The opinion of the court was delivered by: POLLAK
The plaintiff, the Resolution Trust Corporation (RTC), has filed a motion with two objectives: (1) dismissal of the counterclaim of the defendants -- James J. Kolea, his brother John J. Kolea, and their construction company, Cross County Corporation (hereinafter "the Koleas") -- for lack of subject-matter jurisdiction, and (2) partial summary judgment precluding the defendants from relying on written alterations to the loan agreement that serves as the predicate of this suit. For the reasons that follow, the counterclaim shall be dismissed and partial summary judgment shall be granted.
This suit was filed in September 1990. At that time, the RTC was the receiver of Nassau Savings and Loan Association ("Old Nassau") and the conservator of Nassau Federal Savings and Loan Association ("New Nassau"). Approximately one year later, the RTC was appointed receiver of New Nassau as well.
The suit involves a townhouse construction project that, during the mid-1980's, was being developed by Gulph Woods Corporation on a site in Montgomery County known as "Rebel Hill." This development has been the subject of much litigation, see, e.g., Trinsey v. K. Hovnanian at Upper Merion, Inc., 841 F. Supp. 694 (E.D. Pa. 1994); Trinsey v. K. Hovnanian at Upper Merion, Inc., 1993 U.S. Dist. LEXIS 13195, Civ. No. 93-1695, 1993 WL 313510 (E.D. Pa. July 28, 1993); RTC v. Clarke, 1992 U.S. Dist. LEXIS 6724, No. 90-7758, 1992 WL 111139 (E.D. Pa. May 11, 1992), and I shall therefore only briefly touch on the surrounding facts. Old Nassau agreed to lend money to Gulph Woods to fund the development, and eventually filed suit when Gulph Woods defaulted. As part of the settlement of that litigation, the Koleas -- who were not parties to the litigation, but who did participate in, and agree to, the court-approved settlement agreement -- undertook certain obligations. This settlement is set forth both in a transcript of the proceedings before my colleague, Judge Norma L. Shapiro, and in a written stipulation signed by the parties to that litigation but not signed by the Koleas.
See Exhibit C attached to the RTC's Memorandum in Support (docket no. 9); Exhibit K attached to the Koleas' Memorandum in Opposition (docket no. 10). This settlement agreement is referred to by the parties, and will be referred to by me, as the "May 30 agreement." The RTC's allegation that the Koleas failed to satisfy their obligations under the May 30 agreement, and the Koleas' counter-allegations regarding Old and New Nassaus' obligations under the same agreement, form the core of the present dispute.
The Koleas' allegations are contained in counterclaims filed with their answer. The RTC filed the instant motion in late 1991, seeking, inter alia, to have the counterclaims dismissed because the Koleas had failed to exhaust the RTC's administrative claims proceedings, as required by 12 U.S.C. § 1821(d)(13)(D). On February 26, 1992, I held a hearing on the motion, and ruled from the bench that (1) the motion to dismiss the counterclaim against the RTC as receiver for Old Nassau for lack of subject-matter jurisdiction was granted and (2) the motion to dismiss the counterclaim against the RTC as conservator for New Nassau was denied: the difference in disposition resulted from the fact that, under applicable Third Circuit precedent, the jurisdictional exhaustion requirement appeared to apply differently to legal proceedings filed pre- and post-receivership.
I reserved judgment on the portion of the RTC's motion that sought partial summary judgment. This ruling was memorialized in an order of March 2, 1992. Docket No. 17. Shortly thereafter, the parties entered into a stipulation -- which was, upon my approval, transformed into an order, see Docket No. 18 -- that held the counterclaim in abeyance pending a determination of the solvency of the receivership of New Nassau (i.e., a determination whether sufficient funds remained in New Nassau to satisfy any potential judgment in the Koleas' favor on the counterclaim).
The case returned to life in March of this year, when the parties notified me that the solvency determination had been made, and, accordingly, I entered a scheduling order. The parties have now filed pretrial memoranda, and, pursuant to an order I entered in connection with the pretrial conference held on June 28, 1994, they have also filed supplemental memoranda on the pending motion. Although the RTC has not filed a new motion to dismiss, both parties appear to be operating under the assumption that, because the earlier motion to dismiss was apparently denied without prejudice, it has somehow been renewed. This memorandum conforms to that assumption.
