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04/20/95 TEERLING LANDSCAPING v. CHICAGO TITLE AND

April 20, 1995

TEERLING LANDSCAPING, INC., PLAINTIFF-APPELLANT,
v.
CHICAGO TITLE AND TRUST COMPANY, TRUSTEE UNDER TRUST NO. 10916, ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Du Page County. No. 92-CH-524. Honorable John W. Darrah, Judge, Presiding.

Released for Publication May 23, 1995.

The Honorable Justice Doyle delivered the opinion of the court: Inglis and Geiger, JJ., concur.

The opinion of the court was delivered by: Doyle

JUSTICE DOYLE delivered the opinion of the court:

Plaintiff, Teerling Landscaping, Inc., appeals from an order of the circuit court of Du Page County dismissing counts I and III of plaintiff's amended complaint. Plaintiff initiated this lawsuit against numerous defendants to foreclose a mechanic's lien. Only three of the named defendants are appellees in this appeal. They are: Resolution Trust Corporation (RTC), receiver and substitute defendant for Irving Federal Savings & Loan Association, n/k/a Irving Bank for Savings (Irving Federal); Old Kent Bank (Old Kent); and First Federal Savings & Loan Association of Rockford, n/k/a First Federal Bank F.S.B. (First Federal). The other named defendants have either been defaulted or have not submitted pleadings.

Plaintiff's amended complaint contained three counts. Count I sought to foreclose a mechanic's lien against all three of the appellees. Count II was an action at law against only the property owners and is not part of the appeal. Count III alleged a statutory remedy against only RTC.

The trial court dismissed counts I and III as to RTC and count I as to Old Kent and First Federal. The court determined that there was no just reason for delaying enforcement or appeal of its order under Supreme Court Rule 304(a) (157 Ill. 2d R. 304(a)).

As to RTC, plaintiff contends that the trial court erred in granting RTC's motion to dismiss counts I and III of the amended complaint because (1) there were disputed questions of material fact which should have precluded granting the motion to dismiss; (2) plaintiff was denied due process; and (3) plaintiff was entitled to statutory damages.

As to Old Kent and First Federal, plaintiff contends that the trial court erred in granting their motion to dismiss count I of the amended complaint because, contrary to the trial court's determination, the lien's legal description of the property was sufficient and the lien did not have to be apportioned.

Before addressing the merits of plaintiff's contentions as to RTC, we must resolve a jurisdictional question. RTC contends that the circuit court lacked subject-matter jurisdiction to adjudicate plaintiff's case against it because plaintiff failed to exhaust administrative remedies which were a mandatory prerequisite for subject-matter jurisdiction.

Construing certain subsections of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (Pub. Law 101-73, 103 Stat. 183 (codified in scattered sections of 12 U.S.C. (Supp. II 1990))), RTC contends that FIRREA established an exclusive and mandatory administrative procedure under which any claimant against a receiver of a failed thrift must file an administrative claim and obtain a determination of the claim as a prerequisite to the exercise of jurisdiction by any court on the matter. RTC argues that plaintiff failed to exhaust administrative remedies because it did not file an administrative claim and consequently the trial court was without subject-matter jurisdiction.

RTC correctly states the general rule that FIRREA requires a claimant against a receiver for a failed thrift to file an administrative claim as provided in FIRREA or else no court has jurisdiction to adjudicate the dispute. (See, e.g., Resolution Trust Corp. v. Mustang Partners (10th Cir. 1991), 946 F.2d 103, 106.) However, there is an exception to the general rule for pre-receivership cases, i.e., those where the claimant files its action against the thrift in a court prior to the appointment of the receiver for the thrift. ( Whatley v. Resolution Trust Corp. (5th Cir. 1994), 32 F.3d 905, 908.) In pre-receivership cases where the receiver has not mailed the claimant personal notice of the administrative claim procedure and has not timely requested a stay of the judicial proceedings, the general rule does not apply. ( Greater Slidell Auto Auction, Inc. v. American Bank & Trust Co. (5th Cir. 1994), 32 F.3d 939, 941.) In such pre-receivership cases, the receiver is deemed to have determined to proceed with the previously filed litigation and therefore the court conducting those proceedings has jurisdiction to adjudicate the dispute notwithstanding the claimant's failure to file an administrative claim. Whatley, 32 F.3d at 910.

There are several persuasive reasons for the pre-receivership exception. The exception for pre--receivership cases comports both with the purposes of FIRREA and basic notions of fair play. Without the exception, a receiver might simply await the expiration of the time allowed by FIRREA for initiating administrative claims and then move to dismiss pending judicial actions on jurisdictional grounds. ( Whatley, 32 F.3d at 909.) Moreover, the failure to provide notice by mail in pre-receivership cases violates a claimant's right to due process under FIRREA. ( Greater Slidell Auto Auction, 32 F.3d at 942.) Finally, the exception is in accord with Armstrong v. Resolution Trust Corp. (1993), 157 Ill. 2d 49, 191 Ill. Dec. 46, 623 N.E.2d 291, where our supreme court determined that there was "no incompatibility between State-court jurisdiction of pre-receivership claims and Federal interests" (157 Ill. 2d at 60). For these reasons, we elect to follow the cases establishing the pre-receivership exception.

This case is a pre-receivership case in which the exception applies. Plaintiff filed its action to foreclose its mechanic's lien well before RTC was appointed receiver for Irving Federal. RTC has neither mailed plaintiff notice of the administrative claims procedure nor requested a stay of the State court proceedings. RTC argued below that its motion to dismiss counts I and III constituted notice to plaintiff of the administrative aims procedure. However, RTC has not renewed this argument on appeal. In any event, the argument is unpersuasive because the notice" given to plaintiff by RTC's motion to dismiss does not satisfy the FIRREA requirements for notice by mail (12 U.S.C. ยง 1821(d)(3)(C) (19 )). Consequently, the trial court had jurisdiction even though plaintiff did not file an administrative claim under FIRREA.

We turn now to the merits of plaintiff's appeal with respect to RTC. We will first set out the relevant facts as gleaned from the record.

In 1989, plaintiff entered a landscaping contract with owners of property to provide landscaping material and labor on the property. The trustee of a land trust which owned the property and the land trust beneficiaries had previously obtained a mortgage on the property from Irving Federal.

The landscaping contract required plaintiff to perform services and furnish material to improve the property at a price of $135,000. Plaintiff alleged that it completed the contract requirements and also furnished extra work and material in the amount of $24,435, for a total amount owed to it under the contract of $159,435. Plaintiff claimed that it was paid only $127,944 of the ...


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