim. . . . As in the prior action, the plaintiffs seek money
damages in the amount of $820 million.
Id.
Franklin does not dispute the bankruptcy court’s characterization of the
two suits. Indeed, its position is that it has simply refiled its Franklin III action
in Franklin IV, and it concedes that all of the causes of action in both Franklin
III and Franklin IV sound in tort. See Aplt. Opening Br. at 10, 30; Aplt. App.
at 178.
-6-
2. Franklin Bases Franklin IV on Bankruptcy Code § 106
Franklin IV does, however, posit a new legal basis for Franklin’s
contention that the government has waived sovereign immunity: Bankruptcy
Code § 106(b) and (c), the theory we deemed waived in Franklin III. Franklin
asserts that Bankruptcy Code § 106 constitutes a complete waiver of sovereign
immunity separate and apart from the FTCA’s waiver of immunity, and that this
waiver permits tort claims against the United States which would otherwise not be
permitted under the discretionary function exception of FTCA § 2680(a).
Bankruptcy Code § 106, as amended in 1994, provides a waiver of
sovereign immunity when the government files a proof of claim against a debtor
in a bankruptcy proceeding. Section 106(b) waives sovereign immunity with
respect to counterclaims of the debtor’s estate “that arose out of the same
transaction or occurrence” as the proof of claim. 11 U.S.C. § 106(b). 4
Section
106(c) waives sovereign immunity with respect to counterclaims of the debtor’s
estate that did not arise out of the same transaction or occurrence as the proof of
claim, but only to the extent that the claims offset the government’s claim.
4
Section 106(b) states that “[a] governmental unit that has filed a proof of
claim in the case is deemed to have waived sovereign immunity with respect to a
claim against such governmental unit that is property of the estate and that arose
out of the same transaction or occurrence out of which the claim of such
governmental unit arose.”
-7-
Id. § 106(c). 5
The government does not dispute that it filed proofs of claim in
FSC’s bankruptcy proceeding or that the conditions of § 106(b) and (c) are met.
3. The Bankruptcy Court Dismisses Franklin IV
under the Doctrine of Claim Preclusion
The bankruptcy court granted the government’s motion to dismiss on the
basis of res judicata, or claim preclusion. In re Franklin Sav. Corp ., 296 B.R.
at 523, 531. It ruled that Franklin was relitigating the same claims against the
same parties as in Franklin III , and that all of the claims in Franklin IV had been
raised, or could have been raised, in Franklin III. Id. at 527-28. The bankruptcy
court rejected Franklin’s argument that it could reassert its claims because the
claims in Franklin III had not been decided on the merits, but had been dismissed
for lack of jurisdiction. Id. at 526-27. The court also ruled that Bankruptcy Code
§ 106’s waiver of sovereign immunity did not abrogate the discretionary function
exception to the FTCA. Id. at 528-29. The district court affirmed, and this
appeal followed.
II. ANALYSIS
Franklin argues on appeal that Franklin III was dismissed for lack of
jurisdiction, rather than on the merits, and, therefore, the doctrine of claim
5
Section 106(c) states that “[n]otwithstanding any assertion of sovereign
immunity by a governmental unit, there shall be offset against a claim or interest
of a governmental unit any claim against such governmental unit that is property
of the estate.”
-8-
preclusion does not bar the reassertion of its claims. We do not reach this issue,
however, because it is clear that all of the claims in Franklin IV are time-barred.
Even if Franklin III was dismissed without prejudice, the “dismissal of an earlier
suit . . . without prejudice does not authorize a subsequent suit brought outside
of the otherwise binding period of limitations.” Stein v. Reynolds Sec., Inc. ,
667 F.2d 33, 34 (11th Cir. 1982); see also Lambert v. United States , 44 F.3d 296,
298 (5th Cir. 1995) (same, applying 28 U.S.C. § 2401(b)).
Moreover, as we explain below, the statute of limitations issue is
jurisdictional in this case, and must be decided before the claim preclusion issue. 6
Jurisdictional issues must be addressed first and, if they are resolved against
jurisdiction, the case is at an end. See Steel Co. v. Citizens for a Better Env’t ,
523 U.S. 83, 94 (1998). In contrast, “[r]es judicata is not a jurisdictional bar; it is
an affirmative defense,” and, thus, would not defeat subject matter jurisdiction of
6
“[T]his court is under a continuing obligation to examine both its own
jurisdiction and the jurisdiction of the district court. . . .” Local 514 Transport
Workers Union of Am. v. Keating , 358 F.3d 743, 749 n.6 (10th Cir. 2004). “The
determination of the district court’s subject matter jurisdiction is a question of
law. . . .” Salt Lake Tribune Publ’g Co., LLC v. AT & T Corp. , 320 F.3d 1081,
1095 (10th Cir. 2003). Therefore, we may affirm the district court’s dismissal
order if we independently determine that the district court lacked subject matter
jurisdiction. See United States v. Sandoval , 29 F.3d 537, 542 n.6 (10th Cir. 1994)
(noting that this court is “free to affirm a district court decision on any grounds
for which there is a record sufficient to permit conclusions of law”) (quotation
omitted).
