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FEIGEL v. FDIC

May 22, 1996

JACK C. FEIGEL, an individual; T.C. YOUNG, an individual; TERRY LINGEFELDER, an individual; and OWEN W. STRANGE, an individual, Plaintiffs,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR HOMEFED BANK, F.S.B., Defendant.



The opinion of the court was delivered by: MOSKOWITZ

MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

 INTRODUCTION

 The parties have filed cross-motions for summary judgment. The plaintiffs, four former directors of Home Federal Savings & Loan Association, subsequently HomeFed Bank, F.S.B. ("HomeFed"), contend that they are entitled to retirement benefits pursuant to a Director's Retirement Plan instituted by HomeFed in 1987. On July 6, 1992 the RTC was appointed receiver for HomeFed. The FDIC has since replaced the RTC and asserts that the court does not have subject matter jurisdiction over plaintiffs' claims because the plaintiffs failed to properly exhaust their administrative remedies pursuant to the Financial Reform, Recovery and Enforcement Act of 1989, Pub.L.No. 101-73, 103 Stat. 548 (August 9, 1989) ("FIRREA"), 12 U.S.C. §§ 1821(d)(5)-(6). A hearing on the cross-motions for summary judgment was held on May 10, 1996.

 BACKGROUND

 On November 24, 1987, HomeFed approved and adopted a Director's Retirement Plan (the "Plan") specifically covering current and future non-employee directors joining HomeFed's Board of Directors. (Complaint at P 5). Each of the individual plaintiffs qualified for benefits under the Plan at the time of its 1987 adoption by virtue of having served three or more years on the board of directors. (Id. at P 13). On August 22, 1991, HomeFed voted to suspend the Plan by deferring any unvested payments until HomeFed returned to capital compliance. (Id.) Prior to the suspension of the Plan only one of the individual plaintiffs, Jack C. Feigel ("Feigel") retired and began receiving Plan benefits. Feigel began receiving his benefits in March 1989. (Feigel Declaration at P 7). Plaintiff Terry Lingerfelder ("Lingerfelder") retired in February 1992 and plaintiffs T.C. Young ("Young") and Owen W. Strange ("Strange"), retired in April 1992. HomeFed did not pay benefits to either Lingerfelder, Strange or Young upon their retirement. Other than payments made to Feigel, no monies were paid to any of the plaintiffs pursuant to the Plan. Feigel stopped receiving benefits in July 1992.

 On July 6, 1992, the Office of Thrift Supervision ("OTS") appointed the RTC as receiver for HomeFed. *fn1" (Complaint at P 5). Thereafter, the RTC, as receiver for HomeFed, repudiated the Plan pursuant to 12 U.S.C. § 1821(e) on the basis that it was burdensome and that its repudiation and disaffirmance would promote the orderly administration of HomeFed. (See Complaint at P 17(a), (b), (c) and (d)).

 On July 10, 1992, August 10, 1992 and September 10, 1992, the RTC caused a "Notice to Creditors" of HomeFed to be published in the San Diego Union Tribune and Los Angeles Times. (Declaration of Clarke Adams ("Adams Decl.") at Exs. A and B). The Notice to Creditors stated that all claims by creditors against the assets of HomeFed needed to be filed on or before October 13, 1992. In addition to these published notices, the RTC mailed two separate notices to the plaintiffs prior to the October 13, 1992 claims bar date informing them of the need to file proofs of claims. (Adams Decl. at P 6 and Exs. I, J, L and M). On September 16, 1992, the RTC also mailed a letter entitled "Potential Claimant" to the plaintiffs informing them of the date for filing claims. (Id. at P 7 and Exs. N, O, P and Q).

