USCA1 Opinion
February 3, 1994
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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Nos. 93-1427
93-1613
RHETTA B. SWEENEY, ET AL.,
Plaintiffs, Appellants,
v.
RESOLUTION TRUST CORPORATION, ET AL.,
Defendants, Appellees.
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ERRATA SHEET
The opinion of this court issued on January 31, 1994, is
amended as follows:
Page 7, line 21, should read "January 11, 1991" instead of
"January 11, 1993."
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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Nos. 93-1427
93-1613
RHETTA B. SWEENEY, ET AL.,
Plaintiffs, Appellants,
v.
RESOLUTION TRUST CORPORATION, ET AL.,
Defendants, Appellees.
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APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
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Before
Breyer, Chief Judge,
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Selya and Cyr, Circuit Judges.
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Rhetta B. Sweeney, on brief pro se.
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Paul R. Gupta, Joseph F. Shea and Nutter, McClennen & Fish,
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on brief for appellees.
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January 31, 1994
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Per Curiam. Appellants Rhetta Sweeney, individually and
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as trustee of the Maple Leaf Realty Trust and of the Canadian
Realty Trust, and John Sweeney [the Sweeneys] appeal the
final judgment entered by the United States District Court of
the District of Massachusetts for appellees Resolution Trust
Corporation [RTC], in its capacity as receiver of ComFed
Savings Bank, ComFed Mortgage Company, Inc. and Comfed
Advisory Company, Inc. [collectively "ComFed"], and Dennis
Furey, an employee of ComFed Mortgage Company, Inc. The
Sweeneys also appeal the district court award to the RTC of
attorneys' fees incurred in responding to what the court
found a frivolous motion to remand. We affirm.
Background
Background
In 1987, the Sweeneys borrowed $1,600,000 from ComFed
for construction of single family homes and other work on
their property in Hamilton, Massachusetts. The obligation is
evidenced by a promissory note, a loan agreement and a
construction loan agreement, all dated August 27, 1988. The
Sweeneys allege that ComFed also agreed to an additional
$900,000 in construction financing. ComFed denies that it
made any agreement as to a further loan. The Sweeneys
defaulted on the note and, in November 1988, ComFed initiated
foreclosure proceedings.
In April 1989, the Sweeneys filed a nine count complaint
in Middlesex Superior Court asserting various lender
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liability claims against ComFed and Furey. ComFed filed a
counterclaim seeking a determination of the Sweeney's
liability to ComFed under the terms of the $1,600,000 note on
which the Sweeneys had allegedly defaulted. In October 1989,
the superior court issued an injunction barring ComFed from
foreclosing on the Sweeney's mortgaged property.
In March 1990, after a twelve day trial, a superior
court jury returned a special verdict awarding ComFed
$2,069,586.33 for the Sweeneys' breach of the note, and
Rhetta Sweeney $65,000 for intentional infliction of
emotional distress. The court reserved to itself judgment on
two counts: ComFed's alleged violation of Mass. Gen. L. ch.
93A and the claim for specific performance of an alleged
agreement by ComFed to a partial release of the mortgage.
On December 13, 1990, the RTC was appointed conservator
of Comfed and, on January 11, 1991, removed the case to the
United States District Court for the District of
Massachusetts.1 No judgment had yet been entered on the two
counts tried to the superior court. However, on January 30,
1991, the superior court purported to enter judgment on those
two counts. The court purported to find for the Sweeneys on
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1. On January 31, 1991, the RTC was appointed receiver of
ComFed and conservator of ComFed, F.A. On September 13,
1991, the RTC was appointed receiver of ComFed, F.A. The RTC
as receiver of ComFed retains the liabilities in this case
while the RTC as receiver of ComFed, S.A. retains the assets.
"RTC" as used in this opinion refers to the RTC in both its
roles.
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their chapter 93A claim in the amount of $2,998,931.44, plus
interest and costs, and attorneys' fees of $97,704. No
copies or notices of this opinion were mailed to the parties
by the court clerk.
