[PUBLISH]


              IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                    ________________________          FILED
                                             U.S. COURT OF APPEALS
                           No. 97-5178
                    ________________________   ELEVENTH CIRCUIT
                                                    09/10/98
                 D. C. Docket No. 97-8434-cv-KLR THOMAS K. KAHN
                                                     CLERK
NATIONAL PARTNERSHIP INVESTMENT CORP.,
a California Corporation, as the
managing general partner of National
Corporate Tax Credit Fund V, a
California limited partnership and
National Tax Credit Management
Corp. I, a California Corporation,

                                                Plaintiff-Appellee,

                               versus

NATIONAL HOUSING DEVELOPMENT CORPORATION,
a Florida non-profit corporation,

                                               Defendant-Appellant.
                    ________________________

          Appeal from the United States District Court
              for the Southern District of Florida
                    _________________________

                        (September 10, 1998)


Before HATCHETT, Chief Judge, BLACK, Circuit Judge, and KRAVITCH,
     Senior Circuit Judge.

BLACK, Circuit Judge:
       Defendant-Appellant National Housing Development Corp. (NHDC) appeals

the district court's order appointing a receiver pendente lite in this foreclosure action.

The appeal raises two narrow questions of law: (1) whether the appointment of a

receiver by a federal court exercising diversity jurisdiction is governed by state or

federal law; and (2) what standard of review this Court should apply in reviewing the

appointment of a receiver. We conclude that federal law governs the appointment of

a receiver and that the decision of the district court should be reviewed for an abuse

of discretion. Applying these principles to the present case, we affirm the order of the

district court.

                                 I. BACKGROUND

       NHDC is the operating general partner of Mangonia Residence I, Ltd. (“the

Partnership”). The Partnership is a Florida limited partnership that was organized in

1994 to build and lease a 252-unit apartment complex for low income elderly persons

in West Palm Beach, Florida.

       Plaintiff-Appellee National Partnership Investment Corp. (NAPICO) is the

managing general partner of National Corporate Tax Credit Fund V (NCTCV).

NCTCV is a limited partner in the Partnership with a 98.9% ownership interest.

Plaintiff-Appellee National Tax Credit Management Corp. I (NTC) is a special limited




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partner in the Partnership with a 0.1% interest. NHDC owns the remaining 1%

interest in the Partnership.

      NAPICO and NTC (Appellees) brought this diversity action against NHDC to

foreclose their security interest in NHDC's 1% share of the Partnership. Appellees

also filed an emergency motion to oust NHDC as the operating general partner and to

appoint a receiver to take charge of the Partnership. The district court issued an

interlocutory order appointing a receiver pendente lite. NHDC appeals that order

pursuant to 28 U.S.C. § 1292(a)(2).

                                  II. ANALYSIS

      NHDC contends that the appointment of a receiver in a diversity case is

governed by state substantive law in accordance with Erie Railroad Co. v. Tompkins,

, 

(1938). NHDC favors application of Florida law in the

present case because the standards governing the appointment of a receiver under

Florida law are arguably more stringent than under federal law. Compare McAllister

Hotel, Inc. v. Schatzberg, 

, 202-03 (Fla. 1949) (emphasizing the need

to show insolvency or fraud before a receiver will be appointed), with Consolidated

Rail Corp. v. Fore River Ry. Co., 

, 326-27 (1st Cir. 1988) (discussing six

factors federal courts may consider in determining whether to appoint a receiver).




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NHDC further asserts that this Court should conduct a de novo review of the district

court's decision to appoint a receiver.

      Appellees argue that federal law governs the appointment of a receiver in a

diversity case. Appellees also assert that this Court should review the decision to

appoint a receiver for an abuse of discretion.

A. What Law Governs

      As the First Circuit noted in Chase Manhattan Bank, N.A. v. Turabo Shopping

Center, Inc., 

, 26 (1st Cir. 1982), “[m]ost federal court decisions dealing

with the appointment of a receiver pendente lite appear to apply federal law without

discussion.” Of those circuits that have directly addressed the issue, each has held

that the appointment of a receiver in a diversity action is governed by federal law. See

Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc., 

, 316 (8th Cir. 1993);

; see also Resolution Trust Corp. v. Fountain Circle Assocs.

Ltd. Partnership, 

, 50 (N.D. Ohio 1992); New York Life Ins. Co. v.

