National Credit Union Administration Board v. Credit Suisse Securities (USA) LLC et al
Filing
70
MEMORANDUM AND ORDER - In summary, the Court is not persuaded that it erred in its previous ruling 47 , and it reaffirms that ruling that plaintiffs tolling agreement with defendants is not effective in extending the applicable three-year limitations period under the Extender Statute. Signed by District Judge John W. Lungstrum on 7/10/2013. (ses)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
NATIONAL CREDIT UNION
ADMINISTRATION BOARD,
)
)
)
Plaintiff,
)
)
v.
)
)
CREDIT SUISSE SECURITIES (USA) LLC )
and CREDIT SUISSE FIRST BOSTON
)
MORTGAGE SECURITIES CORP.,
)
)
Defendants.
)
)
_______________________________________)
Case No. 12-2648-JWL
MEMORANDUM AND ORDER
Plaintiff National Credit Union Administration Board brings this suit as
conservator and liquidating agent of three credit unions who purchased residential
mortgage-backed securities (“certificates”). Plaintiff brings claims under the federal
Securities Act of 1933 and California and Kansas statutes, based on alleged untrue
statements or omissions of material facts relating to each certificate by defendants, who
sold, underwrote, or issued the certificates. By Memorandum and Order dated April 8,
2013 (Doc. # 47-1), the Court dismissed some of plaintiff’s claims as time-barred. See
National Credit Union Admin. Bd. v. Credit Suisse Sec. (USA) LLC, 2013 WL 1411769
(D. Kan. Apr. 8, 2013). As a part of that ruling, the Court held that the three-year
limitations period for claims by plaintiff as conservator or liquidator, pursuant to the socalled Extender Statute, 12 U.S.C. § 1787(b)(14), could not be extended by a tolling
agreement between the parties. See id. at *9-11.
On April 29, 2013, the Court granted plaintiff’s oral motion for reconsideration
of that particular holding, and it allowed additional briefing on that issue by the parties
to this case and other defendants against whom plaintiff has asserted similar claims in
this Court. The Court also allowed the Federal Deposit Insurance Corporation (FDIC),
which is subject to a similar Extender Statute, to file an amicus brief on the issue.
Having considered these supplemental arguments, the Court reaffirms its prior holding
that the Extender Statute’s limitations periods may not be tolled by agreement.
1.
The Court’s original holding was based on the following reasoning, see id.:
The Supreme Court’s opinion in Mid State Horticultural Co. v. Pennsylvania Railroad
Co., 320 U.S. 356 (1943), in which the Court refused to allow a particular statutory
limitations period to be waived by agreement, taught that if a statutory limitations period
was intended to extinguish the right to sue, that period may not be extended or waived
by agreement. The Extender Statute includes just such a limitations period, as the statute
operates in a similar fashion to the three-year limitations period that it displaces, which
the Tenth Circuit has indicated represents a statute of repose that extinguishes the right
the sue. Moreover, Congress’s intent is most clearly articulated by the text of the
Extender Statute, which prescribes a particular limitations period “[n]otwithstanding any
provision of any contract.” See 12 U.S.C. § 1787(b)(14)(A). The Court rejected
plaintiff’s argument that Congress intended by that language to trump a contractual
provision setting a particular limitations period, but not a contract entered into after the
2
Extender Statute’s limitations period has already begun to run (such as a tolling
agreement entered into by plaintiff as conservator). The Court concluded that the text
of the statute is not so limiting, as it refers to “any provision of any contract.” The Court
also rejected plaintiff’s argument based on equitable estoppel, as allowing plaintiff to
enforce its tolling agreement pursuant to that doctrine would undermine Congress’s
intent to set an outer limit that may not be extended by agreement and would render the
“notwithstanding” limitation meaningless.
2.
Plaintiff first argues that the “notwithstanding” language in the Extender
Statute should not be interpreted to refer to tolling agreements. Plaintiff argues that such
language refers to agreements that change or conflict with the Extender Statute’s
limitations period. See, e.g., Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993)
(use of such a “notwithstanding” clause signals the drafter’s intention that the provision
of that law override conflicting provisions of other laws). Plaintiff further argues that
the tolling agreement does not change or conflict with the Extender Statute’s limitations
period because it does not set forth a different limitations period, but instead merely
dictates which days should be counted in applying the Extender Statute’s limitations
period.
The Court rejects this argument. The Extender Statute sets an outside limit for
the timely filing of claims by plaintiff, and plaintiff’s tolling agreements would alter that
limit; thus, tolling agreements do conflict with the Extender Statute’s limitations period
and therefore must fall within the “notwithstanding” phrase’s scope. Plaintiff’s strained
3
attempt to distinguish tolling agreements as merely dictating the method of calculation
of the applicable limitations period is not persuasive. A pre-conservatorship agreement
to count only every other week against the applicable limitations period, for example,
would certainly be viewed as conflicting with the Extender Statute, which would trump
that prior agreement pursuant to its “notwithstanding” language. So too must the
Extender Statute override a tolling agreement that similarly purports to extend the
statute’s limitations period by excluding some days in calculating that period.
