Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-1-1994

National Union Fire Ins. Co. v. City Savings, FSB
Precedential or Non-Precedential:

Docket 93-5587




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT



                Nos. 93-5587, 93-5595 & 93-5596



              NATIONAL UNION FIRE INSURANCE COMPANY
           OF PITTSBURGH, PA; GULF INSURANCE COMPANY,

                                   National Union Fire Insurance
                                   Company of Pittsburgh, PA
                                   Appellant in Nos. 93-5595/5596

                                   Gulf Insurance Company
                                   Appellant in No. 93-5587


                                  v.


             CITY SAVINGS, F.S.B., In Receivership,
           RESOLUTION TRUST CORPORATION, as Receiver



         On Appeal from the United States District Court
                 for the District of New Jersey
                      (Civ. No. 92-cv-03408)



                        Argued March 28, 1994

              Before:    GREENBERG, COWEN and NYGAARD
                            Circuit Judges

                        (Filed July 1, 1994)

S. Gordon Elkins (argued)
Samuel J. Arena, Jr.
Pauline C. Scalvino
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098

Peter I. Broeman
Bigham, Engler, Jones & Houston


                                  1
One Gateway Center, Suite 527
Newark, NJ 07102-5311
          COUNSEL FOR APPELLANT
          NATIONAL UNION FIRE INSURANCE COMPANY
          OF PITTSBURGH, PA

Thomas F. Quinn (argued)
Wilson, Elser, Moskowitz, Edelman & Dicker
One Gateway Center, Suite 1600
Newark, NJ 07102

          COUNSEL FOR APPELLANT
          GULF INSURANCE COMPANY

Gerald A. Liloia (argued)
Robert J. Gilson
Riker, Danzig, Scherer, Hyland
& Perretti
One Speedwell Avenue
Headquarters Plaza
Morristown, NJ 07962-1981

          COUNSEL FOR APPELLEES
          CITY SAVINGS, F.S.B., In Receivership,
          THE RESOLUTION TRUST CORPORATION, As Receiver




                        OPINION OF THE COURT


COWEN, Circuit Judge.


          National Union Fire Insurance Company of Pittsburgh,

Pennsylvania ("National Union") and Gulf Insurance Company

("Gulf") filed a declaratory judgment action against City

Savings, F.S.B., in Receivership ("City Savings") and the

Resolution Trust Corporation, as Receiver ("RTC").   In the

declaratory judgment action, National Union and Gulf sought to

rescind insurance policies which they had issued and under which

City Savings and the RTC were seeking coverage.   The RTC filed a



                                 2
motion to dismiss the declaratory judgment action and also filed

a counterclaim.   The district court held that under the Financial

Institution Reform, Recovery and Enforcement Act of 1989

("FIRREA"),0 12 U.S.C. § 1821(d)(3), (d)(13)(D), it lacked

subject matter jurisdiction over National Union and Gulf's

declaratory judgment action.   The district court also held that

under FIRREA, National Union and Gulf were jurisdictionally

barred from raising certain affirmative defenses to the RTC's

counterclaim.   For the reasons stated below, we will affirm the

district court's holding that under FIRREA the district court

lacks subject matter jurisdiction over National Union and Gulf's

declaratory judgment action.   However, we will reverse the

district court's holding that under FIRREA National Union and

Gulf are barred from raising affirmative defenses to the

counterclaim.



                          I. BACKGROUND

          Effective March 22, 1989, National Union and Gulf

issued policies of insurance0 to CityFed Financial Corp.

("CityFed") and its subsidiaries.   The insurance policies provide

coverage for losses sustained from, among other things, the

dishonest or fraudulent acts of employees of CityFed and its


0
 FIRREA, Pub. L. No. 101-73, 103 Stat. 183, (appears in scattered
sections of the United States Code).
0
 The parties have also called the insurance polices issued by
National Union and Gulf respectively, "Financial Institution Bond
No. 362 61 69" and "Excess Financial Institution Bond No. GA
5355981 B". We will refer to these instruments collectively as
"insurance policies."


                                3
subsidiaries.   On October 27, 1989, City Federal Savings Bank

("City Federal"), a subsidiary of CityFed, sent a letter to

National Union and Gulf providing notice that City Federal might

have suffered a loss covered by the insurance policies as a

result of dishonest or fraudulent acts of City Federal employees.

On December 7, 1989, City Federal put National Union and Gulf on

notice of another potential claim involving the alleged dishonest

and/or fraudulent acts of George E. Mikula, an Executive Vice

President of City Federal.   On January 4, 1990, City Federal

placed National Union and Gulf on notice of a third potential

claim arising from the alleged dishonest and/or fraudulent acts

of Frank W. Allaben, a former Vice President of City Federal and

City Federal Mortgage Corporation.

          In the interim, by Order dated December 7, 1989, City

Federal was declared insolvent by the Director of the Office of

Thrift Supervision ("OTS") and ordered closed.   By the same

Order, the RTC was appointed Receiver of City Federal, succeeding

to all rights, titles, powers, and interests of City Federal.

Also on December 7, 1989, the Director of the OTS created City

Savings Bank--a federally chartered mutual savings association--

to take over certain assets and liabilities of City Federal.     The

RTC was then appointed as Conservator for and took possession of

City Savings Bank.

          In accordance with FIRREA, 12 U.S.C. § 1821(d)(3)(B),

the RTC then caused to be published notice to all creditors of

City Federal that they had until March 17, 1990 to bring any

claims against the assets of City Federal.   In addition, the RTC


                                4
sent known creditors, i.e., those then appearing on City

Federal's books, individual letters in December of 1989 informing

them of the bar date.    National Union was among those who were

sent a letter notifying it of the RTC's appointment as Receiver

and the bar date for the submission of claims.    The RTC

thereafter published the bar date in the newspaper on December

17, 1989, January 21, 1990, and February 18, 1990.    Gulf

apparently received from the RTC information concerning the

appointment of the RTC as Receiver, but never was sent

information concerning the March 17, 1990 bar date.

            On December 14, 1989 and February 22, 1990,

respectively, Gulf and National Union informed the RTC that

effective December 8, 1989--the takeover date of City Federal--

the insurance policies would be treated as canceled pursuant to

the terms of these policies that they would automatically

terminate upon the takeover of the insured by receiver, other

liquidators, or other state or federal officials.    Although both

National Union and Gulf notified the RTC that they considered the

policies canceled effective the date the RTC took over the

operations of the bank, neither raised or asserted to the RTC a

right to rescind the policies before the March 17, 1990 bar date.

That is, prior to the March 17, 1990 bar date, neither National

Union nor Gulf informed the RTC that it denied coverage under the

polices for events occurring prior to the RTC's appointment as

Receiver.

            By an Order dated September 21, 1990, the Director of

OTS closed City Savings Bank and appointed the RTC as its


                                 5
Receiver.    City Savings--a federally chartered mutual savings

association--was then organized to take over the assets and

liabilities of City Savings Bank.    The RTC was appointed

Conservator of City Savings and, accordingly, took possession and

charge of this newly created entity.    Thereafter, by Order dated

January 11, 1991, the Director of the OTS closed City Savings and

appointed the RTC as its Receiver.

            On or about February 27, 1991, the RTC as Receiver for

City Savings filed three proofs of loss totaling approximately

$152 million with National Union and Gulf, claiming that the

losses were covered by the insurance policies.    The three claims

were attributed to the alleged dishonest and/or fraudulent acts

of City Federal employees.   After investigating the RTC's claims,

National Union and Gulf tendered the entire premiums paid for the

insurance policies, plus interest, to the RTC on June 12th and

26th, 1992, respectively, in an effort to rescind the insurance

contracts.    The RTC rejected the premium refunds.

            On August 7, 1992, National Union and Gulf commenced

the declaratory judgment action against the RTC, as Receiver of

City Savings, asserting that National Union and Gulf had the

right to rescind the insurance policies issued to CityFed.    The

RTC made a motion to dismiss the declaratory judgment action for

lack of subject matter jurisdiction, and also filed a

counterclaim.

            The district court granted the RTC's motion to dismiss

the declaratory judgment action.     The district court held that

under § 1821(d)(3) and (d)(13)(D) of FIRREA, it lacked subject


                                 6
matter jurisdiction over the declaratory judgment action seeking

rescission.    The district court also held that under FIRREA,

National Union and Gulf were jurisdictionally barred from raising

their rescission theory as an affirmative defense to the

counterclaim brought by the RTC against them.



