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FDIC Enforcement Decisions and Orders |
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Civil money penalty assessed against Director who failed to answer Notice of Assessment in a timely manner. FDIC granted special permission to appeal ALJ's denial of enforcement counsel's Motions for Recommended Decision. FDIC found that Respondents' bankruptcy petition did not constitute good cause to toll the regulatory period for answers, and assessed civil money penalties on the basis of the facts set forth in the Notice of Assessment.
[.1] Practice and ProcedureInterlocutory AppealsSpecial Permission
[.2] Civil Money PenaltiesNotice of AssessmentTime to Answer
[.3] BankruptcyEffect of Bankruptcy Filing on FDIC Proceeding
[.4] Civil Money PenaltyNotice of AssessmentGood Cause for Failure to Answer
[.5] Practice and ProcedureUntimely AnswerWaiver of Right to Appeal
[.6] Civil Money PenaltiesNotice of AssessmentFinal Unless Contested
[.7] Practice and ProcedureBankruptcyJurisdiction of ALJ
[.8] Practice and ProcedureBankruptcyAutomatic Stay
[.9] Practice and ProcedureBankruptcyAssessment of Civil Money Penalties
{{4-1-90 p.A-1436}}to establish a pecuniary interest in the bankruptcy estate nor is it in the realm of executing on a money judgment.
In the Matter of
INTRODUCTION
This matter is before the Board of Directors (the "Board") of the Federal Deposit Insurance Corporation (the "FDIC"), upon the request of FDIC enforcement counsel for special permission to appeal the administrative law judge's ("ALJ") denial of the FDIC's Motion for Recommended Decision against * * * ("Respondent").
I. A SPECIAL APPEAL IS APPROPRIATE
[.1] Section 308.12(e) of the FDIC Rules states, in pertinent part, that:
[.2] Respondent has presented no evidence indicating why he was unable to file in a timely manner, although the burden to do so is plainly his. The ALJ made no finding that Respondent has shown good cause to excuse his failure to file in a timely manner. The Board does not believe such a finding could be made on the record before it.
II. MOTION FOR DEFAULT ORDER
The FDIC issued its Notice pursuant to section 18(j)(4) of the Federal Deposit Insurance Act (the "FDI Act"), 12 U.S.C. §1828(j)(4), on November 22, 1988. On December 10, 1988, Respondent filed a request for a hearing. No answer was filed by Respondent within the 20-day time period prescribed by section 308.06(a) of the FDIC Rules, which ended on December 21, 1988. On December 23, 1988, Respondent filed a Suggestion of Bankruptcy and Motion to Dismiss or Stay Proceedings ("Respondent's Motion"). Respondent's Motion failed to admit, deny, or state that he lacked sufficient information to admit or deny the allegations of the Notice, or to state that all of the Notice's allegations were admitted to be true, and failed to request leave to file an answer after the answer date. Thus, it did not meet the requirements of sections 308.06(b) and (c) of the FDIC Rules which set forth the required content of an answer.
The ALJ's Decision
The ALJ's Recommended Decision addresses both Respondent's Motion to dismiss or stay the action and FDIC enforcement counsel's Motion to issue a recommended order to pay civil money penalties.
Discussion
A. Absence of Good Cause.
[.4] The FDIC Rules contemplate certain extraordinary circumstances where an extension of time to file an answer may be appropriate. Section 308.06(a) of the FDIC Rules provides that "for good cause shown, the Board, the Executive Secretary or the administrative law judge may permit filing of an answer after expiration of the filing period," 12 C.F.R. §308.06(a). However, the ALJ did not invoke this provision in reaching his decision. He made no finding that good cause has been shown. However, because this section of the FDIC Rules gives the Board the authority to extend the filing time for an answer even where the ALJ has not found good cause to do so, the Board must independently determine whether good cause exists.
B. The Respondent's Motion does not Toll the Regulatory Timeframe.
The only basis for an ALJ to accept an untimely answer is contained in the previ-
[.5] Furthermore, section 308.06(d) of the FDIC Rules provides that failure of a party to file an answer within the required time "shall be deemed a waiver of the right to appear and contest the allegations" of the Notice and "shall authorize the administrative law judge, without further notice to the party, to find the facts to be as alleged in the Notice and to file with the Executive Secretary a recommended decision containing such findings and appropriate conclusions." 12 C.F.R. §308.06(d). Reading section 308.06(a) in conjunction with section 308.06(d) indicates the regulatory scheme. Section 308.06(a) enables the ALJ to extend the time to file an answer upon a showing of good cause, but not where a submission is made which, according to the ALJ herein, does not constitute an answer but is "sufficiently responsive to toll the time limit." Then, section 308.06(d) serves as a jurisdictional bar to the ALJ's authority to proceed with a hearing.
