The opinion of the court was delivered by: JOHN R. BARTELS
MEMORANDUM-DECISION AND ORDER
This is a motion to dismiss the complaint, or alternatively, to stay the proceedings 180 days, brought by defendant Resolution Trust Corporation ("RTC") for lack of subject matter jurisdiction under Fed.R.Civ.P. Rules 12(b)(1) and (c).
On September 12, 1990, plaintiffs filed a complaint against defendants alleging, inter alia, fraud in connection with their 1988 purchase of a parcel of real property in Shelter Island, New York, for approximately $ 3.1 million. The plaintiffs allege that the sellers of the Shelter Island property (defendants Biondo, Duryea, and Webb), their brokers (defendants Carusona and DiLeo), the plaintiffs' bank (defendant Eastern Federal Savings and Loan Association ("Eastern Federal")) and its Vice President (defendant Donelan), joined together and intentionally misrepresented the value of the property to the plaintiffs. Eastern Federal counterclaimed for foreclosure of its first mortgage lien held against the property after plaintiffs defaulted on payments in December, 1990.
On September 27, 1991, Eastern Federal, insured by the Federal Savings and Loan Insurance Corporation ("FSLIC"), was declared insolvent and closed by the Office of Thrift Supervision ("OTS"). On the same day, OTS placed Eastern Federal under the receivership of the Resolution Trust Corporation ("RTC") pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). Pub.L. 101-73, 103 Stat. 183 (1989), codified in Titles 12 and 15 of U.S.C. The RTC is a mixed-ownership Government corporation, managed exclusively by the Federal Deposit Insurance Corporation ("FDIC"). 12 U.S.C. § 1441a(b)(1) and (2). The RTC functions as the successor-in-interest to FSLIC for certain depository institutions placed into receivership between January 1, 1989 and August 2, 1992. 12 U.S.C. § 1441a(b)(3). As such, it replaced Eastern Federal as defendant in this lawsuit. 12 U.S.C. § 1441a(b) and § 1821(d)(2). On December 24, 1991, the plaintiffs filed & timely claim with the RTC pursuant to 12 U.S.C. § 1821(d)(3).
The RTC argues that 12 U.S.C. § 1821(d)(13)(D) categorically divests courts of subject matter jurisdiction over suits in which plaintiffs seek recovery from the assets of depository institutions held under its receivership until a claimant has completely exhausted its claim process. The pertinent portion of § 1821(d)(13)(D) states,
"(D) Limitation on judicial review
Except as otherwise provided in this subsection, no court shall have jurisdiction over--
(i) any claim or action for payment from . . . the assets of any depository institution for which the (RTC) has been appointed receiver . . ."
Under the wording of § 1821(d)(13)(D), RTC argues that a claimant is required to file a timely administrative claim instead of suing in a court. See 12 U.S.C. § 1821(d)(3). The RTC is allotted 180 days to render a determination on a claim. 12 U.S.C. § 1821(d)(5)(A)(i). A claimant can then file suit in an appropriate federal district court or in the United States District Court for the District of Columbia on the claim. 12 U.S.C. § 1821(d)(6). Notably, the RTC's decision to disallow a claim is unreviewable by any court and the suit proceeds de novo. 12 U.S.C. § 1821(d)(5)(E).
Plaintiffs concede the validity of the RTC's interpretation of § 1821(d)(13)(D). when a claimant files suit originally against RTC as receiver, but distinguish it from a suit filed in a court against a depository institution which is subsequently placed under the receivership of the RTC during the course of litigation. Plaintiffs argue that § 1821(d)(13)(D)'s jurisdiction-stripping language is qualified by the phrase, "except as otherwise provided by this subsection." Even the RTC concedes that no less than five provisions of § 1821(d) contemplate situations where, after the RTC is substituted as a party to litigation involving a claim against a depository institution, the plaintiff files a timely claim with the RTC. See 12 U.S.C. § 1821(d)(5)(F)(ii), § 1821(d)(6)(A), § 1821(d)(6)(B)(ii), § 1821(d)(7)(A), § 1821(d)(8)(C) and § 1821(d)(8)(D). The most notable of these provisions are § 1821(d)(5)(F)(ii) ("the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of a receiver") [emphasis added] and § 1821(d)(6)(A) ("the claimant may request administrative review off the [disallowed] claim . . . or file suit on such claim (or continue an action commenced before appointment of the receiver. . . .") [emphasis added].
Uses of the phrase "continue an action commenced before the appointment of the receiver" or synonymous terminology in these provisions of § 1821(d) indicate that it does not entirely strip a court of subject matter jurisdiction over pre-receivership lawsuits after a plaintiff files the requisite administrative claim with the RTC. Rather, the word "continue," taken within the context of these provisions, plainly directs a court to stay the proceedings against the RTC until the claim-filing process runs its 180 day course. Of course, if the RTC renders a determination before 180 days, the judicial stay of proceedings would be correspondingly shorter. See 12 U.S.C. § 1821(d)(6). House Report No. 101-54(I), 101st ...