On January 31, 1991, counsel for the RTC learned of the
purported opinion when he went to the Middlesex Superior
Court Clerk's office to transport the record to the federal
district court.2 Believing the opinion to be a nullity,
counsel contacted the Massachusetts Attorney General's Office
to urge that the opinion be withdrawn. The superior court
refused to do so and instead released the opinion to the
Sweeneys on February 25, 1991. Counsel for the RTC then
filed the opinion with the district court under seal and
moved to expunge it from the record. On March 1, the
Sweeneys filed a motion to remand the case to the superior
court on the ground that the district court lacked
jurisdiction.
After a series of evidentiary hearings, the district
court determined that the case had been removed on January
11, 1991 and found that the Sweeneys' objection, which was in
the court's view an objection to venue not jurisdiction, was
untimely. On January 9, 1992, the RTC moved that the
district court enter the superior court jury verdict in its
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2. Testimony was presented before the district court that
this was in conformity with Middlesex Court practice.
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entirety and grant the RTC summary judgment on the two counts
which had been tried to the superior court. On April 14,
1992, the district court entered the jury verdict and granted
summary judgment to the RTC. On April 27, 1992, the court
vacated the superior court injunction. Final judgment was
entered on February 9, 1993. On February 13, 1993, Rhetta
Sweeney, purporting to act on behalf of all the plaintiffs,
filed a third motion to remand the case to the superior
court. Finding that the motion made no new factual or legal
argument, the district court allowed the RTC's request,
pursuant to Fed. R. Civ. P. 11, for attorneys' fees incurred
in responding to this motion. The Sweeneys now appeal both
the final order of the court and the grant to the RTC of
attorneys' fees.
Discussion
Discussion
The Sweeneys contend first that the district court erred
in denying their motion to have the case remanded to the
superior court. According to appellants, removal to the
United States District Court for the District of
Massachusetts was improper since 12 U.S.C. 1441(a)(l)(3)
allows for removal only to the United States District Court
for the District of Columbia.3 Construing this as an
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3. At the time of appellants' motion, 1441a(l)(3)
provided that venue was proper in:
the United States District Court for the District
of Columbia, or if the action, suit, or proceeding
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objection to venue, the district court denied the motion on
the ground that it had been filed more than thirty days after
removal. See 28 U.S.C. 1447(c). The Sweeneys argue that
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this period should have been tolled because of the RTC's "bad
faith" in withholding from them a copy of the superior
court's purported judgment, the existence of which the
Sweeneys discovered only on February 25, 1991.4
Even if we grant arguendo that venue in the United
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States District Court for the District of Massachusetts was
improper pursuant to 1441(a)(l)(3) and that appellants'
motion is subject to equitable tolling, we still find no
error in the district court's denial of appellants' motion to
remand. 28 U.S.C. 1441(a) provides that
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arises out of the actions of the Corporation with
respect to an institution for which a conservator
or a receiver has been appointed, the United States
district court for the district where the
institution's principal business is located.
Since this suit did not arise "out of the actions of the
Corporation," venue was proper only in the United States
District Court for the District of Columbia. Section
1441a(l)(3) was amended effective February 1, 1992. Under
the amended section, venue would be proper in Massachusetts.
We express no opinion as to whether this amendment should be
applied retroactively.
4. The Sweeneys appear to concede that 12 U.S.C.
1441a(l)(3) is a venue not a jurisdictional statute. See In
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re 5300 Memorial Investors, Ltd., 973 F.2d 1160, 1163 (5th
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Cir. 1992) (federal courts "consistently have construed the
former provision in section 1441a(l)(3) . . . as concerning
solely venue and not jurisdiction"). The district court had
jurisdiction over this action pursuant to 12 U.S.C.
1441a(l)(1).
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[e]xcept as otherwise expressly provided by Act of
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Congress, any civil action brought in a State court
of which the district courts of the United States
have original jurisdiction may be removed . . . to
the district court of the United States for the
district and division embracing the place where
such action is pending. (emphasis added)
Since nothing in 12 U.S.C. 1441a(l)(3) expressly limits venue,
the general venue provision of 28 U.S.C. 1441(a) is applicable
to this case. See Hellon & Assoc., Inc. v. Phoenix Resort Corp.,
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958 F.2d 295, 298 (9th Cir. 1992) (removal proper under 1441(a)
since "[n]othing in the statutory language provides that RTC is
limited to the specific removal provision found in section
1441a(l)(3)"); Resolution Trust Corp. v. Lightfoot, 938 F.2d 65,
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68 (7th Cir. 1991) (finding removal provision of 12 U.S.C.
