Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

RESNA ASSOCS. v. FINANCIAL EQUITY MORTG. CORP.

November 17, 1987

Resna Associates, Ltd., Plaintiff
v.
Financial Equity Mortgage Corp., et al., Defendants



The opinion of the court was delivered by: LECHNER

 FEMC apparently has not made an appearance in this case. Life Savings filed its Answer, but later removed the action to this Court after the Federal Home Loan Bank Board ("Bank Board") appointed the Federal Savings and Loan Insurance Corporation ("FSLIC") as receiver for Life Savings. FSLIC now moves to dismiss the action for lack of subject matter jurisdiction, asserting that upon the appointment of FSLIC as receiver subject matter jurisdiction rests with FSLIC and the Bank Board. Resna has not opposed the motion. *fn1" The matter is decided on the basis of the papers submitted, in accordance with Rule 78 of the Federal Rules of Civil Procedure.

 Facts

 Resna is a Limited Partnership of the State of New Jersey, with its offices located in New Jersey. (Complaint, Introduction.) FEMC is a mortgage company apparently doing business in New Jersey. (See id., First Count, para. 2.) Life Savings is a federally chartered savings and loan association with its offices located in Illinois. (Id., Second Count, para. 2.)

 On or about December 28, 1984, Resna entered into a contract for the purchase of certain property located in New Jersey. Resna sought financing from FEMC, and on or about January 14, 1985, FEMC issued a loan commitment to Resna. *fn2" Resna executed the commitment letter and returned it to FEMC within the specified time period. (Id., First Count, paras. 1-4.)

 Resna then proceeded to complete all the other requirements of the mortgage commitment and made various payments to FEMC for application fees and processing costs which included inspections and appraisals of the property. Agents of FEMC appraised the property in question. (Id., First Count, paras. 5-8.) On April 22, 1985, shortly before the closing was to occur, FEMC wrote to Resna advising it would not honor the commitment letter previously issued. (Id., First Count, para. 9.)

 On February 3, 1986, Resna instituted this action in the Superior Court of New Jersey, Law Division, Morris County. The complaint contains eight counts. The first count is a breach of contract claim against FEMC. The second count is a breach of contract claim against Life Savings, alleging that FEMC was an agent of Life Savings which procured loans to be underwritten by Life Savings. The third count alleges the rejection of the loan and the failure to underwrite the loan transaction were based on racially discriminatory factors. The fourth count appears to be an implied contract claim, alleging detrimental reliance. The fifth count appears to be an equitable fraud claim. Finally, the sixth count alleges FEMC was an agent for Life Savings, and that Life Savings is responsible for all damages caused by FEMC.

 The record does not reflect what proceedings took place in state court. According to FSLIC (receiver for Life Savings), FEMC has not made an appearance; Life Savings did file an Answer. (Defendant's Brief at 3.)

 On February 13, 1987, the Bank Board appointed FSLIC as receiver for Life Savings, pursuant to 12 U.S.C. § 1464(d)(6)(A). (Herbert Aff., para. 3 and Ex. A at 1-2.) FSLIC was appointed receiver in part because Life Savings was insolvent. (Herbert Aff., Ex. A at 1.) Also on February 13, 1987, the Bank Board directed FSLIC to liquidate the assets of Life Savings. (Herbert Aff., para. 4 and Ex. B at 1.)

 On March 13, 1987, FSLIC, as receiver for Life Savings, petitioned this court to remove the action from state court, asserting jurisdiction under 12 U.S.C. § 1730(k)(1). *fn3" On October 2, 1987, FSLIC moved to dismiss Resna's complaint for lack of subject matter jurisdiction, or in the alternative, for failure to state a claim upon which relief may be granted. FSLIC argues that after its appointment as receiver, subject matter jurisdiction over any claims against Life Savings, now in receivership, rests exclusively with FSLIC and its supervisory authority, the Bank Board. FSLIC asserts all such claims must be brought through a comprehensive administrative claims procedure established by federal statute and regulations. FSLIC's determination on such claims is then subject to administrative review by the Bank Board, and finally, to judicial review under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. (the "APA"). As indicated, Resna has not opposed FSLIC's motion.

 Discussion

 1. Question Presented

 The question posed by defendant's motion to dismiss is whether Congress intended, in its broad grant of administrative powers to the Bank Board and FSLIC, to give these entities exclusive jurisdiction over creditor claims against insolvent institutions in receivership, subject only to judicial review under the APA.

 2. Statutory Framework

 The Bank Board and FSLIC are part of a network of regulatory bodies established by Congress to guard against and to deal with future failures in the nation's banking institutions. The Home Owners' Loan Act of 1933 ("HOLA"), as amended, 12 U.S.C. §§ 1461-1470, created the Federal Savings and Loan Association System, and subchapter IV of the National Housing Act of 1934 ("NHA"), as amended, 12 U.S.C. §§ 1724-1730, created FSLIC.

 Through the HOLA, Congress placed the savings and loan system under the control of the Bank Board. 12 U.S.C. § 1464(a). The HOLA gave the Bank Board broad discretionary powers, including the discretion to appoint a receiver for any institution if the Bank Board determined that one of the statutory grounds, such as insolvency, existed. 12 U.S.C. § 1464(d)(6). The HOLA also authorized the Bank Board to promulgate rules and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.