Plaintiff has not offered any other reasonable interpretation of the
“notwithstanding” language. That language, given its ordinary meaning, broadly
encompasses any other agreement. There is no basis to restrict that language only to
certain types of agreements, such as agreements that shorten the applicable limitations
period (as opposed to agreements than lengthen the period) or agreements executed preconservatorship (as opposed to agreements executed by plaintiff as conservator).1 The
Court concludes that the plain language of the Extender Statute unambiguously prohibits
alteration of its limitations periods by any agreement, including a tolling agreement.
3.
Plaintiff also suggests that the Extender Statute’s purpose and legislative
history weigh in favor of its interpretation. In that regard, plaintiff notes that FIRREA,
the act containing the Extender Statute, was intended to allow it (and the FDIC) to
1
Plaintiff notes that courts have held that the Extender Statute, by virtue of the
“notwithstanding” language, overrides a shorter limitations period agreed by the parties.
That fact, however, does not mean that the Statute does not also override agreements for
longer limitations periods.
4
protect the public by pursuing claims on behalf of failed institutions, as evidenced by the
various provisions granting plaintiff power to enter into or repudiate contracts. Plaintiff
also cites legislative history in the form of the statement by a sponsor of the act, Senator
Donald Riegle, that its limitations provisions “should be construed to maximize potential
recoveries by the Federal Government by preserving to the greatest extent permissible
by law claims that would otherwise have been lost due to the expiration of hitherto
applicable limitations periods.” See 135 Cong. Rec. S10205 (daily ed. Aug. 4, 1989);
see also UMLIC-Nine Corp. v. Lipan Springs Dev. Corp., 168 F.3d 1173, 1178 (10th Cir.
1999) (quoting this statement and noting that in interpreting a statute, substantial weight
is accorded to statements by its sponsors concerning its purpose and scope).
The Court concludes that a general policy of the statute to aid plaintiff and
Senator Riegle’s statement are not sufficient to overcome the plain language of the
statute. That policy and statement certainly do not suggest a Congressional intent to give
plaintiff unfettered latitude in asserting claims, as the Extender Statute clearly and
unambiguously imposes a deadline for such claims, which must be enforced in
accordance with its terms. The Extender Statute also plainly and unambiguously
imposes that deadline “notwithstanding any provision of any contract,” including a
tolling agreement, and that language too must be enforced.
4.
Plaintiff next argues that the Extender Statute’s “notwithstanding”
language should be interpreted against the backdrop of the general rule that a limitations
period may be waived. The Court rejects this argument as well. As noted above, in Mid
5
State the Supreme Court indicated that a statutory limitations period may not be waived
or tolled if Congress intended such a prohibition in enacting the limitations period.
Plaintiff again seeks to distinguish Mid State and confine it to the particular statute at
issue in that case. Plaintiff, however, has not addressed the key inquiry from that
case—whether Congress intended by the limitations period to extinguish the right to sue
instead of merely barring the remedy after that period. As this Court previously
concluded, the “notwithstanding” language provides clear evidence that Congress
intended that the right to sue be extinguished at the expiration of the limitations period
imposed by the Extender Statute.
5.
Plaintiff also takes issue with the Court’s conclusion that the Extender
Statute is akin to a statute of repose that extinguishes the right to sue. As the Court
previously reasoned, the Tenth Circuit has indicated that Section 13 (the limitations
statute displaced by the Extender Statute) contains a statute of repose, and the Extender
Statute’s three-year limitations period is similar to that statute of repose because it sets
an outside date for the filing of claims. Plaintiff argues that Section 13 does not call its
three-year limitations period a “statute of repose” and that the Extender Statute should
not be considered a statute of repose just because it displaces a statute of repose.
Plaintiff also argues that statutes of repose may sometimes be waived. Neither plaintiff
nor the FDIC, however, has attempted to analyze whether Section 13 or the Extender
Statute extinguishes the right to sue or merely bars the remedy—the relevant inquiry
under Mid State identified by this Court in its previous opinion. Thus, plaintiff has not
6
indicated how the Court erred in its analysis. Moreover, the Extender Statute’s
“notwithstanding” language provides additional evidence that Congress intended to
extinguish the right to sue. The Court does not offer any opinion concerning whether
statutes of repose may be tolled by agreement as a general rule; the Court merely holds
that this particular statute may not be tolled by agreement, pursuant to the analysis
indicated in Mid State.2
6.
Plaintiff and the FDIC argue that their interpretation of the Extender
Statute to allow tolling by agreement should be granted some deference by this Court.