                           II. DISCUSSION

A.   APPELLATE JURISDICTION

              We first address whether we have appellate

jurisdiction over the order of the district court dismissing

appellant's complaint for lack of subject matter jurisdiction.

Because the RTC brought a counterclaim which has not been finally

adjudicated, the district court's dismissal of National Union and

Gulf's Complaint for Declaratory Judgment would not ordinarily be

considered a "final judgment," and we would not ordinarily have

appellate jurisdiction under 28 U.S.C. § 1291.    However, pursuant

to Fed. R. Civ. P. 54(b), the district court entered a final

judgment dismissing National Union and Gulf's Complaint for

Declaratory Judgment.0   We therefore have appellate jurisdiction
0
Rule 54(b) of the Federal Rules of Civil Procedure provides, in
relevant part:

           When more than one claim for relief is presented in an
           action, whether as a claim, counterclaim, cross-claim,
           or third-party claim . . . the court may direct the
           entry of a final judgment as to one or more but fewer
           than all of the claims . . . only upon an express
           determination that there is no just reason for delay
           and upon an express direction for the entry of
           judgment.

Fed. R. Civ. P. 54(b). Rule 54(b) may be used to grant final
judgment status over a declaratory judgment action which is part


                                 7
over the district court's dismissal of the declaratory judgment

complaint.    28 U.S.C. § 1291.

            The parties did not raise the question of whether we

have appellate jurisdiction to review that portion of the

district court's Order entered May 27, 1993 which barred National

Union and Gulf from raising affirmative defenses to any

counterclaims brought by the RTC.     Since appellate jurisdiction

cannot be waived or consented to by the parties, Carpenters

Health & Welfare Fund of Phila. & Vicinity v. Kenneth R. Ambrose,

Inc., 

, 468 (3d Cir. 1981), we must determine whether

we have jurisdiction to review the district court's holding

concerning the bar against affirmative defenses by National Union

and Gulf.

             The district court certified the entire Order dated May

27, 1993 as final under Fed. R. Civ. P. 54(b), including its

holding that National Union and Gulf could not raise their

rescission theory as an affirmative defense to the counterclaim

brought by the RTC.    However, simply because a district court

certifies a matter under Rule 54(b) does not automatically result

in proper appellate jurisdiction.     We first review a Rule 54(b)


of a multi-claim litigation, so long as the declaratory judgment
aspect of the litigation has in fact been brought to final
judgment. See, e.g., Heasley v. Belden & Blake Corp., 

, 1253 n.4 (3d Cir. 1993); Granite State Ins. Co. v.
Degerlia, 

, 191 (7th Cir. 1991); Horn v. Transcon
Lines, Inc., 

, 594 (7th Cir. 1990). Thus, the term
"claim" as used in Rule 54(b) must be construed broadly so as to
include declaratory judgment actions. Such a broad construction
of the term "claim" is consistent with common legal usage. For
example, Black's Law Dictionary defines "claim," in part, as "[a]
cause of action." Black's Law Dictionary 247 (6th ed. 1990).

                                  8
certification to determine whether the matter being certified was

actually "final," and in this determination we exercise plenary

review.     Gerardi v. Pelullo, 

, 1368 (3d Cir. 1994).

"Then, if we conclude[] that the judgment[] [was] final, we . . .

consider whether the district court abused its discretion in

determining that [it was] ready for appeal taking into account

judicial administrative interests as well as the equities

involved."    

modifications and citation

omitted).

             As to the first inquiry, the reason for us inquiring

into whether a matter certified under Rule 54(b) is actually

"final" is because Rule 54(b) allows certification of finality in

situations where a claim or a party's interest is adjudicated to

finality, but the claim or party happens to be a part of a

continuing litigation presenting multiple claims or multiple

parties.     Rule 54(b) does not allow a claim which when viewed

separately is not final to be considered final.     In other words,

Rule 54(b) only parses out final claims or parties whose claims

are final from a multiclaim or multiparty litigation--it does not

operate to magically deem a non-final claim "final."     See 

only address the first inquiry, whether the

Order barring National Union and Gulf from raising the

affirmative defense of rescission was final.     Clearly, it was

not.   The affirmative defense of rescission would have been a

defense to the counterclaim brought by the RTC against National

Union and Gulf.     That counterclaim has not been finally

adjudicated, and therefore any orders concerning the

                                  9
counterclaim, including the district court's order that the

affirmative defense of rescission could not be raised as an

affirmative defense to the counterclaim, are not final orders.

Thus, the portion of the Order barring National Union and Gulf

from raising rescission as an affirmative defense, not being a

final order, was not properly certified by the district court

under Rule 54(b).

          We nevertheless conclude that under the doctrine of

pendent appellate jurisdiction, we have appellate jurisdiction to

review the district court's Order which held that National Union

and Gulf are barred from raising the affirmative defense of

rescission in the counterclaim brought by the RTC.    We have

stated that "pendent appellate jurisdiction over an otherwise

unappealable order is available only to the extent necessary to

ensure meaningful review of an appealable order."    Hoxworth v.

Blinder, Robinson & Co., 

, 209 (3d Cir. 1990).0     In


0
Our statement in Hoxworth was made in reliance on our holding in
Kershner v. Mazurkiewicz, 

(3d Cir. 1982) (in banc).
In Kershner we held "that a pendent class certification order is
not appealable under section 1292(a)(1) unless the preliminary
injunction issue cannot properly be decided without reference to
the class certification question." 

    In Hoxworth, we did not discuss the relevance of a decision
in which we seemed to broaden the availability of pendent
appellate jurisdiction. In United States v. Spears, 

(3d Cir. 1988), we held that "[o]nce we have taken jurisdiction
over one issue in a case, we may, in our discretion, consider
otherwise nonappealable issues in the case as well, where there
is sufficient overlap in the facts relevant to the appealable and
nonappealable issues to warrant our exercising plenary authority
over the appeal." 

(internal quotations and brackets
omitted). We went on in Spears to apparently limit the
restrictive holding of Kershner to the preliminary injunction
context. 

                               10
this case, in order for us to meaningfully determine whether

National Union and Gulf may, consistent with due process, be

barred from bringing their declaratory judgment action, it is

necessary for us to address whether they would be able to raise

rescission as a defense or affirmative defense in a proceeding

against them.   See infra typescript at pp. 26-34.   Therefore, we

properly have appellate jurisdiction over the order barring

National Union and Gulf from raising rescission as an affirmative

defense.



B.   ANALYSIS OF § 1821(d)(13)(D)

           The issue presented is whether the district court

properly determined that under FIRREA, 12 U.S.C. § 1821(d)(3) and

(d)(13)(D), the district court lacked subject matter jurisdiction

over National Union and Gulf's declaratory judgment action

seeking rescission of the insurance policies in question.

Furthermore, we must determine whether the district court

correctly determined that under FIRREA, National Union and Gulf

are barred from raising rescission as an affirmative defense to

the RTC's counterclaim.   The issue of whether the district court

correctly interpreted § 1821(d)(3) and (d)(13)(D) of FIRREA

concerning subject matter jurisdiction is a legal question over

which we exercise plenary review.    Cf. Federal Ins. Co. v.


    In this case, we meet the more stringent test for the
availability of pendent appellate jurisdiction as set forth in
Kershner and Hoxworth. We therefore do not address the more
liberal standard of pendent appellate jurisdiction as articulated
in Spears.


                                11
Richard I. Rubin & Co., 

, 1282 (3d Cir. 1993), cert.

denied, ___ U.S. ___,    ___ S. Ct. ___ (U.S. May 23, 1994).

            Section 1821(d)(13)(D) of FIRREA contains a

jurisdictional bar which is central to this appeal.     That section

provides:
               Except as otherwise provided in this subsection, no
            court shall have jurisdiction over--

               (i) any claim or action for payment from, or any
            action seeking a determination of rights with respect
            to, the assets of any depository institution for which
            the Corporation has been appointed receiver, including
            assets which the Corporation may acquire from itself as
            such receiver; or

              (ii) any claim relating to any act or omission of
            such institution or the Corporation as receiver.


