fdic vs. boone hospital board candidate jerry d. kennett

IN THE UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF MISSOURI

CENTRAL DIVISION

FEDERAL DEPOSIT INSURANCE )CORPORATION, )

)Plaintiff, )

)vs. ) Civil Case No.: 10-CV-04261-NKL

)AIR CHARTERS & SALES, LLC, and )JERRY D. KENNETT, )

)Defendants. )

MOTION FOR STAY OF LITIGATION

The Federal Deposit Insurance Corporation (FDIC), in its capacity as Receiver for Premier

Bank, Jefferson City, Missouri (referred to at times as the FDIC or FDIC-R), by and through its

undersigned counsel, does hereby move the Court for its Order staying the litigation in this matter.

In support of this request and motion, the FDIC states:

1. On Friday, October 15, 2010, the Division of Finance for the State of Missouri took

possession of the business and property of Premier Bank pursuant to Section 361.300, RSMo., and

appointed the FDIC as the receiver and liquidating agent for Premier Banks assets.

2. The FDIC has accepted its appointment as receiver.

3. Prior to October 15, 2010, Premier Bank had initiated litigation in the Circuit Court

for Boone County, Missouri against Defendant Air Charters & Sales, LLC (Air Charters) and

Defendant Jerry D. Kennett (Kennett).

4. Kennett is represented in this matter by Attorney Wally Bley, who accepted service

and filed responsive pleadings on behalf of Kennett in the State Court.

Case 2:10-cv-04261-NKL Document 3 Filed 12/09/10 Page 1 of 6

25. Air Charters has not been served with a copy of the State Courts Petition and

Summons, and is not currently represented by counsel at this time.

6. The FDIC filed its notice of removal with this Court on December 8, 2010.

7. Because Kennett has asserted various affirmative defenses in the State Court Action,

the FDIC views these as claims alleged by Kennett and against Premier Bank. As such, these

claims may become subject to FDICs receivership certain statutory proceedings must be followed.

8. The Financial Institutions, Reform, Recovery and Enforcement Act of 1989

(FIRREA or the Act), more specifically at 12 U.S.C. 1821(d)(3)-(13), provides a claim

procedure for all claims asserted against the assets of the failed institution, regardless as to whether

lawsuits enforcing those claims were initiated prior to the appointment of a Receiver. See Marquis

v. FDIC, 965 F.2d 1148 (1 Cir. 1992). Claims against the assets of failed institution are claims thatst

seek payment from the failed institutions assets. See Elmco Properties, Inc. v. Second National

Federal Savings Association, 94 F.3d 914 (4 Cir. 1996).th

9. The Act requires mandatory compliance with the administrative claims review

process. Brown Leasing Co. v. FDIC, 833 F.Supp. 672 (N.D. Ill. 1993). All creditors having claims

against the failed institution must first present them to the FDIC for an administrative determination

of whether they should be paid. 12 U.S.C. 1821(d)(3)-(5). Maher v. Harris Trust and Savings

Bank, 75 F.3d 1182 (7 Cir. 1995).th

10. Creditors have ninety (90) days to present their claims against the assets of the failed

institution upon receiving notice from the FDIC. 12 U.S.C. 1821(d)(3)(B)(i). Once the claim is

presented, the FDIC-R has 180 days within which to consider the claim and notify the claimant

whether it has been allowed or disallowed, 12 U.S.C. 1821(d)(5)(A)(i). When the creditor has


3been notified of the Receivers determination, or when the 180 day period has expired, the creditor

may either request administrative review or file suit on the claim (or continue an action commenced

before the appointment of a receiver) in the federal district court where the failed banks principal

place of business is located. 12 U.S.C. 1821(d)(6)(A).

11. In the instant action, Kennett is asserting a claim against Premier Bank, and for which

the FDIC is now Receiver, and over which the FDIC may retain control. As a result, Kennett is

seeking recovery from a failed institution that is now subject to the FDICs receivership, and should

be submitted to the FDIC for administrative review.