Subject-matter Jurisdiction over the Counterclaim
The crux of the motion to dismiss is the failure of the Koleas to file their claim against the RTC as receiver for New Nassau in the RTC's administrative claims process. The Koleas do not dispute that they have not filed an administrative claim, nor do they assert that they did not receive notice of the claims process. Rather, the Koleas assert that, at least in the Third Circuit, claims filed prior to New Nassau's entry into receivership are not subject to the jurisdictional exhaustion requirement found in the governing statute, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). See 12 U.S.C. § 1821(d)(13)(D).
I had occasion to address this question -- albeit in a somewhat different context -- in a related case. See RTC v. Clarke, 812 F. Supp. 48, 50-51 (E.D. Pa. 1992). In Clarke, I denied the RTC's motion to dismiss a similar, pre-receivership counterclaim, but granted the RTC's alternative motion to stay the litigation pending exhaustion of the administrative proceedings. In so deciding, I noted that the the Third and Tenth Circuits had reached somewhat different views on the issue of dismissal in decisions which were virtually contemporaneous. See RTC v. Mustang Partners, 946 F.2d 103, 106 (10th Cir. 1991); Rosa v. RTC, 938 F.2d 383, 392 & n.12 (3d Cir.), cert. denied, 112 S. Ct. 582 (1991). Although the court in Mustang Partners held that pending pre-receivership claims must be dismissed and then refiled after the administrative proceedings have been exhausted, the Third Circuit in Rosa held that dismissal of such claims is not required by the statute. Since the rulings in Rosa and Mustang Partners, several other circuits have ruled on the issue, and the majority of those to have addressed the question have agreed with the Third Circuit's decision in Rosa. See, e.g., Carney v. RTC, 19 F.3d 950, 955-56 (5th Cir. 1994); Brady Dev. Co. v. RTC, 14 F.3d 998, 1005-06 (4th Cir. 1994); Marquis v. FDIC, 965 F.2d 1148, 1151 (1st Cir. 1992).
In Rosa, the Third Circuit did not have occasion to address the next question, which is whether, although not subject to peremptory dismissal, such claims are nonetheless subject to an exhaustion requirement. Several circuits have held that although pre-receivership claims need not be dismissed, district courts should stay such cases to allow the RTC to consider the claims administratively. See, e.g., Carney, 19 F.3d at 955-56; Brady, 14 F.3d at 1003-04; Marquis, 965 F.2d at 1154-55. The Third Circuit has expressly "expressed no position" on such stays. Praxis Properties, Inc. v. Colonial Savings Bank, S.L.A., 947 F.2d 49, 64 n.14 (3d Cir. 1991). In Clarke -- as noted earlier -- I denied the RTC's motion to dismiss a counterclaim filed before the RTC's appointment as receiver, but I granted the RTC's alternative motion for a 180-day stay to permit the counterclaimants to pursue their administrative remedy. In so ruling, I did not mention (very likely because my research was incomplete) the Third Circuit's stated expression of "no position" in Praxis on the propriety of such stays. It may be that I would have granted such a stay here as well, if the Koleas had ever undertaken to file their claim with the RTC for administrative processing.
The question I must face because of the Koleas' failure to pursue the administrative remedy
is whether, when a pre-receivership claimant which is notified of the claims process nonetheless fails to exhaust that process, I may yet exercise jurisdiction over its claim. Three of the circuit courts that have addressed this problem have held that district courts may not exercise jurisdiction over such claims. See Brady, 14 F.3d at 1006; Bueford v. RTC, 991 F.2d 481, 485 (8th Cir. 1993); Marquis, 965 F.2d at 1151-52. The Fifth Circuit has recently taken a slightly different approach to the issue in Whatley v. RTC, 32 F.3d 905, 1994 WL 481424 (5th Cir. Sept. 7, 1994), apparently holding that the exhaustion requirement only applies to such claims when the RTC requests a stay of the judicial proceedings. And the problem has divided my two fellow judges in the Eastern District who have had occasion to address it. See Spring Garden Assocs., L.P. v. RTC, 860 F. Supp. 1070, 1994 WL 449047, at * 2 (E.D. Pa. 1994) (Bartle, J., holding that, pursuant to Rosa, a pre-receivership claimant "need not present its claim administratively before pursuing its claims in this forum"); W.W. Dev. & Mgmt. Co. v. RTC, 1994 U.S. Dist. LEXIS 9853, Civ. No. 93-4210, 1994 WL 376921, at * 2 & n.2 (E.D. Pa. July 15, 1994) ...