-9-
this or the district court. Kenmen Eng’g v. City of Union , 314 F.3d 468, 479
(10th Cir. 2002).
A. The FTCA and its Time Limitations Govern Franklin’s Claims
1. The Exclusive Avenue for Franklin’s Claim is the FTCA
We must begin our analysis by making clear what Franklin does not
acknowledge: its claims are governed by the FTCA, which provides the exclusive
avenue to assert a claim sounding in tort against the United States. 28 U.S.C.A.
§ 2679(a) (providing that the FTCA remedy is “exclusive” for all “claims which
are cognizable under section 1346(b)”). Franklin seems to argue that it is
bringing its claims under Bankruptcy Code § 106. By its express terms, however,
Bankruptcy Code § 106 does not provide a substantive or independent basis for
asserting a claim against the government. Section 106(a)(5) states: “Nothing in
this section shall create any substantive claim for relief or cause of action not
otherwise existing under this title, the Federal Rules of Bankruptcy Procedure, or
nonbankruptcy law.” Thus, a plaintiff such as Franklin seeking to use the waiver
in § 106 must demonstrate that a source outside of § 106 entitles it to the relief
sought. Hardy v. United States (In re Hardy) , 97 F.3d 1384, 1388 (11th Cir.
1996); see also Zayler v. United States , 279 F. Supp. 2d 805, 814 (E.D. Tex.
2003), appeal pending , No. 03-41345 (5th Cir.) (“[E]ven though §§ 106(b) and
-10-
(c) waive sovereign immunity for counterclaims against the United States, any
substantive rights asserted must have an independent legal basis.”).
That outside source is the FTCA when, as here, the claim sounds in tort. It
is clear that the FTCA provides the exclusive avenue to bring a tort claim against
the United States, notwithstanding other statutes that permit the government to be
sued; a rule previously explained to Franklin in Franklin III, 180 F.3d at 1142-43
(holding that the FTCA provides the exclusive avenue for Franklin’s tort claims,
which are cognizable under FTCA § 1346, notwithstanding the existence of an
independent “sue and be sued” limited waiver of immunity). Although Franklin
never acknowledges that the FTCA governs its claims in Franklin IV , it does
admit that all of its claims sound in tort, that it is simply reasserting the same tort
claims it asserted in Franklin III , and that its claims in Franklin III were brought
under the FTCA. See Aplt. Opening Br. at 5-6, 10; Aplt. App. at 178. Quite
clearly then, the FTCA provides the exclusive avenue for pursuing those claims
against the United States.
2. Time Limitation in Section 2401(b)
Federal law bars any tort claim against the United States unless it is
presented to the appropriate federal agency within two years of the claim’s
accrual, and filed within six months after notice of denial of the claim by that
agency. 28 U.S.C. § 2401(b) (“a tort claim against the United States shall be
-11-
forever barred unless . . . action is begun within six months after the date of
mailing . . . of notice of final denial of the claim by the [appropriate Federal]
agency to which it was presented.”). Section 2401(b) is the limitations period of
the FTCA. Plaza Speedway Inc. v. United States , 311 F.3d 1262, 1266 (10th Cir.
2002). Here, the relevant federal agency denied the claims asserted in Franklin
IV on August 10, 1992, eight years before the Franklin IV complaint was filed.
Aplt. App. at 7, 38.
3. The FTCA’s Timeliness Requirement is Jurisdictional
Timeliness of suit is one of the conditions of the government’s waiver of
sovereign immunity under the FTCA, and the district court lacks subject matter
jurisdiction to proceed under the FTCA if a plaintiff fails to satisfy the FTCA’s
timing requirements set forth in § 2401(b). Dahl v. United States , 319 F.3d 1226,
1228 (10th Cir. 2003).