[.6] It is significant that under revised Part 308, which became effective January 1, 1989, Respondent's Motion clearly would not satisfy the requirements for providing a timely answer. Section 308.21(a)(2) of revised Part 308 specifically provides that the time to file an answer is not extended by the making of any motion. Section 308.21(d)(1) of revised Part 308 further provides that, when an assessment of civil money penalties has been made under section 18(j) of the Act, it shall automatically become final and unappealable unless both the required request for hearing and an answer are timely filed. These revisions indicate an effort by the Board to reduce administrative delays and assure the orderly and rapid completion of enforcement proceedings.
III. CONCLUSION
The Board finds that no showing of good cause has been made to support the waiving of the regulatory answer period, and that it was not appropriate for the ALJ to deem the regulatory answer period tolled by the filing of Respondent's Motion. Therefore, an appropriate order shall be entered granting the FDIC enforcement counsel's Request for Special Permission to Appeal, granting FDIC enforcement counsel's Motion for Recommended Decision against * * *, and ordering the payment of a civil money penalty by Respondent as set forth in the Notice.
ORDER TO PAY CIVIL MONEY
The Board of Directors has considered the record before it, including the ALJ's Recommended Decision and Order, FDIC enforcement counsel's Request for Special Permission to Appeal the ALJ's Denial of FDIC's Motion for Recommended Decision against * * *, the Opposition of Respondent to the Request for Special Permission to Appeal, the Motion for Recommended Decision against * * *, and Respondent's Suggestion of Bankruptcy and Motion to Dismiss or Stay Proceedings. Upon this record the Board finds it appropriate to GRANT the Request for Special Permission to Appeal. Further, the Board finds Respondent has waived his right to appear and contest the allegations of the Notice in that good cause to excuse Respondent's failure to file a timely answer has not been shown and the filing of Respondent's Motion is not sufficient to excuse the failure to file answer. Therefore, the Board finds the facts to be as set forth in the allegations of the Notice. ACCORDINGLY, IT IS HEREBY ORDERED, that
* * * and * * *, individually, and as
On January 3, 1989, Respondent * * *'s Motion to Dismiss or Stay Proceedings was referred to me for disposition. Subsequently, counsel for the Respondent filed a brief. Counsel for the FDIC filed a Motion for Decision based on the Respondent's failure to file a timely answer, and withheld filing or briefing the Respondent's motion on grounds that a favorable disposition of the FDIC motion would make this unnecessary. I conclude, however, that even if the FDIC were to prevail, the Respondent's motion would still have to be decided, inasmuch as it involves a jurisdictional question.
A. MOTION TO DISMISS OR STAY
Although I do not have authority to grant a motion to dismiss, 12 C.F.R. Sec. 308.07, or otherwise to rule in favor of a motion which decides the merits of the matter, in the appropriate case I could make such a recommendation to the Corporation Board. However, I decline to do so here because I conclude that the motion to stay, and therefore the motion to dismiss, should be denied.
[.7] Though the issue raised by the Respondent is fundamentally one of interpreting the Bankruptcy Code, I have jurisdiction to decide it. Courts (and presumably administrative agencies) have competency to determine their own jurisdiction, which includes whether a proceeding must be stayed pursuant to the Bankruptcy Code. In re Baldwin-United Corp. Litigation, 765 F.2d 343 (2d Cir., 1985).
[.8] Section 362(a) of the Bankruptcy Code states that a petition in bankruptcy, such as that filed by the Respondent herein, operates as a stay as to all judicial and administrative proceedings against the debtor including "any act to collect, assess or recover a claim against the debtor that arose before the commencement of the case under the title . . . ." Section 362(b), however, sets forth certain exceptions and provides that the filing of a petition in bankruptcy "does not operate as a stay . . . .
NLRB v. Evans Plumbing Co., 639 NLRB 291 (5th Cir., 1981), was in the Circuit Court to enforce an NLRB reinstatement and backpay order. The respondent argued that the matter should be automatically stayed. The Court found the NLRB to be a governmental agency and that the action was being undertaken to enforce federal law concerning employer-employee relations. The Court said: "We can safely conclude, therefore, that this is an exercise of police or regulatory powers which places it within the Section 362(b)(4) exemption to the automatic stay."
[.10] Therefore I conclude that a proceeding before the FDIC to assess a civil money penalty is exempted from the automatic stay provisions of Section 362 of the United States Bankruptcy Code, and that this litigation may continue. Whether or not such assessment as may be entered would be dischargeable under the Bankruptcy Code is another question, and one to be decided in another proceeding.
B. PETITIONER'S MOTION FOR
To date, the Respondent has not filed an answer as is required by 12 C.F.R. Sec. 308.06(a) of the FDIC Rules of Practice and Procedures applicable to this matter. Since more than 20 days has elapsed since service of the notice of assessment, counsel for the FDIC filed a Motion for a Recommended Decision and documents in support thereof. |
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Last Updated 6/6/2003 | legal@fdic.gov |