12. There is unanimity among the circuits that Congress intended a mandatory exhaustion

of administrative remedies before a litigant may seek relief in federal district court for a claim

against a failed institution. See e.g. Simon v. FDIC, 48 F.3d 53, 57 (1 Cir. 1995; RTC v. Elman, 949st

F.2d 624, 627 (2 Cir. 1991); RTC v. W.W. Dev. & Management, Inc., 73 F.3d 1298, 1304 (3 Cir.nd rd

1996); Brady Dev. Co., Inc. v. RTC, 14 F.3d 998, 1007 (4 Cir. 1994); Bueford v. RTC, 991 F.2dth

481, 484 (8 Cir. 1993).th

13. Strict compliance with the Act is mandated before a litigant may seek relief in federal

district court. See Capitol Leasing Co. v. FDIC, 999 F.2d 188, 192 (7 Cir. 1993); Brown Leasingth

Co. v. FDIC, 833 F.Supp. 672 (N.D. Ill. 1993); Maher v. Harris Trust and Savings Bank, 75 F.3d

1182 (7 Cir. 1996).th

14. Congress specifically deprived federal courts of subject matter jurisdiction over

claims not presented for administrative review. Specifically, the Act provides:

Limitation on judicial review

Except as otherwise provided in this subsection, no court shall have


4jurisdiction 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 [FDIC] has been appointed Receiver, includingassets which the [FDIC] may acquire from itself as such Receiver; or

(ii) any claim relating to any act or omission of such institution or the [FDIC] as Receiver.

12 U.S.C. 1821(d)(13)(D).

15. Thus, the pending action against the FDIC must be stayed until Kennetts claims have

been submitted to the FDIC for administrative review and the FDIC has either made a determination

to disallow the claim, or the 180 day administrative review period has expired. See 12 U.S.C.

1821(d)(5)(A)(i). See also FDIC v. Glynn, Nos. 91 C 3723, 91 C 3726, 1993 WL 413958, at 34

(N.D. Ill. Oct. 15, 1993).

16. Courts are empowered to stay pending litigation until the administrative process has

been exhausted. FDIC v. Glynn, Nos. 91 C 3723, 91 C 3726, 1993 WL 413958, at 3-4 (N.D. Ill. Oct.

15, 1993) (district court retains subject matter jurisdiction over continued lawsuit if plaintiff exhausts

the administrative claims review process).

17. Since Congress manifested an intent to require mandatory compliance with the

administrative review process in the Act, it follows that Congress manifested an intent to require a

stay of all claims against a failed institution pending review of those claims by the FDIC. See Brown

Leasing Company v. FDIC, 833 F.Supp. 672 (N.D. Ill. 1993); FDIC v. Glynn, Nos. 91 C 3723, 91

C 3726, 1993 WL 413958, at 3-04 (N.D. Ill. Oct. 15, 1993); Tuxedo Beach Club Corporation v. City


5Federal Savings Bank, 737 F.Supp. 18, 19-20 (D.N.J. 1990); International Fidelity Insurance Co.

v. Yorkville Federal Savings and Loan Association, 1990 WL 165720 at *2 (S.D.N.Y. 1990).

CONCLUSION

18. Since Defendant Kennett has a pending claims against Premier Bank, which is a failed

institution under the receivership of the FDIC, his participation in the FDICs administrative review

process is mandated. Because the administrative review process is a prerequisite to seeking relief

before this Court, a stay of the instant case until all Defendants exhaust their administrative remedies

with the FDIC is also mandated.

19. This request is made in good faith, and not to delay these proceedings for any

improper purpose.

Accordingly, the FDIC respectfully requests that the Court enter its Order and Judgment

staying this litigation for a period commencing on the date that the Order is entered on the docket

and ending, at a minimum of 120 days from the entry of such Order; and for such other and further

relief, legal or equitable, this Court deems necessary and proper.


6Respectfully Submitted,

MARIEA & SIGMUND, L.L.C.

By /s/ Jonathan C. Browning Jonathan C. Browning #52820310 Monroe StreetJefferson City, Missouri 65101Telephone: (573) 635-7699Facsimile: (573) 635-7425E-Mail: [email protected]

ATTORNEYS FOR FEDERAL DEPOSIT INSURANCECORPORATION AS RECEIVER FOR PREMIER BANK,JEFFERSON CITY, MISSOURI

CERTIFICATE OF SERVICE

The undersigned attorney and firm, counsel for Plaintiff Premier hereby certify that a copyof the foregoing pleading was served, on December 9, 2010, either electronically or by United StatesMail, postage prepaid, to the following:

Mr. Wally BleyBley Law Firm, P.C.1000 West Nifong Blvd., Building 4, Suite 200Columbia, MO 65203Via email to: [email protected]

____________________________________Jonathan C. Browning


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fdic vs. boone hospital board candidate jerry d. kennett

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