Watt West Inv. Corp., 

, 289-90 (E.D. Cal. 1991). Commentators

generally approve of the conclusion reached by these courts. See 12 Charles Alan

Wright et al., Federal Practice and Procedure § 2983, at 33-35 (2d ed. 1997); 13

James Wm. Moore et al., Moore's Federal Practice ¶ 66.09 (3d ed. 1998).




                                           4
      The conclusion that federal law governs the appointment of receivers is based

on several considerations. First and foremost, the appointment of a receiver in equity

is not a substantive right; rather, it is an ancillary remedy which does not affect the

ultimate outcome of the action. Pusey & Jones Co. v. Hanssen, 

, 497,

, 456 (1923). The conclusion that federal law governs the appointment

of a receiver thus does not conflict with the Erie doctrine's requirement that state law

apply to matters of substance. New York 

; 12 Wright § 2983,

at 34; 13 Moore ¶ 66.09; see also Skelly Oil Co. v. Phillips Petroleum Co., 

, 674, 

, 880 (1950) (noting that, in a diversity case, a declaratory

remedy may be given by a federal court even if that remedy is unavailable in state

court); Guaranty Trust Co. of New York v. York, 

, 

(1945)

(stating that the equity power of a federal court exercising diversity jurisdiction cannot

be equated with state law under the Erie doctrine).




                                            5
       Second, Federal Rule of Civil Procedure 661 and the accompanying Advisory

Committee's Note2 assert the primacy of federal law in the practice of federal

receiverships. New York 

, 12 Wright § 2983, at 35. Thus,

to the extent Rule 66 dictates what principles should be applied to federal

receiverships, courts must comply with the Rule even in the face of differing state law.

See Hanna v. Plumer, 

, 471, 

, 1144 (1965) (stating that in

a diversity case, “[w]hen a situation is covered by one of the Federal Rules, . . . the

court has been instructed to apply the Federal Rule, and can refuse to do so only if the

Advisory Committee, this Court, and Congress erred in their prima facie judgment

that the Rule in question transgresses neither the terms of the Enabling Act nor

constitutional restrictions.”); see also 12 Wright § 2983, at 34 (stating that the




       1
         Federal Rule of Civil Procedure 66 provides:
               An action wherein a receiver has been appointed shall not be dismissed
       except by order of the court. The practice in the administration of estates by
       receivers or by other similar officers appointed by the court shall be in accordance
       with the practice heretofore followed in the courts of the United States or as provided
       in rules promulgated by the district courts. In all other respects the action in which
       the appointment of a receiver is sought or which is brought by or against a receiver
       is governed by these rules.
       2
         The Advisory Committee's Note indicates that “[t]he last sentence added to Rule 66 assures
the application of the rules in all matters except actual administration of the receivership estate
itself.”

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conclusion that federal law governs the appointment of a receiver is consistent with

Hanna).3

       We therefore hold that federal law governs the appointment of a receiver by a

federal court exercising diversity jurisdiction.

B. Standard of Review

       Courts and commentators agree not only that federal law governs the

appointment of a receiver, but also that a court of appeals should review a district

court's decision to appoint a receiver for an abuse of discretion. See Aviation Supply

; Lyman v. Spain, 

, 497 (D.C. Cir. 1985); 

; Mintzer v. Arthur L. Wright & Co., 

, 825 (3d Cir. 1959);

13 Moore ¶ 66.07[3]; 12 Wright § 2983, at 30-31. We agree with these authorities

and hold that the decision to appoint a receiver should be reviewed for an abuse of

discretion.

       After reviewing the record and briefs in this case, we conclude that the district

court did not abuse its discretion in appointing a receiver pendente lite.

                                     III. CONCLUSION



       3
         NHDC contends that in Strickland v. Peters, 

, 56 (5th Cir. 1941), this Court
concluded state law should govern the appointment of a receiver. The Strickland Court, however,
never directly addressed whether state or federal law applies to the appointment of a receiver. Any
such statement or implication drawn from Strickland is therefore dicta and not controlling.

                                                7
      The appointment of a receiver by a federal court exercising diversity

jurisdiction is governed by federal law. This Court reviews the decision to appoint a

receiver for an abuse of discretion. In this case, the district court did not abuse its

discretion.

      AFFIRMED.




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