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PRIETO v. STANDARD FED. SAV. BANK

November 16, 1995

EMERIDA PRIETO, Plaintiff, against STANDARD FEDERAL SAVINGS BANK, a Delaware banking corporation; FLUSHING SAVINGS BANK, a New York banking corporation; EDISON FEDERAL SAVINGS & LOAN ASSOCIATION, a New York banking corporation; and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., Defendants.


The opinion of the court was delivered by: CEDARBAUM

 CEDARBAUM, J.

 This is an action for damages arising out of defendants' management of plaintiff's two residential mortgage loans. The complaint alleges claims under the Fair Credit Billing Act, the Fair Debt Collection Practices Act, and New York common law against the four named defendants. Emerida Prieto initiated this action on January 24, 1994. The Resolution Trust Corporation ("RTC") was appointed receiver for defendant Standard Federal Savings Bank on October 21, 1992.

 The RTC as receiver for Standard moves to dismiss the complaint for lack of subject matter jurisdiction on the ground that Prieto failed to exhaust the administrative claims process mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). Prieto does not allege that she submitted her claims against Standard to the RTC for administrative review. Instead, she contends that the exhaustion requirement does not apply to those claims because they arose after the RTC was appointed receiver. In the alternative, she argues that she should be excused from the exhaustion requirement because pursuit of administrative review would be futile. For the reasons that follow, the motion is granted.

 FIRREA prescribes administrative procedures for the adjudication of claims against institutions for which the RTC has been appointed receiver. 12 U.S.C. § 1821(d) (1994); id. § 1441a(b)(4)(A) (1994). The statute provides that the RTC must give notice to the "institution's creditors to present their claims, together with proof, to the receiver by a date specified in the notice which shall be not less than 90 days after the publication of such notice." § 1821(d)(3)(B)(i). Upon the filing of a claim, the RTC has 180 days to review the claim and determine whether to allow or disallow the claim. § 1821(d)(5)(A)(i). After the 180-day period has expired or when the RTC has disallowed the claim, the claimant has sixty days to request administrative review or to file a lawsuit on the claim in federal court. § 1821(d)(6)(A). Claims not filed with the RTC by the date specified in the notice "shall be disallowed and such disallowance shall be final," § 1821(d)(5)(C)(i), unless the claimant did not receive notice in time to file the claims, § 1821(d)(5)(C)(ii).

 Claimants who do not exhaust this administrative process cannot have their claims reviewed by a federal court. Section 1821(d)(13)(D) of the Act provides:

 
(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, 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, including assets which the Corporation may acquire from itself as such receiver; or
 
(ii) any claim relating to any act or omission of such institution or the Corporation as receiver.

 The Second Circuit has held that this provision deprives federal courts of subject matter jurisdiction over claims that have not been first presented to the RTC for review. Circle Indus., Div. of Nastasi-White, Inc. v. City Fed. Sav. Bank, 931 F.2d 7, 8 (2d Cir. 1991) (per curiam); see also Resolution Trust Corp. v. Elman, 949 F.2d 624, 627 (2d Cir. 1991) (citing Circle Industries).

 Prieto contends that § 1821(d)(13)(D)(ii), which bars judicial review of any "claim" relating to an act or omission of the institution or the RTC, should be read to deprive federal courts of jurisdiction over only those claims that are covered by the review procedures set forth in the subsection. Prieto argues that she could not have complied with the requirements for submitting her claims to the RTC within the permissible time limits because her claims against Standard arose after the RTC was appointed receiver. Accordingly, she argues, these claims should not be subject to the jurisdictional bar.

 Some of Prieto's claims against Standard arose prior to the RTC's appointment as receiver. E.g. Amended Complaint PP 15-18 (Count I); 19-24 (Count II); 25-29 (Count III). As to those claims, there is no doubt that § 1821(d)(13)(D) applies and this Court lacks jurisdiction because Prieto failed to exhaust her administrative remedies. The Complaint alleges other claims arising after receivership. E.g. Amended Complaint PP 30-34 (Count IV); 46-49 (Count VII). These claims present a more difficult question of statutory construction: whether § 1821(d)(13)(D) deprives federal courts of jurisdiction over claims that arise after receivership and that the claimant does not submit for administrative review.

 The Second Circuit has not decided this question. Prieto relies heavily on the decision of the Tenth Circuit in Homeland Stores, Inc. v. Resolution Trust Corp., 17 F.3d 1269 (10th Cir.), cert. denied, 130 L. Ed. 2d 279, 115 S. Ct. 317 (1994), which held that the limitation on judicial review set forth in § 1821(d)(13)(D) does not apply to post-receivership claims. The court concluded that because of the statutory time limits for the presentation of claims, the administrative review process was closed to post-receivership claims. Id. at 1274. In doing so, the court disregarded the RTC's assertion that it would review plaintiff's claims. The court stated that it "must first look to the plain language of the statute." Id. at 1274 n.5. The court ...


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