1441a(l)(3) "to supplement, rather than to replace, those of
1441(a)"). Given that the RTC removed this case to the district
court of the United States where the action was pending, venue
was proper pursuant to 28 U.S.C. 1441(a) and appellants' motion
to remand was properly denied.
The Sweeneys next contend that the district court erred in
not entering the purported judgment of the superior court in
their favor. However, the district court supportably found that
this case had been removed to the federal court on January 11,
1991. "At that point, the jurisdiction of the state court
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'absolutely ceased, and that of the [federal court] immediately
attached,'" Hyde Park Partners. L.P. v. Connolly, 839 F.2d 837,
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841 (1st Cir. 1988) (quoting Steamship Co. v. Tugman, 106 U.S.
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118, 122 (1882)), and the state court was under an obligation to
"proceed no further unless and until the case [wa]s remanded,"
28 U.S.C. 1446(e); see also Tugman, 106 U.S. at 122 (once case
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removed, state court had "duty . . . to proceed no further").
Consequently, the purported judgment of the state court was "void
ab initio," Hyde Park Partners, 839 F.2d at 842, and the district
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court committed no error in refusing to enter judgment in accord
with it.
The Sweeneys' third contention is that the district court
improperly granted summary judgment to the RTC on the Sweeneys'
claim under chapter 93A 2(a).5 Appellants argue that the
district court erred when it found that their claim relied on
alleged promises not in writing and hence was barred by the
doctrine enunciated in D'Oench, Duhme & Co. v. Federal Deposit
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Ins. Corp., 315 U.S. 447 (1942) and codified at 12 U.S.C.
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1823(e).
The Sweeneys' principal claim under chapter 93A is that
the closing loan documents were "misleading, oppressive, and
unconscionable" in that they led the Sweeneys to understand that
ComFed would provide them with construction financing in addition
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5. Mass. Gen. L. c. 93A 2 protects against "unfair or
deceptive acts or practices in the conduct of any trade or
commerce."
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to the $1,600,000 loan actually provided. According to
appellants, ComFed knew that without the additional financing the
Sweeneys would be forced to default on the original agreement, as
in fact happened.
The D'Oench doctrine applies to the RTC when it acts, as
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in the instant case, in its capacity as receiver, see 12 U.S.C.
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1441a(b)(4)(A), and extends to the financial interests of any
wholly owned subsidiaries of a failed institution, see Oliver v.
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Resolution Trust Corp., 955 F.2d 583, 585-86 (8th Cir. 1992)
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(citing cases).6 It bars affirmative claims, whether sounding
in contract or tort, when they are premised on an unwritten
agreement. Timberland Design, Inc. v. First Service Bank for
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Sav., 932 F.2d 46, 50 (1st Cir. 1991) (citing cases). To satisfy
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the strictures of D'Oench and 1823(e) appellants must show an
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agreement in writing to provide the additional loans. The mere
fact that the appellants relied in good faith on an unwritten
agreement is not enough. Federal Deposit Ins. Corp. v. Caporale,
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931 F.2d 1, 2 (1st Cir. 1991).
In the instant case, the Sweeneys have identified no
written provision of any loan document which explicitly states
that such additional financing would be forthcoming. Rather,
they claim that they "reasonably understood" ComFed to have
committed itself to such financing based on the language of the
agreements. Yet, the only provisions which they cite in support
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6. Furey is not a defendant in the chapter 93A claim.
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of this position are far too ambiguous, absent extraneous
support, to establish an agreement to fund further
construction.7 At most, they reflect an intention to provide
further funds. However, they are insufficient to establish an
obligation on the part of ComFed which would meet the
requirements of D'Oench. See, e.g., Federal Sav. & Loan Ins.
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Corp. v. Two Rivers Assoc., Inc., 880 F.2d 1267, 1276 (11th Cir.