12 U.S.C. § 1821(d)(13)(D).    The "[e]xcept as otherwise provided

in this subsection" language quoted above refers to subsection

(d) of § 1821.    E.g., Marquis v. FDIC, 

, 1153 & n.5

(1st Cir. 1992).    "Subsection (d) . . . provides for de novo

district court jurisdiction only after the filing of a claim

with, and the initial processing of that claim by, RTC pursuant

to § 1821(d)(5) and (6)(A)."    Rosa v. RTC, 

, 391-92

(3d Cir.), cert. denied, ___ U.S. ___, 

(1991).0
Thus, we have characterized the jurisdictional restriction

contained in     § 1821(d)(13)(D) as a statutory exhaustion

requirement: in order to obtain jurisdiction to bring a claim in

federal court, one must exhaust administrative remedies by

submitting the claim to the receiver in accordance with the

0
The RTC as receiver is subject to the same provisions of FIRREA
as the FDIC, with some exceptions. 12 U.S.C. §1441a(b)(4)-(5).

                                  12
administrative scheme for adjudicating claims detailed in

§1821(d).   

.0

            "When the RTC is appointed as receiver of a failed

thrift institution, the RTC must promptly publish a notice to the

institution's creditors to present their claims and proof by a

specified date, which may not be less than 90 days after

publication.    12 U.S.C. § 1821(d)(3)(B)(i). . . . In addition,

the RTC must mail a similar notice to any creditor shown on the

institution's books.    12 U.S.C. § 1821(d)(3)(C)."    Althouse v.

RTC, 

, 1545 (3d Cir. 1992).

            The RTC provided such notice to National Union.    On

December 8, 1989, the RTC mailed to National Union and Gulf a

letter of notification of the appointment of the RTC as Receiver.

The RTC also notified National Union that it was required to

submit to the RTC all claims by March 17, 1990.0      National Union


0
 We have previously described in detail the administrative scheme
for adjudicating claims under FIRREA, 12 U.S.C. § 1821(d).
Althouse v. RTC, 

, 1545-46 (3d Cir. 1992); FDIC v.
Shain, Schaffer & Rafanello, 

, 131-32 (3d Cir. 1991).
0
 Although Gulf received notice that the RTC was appointed
Receiver, Gulf never received a notice in the mail concerning the
March 17, 1990 bar date and the requirement that any claims
against the failed institution had to be submitted to the RTC by
that date. Gulf contends that given these facts, it did not
receive proper notice under § 1821(d)(3)(B), and that therefore
it cannot be bound by the requirement to exhaust the
administrative remedies provided for under FIRREA. In light of
our conclusion that § 1821(d)(13)(D) does not bar Gulf from
raising rescission as an affirmative defense, we need not address
the issue of proper notice as to the affirmative defense. As for
our conclusion that Gulf's declaratory judgment action is
jurisdictionally barred, we explain below why depriving Gulf of
the right to bring a declaratory judgment action comports with
due process, even assuming that Gulf did not receive proper
notice.


                                 13
and Gulf did not submit by March 17, 1990 any claim or assertion

to the RTC that they had a right to rescind the insurance

policies in question.   Accordingly, we conclude that neither

National Union nor Gulf exhausted the administrative remedies

provided for under FIRREA.   Thus, unless the jurisdictional bar

contained in § 1821(d)(13)(D) is inapplicable, the district court

lacked jurisdiction over National Union and Gulf's declaratory

judgment action for rescission and their affirmative defenses of

rescission.

           We must carefully examine the jurisdictional bar

contained in § 1821(d)(13)(D) to determine whether it deprived

the district court of jurisdiction to hear National Union and

Gulf's declaratory judgment action for rescission and their

affirmative defenses of rescission.   In so doing, we keep in mind

cardinal rules of statutory interpretation:   "The starting point

for interpretation of a statute is the language of the statute

itself."   Kaiser Aluminum & Chemical Corp. v. Bonjorno, 

, ___, 

, 1575 (1990) (internal quotations and

citation omitted).   "The plain meaning of legislation should be

conclusive, except in the rare cases in which the literal

application of a statute will produce a result demonstrably at

odds with the intentions of its drafters."    United States v. Ron
Pair Enter. Inc., 

, 242, 

, 1031 (1989)

(internal quotations, brackets and citation omitted).


1.   Whether the Insurance Policies Are "Assets"
     Under § 1821(d)(13)(D)


                                14
          As a preliminary matter, we consider whether the

insurance polices issued by National Union and Gulf to CityFed

and its subsidiaries are "assets" of City Savings as that term is

used in § 1821(d)(13)(D)(i).   Section 1821(d)(13)(D) provides

that "no court shall have jurisdiction over--(i) any claim or

action for payment from, or any action seeking a determination of

rights with respect to, the assets of any depository institution

for which the Corporation has been appointed receiver . . . ."

§1821(d)(13)(D)(i) (emphasis added).   If the insurance policies

are not assets of the bank, then National Union and Gulf's

declaratory judgment action for and affirmative defenses of

rescission of those insurance policies would not be barred under

§ 1821(d)(13)(D).

          FIRREA does not provide a definition of "assets" as

that term is used specifically in § 1821(d)(13)(D)(i).   In the

absence of a specific definition, we refer to the definition of

the term "assets" in common legal usage:
          Property of all kinds, real and personal, tangible and
          intangible . . . . The entire property of a person,
          association, corporation, or estate that is applicable
          or subject to the payment of his or her or its debts.


Black's Law Dictionary 117 (6th ed. 1990).   Insurance policies

which a bank has purchased and under which it is an insured falls

neatly within this definition of assets.   Insurance policies

obviously are important property interests of individuals and

economic entities.   Furthermore, we believe that business people

consider an insurance policy to be an asset of the named insured,

as the term "asset" is commonly used in the business world.


                                15
Finally, reported court decisions have assumed that insurance

policies are assets of institutions which are holders of the

policies.   See, e.g., FDIC v. Aetna Casualty & Surety Co., 

, 199 (6th Cir. 1991); A.H. Robins Co. v. Piccinin, 

, 1001-02 & n.10 (4th Cir.), cert. denied, 

,

(1986); FDIC v. Gulf Life Ins. Co., 

,

1514-20 (11th Cir. 1984); Samuels v. Acme Market, 

, 294 (E.D. Pa. 1994); Holloway v. New Jersey, 

,

1180 (N.J. Super. Ct. Law Div. 1989).

            Whether City Savings will ultimately be entitled to

collect under the insurance policies is not relevant to the

threshold question of whether the insurance policies issued to

CityFed and its subsidiaries are assets of the banks.    An

insurance policy is of value to the owner and named insured of

the policy, even though it is possible that the owner and named

insured will ultimately be found not to be entitled to a

particular recovery under the policy.    For all of the above

reasons, we conclude that the plain meaning of the term "assets"

contained in § 1821(d)(13)(D)(i) includes the insurance policies

issued by National Union and Gulf to CityFed and its

subsidiaries.

            Having concluded that the insurance polices are assets

of City Savings, we must examine the jurisdictional bar contained

in § 1821(d)(13)(D) to determine whether it deprived the district

court of jurisdiction to hear (1) National Union and Gulf's

declaratory judgment action for rescission of the insurance



                                 16
policies and (2) their affirmative defenses of rescission of the

insurance policies.


2.   Application of Section 1821(d)(13)(D)
     to the Declaratory Judgment Action

             We first address the jurisdictional bar as it applies

to the declaratory judgment action.    The language of

§1821(d)(13)(D) appears to include a bar to declaratory judgment

actions: "[N]o court shall have jurisdiction over--(i) any claim

or action for payment from, or any action seeking a determination

of rights with respect to, the assets of any depository

institution for which the Corporation has been appointed receiver

. . . ."    § 1821(d)(13)(D)(i) (emphasis added).   The plain

meaning of the emphasized words quoted immediately above includes

declaratory judgment actions: a declaratory judgment action is an

"action seeking a determination of rights."      Black's Law

Dictionary defines "declaratory judgment," in relevant part, as

follows:
             Statutory . . . remedy for the determination of a
             justiciable controversy where the plaintiff is in doubt
             as to his [or her] legal rights. A binding
             adjudication of the rights and status of litigants even
             though no consequential relief is awarded.


Black's Law Dictionary 409 (6th ed. 1990).      The same dictionary

defines "action," in part, as "a lawsuit brought in a court; a

formal complaint within the jurisdiction of a court of law."     

