Appeal from the Circuit Court of McHenry County; the Hon.
Roland A. Herrmann, Judge, presiding.
JUSTICE REINHARD DELIVERED THE OPINION OF THE COURT:
Plaintiff, Harold L. Keller, appeals from the dismissal of his first amended complaint against the Federal Savings and Loan Insurance Corporation (FSLIC) as receiver for the Antioch Savings and Loan Association (Antioch). Antioch was declared insolvent by the Federal Home Loan Bank Board (FHLBB), and the FSLIC was appointed as receiver for Antioch. The FSLIC was substituted as proper party for Antioch and filed a motion to dismiss which was granted, the court finding it lacked jurisdiction over the FSLIC. The single issue on appeal is whether the motion to dismiss was properly granted.
Essentially, the facts alleged in Keller's first amended complaint are that Keller and First Antioch Corporation, a wholly-owned subsidiary of Antioch, entered into a joint venture agreement on October 1, 1978. First Antioch Corporation, which assigned to Antioch all of its interests in the joint venture, was also sued, but we are concerned here only with the proceeding against Antioch. The primary purpose of the agreement was to acquire and develop a 70-acre parcel of land in Marengo Township, McHenry County. Antioch's capital contribution was a loan in the amount of $750,000. Keller alleged that he expended large amounts of his personal assets and time in obtaining the necessary zoning, environmental and building permits with no compensation. He also alleged that Antioch failed to fund construction of phase I of the development of the property as required by the agreement, and that he and Antioch had verbally agreed to extend the October 31, 1981, repayment date by which Antioch's capital loan was required to be repaid in full to avoid forfeiture. Keller claims he was advised by officers and agents of Antioch that it was not necessary to commit this extension to writing. Nevertheless, Keller was informed by a letter dated August 18, 1982, that Antioch was forfeiting his interest in the joint venture.
Keller's five-count complaint sought an injunction prohibiting Antioch from alienating its interest in the property during the pendency of the action; a declaratory judgment that the forfeiture of Keller's interest in the joint venture agreement and the property is a penalty and incapable of enforcement by Antioch; $1 million in damages for false representation and breach of contract; and specific performance of the terms and conditions of the joint venture agreement.
On July 7, 1983, the FHLBB found that Antioch was insolvent in that its assets were less than its obligations to its creditors and others and appointed the FSLIC receiver. The FSLIC filed a motion to substitute as proper party for Antioch on December 1, 1983, which was granted. A motion to dismiss the complaint was then filed by the FSLIC which stated that as the Home Owner's Loan Act generally provides that no court may take any action affecting the receivership (12 U.S.C. § 1464(d)(1982)), the court lacked subject matter jurisdiction. The motion also stated that section 406(c)(1)(B) of the National Housing Act, as amended, provides that the FSLIC, as statutory receiver, has the responsibility of liquidating Antioch's assets in an orderly manner (12 U.S.C. § 1729(b)(1)(A) (1982)) and to "settle, compromise, or release claims in favor of or against" Antioch (12 U.S.C. § 1729(d) (1982)). Therefore, any party with a claim against a savings and loan in receivership is required to file the claim with the FSLIC. The motion was granted December 14, 1984, the trial court finding that it did not have jurisdiction over defendant FSLIC. This appeal followed.
Keller initially argues that the dismissal should be reversed because the Federal district court case presented to the trial court as the primary authority upon which the FSLIC based its motion to dismiss was reversed by the United States Court of Appeals for the Fifth Circuit in North Mississippi Savings & Loan Association v. Hudspeth (5th Cir. 1985), 756 F.2d 1096, cert. denied (1986), ___ U.S. ___, 88 L.Ed.2d 768, 106 S.Ct. 790. However, the original opinion filed April 5, 1985, upon which Keller relied, was withdrawn on rehearing and was changed to an affirmance on May 23, 1985, the day before Keller's initial brief was herein filed.
In Hudspeth, the North Mississippi Savings and Loan Association filed an action in State chancery court seeking a declaratory judgment that a deferred compensation agreement with its former president either did not exist or was terminable. Former president Hudspeth counterclaimed for specific performance or damages for breach of contract. The savings and loan was then declared insolvent and the FSLIC was appointed receiver. The FSLIC terminated the compensation contract. The case was removed to Federal court, and the FSLIC filed a motion to dismiss, which was granted by the district court. 756 F.2d 1096, 1099-1100.
In affirming the dismissal, the court of appeals cited the relevant statutes:
"Except as otherwise provided in this subsection, no court may * * *, except at the instance of the [FHLBB], restrain or affect the exercise of powers or functions of a conservator or receiver." (12 U.S.C. § 1464(d)(6)(C) (1982).)
"In connection with the liquidation of insured institutions, the [FSLIC] shall have power * * * to settle, compromise, or release claims in favor of or against the insured institutions, and to do all other things that may be necessary in connection therewith, subject only to the regulation of the Federal Home Loan Bank Board * * *." (12 U.S.C. § 1729(d) (1982).)
The court noted that in explaining the Bank Protection Act of 1968 (12 U.S.C. § 1729, 1881 through 1884 (1982)), which made section 1464(d)(6)(C) applicable in receiverships of State thrift institutions, the senate confirmed that the FSLIC's authority "[i]n carrying out its receivership responsibilities * * * would be subject only to the regulation of the Federal Home Loan Bank Board" (S. Rep. No. 1263, 90th Cong., 2d Sess. 10, reprinted in 1968 U.S. Code Cong. & Ad. News 2530, 2539). The court stated that "Congress wanted the FSLIC to be able to act quickly and decisively in reorganizing, operating, or dissolving a failed institution, and intended that the FSLIC's ability to accomplish these goals not be interfered with by other judicial or regulatory authorities." North Mississippi Savings & Loan Association v. Hudspeth (5th Cir. 1985), 756 F.2d 1096, 1101.
The court then decided that the FSLIC's termination of the compensation contract was unquestionably an exercise of the FSLIC's powers as receiver and could only be challenged before the FHLBB. If Hudspeth remained unsatisfied, judicial review could then be sought under the Administrative Procedure Act. (5 U.S.C. § 701-706 (1982 & Supp. II 1984).) This is because any adjudication of Hudspeth's claims would modify the FSLIC's distributions, and would "restrain or affect" the FSLIC's powers as a receiver in violation of section 1464(d)(6)(C). North Mississippi Savings & Loan Association v. Hudspeth (5th Cir. 1985), 756 F.2d 1096, 1102.
The court also noted that its conclusion is further fortified by the existence of FHLBB regulations setting forth procedures for FSLIC payment of creditor claims. Under these regulations, the FSLIC gives notice to creditors to present their claims, and then may disallow claims "not proven to its satisfaction." Any disallowed claims are submitted to the FHLBB for review. (12 C.F.R. secs. 569a.8, 549.4 (1984).) This administrative process serves to hasten the resolution of the receivership proceedings, in keeping with the congressional purpose, ...