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1989) (requirements of D'Oench not met where written provisions
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reflect only intent to loan additional funds but not obligation
to do so); Beighley v. Federal Deposit Ins. Corp., 868 F.2d 776,
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783 (5th Cir. 1989) (even though one might derive inference from
documents that bank would cooperate in attempt to sell property,
requirements of 1823(e) not met since "not a single document
states in writing" that bank agreed to finance buyer).
The Sweeneys also seek to base their chapter 93A claim on
ComFed's alleged violation of 12 C.F.R. 545.32. This provision
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7. The Sweeneys rely (1) on a clause of the loan agreement
which requires them to pay a "1% nonuse fee in the event
COMFED does not finance the development and construction of
the 7 plus/minus additional lots;" (2) on a clause in the
construction loan agreement which states that the "Lender
shall no[] longer be bound by this Agreement . . . if said
building or buildings and improvements shall not be completed
on or before twelve (12) months from the date hereof, but
Lender may advance payments but shall not be bound to do so
after the date for said completion;" and (3) on a clause in
the construction loan agreement which gave ComFed "the right
to withhold 10% of the final advance until forty-three (43)
days . . . after the full completion of the construction."
Neither the references to possible future financing nor the
references to the project's completion establish an
obligation on the part of ComFed to fund the entire project.
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requires, in relevant part, that a federal savings association
may not make a real estate loan if the loan "exceed[s] the
applicable maximum loan-to-value ratio limitations prescribed [by
the association's board of directors]." 12 C.F.R.
545.32(d)(4). According to appellants, the $1,600,000 loan they
received was more than the 75% loan to value ratio established by
the Board of Directors of ComFed.8
Even if the loan granted the Sweeneys violated ComFed's
own limitation, and hence 12 C.F.R. 545.32, we are aware of no
authority which would indicate that this violation would be, as
appellants assert, a "per se violation" of chapter 93A. While
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violations of certain federal consumer protection statutes may
come within the purview of chapter 93A 2,9 12 C.F.R. 545.32
is not a consumer protection statute but a "means of protecting
insured depositors, the [FDIC] fund, and ultimately federal
taxpayers." Saratoga Sav. & Loan Ass'n. v. Federal Home Loan
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Bank Bd., 879 F.2d 689, 693 (9th Cir. 1989). We are aware of no
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authority supporting the claim that an alleged violation of
545.32 suffices to state a cause of action under chapter 93A.
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8. The property was appraised at $1,960,000.
9. According to Mass. Regs. Code tit. 940, 3.16.4:
an act or practice is a violation of M.G.L. c. 93A,
2 if . . . [i]t violates the Federal Trade
Commission Act, the Federal Consumer Protection Act
or other federal consumer protection statutes
within the purview of M.G.L. c. 93A, 2.
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The district court did not err in granting the RTC summary
judgment on the chapter 93A claim.10
The Sweeneys also assert that, if the case is not
remanded, they are entitled to a new trial in federal court on
the claims decided by the jury in the state action and entered by
the federal district court after removal. The district court,
relying on Fed. R. Civ. P. 63, entered judgment on all the
claims which had been tried to the jury in the state court
action.11 The Sweeneys do not contend that the district court
was without authority to so enter the judgment. Instead they
assert that they suffered prejudice from the entry of the
verdict. See Fed. R. Civ. P. 63. They argue that they were
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prejudiced first because the jury verdict was clearly against the
weight of the evidence. The Sweeneys also contend that the entry
of the verdict prejudiced them because the parties had agreed,
prior to the superior court trial, that the jury claims and those
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10. Since the Sweeneys make only passing reference to the
grant of summary judgment on their claim for specific
performance, any objection to this judgment has been waived.
See Ryan v. Royal Ins. Co., 916 F.2d 731, 734 (1st Cir. 1990)
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(issue referred to in perfunctory manner on appeal and
without developed argumentation deemed waived).
11. Rule 63 provides, in relevant part, that:
If a trial or hearing has been commenced and
the judge is unable to proceed, any other judge may
proceed with it upon certifying familiarity with
the record and determining that the proceedings in
the case may be completed without prejudice to the
parties.
