Resolution Trust Corp. v. Seale ( 1994 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 92-5273
RESOLUTION TRUST CORPORATION,
as Receiver of Jasper Federal
Savings & Loan Association,
Plaintiff-Appellant,
versus
JOHN H. SEALE, ET AL.,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Texas
( January 26, 1994 )
Before HIGGINBOTHAM, DAVIS, and JONES, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
This case concerns whether the Resolution Trust Corporation
can sue three former directors of a savings and loan under
applicable federal and state statutes of limitations. We must
decide whether the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, Pub. L. 101-73, 103 Stat. 183 (Aug. 9,
1989), revives claims barred by state statutes of limitations, the
applicability of the general federal statute of limitations, and
whether in this case the doctrine of "adverse domination" tolls the
state statute of limitations.
I.
On March 10, 1992, the RTC sued John Seale, Virgil Martindale,
and Richard Mays, former directors of Jasper Savings & Loan
Association. The RTC alleged breach of fiduciary duty of care,
gross negligence, and breach of fiduciary duty of obedience. The
allegations concern the "Vanderburg loan" and the "Neuhoff loan,"
transactions allegedly involving regulatory violations and grossly
negligent investments. No defendant served as the chairman of the
Jasper board when it approved or initially funded the projects.
The defendants did not constitute a voting majority of the Jasper
board at any time.
The Jasper directors, including Seale, Martindale, and Mays,
approved the Vanderburg loan on November 10, 1983 with initial
funding soon following. Jasper loaned $7,750,000 to Vanderburg &
Associates, a Texas joint venture, for the construction of office
buildings in Austin. The RTC alleges that the project was located
outside of Jasper's lending area, violated loan-to-one and
concentration regulations, and that the Jasper directors never
obtained a feasibility study.
The Jasper directors, including defendants, approved the
Neuhoff loan on January 12, 1984 and promptly funded the project.
Jasper purchased a participation of $3,000,000 from Western Gulf
Savings & Loan Association, the lead lender, who had made a
$13,000,000 loan for the development of a commercial tract in
Dallas. The RTC alleges that this project was also located outside
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of Jasper's lending area, and that the Jasper directors failed to
assess properly the propriety of the investment.
Jasper became insolvent, and, around March 10, 1989, the
Federal Home Loan Bank Board appointed the Federal Savings & Loan
Insurance Corporation as conservator. On August 9, 1989, FIRREA
took effect, and the RTC became conservator. The RTC sued the
defendants on March 10, 1992. The district court granted summary
judgment, ruling that applicable statutes of limitations barred the
lawsuit. The RTC appealed. We affirm.
II.
The RTC sued for breach of fiduciary duty of care, gross
negligence, and breach of fiduciary duty of obedience. In Texas,
breach of a fiduciary duty of care is a tort subject to a two-year
limitations period. Gross negligence is subject to the same
statute. Breach of fiduciary "duty of obedience" also sounds in
tort and comes under the two-year rule. See Tex. Civ. Prac. & Rem.
Code § 16.003; Russell v. Campbell, 725 S.W.2d 739, 744 (Tex. App.-
-Houston [14th Dist.] 1987, writ ref'd n.r.e.).
For the purpose of applying the Texas statute of limitations,
the cause of action accrues when facts exist that authorize a
claimant to seek a judicial remedy. Murray v. San Jacinto Agency,
Inc., 800 S.W.2d 826, 828 (Tex. 1990). The most recent claims in
this case accrued when the Jasper directors approved and funded the
Neuhoff loan on January 12, 1984, which means that the last
limitations period expired on January 12, 1986. The RTC sued on
March 10, 1992. Under the Texas two-year statute, the RTC cannot
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bring this case because it filed suit more than six years after
expiration of the limitations period.
The RTC argues that FIRREA's internal limitations period
revives claims barred by state statutes of limitations. The FIRREA
limitations provision states, in pertinent part:
Notwithstanding any provision of any contract, the
applicable statute of limitations with regard to any
action brought by the Corporation as conservator or
receiver shall be-- . . . .
(ii) in the case of any tort claim, the longer
of--
(I) the 3-year period beginning on the date the claim
accrues; or
(II) the period applicable under State law.
12 U.S.C. § 1821(d)(14)(A). The FIRREA limitations provision also
states, in pertinent part:
For purposes of subparagraph (A), the date on which the
statute of limitations begins to run on any claim
described in such paragraph shall be the later of--
(i) the date of the appointment of the
Corporation as conservator or receiver; or
(ii) the date on which the cause of action
accrues.
12 U.S.C. § 1821(d)(14)(B).
The RTC assumed the conservatorship on August 9, 1989, and the
FIRREA three-year limitations period started to run on that date.
12 U.S.C. § 1821(d)(14)(B)(i). The RTC sued on March 10, 1992,
less than three years after it assumed the conservatorship and the
limitations period started to run. Under FIRREA, then, the RTC
sued within the three-year limitations period. 12 U.S.C.
