The opinion of the court was delivered by: THOMAS J. MCAVOY
Thomas J. McAvoy, U.S.D.J.
On January 11, 1993, motions in the above captioned case were heard by the undersigned at a motion term in Albany, New York. In response thereto, the court issued a bench decision to all noticed motions except the plaintiff's cross-motion to dismiss defendant's counterclaims on which the court reserved decision. This Decision and Order disposes of this matter now.
The facts of the underlying action will not be repeated in full and some familiarity is assumed. Rather, only those facts pertinent to the instant Decision and Order are explained.
This action was commenced pursuant to New York State law and subsequently removed to federal court by the now appointed receiver/plaintiff Resolution Trust Corporation (RTC). The litigation arises out of a financing agreement between Columbia Banking Federal Savings and Loan Association (Columbia) and the various defendants for the construction of "Adams Station," an apartment complex. When the defendants went into default under the financing agreement, Columbia undertook a foreclosure proceeding in state court. Therein Columbia obtained a state court order appointing a receiver for the Adams Station premises on or about May 20th, 1992.
Defendants J.F. Associates, Catlyn & Derzee, Inc., and Adams Station Commons, Inc. served their Answer including counterclaims against Columbia on or about June 9, 1992. Sometime after the filing of the complaint, Columbia became insolvent and on June 11, 1992, the Federal Office of Thrift Supervision (OTS) closed Columbia and appointed RTC as Receiver and Conservator for purposes of liquidation. See OTS Order No. 92-250 dated June 11, 1992 annexed as Exhibit A to Removal Petition. Thereafter, on or about June 23, 1992, defendants J.F. Associates, Catlyn & Derzee, Inc., Adams Station Commons, Inc., and Jerome Rosen served their Answer with counterclaims to plaintiff's First Amended Complaint.
Having received notice of RTC's appointment as receiver for Columbia, defendants filed a Proof of Claim with the RTC on or about September 14, 1992. On October 8th, 1992, a notice of substitution of RTC as a party plaintiff in the foreclosure action was filed in state court. Immediately thereafter, RTC filed a notice to remove the action to federal court. Plaintiff now seeks to dismiss the defendants' counterclaims on the grounds that this court lacks jurisdiction (Fed.R.Civ.P. 12(b)(1)) under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1821(d).
Not much under FIRREA is clear. This much the parties can agree on. However, through judicial interpretation of this labyrinthine statute it is clear to this court that "FIRREA makes participation in the administrative review process mandatory for all parties asserting claims against the failed institutions, regardless of whether lawsuits to enforce those claims were initiated prior to the appointment of a receiver." Marquis v. F.D.I.C., 965 F.2d 1148, 1151 (1st. Cir. 1992); See RTC v. Elman, 949 F.2d 624, 627 (2d Cir. 1991); RTC v. Mustang Partners, 946 F.2d 103, 106 (10th Cir. 1991) (per curiam); Meliezer v. RTC, 952 F.2d 879, 882 (5th Cir. 1992); FDIC v. Shain, Schaffer & Rafanello, 944 F.2d 129, 132 (3rd Cir. 1991). "Accordingly, . . . where a claimant has been properly notified of the appointment of a federal insurer as a receiver, 12 U.S.C. § 1821(d)(3)(B)-(C), and has nonetheless failed to initiate an administrative claim within the filing period, 12 U.S.C. § 1821(d)(3)(B)(i), the claimant necessarily forfeits any right to pursue a claim against the failed institution's assets in any court. See 12 U.S.C. § 1821(d)(5)(c)(i)." Marquis v. F.D.I.C., 965 F.2d at 1152.
However, there is no dispute in the instant case that defendants timely filed a claim with the appropriate administrative agency. Rather, the dispute concerns whether this court can adjudicate the matter during the pendency of the time-period accorded the administrative agency for review of the claim, and then, whether this court can adjudicate the matter after that time has elapsed.
The claim filed by the defendants with the RTC and the instant counterclaims seek satisfaction from the failed institution's assets. Because FIRREA mandates that the administrative agency must be given priority to review such claims for the first 180 days after its filing, plaintiff argues that until March 14, 1992, this court is without jurisdiction to pass upon the merits of the counterclaim. Further, the plaintiff argues that once the administrative review process has been exhausted, FIRREA allows defendants to seek judicial determination only in the District of Columbia or in the district court of the failed institution's principal place of business - here the Western District of New York. See 12 U.S.C. § 1821(d)(6)(A).
In opposition, defendants argue that under the holding of Marquis v. F.D.I.C., 965 F.2d 1148 (1st Cir. 1992), and the policy reasons discussed therein, as well as under the equities of this case, dismissal should not be granted because: 1) the counterclaim arose prior to RTC's appointment as receiver for Columbia; 2) the defendants abided by the dictates of FIRREA and timely filed with the appropriate administrative agency; 3) the administrative agency has done nothing to date; and, 4) adjudication of this matter in two different district courts would be wasteful of judicial resources and contrary to the public policy reasons underpinning the passage of FIRREA.
The court agrees with the general conclusions reached in the Marquis case. It would be wasteful indeed to dismiss the counterclaims to allow the administrative review process to be exhausted only to have the counter-claims brought as a separate action. As the First Circuit so eloquently explained, neither FIRREA nor common sense requires otherwise when the judicial claim pre-dates the appointment of RTC as receiver. See generally, Marquis, 965 F.2d 1148; Simms v. Biondo, 785 F. Supp. 322, 324-25 (E.D.N.Y. 1992) (ordering pre-receivership claims against RTC stayed until the administrative process was complete). Consequently, the court finds that where a pre-receiver action is removed to federal court, it is proper to stay adjudication to allow the administrative review process to continue. See Marquis, 965 F.2d at 1154; Biondo, 785 F. Supp. at 325.
This analysis necessarily begins with a review of the two most pertinent statutory provisions of FIRREA - 12 U.S.C. §§ 1821(d)(13(d) & 1821(d)(6)(A). Under § 1821(d)(13)(D),
the jurisdictional capacity of the federal courts with regard to claims against the assets of failed depository ...