    When one initiates a declaratory judgment, one brings a

lawsuit in court and files a complaint.      National Union and Gulf

did exactly that in this case.    An action for declaratory


                                  17
judgment is plainly an "action."       No reasonable argument can be

offered that the plain meaning of the "any action seeking a

determination of rights" language of § 1821(d)(13)(D) does not

include complaints requesting declaratory relief.      Therefore,

unless it appears that interpreting § 1821(d)(13)(D) would

produce a result "demonstrably at odds" with the general purpose

of FIRREA, Ron Pair 

, 109 S. Ct. at 1031,

we will conclude that declaratory judgment actions are barred by

§ 1821(d)(13)(D).

          An argument can be made that interpreting

§1821(d)(13)(D) to include a bar to National Union and Gulf's

declaratory judgment action produces an odd result when

§1821(d)(13)(D) is not viewed in isolation, but with reference to

the administrative claims procedure of FIRREA set out in

§1821(d)(3), (d)(5) and (d)(6).     This argument begins by pointing

out that National Union and Gulf's declaratory judgment action is

not a creditor's claim.     Since National Union and Gulf will owe

the RTC money if it is determined that the RTC may collect under

the insurance policies, they are potential debtors, and their

action seeking a declaration that the insurance policies are

rescinded is therefore a potential debtor's claim, not a

creditor's claim.   The argument continues as follows:      Section

1821(d)(13)(D) acts as a jurisdictional bar to claims, but there

is an exception to this jurisdictional bar in that claims which

have been properly submitted through the administrative claims

procedure may be tried de novo in federal court.       §1821(d)(6)(A);

-92.    Therefore, it is contended that since


                                  18
the jurisdictional bar of § 1821(d)(13)(D) contains an exception

for claims submitted through the administrative claims procedure,

§ 1821(d)(13)(D) must be read and interpreted with reference to

the administrative claims procedure contained in § 1821(d)(3),

(d)(5) and (d)(6).   Under 1821(d)'s administrative claims

procedure, creditors, not debtors, are given notice to file

claims with the receiver.   §1821(d)(3)(B),(C).   After a

determination has been made with regard to a claim that has been

submitted, the claimant may request administrative review of the

claim or file suit in federal court.   § 1821(d)(6)(A).     Since

under § 1821(d)(3)(B), (C), only creditors are given notice to

submit claims to the RTC, the argument goes, the jurisdictional

bar contained in §1821(d)(13)(D) could not have been intended to

deprive jurisdiction for actions brought by non-creditors.      In

other words, the argument concludes, only holders of creditors'

claims, for whom the statute provides notice and who may present

their claims in the administrative claims procedure, are meant to

be jurisdictionally barred by § 1821(d)(13)(D) if the claimant

has not in fact exhausted the administrative remedies.

          That § 1821(d)(13)(D)'s ouster of jurisdiction should

be limited to suits otherwise governed by the administrative

claims procedure set out in § 1821(d) is a position that has been

advanced, or at least suggested, by several courts.0   National

0
Cf. Homeland Stores, Inc. v. RTC, 

, 1274 & n.5 (10th
Cir. 1994); RTC v. Midwest Fed. Sav. Bank of Minot, 

,
1496-97 (9th Cir. 1993); National Trust for Historic Preservation
v. FDIC, 

, 240 (D.C. Cir. 1993), vacated, 

(D.C. Cir. 1993), reinstated in relevant part, 

(D.C.
Cir. 1994); FDIC v. diStefano, 

, 115-16 (D.R.I.


                                19
Union and Gulf advocate a version of that position in this

appeal.   They accurately point out that their declaratory

judgment action is not a creditor's claim and therefore their

action is not the type of "claim" for which FIRREA's

administrative claims procedure was established.   Furthermore,

Gulf was never put on notice that it had to submit claims to the

RTC by the March 17, 1990 bar date.   Therefore, Gulf contends

that it especially cannot be held to have been bound by the

requirement to exhaust the administrative claims procedure as a

prerequisite to federal court jurisdiction.   Assuming that

exhaustion of administrative claims procedure was not applicable

to their action for declaratory judgment, National Union and Gulf

conclude that the jurisdictional bar cannot apply.

          However, we reject the suggestion that the broad bar to

jurisdiction indicated by the plain language of § 1821(d)(13)(D)

should be strained and limited by referring to the administrative

claims procedure of § 1821(d)(3), (d)(5) and (d)(6).   Although

there is surely an interrelationship between the jurisdictional

bar contained in § 1821(d)(13)(D) and the administrative claims

procedure, this does not mean that the class of actions addressed

by the jurisdictional bar is necessarily identical to the class

of actions addressed by the administrative claims procedure.     As

explained below, even assuming that § 1821(d)(13)(D)'s ouster of

jurisdiction affects actions not otherwise governed by the

1993); In re Scott, 

, 308-320 (Bankr. W.D. Tex.
1993), vacated, 

(Bankr. W.D. Tex. 1994); In re
Continental Fin. Resources Inc., 

, 387-88 (D. Mass.
1993); In re Purcell, 

, 113-16 (D. Vt. 1993).


                                20
administrative claims procedure, such a regime would not be at

odds with the intentions of Congress in passing FIRREA.

           The language barring jurisdiction over "any action

seeking a determination of rights" contained in § 1821(d)(13)(D)

would appear to cover a larger class of actions than does the

language contained in § 1821(d)(3), (d)(5), and (d)(6),

concerning the administrative claims procedure.   For example, in

the administrative claims procedure portion of FIRREA,

§1821(d)(3)(B) and (C) require notice to be given only to claims

of creditors, and § 1821(d)(5) and (d)(6) refer only to "any

claim"; in contrast, the jurisdictional bar of § 1821(d)(13)(D)

refers to "any action seeking a determination of rights," and

does not limit such actions to actions concerning creditors'

claims.   In making this comparison, a definition of "claim" and

"creditor" would be useful.   Unfortunately, neither the text of

FIRREA nor its legislative history provide an explicit definition

of the term "claim" or "creditor" as they are used in FIRREA.0 In

light of FIRREA's lack of definitions of these terms, the Court

of Appeals for the District of Columbia Circuit has suggested

that the Bankruptcy Code is a promising source to turn to in

defining "claim" and "creditor" as those terms are used in

FIRREA.   Office & Professional Employees Int'l Union, Local 2 v.
FDIC, 

, 68 (D.C. Cir. 1992).   Because the

administrative claims procedure of FIRREA contained in § 1821


0
See generally Pub. L. No. 101-73, 103 Stat. 183 (1989); H.R.
Rep. No. 101-54(I), 101st Cong., 1st Sess. 291 (1989), reprinted
in 1989 U.S.C.C.A.N. 86.


                                21
(d)(3), (d)(5) and (d)(6) addresses a debtor-creditor

relationship, we agree with the D.C. Circuit in this regard, and

in the absence of more specific legislative authority, in

interpreting FIRREA we will apply the definition of "claim" and

"creditor" contained in the Bankruptcy Code, 11 U.S.C. § 101(5),

(10)(A).0   The Bankruptcy Code defines "claim" as follows:
            "claim" means--
            (A) right to payment, whether or not such right is
            reduced to judgment, liquidated, unliquidated, fixed,
            contingent, matured, unmatured, disputed, undisputed,
            legal, equitable, secured, or unsecured; or
            (B) right to an equitable remedy for breach of
            performance if such breach gives rise to a right to
            payment, whether or not such right to an equitable
            remedy is reduced to judgment, fixed, contingent,
            matured, unmatured, disputed, undisputed, secured, or
            unsecured[.]


11 U.S.C. § 101(5) (emphasis added).    The term "creditor" is

defined in relevant part as an "entity that has a claim against

the debtor."   § 101(10)(A).   Hence a "claim" or a "creditor's

claim" is essentially an action asserting a right to payment.     In




0
We note that we interpret the term "claim" as used in Fed. R.
Civ. P. 54(b) more broadly than we interpret that term as used in
FIRREA. See supra note 3. The reason for this is that Rule
54(b) of the Federal Rules of Civil Procedure is a procedural
rule of general applicability, while the administrative claims
procedure of FIRREA addresses the processing of claims in the
particular context of insolvent thrift institutions. Because we
borrow the definition of "claim" and "creditor" from the
Bankruptcy Code, 11 U.S.C. § 101(5), (10), we acknowledge that in
future cases under FIRREA, circumstances may justify straying
from the Bankruptcy Code's definition of those terms. For
instance, if the language of FIRREA or the legislative history of
FIRREA spoke directly to a factual scenario, such direct
authority would presumably trump any reliance on the Bankruptcy
Code.