The doctrine of sovereign immunity precludes suit against the United
States without the consent of Congress; the terms of its consent
define the extent of the court’s jurisdiction. The applicable statute of
limitations is a term of consent. The plaintiff’s failure to sue within
the period of limitations is not simply a waivable defense; it deprives
the court of jurisdiction to entertain the action.
Sisseton-Wahpeton Sioux Tribe v. United States , 895 F.2d 588, 592 (9th Cir.
1990).
-12-
B. Franklin Argues Section 2401(b) Does Not Apply
Franklin does not dispute that the statute of limitations in § 2401 expired
prior to its commencement of Franklin IV . Rather, it argues that § 2401(b) does
not apply. Aplt. Reply Br. at 16. First, it argues that a Kansas saving statute
permits it to refile its otherwise untimely claims. Aplt. Opening Br. at 29-32;
Aplt. App. at 178. Second, it argues that its use of Bankruptcy Code § 106’s
waiver of sovereign immunity abrogates any conditions on the waiver found in the
FTCA, including the statute of limitations provided in § 2401(b). We find no
merit in either proposition.
1. The Kansas Saving Statute
Franklin contends that Franklin IV is not time-barred because it relates
back to the filing date of Franklin III by virtue of the Kansas saving statute,
which allows an action to be refiled within six months if the original action
was timely commenced and was dismissed for reasons other than on the merits.
Kan. Stat. Ann. § 60-518. 7
Franklin argues on appeal that the bankruptcy court
and the district court erred in rejecting application of the Kansas saving statute.
These courts rejected application of section 60-518 on the basis that Franklin III
7
Section 60-518 states: “If any action be commenced within due time, and
the plaintiff fail in such action otherwise than upon the merits, and the time
limited for the same shall have expired, the plaintiff . . . may commence a new
action within six (6) months after such failure.”
-13-
had been dismissed for failure to state a claim under Rule 12(b)(6) and, therefore,
had failed on the merits. We agree that the Kansas saving statute has no
application here, but for a different reason: As noted above, the FTCA is the
exclusive means for Franklin to assert its tort claims against the government, and
there is no legal basis for applying a state saving statute under the FTCA.
Franklin argues that claims under the FTCA rely on the substance of the
forum state’s tort law, here Kansas, and therefore, that Kansas’ statute of
limitations determines the limitation period in federal court. Aplt. Opening Br.
at 30; Aplt. App. at 178. This court has previously rejected this very argument.
Pipkin v. United States Postal Serv ., 951 F.2d 272, 274-75 (10th Cir. 1991); see
also Benge v. United States , 17 F.3d 1286, 1288 (10th Cir. 1994). Although state
law determines whether there is substantive liability under the FTCA, see Cannon
v. United States , 338 F.3d 1183, 1192 (10th Cir. 2003), federal law defines the
applicable limitations period, Pipkin , 951 F.2d at 274-75. “[A] court looks to
state law to define the time limitation applicable to a federal claim only when
Congress has failed to provide a statute of limitations for a federal cause of
action,” but Congress has expressly stated the applicable limitation period for a
tort claim brought against the United States, in § 2401(b), so reference to state
law is inappropriate. Id. (quotation omitted). In both Pipkin and Benge , this
court held that a state saving statute has no application to tort claims brought
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against the United States. Benge , 17 F.3d at 1288 (Oklahoma saving statute);
Pipkin , 951 F.2d at 274-75 (same). Thus, the Kansas saving statute does not
apply to the claims asserted in Franklin IV .
2. Bankruptcy Code § 106 Does not Abrogate § 2401(b)’s
Timeliness Requirements
Franklin responds that Benge and Pipkin are inapplicable because the
waiver of sovereign immunity under Bankruptcy Code § 106 supercedes the more
limited waiver of immunity under the FTCA. Although a condition of the waiver
of immunity under the FTCA is compliance with § 2401(b) timing requirements,
Dahl , 319 F.3d at 1228, Franklin argues that compliance with § 2401(b) is not a
condition of § 106’s waiver of immunity. It contends that the mere filing of a
proof of claim in bankruptcy court constitutes a complete abrogation not only of
any sovereign immunity defense, but also of any rights associated with the waiver
of immunity, including the statute of limitations under § 2401(b). Aplt. Reply Br.
at 18-19. Franklin cites the cases of Anderson v. FDIC , 918 F.2d 1139 (4th Cir.