§ 1821(d)(14)(A)(ii). Thus, this suit is timely if we conclude
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that the FIRREA three-year provision applies to claims barred when
FIRREA became effective.
III.
In interpreting statutes of limitations, we can presume that
the limitations period promotes the value of repose by protecting
citizens from stale and vexatious government claims, FDIC v. Belli,
981 F.2d 838, 842 (5th Cir. 1993); see also Guaranty Trust Co. v.
United States, 304 U.S. 126, 136 (1938), or we can view statutes of
limitations in a way that protects governmental claims by keeping
the courthouse doors open. Belli, 981 F.2d at 842; see also FDIC
v. Former Officers & Directors of Metropolitan Bank, 884 F.2d 1304,
1307-09 (9th Cir. 1989); FDIC v. Hinkson, 848 F.2d 432, 434 (3rd
Cir. 1988). We have styled these arguments as "interpretive rules
or policy inquiries" that need not be reached when a limitations
provision is unambiguous. Id.Consistent with this approach, we follow the plain language of
the FIRREA limitations provision understood in light of
congressional intent. Our refusal to dwell on the purpose of
statutes of limitations in general does not prevent us from using
interpretive tools like legislative history; it simply keeps us
from philosophizing about the intrinsic properties of limitations
periods and how they relate to the value of repose and the
vindication of governmental interests. Put simply, we need not
look to general policy considerations where the particular policy
decisions, found in the text of the statute and the history of its
enactment, dispose of the case. Belli accommodates the competing
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policies by invoking the doctrine of clear statement--Congress can
revive stale claims but must do so clearly.
We follow the plain language of federal statutes, abjuring a
literalist approaat does not serve but rather frustrates
congressional intent. Demarest v. Manspeaker, 111 S. Ct. 599, 604
(1991). FIRREA establishes new limitations periods for bringing
FIRREA claims, which seemingly enables the RTC to revive claims
that had lapsed under state limitations periods. 12 U.S.C.
§§ 1821(d)(14)(A), 1821(d)(14)(B). Logically, this approach would
permit the RTC to resurrect claims stale from the early twentieth
century. The evidence that Congress intended such a sweeping
recovery right is not persuasive.
Given this fact, we have followed other circuits in holding
that FIRREA does not revive claims that have lapsed under state
limitations periods. See, e.g., FDIC v. Shrader & York, 991 F.2d
216, 220 (5th Cir. 1993); FDIC v. Bledsoe, 989 F.2d 805, 808 (5th
Cir. 1993); FDIC v. Belli, 981 F.2d 838, 842-43 (5th Cir. 1993);
FDIC v. McSweeney, 976 F.2d 532, 534 (9th Cir. 1992) cert. denied,
113 S.Ct. 2440 (1993); FDIC v. Hinkson, 848 F.2d 432, 434 (3rd Cir.
1988). The FIRREA limitations period applies to claims that were
alive on August 9, 1989, when FIRREA took effect, but not to claims
that had expired before then. Shrader & York, 991 F.2d at 220;
Bledsoe, 989 F.2d at 808; Belli, 981 F.2d at 842. Under this
view, the expiration of the Texas two-year statute before the RTC
filed denies the RTC the more generous FIRREA limitations period.
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This reading of the statutory provision comports with general
jurisprudence on limitations periods. New limitations periods
usually apply to pending cases and have retroactive effect, Fust v.
Arnar-Stone Lab., Inc., 736 F.2d 1098, 1100 (5th Cir. 1984), but
the federal government has no right to pursue a case after old
limitations periods have expired. Guaranty Trust Co. v. United
States, 304 U.S. 126, 142 (1938). Subsequent extensions of a
limitations period will not revive barred claims in the absence of
a clear expression of contrary legislative intent. Belli, 981 F.2d
at 842-43.
The legislative history of FIRREA indirectly mentions
resurrecting stale claims. Significantly, however, the legislative
record does not contain a clear statement in favor of revival.
Senator Donald Riegle, Chairman of the House-Senate Conference
Committee on FIRREA, stated that the statute sought "to maximize
potential recoveries by the Federal Government by preserving to the
greatest extent permissible by law claims that otherwise would have
been lost due to the expiration of hitherto applicable limitations
periods." 135 Cong. Rec. § 10205 (daily ed. Aug. 4, 1989). He
cited Electrical Workers v. Robbins & Myers, Inc., 429 U.S. 229,
243 (1976), and Chase Sec. Corp. v. Donaldson, 325 U.S. 304, 311-16
(1945).
Senator Riegle's reference to maximizing recoveries "to the
greatest extent permissible by law" that otherwise would have been
lost is not necessarily an insistence on revival of barred claims.
It might mean creating a new accrual date on all causes of action
against a particular thrift after the RTC assumes the
conservatorship. This interpretation is plausible although Senator
Riegle cites to U.S. Supreme Court cases holding in part that a
legislature may constitutionally revive stale claims.
