811 F.3d 390
10th Cir.2016Background
- During the 2007–2008 financial crisis Kansas State Bank Commissioner declared The Columbian Bank and Trust Company insolvent, seized its assets, and appointed the FDIC as receiver; the FDIC promptly sold many assets.
- Columbian Financial Corporation (sole shareholder) sued the state bank commission and four officials under 42 U.S.C. § 1983 alleging deprivation of procedural due process and seeking equitable relief and damages.
- State administrative and judicial review proceedings were ongoing when the federal complaint was filed but later concluded in favor of the commission while this appeal was pending.
- The district court dismissed equitable claims under Younger abstention and dismissed damages claims on immunity grounds (Eleventh Amendment, absolute and qualified immunity for officials).
- On appeal the Tenth Circuit vacated the Younger-based dismissal of equitable claims (state proceedings terminated) and affirmed dismissal of damages claims against two officials (Stork and Thull) on qualified immunity grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court should abstain under Younger and dismiss equitable claims | Younger abstention inappropriate because federal forum is proper and relief needed | Younger applied because state proceedings were ongoing when federal suit was filed | Vacated dismissal; Younger deference no longer bars federal adjudication because state proceedings terminated; remand for further consideration |
| Whether appointment of FDIC receiver and sale without predeprivation hearing violated clearly established due process rights | Col. Fin.: seizure/receivership deprived property interest; predeprivation hearing required | Officials: Fahey/Franklin and other circuits allow ex parte conservator/receiver appointment without prior hearing when public interest and urgency require | Held for defendants: no clearly established right to predeprivation hearing here; qualified immunity for Stork and Thull |
| Whether roughly 3 years, 8 months delay in postdeprivation hearing violated clearly established due process | Col. Fin.: excessive, unjustified delay that harmed property interests | Officials: delay subject to balancing test; precedent unclear; government justification and investigatory context relevant | Held for defendants: delay did not violate a clearly established right; qualified immunity applies |
| Whether contested rights were clearly established for qualified-immunity analysis | Col. Fin.: Winters and other decisions put officials on notice | Officials: conflicting precedent (Fahey/Franklin and several circuits) made legal rule uncertain | Held: law was unsettled; officials reasonably could rely on precedent and statute; qualified immunity granted |
Key Cases Cited
- Fahey v. Mallonee, 332 U.S. 245 (1947) (upheld ex parte appointment of conservator; postdeprivation hearing sufficient)
- Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985) (once due process applies, courts determine what process is due)
- Fuentes v. Shevin, 407 U.S. 67 (1972) (limits on summary seizures; identified factors justifying pre-seizure process exceptions)
- Anderson v. Creighton, 483 U.S. 635 (1987) (qualified-immunity standard; right must be clearly established)
- FDIC v. Mallen, 486 U.S. 230 (1988) (postdeprivation proceedings must be at a meaningful time; promptness important when no predeprivation hearing)
- Franklin Sav. Ass’n v. Director, Office of Thrift Supervision, 934 F.2d 1127 (10th Cir. 1991) (postseizure judicial review can satisfy due process for conservatorship)
- Franklin Sav. Ass’n v. Office of Thrift Supervision, 35 F.3d 1466 (10th Cir. 1994) (replacement of conservator by receiver does not necessarily further deprive owners of property)
- Winters v. Bd. of Cnty. Comm’rs, 4 F.3d 848 (10th Cir. 1993) (post-return of pawned property to rightful owner without pawnshop hearing implicated procedural due process)
- James Madison Ltd. v. Ludwig, 82 F.3d 1085 (D.C. Cir. 1996) (upheld seizure/liquidation of banks prior to hearing when public interest required prompt action)
- FDIC v. Am. Bank Trust Shares, Inc., 629 F.2d 951 (4th Cir. 1980) (rejected bank's due-process claim where FDIC appointed receiver without prior notice)