1990) and Ashbrook v. Block, 917 F.2d 918 (6th Cir. 1990), for the proposition
that none of the limitations on liability contained in § 2401(b) or in the FTCA
apply when a plaintiff is proceeding under the waiver of immunity contained in
§ 106. Aplt. Opening Br. at 35-37; Aplt. Reply Br. at 11-14. For the following
reasons, we conclude that the condition of the § 2401(b)’s limitation period
-15-
must be satisfied, notwithstanding any waiver of immunity under Bankruptcy
Code § 106.
a. Section 106 is Only a Limited Consent to be Sued in Bankruptcy Court
Section 106 allows Franklin to file a counterclaim against the United States
in bankruptcy court; it does not permit Franklin to file an untimely counterclaim.
Section 106 is simply a waiver of sovereign immunity; it does not create a claim
for relief, nor does it provide a separate basis for subject matter jurisdiction.
Cf. Weeks Constr., Inc. v. Oglala Sioux Hous. Auth. , 797 F.2d 668, 671-72
(8th Cir. 1986) (holding that the sovereign’s consent to be sued, standing alone,
does not confer subject matter jurisdiction upon a court to hear a claim against
the sovereign).
In order for a claim against the United States to be heard, first there
must be, because sovereign immunity requires it, consent to be sued;
and because, with the exception of the Supreme Court, the subject
matter jurisdiction of federal courts is defined by statute, there must
be, second, Congressional provision of a court with the authority to
hear the claim and grant relief.
Quality Tooling, Inc. v. United States , 47 F.3d 1569, 1575 (Fed. Cir. 1995).
The court’s subject matter jurisdiction for the claims asserted in Franklin
IV is determined and defined by the provisions of the FTCA. Federal jurisdiction
under the FTCA is limited by a number of conditions, including the statute of
limitations provision of § 2401(b). As previously noted, the FTCA’s waiver of
immunity provision, § 1346(b)(1), is subject to the condition of compliance with
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§ 2401(b)’s time limitations. See Dahl , 319 F.3d at 1228 (holding that court must
dismiss for lack of subject matter jurisdiction if an FTCA litigant does not satisfy
the timing requirement of § 2401(b).
Just as § 2401(b) limits the waiver of sovereign immunity in §§ 1346(b)(1)
and 2674, it also limits the waiver in Bankruptcy Code § 106. Section 2401(b)’s
two-year limitation applies to all tort claims brought against the United States.
Franklin presents no persuasive argument why this broadly-worded time limitation
would not apply simply because the United States has consented to be sued in
bankruptcy court pursuant to § 106.
b. Waivers of Sovereign Immunity and Conditions on that
Waiver are Construed Narrowly
In order for this court to conclude that § 106 abrogates the jurisdictional
statute of limitations contained in § 2401(b), we would need to determine that
Congress unequivocally expressed such a result. “[T]he United States, as
sovereign, is immune from suit save as it consents to be sued . . . and the terms of
its consent to be sued in any court define that court’s jurisdiction to entertain the
suit.” Lehman v. Nakshian , 453 U.S. 156, 160 (1981) (quotations omitted;
alteration in original). “Waivers of the Government’s sovereign immunity, to be
effective, must be unequivocally expressed.” United States v. Nordic Vill., Inc. ,
503 U.S. 30, 33 (1992) (quotations omitted).
-17-
“Like a waiver of immunity itself, which must be unequivocally
expressed[,] [the Supreme] Court has long decided that limitations and conditions
upon which the Government consents to be sued must be strictly observed and
exceptions thereto are not to be implied.” Lehman, 453 U.S. at 160-61
(quotations and citations omitted). Thus, in interpreting § 2401(b)’s statute
of limitations provision, the Court has stated:
Section 2401(b) . . . is the balance struck by Congress in the
context of tort claims against the Government; and we are not free to
construe it so as to defeat its obvious purpose, which is to encourage
the prompt presentation of claims. We should regard the plea of
limitations as a meritorious defense, in itself serving a public
interest.
We should also have in mind that the [FTCA] waives the
immunity of the United States and that in construing the statute of
limitations, which is a condition of that waiver, we should not take it
upon ourselves to extend the waiver beyond that which Congress
intended.
United States v. Kubrick , 444 U.S. 111, 117 (1979) (quotations and citations
omitted).