                                 22
contrast, the phrase "any action"0 does not contain any

limitations, and plainly denotes any affirmative action taken by

a party to commence any suit in any court, whether or not such an

action asserts a right to payment, and whether or not such an

action is brought by a creditor or a debtor.

          With these definitions in mind, and for the purposes of

argument, we will assume that the terms "claims" and

"creditors['] . . . claims" as used in § 1821(d)(3) denote a

smaller class of actions than does the "any action seeking a

determination of rights" language of § 1821(d)(13)(D)(i).0   For

0
 Black's Law Dictionary defines "action", in relevant part, as "a
lawsuit brought in a court." Black's Law Dictionary 28 (6th ed.
1990).
0
 We make this assumption only for the purpose of argument. We
leave for another day the issue of whether § 1821(d)(3), (d)(5)
and (d)(6) requires or permits the RTC to consider claims not
asserting a right to payment, such as National Union and Gulf's
action for declaratory judgment of rescission, in the
administrative claims procedure of FIRREA. Moreover, at least
one court of appeals has indicated a willingness to defer to the
receiver when it has interpreted the administrative claims
procedure broadly to allow the receiver to make determinations
over a larger class of claims than the plain language of FIRREA
might suggest. Heno v. FDIC, 

, 1208-10 (1st Cir.
1994). If the RTC accepted a declaratory judgment action in its
administrative claims procedure and made a determination
concerning such an action, it would appear that the exception to
the jurisdictional bar contained in § 1821(d)(13)(D) would apply.
As noted above, in this case neither National Union nor Gulf
submitted the rescission theory through the administrative claims
procedure by the March 17, 1990 bar date, so we need not address
this issue.
     In Rosa v. RTC, 

(3d Cir.), cert. denied, ___
U.S. ___, 

(1991), we indicated that there is an
interrelationship between the jurisdictional bar contained in
§1821(d)(13)(D) and the administrative claims procedure contained
in § 1821(d)(3), (d)(5) and (d)(6) by characterizing the
jurisdictional bar as a "statutory exhaustion 

. Surely that characterization is accurate as to a
"claim," i.e., an action asserting a right to payment. In the


                               23
instance, under these definitions, National Union and Gulf's

declaratory judgment action for rescission of insurance policies

which they issued would not be a "claim" addressed in the

administrative claims procedure, but would be an "action"

jurisdictionally barred by § 1821(d)(13)(D).   Yet we do not see

why a jurisdictional bar which might cover a larger class of

actions than would be addressed by the administrative claims

procedure would be inconsistent with the general goals of

Congress in passing FIRREA.   One of the important goals of FIRREA

is to enable the receiver to efficiently determine creditors'

claims and preserve assets of the failed institution without

being burdened by complex and costly litigation.0   With this goal

in mind, it would be perfectly consistent for Congress to provide

a scheme wherein a holder of a claim for payment from the assets

portion of the opinion characterizing the jurisdictional bar as
an exhaustion requirement, the Rosa court addressed only
"claims," as opposed to the "any action" language contained in
§1821(d)(13)(D)(i), stating that "[s]ubsection (d) of § 1821
provides for de novo district court jurisdiction only after the
filing of a claim with, and the initial processing of that claim
by, 

(emphasis added). But Rosa did not
address or decide the interesting issue which is still an open
question in this court: whether the class of actions addressed by
the administrative claims procedure is smaller than the class of
actions addressed by the jurisdictional bar. If it were decided
that the administrative claims procedure covered a smaller class
of actions than addressed by the jurisdictional bar, then for
those actions addressed by the jurisdictional bar but not
addressed in the administrative claims procedure the
jurisdictional bar would not be an exhaustion requirement; rather
the jurisdictional bar would be an independent and outright bar
of jurisdiction.
0
 "The primary purpose underlying FIRREA's exhaustion scheme is to
allow RTC to perform its statutory function of promptly
determining claims so as to quickly and efficiently resolve
claims against a failed institution without resorting to
litigation." 

.


                                24
of the failed institution would be provided an administrative

remedy and de novo court review, while the holder of a claim not

asserting a right of payment and who wanted only a declaration of

rights against the failed bank would be provided no

administrative remedy or federal court access.

           The rationale for this treatment of actions which do

not seek payment from the assets of the failed institution would

be that if the RTC leaves the party wishing to bring an action

not seeking payment alone, that party should also leave the RTC

alone.   Accordingly, a party wishing to bring an action not

seeking payment cannot summon the RTC into court to adjudicate a

declaration of rights against the RTC.   Rather, the party wishing

to bring an action not for payment must instead wait and see if

the RTC will sue her.   If it does, then she will be able to

defend herself against the RTC's action at that time.   According

to this rationale, the crisis facing failed banks is so extreme

that the receiver is to focus on preserving the failed bank's

assets, without the distraction and substantial cost of defending

itself in court against declaratory judgment actions which do not

seek a right to payment from the failed institution's assets.

Indeed, since the RTC might never choose to sue the party wishing

to obtain a declaratory judgment that it is not liable to the

RTC, it may turn out that such declaratory judgment relief will

be unnecessary.

           It may be objected that such a scheme would be unfair

to a party wishing to obtain a declaration of rights vis-a-vis

the RTC.   By stripping the party of its right to obtain a

                                25
declaratory judgment, the party must live indefinitely with the

threat that litigation might at any time be commenced against it

by the RTC.   But FIRREA was in fact passed to give the receiver

extraordinary powers.   We acknowledge that the ability to obtain

a declaratory judgment is a valuable right in that it enables a

party to ascertain its rights and obligations sooner than would

be possible if the party were forced to await a lawsuit by an

opposing party.   However, simply because the right to bring a

declaratory judgment action is valuable does not mean that

Congress cannot take it away consistent with due process.

Congress apparently has determined that the societal benefits

resulting from the right to bring actions for a determination of

rights, including declaratory judgments, are outweighed by the

societal benefits resulting from the RTC being able to avoid

costly and perhaps unnecessary litigation.0   If the crisis facing

failed institutions is so severe that Congress decides that it

does not want the RTC spending limited time and resources

processing declaratory judgment actions in its administrative

claims procedure or defending declaratory judgment actions in

court, it has the power to act accordingly.   We believe that the

broad jurisdictional bar contained in the plain language of

§1821(d)(D)(13) reveals that Congress did in fact make this

determination.

          Congress could easily have limited § 1821(d)(13)(D)'s

jurisdictional bar to "claims," thereby limiting the


0
See supra note 13.


                                26
jurisdictional bar to the same class of actions dealt with in the

administrative claims procedure.     But it did not.   The

jurisdictional bar goes further and, in addition to barring "any

claim . . . for payment," § 1821(d)(13)(D)(i), it contains a bar

against "any action seeking a determination of rights with

respect to [] the assets of any depository institution for which

the Corporation has been appointed receiver," 

a statute we are obliged to give effect, if possible, to every

word Congress used,"   Reiter v. Sonotone Corp., 

,

339, 

, 2331 (1979), and without good reason, we

will not assume that a portion of a statute is superfluous, void

or insignificant, see 2A Norman J. Singer, Statutes and Statutory

Construction § 46.06, at 119-20 (5th ed. 1992).

          We therefore assume Congress meant what it said when it

included a jurisdictional bar to "any action."     The term "any

action" includes actions by debtors as well as creditors, and is

not limited to actions asserting a right to payment.      "Absent a

clearly expressed legislative intention to the contrary, [the

statutory] language must ordinarily be regarded as conclusive."

Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 

,
108, 

, 2056 (1980).     Because a jurisdictional bar

to declaratory judgment actions is consistent with Congress'

intention in passing FIRREA, we give effect to the plain language

of § 1821(d)(13)(D) and hold that it bars National Union and

Gulf's declaratory judgment action, regardless of whether

National Union and Gulf are characterized as creditors or



                                27
debtors, and despite the fact that National Union and Gulf do not

assert a right to payment.

