Federal Deposit Insurance Corporation v. Old Republic Insurance Company

Filing 15

ORDER signed by Judge J.P. Stadtmueller on 8/4/2017 GRANTING 13 Plaintiff FDIC's Motion to Stay. Action STAYED until earlier of: 2/5/2018 or 10 days after FDIC issues notice of disposition of any administrative claim Old Republic files before the claims bar date. (cc: all counsel) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
FEDERAL DEPOSIT INSURANCE
CORPORATION,
Plaintiff,
v.
OLD REPUBLIC INSURANCE
COMPANY,

Case No. 17-CV-734-JPS

ORDER

Defendant.
On July 28, 2017, the Federal Deposit Insurance Corporation
(“FDIC”) moved for a stay of this case pending the exhaustion of the
administrative claims process established under the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (“FIRREA”). (Docket #13).
The FDIC states that defendant Old Republic Insurance Company’s (“Old
Republic”) counterclaim in this action is subject to FIRREA’s mandatory
administrative process because the claim is asserted against the FDIC in its
capacity as receiver for a failed financial institution—in this case, Guaranty
Bank. Id. at 1-3. Because it is mandated by statute, the Court will grant the
FDIC’s motion to stay pending exhaustion of the administrative claims
process.
FIRREA established an administrative claims process for resolving
claims against a failed financial institution. 12 U.S.C. §§ 1821(d)(3)-(13). As
part of that process, the FDIC may set a “claims bar date” for claims against
the failed financial institution, after which the FDIC has 180 days to review
and grant or deny each claim. 12 U.S.C. §§ 1821(d)(3), (d)(5)(C), (d)(5)(A)(i).

According to the exception allowing federal jurisdiction, a claimant may
then “file suit on such claim (or continue an action commenced before the
appointment of the receiver)” in district court, within sixty days of either
the FDIC’s initial determination or conclusion of the 180–day period in
which the FDIC may make a determination. 12 U.S.C. § 1821(d)(6)(A).
The statute mandates use of the administrative claims process before
a federal court may hear a claim against a failed bank for which the FDIC
acts as receiver. See 12 U.S.C. § 1821(d)(13)(D) (no jurisdiction over claims
against an institution for which the FDIC is appointed receiver, except as
otherwise provided). As the Seventh Circuit has noted, “FIRREA contains
a clear jurisdictional bar against suits seeking payment of claims against
failed banks taken over by the FDIC[.]” Miller v. F.D.I.C., 738 F.3d 836, 844
(7th Cir. 2013); see also Maher v. F.D.I.C., 441 F.3d 522, 525 (7th Cir. 2006)
(“Under FIRREA, a claimant can file an administrative claim with the
receiver, which then has 180 days to allow or deny the claim. If the receiver
denies or does not render a decision within 180 days, the claimant has 60
days to file suit. Federal courts lack jurisdiction to address claims that fail
to comply with FIRREA’s administrative claims process.”).
Rather than dismissing suits involving such claims, courts have
interpreted the law as allowing for entry of a stay pending exhaustion.
Marquis v. F.D.I.C., 965 F.2d 1148, 1155 (1st Cir. 1992) (“[G]iven Congress’
insistence that virtually all claims against failed financial institutions
should be subjected to administrative scrutiny once the FDIC steps in as a
receiver, we see no reason why . . . district judges would not, upon request
of a party, hold pending litigation in abeyance until the administrative
review process has run its course, or 180 days has passed, whichever first
occurs.”); Brown Leasing Co. v. F.D.I.C., 833 F. Supp. 672, 675 (N.D. Ill. 1993),
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aff'd sub nom. Brown Leasing Co. v. Cosmopolitan Bancorp, Inc., 42 F.3d 1112
(7th Cir. 1994) (“Generally, a district court exercises its discretion and stays
the proceedings to permit exhaustion of the mandatory administrative
claims review process.”) (internal quotation omitted).
Entry of a stay serves FIRREA’s objective of maintaining an efficient
claims process. Thus, the Court finds that, because Old Republic has not yet
filed an administrative claim, let alone exhausted the administrative claims
process, see (Docket #14 at 2), this Court is obliged to enter a stay pending
completion of that process. The Court will grant the FDIC’s motion to stay
this case until the earlier of (i) February 5, 2018 (which is 180 days after
the claims bar date of August 9, 2017, set by the receiver in the Guaranty
Bank receivership); or (ii) ten days after the FDIC issues a notice informing
Old Republic of the disposition of any administrative claim which Old
Republic may file before the claims bar date.
Accordingly,
IT IS ORDERED that plaintiff FDIC’s Motion to Stay (Docket #13)
be and the same is hereby GRANTED. This action is hereby STAYED until
the earlier of (i) February 5, 2018, or (ii) ten days after the FDIC issues a
notice informing Old Republic of the disposition of any administrative
claim which Old Republic may file before the claims bar date.
Dated at Milwaukee, Wisconsin, this 4th day of August, 2017.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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