The legislative record is even more mixed because evidence for
the revival approach can be found in a draft Senate bill on FIRREA.
The House-Senate Conference Committee rejected a provision in the
draft providing that FIRREA could not revive stale claims. The
draft Senate bill stated, in pertinent part:
COMPUTATION OF LIMITATIONS. Notwithstanding any other
provision of law, for the purpose of computing whether
the applicable limitations period has expired prior to
the Corporation's acquisition of the claim, in addition
to the item excluded under any other applicable tolling
rules, there shall be excluded:
(1) as to any other action against a director
or officer, all periods during which any
culpable director or officer continues in such
capacity;
(2) as to any action against an accountant,
attorney, appraiser or other person providing
services to the insured institution, all
periods during which such party continues to
provide services to the insured institution.
If a claim is not already time-barred at the time the
corporation acquires it, the [applicable limitations
period], shall start anew at the time the corporation
acquires the claim.
S. Rep. No. 101-19, 101st Cong., 1st Sess. (1989). The rejected
draft prevented the RTC from suing on a claim that had already
lapsed before the RTC acquired it. The final version of FIRREA
does not contain similar language on the limitations issue.
In short, there is some support in the legislative history for
the revival approach, but neither Senator Riegle's statement nor
the draft Senate bill supplies the clear statement needed to revive
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expired limitations statutes. See Belli, 981 F.2d at 842-43. As
a result, this case falls under the Texas two-year provision. The
Texas limitations statute started to run on November 10, 1983 and
January 12, 1984 respectively, but the RTC did not sue until March
10, 1992, well after the two years had expired.
IV.
A general statutory rule usually does not govern if a more
specific rule covers the case. Green v. Bock Laundry Mach. Co.,
490 U.S. 504, 524 (1989). Under this view, we should apply the
more specific FIRREA limitations provision rather than the more
general federal limitations statute. The latter states, in
pertinent part:
Subject to the provisions of section 2416 of this title,
and except as otherwise provided by Congress, every
action for money damages brought by the United States or
an officer or agency thereof which is founded upon a tort
shall be barred unless the complaint is filed within
three years after the right of action first accrues.
28 U.S.C. § 2415(b). In Belli, however, we gave effect to both
FIRREA and Section 2415. Belli, 981 F.2d at 842. Even if Section
2415 were to apply to this case, the question would remain whether
that provision revives claims that had lapsed under state
limitations statutes.
Section 2415 cannot revive claims barred under a state
limitations period when the RTC takes over after the claims have
been barred under state law. Randolph v. RTC., 995 F.2d 611, 619
& n.7 (5th Cir. 1993); FDIC v. Wheat, 970 F.2d 124, 128 n.7 (5th
Cir. 1992); United States v. Sellers, 487 F.2d 1268, 1269-70 (5th
Cir. 1973). Section 2415 could have been applied when the RTC
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assumed the conservatorship in 1989, see Wheat, 970 F.2d at 128,
but, by that time, the Texas two-year limitations period that had
started running in 1984 had lapsed, meaning that the latest claim
open to the RTC had already been barred. Thus, the RTC cannot sue
under the Section 2415 limitations period.
V.
The doctrine of adverse domination tolls the Texas limitations
period until wrongdoing officers and directors relinquish control
of the corporation. We review de novo a district court finding of
no adverse domination, treating the issue as a ruling on the law
rather than an exercise of equitable discretion. FDIC v. Dawson,
4 F.3d 1303, 1308 (5th Cir. 1993). We also use state rather than
federal equitable tolling principles. Id. at 1308-09. State law
asks whether a majority of Jasper's board was more than negligent
during the state limitations period. Id. at 1309-13; Allen v.
Wilkerson, 396 S.W.2d 493, 500, 501 (Tex. Civ. App.--Austin 1965,
writ ref'd n.r.e.).
Accepting the RTC's proof, we have only that the Jasper board
unanimously approved the Neuhoff and Vanderburg loans, and that
Seale, Martindale, and Mays did not dissent. The RTC has not
created any fact issues of regulatory violations or fraud,
concealment, or other illegal activity amounting to more than
negligence. The RTC argued gross negligence, but provided no more
than conclusory assertions in support. It offered nothing to
support a finding that a majority controlled the Jasper board in a
more than negligent way.
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On the other hand, defendants submitted affidavits stating
that a majority did not adversely control the Jasper board at
anytime during the tolling period. To be sure, these affidavits
did not refute the regulatory violation allegations, but the RTC
offered no proof on that front. The affidavits do suffer from
breezy denials of wrongdoing, but given the limited submission by
the RTC, they adequately respond to the adverse domination charge.
Defendants challenged the RTC to prove regulatory violations
and adverse domination. They argued that naked assertions would
not suffice, and cited In re Lewisville Properties, Inc., 849 F.2d
946 (5th Cir. 1988) (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242 (1986)), and Celotex Corp. v. Catrett, 477 U.S. 317(1986). These cases demonstrate that the RTC did not meet its
burden.
AFFIRMED.
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