 The plaintiffs do not dispute that they received the required notice for filing claims pursuant to 12 U.S.C. § 1821(d)(3)(B). Plaintiffs Lingerfelder, Young and Strange each responded in interrogatories that they had learned of the appointment of a receiver for HomeFed on July 6, 1992. (Declaration of Carl P. Luckadoo ("Luckadoo Decl.") at Exs. F, G, H and I). Plaintiff Feigel learned of the appointment of a receiver on September 30, 1992. (Id. at Ex. E). More importantly, three of the plaintiffs, Young, Lingerfelder and Strange, actually filed claims against HomeFed with the RTC other than for benefits under the Plan on or before the October 13, 1992 notice date. (Adams Decl. at P 4 and Exs. C, D, E, F, G and H).

 Another HomeFed outside director, Terence P. Daly, who was also eligible for benefits under the Plan, filed a claim for benefits under the Plan prior to the October 13, 1992 deadline. This claim was litigated in the district court in Daly v. RTC, 94-0027-T (S.D.Cal. 1994). In Daly, the court addressed the issue of whether the terms of the Plan had vested prior to repudiation by the RTC and whether Daly was entitled to recover his retirement benefits. District Judge Turrentine held that Daly was entitled to receive Plan benefits and that "since [Daly] was vested prior to suspension of the Plan, the August 21, 1991 suspension did not affect his right to demand payments. . . ." (Complaint at Ex. B, Order Re: Motions For Summary Judgment, filed August 26, 1994 at 4). The court further held that Daly was entitled to all benefits other than attorney's fees. (Id.) The Daly decision did not address whether the plaintiff, Daly, was required to file a claim with the RTC prior to the October 13, 1992 date because Daly had in fact complied with FIRREA's exhaustion requirements and timely filed a claim.

 The plaintiffs in this action filed claims for payment of retirement benefits under the Plan with the RTC on February 13, 1995, more than two years after the time for filing such claims. (Complaint at P 20). The RTC did not respond to these claims and the complaint in this action was filed on September 8, 1995. The plaintiffs have sued to obtain declaratory relief that they are entitled to retirement payments under the Plan end that these rights cannot be abrogated, diminished or affected by the provisions of FIRREA, including its provisions for the submission and barring of claims. They have also alleged a claim for breach of the Plan based upon their claim that they have performed all conditions required and that the RTC, as receiver, is required under the Plan to pay HomeFed's obligations pursuant to 12 U.S.C. § 1464(d)(2)(H). The parties have each moved for summary judgment.

 DISCUSSION

 A. Standard for Summary Judgment

 Summary Judgement is appropriate if the record, read in the light most favorable to the non-moving party demonstrates no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Material facts are those necessary to the proof or defense of a claim, and are determined by reference to the substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Any doubt as to the existence of any issue of material fact requires denial of the motion. Anderson, 477 U.S. at 255.

 "Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48.

 In this case, the parties have filed cross-motions for summary judgment. The defendants contend that this court does not have subject matter jurisdiction over the plaintiffs' claims because they failed to file the necessary proofs of claim with the RTC prior to the October 13, 1992 deadline. See 12 U.S.C. §§ 1821(d)(5)(C)(i) and (d)(13)(D). The plaintiffs assert that there is subject matter jurisdiction under either FIRREA or 28 U.S.C. § 1331 and there is no disputed issue of fact relating to any of the elements of their claims.

 B. FIRREA Pursuant to FIRREA's notice requirements:

 
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; and
 
(ii) republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i).

 12 U.S.C. § 1821(d)(3)(B). In this case, the plaintiffs were provided with the required notice a set forth in the above provisions.

 FIRREA further states that:

 
(i) In general
 
Except as provided in clause (ii), claims filed after the date specified in the notice published under paragraph (3)(B)(i) shall be disallowed and such disallowance shall be final.
 
(ii) Certain exceptions
 
Clause (i) shall not apply with respect to any claim filed by any claimant after the date specified in the notice published under paragraph (3)(B)(i) and such claim may be considered by the receiver if-
 
(I) the claimant did not receive notice of the appointment of the receiver in time to file such ...

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