Union County v. DeVere Construction Company, Inc.
3:17-cv-00421
W.D.N.C.Nov 3, 2017Background
- DeVere Construction sued Union County and others over delay damages arising from a sewer project; the parties settled for $407,500 to be paid to DeVere.
- Before payment, DeVere ceased operations and multiple parties (subcontractors, counsel, an unpaid expert, and First NBC Bank) asserted competing claims to the settlement funds.
- First NBC (a Louisiana bank) was closed; the FDIC was appointed receiver and substituted for the bank in the interpleader action pending in Union County Superior Court.
- Plaintiffs filed to interplead the funds and discharge their obligations; the state court ordered discharge upon deposit with the clerk.
- FDIC-Receiver removed the case to federal court asserting 12 U.S.C. § 1819 federal jurisdiction and moved for a 90-day stay under FIRREA/12 U.S.C. § 1821(d); the district court initially stayed the case.
- Movants (Elmore Goldsmith, P.A. and Construction Interface Services, Inc.) moved to lift the stay and remand, arguing the case falls within the § 1819(b)(2)(D) state-action exception; the court granted remand and vacated the stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal was improper under the § 1819(b)(2)(D) state-action exception | Movants (plaintiffs in state court) argued all three exception elements are met: FDIC-R is a non-plaintiff receiver for a state-insured bank; dispute concerns preclosing rights; only state-law issues are needed | FDIC-R conceded the first two elements but argued the third fails because FIRREA’s administrative claims process and federal law defenses apply, creating federal questions and permitting removal | Court held the exception applies; FIRREA/admin-claims do not govern these disputes and FDIC-R has no colorable federal defense, so remand is required |
| Whether the FIRREA administrative-claims process deprives the court of jurisdiction | FDIC-R argued FIRREA § 1821(d)(13)(D)(i) bars district-court jurisdiction over claims to the bank’s assets and that movants’ claims fall within the administrative process | Movants argued the settlement funds are not FDIC-R assets and FIRREA’s claims process applies to claims against the FDIC only, not to parties contesting FDIC’s asserted liens | Court ruled FIRREA’s administrative process does not apply to challenge FDIC-R’s asserted interest here; it protects against claims against the FDIC, not challenges to FDIC’s affirmative claims |
| Whether FDIC-R may compel claimants to use the administrative process to dispute its asserted priority | FDIC-R relied on cases holding disputed ownership does not automatically exempt a claim from FIRREA process | Movants argued allowing FDIC-R to force claimants into administrative claims would let FDIC use the process as a sword to foreclose judicial resolution of contested priorities | Court found FDIC-R cannot use the administrative process to compel opponents to litigate challenges to FDIC’s asserted lien; that would defeat FIRREA’s purpose |
| Whether the prior district-court stay should remain in place | FDIC-R sought to keep the 90-day stay under FIRREA to pursue administrative resolution | Movants sought lifting the stay and remand | Because federal subject-matter jurisdiction was lacking, the court vacated the stay and remanded the case to state court |
Key Cases Cited
- Capizzi v. FDIC, 937 F.2d 8 (1st Cir. 1991) (§ 1819 establishes federal jurisdiction for suits involving FDIC subject to limited exceptions)
- Reding v. FDIC, 942 F.2d 1254 (8th Cir. 1991) (presumption that FDIC removal is proper unless § 1819(b)(2)(D) exceptions are proved)
- Diaz v. McAllen State Bank, 975 F.2d 1145 (5th Cir. 1992) (availability of a colorable federal defense can preclude the state-action exception)
- Bank of Am., N.A. v. Colonial Bank, 604 F.3d 1239 (11th Cir. 2010) (FIRREA may require use of administrative claims process for certain disputes with FDIC)
- In re Continental Fin. Res., Inc., 154 B.R. 385 (Bankr. D. Mass. 1993) (FIRREA’s administrative claims process applies to claims against the FDIC, not to challenges to FDIC’s affirmative claims)