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presented to the court would be tried on the same set of facts
simultaneously. Therefore, the district court should either have
entered both the jury verdict and the state court judgment or
granted a new trial on all counts.
We find no prejudice from the court's entry of the jury
verdicts. As to the first argument, the Sweeneys are entitled to
have the jury verdict set aside only if they demonstrate that the
verdict was a "manifest miscarriage of justice."12 Milone v.
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Moceri Family, Inc., 847 F.3d 35, 37 (1st Cir. 1988) (citing
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cases). The Sweeneys have failed to meet this exacting standard.
As to the second, the jury reached its verdict after hearing the
facts presented at trial; summary judgment was granted by the
district court to the RTC as a matter of law and on the basis of
federal defenses which arose only after the trial. In such
circumstances, appellants suffered no prejudice from the failure
to try both sets of claims simultaneously to the judge and jury.
The remaining substantive claims raised by the Sweeneys
merit only brief responses. Since the opinion issued by the
superior court on January 31, 1991, was void ab initio, there is
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no basis for entering it nunc pro tunc. For the same reason,
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12. The Sweeneys moved for a new trial in the state court on
the ground that the jury verdict was against the weight of
the evidence. This motion was not acted upon before removal
and, therefore, was arguably pending before the district
court. The district court, however, made no ruling on the
motion.
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that opinion cannot affect the propriety of the district court's
entrance of the jury verdict.
The RTC did not engage in impermissible forum shopping in
removing this action to the federal court. 12 U.S.C.
1441a(l)(3)(A) allows the RTC to remove an action brought against
it in its capacity as receiver even while a state appeal is
pending. Resolution Trust Corp. v. Nernberg, 3 F.3d 62, 68 (3d
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Cir. 1993); Lester v. Resolution Trust Corp., 994 F.2d 1247,
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1251-52 (7th Cir. 1993); In re 5300 Memorial Investors, Ltd., 973
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F.2d 1160, 1162 (5th Cir. 1992); see also, Federal Deposit Ins.
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Corp. v. Keating, No. 93-1230, slip. op. at 4-7 (1st Cir. Dec.
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29, 1993) (12 U.S.C. 1819(b)(2), the removal statute for the
Federal Deposit Insurance Corporation, identical in relevant part
to the RTC removal provision, allows removal while state appeal
is pending).
The Sweeneys have failed to make a showing that they have
discovered new evidence relating to the issues tried to the
superior court jury which would be "of such nature that it would
probably change the result if a new trial is granted." Nickerson
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v. G.D. Searle and Co., 900 F.2d 412, 417 (1st Cir. 1990). The
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only evidence they have adduced does not appear related to
actions which form the basis of their complaint.
The Sweeney's request for an injunction preventing the RTC
from foreclosing on the real property securing their $1.6 million
dollar note is barred by 12 U.S.C. 1821(j). See Telematics
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Int'l, Inc. v. NEMLC Leasing Corp., 967 F.2d 703, 707 (1st Cir.
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1992).
None of the other contentions raised by the Sweeneys as to
the disposition of their claims possesses any merit.
Finally, the Sweeneys appeal the grant by the district
court, pursuant to Fed. R. Civ. P. 11, of the RTC's request for
attorneys' fees incurred in responding to appellants' third
motion to remand the case to the superior court. The district
court previously denied two almost identical motions and had made
detailed findings of fact as to both the date of the removal and
the RTC's right to remove. The court did not abuse its
discretion in imposing sanctions for this repetitive motion. See
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Mariani v. Doctors Assoc., Inc., 983 F.2d 5, 7-8 (1st Cir. 1993)
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(affirming imposition of Rule 11 sanction for filing of second
motion which "consisted of virtually verbatim argumentation" from
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a prior motion on which appellants had not prevailed).13
The judgment of the district court is affirmed. The grant
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of attorneys' fees to the RTC pursuant to Fed. R. Civ. P. 11 is
affirmed.
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13. Local Rule 54.3 is inapplicable since this is not a
"case[] where the law makes provision for the award of
attorneys' fees" but one in which attorneys' fees were
imposed as a sanction under Fed. R. Civ. P. 11.
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