415 Mass. 235

January 5, 1993 - May 12, 1993

Essex County


Where, during the pendancy of a plaintiff's appeal of an adverse judgment on her monetary claims against a bank, the Federal Deposit Insurance Corporation (FDIC) was appointed as the bank's liquidating agent, the failure of the plaintiff thereafter to initiate an administrative claim with the FDIC within the ninety-day period prescribed by 12 U.S.C. Section 1821 (d) (3) (B) deprived this court of jurisdiction to consider the appeal. [237-239]

CIVIL ACTION commenced in the Superior Court Department on November 3, 1988.

The case was tried before John Paul Sullivan, J.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Grover Henry Nix, III, for the plaintiff.

Gregory E. Gore, of the District of Columbia, for Federal Deposit Insurance Corporation.

James R. DeGiacomo (Judith K. Wyman with him) for Capitol Bancorporation.

ABRAMS, J. We transferred the appeal from the Appeals Court on our own motion to consider whether we have subject matter jurisdiction to consider an appeal in a case in which the Federal Deposit Insurance Corporation (FDIC) was appointed receiver during the appellate process. On review of the record, we conclude that the plaintiff's failure to

Page 236

participate in a timely fashion in the administrative procedures set out by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) is fatal to the plaintiff's appeal.

The plaintiff, Anne McLaughlin, cosigned and personally guaranteed a series of promissory notes given by her husband, a real estate developer, to Capitol Bank and Trust Company (bank). The plaintiff sued the bank and its parent corporation, Capitol Bancorporation, asserting claims of breach of fiduciary duty and breach of the contractual duty of good faith and fair dealing. The plaintiff alleged that the defendants withheld material information in order to induce her to cosign and guarantee the notes, and that the defendants subsequently undermined her husband's development projects by refusing to advance necessary funds. [Note 2]

The jury found for the plaintiff on both claims and awarded $1 million in damages. The defendants moved for judgment notwithstanding the verdict or, in the alternative, for a new trial. The court ordered the entry of judgment notwithstanding the verdict and conditionally allowed the motion for a new trial on the issue of damages only. The plaintiff appeals.

While the appeal was pending, the Commissioner of Banks ordered that the bank be closed due to financial problems and that the FDIC be appointed as the bank's liquidating agent. A judge of the Superior Court allowed the FDIC's motion to be substituted for the bank as a party to this litigation. A single justice of this court approved the banking commissioner's appointment of the FDIC as the liquidating agent.

At some point the plaintiff filed an administrative claim with the FDIC, pursuant to 12 U.S.C. Section 1821 (d) (6) (Supp. II 1990). The FDIC denied the claim on the ground that it was untimely because the plaintiff failed to file her

Page 237

claim within the administrative filing time period. The plaintiff appealed the denial to the Federal District Court; the District Court dismissed the action. [Note 3] McLaughlin v. Federal Deposit Ins. Corp., 796 F. Supp. 47 (D.Mass. 1992) (FDIC fulfilled notice requirement and plaintiff's claim was submitted after filing deadline). The plaintiff did not appeal from that ruling.

Subject matter jurisdiction. [Note 4] We conclude that under the statute the plaintiff's failure to participate in a timely manner in FIRREA's administrative process is fatal to her appeal. We do not reach the issue whether State courts have jurisdiction over an appeal from an action against a banking institution when the FDIC is appointed as receiver during the appellate process and the plaintiff participates in a timely manner in the FIRREA's administrative process. [Note 5]

The relevant portion of FIRREA provides: "Except as 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

Page 238

"(ii) any claim relating to any act or omission of such institution or the Corporation as receiver." 12 U.S.C. Section 1821 (d) (13) (D). [Note 6]

FIRREA also expressly provides for a limited period during which claimants may file claims against a failed institution: "The receiver, in any case involving the liquidation or winding up of the affairs of a closed depository institution, shall - (i) promptly publish a notice to the depository 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." 12 U.S.C. Section 1821 (d) (3) (B). A party who has been notified of the appointment of a Federal insurer as receiver, and who fails to initiate an administrative claim within the filing period, "necessarily forfeits any right to pursue a claim against the failed institution's assets in any court." Marquis v. Federal Deposit Ins. Corp., 965 F.2d 1148, 1152 (1st Cir. 1992), citing 12 U.S.C. Section 1821 (d) (5) (C) (i) (claims filed after the filing period shall be disallowed and such disallowance shall be final).

Here the plaintiff failed to file an administrative claim in a timely manner. "FIRREA makes participation in the administrative claims review process mandatory for all parties asserting claims against failed institutions, regardless of whether lawsuits to enforce those claims were initiated prior to the appointment of a receiver." Marquis v. Federal Deposit Ins. Corp., supra at 1151. The language of the statute

Page 239

states that except as provided in 12 U.S.C. Section 1821 (d) (13) (D) courts lose jurisdiction over a claim or action against a failed institution if an administrative claim is not timely filed with the FDIC. Because the plaintiff's claim was not timely filed with the FDIC, we dismiss the plaintiff's appeal.

Appeal dismissed.


[Note 1] As receiver for Capitol Bank and Trust Company.

[Note 2] The plaintiff also asserted other claims, including claims of fraud and violation of G. L. c. 93A; the bank asserted a counterclaim for breach of the notes and guarantees. None of these claims is before us on appeal.

[Note 3] Title 12 U.S.C. Section 1821 (d) (6) (A) provides that a "claimant may . . . file suit on [a] claim . . . (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district in which the depository institution's principal place of business is located . . . (and such court shall have jurisdiction to hear such claim)."

[Note 4] The issue of subject matter jurisdiction was not raised until the FDIC's responsive brief on appeal. The plaintiff filed a proof of claim with the FDIC four months after the closing of the bank. Both parties addressed the issue at oral argument, during which we were informed that the Federal District Court had dismissed the plaintiff's claim as untimely.

[Note 5] We allowed the FDIC's application for further appellate review in a case where the Appeals Court concluded that State courts had jurisdiction even after the FDIC's appointment as receiver. Botschafter v. Federal Deposit Ins. Corp., 33 Mass. App. Ct. 595 (1992), further appellate review granted, 414 Mass. 1104 (1993).

[Note 6] The FDIC argues that only Federal District Courts have jurisdiction over claims against assets of an institution once the FDIC has been appointed as receiver. The FDIC relies on 12 U.S.C. Section 1821 (d) (6) (A), which provides that, after an initial administrative determination by the FDIC that a claim should be disallowed, within sixty days after such disallowance, "the claimant may request administrative review of the claim . . . or file suit on such claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district in which the depository institution's principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim)."