           It could be argued that if Congress did in fact intend

that actions seeking a determination of rights but which do not

seek a right to payment, such as National Union and Gulf's

declaratory judgment action for rescission, would be

jurisdictionally barred from both administrative proceedings and

courts of law, that this complete bar to administrative and court

access would result in an unconstitutional deprivation of due

process under the Fifth Amendment.     If this objection were valid,

we might eschew interpreting the "any action seeking a

determination of rights" language of § 1821(d)(13)(D) so as to

cover a larger class of actions than might be covered under the

administrative claims procedure of § 1821(d)(3), (d)(5) and

(d)(6).   This is because "where an otherwise acceptable

construction of a statute would raise serious constitutional

problems, the [c]ourt will construe the statute to avoid such

problems unless such construction is plainly contrary to the

intent of Congress."   Edward J. DeBartolo Corp. v. Florida Gulf

Coast Bldg. & Constr. Trades Council, 

, 575, 108 S.

Ct. 1392, 1397 (1988).

           However, we do not believe that barring jurisdiction

over declaratory judgment actions not seeking a right to payment

in both administrative proceedings and courts of law would

violate the Due Process Clause.    This is because it appears that

whatever rights a party wishes to have announced in a declaratory

judgment action may later be adjudicated in the administrative

                                  28
claims procedure or in an action with the RTC.   Thus, the party

stripped of her right to bring a declaratory judgment action gets

her chance for a hearing--her "opportunity to be heard"0--even

though her hearing may be delayed.   For instance, if the

inability to have a court declare rights in advance leads to the

RTC violating a party's rights causing actual damages, then that

party will have a "claim"--a right to payment--which may be

submitted in the administrative claims procedure.0   That this


0
 Logan v. Zimmerman Brush Co., 

, 429-30, 

, 1154 (1982) (internal quotations and citation omitted).
0
 We recognize that as a result of our holding, the following
problem could arise: The RTC, having taken over as receiver,
could subsequent to receivership cause injury to a party, giving
rise to a cause of action. By the time the cause of action
arose, however, the bar date by which time creditors were put on
notice to bring claims might have passed. In such a situation,
the RTC could argue that the claim based on the cause of action
cannot be submitted to the administrative claims procedure
because the bar date has passed. At the same time, the RTC could
invoke the jurisdictional bar contained in § 1821(d)(13)(D) and
argue that no court has jurisdiction over the claim because the
administrative claims procedure has not been exhausted. In
essence, this would forever deprive the claimant of a hearing. It
appears that this result would violate the Due Process Clause of
the Fifth Amendment. Cf. Coit Independence Joint Venture v.
FSLIC, 

, 583-87, 

, 1374-76 (1989);
Logan v. Zimmerman Brush Co., 

, 428-31, 

, 1154 (1982); Boddie v. Connecticut, 

, 375-80;

, 784-87 (1971).
     If a party were never given a reasonable opportunity to
submit an action seeking a right to payment to the administrative
claims procedure (and the concomitant right to judicial review),
then the jurisdictional bar contained in § 1821(d)(13)(D) would
result in an unconstitutional deprivation of due process as
applied to that party. In other words, when a party presses an
action not merely for a declaration of rights, but rather one
seeking a right to payment, the teachings of Coit, Logan, and
Boddie suggest that a complete bar of jurisdiction, in both
administrative proceedings and courts of law, would as applied to
that party constitute a deprivation of property without due
process of law.


                               29
delay in obtaining relief does not violate the Due Process Clause

is made clear from the teaching of the Supreme Court in Bob Jones

University v. Simon, 

, 

(1974).

          In Bob Jones University, the Supreme Court addressed a

due process challenge to the Anti-Injunction Act of the Internal

Revenue Code, 26 U.S.C. § 7421(a).     The Anti-Injunction Act

provides in part that "no suit for the purpose of restraining the

assessment or collection of any tax shall be maintained in any

court."   

Court held that § 7421(a) barred suit

by Bob Jones University to enjoin the Internal Revenue Service

("IRS") from revoking a favorable ruling letter concerning tax-

deductible contributions which the IRS had previously 

, 

.     The University argued that by

barring suit for injunctive relief, it would either be forced to

await assessment of taxes before being able to challenge the

assessed taxes in administrative proceedings, or else it would

have to pay income taxes and commence a refund proceeding.       

94 S. Ct. at 2050-51.      This delay in adjudicating

whether the ruling letter should be revoked or not would

allegedly cause serious financial harm to the University because

revocation of the ruling letter would result in the loss of many

donations from contributors who depend on tax deductible status

    It therefore appears that if a party has not been given
reasonable notice and an opportunity to be heard concerning an
action for a right to payment in the administrative claims
procedure of FIRREA, the jurisdictional bar contained in
§1821(d)(13)(D) could not constitutionally apply to that party,
and a court would have jurisdiction over that party's claim. See
the discussion of this issue infra typescript at 32-37 and infra
note 22.


                                 30
when making those contributions.     The University contended that

such serious financial hardship resulting from the jurisdictional

bar resulted in a deprivation of due process.

          The Supreme Court rejected the due process challenge:
             This is not a case in which an aggrieved party has
          no access at all to judicial review. Were that true,
          our conclusion might well be different. . . .
          [Petitioner] may . . . petition the Tax Court to review
          the assessment of income taxes. Alternatively,
          petitioner may pay income taxes, . . . exhaust the
          Service's internal refund procedures, and then bring
          suit for a refund. These review procedures offer
          petitioner a full, albeit delayed, opportunity to
          litigate the legality of the Service's revocation of
          tax-exempt status . . . .
             We do not say that these avenues of review are the
          best that can be devised. They present serious
          problems of delay, during which the flow of donations
          to an organization will be impaired and in some cases
          perhaps even terminated. . . . [A]lthough the
          congressional restriction to postenforcement review may
          place an organization claiming tax-exempt status in a
          precarious financial position, the problems presented
          do not rise to the level of constitutional infirmities,
          in light of the powerful governmental interests in
          protecting the administration of the tax system from
          premature judicial interference.

  Thus, even assuming that the

jurisdictional bar contained in the Anti-Injunction Act would

cause the University to suffer a delay in bringing its action,

which delay in itself would result in substantial economic

injury, the Supreme Court rejected the due process challenge to

the limitation on court jurisdiction.

          The holding in Bob Jones University indicates that no

viable due process challenge can be made to the jurisdictional

limitation contained in § 1821(d)(13)(D) as applied to National

Union and Gulf's declaratory judgment action.    Because National


                                31
Union and Gulf, as explained below, will have an opportunity to

raise their right to rescission as an affirmative defense to the

RTC's counterclaim, they too will have a full, although delayed,

opportunity to litigate the rescission issue.0    In light of the

important government interests in addressing the crisis of

insolvent thrift institutions, even if declaratory judgment

actions not asserting a right to payment were completely

jurisdictionally barred from the administrative claims procedure

and courts of law, this would not present a due process

violation.   In contrast, where an action is not merely

declaratory in nature, but rather asserts a right to payment, a

complete bar to such a right-to-payment action in administrative

proceedings and in courts of law would appear to be an

unconstitutional deprivation of due process, since the holder of

the right to payment would never have an opportunity to be heard

concerning property already allegedly owed her.    See, e.g., id.;

see also Coit Independence Joint Venture v. FSLIC, 

,

583-87, 

, 1374-76 (1989); Logan v. Zimmerman Brush

Co., 

, 429-30, 

, 1154 (1982); Mathews
v. Eldridge, 

, 332-49, 

, 901-10 (1976);

supra note 16.   Cf. Lawrence Gene Sager, Foreword: Constitutional




0
Although Bob Jones University dealt with injunctive rather than
declaratory relief, we find its holding to be authoritative as to
actions concerning declaratory relief. This is especially
because in another setting the Supreme Court itself has
recognized that "there is little practical difference between
injunctive and declaratory relief." California v. Grace Brethren
Church, 

, 408, 

, 2508 (1982).


                                32
Limitations on Congress' Authority to Regulate the Jurisdiction

of the Federal Courts, 95 Harv. L. Rev. 17, 69-74 (1981).

          Finally, we note that if a complete jurisdictional bar

to actions not seeking a right to payment were deemed a violation

of the Due Process Clause, then it must follow that litigants

have a constitutional right to declaratory judgments.    This

conclusion is not feasible.   Far from being constitutionally

required, "for some years the Supreme Court had raised serious

doubts about whether an action for a declaratory judgment was

[permitted as] a 'case or controversy' within the jurisdiction of

the federal courts," Charles Alan Wright, The Law of Federal

Courts § 100, at 670 (4th ed. 1983), and "[a]ctions for

declaratory judgments represent a comparatively recent

development in American jurisprudence," 

is possible to find elements of the
          declaratory judgment in ancient procedures, the remedy
          as it is now known has been recognized in the United
          States only since 1919 when legislatures began to adopt
          statutes similar to those still in effect authorizing
          the declaratory judgment. . . .