Neither the language nor the legislative history of Bankruptcy Code § 106
“unequivocally express” a Congressional intent to abrogate, eliminate, or avoid
any applicable statute of limitations that is integral to the cause of action asserted
pursuant to § 106’s waiver. Section 106 requires a plaintiff seeking to use its
waiver to demonstrate that a source outside of § 106 entitles it to the relief
sought, and does not evidence any intent to exempt the plaintiff from satisfying
-18-
any time-bar condition or requirement contained within that outside source. The
legislative history of § 106, as evidenced by both the Senate and House
Committee reports, confirms that Congress intended § 106 to provide a limited
waiver of sovereign immunity to enable a debtor to recover damages only to the
same extent that the debtor’s claims would be cognizable outside of bankruptcy:
Section 106 provides for a limited waiver of sovereign
immunity in bankruptcy cases. Though Congress has the power to
waive sovereign immunity for the Federal government completely in
bankruptcy cases, the policy followed here is designed to achieve
approximately the same result that would prevail outside of
bankruptcy. . . .
....
This section does not confer sovereign immunity on any
governmental unit that does not already have immunity. It simply
recognizes any immunity that exists and prescribes the proper
treatment of claims by and against that sovereign.
S. REP. No. 95-989, 95th Cong., 2d Sess. at 29-30 (1978), reprinted in 1978
U.S.C.C.A.N. 5787, 5815-16; H.R. REP. No. 95-595, 95th Cong., 1st Sess. at 317
(1977), reprinted in 1978 U.S.C.C.A.N. 5787, 6274 (emphasis added).
c. Anderson and Ashbrook
In Anderson v. FDIC , and Ashbrook v. Block , the Fourth and Sixth Circuit,
respectively, held that, under Bankruptcy Code § 106, the government waives the
administrative exhaustion requirement in § 2675(a) of the FTCA by simply filing
a proof of claim. Anderson , 918 F.2d at 1143-44; Ashbrook , 917 F.2d at 922-23.
-19-
Bankruptcy Code § 106 “is based on equity[;] in essence, it would be unfair for
a governmental unit to participate in the distributions of a bankruptcy case while
at the same time shielding itself from liability.” Zayler , 279 F. Supp. 2d at 811.
The Anderson and Ashbrook courts concluded it would be inequitable to allow the
government to file a proof of claim and receive a distribution from a debtor’s
estate, while requiring the debtor to pursue administrative remedies in order to
pursue a counterclaim against the government. Franklin urges us to follow these
decisions and conclude that the government also waives § 2401(b)’s statute of
limitations when it files a proof of claim.
We express no opinion as to the merits of Anderson and Ashbrook with
respect to their conclusion that § 106 avoids § 2675(a)’s administrative
exhaustion requirement. We find, however, no similar policy or other reason of
equity to support a conclusion that Congress intended § 106’s waiver to eliminate
the government’s right to demand compliance with the statute of limitations
condition contained in § 2401(b). There are fundamental differences between
eliminating a requirement that a claim be first presented to an administrative
agency, which is based on principles of judicial efficiency, and eliminating a
requirement that a claim be filed in a timely manner:
Statutes of limitations, which are found and approved in all systems
of enlightened jurisprudence, represent a pervasive legislative
judgment that it is unjust to fail to put the adversary on notice to
defend within a specified period of time and that the right to be free
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of stale claims in time comes to prevail over the right to prosecute
them.
Kubrick , 444 U.S. at 117 (quotations and citation omitted).
It would be extraordinarily unfair to the United States if the mere filing of
a proof of claim in a bankruptcy proceeding subjected it to liability for untimely
claims, leaving it without recourse to the usual protections from stale claims
available to it in any other, non-bankruptcy proceeding. To state such a
proposition is to reject it. Moreover, the Anderson and Ashbrook decisions were
decided before the 1994 amendment to § 106, which added the explicit statement
in subsection 106(a)(5), that § 106 did not create any substantive claim for relief
or cause of action, and that any substantive rights asserted thereunder must have
an independent legal basis.
In summary, even though Franklin may avail itself of the waiver of
immunity in Bankruptcy Code § 106, the FTCA remains the exclusive means by
which Franklin may assert its tort claims, with the FTCA’s attendant statute of
limitations condition contained in § 2401(b). Congress did not unequivocally
manifest an intent in Bankruptcy Code § 106 to displace § 2401. Absent such an
unequivocal expression of intent, this court is not at liberty to construe § 106’s
waiver or § 2401(b)’s statute of limitations “beyond that which Congress
intended” or to construe the limitations requirement of § 2401(b) “so as to defeat
its obvious purpose, which is to encourage the prompt presentation of claims.”
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Kubrick , 444 U.S. at 117-18. The government has not consented to be sued once
the time period prescribed by § 2401(b) has run. Because Franklin’s claim is
untimely under § 2401(b), this court lacks subject matter jurisdiction.
The judgment of the district court is AFFIRMED.
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