US SUPREME COURT DECISIONS

Due to disagreements about loans to petitioner by FirstSouth, F.A. a federal savings and loan association, petitioner filed suit against FirstSouth in state court, alleging various state law causes of action and seeking damages and equitable relief. Two months later, the Federal Home Loan Bank Board (Bank Board) determined that FirstSouth was insolvent, and appointed as receiver the Federal Savings and Loan Insurance Corporation (FSLIC), which substituted itself for FirstSouth in petitioner's suit and removed the case to Federal District Court. That court dismissed the suit for lack of subject matter jurisdiction under North Mississippi Savings & Loan Assn. v. Hudspeth, 756 F.2d 1096 (CA5), which held that Congress, by virtue of 12 U.S.C. §§ 1464(d)(6)(C) and 1729(d), had granted FSLIC exclusive jurisdiction to adjudicate claims against the assets of an insolvent savings and loan association under FSLIC receivership, subject only to review by the Bank Board and then to limited judicial review under the Administrative Procedure Act. Shortly before the Court of Appeals affirmed the dismissal on the basis of Hudspeth, petitioner, on the day established by FSLIC as the deadline for the filing of creditor claims against FirstSouth, filed its proof of claim for approximately $113 million. Six months later, FSLIC notified petitioner that its claim had been "retained for further review." There has been no further action on the claim.

Held.

1. The statutes governing FSLIC and the Bank Board do not grant FSLIC adjudicatory power over creditors' claims against insolvent savings and loan associations under FSLIC receivership, and do not divest the courts of jurisdiction to consider those claims de novo. Pp. 489 U. S. 572-579.

(a) The plain language of §§ 1729(b) and (d) cannot be read to confer upon FSLIC as receiver the power to adjudicate creditors' claims with the force of law. The power granted by § 1729(d) to "settle, compromise, or release" claims is distinguishable from the power to adjudicate, and is to some extent inconsistent with it, since a body with the power to say "yes" or "no" with the force of law has little need to settle or compromise. Similarly, § 1729(b)(1)(B)'s directive to FSLIC to "pay all valid chanrobles.com-red

Page 489 U. S. 562

credit obligations" of an insolvent association cannot be read to confer adjudicatory power over claims, or to preclude claimants from resorting to the courts for a determination of their claims' validity; it simply empowers FSLIC, much like an ordinary insurance company, to pay claims proved to its satisfaction. The statutory framework in which § 1729 appears demonstrates clearly that, when Congress meant to confer adjudicatory authority on FSLIC, it did so explicitly, enacting detailed provisions governing procedural and substantive rights and providing for judicial review. Pp. 489 U. S. 572-574.

(b) Judicial resolution of petitioner's state law claims would not "restrain or affect" FSLIC's exercise of its receivership functions in violation of § 1464(d)(6)(C), which states that,

"[e]xcept as otherwise provided in this subsection, no court may take any action for or toward the removal of any . . . receiver, or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a . . . receiver."

This language does not add adjudication of creditor claims to FSLIC's receivership powers, but simply prohibits courts from restraining or affecting FSLIC's exercise of those receivership "powers and functions" that have been granted by other statutory sources, none of which confer adjudicatory power. Moreover, in the context of its relationship to § 1464(d)(6)(A) -- which specifies grounds for the Bank Board's appointment of a receiver and authorizes an association placed in receivership to bring a district court suit within 30 days to challenge the appointment -- § 1464(d)(6)(C) must be read simply to prohibit untimely challenges to the receiver's appointment or collateral attacks attempting to restrain the receiver from carrying out its basic functions, and not to divest state and federal courts of subject matter jurisdiction to determine the validity of claims against institutions under a FSLIC receivership. This reading is reinforced by the fact that, at the time of the statute's enactment, it was well established at common law that suits to establish the validity and amount of a claim against an insolvent debtor in receivership did not interfere with the receiver's powers and functions. Hudspeth erred in assuming that such adjudication would "restrain" FSLIC's exercise of its receivership powers by delaying its prompt liquidation of failed savings and loans, since a receiver can make an interim distribution of assets pending the resolution of disputed claims in other courts. Pp. 489 U. S. 574-577.

(c) That Congress clearly envisaged that the courts would have subject matter jurisdiction over creditor suits against FSLIC as receiver is demonstrated by several other statutory provisions, including those allowing FSLIC to sue and be sued in any court, § 1725(c)(4), and establishing a statute of limitations for actions against FSLIC to enforce deposit insurance claims, § 1728(c). Most significantly, § 1730(k)(1) provides chanrobles.com-red

Page 489 U. S. 563

an explicit grant of subject matter jurisdiction that clearly contemplates creditors' state court suits against FSLIC as receiver for state-chartered associations. There is no indication that Congress intended to treat federally chartered associations differently in this respect. Pp. 489 U. S. 577-579.

2. Creditors are not required to exhaust the Bank Board's current administrative claims procedure before bringing suit, because that procedure does not place a reasonable time limit on FSLIC's consideration of creditors' claims. Pp. 489 U. S. 579-587.

(a) Under the current claims procedure, the entire process for a claimant whose claim is not allowed in full could take well over a year from the time the claim is first filed with FSLIC until the Board completes its final review. Moreover, because the claims procedure places no time limit on FSLIC's consideration of claims retained for "further review," the length of time for such claims could be far longer, and even indefinite. Nevertheless, the claims procedure specifies that judicial review is available only after exhaustion of these administrative procedures. Pp. 489 U. S. 579-583.

(b) Although the statutes governing FSLIC and the Bank Board do not explicitly mandate exhaustion of administrative remedies, it would be a reasonable exercise of the Board's broad power to make rules for the conduct of receiverships, § 1464(d)(11), and it would be entirely consistent with Congress' clear intent that FSLIC liquidate failed associations "in an orderly manner," § 1729(b)(1)(A)(v), if the Board's regulations only required that claimants give FSLIC notice of their claims and then wait for a reasonable period of time before filing suit while FSLIC decided whether to pay, settle, or disallow the claims. The Board reasonably could decide that FSLIC simply cannot perform its statutory function unless it is notified of the entire array of claims against a failed association's assets and has a reasonable period of time to make rational and consistent judgments regarding those claims. Pp. 489 U. S. 583-585.

(c) However, the present claims procedure exceeds the Bank Board's statutory authority by not placing a clear and reasonable time limit on FSLIC's consideration of claims. The lack of such a reasonable limit renders the claims procedure inadequate, because it allows FSLIC to delay the administrative processing of claims indefinitely, thereby denying litigants their day in court while the statute of limitations runs; because it may enable FSLIC to coerce unfair settlements by virtue of the fact that the receiver's assets may be depleted by other, interim distributions before the claimant gets to court; and because FSLIC itself is often the main creditor, and thus may well have an incentive to delay decisions on large claims such as petitioner's. Because an inadequate administrative remedy need not be exhausted, petitioner may proceed chanrobles.com-red

Page 489 U. S. 564

directly to court for a de novo determination on the merits of its state law claims. Pp. 489 U. S. 586-587.

829 F.2d 563, reversed and remanded.

O'CONNOR, J., delivered the opinion for a unanimous Court with respect to Parts I, II, and III, and the opinion of the Court with respect to Part IV, in which REHNQUIST, C.J.,and BRENNAN, WHITE, MARSHALL, STEVENS, and KENNEDY, JJ., joined. BLACKMUN, J., post, p. 489 U. S. 588, and SCALIA, J., post, p. 489 U. S. 588, filed opinions concurring in part and concurring in the judgment.