               Constitutional doubts deterred adoption of a
          federal statute authorizing declaratory judgments but
          when these were quieted by the Supreme Court in 1933,
          Congress responded promptly by passing the Federal
          Declaratory Judgment Act in 1934.


Charles Alan Wright et al., 10A Federal Practice and Procedure

§2752, at 571-72 (2d ed. 1983) (footnotes omitted).     In light of

the history of the Declaratory Judgment Act,0 it seems that the

right to bring a declaratory judgment action is not a

0
The Declaratory Judgment Act is codified at 28 U.S.C. §§2201,
2202.

                                33
constitutional right, but rather a remedy provided as a matter of

grace by the legislature; accordingly, the legislature has the

power to abolish that form of remedy.0

          Since a complete bar of jurisdiction in the

administrative claims procedure and courts of law over

declaratory judgment actions not asserting a right to payment

would comport with due process, National Union and Gulf's

argument that they did not receive proper notice from the RTC

concerning the submission of claims pursuant to the

administrative claims procedure is irrelevant.   That is, Congress

need not have provided an administrative remedy as an alternative

to its barring jurisdiction in courts of law over declaratory

judgment actions not asserting a right to payment, so notice of

any administrative remedies a fortiori is not required.

          In holding that § 1821(d)(13)(D)'s ouster of

jurisdiction is not necessarily limited to suits otherwise

governed by the administrative claims procedure set out in

§1821(d)(3), (d)(5) and (d)(6),0 we acknowledge that it is

possible that in some factual settings the broad bar to

jurisdiction contained in § 1821(d)(13)(D) could raise

constitutional concerns.   Such a situation could arise if the

0
 The Supreme Court has characterized the Declaratory Judgment Act
as a form of remedy, procedural in nature, rather than as a grant
of jurisdiction. Aetna Life Ins. Co. of Hartford, Conn. v.
Haworth, 

, 240, 

, 463 (1937).    To this
extent, some might find it preferable not to characterize
§1821(d)(13)(D) as a jurisdictional bar to declaratory judgment
actions, but rather as a limitation to the relief made available
by the Declaratory Judgment Act.
0
 See supra note 12.


                                34
holder of an action asserting a right to payment were not

provided reasonable notice and opportunity to be heard in the

administrative claims procedure.     In such a setting, application

of the broad jurisdictional bar, as stated above, would appear to

be unconstitutional.   But simply because § 1821(d)(13)(D)'s

application in imaginary future cases would be unconstitutional

is not a good reason to interpret its jurisdictional bar

narrowly, as some courts have suggested.0    Rather, if and when

the RTC seeks to use § 1821(d)(13)(D) unconstitutionally, it

would seem that the courts should deem application of

§1821(d)(13)(D) unconstitutional as applied in that case, and

take jurisdiction over the case.0



0
See supra note 8.
0
Courts routinely declare particular applications of a statute
unconstitutional, while leaving the statute intact. E.g.,
Tennessee v. Garner, 

, 11-12, 

, 1701
(1985) ("The Tennessee statute is unconstitutional insofar as it
authorizes the use of deadly force against . . . fleeing
suspects. It is not, however, unconstitutional on its face.
Where the officer has probable cause to believe that the suspect
poses a threat of serious physical harm, either to the officer or
to others, it is not constitutionally unreasonable to prevent
escape by using deadly force. . . . As applied in such
circumstances, the Tennessee statute would pass constitutional
muster."); see also, e.g., Bowen v. Kendrick, 

, 593-
622, 

, 2565-81 (1988) (statute did not violate
Establishment Clause on its face, and case remanded to determine
whether in particular cases statute was unconstitutional as
applied); Boddie v. Connecticut, 

, 379, 382-83, 91 S.
Ct. 780, 787, 788-89 (1971). For a compelling argument that
where a constitutionally flawed limitation of jurisdiction is
announced by Congress, courts should assume that pertinent
general grants of jurisdiction (e.g., 28 U.S.C. §§ 1331, 1343)
remain intact, see Lawrence Gene Sager, Foreword: Constitutional
Limitations on Congress' Authority to Regulate the Jurisdiction
of the Federal Courts, 95 Harv. L. Rev. 17, 22-30 (1981).


                                35
           We conclude that § 1821(d)(13)(D) bars jurisdiction in

any court over National Union and Gulf's declaratory judgment

action, regardless of whether the declaratory judgment action

could have been submitted to the RTC pursuant to the

administrative claims procedure.     Moreover, the language

contained in § 1821(d)(13)(D) barring "any action seeking a

determination of rights" is not limited in its application to

actions brought by creditors; it applies to debtors as well, and

applies regardless of whether the action is asserting a right to

payment.   It is therefore irrelevant that National Union and Gulf

claim to be potential debtors of the RTC.     Accordingly, we will

affirm the district court's holding that it lacked jurisdiction

to hear National Union and Gulf's declaratory judgment action.0


3.   Application of Section 1821(d)(13)(D) to the
     Affirmative Defense of Rescission

           We now turn to consider whether the district court

correctly determined that National Union and Gulf are

jurisdictionally barred under § 1821(d)(13)(D) from raising an

affirmative defense of rescission to the RTC's counterclaim.    We

believe that the plain meaning of the language contained in

0
Our holding is in accord with the weight of authority. See,
e.g., Carney v. RTC, 

, 956-58 (5th Cir. 1994) (12
U.C.S. § 1821(j) deprives district courts of certain forms of
declaratory relief); Deera Homes, Inc. v. Metrobank for Sav.,
FSB, 

, 377-78 (E.D.N.Y. 1993) (§ 1821(d)(13)(D)
bars action for declaratory relief); Chisim v. RTC, 

, 362-63 (N.D. Ill. 1991) (same). But see In re Continental
Fin. Resources, Inc., 

, 387-89 (D. Mass. 1993) (§
1821(d)(13)(D) does not divest jurisdiction over debtor's, as
opposed to a creditor's, declaratory judgment action).


                                36
§1821(d)(13)(D) indicates that the statute does not create a

jurisdictional bar to defenses or affirmative defenses which a

party seeks to raise in defending against a claim.

          Section 1821(d)(13)(D) limits jurisdiction as follows:
            Except as otherwise provided in this subsection, no
          court shall have jurisdiction over--
                (i) any claim or action for payment from, or any
               action seeking a determination of rights with
               respect to, the assets of any depository
               institution for which the [RTC] has been appointed
               receiver, including assets which the [RTC] may
               acquire from itself as such receiver; or
                (ii) any claim relating to any act or omission of
               such institution or the [RTC] as receiver.


12 U.S.C. § 1821(d)(13)(D).   The above language bars jurisdiction

over four categories of actions: (1) claims for payment from

assets of any depository institution for which the RTC has been

appointed receiver; (2) actions for payment from assets of such

depository institution; (3) actions seeking a determination of

rights with respect to assets of such depository institution; and

(4) a claim relating to any act or omission of such institution

or the RTC as receiver.   The issue is whether defenses or

affirmative defenses to claims can be said to fall under any of

the above four categories.

          We think it is plain enough that a defense or an

affirmative defense is neither an "action" nor a "claim," but

rather is a response to an action or a claim, and that therefore

defenses and affirmative defenses do not fall under any of the

above four categories of actions.      In the interest of clarity, we

explain our position in detail.




                                  37
          Black's Law Dictionary defines "defense," in relevant

part, as follows:
            That which is offered and alleged by the party
          proceeded against in an action or suit, as a reason in
          law or fact why the plaintiff should not recover or
          establish what he seeks. That which is put forward to
          diminish plaintiff's cause of action or defeat
          recovery. . . .
          . . .
            A response to the claims of the other party, setting
          forth reasons why the claims should not be granted. The
          defense may be as simple as a flat denial of the other
          party's factual allegations or may involve entirely new
          factual allegations. In the latter situation, the
          defense is an affirmative defense.


Black's Law Dictionary 419 (6th ed. 1990) (emphasis added).

"Affirmative defense" is defined in more detail as follows:
            In pleading, matter asserted by defendant which,
          assuming the complaint to be true, constitutes a
          defense to it. A response to a plaintiff's claim which
          attacks the plaintiff's [legal] right to bring an
          action, as opposed to attacking the truth of claim.
          Under the Fed. Rules of Civil Procedure, and also under
          most state Rules, all affirmative defenses must be
          raised in the responsive pleading (answer) . . . .

