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Westberg v. Federal Deposit Ins. Corp.

United States Court of Appeals, District of Columbia Circuit

January 31, 2014

Kim S. WESTBERG, Husband, and Laverne V. Westberg, Wife, Appellants
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for and on Behalf of Silver State Bank, and Multibank 2009-1 Res-Adc Venture, LLC, Appellees.

Argued Nov. 21, 2013.

Page 1302

Appeal from the United States District Court for the District of Columbia, (No. 1:09-cv-01690).

Christopher Alan LaVoy argued the cause for the appellants.

Kathleen V. Gunning, Counsel, Federal Deposit Insurance Corporation, argued the cause for the appellees. Colleen J. Boles, Assistant General Counsel, Kathryn R. Norcross, Senior Counsel, John B. Isbister and Jaime W. Luse were on brief.

Before: HENDERSON, BROWN and GRIFFITH, Circuit Judges.

KAREN LECRAFT HENDERSON, Circuit Judge:

In May 2008, Kim and Laverne Westberg (Westbergs) obtained a residential construction loan from Silver State Bank (Silver State), located in Henderson, Nevada. Silver State collapsed shortly thereafter and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. The FDIC repudiated the loan agreement but notified the Westbergs that they were obligated to continue making payments on the portion of the loan that had been disbursed to them before Silver State's failure. The Westbergs brought suit in district court seeking, inter alia, a declaratory judgment that the FDIC's repudiation relieved them of any obligation to continue making loan payments. The FDIC subsequently assigned its interest in the loan to Multibank 2009-1 RES-ADC Venture, LLC (Multibank) and the Westbergs amended their complaint to add Multibank as a defendant. The district court dismissed the Westbergs' claim for declaratory relief against Multibank for lack of subject matter jurisdiction, concluding that their claim was subject to the administrative exhaustion requirement set

Page 1303

forth in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101-73, 103 Stat. 183 (FIRREA or Act), and that they did not exhaust that administrative remedy. We affirm.

I. Background

A

The Congress enacted FIRREA " in the midst of the savings and loan insolvency crisis to enable the FDIC ... to expeditiously wind up the affairs of literally hundreds of failed financial institutions throughout the country." Freeman v. FDIC, 56 F.3d 1394, 1398 (D.C.Cir.1995) (citing H.R. REP. NO. 101-54(I), reprinted in 1989 U.S.C.C.A.N. 86, 87, 103). FIRREA confers broad powers on the FDIC in its capacity as receiver for failed depository institutions. See id. at 1398-99. Its powers include the authority to repudiate any contract " (A) to which [the failed] institution is a party; (B) the performance of which the [FDIC], in [its] discretion, determines to be burdensome; and (C) the disaffirmance or repudiation of which the [FDIC] determines, in [its] discretion, will promote the orderly administration of the institution's affairs." 12 U.S.C. § 1821(e)(1); see also Nashville Lodging Co. v. Resolution Trust Corp., 59 F.3d 236, 241 (D.C.Cir.1995).

FIRREA also authorizes the FDIC to adjudicate creditors' claims against failed depository institutions for which the FDIC has been appointed receiver. See 12 U.S.C. § 1821(d)(3)-(13); see also Freeman, 56 F.3d at 1399-1400 (summarizing administrative claims ...


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