Waldron v. FDIC, No. 18-35375 (9th Cir. 2019)
Annotate this CaseThe Ninth Circuit reversed the district court's judgment affirming the bankruptcy court's judgment in favor of the chapter 7 trustee. The trustee claimed that the tax refunds should be considered part of the bankruptcy estate and the bankruptcy court agreed. However, the panel held that the trustee failed to exhaust the administrative claims process as required by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Therefore, the panel held that the bankruptcy court did not have subject matter jurisdiction over the dispute because of the failure to exhaust.
Court Description: Bankruptcy. The panel reversed the district court’s judgment affirming the bankruptcy court’s decision after a bench trial in favor of the chapter 7 trustee for the bankruptcy estate of a failed bank’s parent company, on a claim for recovery as a preferential transfer of tax refunds obtained by the FDIC, receiver of the failed bank. Agreeing with other circuits, the panel held that the FDIC’s appeal was timely filed within 60 days of entry of the district court’s judgment because, even though acting solely as a receiver, the FDIC was a United States agency under Federal Rule of Appellate Procedure 4(a)(1)(B)(ii). Reversing and remanding, the panel held that the Financial Institutions Reform, Recovery, and Enforcement Act divested the bankruptcy court of jurisdiction because the bankruptcy trustee did not exhaust required administrative remedies before filing the preference action. The panel held that the Parker exhaustion exception did not apply because the preference action did not arise incident to the FDIC’s collection efforts against the debtor. Declining to expand the Parker exception, the panel held that, because the trustee failed to exhaust, the bankruptcy court lacked subject matter jurisdiction over his claims. WALDRON V. FDIC 3
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