(emphasis added).   We have stated above that an action

means "a lawsuit brought in a court."   

  In the above
discussion we also stated, borrowing from the Bankruptcy Code,

that as used in § 1821(d) the term "claim" essentially means "an

action asserting a right to payment."

          With the aid of these definitions, it is clear that a

defense or affirmative defense is not properly called an "action"

or a "claim" but is rather a response to an action or a claim.

When a lawyer files a responsive pleading to an action or claim,

she does not say that she is bringing an action or filing a



                                38
claim; instead, she says that she is answering, responding to, or

defending against an action.    The jurisdictional bar contained in

§ 1821(d)(13)(D) therefore does not apply to defenses or

affirmative defenses.0

           Of course, if in addition to raising defenses or

affirmative defenses to an action or claim, a party also raises

counterclaims, such counterclaims would fall under

§1821(d)(13)(D)'s jurisdictional bar, because a counterclaim is a

"claim."   Black's Law Dictionary defines counterclaim as "[a]

claim presented by a defendant in opposition to or deduction from

the claim of the plaintiff."   Black's Law Dictionary 349 (6th ed.

1990).    Therefore, unless counterclaims were properly submitted

to the administrative claims procedure of FIRREA, they would be

subject to the jurisdictional bar of § 1821(d)(13)(D).0

            Whether an assertion is truly a defense, an affirmative

defense, or a counterclaim is a question courts are competent to

answer.    As discussed above, a claim (or a counterclaim) is

essentially an action which asserts a right to payment.    Courts


0
 There is a conflict among courts concerning whether affirmative
defenses are jurisdictionally barred by §1821(d)(13)(D). See
cases cited in RTC v. Schonacher, 

, 692-94 (D.
Kan. 1994). The only court of appeals to consider this issue has
held that an affirmative defense of mutual mistake is not barred
by § 1821(d)(13)(D). RTC v. Midwest Fed. Sav. Bank of Minot, 

, 1494-97 (9th Cir. 1993). We agree with the outcome of
Midwest Federal, but, as suggested 

typescript at 20-37
and note 8, our analysis does not mirror the reasoning of the
Court of Appeals for the Ninth Circuit.
0
 It appears that there is a forming consensus in the courts that
counterclaims are jurisdictionally barred by §1821(d)(13)(D),
unless administrative remedies are exhausted. See cases cited in

.


                                 39
should not allow parties to avoid the procedural bar of

§1821(d)(13)(D) by simply labelling what is actually a

counterclaim as a defense or affirmative defense.

          We will assume that under the state and/or federal law

which ultimately will govern this case, a defense of rescission

is an "affirmative defense".0   The district court has

characterized rescission as an affirmative defense, and we accept

that characterization.   National Union and Gulf are therefore not

barred by § 1821(d)(13)(D) from raising rescission as an

affirmative defense to the RTC's counterclaim.

          Our interpretation of § 1821(d)(13)(D) is based on the

plain meaning of the language of that section.   However, we point

out that even if it could be argued that the jurisdictional bar

of § 1821(d)(13)(D) could be fairly interpreted to bar

jurisdiction over defenses or affirmative defenses, we would not

adopt this position.   This is because interpreting the

jurisdictional bar in such a manner would, in a substantial

number of cases, and in this case in particular, result in an

unconstitutional deprivation of due process.   Property which one

stands to lose as a result of a lawsuit is a property interest

protected by the Due Process Clause, 

,

102 S. Ct. at 1154, and the "Due Process Clause . . . prevent[s]

. . . denying potential litigants use of established adjudicatory


0
We have found authority for the proposition that rescission is
an affirmative defense, and none to the contrary. E.g.,
Intertech Assoc., Inc. v. City of Paterson, 

, 632
(N.J. Super. Ct. App. Div. 1992); Falcione v. Cornell Sch. Dist.,

, 428 (Pa. Super. Ct. 1989).


                                 40
procedures, when such an action would be 'the equivalent of

denying them an opportunity to be heard upon their claimed

right[s],'" 

102 S. Ct. at 1154.     If parties were

barred from presenting defenses and affirmative defenses to

claims which have been filed against them, they would not only be

unconstitutionally deprived of their opportunity to be heard, but

they would invariably lose on the merits of the claims brought

against them.   Such a serious deprivation of property without due

process of law cannot be countenanced in our constitutional

system.0   "[W]here an otherwise acceptable construction of a

statute would raise serious constitutional problems, the [c]ourt

will construe the statute to avoid such problems unless such

construction is plainly contrary to the intent of Congress."

Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr.

Trades Council, 

, 575, 

, 1397 (1988).

Especially in light of the serious due process concerns which

would unavoidably arise were we to interpret the jurisdictional

bar of § 1821(d)(13)(D) as applying to defenses and affirmative

defenses, we reject such an interpretation.

           It may be argued that barring defenses and affirmative

defenses in court would not be unconstitutional because under

FIRREA parties could always file potential defenses and

affirmative defenses in the administrative claims procedure

provided for in § 1821(d)(3), (d)(5) and (d)(6).    But this

0
In contrast, our holding above that Congress may divest the
courts of jurisdiction over declaratory judgment actions would
result only in a delay in adjudication, not a permanent
deprivation of property without an opportunity to be heard.


                                 41
suggestion is not tenable.    For one thing, many of the parties

who would be raising defenses to RTC-initiated lawsuits would not

be creditors of the thrift institution in receivership and so

would not receive notice of the time within which they would be

required to present information to the administrative claims

procedure, as provided for in § 1821(d)(3).    Again, this would

raise due process concerns.    Moreover, even if parties received

notice that they must submit potential defenses or affirmative

defenses to the administrative claims procedure, such parties

would often find it difficult if not impossible to do so.    Since

a party cannot know what her defense is until she hears the claim

leveled against her, it seems that it would be nearly impossible

for a party to submit future hypothetical defenses to the

administrative claims procedure--defenses to lawsuits which may

not yet have brought against her or which may never be brought at

all.   We agree with the court in RTC v. Conner, 

(W.D. Okla. 1993), "that even if the plain language of

§1821(d)(13)(D) were read or understood to include affirmative

defenses, an exception to the plain meaning rule of statutory

construction would apply because such a literal application of

the statute . . . would lead to the patently absurd consequence

of requiring presentment and proof to the RTC of all potential

affirmative defenses that might be asserted in response to

unknown and unasserted claims or actions by the RTC," 

(internal quotations and citations omitted).

           For the above reasons, we conclude that §1821(d)(13)(D)

does not bar National Union or Gulf from raising any defense or

                                 42
affirmative defense to the RTC's counterclaim.     We will therefore

reverse the district court's holding that National Union and Gulf

were jurisdictionally barred from raising rescission as an

affirmative defense.



                            CONCLUSION

           We hold that the jurisdictional bar contained in

§1821(d)(13)(D) deprives the district court of jurisdiction to

hear National Union and Gulf's declaratory judgment action for

rescission of the insurance polices they issued, but that the

jurisdictional bar does not apply to the same theory of

rescission when raised as an affirmative defense.     At first

blush, it might seem hypertechnical for us to interpret

§1821(d)(13)(D) as making a distinction between a rescission

theory when asserted in a declaratory judgment action, and the

same theory of rescission when raised as an affirmative defense,

and to further hold that jurisdiction in the district court does

not exist for the former, but exists for the latter.

           Yet there is a principled and common sense rationale

for this distinction, which is evidenced by the text of FIRREA

and its legislative history:   One cannot hale the RTC into court

to obtain only a declaration of rights; rather, the RTC is to be

left alone to preserve the assets of the thrift institution in

receivership and efficiently process claims for payment for the

institution's assets.   However, if the RTC brings an action

against a party, that party has a right to raise defenses in that

action.   This rationale is both sound and just.


                                43
          We will affirm the district court's holding that it

does not have jurisdiction to hear National Union and Gulf's

declaratory judgment action.    However, we will reverse the

district court's holding that the jurisdictional bar contained in

§ 1821(d)(13)(D) prevents National Union and Gulf from raising

the affirmative defense of rescission to the RTC's counterclaim.

We will remand the case to the district court for proceedings

consistent with this opinion.




                                 44
45