Although neither agency has cited any such formal interpretation that it has issued, they
note that they have used such tolling agreements for many years. The FDIC argues for
Skidmore deference, under which “[t]he weight of such a judgment [by an agency] in a
particular case will depend upon the thoroughness evident in its consideration, the
validity of its reasoning, its consistency with earlier and later pronouncements, and all
those factors which give it power to persuade, if lacking power to control.” See
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). The Tenth Circuit has noted,
2
Plaintiff cites In re Lehman Brothers Securities and ERISA Litigation, 2012 WL
6584524 (S.D.N.Y. Dec. 18, 2012), in which the court rejected an argument based on
Mid State. The Court does not find that case persuasive on this issue. That court did not
analyze whether the statute at issue extinguished the right to sue, but instead it merely
distinguished the policy furthered by the statute in Mid State. See id. at *2. Moreover,
the Lehman Brothers court was considering the tolling of Section 13, the underlying
statute of limitations, which does not contain the “notwithstanding” language that is key
to this Court’s ruling concerning the Extender Statute. See id. This Court does not offer
any opinion here concerning whether Section 13’s limitations periods may be tolled by
agreement.
7
however, that courts do not generally defer to an agency’s interpretation of a statute
lying outside that agency’s particular expertise, and that “an agency’s interpretation of
a statute merits deference under Skidmore only in proportion to its power to persuade.”
See Hydro Resources, Inc. v. U.S. E.P.A., 608 F.3d 1131, 1146 & n.10 (10th Cir. 2010)
(internal quotations omitted).
In this instance, the Court will not defer to the
interpretation of the Extender Statute urged by plaintiff and the FDIC. Those agencies
do not have any particular expertise with respect to the interpretation of statutory
limitations periods. In addition, as noted above, the Extender Statute unambiguously
precludes reliance on agreements to alter its limitations periods; thus, the positions of
plaintiff and the FDIC have no persuasive value. The Extender Statute is clear, and the
fact that plaintiff and the FDIC have been using tolling agreements in contravention to
the statute does not compel or weigh in favor of a contrary interpretation. See Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984)
(if Congressional intent is clear, a court does not defer to an agency and must give effect
to that unambiguously expressed intent).
7.
Plaintiff again suggests that defendants should be equitably estopped from
arguing that the tolling agreement they executed may not be enforced. Plaintiff cites
Montoya v. Chao, 296 F.3d 952 (10th Cir. 2002). In that case, however, the Tenth
Circuit merely held that a particular statutory limitations period was not jurisdictional
and was therefore subject to equitable tolling. See id. That holding is not relevant to the
question whether equitable estoppel is appropriate in this case with this statute. The
8
Court previously concluded, based on precedent, that the Tenth Circuit would likely not
permit equitable estoppel in this instance in which application of that doctrine would
effectively eviscerate the “notwithstanding” language in the Extender Statute. Plaintiff
has not addressed that Tenth Circuit precedent or that potential evisceration; thus,
plaintiff has not persuaded the Court that it erred in its original conclusion.
8.
Plaintiff asserts for the first time that even without recourse to the tolling
agreement, its state law claims are timely under the Extender Statute’s alternative
limitations period of “the period applicable under State law.” First, this issue falls
outside of the Court’s reconsideration of the issue of the enforcement of the tolling
agreement, and thus this argument by plaintiff is improper. Moreover, plaintiff’s
argument lacks merit. Under the Extender Statute, the applicable five-year state-law
limitations period would run from the violation or purchase date, not from the date of
plaintiff’s appointment as conservator (which triggers the Extender Statute’s three-year
limitations period). In addition, the “notwithstanding” language applies to either
alternative limitations period under the Extender Statute; thus, plaintiff may not use the
tolling agreement to extend the applicable state-law limitations period. Plaintiff filed this
suit more than five years after the certificates at issue were purchased; accordingly,
plaintiff’s state-law claims are not timely under the applicable state limitations periods.
9.
Plaintiff also repeats its original argument that the Extender Statute’s three-
year limitations period should be measured from the date of its appointment as liquidator
for the credit unions and not from its earlier conservator appointment date. This
9
argument too improperly exceeds the scope of the reconsideration granted by the Court.
In addition, plaintiff’s argument lacks merit, for the reasons stated by the Court in its
original opinion. Plaintiff cites to UMLIC, in which the Tenth Circuit held that the threeyear period could be reset by the FDIC’s appointment as conservator to a second
savings and loan that had acquired the asset at issue. See 168 F.3d 1173. The Tenth
Circuit did not analyze the particular language involving the dates of appointment as
conservator and liquidator, however. The statute provides that either appointment
triggers the three-year period. Thus, plaintiff’s three-year period in this case must be
measured from the date of its appointment as conservator for the credit unions.
10.
In summary, the Court is not persuaded that it erred in its previous ruling,
and it reaffirms that ruling that plaintiff’s tolling agreement with defendants is not
effective in extending the applicable three-year limitations period under the Extender
Statute.
IT IS SO ORDERED.
Dated this 10th day of July, 2013, in Kansas City, Kansas.
s/ John W. Lungstrum
John W. Lungstrum
United States District Judge
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?