Case 128

National Trust for Historic Preservation v. Federal Deposit Insurance Corporation, No. 93 0904 (D.D.C. May 7, 1993), aff'd, 995 F.2d 238 (D.C. Cir.), vacated, 5 F.3d 567 (D.C. Cir. 1993), reinstated in part, 21 F.3d 469 (D.C. Cir.), cert. denied, 115 S. Ct. 683 (1994).

The National Trust for Historic Preservation and other preservation organizations sought to prevent the Federal Deposit Insurance Corporation (FDIC) from completing the sale and demolition of the Dallas, Texas, headquarters of the Dr. Pepper company, a 1948 Art Moderne building eligible for listing in the National Register of Historic Places. FDIC had obtained title to the building through the liquidation of a failed bank and entered into a contract to sell the historic building to a corporation that planned to demolish it.

Plaintiffs applied for a temporary restraining order to prevent demolition prior to the court's ruling on their allegations that FDIC could not lawfully complete the sale without complying with the National Historic Preservation Act (NHPA). FDIC argued that when it merely acts as an asset liquidator it is not a Federal agency and, therefore, is not obligated to comply with NHPA. The district court found plaintiffs met the burden of showing substantial likelihood of success on the merits, irreparable injury, absence of substantial harm to other parties if the injunction were granted, and a benefit to the public. In particular, the district court found a strong showing of irreparable harm and noted that in the D.C. Circuit where such a finding is made, plaintiff need only demonstrate a likelihood of success on the merits. Slip op. at 6. The district court granted plaintiffs' motion for a temporary restraining order and set a hearing date for one week later to hear the motion for a preliminary injunction.

On the motion for a preliminary injunction, under a different judge, the district court denied plaintiffs' motion and dismissed the case for lack of jurisdiction in a conclusory order. In dismissing the case, the court relied on the Federal Deposit Insurance Act, which provides that "no court may take any action . . . to restrain or affect the exercise of powers or functions of the [FDIC] as a conservator or receiver." 12 U.S.C. § 1821(j). The district court determined that FDIC was acting as a receiver and that an injunction against the sale would restrain it from exercising its powers, thus violating Section 1821(j) of the Federal Deposit Insurance Act.

Plaintiffs brought an emergency motion for a stay pending appeal, but the court of appeals denied the application and affirmed the district court's dismissal of the case. The appellate court agreed with the district court's interpretation of Section 1821(j). Rejecting the National Trust's argument that Section 1821(j) was inapplicable to FDIC in this case because it was acting in its corporate capacity rather than as a receiver, the court found that FDIC acquired and disposed of the Dr. Pepper building pursuant to its powers as a receiver, as described in Section 1823(d)(3)(A), and, therefore, had the benefit of immunity from judicial restraint under Section 1821(j). 995 F.2d at 240.

The National Trust argued that Section 1821(j)'s limitation on judicial review applies only to matters subject to the administrative claims procedures set forth in Section 1821(d), which do not provide a remedy for failure to comply with the NHPA. The court disagreed, reasoning that nothing in the text of Section 1821(j) so limited its application and, further, that the exclusivity of the administrative claims procedures stemmed from another section, Section 1821(d)(13)(D). The court further explained that plaintiffs' interpretation rendered Section 1821(j) redundant and neglected the language of Section 1821(j) which broadly shielded FDIC's exercise of its powers and functions. Id. Because the court found that FDIC was acting within its statutory powers and functions when liquidating the assets of the failed bank, the court found that Section 1821(j) barred suit.

Circuit Judge Patricia Wald issued a strong dissent from the appellate court decision, primarily based on a finding that it was inappropriate to decide the case without the benefit of full briefing and oral argument. Section 1821(j) should be read in the context of the statutory scheme and legislative history, the judge opined, as the United States Supreme Court did in South Carolina v. Regan, 465 U.S. 367 (1984), to determine the scope of the preclusion of judicial intervention. 995 F.2d at 241. Judge Wald was dissatisfied with the court of appeals' treatment of the Regan precedent in a mere footnote in the opinion, finding it deserved greater attention. Most importantly, the judge was concerned about the broad implications of the case which effectively insulated FDIC from judicial intervention even if it violated Federal laws that could result in grave harm.

The National Trust petitioned for a rehearing. The court of appeals granted it and vacated the May 28, 1993, opinion and order. On rehearing, the court considered the briefs and oral arguments of the parties and reinstated the May 28 opinion, except for the footnote regarding the Regan case. Like the earlier opinion, this decision explained that FDIC had acquired the Dr. Pepper building pursuant to Section 1823 of the Federal Deposit Insurance Act and, thus, enjoyed immunity from suit in accordance with Section 1821. The appellate court distinguished and disagreed with a Fifth Circuit opinion, Sierra Club, Lone Star Chapter v. Federal Deposit Ins. Corp., 992 F.2d 545 (5th Cir. 1993), which allowed an injunction against FDIC for failure to comply with NEPA when disposing of environmentally sensitive lands. Further, in a controlling concurring opinion, Circuit Judge Wald examined the legislative history and statutory scheme and rejected plaintiffs' argument that Section 1821(j) barred only actions brought by parties who have access to an alternative remedy against FDIC. 21 F.3d at 472. The court did note that an aggrieved plaintiff could bring a suit for damages or seek administrative redress after the fact though the Section 1821(d) monetary claims procedure.

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