Under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), customers of failed banks that have been taken over by the Federal Deposit Insurance Corporation (FDIC) must, in the first instance, submit any claims they may have against the bank for resolution by the FDIC. If the FDIC disallows the claim, either expressly or by failing to act on the claim within 180 days, the claimant has 60 days to seek judicial review of the FDIC's decision. In a recent opinion, the Seventh Circuit held that, when a claimant does not seek judicial review during that 60-day period, the courts are divested of jurisdiction to review the FDIC's disallowance of the claim.
In Miller v. Federal Deposit Insurance Corporation, the FDIC took over a failed bank. Sidney Miller, a customer of the bank, submitted $6 million in claims against the bank to the FDIC, which the FDIC disallowed. The FDIC mailed a letter to Miller at the address in the bank's files informing Miller that it had disallowed his claims, but the postal service returned the letter to the FDIC as undeliverable. Almost 90 days after the FDIC mailed the letter, Miller learned that the FDIC had disallowed his claims, and filed an action seeking judicial review of that decision. The district court dismissed the action because Miller filed his lawsuit more than 60 days after the FDIC sent notice that it had disallowed his claims.
On appeal, Miller first argued that the clock on the 60-day period for seeking judicial review of a disallowance should begin to run on the date the claimant receives notice of the disallowance. The Seventh Circuit rejected this argument, holding that the plain language of FIRREA makes clear that the 60-day period begins on the date the FDIC sends the notice. The Court acknowledged that "[t]his strict rule may seem harsh," but reasoned that it "makes sense when considered in light of FIRREA's goal of promoting the quick and efficient resolution of claims against a failed bank."
Miller next argued that the 60-day period for seeking judicial review is a standard statute of limitations that can be equitably tolled, and, in his case, should have been equitably tolled. The Court rejected this argument, holding that filing a lawsuit within 60 days is a jurisdictional prerequisite to seeking judicial review of a disallowance of a claim by the FDIC. Because Miller did not file his action within 60 days of the FDIC's notice of disallowance, the courts lacked jurisdiction to review his claim.
For customers who wish to pursue claims against failed banks that are under FDIC receivership, the Miller case highlights the importance of closely monitoring the status of one's claim with the FDIC.
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